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CSR Report 2013

Corporate Governance

Basic Approach

It is the JSR Group's goal to make steady progress in realizing its corporate mission (Materials Innovation: We create value through materials to enrich society, people and the environment). This shall be done through efficient and transparent business management, by sustaining sound and healthy business practices. The Group will also continuously strive to create new corporate values. It is hoped that these and other such efforts will secure the trust of all our stakeholders and help us become an attractive and highly satisfying corporation.

As a company with internal auditors, JSR monitors and oversees the execution of its operations through the Board of Directors and corporate auditors. In 2004, directors at JSR have had their two year-terms shortened to one year. In 2005, we introduced an officer system to clearly distinguish and strengthen the functions of monitoring and overseeing management and that of overseeing the execution of business duties. In June 2013, we designated three of the seven directorships as positions filled by outside directors appointed from organizations independent of the company. This has made management more transparent and efficient and has strengthened the Board of Directors' function in monitoring and directing management.

JSR has three corporate auditors, including two outside auditors. Two outside corporate auditors are lawyers or certified public accountants appointed from an organization independent of the company, thereby strengthening their function in monitoring and overseeing management. Additionally, we strive to ensure and improve the effectiveness of internal control by systematically conducting audits through the Internal Audit Department, which functions independently from business operations and reports directly to the president; strengthening collaboration between the Internal Audit Department and corporate auditors; and instituting a reporting system whereby important issues are reported by directors and employees to the corporate auditors when deemed necessary.

Corporate Governance Structural Diagram (as of June 21, 2013)

Corporate Governance Structural Diagram

Business Management System

(1) Board of Directors

The board of directors consists of seven directors. As a rule, the board meets once a month. The board discusses, reviews and finalizes important issues regarding the execution of business operations, as well as oversees the execution of directors' and officers' duties. The board is chaired by the chairman of JSR. In the absence of the JSR chairman, however, the board is chaired by a director other than the representative director and president, in order to separate the roles played by the representative director and president, who is the chief executive of management execution, from those played by the chairman of the board, which must monitor and oversee the management, and also to further strengthen corporate governance. Meanwhile, meetings of the board of directors are also attended by a total of three corporate auditors, including two outside corporate auditors appointed from outside the company, to gain insight from their opinions.

(2) Executive Committee

The Executive Committee deliberates and steers the Group, as well as receives reports on matters concerning fundamental management initiatives, management policies and business plans, as well as the major executive issues of the individual departments. Of the bills submitted to the Executive Committee, those that are deemed necessary are brought up for discussion before the Board of Directors where they undergo deliberation.
The Executive Committee comprises the president, the executive managing officer, and officers appointed by the president. Their goal is to achieve speedy decision-making and efficient business operations while also addressing important business duties. As a rule, the board convenes for a meeting once a month, and is chaired by the president of JSR. Full-time corporate auditors also attend the meetings.

(3) Business Issues Committee

Members of the Business Issues Committee deliberate on the general direction of matters relating to basic strategies and management policies and changes to the basic policies and business strategies behind individual projects through preliminary discussions and by sharing information and awareness of the issues involved, and carry their results to the Board of Directors and Executive Committee. The Management Issues Committee comprises the president, executive managing officer, and officers appointed by the president. As a rule, the Committee convenes for a meeting once a week, and is chaired by the president.

(4) Officers Committee

The Officers Committee comprises the president, all officers (excluding overseas representatives, however, overseas representatives attend at least one meeting per quarter), who exchange information to stay updated on business conditions and issues. As a rule, the board convenes for a meeting twice a month, and is chaired by the president of JSR. Full-time corporate auditors also attend the meetings.

(5) Board of Auditors

The Board of Auditors comprises three corporate auditors, including two outside corporate auditors. As a general rule, the Board of Auditors meets once a month as stipulated in the Regulations of the Board of Auditors to carry out reports, discussions and decisions on important matters. Two outside corporate auditors—a lawyer and a certified public accountant—are independent officers who perform audits from an expert and independent perspective. Based on the Auditing Standards for Auditors, in addition to the meetings of the Board of Directors, the auditors attend other important meetings, such as those of the Executive Committee, and endeavor to gain an understanding of the processes involved in important decision-making and how duties are being executed. They form their opinions on audit-related matters upon discussions and reports received from independent financial accountants, board members and other persons.

(6) CSR Committee

The CSR Committee was established to monitor the implementation of corporate social responsibility and legal compliance. The Committee oversees and directs four subcommittees—the Corporate Ethics Committee, Responsible Care Committee, Risk Management Committee, and Social Contribution Committee—to reinforce CSR activities, and convenes four regular meetings per year and special meetings as necessary. The Committee is chaired by the officer in charge of CSR and is additionally composed of three managing officers, one senior officer, and three officers. The bureaus of the four subcommittees also attend the meetings. Committee members clarify the Group's position on CSR and strive to enhance CSR activities.

(7) Internal Audit Department

The Internal Audit Department oversees internal audits of the JSR Group. Its goal is to strengthen various auditing functions pertaining to the internal control of JSR and its group companies based on a core policy of legal and regulatory compliance.

(8) Remuneration Advisory Committee

In October 2012, we established the Remuneration Advisory Committee to ensure objective and transparent monitoring of the director remuneration system and to deliberate on various problems with the participation of outside directors. The committee deliberates on basic remuneration policies, the remuneration system, and the annual bonus structure, and submits proposals to the Board of Directors.


CSR Report 2013