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 System
The Company employs the traditional statutory auditor
system, comprising seven directors and four statutory
auditors (hereafter, “corporate auditors”), one of whom
is an outside director. Beginning from April 1, 2011,
the Company reviewed its management system in orderto speed up management decision-making, strengthen
oversight functions and improve management of dayto-day operations and reduced the number of Board
members and their term of office from two years to oneyear. It also introduced a corporate officer system tokeep the decision-making and supervisory functions oftop management separate from the day-to-day businessexecution functions of corporate officers. In principle,the Board of Directors’ meeting is convened once amonth. At the meeting, decisions and reports are madeon matters of importance to the management of theCompany, including basic management policies andmatters stipulated by legal statute. The Board is also
responsible for overseeing the day-to-day execution ofbusiness by directors. Meetings are also held by theExecutive Board, composed of the Company’spresident, executive vice president, and any otherperson as shall be designated by the president. The
Executive Board convenes once a week to deliberate on
important matters and is augmented by the heads ofoperating divisions, plant general managers andmanagers at corporate headquarters to form theManagement Council, which convenes once a month,
as a general rule. The Management Council analyzes
the business environment, monitors the progress of

12business plans, and ensures that knowledge is widely
shared among the Company’s management and isreflected in their decisions and that risk management
and compliance are rigorously observed.
The Board of Corporate Auditors consists of four
corporate auditors, of which two are outside corporate
auditors with one serving full-time. The Company’s
corporate auditors attend meetings of the Board ofDirectors, the Executive Board, the Management
Council and other important meetings. They also pay
regular inspection visits to all the Company’s plants
and offices and to Group subsidiaries once during eachhalf of the fiscal year, as a general rule. They exercise
strict oversight with regard to the execution ofCompany directors’ duties, such as by receiving
important reports when needed from theaforementioned divisions and exchanging views withdirectors and key employees. Based on this, theyexpress their views to management from an objective
and neutral point of view.

Our Internal Controland 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 tosupervising 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. The key to successfor compliance activities lies in having directors andcorporate officers take the initiative in setting anexample and practicing truthfulness, while raising
employee awareness on compliance issues througheducation and training and promoting this in an
integrated manner with risk management.
JSW has established a department responsiblefor internal audits to ensure that the Company’s
overall operations observe all laws and regulations,as well as in-house rules. In addition to periodicaudits, this department conducts spot audits, asdeemed necessary. The results of these audits arereported to the president and relevant parties
including, as appropriate, the Board of Directors, theExecutive Board, the Management Council and theBoard of Corporate Auditors.
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, corporate
officers or staff, will be punished accordingly, andmeasures will be taken swiftly to prevent anyrecurrence.
The Company has clarified in its Corporate Codeof Conduct its policy of strict opposition to theactivities of criminal organizations or individuals
and it takes firm action to eliminate these anti-socialforces through the establishment of a single
dedicated office for the communication of relevant
information and the management ofcountermeasures.
3. Safeguarding and management of information
The Company appoints a director or corporate
officer to be the chief information security officer(CISO) to ensure the safeguarding and managementof information. In accordance with rules andregulations governing the management ofdocuments and information, the Company storesand manages important information related to theexecution of directors’ and corporate officers’ duties
including the minutes of important meetings andwritten requests for management decision approval(ringisho), and other important documents as written
documents or as electronic records held in
safekeeping. Further, directors and corporate
auditors are able to access and view or copy thisinformation as needed.
The Company also discloses financial andimportant management information in a timely andappropriate manner.
4. Risk management
At JSW, directors, who concurrently serve as themanagers at corporate headquarters, corporate
officers, and employees understand and evaluate therisks involved in carrying out their duties in theirdivisions, and within the scope of their authority, as
stipulated by regulations and the system for
management decision approval (ringisho), they
ensure that they execute their duties efficiently andrespond to risks in an integrated manner. Importantmatters pertaining to risk management are discussed
at meetings of the Board of Directors or of the
Executive Board.

