Corporate Governance Framework

Approach to Corporate Governance

Under the leadership of JS Group Corporation, which is operated as a pure holding company, Group operating companies work as independent partners to carry out their duties while cooperating with one another to produce superior results.
The JS Group Corporation works to create and provide value that is attractive for all stakeholders to be able to continue as a corporate group that has the trust of society. The Company recognizes strengthening of corporate governance as one of its most important management themes in this context.
The Company undertakes various effective measures to expedite decision-making, ensure effective and efficient business execution, and prepare an appropriate structure for Group control.

Overview of Corporate Governance Framework

On June 23, 2011, the Company changed its corporate governance system from a company with corporate auditors system to a company with committees system. This move resulted in the following changes.

Board of Directors	The Board of Directors is made up of 10 directors, 5 of whom are outside directors. The Board decides on matters stipulated by laws and regulations, basic management policy and other important management matters. At the same time, the Board supervises the execution of duties by the directors and executive officers. Outside directors in particular perform an important supervisory role from an independent standpoint, helping to ensure even more robust and effective corporate governance. In principle, the Board of Directors meets once a month.
Nomination Committee, Audit Committee and Compensation Committee	The Nomination Committee is made up of three directors, two of whom are outside directors. This Committee decides the details of proposals submitted to the General Meeting of Shareholders concerning the appointment and dismissal of directors. The Nomination Committee meets at least once a year, or as necessary. The Compensation Committee is made up of three directors, two of whom are outside directors. This Committee decides details of individual compensation for directors and executive officers. The Compensation Committee meets at least once a year, or as necessary. The Audit Committee is made up of three directors, all of whom are outside directors. In addition to auditing the execution of duties by the directors and executive officers, the Audit Committee decides the details of audit policy, audit plans, proposals for the appointment or dismissal of the independent auditors to the General Meeting of Shareholders, and other matters. As a rule, this Committee convenes at least once every two months, or as necessary.

Board of Directors

The Board of Directors is made up of 10 directors, 5 of whom are outside directors. The Board decides on matters stipulated by laws and regulations, basic management policy and other important management matters. At the same time, the Board supervises the execution of duties by the directors and executive officers. Outside directors in particular perform an important supervisory role from an independent standpoint, helping to ensure even more robust and effective corporate governance. In principle, the Board of Directors meets once a month.

Nomination Committee, Audit Committee and Compensation Committee

The Nomination Committee is made up of three directors, two of whom are outside directors. This Committee decides the details of proposals submitted to the General Meeting of Shareholders concerning the appointment and dismissal of directors. The Nomination Committee meets at least once a year, or as necessary.
The Compensation Committee is made up of three directors, two of whom are outside directors. This Committee decides details of individual compensation for directors and executive officers. The Compensation Committee meets at least once a year, or as necessary.
The Audit Committee is made up of three directors, all of whom are outside directors. In addition to auditing the execution of duties by the directors and executive officers, the Audit Committee decides the details of audit policy, audit plans, proposals for the appointment or dismissal of the independent auditors to the General Meeting of Shareholders, and other matters. As a rule, this Committee convenes at least once every two months, or as necessary.

Composition of Committees and Chairpersons
	Total members	Standing members	Internal directors	Outside directors	Chairperson
Nomination Committee	3	0	1	2	Internal director
Compensation Committee	3	0	1	2	Internal director
Audit Committee	3	0	0	3	Outside director

Executive Officers Meeting	The Executive Officers Meeting is made up of the executive officers and serves as a decision-making body for business execution based on the basic policy decided by the Board of Directors. It decides on important matters relating to business execution of the Company. As a rule, the Executive Officers Meeting meets once a month, but may hold extraordinary meetings as necessary.
Internal Audit	The Company has an Internal Audit Division, which is independent of divisions responsible for business execution. The Internal Audit Division conducts audits of all business divisions, except the Secretariat of the Internal Audit Committee, while working with the internal audit divisions of each operating company, in accordance with the internal audit plan. It provides advice and follows up on matters for improvement.
Accounting Audits	The JS Group Corporation retains Deloitte Touche Tohmatsu LLC to conduct audits. Proper audits are carried out according to the provisions of laws and regulations. The names of the certified public accountants who led auditing duties for the year under review ending March 31, 2011, the number of consecutive years they have audited the Company, and details of personnel who assisted with audits are as follows. Names of certified public accountants who led auditing duties and number of consecutive audit years Designated limited liability partner: Kazuhiro Sasai (5 consecutive years), Yoshinori Hirano (5 consecutive years), and Junichi Yamanobe (2 consecutive years) Assistants on audits 8 certified public accountants, 7 assistant accountants

Executive Officers Meeting

The Executive Officers Meeting is made up of the executive officers and serves as a decision-making body for business execution based on the basic policy decided by the Board of Directors. It decides on important matters relating to business execution of the Company. As a rule, the Executive Officers Meeting meets once a month, but may hold extraordinary meetings as necessary.

Internal Audit

The Company has an Internal Audit Division, which is independent of divisions responsible for business execution. The Internal Audit Division conducts audits of all business divisions, except the Secretariat of the Internal Audit Committee, while working with the internal audit divisions of each operating company, in accordance with the internal audit plan. It provides advice and follows up on matters for improvement.

