Structure of Corporate Governance

Corporate governance is the system of rules, practices, and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company’s many stakeholders, such as shareholders, senior management executives, customers, suppliers, financiers, the government, and the community.

Corporate Governance Structure

The Company has established the Audit & Supervisory Board to ensure that the Board of Directors carries out appropriate decision-making and supervisory functions, as well as ensure that Audit & Supervisory Board members, who are appointed on an individual basis, appropriately carry out their audit functions. Through the strengthening of the functions of both the Board of Directors and the Audit & Supervisory Board, the Company is working to enhance corporate governance. The Company has established a system of executive officers, thereby clarifying the division of roles in the execution of operations, delegating authority, and ensuring expeditious execution of operations. Furthermore, the Company aims to realize effective and transparent corporate governance. Specifically, it has established the Nominations Advisory Committee and the Remuneration Advisory Committee as advisory bodies to the Board of Directors, and the Corporate Governance Committee as a body reporting directly to the Board of Directors.

Executive officers hold responsibility and authority for the execution of operations. Executive officers comprise the CEO, COO, CFO, executive officers responsible for supervising specific functions, and executive officers. Executive officers are appointed through resolution of the Board of Directors.

Board of Directors

The Board of Directors determines the Company’s basic management policies, and makes decisions regarding important operational matters and other matters delegated by resolution of the General Meeting of Shareholders. The Board of Directors also makes decisions on matters stipulated by law and the Company’s Articles of Incorporation, and receives reports regarding the status of significant operational matters. Based on this structure, the Board of Directors oversees the operational execution of the Company’s management.

The Board of Directors shall comprise at least three but no more than 13 members. Of those, at least two members shall be independent outside directors.

Audit & Supervisory Board Members and the Audit & Supervisory Board

As independent officers functioning under a mandate from the General Meeting of Shareholders, the Audit & Supervisory Board Members audit the directors’ execution of duties and have the role of carrying out a supervisory function over the Company in cooperation with the Board of Directors. The Audit & Supervisory Board is a body that holds discussions and makes decisions regarding the audits undertaken by the Audit & Supervisory Board Members for the purpose of formulating opinions. Each Audit & Supervisory Board Member utilizes the Audit & Supervisory Board as a means of ensuring effectiveness. As a body to support the Audit & Supervisory Board Members’ execution of duties, the Company has established the Audit & Supervisory Board Members’ Secretariat and has appointed dedicated staff to this body.

Management Committee

As an advisory body to the COO, the Management Committee comprises mainly executive officers responsible for supervising each function of the Company’s business organization. In principle, the Management Committee convenes three times per month and broadly considers and debates matters delegated by the Board of Directors, important operational matters, and various issues.

Audit Office

The Company has established an Audit Office, which reports directly to the CEO, as an independent internal audit unit. The Audit Office considers and evaluates the effectiveness of business risk management control and governance processes for the overall operations of each JACCS Group business site. The Audit Office carries out internal audit operations based on the “Fundamental Policy relating to the Internal Control System,” etc.

Accounting Auditor

The Company appoints an auditor based on the selection criteria of the Audit and Supervisory Board.

Committees

(i) Nominations Advisory Committee

The Company has voluntarily established the Nominations Advisory Committee as an advisory body to the Board of Directors. This committee considers and debates nomination and dismissal proposals for directors and executive officers responsible for supervising specific functions. The committee reports its findings to the Board of Directors. The committee also considers and debates the content of the “Standards for the Independence of outside Officers,” and reports its findings to the Board of Directors. The committee includes outside directors as members, and ensures objectivity and transparency is maintained.

(ii) Remuneration Advisory Committee

The Company has voluntarily established the Remuneration Advisory Committee as an advisory body to the Board of Directors. The committee considers and debates the performance of directors and executive officers responsible for supervising specific functions and the content of their remuneration, and reports its findings to the Board of Directors. The committee includes outside directors as members, and ensures objectivity and transparency is maintained.

(iii) Corporate Governance Committee

The Company has established the Corporate Governance Committee as a body reporting directly to the Board of Directors. The Committee considers and debates matters relating to the following, and reports its findings to the Board of Directors.