MAX conducts the following compliance education in order to spread compliance within the Company. Additionally, since December 2020, we have distributed the monthly Compliance Newsletter on our intranet.

MAX has established an in-house consultation desk and an external consultation desk as contact points for whistleblowing. In accordance with the contents of whistleblowing reports, we consider matters and take necessary measures. We also report the number of received whistleblowing reports to the Corporate Governance Committee, which meets quarterly.

MAX acquired certification for business continuity management systems (ISO 22301) in 2016. We are working to increase the number of manufacturing bases and suppliers for priority product groups in case of risks such as natural disasters and infectious diseases. For our supply chain, we ascertain the production location of secondary suppliers. When a risk occurs, we forecast the impact on our company and take swift action according to predefined procedures.
In terms of risk associated with natural disasters, we assume earthquakes and flood damage due to rivers overflowing. Although we assume that there is little risk of large-scale earthquakes occurring in Gunma Prefecture, where our main production bases are located, we assume occurrence in Tokyo, Osaka, Nagoya, and Sendai, where our head office and branch offices are located. Therefore, in those locations, we are taking measures such as carrying out seismic retrofitting and formulating business continuity plans centered on systems.

Based on our Information Security Basic Policy, MAX acquired certification for information security management systems (ISO 27001) in 2004. We acquired this certification for the purpose of protecting customer information, information related to orders and shipping, and technical drawing information. In addition to constructing an information security system that covers all bases in Japan and overseas, the System Control Department is responsible for training all employees, conducting internal audits, and constructing a system that prevents information from being removed from the Company. Moreover, if a security incident occurs, we ensure swift reporting and respond in accordance with procedures.
Reports on information security education, the status of internal audits, and new security measures and related progress are given at the Information Security Committee, which is held quarterly with all officers as members.

At MAX, "MAX Group Employee Code of Conduct" prohibits the giving and receiving of private interests, prohibits excessive gifts, entertainment, and bribery, and requires compliance with the Antimonopoly Act and the Unfair Competition Prevention Act. We also conduct internal audits of domestic and overseas bases. An internal audit was conducted in the procurement divisions and other divisions in fiscal 2020.
There were no serious compliance violations in fiscal 2022.

MAX has established the "MAX Group Employee Code of Conduct" and ensures that all officers and employees are thoroughly familiar with it. MAX shall take a firm and systematic stance against antisocial forces that threaten social order and sound corporate activities, and shall have no relationship with such forces, including business relationships with them.

MAX constantly takes measures to identify, evaluate, and analyze events that may have a serious impact on business performance and financial position and hinder smooth business operation and growth.
Risk factors that may have a significant influence on investors' decision include the following.

1．Trends in the number of new housing starts in Japan

Among the Group’s businesses, the main products of the Industrial Equipment segment include nailers for the construction market, pneumatic machinery including air compressors, rechargeable tools, consumables such as staples, nails, and screws, and home environment equipment including heater-ventilator-dryers for bathrooms and 24-hour ventilation systems. As such, a decrease in the number of new housing starts in Japan may adversely affect demand for such products and the business performance of the Industrial Equipment segment, while an increase in the number may have a positive impact.

2．Exchange rate fluctuations

A portion of the Group’s sales to overseas and procurement from overseas includes transactions denominated in foreign currencies. Although the impact of exchange rate fluctuations is being reduced by offsetting foreign currency-denominated sales with foreign currency-denominated procurement and vice versa, sharp exchange rate fluctuations may impact business performance.

3．Fluctuations in raw material prices

Among the Group’s products, consumables such as staples, nails, and screws, as well as wires for rebar tying tools use common wires as raw materials. Prices of such wires may fluctuate as a result of shortages of raw materials such as iron ore, coal, and oil and trends in demand in other countries. Although the Group continues striving to enhance profitability, sharp fluctuations in raw material prices may adversely affect business performance.

4． Factors related to product quality

The Group places a premium on product quality and deploys quality control and quality assurance systems, including obtaining ISO 9001 certification in development and production. However, there is no guarantee that every product will be defect-free. Product accidents and other events may incur costs for notifications to customers and inspection or recall of products, and adversely affect business performance.

5．Information leakage, information system breakdown and damage

Regarding the confidentiality of customer information and availability of order information, the Group aims to maintain and improve information security through initiatives such as obtaining information security management system (ISMS) certification (obtained ISO/IEC 27001 on April 27, 2004). In addition, the Group has drawn up an ISMS risk response plan, including establishing a basic policy on information security, and has implemented measures to prevent information leakages from the personnel, organizational, physical, and technological perspectives. With regard to system breakdowns and damages as well, the Group has formulated business continuity plans and conducted appropriate training for these events. However, the occurrence of information leakages and system breakdowns and damages may adversely affect business.

6．Limitation on intellectual property protection

The Group has enhanced the trust of customers through the MAX brand mainly by accumulating unparalleled technologies and know-how and developing products that meet customer needs. The Group also recognizes the importance of intellectual property it has developed and takes protective measures. However, the Group may be unable to prevent third parties from manufacturing similar products in some cases, which in turn may adversely affect the Group’s market competitiveness. In addition, although the Group pays close attention to avoid infringing on intellectual property held by third parties, it may be possible that the Group is deemed to be infringing on their intellectual property in some cases, which in turn may adversely affect business

7．Retirement benefit obligations

At the Group, retirement benefit expenses and obligations are calculated based on actuarial assumptions such as the discount rate and the expected rate of return on pension assets. In addition, the discount rate is set by taking into account market yields on Japanese government bonds. If the actual expenses and obligations differ from the actuarial assumptions, or if the assumptions are altered, the effect is accumulated and will be recognized regularly in the future, which generally affects the expenses recognized and the obligations recorded in future periods. A further decline in the discount rate and a deterioration of yield may adversely affect business performance.

8．Country risk

In some regions where the Group operates, there are risks including the existence or occurrence of economically unfavorable factors such as unforeseen changes in laws and regulations, and social or political turmoil stemming from terrorism, war, and other factors. The manifestation of such risks may hinder overseas business activities, thereby affecting the Group’s performance and future plans.

9．Natural disasters, infections, etc.

The occurrence of natural disasters, such as earthquakes, typhoons, and floods, and infections on a larger-than-expected scale may adversely affect business, mainly as a result of causing damage to the assets at sales bases and production bases and making it difficult for employees to maintain the business operation structure. The Group is pushing ahead with initiatives to minimize the impact on production and sales through changes in workstyles, among other things. Nevertheless, the spread of New infectious disease similar to COVID-19 may further adversely affect business performance in the future. In response to such risks, the Group will devise various preventive measures while controlling risks mainly by making flexible responses to particular situations.
In addition, MAX acquired certification for business continuity management systems (BCMS) (ISO 22301) on March 25, 2016.