Compliance and Anti-Corruption

The Brother Group considers that compliance with laws and ethics is indispensable for upholding the foundation of its management with an emphasis on sustainability and avoiding various risks. To ensure compliance on a Group basis, we have set standards for employee behavior based on one of the Codes of Practice of the Brother Group Global Charter, Ethics and Morality; and the Brother Group Principles of Social Responsibility, which clearly define our corporate social responsibility and guide us in fulfilling it.

Compliance promotion structure

Brother Industries, Ltd. (BIL) established the Compliance Committee and set up the Employee Helpline for Compliance Issues to prevent violations, take prompt action in the event of a violation, and prevent reoccurrences thereof. In addition, each group company, including international affiliates, has established their own employee helplines.
When a compliance risk that greatly affects the management of the Brother Group arises or is expected to arise, the respective group company will report it to the BIL Compliance Committee in a timely manner for consultation to determine the response policy, thereby establishing a system for prompt group-wide responses.
BIL has established the internal Employee Helpline for Harassment Issues that is dedicated to harassment behavior—such as sexual and power harassment—in an effort to create workplace environments where employees can work while respecting each other. BIL has also set up a Quality Compliance Helpline with the aim of preventing compliance violations and scandals related to quality of products and services of Brother Group, and improving and correcting violations. In addition, an external helpline for compliance issues has also been established with affiliated lawyers outside the company to allow employees to directly report violations.

For the purpose of developing a mechanism to ensure that each Group company receives and handles inquiries and reports internally, thereby improving the company's ability to govern itself and mitigating reputational risks or the like (such risks may be caused by reporting outside the company), the Brother Group has established the Employee Helpline for Compliance Issues. In operating the helpline, the Group has established the Operation Standards of the Employee Helpline for Compliance Issues as regulations of the Brother Group.
In addition, Group companies regularly report the inquiries and reports to the Secretariat of the BIL Compliance Committee to centralize information and thereby control compliance across the entire Brother Group. In particular, inquiries and reports that may have a significant impact on the management of the Group will be reported by each Group company to the Secretariat of the BIL Compliance Committee upon receipt of the report and initiation of a primary investigation, as well as upon completion of the investigation. To promote these initiatives, BIL has formulated the Brother Group Global Policy for Helpline for Compliance Issues.

Global Policy for Helpline for Compliance Issues

1) Scope of Application

This policy will be applied to the establishment and operation of the Helpline, which receives inquires and reports from Directors, Corporate Auditors, employees or others who work for Brother Industries, Ltd. or any of its subsidiaries.

2) Individuals Allowed to Make an Inquiry or Report

Any worker who works for Brother Group may make an inquiry or report. An inquiry or report may be made to the contact point established in each group company or an external contact point designated by each group company.

3) Appointment of Persons in Charge

Each group company will appoint persons in charge of compliance who serve full-time or concurrently. The persons in charge are provided with necessary training on their duties such as receiving and dealing with inquiries or reports and conducting investigations.

4) Prohibition of Detrimental Treatment of Whistleblowers

We will not treat whistleblowers in a detrimental way due to their making inquiries or reports.

5) Protection of Anonymity of Whistleblowers

We will protect whistleblowers' anonymity to prevent them from being identified. We will not disclose whistleblowers' real name, department name or any other information that identifies whistleblowers without their consent or a justifiable reason for doing so. In addition, we will establish the necessary rules to protect anonymity, manage information and, when conducting investigations, take care to prevent whistleblowers from being identified.

6) Elimination of Interested Persons from Persons Conducting Investigation

The persons in charge of receiving and dealing with inquiries or reports and conducting investigations must not be involved in the handling of cases in which they are concerned with.

7) Remedial Actions

If any violation or breach of laws or internal rules is revealed as a result of investigations, we will take remedial and/or recurrence prevention measures promptly. When needed, we will give appropriate responses such as disciplinary actions toward concerned parties through appropriate internal process. Further, we will make a report to relevant governmental agencies as required.

