CORPORATE GOVERNANCE
JSW recognizes that it must earn the trust of shareholders, customers, employees, and other stakeholders to aim toenhance enterprise value and thereby contribute to the economy and society as a whole.
We therefore created a corporate governance setup that encompasses a management organization andframework to implement essential measures and pursues fair disclosure to ensure business transparency.
On November 18, 2015, we formulated “Corporate Governance Policy of The Japan Steel Works, Ltd.” based resolution ofthe Board of Directors. The aim of the Policy is to clarify our basic stance, initiatives, and approach with respect to corporate
governance. The Policy can be found at the following website: http://www.jsw.co.jp/en/guide/governance.html

Overview of Corporate Governance Structure

Our Management Council also convenes once monthly,in principle. Members include directors, corporate auditors,

We employ a statutory auditor system comprising eight

divisional heads, plant general managers, headquarters

directors, two of whom are independent, and four statu-managers, and others with executive responsibilities. This

tory auditors (hereafter, “corporate auditors”), two of

body’s tasks include assessing the business environment

whom are external.

and monitoring the progress of the Company’s business

The term of office of directors is one year. We maintainplan. Its goals are to share such knowledge throughouta corporate officer system and separate decision-making

management and reflect it in their decisions as well as toand oversight from the executive functions of corporate

ensure risk management and compliance.

officers. The goal is to accelerate decision-making andenhance oversight and execution.

16The Board of Corporate Auditors comprises four corporate auditors, two of whom are external as part-time.

In principle, the Board of Directors convenes once

These auditors attend meetings of the Board of Directors,

monthly to decide and report on important management

the Executive Board, the Management Council, and otherissues, including basic operational policies and legallyimportant gatherings. In principle, they visit the Compa-

stipulated matters. Managing executive officers and above

ny’s plants and offices and major subsidiaries once every

attend these meetings, positioning the Board as a vehicle

six months. The auditors receive divisional reports as nec-

for mutual oversight of directors and corporate officers.

essary and exchange opinions with directors and key

The Strategy Council—consisting of two representa-

employees. Based on these efforts, the auditors express

tive directors and other directors with executive responsi-

their views to management from an objective and neutral

bilities nominated by the president, two outside directors,

perspective, and exercise strict oversight with regard toand a corporate auditor (chosen by rotation)—meetsthe execution of directors’ duties.

once a week to deliberate and decide on important man-

Seeking to ensure fairness and transparency of deci-

agement matters and important business execution deci-sion-making processes related to executive nomination

sions made by directors and executive officers. Theand remuneration, the Company established the Nomi-

Strategy Council also discusses, reports on, and monitors

nation Advisory Committee and the Remuneration Advi-

overall operational matters.

sory Committee. Consisting of five members, including

RESEARCH AND DEVELOPMENT

several outside executives, the committees serve as advisory bodies to the Board of Directors.

•	The Company has created multiple ways, including internal and external channels, for reporting and discussing
compliance-related problems uncovered by employees,

Status of Internal Control System

based on a guarantee of protection for whistleblowers.
•	In addition to its Corporate Code of Conduct, which

The Company recognizes the importance of its manage-

opposes anti-social forces, the Company maintains anment responsibilities with respect to establishing and prop-

office to share relevant information and spearheaderly managing the necessary systems to ensure appropriate

tough measures to eliminate anti-social forces.

business operations. Based on this recognition, it has set up
a specialist unit to supervise internal controls, and its Internal Control Committee also meets as necessary. The Com-2.	Safeguarding and managing information relating
to execution of duties by directors

pany is working to improve its internal control system in line•	The Company appoints a director or corporate officer aswith its Basic Policy on Internal Control Systems, adopted by

the person responsible for safeguarding and managing

the Board of Directors, as described below.

information. Adhering to document and information
management rules and regulations, the Company stores

1.	Adhering to laws and regulations and the Articles

and manages important information relating to the exe-of Incorporation relating to execution of duties by

cution of duties by directors and corporate officers as

directors and employees

printed or digital records. This information includes the•	At the Company, compliance extends beyond preventing

minutes of important meetings and written requests forfraud and adhering to laws and regulations and in-houseapprovals. Further, directors and corporate auditors may

rules. It also encompasses the fulfillment of broad social

review or copy this information as needed.

responsibilities and establishment of various compli-•	The Company discloses financial and important manage-

ance-related rules. The essence of its compliance activities

ment information in an appropriate and timely manner.

centers on directors and corporate officers taking the leadand practicing integrity and raising employee awareness3. Rules on managing risk of lossesof compliance issues through education and training.

