SYSMEX CORPORATION

Corporate Information

Compliance

Compliance Structure

Pursuing Open and Aboveboard Business Activities

Based on our Group philosophy, the "Sysmex Way," we define our view of compliance as "conducting business activities not only in compliance with applicable laws and regulations, but also based on fairness and high ethical standards." In accordance with this definition, we have established a Global Compliance Code, in which particularly important conformance rules and behavioral guidelines for all Group executives and employees to abide by are compiled. We take advantage of various training opportunities to enhance awareness of the code, as part of our efforts to ensure that our business activities are compliant with laws and regulations in each country and region in which we operate.

We revised the compliance structure in October 2013, establishing the Compliance Committee independently from the Risk Management Committee. In addition, we are encouraging compliance in a manner that reinforces the relationship between the Group Compliance Officer and the officer of Group companies. In May 2014, we revised our global compliance code, adding text to describe our thoughts on ethics in relation to research and development, prevention of bribery, adherence to international guidelines such as the Universal Declaration on Human Rights, as well as research and development. We also set forth a bylaw for revising this code once every two years, in principle, to respond to changes in our internal and external environments.

We also formulated the Sysmex Promotion Code to spell out in greater detail and more specifically two elements of the Global Compliance Code: "2.To Promote Fair Dealing and Free Competition" and "9.Distinction between Public and Private Matters and No Conflicts of Interest," and we are conducting awareness activities in this regard.

Compliance System

Compliance System

Sysmex Global Compliance Code
  1. To Ensure Safety of Our Products and Services to Customers
    In all of our corporate activities, we will make it a matter of priority to provide our customers with safety and security.
  2. To Promote Fair Dealing and Free Competition
    We will deal with our customers and business partners in a just and fair manner and will conduct transactions under appropriate conditions. As regards our relations with other companies in the same line of business, we will not illegally, dishonestly or unreasonably restrict their business, nor will we engage in the public defamation of those companies.
  3. Fair and Proper Information Disclosure and Exercise of Complete Information Control
    Our corporate information, such as our group’s financial conditions and business activities, will be disclosed in a fair, prompt, correct and clear manner in accordance with applicable laws and regulations and we will exercise strict control over confidential information collected through our business activities so as not to cause any infringement to the rights of third parties.
  4. . Implementation of Appropriate Research and Development Activities
    When carrying out our research and development, we will protect the dignity and human rights of the trial subjects and their privacy in the research of genes and other matters, and will comply with applicable laws and regulations and carry out our research activities in accordance with high ethical standards.
  5. To Respect Intellectual Property
    We respect both the rights of our own company’s intellectual properties and the intellectual properties of others. We will not unlawfully acquire or utilize any confidential business information or the proprietary assets of others.
  6. To Maintain International Peace and Safety
    We will comply with export- and import-related laws and regulations, and will not be engaged in any transaction likely to impede maintenance of international peace and safety.
  7. To Conduct Proper Accounting and Appropriate Tax Payments
    We will always apply the appropriate accounting treatment and recognize tax obligations set forth in applicable tax laws and accounting regulations and standards.
  8. To Respect Human Rights and to Improve Occupational Health and Safety
    We will support the Universal Declaration of Human Rights and Core Labour Standards, and respect the fundamental human rights of each person and will not infringe thereon by such acts as discrimination, harassment, etc. We will also comply with applicable laws and regulations, endeavor to improve occupational health and safety, and will not force any unfair labor practice on the personnel of the company.
  9. Distinction between Public and Private Matters and No Conflicts of Interest
    We will not attempt to gain any personal profit in performance of our duties, and will not make any unauthorized use of our group’s assets, goods and information, nor will we perform such personal acts that may cause harm to our group’s business activities or reputation.
  10. To Maintain Sound Relationships with Society
    We will comply with applicable laws and regulations related to anti-bribery statutes and comply strictly with applicable laws when making political donations, if allowed under local law. We will not be intimidated by antisocial activities, behavior and groups, and will never maintain any relationship with them.
  11. To Preserve the Global Environment
    We will comply with environment-related laws and regulations, etc. and pay attention to the environment throughout our business activities based on international standards, etc. for the environment in an endeavor to preserve and improve the global environment.

