Compliance and Risk Management
Compliance with and implementation of the MAX Group Code of Conduct
MAX established the MAX Group Code of Conduct, which outlines the values, ethics, and actions that all individuals working at the MAX Group should share.
The Max Group Code of Conduct promotes understanding of its contents by consistently referring its items in employee self-checks. Furthermore, it has been translated into multiple languages to share its content across the entire Group, both in Japan and overseas.
By adhering to this Code of Conduct, we aim for sustainable development of the MAX Group, while fulfilling our corporate social responsibilities and meeting the trust and expectations of our stakeholders.
Introduction
This Code of Conduct outlines the values, ethics, and actions that all individuals working at MAX Group (hereinafter referred to as “we”) should share.
By adhering to this Code of Conduct, we aim for our own growth and the sustainable development of the MAX Group, while fulfilling our corporate social responsibilities and meeting the trust and expectations of our stakeholders.
1. Supplying Quality Products and Services
We will serve society and contribute to culture by supplying quality products and services to customers worldwide.
2. Respect for Human Rights
We will recognize respect for human rights as a fundamental standard of conduct required of all companies and eliminate all forms of discrimination and harassment.
3. Preservation of the Global Environment
We will give utmost consideration to preserving the global environment and contribute to building a sustainable society where people and nature coexist.
4. Promotion of Fair and Transparent Business Activities
We will respect internationally recognized norms, comply with domestic and international laws and regulations as well as internal rules, thoroughly implement corporate ethics, and promote honest business activities.
5. Promoting Communications with Society
We will promote communications with society by disclosing corporate information in a timely and appropriate manner for the enhancement of sustainable corporate value.
6. Responsible Actions
When incidents occur that violate this Code of Conduct, we will promptly and accurately disclose information, investigate the cause, and implement measures to prevent recurrence. We will also strive to ensure that stakeholders, including our business partners, understand the purpose of this Code of Conduct.
These MAX Group Code of Conduct Detailed Rules outline specific actions for achieving the shared understanding of each item in the Code of Conduct by each and every one of us. We expect each of us to comply with all applicable laws and regulations in our respective countries and regions, and to practice the contents of these Detailed Rules.
1. Supplying Quality Products and Services
1-1. We will practice creating things and experiences that exceed our customers’ expectations and continue to provide innovative, safe, and high-quality products and services.
1-2. We will listen to our customers’ voices and reflect their feedback in the development and improvement of better products and services.
1-3. We will advance our business through the creation of intellectual property without infringing on the intellectual property rights of third parties.
1-4. In the event of any issues arising with our products or services, we will address them promptly, appropriately, and fairly, and implement measures to prevent recurrence.
1-5. We will strive for personal growth and organizational vitality not only through individual self-development but also through mutual learning and collaboration.
2. Respect for Human Rights
2-1. We will continue to study the United Nations’ “Guiding Principles on Business and Human Rights” and “Universal Declaration of Human Rights,” and other internationally recognized human rights standards and address various human rights issues.
2-2. We will comply with the MAX Group Human Rights Policy.
2-3. We will establish a human rights due diligence framework to identify adverse impacts on human rights and strive to prevent and mitigate them.
2-4. Based on the MAX Group Sustainability Guidelines for Business Partners, we will work with our suppliers to build responsible supply chains, including prohibiting the procurement of minerals that may be associated with human rights violations.
2-5. We will respect the dignity, rights, and diversity of all individuals, refrain from unfair discrimination, eliminate harassment, child labor, forced labor, etc., manage appropriate working hours, foster a comfortable workplace environment with consideration for safety and health, respect the freedom of association and the right to collective bargaining, and cultivate an open corporate culture.
3. Preservation of the Global Environment
3-1. We will pursue the reduction of environmental impact across society throughout the entire lifecycle of our products and services, from development, manufacturing, sales, and transportation, to use and disposal.
3-2. We will work to reduce greenhouse gas emissions to realize a decarbonized society.