8) Notification to Whistleblowers

With respect to investigation results, we will notify whistleblowers of whether there is any compliance problem and the summary of any remedial actions taken. We will also feedback an outline of the progress of the investigation to whistleblowers as needed.

9) Recording and Storage

We will record the series of steps from receiving an inquiry or report to dealing with it so that the records may be verified later. These records will be retained and managed to ensure that they are not easily available for unauthorized individuals to access in consideration of the protection of anonymity of whistleblowers.

10) Follow-up

After the process to deal with an inquiry or report is completed, we will conduct verifications to find if remedial and recurrence prevention measures are adequately working. We will also take a follow-up action as needed by checking that whistleblowers are free from any detrimental treatment.

Number of cases handled by the Brother Group Employee Helpline for Compliance Issues

Publication of the Compliance Handbook

In 2010, BIL published the Compliance Handbook to raise employee awareness of compliance and ethics. The Handbook contains codes of conduct, rules to be followed as a company, and examples of actions that constitute compliance violations, enabling employees to apply its content to themselves and the work they are responsible for.

In FY2023, the Handbook was revised as social conditions and compliance awareness have changed dramatically since the first edition was published. The revised edition includes new topics such as the prohibition of maternity harassment and precautions for the use of social media, providing compliance information in line with the current social environment. In addition, the FY2023 edition was changed from paper form to publication on the intranet. This change not only reduces paper consumption but also makes it easy to update content and add new information, allowing employees to always have access to the latest version of the Handbook.

Issuance of Compliance Card and Creation of Posters

BIL distributes a Compliance Card to the employees of Group companies in Japan to increase awareness of compliance and to remind employees of the mindset required for thorough compliance. BIL has also created a Compliance Poster and displays it at the company to raise employee awareness of compliance. The cards and posters include contact information for the Employee Helpline for Compliance Issues to spread the word about the Helpline.

Compliance Education

In Japan, we provide compliance education to employees through group training programs, including training programs for new employees, new manager training and training before overseas assignments, as well as online training programs using an e-learning system. Brother Group companies outside Japan also provide compliance education to raise employee awareness of compliance. In addition, in light of regulatory trends in recent years, we are also researching laws and regulations and striving to educate and raise awareness among Group companies to ensure compliance with local anti-bribery and antitrust laws.

We conduct a yearly online compliance training (e-learning) for employees in group companies in Japan.

Online Compliance Training (e-learning) Results for BIL and Japan-based Brother Group Companies

Furthermore, in addition to e-learning, BIL also checks awareness of the Helpline for Compliance Issues via a periodical questionnaire. In FY2023, awareness of the Helpline for Compliance Issues was at 92%.

In the "Codes of Practice" of the Brother Group Global Charter, the Brother Group states that it is committed to complying with relevant laws and regulations in the countries and regions in which it operates.
Bribery and corruption are prohibited by the laws and regulations in most countries where we operate as acts that hinder economic and social development. In our Brother Group Principles of Social Responsibility, we promise our stakeholders that we shall not engage in any form of corruption, extortion or embezzlement. However, in recent years, laws and regulations governing bribery and corruption have become increasingly stringent, and in consideration of such circumstances, we are implementing this policy to further promote our anti-corruption efforts.

Brother Group Anti-Corruption Global Policy

1) Scope

This policy applies to all officers, employees, part-time employees, seconded employees, and temporary employees of Brother Group (hereinafter referred to as "Brother Group Officers and Employees").

2) Compliance with Applicable Laws

Brother Group Officers and Employees shall comply with the laws and regulations related to prevention of bribery that is applied in the countries and/or regions in which Brother Group operates.

3) Prohibition of giving bribery to government officials, etc.

