Compliance

Compliance

Fiscal 2020 Objectives Fiscal 2020 Achievements Self-Evaluation
  • Continue global compliance enhancement
  • At affiliated companies in Southeast Asia, Oceania, and the Middle East, introduced bribery and corruption risk management processes and updated rules for preventing bribery and corruption
★★
Priority Objectives for Fiscal 2021
  • Continue global compliance enhancement
  • Self-evaluation: ★★★ Achieved more than targeted / ★★ Achieved as targeted / ★ Achieved to some extent

System to Promote Compliance

Sharp defines compliance as “observing laws, regulations, and company rules, and acting in line with corporate ethics.” Accordingly, Sharp is pursuing management practices that give priority to compliance.

The person most responsible for leading compliance at Sharp is the general manager of the Corporate Strategic Planning and Control Group. This person is in charge of formulating basic policies for compliance and making sure these policies are firmly established within the company. Meanwhile, the person responsible for leading compliance for the entire Sharp Group is the general manager of the Chairman’s Office. This person is in charge of devising concrete measures for compliance and thoroughly implementing them. As well as affirming the implementation status of compliance measures, they draw up corrective measures where necessary and makes sure they are thoroughly executed.

Under these two general managers, the general managers of the business units are responsible for compliance within their respective organizations. The business unit general managers are also responsible for guiding and supervising compliance measures at subsidiaries and affiliated companies (hereafter, “affiliates”) under their business units.

Promoting compliance at each affiliate is the responsibility of the affiliate president.

Among the laws and regulations that pertain to business execution, some are considered to be critically important and capable of affecting the entire Sharp Group. For each of these material categories of laws and regulations, the company sets up a dedicated legal department. The aim is to achieve thorough compliance with these laws and regulations. Each legal department fully understands the content of the critically important law and studies the effects it could have on the business of the entire Sharp Group and on operations shared by different departments. It then reviews—as needed—business operations and processes, revises company regulations, formulates or revises routine operation standards, communicates these changes, and provides guidance and supervision to executives and employees.

If a compliance-related risk occurs, Sharp will respond appropriately in accordance with the Basic Rules for Compliance and the Rules for Business Risk Management, and take comprehensive corrective measures and prevent recurrence.

Compliance Training

As a means of promoting compliance, the Sharp Group has formulated the Sharp Group Compliance Guidebook, which states defined standards for matters to be observed, matters which are prohibited, and actions to be taken for all executives and employees, and publishes and disseminates this throughout the company.

Sharp also periodically carries out compliance training (including e-learning) on the Sharp Code of Conduct and material categories of laws and regulations (such as competition laws, anticorruption, and personal information protection). Approximately 19,000 employees took part in this training in fiscal 2020.

Consultation Hotline for Compliance Issues

Sharp Corporation and its affiliated companies in Japan have set up the Crystal Hotline, a hotline to provide counseling services for problems in the workplace, such as compliance issues. The company has also set up a competition law hotline, which serves as a contact point specifically for issues related to competition laws. These hotlines have been set up both inside the company and externally (via an outside law firm providing legal counsel). In line with the spirit of Japan’s Whistleblower Protection Act, they are available via e-mail, phone, and other means for employees and temporary staff, as well as employees of business partners*, to make reports or request consultation. The hotlines also accept anonymous reports and consultations. Sharp also has a consultation service dedicated to addressing workplace harassment (which includes sexual harassment, pregnancy discrimination, and abuse of authority). Besides operating under strict rules, the hotlines and consultation service have measures that are put into effect if anything that is reported turns out to be illegal. If the people who made the reports or requested the consultation have provided a means of contacting them, they are informed of the results.

In fiscal 2020, the Crystal Hotline received 54 reports and consultation requests. For each of these, Sharp investigated the facts of the matter, issued orders for any necessary corrective measures, and took disciplinary action against those involved (including reprimands for compliance violations). Meanwhile, the competition law hotline received no reports or requests for consultations in fiscal 2020.

The hotlines are operated in line with the clear stipulation of both the Sharp Code of Conduct and the rules governing hotline service operation that the privacy of individuals contacting the hotlines will be strictly protected and that those persons will suffer no unfavorable treatment or penalties. Six months after any corrective action is taken, we check that the whistleblower contacting the Crystal Hotline has not been disadvantaged.

