Corporate Governance
Basic Stance on Corporate Governance
At JSW, we believe we must earn the trust of all our stakeholders, including our shareholders and employees,
not merely to raise our enterprise value, which comprises both the Company’s economic value and its value
to society in the broader sense, but to make possible our very existence.
We have, therefore, designed a set of management structures to ensure an effective system of corporate
governance, and have taken all necessary measures to facilitate the appropriate disclosure of corporate
information so as to achieve the level of management transparency demanded by investors today.

An Outline of our Corporate
Governance SystemThe Company employs the traditional statutory auditor
system, comprising 13 directors and four statutory
auditors, two of whom are outside auditors. The Boardof Directors debates and passes resolutions on mattersof importance to the management of the Company,
including basic management policies and matters
stipulated by legal statute. The Board is also responsible
for overseeing the management of day-to-day
operations by the heads of departments and plants, andother managers of similar rank.
Meetings are also held by the Executive Board,
composed of the Company’s president, executive vicepresidents, senior managing directors, and any otherperson as shall be designated by the president. Thiscommittee, augmented when deemed necessary by theheads of operating divisions, plant general managers
and managers at corporate headquarters to form theManagement Council, analyzes the businessenvironment, monitors the progress of business plans,and ensures that knowledge is widely shared among theCompany’s management staff. In also ensures that theopinions of specialists are heard and reflected in the
final decisions made by the Company’s topmanagement. The activities of these bodies ensure that
corporate governance is conducted effectively, and, inparticular, that the principles of legal and ethical risk
management and compliance are properly observed.
The Company’s statutory auditors (hereafter“corporate auditors”) attend meetings of the Board ofDirectors, the Executive Board, the Management Council,

14and other important meetings. They also pay regularinspection visits to all the Company’s plants and offices,and to Group subsidiaries, and exercise strict oversightwith regard to the execution of their duties by theCompany’s directors, such as by receiving important
reports when needed from the aforementioned divisions
and exchanging views with directors and key employees.
Based on this, they express their views to managementfrom an objective and neutral point of view.

Our Internal Control
and Risk Management System
JSW regards it as a management issue of crucial
importance to have an effective internal control system
in place to ensure the correct performance of business
operations. We are, therefore, working to improve oursystem of internal control in line with our Basic Policy
on Internal Control Systems resolved at the meetings ofthe Board of Directors as well as detailed measures
decided each year for dealing with specific internal
control issues. In addition, we will respond to socialchanges and work to achieve a more appropriate andefficient system by properly reviewing internal control
issues and responses. The points below delineate thefundamental stance adopted by the management of
JSW toward the issue of internal control, and theprogress achieved thus far in strengthening theCompany’s internal control system.
1. Improving the internal control system
In addition to setting up a specialist unit dedicated tosupervising the Company’s internal control system,
the Internal Control Committee holds meetings both
regularly and ad hoc as deemed necessary.
2. Observance of legal regulations and theCompany’s Articles of Incorporation
JSW does not limit compliance to the prevention ofillegal acts and the observance of legal regulations
and the Company’s Articles of Incorporation. It
views compliance in the broader context of generalsocial responsibilities and the upholding of a wide
variety of rules and regulations, which include theCompany’s Vision, its Management Philosophy, andAction Guidelines. The key to success for complianceactivities is that the directors take the initiative insetting an example and practicing truthfulness, whileraising employee awareness on compliance issues
through training sessions and other means.
The implementation of compliance activities isoverseen by a director who has been appointed tosupervise CSR activities. Committees have been
formed to oversee internal controls, security andexport controls, environmental management, safety
and hygiene (hereafter collectively referred to as “thecommittees”). These committees undertake activities
companywide.
Meanwhile, the planning and administrationdepartments of each business unit closely collaborate
with the corresponding departments of management
planning, personnel training, accounting and financing,
general affairs and legal affairs within the headquarters(hereafter, “headquarters departments”) to carry out
compliance duties. In this way, we have achieved adivision of duties from the overall management
control function, and through mutual cooperation,
management controls are overseen in every area.
We have established a department responsiblefor internal controls to ensure that the Company’soverall administrative operations observe all laws andregulations, as well as in-house rules. In addition toperiodic audits, this department conducts spot audits
at other times, as deemed necessary. The results ofthese audits are reported to the president.
We have also created a system of internal andexternal routes for reporting and discussing

