Corporate Governance

Basic Approach

JEOL's basic approach to corporate governance is to build a stable profit structure and to realize basic management policies that focus on enhancing corporate value while achieving future-oriented development and growth. These goals will be reached by implementing various measures, including setting up an organizational management structure with efficient, highly transparent management that upholds our responsibility to respect the position of stakeholders such as shareholders, business partners, customers, and employees. In addition, we will always question if our corporate governance itself meets the age, and pursue what it should be, to respond to changes to come.

Corporate Governance Structure

① Outline of Corporate Governance Structure and Reasons for Adoption of the Structure

The Company has adopted a corporate auditor system, whereby the Board of Directors and the Audit＆Supervisory Board supervise and audit the execution of business operations.
In order to respond quickly to changes in the business environment, the Company has streamlined its management by optimizing the number of directors (the maximum limit in the Articles of Incorporation).
With the aim of separating the execution of the business operation from supervising, the positions of Director and President, Director and Chairman, and Director and Vice Chairman have been abolished and the new positions of the Chairman & Executive Officer and President & Executive Officer have been established.
The corporate auditors have considerable knowledge of finance and accounting matters, and the outside corporate auditors, from a standpoint independent of management, attend meetings of the Board of Directors, audit affiliated companies and branch offices, audit the execution of duties by directors, and perform other duties. Thus, the Company's governance system is structured to enable auditors to fully fulfill their supervisory functions.
The Board of Directors met 13 times, the Management Council met 48 times, the Executive Committee met 11 times, and the Audit & Supervisory Board met 18 times during the 77th fiscal year.
In order for the continued enhancement and improvement of the internal control, compliance, and risk management of the entire group, the "CSR Committee", chaired by the President has been established. The committee has received reports from the internal control and risk management committees as well as the internal audit division, JGMS (JEOL Group Management System) and MDQMS (Medical Devices Quality Management System), provided advice and proposals on CSR activities, and reported to the Board of Directors and the Audit & Supervisory Board.

Furthermore, the internal audit division conducts internal auditing about business implementation of JEOL and group companies and compliances and has reported the results to the CSR committee.

As of June 26, 2024, the Company's corporate body consists of 9 directors (3 of whom are outside directors) and 4 auditors (2 of whom are outside auditors).
The composition of the Board of Directors as of the date of submission of the Annual Securities Report is as follows.

Chairman:	Representative Director President & CEO Izumi Oi
Members:	Director & Senior Executive Officer Toyohiko Tazawa
	Director & Senior Executive Officer Katsumoto Yaguchi
	Director & Executive Officer Atsushi Seki
	Director & Executive Officer Akihiro Kobayashi
	Director & Officer Toshihiko Kanayama
	Outside Director Ryuji Kanno
	Outside Director Kaoru Terashima
	Outside Director Yukari Yomo
	Audit & Supervisory Board Member(fulltime) Koichi Fukuyama
	Audit & Supervisory Board Member(fulltime) Mitsuru Takahashi
	Outside Audit & Supervisory Board Member Akifumi Goto
	Outside Audit & Supervisory Board Member Akihiko Minato

The composition of the Audit & Supervisory Board as of the date of submission of the Annual Securities Report is as follows.

Chairman:	Audit & Supervisory Board Member(fulltime) Koichi Fukuyama
Members:	Audit & Supervisory Board Member(fulltime) Mitsuru Takahashi
	Outside Audit & Supervisory Board Member Akifumi Goto
	Outside Audit & Supervisory Board Member Akihiko Minato

The Company's institutions related to corporate governance are shown in the diagram below.

Corporate governance system

② Internal Control System Status

I. System for ensuring appropriateness of the business

Listed below are the basic policies of our company about the systems that ensure the execution of duties by directors adhere to all laws, regulations, and the Articles of Incorporation as well as other systems (internal control systems). In order to realize the company philosophy since its foundation that "On the basis of "Creativity" and "Research and Development", JEOL positively challenges the world's highest technology, thus forever contributing to the progress in both Science and Human Society through its products".