Similar reporting and consultation services have been set up at Sharp’s major overseas bases, with consideration for the legal system and other matters in each country. Action is taken to swiftly address any problems. In fiscal 2020, there were 79 reports and consultation requests.

  • Only the compliance hotline is available for use by employees of business partners.

Compliance with Competition Laws

In order to comply with Japan’s Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, as well as with equivalent overseas laws and treaties enacted to protect the interests of consumers by maintaining and promoting free and fair markets (hereafter, “competition laws”), Sharp has put in place rules across the entire Sharp Group on observing competition laws. It has also created an Antimonopoly Act Compliance Manual (Action Guidelines). These guidelines stipulate basic compliance matters that employees must adhere to in their duties with regard to cartels. To raise awareness amongst employees, Sharp has prepared a guidebook summarizing the key points of competition laws for each field of business, and it carries out periodic internal training via e-learning. Sharp also raises awareness internally of case studies relating to competition laws from within Japan and internationally as well as information on major revisions to the laws. Sharp prevents actualization of competition law-related risks in transactions with business partners by reviewing all contracts and consulting with its legal department when approving new contracts.

Sharp’s legal department monitors the status of compliance with competition laws by confirming the circumstances of matters such as transactions and contacts with competitors in each field based on the reports from the business departments to the legal department. This enables Sharp to more effectively prevent the actualization of competition law risks (such as cartel activities or bid-rigging). Such efforts maintain the effectiveness of Sharp’s compliance program.

No violations were reported in fiscal 2020.

Preventing Corruption in All Forms and Dealing Properly with Donations

The Sharp Group Charter of Corporate Behavior and the Sharp Code of Conduct contain provisions that strictly prohibit any form of corrupt behavior, such as extortion or direct or indirect bribes of money, goods, or services. The Group Charter and Code of Conduct also stipulate that donations must be handled in a proper manner.

Systems and Rules for Preventing Bribery

In March 2015, Sharp instituted the Rules for Prohibition of Bribery (hereinafter “the Rules”), which govern both executives and employees, with a view to preventing corrupt practices such as bribery. Under the Rules, Sharp is working to clarify and strengthen an internal checking system and prevent any act of bribery. Particular attention is paid to the employment of third parties such as agents and consultants, providing or exchanging gifts or entertainment to government employees, and participation in associations, with defined issues for relevant departments to confirm. Sharp sets up a consulting department for providing internal approval for each issue above. In order to further augment this checking system and clarify the targets for checking, a partial revision of the relevant rules was undertaken in August 2018.

The Rules define “facilitation payments” and clearly state that they are considered a form of bribery and are prohibited in principle.

Global Response

In order to ascertain the risk of bribery and corruption among overseas affiliates and institute a more effective checking system, in fiscal 2020 Sharp analyzed risk at affiliates in Southeast Asia, Oceania, and the Middle East. Based on this analysis, the company proceeded to update its internal rules of anti-bribery and incorporate bribery risk management processes utilized at Sharp in Japan into operations at overseas affiliates.

Raising Awareness within the Sharp Group

To raise awareness among employees in Japan and overseas, Sharp has created and published an in-house guidebook and training materials to ensure compliance with Japan’s Unfair Competition Prevention Act and other relevant laws. And with the US taking a more proactive stance on punishing foreign companies in recent years, Sharp has also invited US attorneys to come and conduct a training session on the US Foreign Corrupt Practices Act (FCPA), which included how it affects the entire Sharp Group.

Sharp’s intranet for affiliates in Japan and its global intranet for overseas affiliates periodically feature articles on bribery in Japanese, English, and Chinese. These articles present bribery-related cases and analyze and explain related issues. The aim is to deepen understanding and raise awareness of bribery among employees of affiliates in Japan and overseas.

No violations were reported in fiscal 2020.

Dealing Properly with Donations

In Japan, Sharp prevents illegal payoffs and improper expenditures through a system of compulsory reviews that check legality, reasonableness, and transparency. In place since December 2008, this system serves to assess the propriety of monetary disbursements such as donations and contributions made by Sharp Corporation and its affiliated companies. In fiscal 2020, 11 cases of contributions were reviewed.