Brother Group Officers and Employees shall not, for the purpose of improperly influencing or rewarding the behavior of someone to obtain or retain business or a commercial advantage, or for any other improper purpose, directly or indirectly through third parties, corruptly give, offer, promise, or authorize payments of money or anything of value, including gifts, hospitality, entertainment, and other benefits (including kickbacks), to a government official. A government official includes local or foreign government officials, employees of government-owned or -controlled entities, officers and employees of public international organizations, any political party official or candidate, members of royal families or persons in a similar position acting in an official capacity on behalf of a national, state, or local government, including uncompensated officials if they have actual influence in awarding government business or technical or marketing consultants who also hold a government position.

4) Prohibition of giving bribery to non-government officials

Brother Group Officers and Employees shall not, for the purpose of improperly influencing or rewarding the behavior of someone to obtain or retain business or a commercial advantage, or for any other improper purpose, directly or indirectly through third parties, corruptly give, offer, promise, or authorize payments of money or anything of value, including gifts, hospitality, entertainment, and other benefits (including kickbacks), to any person other than a government official, unless the giving of such money or anything of value are within bounds of good standard business practice, the Brother Group policy, and the applicable laws or regulations of the country or region concerned.

5) Prohibition of accepting bribery

Brother Group Officers and Employees shall not, for the purpose of obtaining personal gain or advantage, or for any other improper purpose, directly or indirectly through third parties, demand any person to give money or anything of value, including gifts, hospitality, entertainment, or other benefits (including kickbacks), unless the accepting of gifts, hospitality, entertainment, or other benefits are within bounds of good standard business practice, the Brother Group policy, and the applicable laws or regulations of the country or region concerned.

6) Accurate Records

Brother Group Officials and Employees shall properly maintain and manage accurate and complete records of all payments and other expenses made to third parties and shall endeavor to detect and promptly report fraudulent activity or the possibility of such misconduct.

7) Violation

Brother Group Officials and Employees who violate this policy will be subject to disciplinary proceedings based on employment rules and other internal rules and policies of the respective Brother Group company.

In the Brother Group Principles of Social Responsibility and the Brother Group Anti-Corruption Global Policy, Brother Group employees are prohibited from engaging in corruption or bribery. These policies are communicated to all Brother Group employees through the BIL website and the Brother Group intranet site, among others.

In addition to the dissemination of the policies, the Brother Group is engaged in anti-corruption activities through the following initiatives.

Anti-corruption efforts in Japan

For all employees of Group companies in Japan, we are working to raise their anti-corruption awareness by distributing a handbook containing specific examples of bribe-giving and entertainment. To prevent the risk of corruption, we also provide training for new hires and mid-career recruits, as well as for employees before overseas assignments at BIL and certain Group companies in Japan.
From FY2018 to FY2023, there were no terminations for corruption in Japan, zero corruption-related fines, and no penalties. BIL's political contributions were zero.

Global anti-corruption efforts

Asia: Introducing a bribery checklist

In Asia, we introduced a bribery checklist in FY2020 for use by our sales facilities. This checklist is used by sales facilities to check for red flags^* that may present bribery risks when doing business with third parties such as distributors, consultants and service providers. Using the checklist, our sales facilities in Asia and BIL work together to regularly review and monitor transactions with third parties such as government agencies and officials.

Based on the results of the checklist, an anti-bribery clause was added in FY2021 to major contracts between our sales facilities in Asia and third parties. As part of our measures to reduce the risk of bribery, some of our sales facilities in Asia began formulating their own internal anti-bribery policies in FY2022, and in FY2023 we expanded the scope of sales facilities formulating internal policies.

• Refers to conflicts of interest, unusual payments, improper sales rebates and discounts, and improper gifts and entertainment.

The Americas: Conducting training, sharing anti-corruption policies, conducting anti-corruption screening of business partners

Brother International Corporation (U.S.A.) ("BIC (USA)"), the regional headquarter for the Americas, conducts online anti-bribery training for employees in the Americas that includes examples of what may constitute bribery.