compliance violations when discovered. The person
filing the report is guaranteed anonymity. Violators,
regardless of whether they are directors or staff, will
be punished accordingly, and measures will be taken
swiftly to prevent any recurrence.
The Company has clarified in writing its policyof strict opposition to the activities of criminalorganizations or individuals. As specific measures
within its internal control system to ensure
noninvolvement with such criminal elements, theCompany has mandated careful background checks
on business partners, the inclusion in basic contracts
drawn up with other companies of clauses specifying
the exclusion of known criminal organizations orindividuals, the requirement to report all contacts
with such criminal elements, and the establishmentof a single dedicated office for the investigation ofsuch reports and the management ofcountermeasures.
3. Safeguarding and management of information
We have appointed a chief information security
officer (CISO) to ensure the safeguarding andmanagement of information. In accordance withinhouse regulations governing the safeguarding ofdocuments and other information and basic data
security guidelines, the minutes of general shareholder
meetings, meetings of the Board of Directors andStrategy Council meetings, as well as written requests
for approval of managerial decisions (rinshinsho),and other important documents are stored in written
form or in the Company’s computer database, where
they are held in safekeeping. We also store andmanage information relating to our internal controls
system, to ensure an adequate degree of disclosure ofcorporate information.
4. Risk management
The risk management system confirms that thepresident, the division chief, the general plant
managers, the directors in charge of departments
within headquarters, and other executives arecarrying out their duties within the scope of theirauthority, as stipulated by job authority regulations
and the system for managerial decisions (ringisho),15

Corporate Governanceand that they control the risks involved in the loss ordamage to authority in the execution of duties.
Important items pertaining to risk management arediscussed at meetings of the Board of Directors or of
the Strategy Council.
To manage the wide variety of risks to which theCompany is exposed, a director of the Company has
been placed in charge of overall risk management.
Controls are being implemented across divisionboundaries by the Internal Controls Committee andother committees. Simultaneously, each business
unit’s planning and administration departments, aswell as the plants’ departments and headquarters
departments work together with the departments
responsible for overseeing every area of risk
management. Reports are made on the status of risk
management and the suitability of the measures inplace at meetings of the Board of Directors and theStrategy Council.
Risk managers are assigned within each divisionat the headquarters, within each business unit, andat each plant. These risk managers ascertain theappropriateness of existing measures and work toeliminate everyday risks. In the case of critical risk
situations, a crisis management headquarters isestablished to provide the appropriate response. In
this way, we are responding to risks under bothordinary and extraordinary circumstances.
5. Ensuring efficient performance of duties
The president is the chief executive officer, anddirectors have been assigned to departments within
the headquarters and our plants. In addition,
directors have been put in charge of business units
that are responsible for the profitability planningand budget controls of each product division. The
directors must perform their duties in an efficientmanner within the scope of their authority, as
specified in the job authority regulations for theposts of president, director in charge, business unitchief, and general plant manager, or else indicatedunder the ringisho system for managerial decisionmaking. High-priority items are brought before theBoard of Directors or the Strategy Council for
discussion, approval and reporting.

