Cor p orate G ove r n a n ce

Corporate Governance
JSW recognizes that it must earn the trust of shareholders, customers, employees, and other stakeholders to aim to enhance enterprise value and thereby contribute to the economy and society as a whole.
We therefore created a corporate governance setup that encompasses a management organizationand framework 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 on a resolution of the 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: https://www.jsw.co.jp/en/ir/governance.html

Overview of Corporate Governance
Structure
We employ an audit & supervisor board member systemcomprising nine directors, three of whom are independent, and four audit & supervisory board members, twoof whom are external.
The term of office of directors is one year. We maintain an executive officer system: separate decision-making and oversight from the executive functions ofexecutive officers. The goal is to accelerate decision-making and enhance oversight and execution.
In principle, the Board of Directors convenes once
monthly to decide and report on basic operational policies, legally stipulated matters, and other importantmanagement issues. Managing executive officers andabove attend these meetings, positioning the Board as avehicle for mutual oversight of directors and executive
officers.
The Executive Board—consisting of two representative directors, executive officers nominated by the president, three outside directors, and an audit & supervisoryboard member (chosen by rotation)—meets once aweek to deliberate and decide on important management matters and important business execution decisions made by directors and executive officers in addition
to discussing, reporting on, and monitoring overall operational matters.
Our Management Council also convenes once
monthly, in principle. Members include directors, audit &supervisory board members, divisional heads, generalplant managers, headquarters managers, and executive
officers. This body’s tasks include assessing the businessenvironment and monitoring the progress of the18

Company’s business plan. Its goals are to share suchknowledge throughout management and reflect it intheir decisions as well as to ensure risk management andcompliance.
The Audit & Supervisory Board comprises four audit &supervisory board members, two of whom are external
as part-time. These members attend meetings of theBoard of Directors, the Executive Board, the Management Council, and other important gatherings. In principle, they visit the Company’s plants and offices as well as
major subsidiaries once every six months. The members
receive divisional reports as necessary and exchange
opinions with directors, executive officers, and key
employees. Based on these efforts, the members express
their views to management from an objective and neutral perspective, and exercise strict oversight with regard
to the execution of directors’ duties.
Seeking to ensure fairness and transparency of decision-making processes related to executive nomination
and remuneration, the Company established the Nomination Advisory Committee and the Remuneration Advisory Committee. Consisting of six members, including
several outside executives, the committees serve as advisory bodies to the Board of Directors. The Nomination
Advisory Committee deliberates on matters related toappointment and dismissal of directors, audit & supervisory board members, and executive officers and reports
to the Board of Directors. Likewise, the Remuneration
Advisory Committee deliberates on matters related torenumeration of directors and executive officers andreports to the Board of Directors.
The constituent members of each entity are as
follows.

Constituent members
Board ofDirectors

Executive
Board

Management
Council(Chairman)(Chairman)(Chairman)

Name

Title

Naotaka Miyauchi

Representative
Director &President

Toshio Matsuo

Representative
Director &Executive Vice
President

Takashi Shibata

Director,
Managing
Executive Officer

Junichiro Deguchi

Director,
Managing
Executive Officer

Takashi Iwamoto

Director,
Managing
Executive Officer

Hiroki Kikuchi

Director,
Executive Officer

Sadao Degawa

Director(Note 1)

(Notes 4)

Yoshiyuki Nakanishi

Director(Note 1)

(Notes 4)

Hisao Mitsui

Director(Note 1)

(Notes 4)

Kenji Watanabe

Audit &
Supervisory Board
Member(full-time)(Notes 3 & 4)

Toru Nishiyama

Audit &
Supervisory Board
Member(full-time)(Notes 3 & 4)

Fumihiko Tanizawa

Audit &
Supervisory Board
Member(Note 2)Hiroshi Misawa

Audit &
Supervisory Board
Member(Note 2)

Masao Oshita

Managing
Executive Officer

Toyohiko Kagawa

Managing
Executive Officer

Yoshitaka Sato

Executive Officer

Shingo Mito

Executive Officer

Shigeki Inoue

Executive Officer

Seiji Umamoto

Executive Officer

Shoji Nunoshita

Executive Officer

Other constituent members

Audit &
Supervisory
Board

Nomination
Advisory
Committee

Remuneration
Advisory
Committee(Chairman)(Chairman)(Chairman)(Notes 5)(Notes 5)

Divisional heads,
deputy director ofheads, generalplant managers,
headquarters
managers

Notes: 1. Sadao Degawa, Yoshiyuki Nakanishi, and Hisao Mitsui are outside directors. 2. Fumihiko Tanizawa and Hiroshi Misawa are outside audit & supervisory board members.
3. One audit & supervisory board member attends by rotation. 4. Attends as an observer. 5. Attends as an advisor.

