Major reforms implemented to date

1. Corporate Ethics Committee

(1) Date of establishment

• January 1998; reorganized in August 2001.

(2) Purpose

• To promote the practice of corporate ethics principles and to ensure they reach all areas of the organization.
• To create a corporate culture in which corporate ethics principles are practiced and respected.

(3) Authority/Powers

• The CEC is empowered to establish, revise, and/or abolish policy concerning the practice of corporate ethics principles.
• The CEC is empowered to instruct continuation of, or changes to activities after receipt of reports from its sub-committees.
• The CEC is empowered to make decisions on the course of action to be taken after receipt of a report from the department concerned when a serious ethical issue arises.

(4) Operational status of CEC

• Convenes: Once or twice a year
• Major agenda results to date:
  1. Formulated the MMC Corporate Conduct Code.
  2. Revised the MMC corporate creed.
  3. Revised the MMC Corporate Ethics manual.
  4. Appointed Code Leaders and a Compliance Officer.
  5. Clarified corporate standards governing the receipt of gifts and entertainment, and political support activities.
  6. Drafted plans for giving employees and officers more education and training in corporate ethics.
  7. Established a conceptual framework for setting up an internal reporting system and drafted Employee Protection standards for those who report infringements.
  8. Drafted plans for promoting the establishment of the MMC Group Corporate Ethics Organization.

2. Action Sub-committee & Investigatory Sub-committee

(1) Date of establishment

• August 2001

(2) Purpose

• The sub-committees were set up under the CEC to handle issues related to promoting the practice of corporate ethics policy.
• The sub-committees report to the CEC on the status of activities concerning the practice of corporate ethics throughout the MMC group.

(3) Authority/Powers

• The Action Sub-committee is empowered to formulate, implement and follow-up specific measures for putting corporate ethics policy into practice and for ensuring that the policy reaches all areas of the organization.
• The Investigatory Sub-committee is empowered to examine ways of solving and preventing a recurrence of serious ethical issues that arise within MMC or its affiliated companies.

(4) Operational status of sub-committees

• Convene: Once or twice a year.
• Major agenda results to date
  a. Action Sub-committee
     Has considered and examined specific measures for matters arising from the CEC agenda.
  b. Investigatory Sub-committee
     Has not investigated any matters.

3. Code Leader System

(1) Details

• Role
  1. The Code Leader assists the head of section/department in communicating corporate ethics principles to employees in his/her own unit and in tackling corporate ethics issues that arise in his/her own unit.
• Authority/Powers
  1. The Code Leader is empowered to investigate inappropriate incidents that occur within his/her own section/department.
  2. The Code Leader is empowered to refer or report matters relating to corporate ethics to the Compliance Officer and to seek advice from him/her.

(2) System operational status

• Dec 2001: 15２ Code Leaders appointed.
• Feb - Mar 2002: In-house training given to Code Leaders; Code Leaders give training to employees in their own section/department.
• Sep 2002: Code Leader appointments reviewed, following organizational changes. 164 Code Leaders appointed, including 67 new appointments.
• Nov 2002: In-house training given to newly appointed Code Leaders.
• July 2003: Code Leader appointments reviewed, following organizational changes. 127 Code Leaders appointed, including 51 new appointments.
• Aug-Sep 2003: In-house training using case studies given to all Code Leaders.

4. Compliance Officer

(1) Role

• The CO serves as assistant to the CBEO in the running of the Code Leader system.
• The CO coordinates the Corporate Ethics Committee and provides support and advice on corporate ethics issues.

(2) Authority/Powers

• The CO is empowered to take action on issues related to the Code Leader system that are reported, or on which his/her advice is sought, by Code Leaders.
• The CO is empowered in his/her role as assistant to CBEO to run the Corporate Ethics Committee.

5. Establishment of Compliance Fund

The Compliance Fund was established February 2004 following a court-mediated settlement reached on December 2, 2003 in relation to Action for Damages (brought on behalf of shareholders) No. 4814, filed at the Tokyo District Court in 2001. Under the terms of the settlement, the defendants in the action, who were former MMC officers, agreed to pay a sum of \160 million and this has been put towards the establishment of the Compliance Fund.

The newly established Compliance Fund will be used principally to strengthen MMC's corporate compliance structure. The company will appoint a lawyer to serve as an external expert in the section that deals with internally reported legal and regulatory infringements. This appointment complements the Employee Counseling Office (ECO) that already exists as the internal reporting system's employee help-line.