16At JSW, the management drafts a list of common
goals to be shared companywide by directors andemployees through incorporation in the Company’s
Medium-Term Management Plan, and the businessplans for each business unit. Each director develops
specific measures for achieving these goals. A
division of duties is undertaken in line with theinhouse regulations, and the specific measures areplanned and implemented. Each director conducts areview of the results and provides periodic progress
reports, as well as impromptu reports at meetings ofthe Board of Directors, the Strategy Council and theManagement Council. All members of the JSW
management are working to ensure impartialpersonnel evaluations.
The Company has prepared an outline of duties
to be executed by each director of the Board, and theorder in which these duties are to be performed. Also
indicated are the types of work experience,
knowhow, specialized skills, and technology
required. These documents are revised on an
ongoing basis to reflect the actual situation, taking
into account all varieties of laws, regulations and risk
countermeasures. In addition, the appropriate
educational activities and training are recommended
for each director and employee.
6. Ensuring appropriate management conduct at
Group companies
The Company encourages its subsidiaries to follow
its Vision, Management Philosophy and Action
Guidelines, and also create their own systems ofinternal controls. In addition, the Company supports
the autonomy of their management.
The Company has drafted regulations
concerning the operation and management of its
subsidiaries. The responsibilities of each division of
the Company will be made clear with regard to thecontrols governing operations and the nurturing ofoperations of subsidiaries. At the same time, theCompany is creating a system whereby reports andnotifications can be made regarding subsidiaries’
decisions on important issues and other matters ofconcern, and data can be collected.
Corporate governance system has been adopted

whereby directors and statutory auditors can beassigned to JSW subsidiaries. To ensure oursubsidiaries’ strict adherence to all laws andregulations, as well as in-house company regulations,
we request that these companies conduct in-house
audits, both periodic and spot audits, through thedepartments in charge of each subsidiary, and also by
a department responsible for the internal auditing ofsubsidiaries. We will also directly audit operations
and provide guidance for improving internal controlsof subsidiaries.
7. Appointing staff to assist corporate auditors, andensuring the independence thereof
The Company appoints staff from among its
employees to assist the corporate auditors in theperformance of their duties. The opinions of theauditors themselves are sought with respect to theappointment and dismissal of the said staff and allother personnel-related measures such asperformance evaluation and bonuses, and no action
is taken without the auditors’ agreement, so as toensure the independence of the auditors’ assistantsfrom the influence of the directors of the Company.
8. System for submission of reports to the auditors by
the directors and employees of the Company
In addition to attending meetings of the Board ofDirectors, the Executive Board, and the ManagementCouncil, as well as other important managerial
meetings, the corporate auditors also request memos
and the minutes of decision-making meetings fortheir perusal, and hold regular meetings (as well as
ad hoc meetings when deemed necessary) with thedirectors and managerial-level employees. The
auditors may request reports from directors oremployees at any time as they deem this necessary.
The timing of these reports and the method to be
used are agreed beforehand through discussions
between the auditors and the directors or employees.
The corporate auditors of the Company conduct
audits of the Company’s subsidiaries to ascertain thestate of management of these companies. This isdone through close liaison with the corporate
auditors of the subsidiaries and the staff of theCompany’s divisions responsible for supervision ofsubsidiaries, as well as the Internal Audit Divisionand other head office divisions.
9. Ensuring effective performance of audits by thecorporate auditors
The directors and employees of the Company are fully
aware of the importance of audits performed by thecorporate auditors, and wherever possible give priority
to cooperating with the auditors in their duties.
The corporate auditors have the authority torequest the cooperation of the Company’s Internal
Audit Division, other head office divisions, and allother divisions of the Company in the performanceof audits.
The corporate auditors collaborate closely withthe accounting auditors (an external accounting firmmeeting). The corporate auditors have the authority
to employ the services of legal advisors and otheroutside experts as appropriate.

Policy Regarding Large-Scale
Purchases of Company Shares
By resolution of a meeting of the Board of Directors ofThe Japan Steel Works, Ltd. held on September 10,
2007, the Company instituted a set of rules to beobeyed and procedures to be followed by any party
seeking to make a tender offer for the purchase of 20%
or more of the total shares issued and outstanding of theCompany. These rules and procedures were adopted
under the name of Measures Against Large-Scale Share
Acquisitions (Measures to Prevent Takeover).
Subsequent to this resolution, an amended versionof these measures (hereinafter “the present plan”) waspresented to the Company’s 82nd Regular General
Meeting of Shareholders held on June 27, 2008, and theagenda item was approved by vote of a majority ofshareholders present.
The present plan is a preemptive measure to preventa takeover which utilizes the gratis issue of sharesubscription rights, and is effective for a three-year
period ending with the Regular General Meeting ofShareholders to be held in June 2011.

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