• System for ensuring that the execution of duties by directors and employees complies with all laws, regulations, and the Articles of Incorporation

  1. The Company establishes "JEOL Corporate Ethics Code of Conduct" and demonstrates concrete code of practice on corporate ethics to its directors and employees. This ensures that directors and employees comply with laws and regulations and act in accordance with social ethics.
  2. The Company stresses to directors and employees at meetings of the Board of Directors and every other opportunity, the need to ensure compliance with laws, regulations, and the Articles of Incorporation to foster an awareness of the importance of prioritizing compliance in all business activities.
  3. In order for the continued enhancement and improvement of internal control, compliance, risk management, etc. for the entire group, the Company establishes the "CSR Committee" chaired by the President.
  4. Members are assigned within the Company and group companies to promote compliance, and maintain and improve the awareness of the need of compliance for the entire group.
  5. The internal audit division should conduct internal audits on business execution and compliance of the company and report the results to the CSR Committee.
  6. The Company shall reject any relationship with antisocial forces or groups that threaten social order and safety, and shall take a firm stance against any unreasonable or illegal demands and shall never accept such demands.

• System for storing and managing information on the execution of duties by directors

  1. Documents related to decisions made by the Board of Directors (including documents related to the execution of duties) are strictly preserved and managed in an easily searchable manner in accordance with the "Document Management Rules" (retention period of 10 years in principle).
  2. The above documents shall be stored and managed in such a way that they are accessible to all directors and Audit & Supervisory Board Members at all times.

• Rules and other systems for risk management to prevent loss

  1. "Compliance Management Regulations" are established to create a compliance system, ensure a proper business operation, and promote sound development.
  2. Based on the "Compliance Reporting Regulations", the Compliance Reporting Desk is established, striving for early detection and correction of misconduct, etc.
  3. For the risks related to information security, quality/environment, export control, safety and health, disaster, etc. , responsible departments or committees are assigned to establish regulations, respond to risks, and conduct trainings, and then report the situation to the CSR Committee.
  4. The CSR Committee manages the risk management for the entire group, identifies and evaluates the risks, considers actions to be taken. They also conduct inquiries and recommendations to the involved departments and each committee related to risk management and then reports the results to the Board of Directors and the Audit & Supervisory Board.

• System for ensuring the efficient execution of duties by directors

  1. In order to respond quickly to changes in the business environment, the company should streamline its management by optimizing the number of directors (the maximum number allowed under the Articles of Incorporation), etc.
  2. In order to clarify the management responsibilities of directors and build a management system that can respond quickly to changes in the business environment, the term of office of directors should be one year.
  3. Regular meetings of the Board of Directors are held once a month in principle to make decisions on important matters and receive reports on the status of business execution from each director in charge. In addition, extraordinary meetings of the Board of Directors are convened as necessary. The Board of Directors also analyzes and evaluates the effectiveness of the Board of Directors as a whole by means of a self-assessment questionnaire, discloses a summary of the results, and takes action to address issues.
  4. The responsibilities and roles of the directors are clearly defined in the "Regulations for the Directors" and the "Regulations for the Outside Directors" with the aim of improving corporate value over the medium to long term.

• System for ensuring the appropriateness of operations in the corporate group comprising the company and all subsidiaries

  1. The "JEOL Group Management Meeting" is held on a timely basis for sharing and disseminating important policies and basic strategies of the entire group.
  2. Internal regulations which outline the management operation policy of the subsidiaries should be established and define the item to report to the company and items for approval. In addition, the "Affiliated Company Administration Meetings" are held regularly with the general affairs and finance staff of group companies to strengthen the integrated management of the group.
  3. Business process procedures should be prepared for accounting procedures at all group companies and a system should be established to control fraud risks and to detect and solve problems as early as possible.
  4. In order to ensure compliance with laws and regulations at each company in the corporate group, the company conducts the Domestic Affiliated Company Meeting once a year, and the Tokyo Meeting with the management in charge of overseas companies twice a year to communicate through hearings and other means.

• Matters related to the employees who support the duties of Audit & Supervisory Board Members when such members request their assistance as well as matters related to the independence of the employees from directors and ensuring the effectiveness of instructions given by the Audit & Supervisory Board Members to the employees

  1. Employees are assigned to support the duties of Audit & Supervisory Board Members when requested by such members upon discussion.
  2. The above employees shall conduct their duties according to the instruction and order of the Audit & Supervisory Board Members.
  3. The appointment and dismissal of the above employees is based on the exchange of opinions between the directors and the Audit ＆Supervisory Board Members. The independence of their duties is thoroughly communicated to ensure the effectiveness of the Audit ＆Supervisory Board members' instructions.

• System for reporting to the Audit ＆Supervisory Board Members by the directors, etc.

  1. Directors and employees are required to report to the Audit & Supervisory Board if they discover any facts that may cause significant damage to the company without delay.
  2. Directors, corporate auditors, and employees of Group companies or those who receive reports from them must report to the Audit & Supervisory Board in accordance with the preceding item. This is well known through the "JEOL Group Management Meeting" and the "Affiliated Companies Administrative Meeting" described in Section 5 without failure.

