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Compliance

Basic Policy

At Duskin, we interpret compliance as meaning "think and act from other people's perspectives". In order to increase corporate value over the long term while maintaining sound management, and for each of us to earn the trust of consumers and society, we practice the Duskin Code of Conduct in our daily operations and strive to always actualize compliance.

Compliance Committee

We maintain a Compliance Committee to establish, disseminate, and entrench our Group's compliance system. This committee is led by the Operating Officer in charge of the Legal Affairs & Corporate Compliance division and also includes other Operating Officers, Outside Directors, an attorney, an Audit and Supervisory Board Member, and the President of the Duskin Workers' Union. It deliberates on matters including important compliance-related issues and annual plans, Code of Conduct violations and effectiveness verification, and educational training plans.

It also performs duties related to company compliance as an advisory body to the Board of Directors.

It meets regularly every year to discuss and report on compliance-related frameworks, rules, annual plans, and training plans as well as the operation status of the internal reporting system.

As our companywide approach towards compliance violations, the committee conduct surveys with cooperation from related divisions, etc. to verify the effectiveness of the Code of Conduct and investigate matters recognized as compliance problems. If improvements need to be made, deliberation first occurs in the Compliance Committee regarding the violator and the related division, followed by the Committee requesting appropriate resolution measures. There were no grave compliance violations in FY 2020.

The Compliance Committee issues regular reports to the Board of Directors concerning its deliberations.

Promoting compliance

Compliance training

In addition to instilling thorough Code of Conduct awareness among officers and employees, the Duskin Group implements compliance training targeted at all officers and employees every year. This fiscal year, we implemented training for corporate risk management to officer and management positions, and training for the Act on the Protection of Personal Information and insider trading to employees. Moving forward, we will continue to use training to cultivate awareness and promote understanding of compliance.

Day of Resolve

On May 31, 2002, Duskin was issued an order of partial business suspension by the Osaka Prefecture Government after the "Large Meat Bun incident^*".

To remember this as a lesson and reflect what was learned in our future business activities, we set May 31 as our "Day of Resolve". On this day, all employees write messages pledging compliance to consumers and society.

It has been about twenty years since the incident, but we use the yearly "Day of Resolve" to further increase compliance awareness and prevent a recurrence.

**An incident in which a food additive that was unauthorized in Japan at the time was used for the Large Meat Buns sold at Mister Donut. While Duskin discovered this problem at the early stage of the incident, the use of this food additive was not disclosed to the public until inquiries were made by the media. This resulted in severe social criticism.

Insider trading prevention

We maintain Insider Information Management Regulations and Insider Information Handling Regulations, and conduct information management for important information generated in the process of conducting business, etc., and business performance records, etc. We maintain a framework in which all important information is centralized at the Investor Relations office, the section responsible for handling information. In addition, we understand that timely and appropriate corporate information disclosure to investors is what forms the foundation of a sound security market, and as such we strive to maintain impartiality and soundness for the securities market in our information disclosure process.

We have also separately formulated a Disclosure Policy. In order to prevent the leakage of financial results information (including quarterly financial results) and ensure fairness, we set a period of silence from the day after the end of the fiscal year to the day of the announcement of financial results. During this period, we refrain from giving responses to questions on, or making comments concerning, issues such as financial results and business performance forecasts.

Also, based on our Insider Information Management Regulations, the Investor Relations office implements training as needed to officers and employees in both our company and in affiliated companies concerning information management and insider trading prevention, and strives for thorough awareness.

Our whistleblower report reception service

Our internal whistleblower reception service "Hotline"

In accordance with the Whistleblower Protection Act, we maintain a reception framework with the Corporate Compliance office as an internal-company reception office for whistleblowing reports and a legal office as an external reception office for whistleblowing reports, and operate a Hotline system that enables direct whistleblower reporting. This framework applies not only to regular employees, but also to part-time and temporary staff. It allows anonymous reporting to ensure that no one will be subjected to adverse treatment such as dismissal, reassignment, or discrimination for reporting. This fiscal year, the number of Hotline users increased due to service awareness raising through the distribution of newly designed Hotline posters among company-owned sales locations and wholly-owned subsidiaries.

Hotline users

Number of claims regarding human rights violations
Hotline flowchart

Enlarge the image.

Line for supplier companies

Duskin Purchasing Clean Line for supplier companies is a reception service that allows our supplier companies to notify us if any of our officers or employees violate the Duskin Code of Conduct or exhibit conduct that is questionable in light of the law or societal morals.
Reports can be made anonymously. All matters are kept strictly confidential, including privacy in the reporter name and report content, meaning there will never be any adverse treatment to anyone at our supplier companies. Through this framework, we aim to enhance transaction transparency and fairness with all of our supplier companies and build even deeper trust relationships.
The number of users This fiscal year was zero.