In consideration of the high risks involved in international transactions, BIC (USA) also communicates its strong anti-corruption policy by including an anti-corruption clause in its contracts concluded with third parties such as new business partners, contractors and agents outside the United States.

Furthermore, BIC (USA) conducts anti-corruption screening of business partners selling outside the United States. The screening identifies high-risk business partners by assigning scores to anti-corruption, negative media information, political exposure and other high-risk factors. We ask business partners identified as high risk in the screening process to complete a compliance questionnaire after viewing an anti-corruption video. This screening process is also applied to potential business partners. Before doing business, we confirm that there are no issues based on the screening.

In addition, BIC (USA) monitors all screened business partners on an ongoing basis. Any new issues or risks that are identified are addressed immediately.
Specifically, the results of the screening are used to consider whether to continue doing business with the business partner concerned, whether additional due diligence is required, and other risk mitigation measures.

Europe: Providing education for employees, including an anti-bribery clause in contracts

In Europe, we are working to ensure the prohibition of bribery by providing regular online education to employees, mainly at Brother International Europe Ltd., the European sales overseeing company of the Printing & Solutions Business, and Domino Printing Science plc, and by including an anti-bribery clause in major contracts with third parties.

Under the Brother Group Global Charter, Brother Group promises to conduct fair transactions with business partners in order to promptly deliver superior value to customers.
Cartels and other practices that hinder competition may be prohibited by the laws and regulations of the countries or regions in which the Brother Group conducts business. All officers and employees of the Brother Group, including company employees, contractors, seconded employees, and temporary employees, shall comply with the competition laws (antitrust laws) applied to the country or region in which we operate and conduct free and fair business activities in accordance with the Global Charter and this policy.

1) Prohibition of unlawful information exchange with competitors

-Brother Group shall not engage in price-fixing, restricting quantities, allocating sales territory or customers, and other unlawful agreements or information exchange with competitors in violation of applicable competition laws in the countries and regions in which we operate.

-Furthermore, Brother Group shall not exchange information with competitors regarding costs, sales terms, customers, production capacity, suppliers, technology, or any other information that may hinder competition; provided, however, that information exchange performed only to the minimum extent necessary for a legitimate purpose in accordance with internal rules or guidelines shall not be prohibited.

2) Prohibited acts with business partners, etc.

-Brother Group shall not impose restraints on distributors, retailers, customers, and other business partners in violation of applicable competition laws in the countries and regions in which we operate.

-Specifically, where such actions are prohibited under the applicable laws, Brother Group shall not impose unlawful restrictions on business partners regarding sales territory, customers, sales methods, and other terms of sale, or unlawfully determine resale price of our products and services by our business partners (excluding agents who engage in transactions on behalf of the respective Brother Group company).

3) Prohibited acts when Brother Group has a dominant position

-When Brother Group has a high market share (i.e., 50% or more), in many countries, Brother Group holds a special responsibility not to act in a way that limits the competition in the relevant market. Under such circumstances, Brother Group shall not, without objective justification, engage in actions that reduce market competition in violation of applicable competition laws in the countries and regions in which we operate. Examples of such actions are illustrated below:

Based on this policy, Brother Group implements various training programs to foster compliance with applicable competition laws. Brother Group officers and employees who violate this policy are subject to disciplinary proceedings based on employment rules and other internal rules and policies of the respective Brother Group company.

At the Brother Group, we continuously implement initiatives to comply with the competition laws of all countries and regions in which we operate. For example, as the Brother Group, we have established internal rules and policies for compliance with competition laws and ensure that all employees are aware of them by posting them on the intranet. In Japan, we established anti-cartel guidelines in FY2021 and conducted online seminars and e-learning courses on competition law.

In addition, Brother Industries' Risk Management Committee conducts an annual questionnaire on legal compliance (including competition law) in order to assess the risk of competition law for the entire Brother Group and to prevent competition law violations.