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 (one of whom is anoutside director) and four statutory auditors (hereafter,“corporate auditors”), of whom two are outsideauditors.
The term of office of directors is one year, and wehave adopted the corporate officer system andseparated the decision-making and oversight functions
from the executive functions performed by thecorporate officers. In this way, we have taken steps tospeed up management decision-making and enhance
the performance of both oversight and executivefunctions.
In principle, the Board of Directors’ meeting isconvened once a month. At the meeting, decisions andreports are made on matters of importance to themanagement of the Company, including basic
management policies and matters stipulated by legal
statute. Meetings are also attended by senior corporate
officers and those of higher rank. The Board ofDirectors is also positioned as an oversight body withrespect to the performance of their duties by thedirectors and corporate officers.
In addition, a Strategy Council composed of three
representative directors and other officers designated by
the President, including one outside director and oneauditor (chosen by rotation) meets once each week todiscuss and make decisions on matters of management
importance and other matters of importance to theperformance of their duties by the directors and14

corporate officers, as well as to discuss, report, andmonitor matters relating to overall management of theCompany.
In addition to these bodies, the Management
Council, consisting of directors, auditors, the heads ofoperating divisions, plant general managers andmanagers at corporate headquarters, and other persons
with executive responsibility, convenes once a monthin principle. The Management Council analyzes thebusiness environment, monitors the progress ofbusiness 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 Control
and Risk Management SystemJSW 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, in addition to the Regulations
Regarding the Promotion of Internal Control Activities(one of the Company’s internal regulations). In
addition, we will respond to social changes and work toachieve a more appropriate and efficient system byproperly reviewing internal control issues andresponses. The points below delineate the fundamental
stance adopted by the management of JSW toward theissue of internal control, and the progress achieved thus
far in strengthening the Company’s internal controlsystem.
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 onan ad hoc basis, 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 an
example 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 any
recurrence.
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 the15Corporate Governancemanagers 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.
The Company has established regulations forrisk management and defined a Companywide riskmanagement 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. A
director 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. Inthis 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

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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
officer 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 systemsof 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 areassigned 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 each subsidiary,
and also by a department responsible for the internal
auditing of subsidiaries. We will also directly audit
operations and provide guidance for improving
internal controls of subsidiaries.
7. Appointing staff to assist corporate auditors, andensuring the independence thereof
The Company appoints staff from among its
employees to assist the corporate auditors in theperformance 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 accounting
auditors 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 ofThe 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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