The Sharp Code of Conduct states, “Regarding political donations, we will observe all applicable laws and regulations and we will ensure transparency and proceed in strict conformance with internal company rules when making such donations in line with the company policy to build a healthy and responsible relationship with politics and government.” Based on this policy, any political donations abide by relevant laws and follow the necessary internal procedures.

Management of Personal Information

Domestic Response

In order to thoroughly ensure that personal information is appropriately managed and to prevent incidents of data leakage, Sharp Corporation provides e-learning training once a year to all employees in Japan about the protection of personal information. In addition, training seminars are conducted for employees who handle personal information as part of their job duties.

To ensure the effectiveness of Sharp’s efforts to protect personal information, processes that require approval from the department specialized in personal information protection are incorporated into Sharp’s internal approval system regarding the handling of personal information. This contributes to consistently appropriate management of personal information obtainment, sub-processing, and provision to third parties by relevant departments. Also, following approval, the handling status—e.g., obtainment, storage, management, usage, deletion—of each customer’s personal information is to be recorded in Sharp’s own management database and updated as needed so that it can be checked and reviewed on an ongoing basis.

Appropriate handling of personal information is further ensured through the management of database audits of all departments that obtain customers’ personal information, checking the handling status against what is recorded in the management database. Moreover, on-site audits are also performed for specific departments that must follow even more stringent handling requirements.

Learning about protecting personal information

Global Response

The General Data Protection Regulation (GDPR) in the EU was enacted to protect personal data. Governments around the world have been increasingly enforcing measures and formulating new laws based on the GDPR. With data protection taking on growing importance, the Sharp Group has been periodically conducting fact-finding surveys and risk analysis on the various areas related to the acquisition and processing of personal data in the EU. Based on its findings, it has been taking measures that include providing appropriate privacy notices, signing agreements, and putting in place internal rules required for proper handling of personal data. In addition, Sharp is raising awareness among employees through online education on global personal information protection.

Sharp is also continuously gathering and analyzing information on data protection laws around the world—the California Consumer Privacy Act (CCPA), for example—as part of global efforts to formulate and implement measures to comply with laws on the handling of personal information.

Exclusion of Antisocial Forces

Fundamental Stance on the Exclusion of Antisocial Forces

As a matter of basic policy, Sharp prevents or excludes any association with antisocial forces without exception, and deals with them in a resolute manner. It has established specific guidelines in the Sharp Group Charter of Corporate Behavior under the section entitled “Practice of Fair and Open Management,” as well as clearly stipulated in the Sharp Code of Conduct that Sharp shall seek to exclude antisocial forces by being “cooperative in the maintenance of social order, and will not engage in antisocial activity.”

Activities Aimed at Excluding Antisocial Forces

Sharp Corporation has established Rules for Excluding Antisocial Forces, which serve as the basis for Sharp’s effort to prevent antisocial transactions, as well as Sharp’s preparation and updating, as needed, of such resources as manuals for dealing with antisocial forces.

In order to facilitate its handling of antisocial forces, Sharp maintains a system of prompt communication and cooperation with the police, legal advisors, and other external experts, from whom it regularly obtains information, which is then thoroughly disseminated and managed amongst the Sharp Group. Sharp also works to raise employee awareness by conducting once-a-year compliance training, which includes how to deal with antisocial forces.

In addition, Sharp Corporation and its affiliated companies in Japan take other steps to exclude antisocial forces, such as including a stipulation of antisocial forces exclusion in all basic agreements for ongoing transactions and concluding memorandums containing the equivalent stipulation with existing suppliers.

Appropriate Advertising and Promotion, Representation-Related Law Compliance

Under its business creed of “Sincerity and Creativity,” Sharp strives to reliably fulfill its corporate social responsibilities to customers and all stakeholders in the provision of correct information useful for selecting products and services. To this end, Sharp prioritizes appropriate advertising and promotion activities. It also complies with product and service representation-related laws, such as the Act against Unjustifiable Premiums and Misleading Representations, Pharmaceutical and Medical Device Act*1, and Fair Competition Code. Sharp positions compliance with these laws as a control item within its Rules of Business Risk Management, and implements various measures to promote compliance.

Systems and Rules for Preventing Legal Violations

With regard to product and service representation within Japan, Sharp follows internal rules, which stipulate the basic approach to representation and a practical system for checking appropriate representations.

