Compliance

NSK’s Approach

The NSK Group has positioned compliance as one of its core values. For NSK, compliance goes beyond adherence to laws and regulations. It also entails acting in accordance with internal rules, social norms and the Corporate Philosophy in a sincere and fair manner. Moreover, compliance means earning the trust of society and contributing to the development of the economy and society in Japan and around the world.

NSK Code of Corporate Ethics (Established: February 22, 2002, Revised: June 23, 2017)

NSK Code of Corporate Ethics, based on the NSK Corporate Philosophy, lays down the fundamental principles that all officers and employees of NSK Ltd. and NSK Group companies (“Personnel”) shall comply with when conducting various business activities. All officers and employees of the NSK Group must follow this code. Whenever it is violated, the person concerned is subject to disciplinary action based on the employment regulations.
_{Scope: NSK Code of Corporate Ethics applies to NSK Ltd., its consolidated subsidiaries (unless they have established their own code independently), and NSK-Warner K.K.}

[1] NSK Corporate Ethics Policies

1. Personnel will strive to ensure that NSK Ltd. and its affiliates continue to prosper as a company that acts in a sincere and fair manner, and which is respected and trusted in international and regional society.
2. Personnel will comply with all laws related to its business activities. Moreover, personnel will act in a highly ethical manner in order to ensure that NSK fulfils its responsibility as a corporate citizen.

[2] NSK Code of Conduct Concerning Compliance

1. Compliance with Competition Laws
Personnel must not make agreements with competitors to set selling price or territorial sales markets, restrict resale price, or perform other anticompetitive acts. Personnel will conduct legitimate trade through free and fair market competition.

2. Compliance with Import- and Export-Related Laws
Compliance with international rules is essential for freedom of global business activities. Personnel must comply with all import- and export-related laws.

3. Prohibition of Commercial Bribery (handling of entertainment, gifts, etc.)
When giving and receiving gifts and entertainment, bribery — and any acts deviating from socially-accepted norms — is prohibited. Personnel must not provide entertainment and gifts to officials and employees of public institutions unless there are special reasons for doing so.

4. Transactions with Public Institutions and Handling of Political Donations
Personnel must comply with all laws related to transactions with public institutions. Personnel must also comply with all laws related to political donations and must avoid questionable expenditures/provision of benefits.

5. Accurate Recording and Processing
All business activities must be accurately recorded, archived, and processed appropriately in accordance with related laws and regulations. In the event of an audit, whether internal or external, personnel must cooperate fully and provide honest information.

6. Prohibition of Insider Trading
Personnel must not trade in stock or other securities with the knowledge of nonpublic insider information or provide said information to any third party, including family members.

7. Handling of Intellectual Property Rights
Personnel must strive to create, protect, and utilize intellectual property, such as inventions, and must handle intellectual property rights with great care. In addition, personnel must not infringe the intellectual property rights of others.

8. Prohibition of Illegal and Criminal Conduct
Personnel must adopt a resolute stance against illegal conduct and must not interact with organizations that are engaged in criminal operations.

9. Protection of Corporate Assets
Personnel must use corporate assets in an appropriate manner, solely for the purpose of corporate operations, and endeavor to protect such assets. Personnel must avoid the misuse and waste of corporate facilities, equipment, tools, materials, spare parts, and network systems.

10. Handling of Confidential and Personal Information
Personnel must not obtain confidential information of companies, customers, suppliers, etc. through wrongful means, disclose such information to any third party, nor use for private purposes, including after retirement. Personnel must also manage personal information appropriately in order to protect privacy.

11. Relations with Customers
Personnel must always provide high-quality, safe, and secure products and services. Personnel must always commit themselves to entering into fair trade practices, being sincere in attitude, and making proactive proposals in order to enhance trust in the NSK brand.

12. Relations with Suppliers
Selection of suppliers must be based on fair criteria. When conducting business with suppliers, personnel must comply with related laws and treat suppliers as an equal business partner. In addition, personnel shall not seek nor receive personal profits using a dominant bargaining position.

13. Prohibition of Acts Discrediting Competitors
Fair business activities must be performed based on the principles of free competition. Personnel must not unfairly undermine competitors’ credibility by disseminating arbitrary information about competitors or their products, including libel, slander, or defamation.

