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), and has introduced an executive officer system to speed up management decision-making and improve the efficiency of business execution.
With the aim of separating the execution of 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 16 times, the Management Council met 49 times, the Executive Committee met 11 times, and the Audit & Supervisory Board met 23 times during the 76th fiscal year.
As part of a review of the management meetings, the previous Executive Committee was changed to the Management Council in April 2006, creating a structure that enables more effective and speedy business operations.
In addition, the "CSR Committee," chaired by the President and attended by outside attorneys, has been established to promote and strengthen social contribution, compliance, and risk management with an emphasis on the company's social responsibility. The committee receives reports from the internal control and risk management committees and the internal audit division, including JGMS and MDQMS, provides advice and proposals on CSR activities, and reports to the Board of Directors.
Furthermore, the internal audit function, excluding JGMS and MDQMS, has been integrated into the "Business Supervision Office.
As of June 28, 2023, 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 Chairman & Chairman of the Board of Directors Gon-emon Kurihara
Members:	Representative Director President & CEO Izumi Oi
	Director & Senior Executive Officer Toyohiko Tazawa
	Director & Executive Officer Atsushi Seki
	Director & Executive Officer Katsumoto Yaguchi
	Director & Executive Officer Akihiro Kobayashi
	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

Listed below are the items resolved and operation status of systems that ensure that the execution of duties by directors adhere to all laws, regulations, and the Articles of Incorporation as well as other systems (internal control systems) that ensure the appropriateness of operations by the Company and the corporate group, comprising the Company and all subsidiaries.

1. Internal Control System Overview

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

  • 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).
  • The Company promptly responds to requests from directors and corporate auditors for inspection, copying, and submission of the above documents.

• Rules and other systems for risk management to prevent loss

  As a system exclusively responsible for loss risk management, the Company has already established the following Compliance Management Regulations, set up a Compliance Reporting Desk, operated the JGMS (JEOL Group Management System) and MDQMS (Medical Devices Quality Management System), and established the Safety and Health Committee, the Crisis Management Committee, the Export Control Committee, the Information Security Committee, and the BCP (Business Continuity Plan) Promotion Committee. In addition, the company has established a Health and Safety Committee, a Crisis Management Committee, an Export Control Committee, an Information Security Committee, and a Business Continuity Plan (BCP) Promotion Committee.

  • Compliance Management Regulations have been established to establish a compliance system, ensure proper business operations, and promote sound development.
  • Based on the Compliance Management Regulations, JEOL has established the "JEOL Corporate Code of Ethical Conduct," which is disclosed to the public, and ensures that all directors and employees comply with laws and regulations, and act in accordance with social ethics.
  • JEOL has established a Compliance Reporting Desk in accordance with the Compliance Reporting Regulations, and is striving for early detection and correction of misconduct, etc.
  • To maintain and improve product quality control, JEOL operates JGMS and MDQMS, and has established a management system that can withstand internal and external audits.
  • The Safety and Health Committee is headed by the General Safety and Health Manager and has Safety and Health Committee members in each department under him, in accordance with the Occupational Safety and Health Law and Safety and Health Management Regulations, to prevent worker hazards and health problems and to implement other statutory requirements for business operators.
  • The Crisis Management Committee is to continuously forecast and prepare for emergencies and deal with them as they occur.
  • The Export Control Committee is committed to compliance with the Foreign Exchange and Foreign Trade Law and other laws and regulations in accordance with the Security Export Control Regulations.
  • The Information Security Committee strives to ensure the availability, integrity, and confidentiality of the network and information/data in accordance with the Information Security Policy.
  • The BCP (Business Continuity Plan) Promotion Committee establishes business continuity plans and promotes effective efforts to prepare for large-scale accidents and disasters to the extent foreseeable.

• System for ensuring the efficient execution of duties by directors

  • 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 number allowed under the Articles of Incorporation), and has introduced an "Executive Officer System" to speed up management decision-making and improve the efficiency of business execution.
  • 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 has been shortened from two years to one year.
  • 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.
  • The responsibilities and roles of the Directors are clearly defined in the regulations for the Directors and the Outside Directors with the aim of improving corporate value over the medium to long term.
  • In order to establish a system that enables more effective and speedy decision-making and business operations, the Company has established a "Management Council " with appropriate members, which deliberates on specific themes.

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

  • The Company stresses to its Directors and employees at every opportunity, at meetings of the Board of Directors, and at various meetings, the need to ensure compliance with laws, regulations, and the Articles of Incorporation. In addition, the Company has a system in place to provide intensive consultation and review of questions regarding laws, regulations, and the Articles of Incorporation that arise during the execution of business operations.
  • The Company has established a "CSR Committee" chaired by the President and attended by outside attorneys to promote and strengthen social contribution, compliance, and risk management with an emphasis on the Company's social responsibility. The committee receives reports from the internal control and risk management committees, the internal audit division, and on JGMS and MDQMS, provides advice and recommendations on CSR activities, and reports to the Board of Directors.
  • The internal audit function, excluding JGMS and MDQMS, is centralized in the "Business Supervision Office.

• System for ensuring the appropriateness of operations in the corporate Group comprising the Company and all subsidiaries (No parent company for us)

  • Regarding the management of the group consisting of the Company and its affiliates, the "JEOL Group Management Meeting" is held on a timely basis as a forum for sharing and disseminating important policies and basic strategies of the entire group.
  • With respect to the management of affiliated companies, while respecting their autonomy, they regularly report to the Company on the details of their respective operations and discuss important matters with the Company in advance. For this purpose, "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.
  • In order to ensure compliance with laws and regulations and promote management efficiency at each company in the corporate group, the Company conducts the Domestic Affiliated Company Meeting for domestic companies once a year, and the Tokyo Meeting for 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 those members request their assistance

  Full-time staff members are assigned in the "Business Supervisory Office" to assist the duties of corporate auditors.