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Cor p orate G ove r n a n ce

Reason for Adopting the Corporate
Governance Structure
Each director reports on the business execution status atimportant meetings of the Board of Directors, the Executive Board, the Management Council, and other bodies,
which ensures mutual oversight of directors. Elevenexecutive officers, four of whom concurrently serve as
directors, are appointed at the meeting of the Board of
Directors. They execute business operations and makebusiness-related decisions to the extent delegated, andreport on the business execution status at meetings ofthe abovementioned Executive Board, Management
Council, and other bodies, thereby ensuring oversight ofexecutive officers by directors. Outside directors also
attend each of important meetings mentioned above,
participating in the decision-making process of management as well as expressing opinions to managementfrom an objective and neutral perspective.
In addition to attending aforementioned important meetings as well as other meetings, each audit &supervisory board member conducts audits of headquarters divisions, business divisions, subsidiaries, andother organizations on a regular basis. When deemednecessary, they receive reports on information related
to risk management, compliance, and other mattersfrom respective departments. By exchanging opinionswith directors, executive officers, and key employees,
they keep tabs on the business execution status of
directors and express opinions to management froman objective and neutral perspective.
The Company believes these measures ensure thecurrent corporate governance structure to fully exert theoversight function over management.

Status of Internal Control System
The Company recognizes the importance of its management responsibilities with respect to establishing andproperly managing the necessary systems to ensure
appropriate business operations. Based on thisShareholders’ meetings
Board of Directors

Audit & Supervisory Board
Monitoring

Executive Directors
Outside directors

Decisionmaking

Reporting

Audit & supervisory board members
Cooperation

Outside audit & supervisory board members

Oversight/
monitoring

Nomination Advisory Committee

Cooperation

Monitoring

Monitoring

Accounting
auditors

Cooperation

Remuneration Advisory Committee<Business execution>

Executive Board

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Information Security
Committee

Business execution organizations
Headquarters divisions
Business divisions
Plants
Subsidiaries

General Safety andHygiene Council

Directors with business execution responsibilities/executive officers

Export Control Administration
Committee

Management Council

Environmental Management
Committee

Internal Auditors OfficeInternal Control Committee

President

recognition, it has set up a specialist unit to supervise
internal controls, and its Internal Control Committee also
meets as necessary. The Company is working to improve
its internal control system in line with its Basic Policy on
Internal Control Systems, adopted by the Board of Directors, as described below.
1.	Adhering to laws and regulations and the Articles
of Incorporation relating to the execution of duties
by directors and employees   • At the Company, compliance extends beyond preventing fraud and adhering to laws and regulations
and in-house rules. It also encompasses the fulfillment of broad social responsibilities and establishment of various compliance-related rules. The
essence of its compliance activities centers on directors and executive officers taking the lead and practicing integrity and raising employee awareness ofcompliance issues through education and training.
   • The Company established the Internal Audit Division
to ensure that all of its corporate operations comply
with all laws and regulations and in-house rules. The
Division conducts regular and spot audits and submits
the results of its audits to the president and to otherrelevant parties as appropriate, including the Board of
Directors, the Executive Board, the Management Council, and audit & supervisory board members.
   • The Company ensures multiple ways, including internal and external channels, for reporting and discussing compliance-related problems uncovered by
employees, based on a guarantee of protection for
whistleblowers.
   • The Company clearly stipulates in its Corporate Codeof Behavior the thorough enforcement of organizational crisis management against anti-social forces,
and firmly rejects unwarranted demands from themin accordance with the law and in collaboration with
relevant authorities.