  1. A dedicated supervisor is appointed to work with departments involved in the production of representations and to perform a final check prior to the publication of brochures and mass advertising
  2. A senior committee is established to make decisions about any questionable representations (Representation Review Committee, Sharp Fair Representation Council)
  3. Operations are carried out in line with the Manufacturing Labeling Standards*2
  4. Public external organizations*3 are consulted for objective guidance and advice on representation-related problems and other matters
  • *1 Act on Securing Quality, Efficacy, and Safety of Products Including Pharmaceuticals and Medical Devices
  • *2 Voluntary industry standards for product representation formulated by the Home Electric Appliances Fair Trade Conference and recognized by the Consumer Affairs Agency and Japan Fair Trade Commission
  • *3 Home Electric Appliances Fair Trade Conference, Japan Advertising Review Organization (JARO), others

Fostering Awareness via Upskilling Support for Relevant Personnel

Regular in-house training related to the Premiums and Representations Act, Pharmaceutical and Medical Device Act, and Fair Competition Code is provided to departments involved in the production of representations. Additionally, Sharp actively participates in outside seminars led by public institutions and then uses in-house training to provide feedback on the most recent trends.

Further, Sharp uses the “Fair Representation” page on its intranet to ensure the thorough dissemination of in-house standards and rules for performing checks, which are based on in-house specifications and manuals. The intranet page also provides information, such as the latest trends connected with the Premiums and Representations Act.

In fiscal 2020, there were no violations of the Premiums and Representations Act or the Pharmaceutical and Medical Device Act by the Sharp Group

Representation Review Framework

Ensuring Representations Keep Up with Social Changes

Sharp strives to create appropriate representations that keep up with current events and laws.

In fiscal 2020 against the backdrop of the Covid-19 pandemic, Sharp focused on strictly abiding by the Pharmaceutical and Medical Device Act by strengthening training for departments in the health-related business. The training included explanations of relevant rules and case studies of actions taken by government agencies. Sharp also distributed company-wide reminders and enhanced checking and consultation regarding the labeling of antibacterial and antiviral-related products.

Tax Management Initiatives

Tax Policy and Governance System

Sharp demonstrates sincerity and creativity in its pursuit of sound business activities, in the process fulfilling its responsibilities as a member of society. A basic policy of the Sharp Group Charter of Corporate Behavior and Sharp Code of Conduct is the “Practice of fair and open management” in all corporate activities and operations, conforming to the laws and regulations of each country and region, international rules and company rules, as well as social norms and corporate ethics. Based on this basic policy, Sharp works to maintain and improve its compliance with tax laws and other tax-related regulations through proper payment of taxes and employee education.

In line with its basic tax policy, and with the support of the Finance and Administration Office in the Head Office, which oversees the tax obligations for the Sharp Group as a whole, Sharp has a responsibility to understand and comply with the relevant tax laws and regulations of each country. The Accounting Department in the Finance and Administration Office handles tax-related duties and endeavors to reduce tax-related risk, obtaining advice from tax specialists when necessary.

Proper Payment of Taxes

Legal and regulatory compliance is Sharp’s top priority. It endeavors to maximize corporate value through the use of tax incentives and other mechanisms established in each country and region, in line with the legislative intent behind said mechanisms, across the entire scope of its normal business activities. It is our policy to not employ mechanisms that excessively reduce the amount of tax we pay in each country by taking advantage of the differences in tax systems between countries.

Compliance with Transfer Pricing Rules

Regarding transactions with parties related to Sharp, appropriate pricing is established based on the arm's-length principle, in line with OECD transfer pricing guidelines and in accordance with each company’s functions and risks. Sharp also draws up transfer pricing documentation based on the laws and regulations of each country. Also, for important transactions, Sharp takes steps to reduce tax-related uncertainty, such as actively working with tax authorities to make use of advance pricing arrangements.

Relationship with Tax Authorities

In order to maintain good relations with tax authorities, Sharp endeavors to be diligent and responsive to the requests of tax authorities in each country, such as by providing them with information in an appropriate and timely manner. Whenever tax authorities raise questions about Sharp’s filing and payment of taxes, Sharp examines the validity of their claims and, if it has an objection, may opt to formally file a petition against the tax authority with regard to the matter. However, if any corrective action is required, such action will be promptly implemented.