Basic Policy on Internal Control System

We believe that the reinforcement of our company's corporate governance plays a pivotal role in achieving "a fair and transparent management capable of enjoying stakeholders' confidence", and we intend to increase its effectiveness by improving the quality of our internal control. We acknowledge that the achievement of effectiveness and efficiency of business, the accuracy of financial reports, the compliance with relevant laws and regulations, and the preservation of company's assets are the management's responsibility. Accordingly, we will prepare and refine a framework including our internal regulations as well as our organization, to ensure fair business activity in compliance with the Japanese Corporation Law and relevant regulations.

1. A framework to ensure that performance of a director's or an employee's duty is in compliance with relevant laws and the articles of incorporation.
   

   (1)	We have established the "Nikon CSR Charter", which shows Nikon Group's basic stance on corporate social responsibility. Additionally, the "Nikon Code of Conduct" defines the standards of behavior to ensure sensible conduct by directors and employees, based on a high level of morality, pursuant to relevant laws and internal regulations.
   (2)	Putting special emphasis on a social responsibility-oriented management, we established the "CSR Committee", which aims at nurturing, educating as well as disseminating CSR awareness. Established as its sub-committee, the "Business Conduct Committee" regularly performs its function to ensure legitimate, fair, and sound corporate behavior. Finally, dedicated departments integrate and promote activities pertaining to CSR and corporate compliance.
   (3)	Preparation and refinement of our corporate compliance framework are vigorously pursued, in order to prevent or rectify behaviors that violate social rules or corporate ethics. The "Code of Conduct Hotline" has been created as the internal complaint reporting mechanism in this respect.
   (4)	An internal audit department has been created as an independent organization, reporting directly to the President. This department examines whether operations within the Nikon Group are conducted in compliance with internal rules and standards, and, when necessary, makes recommendations as to how they can be improved.
   (5)	Regarding elimination of antisocial forces and groups, we have defined our basic policy and standards in the "Nikon CSR Charter" and the "Nikon Code of Conduct." Additionally, we have established a system to liaison with attorneys and police forces, to take steadfast action as an organization.

2. A framework to ensure an efficient performance of directors' duties.
   

   (1)	The executive officer system provides a clear definition of the authority and responsibility in performance of an officer's duty, resulting in a quick decision-making as well as an efficient performance of the officer's duty.
   (2)	The "Rules of Organization and Authority" clearly defines the scope of authority and responsibility for each post as well as each organization, to ensure organized and efficient performance of duties.
   (3)	The following organs are established to enable an efficient decision-making and performance of duties by the directors: The "Executive Committee," primarily consisting of full-time directors, deliberates about and resolves major issues regarding management, general internal control, and guidelines about general operation of company's business, in accordance with the basic direction of management as determined by the Board of Directors. Major issues are reported to the Executive Committee by each department. Depending upon its purpose, other organs such as the "Executive Meeting", the "Management Strategy Meeting", as well as other committees are established.
   (4)	In accordance with our corporate philosophy of "Trustworthiness & Creativity," management targets are defined within annual plans as well as within the Medium Term Management Plans, and implemented as specific measures. In order to achieve annual targets, management of operations is carried out through our "internal company system", an operation-based framework including subsidiaries engaged in the same business. The regularly held "Business Activity Review Meeting" evaluates the achievement's progress level, identifies issues, if any, and results are evaluated and validated based on the "Achievement Evaluation System".

3. A framework aimed at preservation and control of information relating to the directors' duty performance.
   

   (1)

   Information regarding resolutions, approvals, and reports pertaining to directors' performance of their duties are preserved in documentary format and until such time as provided in the "Rules of the Board of Directors", the "Rules of the Executive Committee", and the "Information Management Rules". The information control system is designed to accept access, when needed, from directors, corporate auditors as well as auditors.

   (2)

   Internal regulations provide that our company's information are protected, specifically by defining the access level per category and relevance, by password control, as well as by providing measures for preventing leaks, manipulations, and destructions of proprietary information. An information management framework has been coordinated and reinforced for the purpose of protecting all of our company's information resource, and of promoting fair performance of duties as well as its effectiveness. Based on this framework, a thorough implementation of preservation and control of information by employees and directors is pursued.

4. A framework including rules concerning risk of loss management.
   

   (1)	Identification, assessment, and control of risk factors potentially affecting operation and continuity of business are recognized as critical issues. A risk-controlling framework led by the "Risk Management Committee," which identifies critical risks, and supported by the "Disaster Prevention and BCM Committee," which prepares specific countermeasures,appropriately deals with risks surrounding Nikon Group.
   (2)	We have prepared and implemented manuals and rules pertaining to such field as corporate ethics, protection of personal information, environmental control, quality control, export control, and disaster prevention, which reinforce the management framework concerning prevention of loss. Additionally, a business continuity framework has been established to promptly deal with critical situations.
   (3)	A framework is in place whereby the internal audit department audits other departments about their risk management, evaluates their effectiveness, and reports to the Board through the representative director when necessary so that corrective measures can be implemented.

5. A framework to ensure fairness of operation within Nikon Group, including parent companies and subsidiaries.
   

   (1)	The "Authorization Standards for Subsidiaries" defines the scope of authority and responsibility for subsidiaries in Japan and abroad. Control and guidance based on such standards are exhaustively implemented.
   (2)	Audits to companies within Nikon Group are carried out by corporate auditors and outside auditors. Additionally, we will reinforce our internal audit department and expand the scope of audit.
   (3)	In the area of corporate compliance within Nikon Group, a "Code of Conduct Coordinator" is appointed for each company, in order to encourage ethical behavior at all levels according to the "Nikon CSR Charter" and the "Nikon Code of Conduct". Furthermore, the existence and availability of an internal complaint reporting system is widely shared by all Group companies.

6. A framework concerning employees assisting corporate auditors based on such corporate auditor's request, and such employees' independence from other officers.
   

   (1)	Several employees are appointed as dedicated assistants to corporate auditors, in order to ensure an efficient procedure of the Corporate Auditors' Meeting as well as to ensure the increased effectiveness of the audit.
   (2)	Transfer of the assistants, or evaluation of the assistants' performance requires prior agreement by the corporate auditors, to ensure independence of such employees from other officers.

7. A reporting framework to corporate auditors, including reporting by directors or employees.
   

   (1)	A corporate auditor has the authority to attend major meetings, such as the Executive Committee or the Business Activity Review Meeting. This ensures that the corporate auditors can constantly understand and audit the status of operation and the decision-making process.
   (2)	Prompt and effective report is done regarding facts that can potentially cause damage to our company, information obtained through the internal complaint reporting system, or items to be reported to the Corporate Auditors' Meeting as previously agreed with directors.
   (3)	The corporate auditor will carry out effective audit in cooperation with the internal audit department. The corporate auditor can request report or investigation regarding the status of internal audit and the audit results by the internal audit department.

8. A framework to ensure effective audit by the corporate auditors.
   

   (1)	While ensuring independence, this framework enables the corporate auditor to hold regular meetings with the representative director in order to exchange opinions regarding issues to be dealt with by the company, or important tasks pertaining to audits, and to make necessary requests, consequently deepening the mutual understanding between them.
   (2)	Corporate auditors can hold regular meetings with outside auditors, to actively exchange opinions and information.