Governance Structure

Corporate Governance System

J-POWER has adopted a Company with an Audit & Supervisory Board structure, and has put in place a system for mutual oversight among Directors through the meetings of the Board of Directors attended by Outside Directors who participate in the Company's management decision-making from an independent position.

Also, in fiscal 2019 the Company established Nomination and Compensation Committee, more than half the members of which are Independent Officers, to enhance the independence, objectivity and accountability of the Board of Directors with regard to the nomination and compensation of Directors and top management.

Further, the execution of duties by Directors is constantly monitored through the attendance at the meetings of the Board of Directors and other management meetings of the Audit & Supervisory Board Members, including Outside Audit & Supervisory Board Members with abundant experience in such areas as the management of leading Japanese listed companies and the execution of government policies. The Company believes this system allows for sufficient corporate governance functionality.

In addition to the above, the Company also maintains the Executive Committee.

Composition of the Board of Directors and the Audit & Supervisory Board

Composition of the Board of Directors

The Board of Directors is composed of Directors with abundant experience and sufficient specialized knowledge to maintain balance and diversity in the knowledge, experience, and abilities of the Board of Directors as a whole. The number of Directors is 14 or less.

In addition, in order to ensure the effectiveness of the independent and objective management supervision conducted by the Board of Directors, the Company endeavors to appoint at least 2 Independent Outside Directors selected for their experience, knowledge, specialization, and other attributes.

Currently, the total number of Directors is 13, including 3 Independent Outside Directors.

Composition of the Audit & Supervisory Board

The Audit & Supervisory Board consists of a maximum of 5 Audit & Supervisory Board Members, at least three of whom are Outside Audit & Supervisory Board Members. In addition, at least 1 person with appropriate knowledge of finance and accounting is appointed as an Audit & Supervisory Board Member.^*

Currently, the total number of the Audit & Supervisory Board Members is 5, including 3 Independent Outside Audit & Supervisory Board Members.

※The Senior Audit & Supervisory Board Member, Hiroshi Fujioka (Independent Outside Audit & Supervisory Board Member), has gained an advanced level of knowledge in the area of finance and accounting through his long experience in the administration of fiscal and financial issues, etc.
※Audit & Supervisory Board Member Shinichi Kawatani has gained an advanced level of knowledge in the area of finance and accounting through his long experience in the departments of accounting & finance in the Company.

System for the Execution of Directors' Duties

Ensuring Effectiveness in Business Execution

The Board of Directors meets monthly in principle^*1 and on an as-needed basis, with attendance of all of the Directors and Audit & Supervisory Board Members, including the Outside Directors and Outside Audit & Supervisory Board Members. Additionally, the Executive Committee meets weekly in principle, with the attendance of all Senior Directors^*2, the Titled Executive Officers, and the full-time Audit & Supervisory Board Members. This committee discusses matters referred to the Board of Directors, significant company-wide matters related to businesses executed by the President and Executive Vice Presidents based on policies among the matters decided by the Board of Directors, and important matters related to individual business execution.

In addition to allocating functions to the Board of Directors and Executive Committee, the Company has established a system in which Senior Directors and Executive Officers share responsibility for business execution. , This system has made appropriate and prompt decision-making possible by clarifying the responsibilities and authorities, leading to efficient corporate management.

※1:The Board of Directors met 12 times during FY2019.
※2:Senior Directors: Chairman, President

Ensuring Appropriateness in Business Execution

The Company has established an "Internal Audit Department" to ensure proper business execution by conducting internal audits from a position independent from the other operating units. In addition, each operating unit regularly audits its own business execution.

Preventing Conflicts of Interest

The Directors of the Company, in accordance with its Corporate Philosophy, Corporate Conduct Rules, and Compliance Action Guidelines^*1, take the initiative and set an example of honest and fair conduct based on a firm spirit of compliance and business ethics. In addition, the Company works to prevent conflicts of interest in the event that the Company engages in a transaction with one of its Directors, etc., ^*2 by requiring advance approval of the Board of Directors for such transactions and the reporting of the results of the transactions to the Board of Directors.

※Directors or major shareholders (shareholders with shares representing 10% or more of the voting rights in the Company)

※1:Please see page 58 for further information on the Corporate Conduct Rules and Compliance Action Guidelines.

Audits by Audit & Supervisory Board Members

In accordance with the Companies Act, J-POWER appoints Audit & Supervisory Board Members who audit the legality and appropriateness of the execution of business by Directors. The Audit & Supervisory Board Members conduct audits at J-POWER's Headquarters by attending the meetings of the Board of Directors and other important meetings and by interviewing the Directors and Executive Officers on the status of the execution of Directors' and Executive Officers' duties. In addition, the Audit & Supervisory Board Members perform site visits to local operating units and subsidiaries in Japan and overseas.

In the course of the accounting audits, Audit & Supervisory Board Members liaise with the Independent Auditors to regularly receive reports and exchange opinions regarding auditing schedules and the audit results. This enables Audit & Supervisory Board Members to judge the validity of the auditing method of the Independent Auditors and the results of the audits.

When performing these audits, the Audit & Supervisory Board Members liaise with the Internal Audit Department.

With regard to auditing staff under the Audit & Supervisory Board Members, the Company has established an Office of Audit & Supervisory Board Members as an independent unit separated from the Directors' chain of command. The office's full-time specialist staff assist the Audit & Supervisory Board Members in the course of their audits.

Group Governance

With regard to the administration of subsidiaries and affiliates, the J-POWER Group's basic policy aims at integral Group-wide development in accordance with the Group's management plan. The administration of subsidiaries and affiliates is conducted in accordance with the Company's internal regulations, and the "Group Management Committee" works to improve the appropriateness of operations for the entire corporate Group. In addition, the Audit & Supervisory Board Members and the Internal Audit Department conduct audits of subsidiaries and affiliates with the objective of ensuring proper operations over all Group companies.

Evaluation of the Effectiveness of the Board of Directors

The Company analyzes and evaluates the effectiveness of the Board of Directors on an annual basis.
To improve the effectiveness of the Board of Directors, the Company strives to enhance the quality of discussion at monthly meetings of the Board of Directors and to this end has implemented a number of initiatives, including the following.

Utilize Nomination and Compensation Committee
Promoting discussion between officers in settings other than meetings of the Board of Directors
Enhancing the provision of information, including the content of Executive Committee discussions, to outside officers
Inspections of power plants and other facilities by outside officers
Training for internal officers

Regarding the evaluation in 2020, the Board of Directors discussed the status of measures implemented on the basis of the previous year’s analysis and evaluation as well as the results of interviews and surveys of all officers, including outside officers. As a result of the discussion, the effectiveness of the Board of Directors was deemed sufficient. Going forward, the Company will further expand the scope of deliberation based on changes in the business environment, and make continual efforts to enhance the effectiveness of the Board of Directors.

Outside Officers

The Company's Outside Directors and Outside Audit & Supervisory Board Members are independent officers who have fulfilled both the requirements for independent officers prescribed by the Tokyo Stock Exchange and the "Criteria to Determine the Independence of Outside Officers" prescribed by the Company.

See "Basic Policy for Corporate Governance."(254KB)