information management rules and regulations, theCompany stores and manages important information
relating to the execution of duties by directors andexecutive officers as printed or digital records. This
information includes the minutes of important meetings and written requests for approvals. Further,
directors and audit & supervisory board members
may review or copy this information as needed.
   • The Company discloses financial and important management information in an appropriate and timely
manner.
3. Rules on managing risk of losses   • Directors, executive officers, and employees concurrently serving as general managers identify and evaluate risks arising in the course of business. They addressthese risks in keeping with regulations and the management approval system. The Board of Directors andthe Executive Board deliberate on key risks.
   • The Company maintains risk management rules anda Companywide risk management system. Divisions
overseeing risks in such areas as safety and hygiene,
environmental management, information security,and export control administration set up committees
and create and administer rules for properly managing such risks throughout the Company. The Company also appoints a director or an executive officer
as the person responsible for risk management. In
collaboration with the Internal Audit Division, that
person monitors the progress of risk management
and reports to the Board of Directors or the Executive
Board as appropriate.
   • At key headquarters divisions, business divisions, andplants, the Company has risk managers who evaluate
measures and identify daily risks. It also has a crisis
management headquarters to handle critical situations. Accordingly, the Company is prepared for bothordinary and emergency situations.

2.	Safeguarding and managing information relating
to the execution of duties by directors   • The Company appoints a director or an executive officer as the person responsible for safeguarding andmanaging information. Adhering to document and21

Cor p orate G ove r n a n ce

4. Ensuring the efficient execution of duties by directors   • The Company ensures rapid decision-making andflexible and efficient business execution by having
the president act as chief executive officer, with directors overseeing key headquarters divisions and business units. Under this command and management
structure, executive officers appointed by the Boardof Directors perform the duties assigned to them.
Directors and executive officers deliberate, decide,and report on important matters in meetings of theBoard of Directors and the Executive Board.
   • The Board of Directors formulates the medium-term
management plan and annual business plans as Companywide objectives for directors, executive officers,
and employees. Directors and executive officers planand implement specific policies for reaching goals,
segregating tasks in line with in-house rules. They also
evaluate the results, review progress, and submit periodic and spot reports to the Board of Directors, theExecutive Board, and the Management Council.
5. Ensuring appropriate conduct at Group companies   • The Company encourages Group subsidiaries to workto establish and build Companywide internal controls
according to JSW’s Vision, Management Philosophy,
and JSW Group Corporate Code of Behavior. The
Company also supports Group subsidiaries to strive
for efficient business execution and autonomous
management by ensuring proper division of duties
and clarification of decision-making authority basedon their own in-house rules.
   • The Company has formulated operational and management rules for subsidiaries and defined therelated management responsibilities and leadership
structures. The Company maintains a system forreporting, notifying, and gathering information
about subsidiary decisions on important matters andimportant facts.
   • In addition to dispatching directors and audit &supervisory board members to Group subsidiaries,
the Company ensures that subsidiaries comply withall laws and regulations and in-house rules by

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mandating periodic and spot internal audits throughrelevant departments or the Internal Audit Division. It
also audits operations directly and instructs subsidiaries on internal control improvements.
   • The Company supports the efforts of Group subsidiaries to establish systems to identify and evaluate risks
according to division of duties determined independently based on rules concerning risk management.
6.	
Appointing audit & supervisory board member
assistants, securing their independence from directors, and ensuring the effectiveness of instructions
given to them   • On request from audit & supervisory board members,
the Company offers employees as assistants. The
Company seeks the opinions and consent of thesemembers for appointments, dismissals, evaluations,and other personnel treatment regarding these assistants to secure their independence from directors
and executive officers.
   • The Company ensures that employees assigned as
assistants can perform their duties according to thedirections and instructions of audit & supervisoryboard members.
7.	Reporting to audit & supervisory board membersby directors and employees of the Company and its
subsidiaries, other structures for reporting to audit& supervisory board members, and preventing
unfavorable treatment based on the content ofwhat is reported   • Audit & supervisory board members are guaranteed
the opportunity to attend meetings of the Board of
Directors, the Executive Board, the Management
Council, and other managerial meetings that deliberate, decide, and report on important matters.
   • Based on its management approval system, the Company presents approval records to audit & supervisoryboard members. Audit & supervisory board members
can at any time request reports from directors, executive
officers, and employees of the Company and Groupsubsidiaries. Also, persons who have received reports