• System for making sure that people who have made reports, as provided in the preceding item, will not be treated disadvantageously after making such report

  When Audit ＆Supervisory Board Members receive a report as described in the preceding item, it is prohibited to treat the person who made the report disadvantageously because of such report.

• Matters related to policies for the procedure of payments made in advance or reimbursement of expenses in the execution of duties by Audit＆Supervisory Board Members and for other treatment of expense and liabilities associated with the execution of these duties

  When an Audit ＆Supervisory Board member makes a request for prepayment or reimbursement of expenses incurred in the performance of his/her duties, the Company shall promptly dispose of such expenses or liabilities, except in cases where such expenses or liabilities are deemed not necessary for the performance of the Audit＆Supervisory Board Member's duties.

• Systems for ensuring that audits are conducted effectively by the Audit＆Supervisory Board Members

  In order to ensure the effectiveness of an audit, Audit＆Supervisory Board members have the opportunity to exchange information with directors, the internal audit function, and the accounting auditors.

③ Status of Audits

1. Auditing by Corporate Auditors

The Company's Audit & Supervisory Board consists of four members (two of whom are full-time Audit & Supervisory Board Members and two of whom are outside Audit & Supervisory Board Members), and the Chairman of the Board is a full-time Audit & Supervisory Board Member.
Full-time Audit & Supervisory Board Member Koichi Fukuyama has served as a director & senior executive officer of the Company and has considerable knowledge of finance and accounting.
Full-time Audit & Supervisory Board Member Mitsuru Takahashi has considerable knowledge of finance and accounting, having served as General Manager of the Accounting Department of the Finance Division of the Company.
Akifumi Goto, an outside Audit & Supervisory Board Member, is an attorney-at-law and has considerable knowledge of finance and accounting.
Outside Audit & Supervisory Board Member, Akihiko Minato has considerable knowledge of finance and accounting, having served as a managing executive officer of The Bank of Tokyo-Mitsubishi, Ltd.(now MUFG Bank, Ltd) and as representative director of MARUNOUCHI YOROZU Co,Ltd.
Each Audit & Supervisory Board Member monitors and supervises the execution of duties by directors from an independent standpoint by attending meetings of the Board of Directors and other important meetings, inspecting important documents, and auditing the status of business execution, in accordance with the audit policy, audit plan, and division of audit duties determined by the Audit & Supervisory Board at the beginning of the term.
The specific items discussed at the Audit & Supervisory Board include reports on audit activities during the term regarding the development and operation of the internal control system and responses to internal information obtained, etc., and at the end of the term, the appropriateness of audits by the accounting auditors, the status of the execution of duties by directors and their legality, etc., and the audit reports of each Audit & Supervisory Board Member and the Audit & Supervisory Board. In addition, meetings were held regularly to exchange opinions with the representative directors and information with the outside directors.

Attendance at meetings of the Audit & Supervisory Board during the 77th fiscal year is as follows.

Full-time Audit & Supervisory Board Members have attended meetings of the Board of Directors, the Management Council, and other important meetings, conducted on-site inspections and hearings at major divisions and Group subsidiaries, and inspected minutes of important meetings, important documents, and approval documents to ascertain management conditions and audit the execution of duties by Directors and Executive Officers. Part-time corporate auditors attend meetings of the Audit & Supervisory Board to receive reports on the status of these audits and provide advice and other necessary opinions by accompanying the auditors on their visits, attending important meetings, and so forth.
In addition, employees have been assigned to support Audit & Supervisory Board Members' duties when requested by Audit & Supervisory Board Members upon discussion with the Audit & Supervisory Board Members, in order to enhance the capability to support Audit & Supervisory Board Members.

2. Status of Internal Audits

The internal audit division(4 members) has conducted internal audits for the status of business operation and compliance by the Company and its group companies and then reported the results to the CSR committee. With regard to the maintenance and evaluation of internal control over financial reporting, we conduct audit activities in cooperation with the Japanese SOX Act Audit Committee and share information with the accounting auditors in an effort to achieve mutual cooperation.
In addition, the Company conducts the Domestic Affiliated Company Meeting once a year, and the Tokyo Meeting with the management in charge of overseas companies twice a year to establish a system in order to ensure compliance with laws and regulations and improve effectiveness of internal audit. The CSR Committee receives reports from the committee on internal control and risk management as well as the internal audit division, JGMS (JEOL Group Management System) and MDQMS (Medical Devices Quality Management System), and provide advices and proposals on the CSR activities and also reports to the Board of Directors and Audit & Supervisory Board.
Through these efforts, we ensure the effectiveness of internal audits.