Revised May 2014

Third-Party Evaluations of Group Structure to Promote Compliance and Its Operational Status

We confirm the appropriateness of our compliance-related initiatives and regulations with respect to social conditions and various laws and regulations, revising our content as needed. To reinforce our compliance promotion structure, in fiscal 2014 we revised our Global Compliance Regulations, which form the basis for these activities. We also invited outside institutions to evaluate our Group structure to promote compliance and its operational status. We are considering improvements to issues that were identified.

We also take appropriate steps to verify that designs and other aspects of our products do not violate laws and regulations. In fiscal 2014, we created a checklist to confirm that designs of products for which we are filing pharmaceutical applications are in line with regulatory content, and completed the process of confirming their compliance.

Establishment of an Internal Reporting System

In principle, we aim to resolve any compliance-related issues within the organization but have established "Campanula Lines" for resolving issues that are difficult to address internally. In the interest of resolving issues at an early stage, "Campanula Lines" allow our employees to seek consultations and file reports via telephone, postal mail or e-mail through two lines (in-house and external).

Any information received is handled anonymously to protect those providing the information from any adverse reactions. Also, such internal reporting systems are in place at overseas Group companies.

In fiscal 2014, we fielded 17 consultations from Group companies in Japan. We conducted factual inquiries for consultations and dealt with each of them appropriately

"Campanula Lines" Internal Reporting System

"Campanula Lines" Internal Reporting System

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Compliance Education

Continuously Providing Education on Compliance

Compliance managers are in place at each Group company, and Sysmex provides compliance education for all employees. We have produced a Compliance Handbook and distributed a copy to each Group company employee in Japan to ensure that all employees are thoroughly compliance-aware.

At Group companies in Japan, in addition to conducting regular compliance education each year we set key themes and conduct education at related departments according to these themes. Educational themes in fiscal 2014 were the Global Compliance Code, promoting fair trade and ensuring transparency in relationships with medical institutions. We prepared new video-based educational materials to promote understanding of the Global Compliance Code in particular.

We also conduct compliance education at Group companies overseas, in accordance with conditions in individual countries.

Main Compliance Education in Fiscal 2014 (Japan)

(1) Global Compliance Code

  • Conducted e-learning
  • Prepared video-based educational materials to promote understanding

(2) Promoting fair trade

  • Conducted e-learning related to anti-bribery legislation
  • Explained revisions of the Sysmex Promotion Code to Sysmex TMC and Sysmex CNA

(3) Ensuring transparency in relationships with medical institutions

  • International Business Management Division’s members are trained about Sunshine laws* and transparency guidelines
* Sunshine laws: A vernacular term for laws such as those that have been put into place in the United States, France and other countries that make it a legal obligation for healthcare companies to disclose information about payments to doctors and doctor-education hospitals.

Main Compliance Education in Fiscal 2014 (Overseas)

  • Jinan Sysmex (China): Conducted compliance education as part of training related to work improvements
  • Sysmex Wuxi (China): Conducted compliance education for all employees
  • Sysmex Asia Pacific: Conducted training on work improvements
  • Sysmex Indonesia: In addition to occasions when new employees joined the company, provided opportunities for compliance education throughout the year
Holding a Lecture Presentation on Laws and Regulatory Systems Related to Medical Instruments

An awareness of the laws and regulations in the countries where our products are sold is an important part of promoting global compliance.

In December 2014, we held a lecture presentation by members of the Beijing Institute of Metrology and Testing (BIMT), which conducts field trials for regulatory applications in China, when they came to Japan for training. More than 80 people attended, including members of our Regulatory Affairs and Research departments. Participants listened to lectures about recent revisions, particularly to China’s Pharmaceutical Affairs Law. The lectures were followed by a question-and-answer session involving a lively exchange of views.

Lecture presentation underwayLecture presentation underway

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Security Export Control

Establishing a Security Export Control Structure

Sysmex formulates internal control regulations in this regard, and registers for approval with the regulatory authorities at the Ministry of Economy, Trade and Industry.

Under the Compliance Committee we have established a Security Export Control Committee. Based on our internal control regulations, this committee strives to reinforce our security export control system and thoroughly verify the destinations and purposes of our export of commodity and technology.