from directors, executive officers, and employees of theCompany and Group subsidiaries can convey suchreports to audit & supervisory board members.
   • The Company guarantees that persons making reports
to audit & supervisory board members are not subject
to unfavorable treatment based on the content of suchreports.
8.	Policies on advance payment and compensation
pertaining to costs and obligations incurred in theexecution of duties by audit & supervisory board
members   • The Company assumes responsibility for any necessary costs incurred in the execution of duties by audit& supervisory board members.
9.	Ensuring the effectiveness of audits conducted byaudit & supervisory board members   • The Company encourages directors, executive officers, and employees to recognize the importance andvalue of audits conducted by audit & supervisoryboard members and to accord them their fullest
cooperation. These members can request assistancefrom the Internal Audit Division, headquarters divisions, and all other divisions for auditing tasks.
   • The Company enables audit & supervisory board
members to collaborate closely with the accounting
auditor and the Internal Audit Division.
   • Audit & supervisory board members have the discretion to employ the services of legal advisors andother outside experts.

Outline of Liability Limitation Agreement
In accordance with Article 427, Paragraph 1 of the Companies Act as well as Articles 28 and 36 of the Articles ofIncorporation, the Company has concluded a Liability
Limitation Agreement with three outside directors andfour audit & supervisory board members as stipulated in
Article 423, Paragraph 1 of the Companies Act. The liability limit based on this agreement shall be the amountstipulated in the act.
Liability limitation will be applicable only when theexecution of duties by outside directors and audit &supervisory board members giving rise to such liabilities
is recognized to have been carried out in good faith andwith no gross negligence.

Number of Directors
The Articles of Incorporation stipulates the number of
directors to be 10 or less.

Requirements for Resolution forElection of Directors
The Articles of Incorporation stipulates that the resolution for the election of directors shall require the presence of shareholders holding one-third or more of thevoting rights of shareholders who can exercise voting
rights as well as a majority vote of such shareholders, andthat no cumulative voting shall be accepted for the
resolution.

10. Ensuring reliable financial reporting   • The Company evaluates the effectiveness of internal
controls for financial reports in keeping with basic
policies for such controls. The Board of Directors andthe Executive Board deliberate and report on thefindings of such evaluations.

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Cor p orate G ove r n a n ce

Special Resolution Requirements of the
Meeting of Shareholders
The Articles of Incorporation stipulates that the resolution stipulated by Article 309, Paragraph 2 of the Companies Act shall require the presence of shareholders
holding one-third or more of the voting rights of shareholders who can exercise voting rights as well as a twothirds majority of such voting rights. The aim for therequirement is to smoothly lead the meeting of shareholders by relaxing the quorum for special resolutions atshareholder meetings.

Shareholder Meeting Resolutions
That Can Be Resolved at Meetings of theBoard of Directors
1.	Acquisition of treasury stock   • To execute a flexible capital policy, the Articles of Incorporation allows the acquisition of treasury stock by aresolution of the Board of Directors in accordance with
Article 165, Paragraph 2 of the Companies Act.
2.	Interim dividends   • The Articles of Incorporation stipulates the payment
of interim dividends with September 30 as the record
date by a resolution of the Board of Directors in accordance with Article 454, Paragraph 5 of the Companies
Act. The aim is to enable the swift return of profits toshareholders.

Basic Policy on Control over the Company
I.	Basic Policy on the Nature of Persons Who Control
Decision-Making over the Company’s Financial andBusiness Policies
JSW believes that the decision on whether persons who
control decision-making over JSW’s financial and business policies will ensure and enhance JSW’s corporate
value and the common interests of JSW’s shareholders
should ultimately be made based on the general will of
JSW’s shareholders.