3-3. We will work to effectively utilize resources and promote resource circulation.
3-4. We will promote the conservation of water resources and the reduction of waste and chemical emissions.
3-5. We will strive to mitigate the impact of our business activities on ecosystems and contribute to the conservation of biodiversity
4. Promotion of Fair and Transparent Business Activities
4-1. We will always conduct open and fair transactions to maintain good and appropriate relationships with our customers and business partners.
4-2. We will comply with the competition laws of each country and region, including prohibitions against private monopolies, unfair trade restrictions (such as cartels and bid-rigging), and unfair trade practices (such as abuse of superior bargaining position).
4-3. We will have absolutely no relationship with anti-social forces and will respond to them with a firm stance.
4-4. We will build sound relationships with others, such as public officials and government personnel, and will neither accept nor engage in gifts, entertainment, or other corrupt practices that are not socially acceptable.
4-5. We will not provide favors or exchange private benefits, regardless of the pretext.
4-6. We will participate in political activities and similar endeavors with the understanding that we are participating as individuals.
4-7. We will recognize the importance of confidential information, including personal information, and information about our company and other companies obtained through business activities, and strictly manage such information by developing an appropriate information security framework and prevent its leakage to external parties.
4-8. We will handle unpublished material facts of our company and other companies with care and comply with insider trading regulations.
4-9. We will conduct business-related record-keeping, applications, and reporting based on appropriate evidence (supporting documentation), and perform proper accounting and tax compliance.
4-10. We will use the company’s assets, whether tangible or intangible, solely for legitimate business purposes and not engage in any misappropriation.
4-11. To maintain international peace and security, we will comply with trade-related laws and regulations governing imports and exports.
5. Promoting Communications with Society
5-1. We will strive to disclose information that is useful and reliable for stakeholders, not limited to disclosures required by laws and regulations.
5-2. We will promote two-way communications with a wide range of stakeholders, including customers, business partners, employees, shareholders, investors, local communities, and government agencies.
5-3. As a member of the international community, we will respect the cultures and customs of countries and regions while striving to actively contribute to society through our business activities.
6. Responsible Actions
6-1. We will thoroughly consider and understand the purpose of this Code of Conduct, practice responsible behavior, and establish systems to enable the “prevention,” “early detection,” and “early response” regarding any situation that violates the Code.
6-2. If we discover any issues that violate this Code of Conduct, we will promptly report them to our supervisor, the appropriate department, or the reporting office. Retaliatory actions against reporters will not be tolerated, and individuals who report in good faith will not be subject to disadvantageous treatment.
6-3. Should a serious violation of this Code of Conduct occur, management will promptly and accurately explain the situation to society, investigate the facts and causes, and implement measures to prevent recurrence. Management will also clearly define responsibility for the issue and, where necessary, impose strict disciplinary action, including on themselves.
6-4. We will establish an organizational crisis management system, including preventive measures, to prepare for natural disasters, cyberattacks, infectious diseases, terrorism, accidents, and other threats to our business activities. In the event of any disaster, we will aim for the early restoration of business operations and strive to minimize impacts on customers, business partners, and others.
Compliance Education
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.
- Education on compliance with the Act on the Protection of Personal Information and the Intellectual Property Act, and information security (ISMS education)
Biannually for all employees (including part-time employees and temporary employees who use personal computers)
- Compliance education on environment and quality (general environmental education)
Annually for all employees at manufacturing bases
- Compliance study sessions (harassment, handling of complaints, transactions and contracts, Antimonopoly Act, precautions when creating advertisements, etc.)
Annually for sales-related employees
Whistleblowing System
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.
Risk Management and BCP
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.
Information Security
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 Integrated Digital Innovation 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.
Efforts to Prevent Corruption
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.
There were no serious compliance violations in fiscal 2023.
Measures to Eliminate Antisocial Forces
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.
Business Risks
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 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.