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Corporate Governance
The Company has established regulations forrisk management and defined a Companywide risk
management system. With respect to risk based onfunctions such as safety and hygiene, environmental
management, information security, and security
export controls, the relevant division in charge of
those risks sets up committees or creates regulations
for managing each of those risks across divisionboundaries and then appropriately manages them. Adirector or corporate officer of the Company has
been placed in charge of CSR and risk management
who monitors these risk management conditions incollaboration with the department responsible forinternal audits and reports to the Board of Directors
or the Executive Board.	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
To ensure rapid decision-making and the flexible
and efficient performance of management duties, thepresident has been made the chief executive officer,
and directors have been put in charge of theperformance of duties in key departments within
headquarters and business units. Under theirleadership and supervision, the corporate officers
appointed by the Board of Directors perform theduties delegated to them. Moreover, the directors
and corporate officers perform their duties integrated
with risk management and also discuss, decide andreport on important matters at the Board ofDirectors’ meeting and the Executive Board.	At JSW, Companywide goals that are to beshared by directors, corporate officers and employees
are established at the Board of Directors’ meeting,which are incorporated in the Company’s MediumTerm Management Plan and the business plans foreach business unit. Each director and corporate

14officer develops specific measures for achieving thesegoals. A division of duties is undertaken in line within-house regulations, and the specific measures areplanned and implemented. Each director andcorporate officer conducts a review of the results andprovides periodic progress reports, as well asimpromptu reports at meetings of the Board ofDirectors, the Executive Board and the ManagementCouncil. All members of the JSW management areworking to ensure impartial personnel evaluations.
6. Ensuring appropriate management conduct atGroup companies
The Company encourages its subsidiaries to follow
its Vision, Management Philosophy and Corporate
Code of Conduct, and also create their own systems
of internal controls. In addition, the Company
supports the autonomy of their management.
The Company has drafted regulations
concerning the operation and management of its
subsidiaries and has clarified the system ofmanagement responsibility and leadership for them.
At the same time, the Company is creating a system
whereby reports and notifications can be maderegarding subsidiaries’ decisions on important issues
and other matters of concern, and data can becollected. However, as listed subsidiaries, theCompany is careful to ensure a certain amount ofmanagement independence.	At JSW, directors and corporate auditors are
assigned to JSW subsidiaries. Also, 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 the departments in charge of eachsubsidiary, and also by a department responsible forthe internal auditing of subsidiaries. We will also
directly audit operations and provide guidance for
improving internal controls of subsidiaries.
7. A
 ppointing staff to assist corporate auditors, andensuring the independence thereof
The Company appoints staff from among its
employees to assist the corporate auditors in theperformance of their duties, upon request. The
opinions of the auditors themselves are sought withrespect to the appointment and dismissal of the said
staff and all other personnel-related measures such as
performance 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
At JSW, corporate auditors attend the Board ofDirectors, the Executive Board, the Management
Council, and other managerial meetings whereimportant matters are discussed, decided and reported.
Corporate auditors are guaranteed these opportunities.	In keeping with the ringi system, corporate
auditors are also shown the records of management
decision approval (ringisho) for their perusal.
Moreover, the auditors may request reports fromdirectors, corporate officers or employees at any timeas they deem this necessary. The timing of thesereports and the method to be used are agreed
beforehand through discussions between the auditors
and the directors, corporate officers or employees.
9. Ensuring effective performance of audits by thecorporate auditors
We provide an environment in which directors,
corporate officers and employees of the Company canrecognize the importance and benefits of audits
performed by corporate auditors, and can give thehighest priority to cooperating with auditors in theirduties as far as possible. The corporate auditors canrequest the collaboration and cooperation of theCompany’s Internal Audit Division, other head officedivisions, and all other divisions of the Company inthe performance of audits.
We provide an environment that ensures
corporate auditors collaborate closely with accountingauditors and the Internal Audit Division.
We also provide an environment that allows
corporate auditors to employ the services of legal
advisors and other outside experts at their own
discretion.

10. System for ensuring the reliability of financial
reports
The Company follows basic internal control policies
for financial reports and evaluates the effectiveness ofinternal controls for financial reports. The Board ofDirectors and the Executive Board discuss and reporton the results of those evaluations.

Policy Regarding Large-Scale
Purchases of Company Shares
By resolution of a meeting of the Board of Directors of
The 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 theshares issued and outstanding of the Company. Theserules and procedures were adopted under the name ofMeasures against Large-Scale Share Acquisitions(Measures to Prevent Takeover). Subsequent to thisresolution, a partial amendment of these measures waspresented at the Company’s 82nd Regular General
Meeting of Shareholders held on June 27, 2008, and theagenda item was approved and updated. After that,necessary amendments were made and then approvedby shareholders at the Company’s 85th Regular General
Meeting of Shareholders held on June 24, 2011.

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