3. Status of Accounting Audit

• Name of Audit Firm

  Deloitte Touche Tohmatsu LLC

• Continuous audit period

  32 years

• Certified Public Accountants who performed services

  Designated and Engagement Partner Hiroyuki Mogi
  Designated and Engagement Partner Katsuhiko Igarashi

• Composition of Assistants for Auditing Operations

  Assistants for accounting audit services consist of 9 certified public accountants and 30 others.

• Reasons for selecting and evaluating the audit firm

  The Audit＆Supervisory Board evaluates and selects the accounting auditor based on the "Accounting Auditor Selection and Dismissal and Evaluation Standards" and the evaluation checklist established by the Audit ＆Supervisory Board. The Audit＆Supervisory Board made a comprehensive judgment based on the evaluation of the accounting auditor's expertise, quality control system, independence, and ability to handle global audits through regular communication and attendance at accounting audits, as well as by considering evaluations from the accounting department and other relevant departments, and resolved to reappoint Deloitte Touche Tohmatsu LLC.
  The Audit＆Supervisory Board will dismiss the accounting auditor with the unanimous consent of the Audit＆Supervisory Board Members if the accounting auditor is deemed to fall under any of the items of Article 340, Paragraph 1 of the Companies Act.

④ Outside Directors and Auditors

The Company has three outside directors and two outside Audit & Supervisory Board Members. Regarding personal, capital, business relationships and other interests with outside directors and outside Audit & Supervisory Board Members, there is no personal, capital, business, or other interest relationship with the three outside directors and the two outside Audit & Supervisory Board Members.
In appointing outside directors and outside Audit & Supervisory Board Members, the Company takes into consideration the requirements for externalities as stipulated in the Companies Act and the independence standards stipulated by financial instruments exchanges, as well as ensuring an appropriate number and diversity of personnel, from the viewpoint that having corporate management checked from a third party's perspective outside the Company will help maintain sound corporate governance.
Outside directors check management decisions from an independent and neutral standpoint based on their extensive experience and high-level insight, and outside Audit & Supervisory Board Members apply their viewpoints based on their high level of expertise and wealth of experience and knowledge to audits. In order to ensure the provision of necessary information to outside directors and outside Audit & Supervisory Board Members, regular meetings are held between outside directors and the Audit＆Supervisory Board, including full-time Audit & Supervisory Board Members, and information is exchanged with the Internal Audit Division, Quality Assurance Division, and CSR Committee on an ad hoc basis. The Company also strives to ensure the effectiveness of supervision by the outside directors and audits by the outside Audit & Supervisory Board Members. In addition, the outside Audit & Supervisory Board Members strive to deepen communication with the accounting auditors to ensure the appropriateness and reliability of accounting audits.

Evaluating the Effectiveness of the Board of Directors

Summary of "Analysis・Evaluation of the Effectiveness of the Board of Directors"

JEOL has analyzed and evaluated the efficiency of the Board of Directors to make certain that it is functioning effectively. Based on the results of this analysis and evaluation, we intend to improve the overall effectiveness of the Board of Directors through an ongoing process of identifying and improving issues and by further strengthening the Board.
The results of the Board of Directors' analyses and evaluations in fiscal 2023 have been compiled and are disclosed below.

• Evaluation Method

  • Self-assessment questionnaires evaluating the effectiveness of the Board of Directors were completed by all Directors and Audit & Supervisory Board members at the board of Director meetings held during fiscal 2023 (April 2023 to March 2024). The results were reported at the Board of Directors meeting held on Tuesday, May 28, 2024.
  • Evaluation Items
    Evaluation items were categorized into three areas:
    ①Board composition
    ②Management of the Board of Directors
    ③Providing information to outside officers

• Summary of Evaluation Results

  After reviewing the self-evaluation questionnaires for all directors and Audit & Supervisory Board members, all of 19 evaluation items were found to be above average and the overall effectiveness of the Board of Directors was found to be generally maintained.

• Issues and Major Initiatives for Evaluating the Board of Directors

  • Issues Raised by the Questionnaire Results

    1 Improving the agenda and items to report for the Board of Directors meeting.

  • Measures Taken for Issues Recognized in the previous Questionnaire

    1 Summarizing and simplifying the materials for the Board of Directors

    2 Preparing internal audit structure and strengthening its function

• Future Responses

  The Board of Directors will respond to issues based on the results of these evaluations and will continue to make evaluations and analyses to improve their effectiveness.