Corporate GovernanceGroup Philosophy

Corporate Bodies and Internal Control Systems
J. Front Retailing has the Board of Corporate Auditors. Its corporate bodies

We at J. Front Retailing Group aim at:

include Shareholders Meeting, the Board of Directors, the Board of Corporate（1）Providing high quality products and services thatAuditors and independent auditors as stipulated in the Corporate Law. In

meet the changes of the times and satisfying

addition, the Company adopts a corporate oﬃcer system as a body to perform

customers beyond their expectations; andoperations. It also has a Compliance Committee, which is chaired by CEO and（2）Developing the Group by making a broad
contribution to society as an honest and reliablecompany.

Group Vision
We will establish a status as a leading Japaneseconsists of a corporate lawyer and Directors and Corporate Auditors named by
the chairman, as an advisory body to the Board of Directors and adopts awhistle-blowing system to solve compliance issues.
Corporate governance organizationand internal control system

Shareholders Meeting

Compliance Committee

retail company both in terms of quality and quantitywith the department store business as our core.

Board of DirectorsChairman and CEO

Board of Corporate Auditors

President

Corporate Auditors

Internal Audit Division

Basic Concepts
As the core of the uniﬁed governance of the Group, J. Front
Retailing positions the strengthening of corporate governanceCorporate Oﬃcer
Management Planning Unit

Corporate Oﬃcer
Administration Unit

as one of the most important business challenges to ensure
the transparency, soundness and compliance of themanagement of the whole Group and thoroughly fulﬁll its
accountability to its stakeholders (including customers,
shareholders, employees, suppliers and communities).

Department store businessSupermarket business

Wholesale business

Other businessesMeetings of the Board of Directors and Outside Directors

To this end, we have two units (Management Planning

The Board of Directors as a management decision-making body consists ofUnit and Administration Unit) in the company organization toseven Directors (including two outside directors) and generally meets once aclarify roles, responsibilities and authorities, thereby

month under the chairmanship of Chairman and CEO and with the attendance ofimproving supervisory function and the internal control

Corporate Auditors to discuss and resolve the matters required by laws orsystems of the whole Group. In addition, a corporate oﬃcerprescribed by the articles of incorporation as well as the matters stipulated in thesystem is in place to separate between decision-making andrules and regulations of the Board of Directors.

execution of the management, which enables more speedy
decision-making and implementation.
The term for Directors and Corporate Oﬃcers is one year
and they are remunerated based on their individual annual
performance to clarify their responsibilities for theenhancement of management and business results.

During ﬁscal 2009, the Board of Directors had 17 meetings to discuss andresolve the merger among consolidated subsidiaries and the change of tradename, the closure of Matsuzakaya Okazaki store and the closure of Matsuzakaya
Nagoya Station store, as well as approve budgets and settlements.
J. Front Retailing has invited Takayama Tsuyoshi and Takeuchi Isao as highly
independent outside directors who can judge independently from the top
management and appropriately determine the decisions and supervisory actions
made by the Board of Directors. They are both in an objective position
independent from the management team performing operations. We expect
Takayama as an executive of a business entity and Takeuchi as an executive ofa ﬁnancial institution and a business entity to reﬂect their rich experience,achievements and insights in the management of J. Front Retailing.

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Audit Function

Preparation of Compliance Manual

In order to support the soundness of its management structure, J.

J. Front Retailing prepared a compliance manual to demonstrate its

Front Retailing has ﬁve Corporate Auditors (including three outside

structure, principles of action and code of conduct to implement

auditors) to determine its audit policy and approach, while having acompliance management.

system that enables their views concerning important audit matters

The manual provides that the basic framework of the complianceto be reﬂected in the Board of Directors. The Company also hassystem is a binary structure consisting of all companies andInternal Audit Division reporting directly to President to verify thedivisions voluntary compliance with laws and corporate ethics inappropriateness and eﬀectiveness of the business process of daily

conducting business and training, supervision and strict audit byroutine and ﬁnancial operations of J. Front Retailing and J. Front

compliance divisions, operational audit divisions and others.

Retailing Group according to the annual audit plan. Important

sets compliance principles of action and code of conduct consisting

matters are duly reported to the Board of Directors and the Board ofof four perspectives to be followed by all oﬃcers and employees ofCorporate Auditors.

J. Front Retailing Group.

It alsoThe Group ensures thorough compliance activities on a dailyInternal Control Systems

basis by posting compliance self-check lists in each company,

J. Front Retailing develops systems in line with the Basic Policy towhich enable employees to check their own everyday behavior.

Build Internal Control Systems.

In 2009, marking the ﬁrst year inwhich an internal control reporting system is adopted, the Company■ Food Quality Control

established the Rules and Regulations for Internal Control over

Sanitary supervisors are placed in the food departments of all locations ofDaimaru Matsuzakaya Department Stores and aﬃliated department storesto ensure the high level of quality expected of department stores. For
customers security and safety, they periodically inspect the conditions ofquality control in cooperation with Consumer Product End-Use ResearchInstitute based on the Food Sanitation Law,
Quality ControlRegulations and rules for running.

Financial Reporting to clarify roles and authorities concerning theirimprovement and operation. Accordingly, internal control
administration function and independent assessment function weretransferred to General Aﬀairs Division of Administration Unit andInternal Audit Division respectively.

Risk Management
With President and Executive General Managers of two units asresponsible supervisors, each division assesses and manages risks
in a manner suiting the division and reports the management statusof important risks to the Board of Directors on a regular basis.
In respect to particularly signiﬁcant business risk factors thus
identiﬁed, we ask Corporate Auditors to attend the Group s strategy
meeting and discuss and determine a policy to deal with them andconcerned division implements it to prevent such risks from arising.
In case of emergencies including great earthquakes, ﬁres andaccidents, the Emergency Headquarters headed by President areresponsible for managing a crisis.

■Protection of Personal Information
In order to ensure the protection of personal information, J. Front RetailingGroup established the basic principles and the code of conduct andcontinuously provides employee training and checks the management
status in all companies of the Group. JFR Information Center Co., Ltd. andJFR Card Co., Ltd., which handle all the customer information data ofDaimaru Matsuzakaya Department Stores, acquired the Privacy Markcertiﬁcation to protect the personal information of customers.

■Customer Consultation Service
Major stores of Daimaru and Matsuzakaya have Consultation Corners forConsumers and consultants certiﬁed as advisory specialists for
consumers aﬀairs oﬀer consultation for customers. Customer complaints
about products are sent online to Consumer Product End-Use ResearchInstitute for scientiﬁc quality inspection. Consultants inform customers ofthe results. These test results are also provided to stores andmanufacturers to prevent recurrence and improve quality.

Practice of Compliance under Company Regulations
and Operation Manuals

Monitoring of Implementation

J. Front Retailing develops company regulations and various

Persons in charge in each business place provide on-site guidance

operation manuals to ensure the implementation of the Groupand inspection to check the steady implementation of compliancephilosophy on the job, while setting its own strict standards onpolicies and rules. In case an accident should happen, it will be

quality control and the protection and management of personal

reported immediately to the Compliance Committee and remedial

information to thoroughly carry out daily compliance activities.

actions will be taken under the leadership of the Committee.
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