Compliance

Approach

The Lion Group Charter for Corporate Behavior and the Behavioral Guidelines form the foundation of the Lion Group’s compliance framework. The Corporate Ethics Committee, chaired by the director responsible for corporate ethics, works proactively to foster compliance awareness within the Lion Group. The Lion Group Charter for Corporate Behavior and the Behavioral Guidelines are distributed in pamphlet form to all employees and publicly available on Lion’s website.

The Lion Group has established the LION Anti-Bribery Principles in light of developments around the world related to the strengthening of legal regulations against acts of bribery and corruption. Regarding taxation, the Group has established the Lion Group Tax Policy, stipulating that the Group shall practice highly transparent tax treatment and appropriately fulfill its tax obligations.

e-Learning Training

Lion conducts periodic e-learning. Topics covered in the mandatory Lion Career Village (LCV) e-learning curriculum in 2020 included a declaration of commitment to the Lion Group Charter for Corporate Behavior and other aspects of compliance (including harassment prevention), Lion’s conceptual approach to quality, social media-related risks, information management, basic knowledge of insider trading regulations, human rights, bribery and safety (including occupational accidents).

Compliance Awareness Survey

Every year, the Corporate Ethics Committee conducts the Compliance Awareness Survey,* which covers all domestic Lion Group employees (including part-time employees). This survey provides an assessment of compliance awareness at the individual employee level and a periodic evaluation of the effectiveness of compliance systems. In 2020, the survey was conducted for the 17th time. Approximately 91.8% of the targeted 4,334 employees responded. Matters identified as requiring a response through the opinions and other results gathered via the survey are dealt with promptly, and the survey results are reported to management, which then provides feedback to individual divisions.

Percentage of Employees Who Received Feedback from the Survey Results

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*Anonymous questionnaire survey covering such topics as compliance with the Lion Group Charter for Corporate Behavior, whether there was feedback from the results of the previous Compliance Awareness Survey, and awareness of the AL (All Lion) Heart Hotline.

Harassment Prevention

The Lion Group Charter for Corporate Behavior states that “We shall promote fair treatment and respect the diversity, individuality and personalities of our employees. We shall ensure a safe and comfortable workplace to realize the mental and physical well-being of our employees.” Accordingly, Lion prohibits sexual harassment as well as all other forms of workplace harassment, including those related to pregnancy, childbirth, childcare leave and nursing care leave.

Furthermore, to prevent the occurrence of harassment, we have formulated the Harassment Prevention Declarations, which define and provide examples of harassment. We are promoting widespread awareness of the Declarations among employees via the Company intranet and through regular e-learning training and other educational activities.

The Declaration applies not only to regular employees, but to everyone who works at Lion, including contract, part-time and temporary employees. The Lion Group strives to prevent and respond appropriately to harassment not only among employees, but also that involving customers and business partners.

Raising Awareness of the Hotline

Lion has set up an internal and external whistle-blowing system, the AL Heart Hotline, as a set of contacts for consultations for use when an employee learns of a compliance violation and ordinary reporting routes within the workplace are inadequate or unusable. We are taking steps to raise awareness of said system among all employees, including temporary staff. Furthermore, via the annual Compliance Awareness Survey for employees, we provide an explanation of the hotline and monitor its recognition rate among employees. The recognition rate was 99.5% in 2020.

The AL Heart Hotline Recognition Rate Among Employees
2017 2018 2019 2020
95.8% 98.5% 98.6% 99.5%

AL Heart Hotline Consultations and Reports and Lion’s Response

When the AL Heart Hotline receives a consultation or report, we confirm the details of said report and the response desired by the reporter, and the director of corporate ethics investigates and confirms the facts of the matter. If a problem is detected, steps are taken to seek solutions and resolve it. During this process, the privacy of both the employee who used the hotline and the employees involved in the matter reported is protected, and strict confidentiality is maintained regarding the investigation. We take steps to ensure that employees who make reports or cooperate in investigations will not be treated disadvantageously.

All consultations and reports received by the Hotline are reported to the Corporate Ethics Committee,* and matters are also reported to the Board of Directors as needed. Furthermore, except in the case of anonymous reports or other such circumstances, feedback is provided to all consulters and reporters.

The AL Heart Hotline System

The AL Heart Hotline System

*An independent, Group-wide committee that promotes specific measures related to improving the compliance framework and spreading and reinforcing compliance awareness.

AL Heart Hotline Consultations and Reports
2017 2018 2019 2020
Harassment 9 15 11 8
Personnel and labor management issues 5 6 11 7
Others 4 2 3 58

The Lion Group makes informed estimates of the risk of human rights violations, such as abuse of authority by superiors or sexual harassment, at all Group departments. Based on these estimates, we implement education on harassment and other thoroughgoing measures tailored to each department with the goal of reducing such risk.

We also implement e-learning training on behaviors that constitute harassment for all employees as part of proactive harassment prevention.

Respect for Intellectual Property Rights

Lion’s basic policy regarding intellectual property rights is set forth in its Behavioral Guidelines. These stipulate that we will strive to create, properly protect and actively utilize intellectual property, and that we will respect the intellectual property of others and not seek to improperly acquire or use it. Lion has established a dedicated intellectual property department to coordinate investment in intellectual property with management strategy and ensure the proper use of intellectual property rights.

LION Anti-Bribery Principles

LION Anti-Bribery Principles

LION Group will, in accordance with the global trend of reinforced legal regulations against the acts of bribery and corruption, set out the following basic principles with a view to preventing such acts of bribery and corruption and thoroughly requires the pursuit of business activities in compliance with all applicable laws of the countries and regions where we are conducting business.