•	
Directors, corporate officers, and employees concur-•	The Company established the Internal Audit Division torently serving as general managers identify and evaluate

ensure that all of its corporate operations comply withrisks arising in the course of business. They address

all laws and regulations and in-house rules. The Divisionthese risks in keeping with regulations and the manage-conducts regular and spot audits and submits the results

ment approval system. The Board of Directors and theof its audits to the president, and to other relevant par-Executive Board deliberate on key risks.

ties as appropriate, including the Board of Directors, the•	The Company maintains risk management rules and a

Executive Board, the Management Council, and corpo-

Companywide risk management system. Divisions oversee-rate auditors.

ing risks in such areas as safety and hygiene, environmental

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management, information security, and export safety con-

5. Ensuring appropriate conduct at Group companies

trols set up committees and create and administer rules for•	The Company encourages Group subsidiaries to work toproperly managing such risks throughout the Company.

establish and build Companywide internal controls

The Company also appoints a director or corporate officer

according to JSW’s Vision, Management Philosophy, andas the person responsible for risk management. In collabo-Corporate Code of Conduct. The Company also supports

ration with the Internal Audit Division, that person monitors

Group subsidiaries to strive for efficient business execu-

the progress of risk management and reports to the Board

tion and autonomous management by ensuring properof Directors or the Executive Board as appropriate.

division of duties and clarification of decision-making•	
At all divisional headquarters, business units, andauthority based on their own in-house rules.

plants, the Company has risk managers who evaluate•	The Company has formulated operational and manage-

measures and identify daily risks. It also has a crisis

ment rules for subsidiaries and defined the related man-management headquarters to handle critical situa-

agement responsibilities and leadership structures. Thetions. Accordingly, the Company is prepared for bothCompany maintains a system for reporting, notifying,ordinary and emergency situations.

and gathering information about subsidiary decisions
on important matters and important facts. At the same

4. Ensuring efficient execution of duties by directors

time, the Company ensures that listed subsidiaries retain•	The Company ensures rapid decision-making and flexible

a degree of management autonomy.

and efficient business execution by having the president•	In addition to dispatching directors and corporate audi-

act as chief executive officer, with directors overseeing key

tors to Group subsidiaries, the Company ensures that

headquarters divisions and business units. Under thissubsidiaries comply with all laws and regulations andcommand and management structure, corporate officers

in-house rules by mandating periodic and spot internal

appointed by the Board of Directors perform the duties

audits through relevant departments or the Internal

assigned to them. Directors and corporate officers deliber-Audit Division. It also audits operations directly andate, decide, and report on important matters in meetings

instructs subsidiaries on internal control improvements.

of the Board of Directors and the Executive Board.

•	The Company supports the efforts of Group subsidiaries•	The Board of Directors formulates the medium-termto establish systems to identify and evaluate risks

management plan and annual business plans as Com-according to division of duties determined inde-panywide objectives for directors, corporate officers, andpendently based on rules concerning risk management.

employees. Directors and corporate officers plan andimplement specific policies for reaching goals, segregat-6.	Appointing corporate auditor assistants, securing

ing tasks in line with in-house rules. They also evaluate

their independence from directors, and ensuring

the results, review progress and submit periodic andeffectiveness of instructions given to themspot reports to the Board of Directors, the Executive
Board, and the Management Council.

18•	On request from corporate auditors, the Company offers
employees as assistants. The Company seeks theRESEARCH AND DEVELOPMENT

opinions and consent of these auditors for appointments,
dismissals, evaluations, and other personnel treatment
regarding these assistants to secure their independence
from directors and corporate officers.

9.	Ensuring effectiveness of audits conducted bycorporate auditors•	The Company encourages directors, corporate officers,
and employees to recognize the importance and value of•	The Company ensures that employees assigned as assis-audits conducted by corporate auditors and to accord

tants can perform their duties according to the direc-

them their fullest cooperation. These auditors can request

tions and instructions of corporate auditors.

assistance from the Internal Audit Division, other headquarters divisions, and all other divisions for auditing tasks.

7.	Reporting to corporate auditors by directors and•	The Company enables corporate auditors to collaborate

employees and preventing unfavorable treatment

closely with the accounting auditor and the Internal

based on its content

Audit Division.

•	Corporate auditors are guaranteed the opportunity to•	Corporate auditors have the discretion to employ theattend meetings of the Board of Directors, the Executiveservices of legal advisors and other outside experts.

Board, the Management Council, and other managerial
meetings that deliberate, decide, and report on impor-

10. Ensuring reliable financial reportingtant matters.

•	The Company evaluates the effectiveness of internal•	Based on its management approval system, the Com-controls for financial reports in keeping with basic poli-pany presents approval records to corporate auditors.

cies for such controls. The Board of Directors and theCorporate auditors can at any time request reports fromExecutive Board deliberate and report on the findings ofdirectors, corporate officers, and employees of the Com-such evaluations.

pany and Group subsidiaries. Also, persons who havereceived reports from directors, corporate officers, andemployees of the Company and Group subsidiaries canPolicy Regarding Large-Scale Purchaseof Company Sharesconvey such reports to corporate auditors.
•	The Company guarantees that persons making reports

On May 7, 2014, the Board of Directors resolved to amendto corporate auditors are not subject to unfavorable

Measures against Large-Scale Share Acquisitions (takeover

treatment based on the content of such reports.

defense measures), a set of rules and procedures for parties
seeking to purchase our shares (namely, holders of Compa-8.	Policies on advance payment and compensation

ny-issued shares seeking to increase their stakes to more thanpertaining to costs and obligations incurred in exe-

20% through purchases, or those making a tender offer tocution of duties by corporate auditors

boost their combined shareholding ratio with the inclusion of•	The Company assumes responsibility for any necessary

the holdings of special parties to more than 20% through acosts incurred in the execution of duties by corporatetender offer). The amendment was approved at the 88th Reg-auditors.

ular General Meeting of Shareholders on June 25, 2014.

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