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However, in the event that a takeover proposal ismade by a third party, it may not always be easy for JSW’s
shareholders to properly judge in a short space of timethe impact of the takeover on JSW’s corporate value andthe common interests of shareholders based on a sufficient understanding of JSW’s tangible and intangible
management resources, the potential effect of forward-looking policies, and other components of JSW’s
corporate value. Accordingly, JSW deems any persons
who propose a large-scale acquisition of JSW shares or
takeover without providing JSW’s shareholders with sufficient information or time to examine the content of the
takeover proposal to be inappropriate as persons who
control decision-making over JSW’s financial and business policies. Moreover, some takeover proposals may beintended to cause clear damage to JSW’s corporate valueor the common interests of JSW’s shareholders whileothers may effectively coerce JSW’s shareholders into
selling their JSW shares. JSW deems any persons whomake such a takeover proposal to be inappropriate aspersons who control decision-making over JSW’s financial and business policies.
II.	Measures to Prevent Decisions on the Company’s
Financial and Business Policies from Being Controlled by Persons Deemed Inappropriate under the
Basic Policy
JSW resolved to renew the Countermeasures to Large-Scale Acquisitions of JSW’s Stock (Takeover Defense Measures) at the meeting of its Board of Directors held on
May 15, 2017 and obtained shareholders’ approval forrenewal at the 91st Annual General Meeting of Shareholders held on June 27, 2017 (hereinafter the renewed
countermeasures are referred to as the “Plan”).
For further details of the Plan, please refer to “Renewalof Countermeasures to Large-Scale Acquisitions of JSW’s
Stock (Takeover Defense Measures)” dated May 15, 2017
in the News section of JSW’s website (https://www.jsw.
co.jp/) (in Japanese).

1.	Purpose of the Plan
The purpose of the Plan is to secure and enhance JSW’s
corporate value and, in turn, the common interests of its
shareholders by ensuring, in the event of a tender offer
for JSW’s shares, an act similar thereto or a proposal
thereof (hereinafter referred to as “Tender Offer, etc.”), theinformation and time necessary for shareholders todecide whether they should accept the Tender Offer, etc.
or for JSW’s Board of Directors to make an alternative
proposal or, in some cases, to enable negotiations to beheld with the tender offeror or the person proposing thetender offer (hereinafter referred to as the “Tender
Offeror, etc.”).
2.	Summary of the Plan(i) Establishment of Procedures for Triggering the Plan
The Plan sets out necessary procedures for realizing the“1. Purpose of the Plan” in the event of a Tender Offer, etc.
for JSW’s shares, including requirements for advance provision of information about the Tender Offer, etc. by theTender Offeror, etc.
(ii) Gratis Allotment of Stock Acquisition Rights and Useof Independent Committee
In the event that a Tender Offer, etc. by a Tender Offeror,
etc. is deemed potentially to seriously damage JSW’s corporate value and the common interests of its shareholders, for example, a Tender Offeror, etc. makes a Tender
Offer, etc., without following the procedures set forth in
the Plan, JSW shall allot, by means of the gratis allotmentof stock acquisition rights, to all shareholders, excluding
JSW, at such time stock acquisition rights (hereinafterreferred to as the “Stock Acquisition Rights”) with thecondition that exercise by the Tender Offeror, etc. is notallowed and provisions regarding acquisition stating that
JSW may acquire the Stock Acquisition Rights from holders other than the Tender Offeror, etc. in exchange for
JSW’s shares. JSW does not intend to deliver money as
consideration for acquisition of the Stock Acquisition
Rights held by the Tender Offeror, etc.

With respect to decisions on the implementation or
non-implementation of the gratis allotment of the Stock
Acquisition Rights and the acquisition thereof, the Plan
aims to eliminate arbitrary decisions by the Board of
Directors by formulating Independent Committee Rules,
by establishing in accordance with these rules an independent committee comprised of experts (experienced
corporate managers, former employees of government
agencies, parties with knowledge of the investmentbanking industry, lawyers, certified public accountants,
academics, etc.) who are independent from JSW management, and by seeking decision-making through thecommittee while at the same time aiming to ensuretransparency through proper information disclosure toshareholders in a timely manner.
(iii) Exercise of the Stock Acquisition Rights and Acquisition of the Stock Acquisition Rights by the Company
In the event that gratis allotment of the Stock Acquisition
Rights takes place in accordance with the Plan and allshareholders other than the Tender Offeror, etc. receive
shares in JSW as a result of those shareholders exercising
the Stock Acquisition Rights or the Company acquiring
the Stock Acquisition Rights, the ratio of voting rights in
JSW held by the Tender Offeror, etc. may be diluted by up
to a maximum of 50%.

