Internal Control System

In view of the changing public expectations regarding corporate risk management, we established the Kubota Group Risk Management Committee in January 2023 to adapt to these changes and to put in place a system able to respond flexibly to future changes.
With the aim of increasing the Kubota Group’s corporate value, the committee’s role is to maintain existing risk management activities relating to internal control risk and to put in place a new management system for risk with potential major impact on business operations.
To do this, the committee will undertake regular risk assessments of the Kubota Group in order to identify risks to be addressed as a priority. It is envisaged that subcommittees under the supervision of the Risk Management Committee will implement the risk response measures adopted and report back to the committee on their progress, which the committee will review before issuing instructions where necessary.
The director in charge of risk management will make regular reports to the Board of Directors on these risk assessments as well as on the associated response measures and policies and progress with their implementation.

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  System Diagram

Kubota positions risk management activities as part of its business activities. Based on the awareness that risk management is the foundation of business activities, Kubota identifies risks common to the entire Kubota Group, such as those relating to the reliability of financial reporting, and exerts efforts to manage risks appropriately through continuous steady improvement to “immediately correct any inadequacies.” At the same time, while accelerating the global development of its businesses, Kubota strongly recognizes that risk management activities are the foundation for the continuity of its businesses, and strives to improve such activities both in Japan and overseas.

Kubota has established and operates an internal control system in order to confirm the reliability of financial reporting for the entire Kubota Group, including its overseas subsidiaries.
Also to confirm the effectiveness of the system, the Corporate Auditing Department and the auditing divisions of the subsidiaries conduct regular internal audits.
Kubota has also created a system for evaluating the effectiveness of internal controls on a Group consolidated basis. This assessment is based on the results of the abovementioned auditing results, and conforms to the internal control reporting system related to financial reporting stipulated by the Finance Instruments and Exchange Act (J-SOX) and other ordinances.

We realize that full implementation of compliance is key to establishing Kubota as a Global Major Brand. The Kubota Group therefore engages in the risk management activities set out below to ensure advance preventive action against any infringement of antimonopoly or competition law.

Kubota conducts written surveys targeting each of its business divisions and Group companies in Japan on a periodic basis. Kubota also offers training programs to promote understanding of the Act against Delay in Payment to Subcontractors at each business site and Group company and holds consultancy sessions concerning practical operations, such as ordering, related to the Subcontractors Act, thereby developing voluntary risk management systems.

Kubota Group has placed particular focus on preventing bribery among risk management activities on the preventing illegal payment, and will work to achieve SDGs Target 16.5: Substantially reduce corruption and bribery in all their forms.
Amid increasing international moves to anti-bribery, we marked December 9 – designated by the United Nations as International Anti-Corruption Day – by broadcasting a President’s Message to all Kubota Group officers and employees every year. In the message, our top management made a clear commitment by declaring that ‘Kubota Group rejects bribery and all other inappropriate business practices.’ As a focused initiative to educate officers and employees on prevention of bribery, Kubota Group runs a program of training sessions in Japan and overseas. In FY2020, under coronavirus pandemic, new approach were taken such as web-based training sessions and an e-learning program to prevent further spread of infection. In the web-based training, information on bribery-related legislation and enforcement conditions in each country is presented as well as the case studies of bribery. And the e-learning was prepared to have an impact to the viewers by introducing a message movie from the President of Kubota Corporation at the beginning, as well as adopting movies and comprehension test in the program. Through continuous program of training sessions, Kubota Group seek to disseminate the latest information and to promote awareness of bribery prevention.
Additionally, we have put together a Kubota Group Handbook for Anti-Bribery which outlines our Anti-Bribery Policy and the main points of our Anti-Bribery Guidelines. The Handbook is issued in a global version with universal content available in Japanese, English and French, and in individual country versions that supplement the universal content with more detailed information on the points to be noted and actions to be taken in the particular country or region. These are available for China, Thailand, Korea, Indonesia, Myanmar, the Philippines, Vietnam and Mexico.
Meanwhile, as an initiative directed toward outside the company, ‘Request to Suppliers’ was posted on the Kubota website in the name of the General Manager of the Corporate Compliance and Risk Management Headquarters. The text outlined to suppliers the Kubota Group’s approach to bribery prevention and asked for their understanding and cooperation in bribery prevention activities.
To verify these risk management activities, Kubota Group has established the Committee on Prevention of Illegal Payments. In FY2020, document surveys were conducted at 11 departments/companies in Japan and 39 overseas bases to investigate whether preventive framework were in place and sufficiently functioning, as well as whether there were any illegal payments.
The policies for these risk management activities and the results of the activities are periodically reported to the President, the Board of Directors, and the Audits & Supervisory Board through the Company-wide Risk Management Committee, composed mainly Directors, and based on their feedback, the contents of activities are occasionally revised thereby improving the level of the activities.

• The Kubota Group Anti-Bribery Policy (excerpt)

  As specified in the Kubota Group Charter for Action, we commit ourselves to “conducting corporate activities based on compliance with legal regulations and ethical principles.” As such, Kubota Group never allows business based on unfair practices such as bribery. The Group also strictly prohibits all of its companies, officers and employees from being involved in bribery.

  • Kubota Group Charter for Action & Code of Conducts

  President, Kubota

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  Message from Mr. Kitao, President, Kubota Corporation (Screenshot of Thomson Reuters e-learning)