14. Prohibition of Discrimination, Cultivation of a Sound Workplace
Personnel must respect the rights of individuals and must not unfairly discriminate on the basis of race, appearance, belief, gender, lineage, ethnicity, nationality, age, marital status, physical disability, or other inappropriate reason. In addition, personnel must avoid engaging in acts that cause offense to the recipient.

15. Respect of Fundamental Rights at Work
Personnel must not use forced or child labor. In addition, personnel must comply with all labor laws and respect fundamental rights at work.

16. Global Environmental Protection
Personnel must comply with environment-related laws and internal rules. In addition, personnel must be conscious of the effect their work has on the environment, and strive to prevent pollution as well as protect human health and the ecosystem in order to pass on a better environment to the next generation.

[3] Disciplinary Actions

Personnel who violate this Code will be subjected to disciplinary actions.

System

Compliance Promotion System

NSK has established a Compliance Committee chaired by the president. The committee formulates policies aimed at strengthening compliance and formulates and promotes initiatives to strengthen compliance in order to achieve those policies. At the same time, it monitors and supervises the implementation of those initiatives and reports regularly to the Board of Directors.

We have also established a Compliance Enhancement Office in the Legal Department at CSR Division Headquarters and tasked it with overseeing the practical work related to compliance across the entire NSK Group based on the decisions of the Compliance Committee. The NSK Group has appointed persons responsible for compliance at each department, site, and NSK Group company in Japan as well as each headquarters outside Japan to serve as key contact points who regularly report on compliance and conduct risk management.

Global Legal and Compliance Meetings

In order to strengthen the global compliance system, global legal and compliance meetings are held once or twice a year. At these meetings, members responsible for compliance from the Americas, Europe, China, ASEAN, India, and South Korea gather to report on and discuss compliance activities in their respective regions and countries. This includes compliance training implementation methods and compliance hotline operation. They also share information on relevant laws and regulations in each country, helping one another to identify ways to improve future performance.

Targets and Performance

Sixth Mid-Term Management Plan Targets (FY2019–2021) and the FY2021 Targets and Performance

Mid-Term Management Plan 2026 (MTP2026) Targets (FY2022–2026) and the FY2022 Targets

Creating Internal Regulations, Training and Awareness Raising Activities

Distribution of Compliance Guidebook

NSK distributed the NSK Compliance Guidebook, which explains the 16 items of the NSK Code of Conduct Concerning Compliance in the NSK Code of Corporate Ethics, to officers and employees of the NSK Group to raise awareness about compliance. We have prepared additional localized versions of the guidebook when needed, based on relevant national laws. Employees who receive the Guidebook pledge to abide by its content.

NSK Compliance Guidebook

Preventing Violations of the Competition Law

The NSK Group has established Rules for Compliance with Competition Law. We prohibit officers and employees from exchanging information or making arrangements with competitors regarding product prices or customers, or from making efforts to restrict sales price setting by retail stores. Moreover, contact with competitors is prohibited in principle. Whenever officers or employees need to participate in a business meeting where there is a chance for interaction with competitors, they must submit an application in advance followed by a report afterwards.
We also conduct training worldwide, focusing on sales departments annually. The training covers competition law and other compliance-related themes. The training includes the review of past cases of cartel behavior, in order to keep the applicable lessons fresh in employee minds.

Anti-bribery

The NSK Group’s Anti-Bribery Standards prohibit officers and employees not only from engaging in bribery, but also giving or receiving entertainment or gifts that deviate from publicly accepted norms. In principle, the provision of entertainment or gifts to any officer or employee of a public institution is prohibited.
Based on the Anti-Bribery Standards, localized internal regulations have been established for Group companies worldwide, based on relevant anti-bribery laws. These are communicated through training and e-learning programs to prevent bribery.

Preventing Insider Trading

The Internal Regulation for Preventing Insider Trading applies to all officers and employees of the NSK Group. This regulation prohibits officers and employees from buying or selling company stock while in possession of insider knowledge of related undisclosed information. Personnel in this situation are also not allowed to encourage others including family members to buy or sell company stock. It also prohibits NSK Group officers and employees from purchasing NSK shares on the stock market. When selling NSK shares, they must apply for permission in advance using a special system. We are working to ensure thorough awareness of insider training across the Group. We provide e-learning modules and other training, posters, and internal communication materials such as the Compliance Newsletter.