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Cor p orate G ove r n a n ce

III.	Decision of Board of Directors on Specific Measures
and Rationale for Decision
JSW’s medium-term management plan and measures tostrengthen corporate governance were formulated as
specific measures to ensure and enhance JSW’s corporate value and the common interests of its shareholders,and are, therefore, in line with JSW’s basic policy and do
not aim to maintain the position of the directors or executive officers of the Company.
The Plan is a framework in case of a Tender Offer, etc.
for JSW’s shares designed to ensure and enhance JSW’s
corporate value and, in turn, the common interests of its
shareholders and is in line with JSW’s basic policy. The
Plan’s fairness and objectivity is ensured primarily
because it was approved by shareholders at the 91st
Annual General Meeting of Shareholders of JSW; it is aframework which attaches importance to the wishes ofshareholders regarding implementation of a gratis allotment of the Stock Acquisition Rights; it requires theestablishment of an independent committee comprisedof independent outside experts and only allows implementation of gratis allotment of the Stock Acquisition
Rights based on a decision by the independent committee; and gratis allotment of the Stock Acquisition Rights
can only be implemented if reasonable and objective
conditions are satisfied. The Plan does not aim to maintain the position of the directors or executive officers of
the Company.
Notes:1. The Basic Policy on Control Over the Company is as of the end of the consolidated
fiscal year under review.
Notes:2. Non-renewal of the Plan:
The Plan was due to expire at the close of the 94th Annual General Meeting of
Shareholders held on June 24, 2020. Prior to expiry of the Plan, JSW had been
engaged in much discussion and examination of its handling based on recent
trends surrounding takeover defense measures and dialogue with shareholders
both in Japan and overseas, including institutional shareholders. As a result, basedon comprehensive consideration of the recent trend toward stronger corporate
governance and the status of JSW’s initiatives for stronger corporate governanceas well as changes in JSW’s operating environment, JSW decided at a meeting of its
Board of Directors held on May 25, 2020 not to renew the Plan.
JSW will strive even further to strengthen corporate governance, which has long
been a focus of its efforts, and will remain committed to sustainable growth andthe enhancement of its corporate value over the medium to long term. Moreover,even after expiry of the Plan, JSW will continue to take appropriate steps in accordance with the Financial Instruments and Exchange Act, the Companies Act, andother relevant laws and regulations in relation to persons who intend to makelarge-scale acquisitions of its shares. Such steps include demanding that they provide necessary and sufficient information for shareholders to properly determine
the pros and cons of the large-scale acquisition; disclosing the opinion of theBoard of Directors based on due respect for the opinions of independent outside
directors; and endeavoring to ensure that shareholders have the time and information necessary to examine any proposal.

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Board of Directors, Audit & Supervisory
Board Members, and Executive Officers

Organization

General Meeting of Shareholders

Corporate Planning Office

Board of Directors
As of September 1, 2020

Representative Director &President

Naotaka Miyauchi

Representative Director &Executive Vice President

Toshio Matsuo

Directors, Managing
Executive Officers

Takashi Shibata
Junichiro Deguchi
Takashi Iwamoto

Board of Directors

Executive Board

President

Directors, Executive Officer

Hiroki Kikuchi

Directors

Sadao Degawa (Outside)
Yoshiyuki Nakanishi (Outside)
Hisao Mitsui (Outsaide)

Office of Information Technology

Business Development Office
Personnel Department
Secretary OfficeInternal Auditors Office
Audit & Supervisory Board

General Affairs Department

Finance & Accounting Department

New Business Promotion Headquarters

Audit & Supervisory Board Members

Plastics Machinery Business Division

Hiroshima Plant

As of September 1, 2020

Audit & Supervisory Board
Members

Kenji Watanabe
Toru Nishiyama
Fumihiko Tanizawa (Outside)
Hiroshi Misawa (Outside)

Injection Molding Machinery Business Division

Yokohama Plant
Meiki Plant

Industrial Machinery Business Division

Ordnance Business Headquarters

Executive Officers
As of September 1, 2020

Managing Executive
Officers

Masao Oshita
Toyohiko Kagawa

Executive Officers

Yoshitaka Sato
Shingo Mito
Shigeki Inoue
Seiji Umamoto
Shoji Nunoshita27