It should be noted, however, that we cannot answer questions regarding specific transaction deals on the Duskin Purchasing Clean Line. For this kind of inquiry, please contact our company member who is responsible for the business in concern.

Duskin Purchasing Clean Line image — Duskin Purchasing Clean Line

We responsibly manage the personal information that is provided and use it only for issuing responses to the individual issuing the inquiry. We never disclose that information to a third party or use it for any other purpose. In some cases, we may disclose information to the related division within a Duskin Group company for fact-checking or investigation purposes, with prior consent from the relevant individual.

Protecting intellectual property

We believe intellectual property protection is absolutely essential in our business activities. In addition to actively promoting rights acquisition as the business develops, we implement the appropriate measures based on related laws and rules if we discover any infringements of our intellectual property rights by third parties.
Conversely, when we introduce a new product or service, performing intellectual property checks in the appropriate division (Legal Affairs & Corporate Compliance division) before release is our rule to prevent infringements on the rights of others. For products and services related to the Direct Selling Group in particular, investigations and analyses concerning intellectual property rights are performed in the division conducting research and development from the research and development stage to thoroughly protect intellectual property.
To efficiently operate and manage these intellectual properties, our Legal Affairs & Corporate Compliance division provides central overseeing management in linkage with related divisions.

Duskin's number of intellectual property rights
		FY 2018	FY 2019	FY 2020	FY 2021	FY 2022
Patents	Domestic	141	137	143	142	136
Patents	Foreign	5	3	4	4	5
Designs	Domestic	82	76	70	74	68
Designs	Foreign	26	26	24	18	15
Utility models		3	4	3	3	3
Trademarks	Domestic	353	351	356	365	361
Trademarks	Foreign	208	206	207	216	238

Preventing corruption

The Duskin Code of Conduct includes statements such as "Act according to the law and social common sense", "No relationship with anti-social forces", and "Maintain sound relationships with the government". In this way, we strive to prevent violations of prohibited acts like bribes to government officials, etc. To complement the Duskin Code of Conduct, we have also established a basic policy regarding bribery. And through compliance training and other measures, we are working to instill and ensure ethical awareness.

To actualize these goals, we established our conduct guide called the Duskin Code of Conduct.

●No relationship with anti-social forces: We will never give in to unreasonable pressure or financial or other demands placed on us by anti-social forces or organizations. At the same time, we will never have any relationships that could be misinterpreted by society as non-transparent interactions.

●Maintaining sound relationships with the administration: In our relationships with governmental offices and staff, we comply with the law, ordinances, and the rules of administrative bodies, etc., and do not give gifts of money or goods, or provide entertainment.

●Maintaining proper relationships with suppliers: We only make final decisions on selecting suppliers and continuing business relationships by applying impartial standards for price, quality, and delivery time, and through proper procedures.

●Basing judgments and actions on laws and rules: In all cases, we always make judgments and take action based on laws, ordinances, company rules, and other relevant regulations. We will refuse to obey work orders that do not comply with such laws and regulations. Furthermore, if a superior or colleague tries to force us to commit any wrongdoing, or if we notice any wrongdoing that cannot be resolved within our workplace, we will report it to the in-house consultant or Hotline. We pay due respect to the copyrights, patents, know-how and other property owned by other people and companies, and take utmost care not to violate these rights. In using social media, we act according to the guidelines for Hataraki-san (employees).

Basic Policy regarding Bribery

1. Prohibition on bribery: We will not give, offer, promise, or accept any bribe, directly or indirectly, to or from any person.
2. Bribery prevention system and risk management: We shall strive to operate the departments in charge of compliance and the "Hotline" for internal reporting in a fair and equitable manner, provide education and training to officers and employees, and maintain an auditing system through internal audits. We will also continuously evaluate the effectiveness of our anti-bribery system and make improvements as necessary.
3. Payment record retention: We keep factual and accurate accounting records under an appropriate system of internal controls and properly retain payment records.
4. Discipline: If any officers or employees are found to have violated this policy, we will take strict disciplinary action against them in accordance with our work rules, etc.

Tax transparency

In accordance with the Duskin Code of Conduct, the Duskin Group ensures transparency in its transactions, including taxation. We comply with applicable tax-related laws and regulations in each country and region in which we operate and file and pay appropriate taxes.

We also want to contribute to the economic development of the countries and regions in which we do business by fulfilling our responsibilities as responsible taxpayers, without unfairly using tax planning or tax havens intended to avoid taxes.

We will strive to build a relationship of trust with the tax authorities and ensure transparency and credibility in tax matters by providing timely and appropriate tax information and responding in good faith during tax audits. In addition, we maintain sound and above-board relationships with tax authorities and do not provide any undue benefits.