Corporate Governance

PRINCIPAL POLICY ON CORPORATE
GOVERNANCE
As Japan’s only central securities depository, JASDEC has
a social obligation to adhere to a basic management
responsibility that hinges on the creation of a highly
secure, efficient and convenient securities clearing and settlement infrastructure.
Consequently, our principal policy on corporate
governance requires us to undertake business activities
that satisfy the wide-ranging needs of clients who utilize
the Group’s systems, from participants—securities companies, financial institutions and other users of our bookentry transfer services—to investors, and to ensure thatthese activities are highly transparent and characterized byfairness and integrity. Moreover, as the organization
responsible for the infrastructure of securities clearing andsettlement in Japan, we must earn and uphold a solid reputation for reliability.

In principle, the Board meets once a month todecide basic management policies.

BOARD OF AUDITORS JASDEC maintains a corporate
auditor system. As of publication of the annual report,
the Board of Auditors comprises three members, two ofwhom are selected from eligible participants—one eachfrom a securities firm and a financial institution—and
all three auditors, including the standing auditor, areexternal auditors, in accordance with prevailing legislation.
The Board of Auditors meets once a month.
However, in line with auditing plans and the direction
established by the Board of Auditors, auditors will also
attend important meetings, including those of the Boardof Directors, and will execute audits of directors byassessing the status of services and assets to ascertain theeffectiveness of directors in executing respective duties.

A DDITIONAL COMMITTEES To accurately reflect theneeds of system users in our operations, we established

STATUS OF POLICY IMPLEMENTATIONMANAGEMENT STRUCTURE AND OTHER CORPORATE
GOVERNANCE SYSTEMS TO FACILITATE EXECUTIVEDECISION-MAKING, THE EXECUTION OF OPERATIONS AND
THE IMPLEMENTATION OF AUDITS

the Committee for Business Operations as a unit independent from other corporate structures, such as theBoard of Directors. This committee addresses pertinentissues related to the business of the Company, based onqueries from the Board of Directors, and assigns topics
to the eight subcommittees under its control.

Corporate Structures

These subcommittees are responsible for a spe-

BOARD OF DIRECTORS The Board of Directors com-cific segment of operations and each comprises mem-prises 18 members. A key requirement of the Board ofbers who are actually involved in these operations.

Directors is to demonstrate a suitably balanced

JASDEC applies results raised by each subcommittee toapproach to business, guided by wide-ranging perspec-

various operational issues that will facilitate early real-

tives, including user-oriented views as well as business-

ization of securities clearing and settlement systemoriented ideas on preserving operational neutrality andreform in Japan.

impartiality. To fully reflect the opinions of users in ourTo foster greater operational transparency, JAS-business activities and to ensure discussions based on

DEC, when appropriate, posts summaries of these dis-fairness and integrity, 10 of the 13 external directors are

cussions and other information on its web site and on

selected from eligible participants in the Company, andthe book-entry portal for participants.

the remaining three external directors belong to a stock-

As a key instrument in the infrastructural devel-issuing company, academia and the legal profession.

opment of the securities market, we strive for an

Through such a functional system, all directors can beextremely high level of fairness and integrity in our activ-

evaluated against their effectiveness in executing theirities. To this end, we established the Advisory

respective duties.

Committee, which enables the president to see the bigger
picture regarding the administration of a securities clear-

12Corporate Governanceing and settlement system by accessing the extensive

In regard to audits by corporate auditors, theknowledge of experts in financial and securities systems.

standing auditor routinely attends important meetings,

JASDEC DVP Clearing Corporation (JDCC), asuch as those of the Board of Directors and thewholly owned subsidiary, maintains a business philoso-

Executive Committee, comprising managing directors,

phy similar to that of JASDEC. JDCC set up the Com-and examines internal documents requiring executive

mittee for DVP Operations to study pertinent issues

approval. The standing auditor will also perform audits,regarding operations and works to reflect the needs ofin accordance with auditing plans and policies estab-users of the DVP settlement system for NETDs in its ser-lished by the Board of Auditors, and provide the othervices. In addition, the company provides JASDEC’s

corporate auditors with updates on the progress of such

Board of Directors with updates on issues deemed perti-

activities at the meeting of corporate auditors, which isnent by its own Board of Directors to ensure consistency

scheduled to take place monthly.

in the activities of the two companies.

Non-standing auditors attend Board of Directors’

A summary of other corporate governance sys-meetings and check on the status of duties executed bytems and the business structure at JASDEC is presented

directors. They also assess the level of duties executed

below.

by directors, based on several sources, including updates
from the standing auditor on auditing activities.

Risk Management System
JASDEC assigns staff specifically to assist corpo-

The business activities of JASDEC will be further con-rate auditors in their audits.

centrated in accordance with the expansion of the scope

Corporate auditors also investigate accountingof certain operations, and, in order to mitigate the influ-

audits in close cooperation with the Company’s ac-

ence of further manifestation of business-related risk incounting firm. This effort includes hearing reports from

specific areas, we must make our risk management sys-

accounting auditors on auditing plans and the results oftem more efficient and well structured.

audits.

As the pillar of Japan’s securities clearing and set-

The certified public accountants who execute ourtlement infrastructure, we are pushing ahead with theaccounting audits are Hiroyuki Yamasaki and Tsutomu

implementation of a companywide risk management

Nobuta (designated partners under Article 34-10-4 ofsystem that includes the establishment of a risk manage-

the Certified Public Accountant Law). They are employedment committee, chaired by the president, as well as theby ChuoAoyama PricewaterhouseCoopers and execute

execution of system audits and the development of aaccounting audits, including checks of financial docu-

business continuity plan (BCP) for use in times of emer-ments, based on Article 2-1 of the old Law of Excep-gency.

tional Provisions to the Commercial Code Concerning
the Audit, etc., of Stock Companies. Mr. Yamasaki andInternal Controls and Audits
by Corporate Auditors andthe Accounting FirmMr. Nobuta have audited JASDEC’s accounts for fiveconsecutive years and one year, respectively.
Five certified public accountants and five junior

JASDEC’s internal controls include reports to the Board

accountants help with accounting audit procedures.

of Directors, as necessary, that describe the activities ofNo items of particular regard, such as serious

the Risk Management Committee, which regularly mon-irregularities or instances of illegal behavior, have beenitors the status of all types of risk. Reports are also pre-found.

pared on the status of improvements and progress
related to risk management and other aspects of risk
management within the Company.

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