We have been working steadily to enhance corporate governance, viewing it as an important management issue to integrate systems, in the aim of responding promptly and adequately to changes in the business environment and realizing a more just and highly transparent management structure.
System integration is currently in progress as we specifically aspire to enhance the level of strict compliance and risk management. In order to ensure transparent management, we intend to hold substantive discussions at the general meetings of shareholders and pursue a proactive dialogue with the markets through our investor relation activities.
Corporate bodies
Regarding the general meeting of shareholders, who act as the supreme decision-making body of our company, an annual meeting of shareholders is held on a date that does not overlap with other shareholders' meetings, held by most companies, as to promote greater attendance.
As for the Board of Directors' meeting, it is held on a regular monthly basis. Also, special meetings are held when appropriate. As of June 2005, our Board of Directors consists of nine directors.
We have also adopted an auditing system. As of June 2005, our Board of Auditors consists of four auditors, including two full-time auditors and two part-time auditors (of them, three are outside auditors).
Current status of internal control systems
We have established the Internal Audit Office as a unit dedicated to internal control, which cooperates with the Board of Auditors. In order to ensure further strict compliance, we have founded a Compliance Committee, chaired by the President. Also chaired by the President, is the Company-Wide Crisis Management Committee, for the purpose of prompt responses to natural disasters and other emergency situations that could adversely affect the company.
The Internal Audit Office, under the immediate supervision of the President, is dedicated to activities designed to contribute to corporate management by reviewing and monitoring organizational systems and business operation performance, and presenting remedial measures directly to the President. It has two full-time staff members, who, in cooperation with the auditors and the Board of Auditors, conduct audits on the business activities of all business divisions and offices within our company and subsidiaries.
Auditors conduct business operation audits in accordance with an audit policy and plan set forth by the Board of Auditors. Auditors audit the execution of duties by directors, present appropriate recommendations and advices by attending meetings of the Board of Directors and other important in-house conferences, and also by examining the status of business operations as well as corporate assets.
As for our accounting audit, we have an ongoing audit contract with Ernst & Young ShinNihon.
The Internal Audit Office, auditors and accounting auditors cooperate by exchanging information on an as-needed basis and holding regular meetings for discussing audit plans and results.
As of June 2005, we have three outside auditors. Two are employees of JFE Steel Corporation, and the other is a former employee. Furthermore, as of June 2005, we have no outside board members. It is also to be noted that there are no capital or business relationships between outside auditors and our company.
Current status of risk management systems
In order to ensure strict compliance with laws and regulations, we have established the Compliance Committee, chaired by the President (since April 2003). The Committee meets at least once a year. In addition, we conduct activities to educate directors and employees about compliance and are taking all possible steps to assure strict compliance by the corporate group as a whole, including subsidiaries.
We also have a Company-Wide Crisis Management Committee, chaired by the President (since November 2002) for the purpose of prompt responses to natural disasters and other emergency situations that could adversely affect the company.
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