  1. LION Group will, in accordance with 2. Compliance with Public Rules – “We shall observe all relevant laws and regulations and engage in fair, transparent and free competition and proper transactions”, as provided for in Lion Group Charter for Corporate Behavior, comply with anti-bribery laws applicable in Japan and abroad as well as corporate ethics and will not therefore tolerate any act of bribery or corruption.
  2. LION Group shall not, for whatever reason, seek any profits that could not be procured without acts of bribery or corruption or any similar unjust means. We also require all business partners involved in our business, whether in Japan or abroad, to fully understand the objective of this policy and to absolutely avoid seeking any profits for our company by these unjust means.
  3. LION Group will designate the officer(s) in charge of corporate ethics as supervisory manager responsible for prevention of bribery and take such measures as education and reinforced whistle-blowing hotlines necessary for prevention of bribery, thereby ensuring effective enforcement and maintenance of our compliance system.

Established January 1st, 2019
Lion Corporation

Initiatives at Overseas Group Companies

Anti-Corruption Measures at Lion Corporation (Thailand) Ltd.

To ensure honest, transparent and corruption-free business activities, Lion Corporation (Thailand) Ltd. (“LCT”) has been a member of the Private Sector Collective Action Coalition Against Corruption since 2014 and established an Anti-Corruption Policy in 2015. This policy prohibits the receipt of bribes and lays out rules to ensure the transparency of donations and other forms of support for external organizations.
LCT also implements measures to spread anti-corruption awareness among employees. At an anti-corruption event, top management spoke about the company’s anti-corruption commitment, and everyone in attendance provided their signature to create an anti-corruption board. Furthermore, the company had ballpoint pens inscribed with “Anti-Corruption” made and distributed to employees to remind them to think carefully about possible issues before signing contracts with external parties.

Anti-corruption board featuring the signatures of participating employees

Pens inscribed with “Anti-Corruption”

Compliance Initiatives at Southern Lion Sdn. Bhd.

Southern Lion Sdn. Bhd. (“SL”) in Malaysia distributes an Employee Handbook, containing its CSR policy and stance on human rights, to all employees. Furthermore, SL has prepared a Code of Conduct that includes the key elements of the Lion Group’s latest policies and works to ensure awareness of it among employees.

Employee Handbook

Employee Handbook

Principles for Corporate Social Responsibility

Principles for Corporate Social Responsibility

Hotline Initiatives at Lion Corporation (Korea)

Lion Corporation (Korea) (“LCK”) has operated a hotline for employees (including part-time and contract employees) as well as external stakeholders since 2004. Consultations made through the hotline are reported to the director in charge of ethics, the relevant officers and external consulting lawyers. Those using the hotline can choose to do so under their name or anonymously. The confidentiality of consultations is assured.

To promote awareness of the hotline, LCK notifies employees of the hotline as part of their compliance education and provides information on the hotline via the LCK website and company intranet.

Hotline Initiatives at Lion Daily Necessities Chemicals (Qingdao) Co., Ltd.

Since 2014, Lion Daily Necessities Chemicals (Qingdao) Co., Ltd. (“QDL”) has provided a hotline that employees can use in the event of a violation corporate ethics. An external Chinese law firm receives reports from the hotline, and the director of corporate ethics and other related QDL staff investigate reports and take action as needed. QDL promotes employee awareness of the hotline via postings on the company intranet.

Tax Transparency

Lion Group Tax Policy

The Lion Group Charter for Corporate Behavior and the Behavioral Guidelines form the foundation of the Lion Group’s compliance framework. We seek to ensure thoroughgoing legal compliance by establishing and appropriately applying internal rules and to develop strong ethics awareness through internal training and education.

The Lion Group strives to correctly understand both the letter and the spirit of tax-related laws and systems in the countries and regions in which it operates and to appropriately fulfill its tax obligations. To this end, the Group has established the Lion Group Tax Policy. By practicing highly transparent tax treatment and appropriately utilizing tax planning and tax incentives, the Group seeks to contribute to the development of local communities and increase its corporate value.

  1. Tax Compliance
    The Lion Group complies with the laws and regulations related to taxation of each country and region in which it operates and follows the Organization for Economic Co-operation and Development (OECD) guidelines. The Group appropriately fulfills its tax obligations and conducts highly transparent tax treatment.
  2. Tax Governance
    The director responsible for the Finance Department bears ultimate responsibility for instituting and maintaining tax-related governance systems. The finance divisions manage taxation and accounting in addition to establishing systems and environments that ensure proper communication between Group companies.
  3. Tax Planning
    The Lion Group does not use tax planning without commercial substance and does not use tax havens for tax avoidance. In the event that it is subject to the anti-tax haven tax systems of the countries and regions in which it operates, the Group appropriately files and pays taxes in accordance with the applicable tax systems.
  4. Transfer Pricing
    The Group has established a global transfer pricing policy compliant with the OECD Transfer Pricing Taxation Guidelines. Based on this policy, the Group undertakes transfer pricing between Group companies using the arm’s length principle. The Group pays the appropriate amount of taxes in appropriate tax jurisdictions based on the value created through its business activities. In addition, the Group prepares appropriate transfer pricing documents in accordance with the transfer pricing taxation systems of each country and region in which it operates.
  5. Utilization of Tax Incentives
    While complying with the tax-related laws and regulations of each country and region in which it operates, the Group strives to ensure that its tax expenses are appropriate, mainly through the use of applicable tax incentives.
  6. Relationships with Tax Authorities
    The Group sincerely responds to requests from the tax authorities of each country and region in which it operates and builds and maintains sound and positive relationships with the authorities. In the event of a difference of opinion between the Group and a tax authority, the Group engages in constructive dialogue and works to resolve the issue.

The establishment, revision and abolishment of this policy are subject to internal approval processes and are reported to the Board of Directors.

Established July, 2021
Lion Corporation