Security Export Control

The NSK Group has strengthened its system for controls for preventing products and technology from being exported for the aims of the development, manufacture, and use of weapons, based on Japan’s Foreign Exchange and Foreign Trade Act. A basic policy and system of controls related to security export have been set forth in the Standards on Security Export Control, and we are working to maintain and improve the reliability of the NSK Group’s export-related operations and to reduce the risk of legal violations.

Protecting Personal Information

The NSK Group maintains a basic policy concerning the acquisition, management and protection of personal information. Internal control systems have been set up for the protection of personal information based on the actual business situation. These enable the Group to collect, use, and provide personal information appropriately in accordance with its prescribed rules. We continually strive to prevent unauthorized access to personal information, as well as its leakage, loss, destruction, or falsification. This includes carefully supervising Group employees who process data containing personal information and any external provider contracted to do so.

No Association with Organized Crime

The NSK Group is fulfilling its corporate social responsibilities with a basic policy for completely blocking any association with organized crime, including transactional relationships. Furthermore, this policy is spelled out clearly in the NSK Code of Corporate Ethics and awareness of it is continually promoted to ensure a systematic response across the Group. We have also strengthened cooperation with the police and other external organizations. In Japan, the Group adds special clauses to its contracts with business partners to enable cancellation if the business partner is later found to be connected with organized crime.

Tax Compliance

As the globalization of business advances, the NSK Group believes that the proper payment of taxes in the countries and regions where it operates is one of the most fundamental and important social responsibilities that it should undertake. In March 2018, we established the NSK Group Tax Policy. We are striving to ensure appropriate tax treatment, including refraining from forming organizations that are inconsistent with business purposes and actual conditions for the purpose of tax avoidance.

Other Training and Awareness Raising Activities

The NSK Group supports information sharing with internal communications such as the Compliance Newsletters, group training and e-learning activities to further raise compliance awareness among officers and employees. The training content is tailored to the particular risks faced by each department in every Group company. It covers a wide range of topics, including compliance with competition law, anti-bribery measures, and prevention of insider trading.
Since fiscal 2019, we have conducted compliance training for all operators working at plants to further raise compliance awareness. With department managers serving as the instructors, the training covers NSK’s basic approach to compliance. Group discussions are also carried out using video teaching materials on the topic of product quality. The employees renew their appreciation of the importance of quality assurance and internal rules.

Monitoring

Employee Engagement Surveys (Compliance Awareness Surveys)

An employee engagement survey is conducted with the Human Resources Department. The objective is to assess the level of compliance awareness and the condition of work environments, in terms of motivation and opportunities for growth for each employee. We are working to address issues identified based on employee engagement surveys. These activities include raising compliance awareness in the manufacturing division, while further improving the compliance hotline’s reliability.

Auditing and Inspection

Since fiscal 2013, the Compliance Enhancement Office in NSK’s Legal Department has been conducting annual audits to assess the extent of compliance with competition law. We also use self-inspections to check for risks relating to specific compliance topics.

Compliance Hotline (Whistleblowing System)

The NSK Group has made explicit in its internal rules that employees who learn of acts that violate or might violate the NSK Code of Corporate Ethics or compliance are to contact the compliance hotline made available in their regions and countries. The Group makes sure that employees are well informed about these hotlines. In some countries and regions, the hotline is available to suppliers, as well.
In Japan, we established hotline operational rules to ensure that the functioning of our system is in full compliance with Japan’s Whistleblower Protection Act. In fiscal 2017, we changed the hotline system to enable users to contact the Audit Committee concerning officer compliance matters. This point of contact is independent of executive personnel, and has further increased the effectiveness of the compliance hotline. The system allows hotline users to remain anonymous, and rules are established to ensure they are protected from disadvantageous repercussions. Reported incidents are investigated by the CSR Division Headquarters in Japan and by the local legal department outside Japan with the help of relevant departments as needed. If a compliance violation becomes apparent, corrective actions and recurrence prevention measures are quickly taken where needed.
We are working to ensure that employees are well informed about the compliance hotline. This is done by putting up posters about the compliance hotline and distributing business card-sized cards containing the hotline contact information.