Accounting Audits

The JS Group Corporation retains Deloitte Touche Tohmatsu LLC to conduct audits. Proper audits are carried out according to the provisions of laws and regulations. The names of the certified public accountants who led auditing duties for the year under review ending March 31, 2011, the number of consecutive years they have audited the Company, and details of personnel who assisted with audits are as follows.

Names of certified public accountants who led auditing duties and number of consecutive audit years
Designated limited liability partner: Kazuhiro Sasai (5 consecutive years), Yoshinori Hirano (5 consecutive years), and Junichi Yamanobe (2 consecutive years)
Assistants on audits
8 certified public accountants, 7 assistant accountants

Reason for Selecting Current Corporate Governance Framework

The General Meeting of Shareholders held on June 23, 2011 approved the adoption of a company with committees system of corporate governance for the JS Group. The aim of this change is to facilitate swift business decision-making by executive officers through the separation of management execution and supervision, and to secure management transparency.

Outside Directors

Name	Reason for Selection
Masahiro Takasaki	Mr. Takasaki was appointed on the basis of his wide-ranging knowledge and deep insight of corporate management based on extensive managerial experience. Furthermore, as an outside director, he has properly fulfilled his role in supervising decision-making on important management matters and business execution. Mr. Takasaki worked for a financial institution in the past with which the Company had dealings, but the Company believes a certain degree of independence is assured.
Tetsuo Shimura	Mr. Shimura was appointed on the basis of his wide-ranging knowledge and deep insight of corporate management based on extensive managerial experience. Furthermore, as an outside director, he has properly fulfilled his role in supervising decision-making on important management matters and business execution. Mr. Shimura worked for a financial institution in the past with which the Company had dealings, but the Company believes a certain degree of independence is assured.
Fumio Sudo	Mr. Sudo was appointed on the basis of his wide-ranging knowledge and deep insight of corporate management based on extensive managerial experience. As an outside director, he has been properly fulfilling his role in supervising decision-making on important management matters and business execution. Outside director Fumio Sudo was appointed as an independent director of the Company who does not infringe either of the evaluation standards concerning independence of independent directors and corporate auditors stipulated by the Tokyo Stock Exchange because management judged there was no risk of a conflict of interest with ordinary shareholders.
Hidehiko Sato	Mr. Sato was appointed on the basis of his wide-ranging knowledge and deep insight of compliance and extensive experience in law enforcement and government, and due to the Company's belief that he will further strengthen the function of the Board of Directors. As an outside director, he has been properly fulfilling his role in supervising decision-making on important management matters and business execution. Outside director Hidehiko Sato was appointed as an independent director of the Company who does not infringe either of the evaluation standards concerning independence of independent directors and corporate auditors stipulated by the Tokyo Stock Exchange because management judged there was no risk of a conflict of interest with ordinary shareholders.
Tsutomu Kawaguchi	Mr. Kawaguchi was appointed on the basis of his specialist knowledge and extensive experience in finance and accounting gained as a certified public accountant, and due to the Company's belief that he will further strengthen the function of the Board of Directors. As an outside director, he has been properly fulfilling his role in supervising decision-making on important management matters and business execution. Outside director Tsutomu Kawaguchi was appointed as an independent director of the Company who does not infringe either of the evaluation standards concerning independence of independent directors and corporate auditors stipulated by the Tokyo Stock Exchange because management judged there was no risk of a conflict of interest with ordinary shareholders.

Director and Corporate Auditor Remuneration

Remuneration paid to the Company's directors and corporate auditors in the year ended March 31, 2011 was as per the table below.

	Total Remuneration (Millions of yen)	Total Remuneration by Type (Millions of yen)		Number of Corporate Officers Eligible for Remuneration
	Total Remuneration (Millions of yen)	Basic Remuneration	Performance- based remuneration	Number of Corporate Officers Eligible for Remuneration
Directors (Excluding outside directors)	199	184	15	7
Corporate auditors (Excluding outside auditors)	42	42	-	2
Outside directors and outside auditors	35	35	-	5

Policy for Determining the Amount and Method of Calculation of Corporate Officers' Remuneration and Decision-Making Method

Regarding the amount and method of determining the remuneration of corporate officers, the Company's policy is to pay a level of remuneration commensurate with each corporate officer's duties in order to meet shareholders' expectations.
In accordance with this policy, annual remuneration amounts are determined with consideration to each corporate officer's responsibilities and with reference to the remuneration levels of other companies. Regarding Representative Directors and the Executive Directors (hereinafter referred to as the "Executive Officers"), part of the annual remuneration amount is performance-based remuneration (salaries linked to Company income), and is calculated as follows.

Method of Calculating Performance-Based Remuneration (Salaries Linked to Company Income)

We pay Executive Officers holding positions at the end of each fiscal year remuneration linked to the Company's business performance of up to one thousandth of the Group's consolidated net income (but limited to a maximum of \60 million) for that fiscal year. This remuneration is calculated for each individual Executive Officer by dividing that individual Executive Officer's base annual salary by the total base annual salary for all of the Executive Officers, and multiplying that percentage by the total remuneration to be paid.
Up to the General Meeting of Shareholders held on June 23, 2011, the Company had a corporate auditor system of corporate governance.