• Matters related to the independence of the employees from directors (stated in the preceding item) and ensuring the effectiveness of instructions given by Audit & Supervisory Board members to employees

  The appointment and dismissal of the above staff members is based on the exchange of opinions between the directors and the auditors, and the independence of their duties is thoroughly communicated to ensure the effectiveness of the auditors' instructions.

• System for reporting to Audit & Supervisory Board members by directors, etc. and other systems relating to reports to these members

  • Directors are required to report to the Audit & Supervisory Board if they discover any facts that may cause significant damage to the Company (Article 357 of the Companies Act), and employees are also required to report to the Audit ＆Supervisory Board in the same manner. The system is well known by everybody.
  • Directors, corporate auditors, and employees of subsidiaries or those who receive reports from them must report to the Audit & Supervisory Board in accordance with the preceding item and it 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 unfavorably after making a report

  When auditors receive a report as described in the preceding paragraph, they are informed that the person who made the report will not be treated disadvantageously because of such report and this system is well known by everybody.

• 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 a corporate auditor 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 corporate auditor's duties.

• Other systems for checking that audits performed by Audit & Supervisory Board members are conducted effectively.

  • Corporate Auditors hold regular meetings with Representative Director to exchange opinions.
  • Corporate Auditors hold regular meetings with the outside directors to exchange opinions.
  • Corporate Auditors exchange information with the Accounting Auditor to enhance the effectiveness of audits.

• Basic Policy on Elimination of Antisocial Forces and Status of Its Development

  • 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.
  • The Company collects and manages information on antisocial forces and groups in cooperation with police authorities and related organizations.

• System to ensure reliability and appropriateness of financial reporting

  In order to ensure the reliability and appropriateness of the financial reports of the Company and its affiliates, the Company has established the "Japanese SOX Act Audit Committee" to establish, operate, and periodically evaluate internal controls to ensure the reliability and appropriateness of financial reports as required by the Financial Instruments and Exchange Act and other related laws and regulations.

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 Corporate Auditors and two of whom are outside Corporate Auditors), and the Chairman of the Board is a full-time Corporate Auditor.
Full-time Corporate Auditor Koichi Fukuyama has served as a director & senior executive officer of the Company and has considerable knowledge of finance and accounting.
Full-time Corporate Auditor 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 corporate auditor, is an attorney-at-law and has considerable knowledge of finance and accounting.
Outside corporate auditor, 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 corporate auditor 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 corporate auditor 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 76th fiscal year is as follows.

(Note)

The attendance status of Koichi Fukuyama and Akihiko Minato at the Audit & Supervisory Board meetings covers the Audit & Supervisory Board meetings held after their appointment as Audit & Supervisory Board Member on June 28, 2022.

Full-time Corporate Auditors 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, full-time staff members are assigned to the Business Management Office to assist the statutory auditors in their duties, thereby strengthening the statutory auditors' support functions.

2. Status of Internal Audits

The Company has established a Business Supervision Office, which consolidates internal audit functions except for JGMS (JEOL Group Management System) and MDQMS (Medical Devices Quality Management System) and works closely with the auditors (3 members). The internal audit function is centralized and works closely with the corporate auditors (4 members). 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 for domestic companies once a year, and the Tokyo Meeting for overseas companies twice a year to communicate through hearings and other means in order to ensure compliance with laws and regulations and promote management efficiency. These internal audit activities, together with JGMS and MDQMS, are regularly reported to the CSR Committee and finally to the Board of Directors.
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

  31 years

• Certified Public Accountants who performed services

  Designated and Engagement Partner Yasuhiro Ohnaka
  Designated and Engagement Partner Katsuhiko Igarashi

• Composition of Assistants for Auditing Operations

  Assistants for accounting audit services consist of 10 certified public accountants and 18 others.

• Reasons for selecting and evaluating the audit firm

  The Board of Corporate Auditors 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 resolved to reappoint Deloitte Touche Tohmatsu LLC.
  The Audit＆Supervisory Board will dismiss the accounting auditor with the unanimous consent of the Corporate Auditors 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 corporate auditors. Regarding personal, capital, business relationships and other interests with outside directors and outside corporate auditors, there is no personal, capital, business, or other interest relationship with the three outside directors and the two outside corporate auditors.
In appointing outside directors and outside corporate auditors, 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 corporate auditors 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 corporate auditors, regular meetings are held between outside directors and the Audit＆Supervisory Board, including full-time corporate auditors, and information is exchanged with the Business Management Office, Quality Assurance Office, 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 corporate auditors. In addition, the outside corporate auditors 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 2021 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 2021 (April 2021 to March 2022). The results were reported at the Board of Directors meeting held on Tuesday, May 31, 2022.
  • 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 18 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 Questionnaire Results

    1 Improving the materials for the Board of Directors meeting.

    2 Distributing materials to outside officers more quickly.

    3 Preparing internal auditing structure and strengthening its function.

  • Measures Taken for Issues Recognized in the Fiscal 2020 Questionnaire

    1 Providing outside officers with thorough explanation prior to meetings

    2 Summaries will be provided in reports.

    3 Reports will be reviewed.

  • Measures to Be Taken for Issues Recognized in the Fiscal 2021 Questionnaire

    1 Summarizing and simplifying the materials for the Board of Directors.

    2 Distributing materials to outside officers more quickly.

• 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 efficiency.