We conduct workshops and e-learning to raise awareness of security export controls and export administration regulations in the United States, as well as performing audits to ensure thorough controls. Furthermore, to strengthen the security export control system for the Group as a whole, we are introducing management systems that link with enterprise resource planning (ERP) systems at regional headquarters overseas in an effort to ensure management thoroughness and increase efficiency.

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Intellectual Property Management

To Respect Intellectual Property

Sysmex accords third-party intellectual property rights the same level of respect as it does its own.

Each new product development project involves a patent review to decide what patents to apply for to protect our own intellectual property and review third parties’ intellectual property information. As a part of this review, a patent application study committee is convened, where Intellectual Property members and R&D engineers draw up patent application policies and plans for technologies under development. At the same time, the committee investigates the status of third-party intellectual property rights, thereby minimizing any risks associated with intellectual property.

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Research Ethics

Conducting Appropriate R&D Activities

Being involved in clinical research and development and human genome and genetic analysis research, Sysmex has adopted the Ethics Regulations on Clinical Research and Development and Human Genome and Genetic Analysis Research, whose basic policies include respect of human dignity and thorough protection of personal information. Sysmex has also established a Research Ethics Examination Committee, which includes outside members such as legal and science experts, in order to review research content. The list of committee members and examination results are disclosed on our website, thus ensuring transparency.

In relation to animal testing and recombinant genetic testing, we have also set up the Testing Control Committee to deliberate on whether testing plans satisfy related legislation.

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Bribery Prevention

Promoting Compliance with Applicable Laws in Japan and Overseas

Sysmex is striving to prevent corruption based on the 10th principle of the Global Compact, that "Businesses should work against corruption in all its forms, including extortion and bribery."

We have prepared a practical guide that covers applicable laws not only in Japan, but also in the United States, the United Kingdom, China and other major countries, and use this guide in universal awareness activities.

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Tax Transparency

Appropriate Tax Payments and Disclosure

Item 7 of the Global Compliance Code for Sysmex Corporation provides for "conducting proper accounting and appropriate tax payments." Furthermore, in line with the international consensus we employ OECD guidelines when pricing internal transactions among Group companies overseas.

We disclose Group payments of corporate and other taxes in financial and other reports, as well as the reasons for differences with effective statutory tax rates.

Sysmex Group Compliance Code (Excerpt)

7. To Conduct Proper Accounting and Appropriate Tax Payments

We will always apply the appropriate accounting treatment and recognize tax obligations set forth in applicable tax laws and accounting regulations and standards.

7-1 Appropriate tax return procedures

We will adhere to tax laws and regulations applicable to jurisdictions both domestic and foreign, following appropriate and compliant tax return procedures.

7-2 Proper accounting procedures

We will fully comply with tax laws, external accounting standards and internal accounting procedures, including global, regional and local, related to accounting entries of transactions such as sales and expenditures. Also, we will maintain accurate and complete records of all slips invoices, receipts, books, records and other documents material to financial transactions and will not make false or misleading entries.

7-3 Preparation of fair and transparent financial statements

We will prepare and distribute financial statements that fairly and accurately reflect the financial performance of the company and fully comply with applicable laws, regulations and accepted accounting standards, and will not conduct illegal acts such as deliberate the misstatement of accounts.

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Principles for Transparency in Relationships with Medical Institutions

Introduction

Sysmex, with its Group corporate mission of "Shaping the advancement of healthcare," conducts business activities with the aim of providing reassurance to its various stakeholders, including customers. As part of this objective, at every stage of our operations—from research and development to manufacturing, sales and after-sales support—we are increasing the number of opportunities for collaboration with medical institutions and medical professionals. We believe that maintaining a strong sense of ethics as we go about these activities is important in securing broader society’s understanding of us as a company.

In 2012, the Japan Association of Clinical Reagents Industries formulated guidelines for ensuring the transparency of relationships between corporate activities and medical institutions. Concurring with the gist of these guidelines, Sysmex Corporation and Sysmex International Reagents make public information about funding they provide to medical institutions.

Disclosure Method

We disclose relevant information for the previous fiscal year on our website.

Start of Disclosure

Information concerning the start of fiscal 2013 is disclosed in fiscal 2014.

Target of Disclosure

This information is based on the "Guidelines on Transparency of Relationships between Corporate Activities and Medical Institutions" established by the Japan Association of Clinical Reagents Industries.

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