Corporate Governance

■ Definitions of Skills and Expertise

• International experience: at least three years internal business experience as a company officer or member of an executive management team
• Corporate management: at least three years experience in executive duties as a director or executive officer at a listed company, or a large company
• Human resource industry: at least three years experience in executive duties as a member of management in a sector related to human resources, which is JAC Recruitment's core business
• Marketing/sales promotions: at least three years experience in executive duties as a member of management in a marketing-related occupation
• Legal affairs/compliance: an expert qualified in a relevant field, such as an attorney, or alternatively someone with at least three years experience in executive duties as the head of an applicable department in a listed company, or a leading company
• Finance/accounting: an expert qualified in a relevant field, such as a certified public accountant, or alternatively someone with at least three years experience in executive duties as the head of an applicable department at a listed company, or a leading company

11. Executive officers serving in concurrent positions with other companies (Corporate Governance Code Supplementary Principle 4-11-2)
    Any concurrent positions held with other companies by directors are disclosed in securities reports and notices of convocation for general shareholder meetings. Furthermore, when a director is appointed, a board of independent directors discusses the appointment and checks that it will not impede JAC Recruitment's business operations.
     
12. Overall effectiveness of the Board of Directors (Corporate Governance Code Supplementary Principle 4-11-3)
    The Board of Directors annually evaluates and analyses the overall effectiveness of the Board of Directors.

13. Training for executive officers (Corporate Governance Code Supplementary Principle 4-14-2)
    JAC Recruitment subsidizes expenses necessary for self-study by in-house directors. External directors receive an orientation of the company's business when they are appointed, in order to facilitate discussion at meetings of the Board of Directors. Due to the nature of our business, we also conduct annual training on the protection of personal information for all officers, and we also invite experts from outside the company to provide relevant training as appropriate whenever there are any significant system changes, etc., required by the laws and ordinances related to the Companies Act, compliance, or corporate governance.
     
14. Constructive dialog with shareholders (Corporate Governance Code Principle 5-1)
    JAC Recruitment is proactive in seizing various opportunities to promote constructive dialog with shareholders, including general shareholder meetings, with the aim of improving corporate value in the medium to long term. We explains our management policy to shareholders in a clear and easy-to-understand manner in an effort to gain their understanding, and we also try to respect the views and positions of each shareholder and respond to them in an appropriate manner.
    1. The Representative Director and CEO oversees all dialog with shareholders and works to achieve constructive dialog with them.
    2. The Head of Administration is responsible for Investor Relation (IR) activities. The IR Team, which is in charge of IR, cooperates with the General Affairs & Accounting Department as appropriate and also liaises with any related departments such as the Operating Controls & Legal Affairs Department to support smooth IR activities and management dialog with shareholders.
    3. In addition to holding individual meetings with shareholders and institutional investors, we also host briefings and similar meetings for institutional investors and analysts. We also take part in briefings for investors hosted by securities companies, etc., to try and enhance dialog with shareholders and investors.
    4. Once every six months, the Representative Director and CEO and the General Manager of Administration report details of discussions with shareholders to the Board of Directors, to make the Board aware of the opinions and concerns of shareholders that have been identified through discussions, which can then be reflected in business operations.
    5. Insider information is managed in accordance with the Regulations on the Management of Insider Trading, and the period before the announcement of financial results is designated as a "quiet period", when dialog with shareholders and institutional investors is restricted.

15. Formulation and publication of management strategies and plans (Corporate Governance Code Principle 5-2)
    As recruitment consulting professionals, we aim to become the global number one in terms of both service quality and profitability by 2030, as outlined in our long-term management vision "JAC as No.1". To achieve this, we are focusing on investing in growth and on enhancing human capital, essential to improving service quality. We are also strongly developing our recruitment consulting business in promising overseas markets, centred on expanding our share of the domestic white-collar recruitment consulting market, which has both profitability and growth potential.
    We recognise that raising profitability of capital more than the cost of capital is an essential requirement for management, and so we aim to obtain market reputation by realising higher profitability of capital.
    We recognise 8.2% as a cost of capital, which is determined by the weighted-average cost of capital (WACC). On the other hand, our return on equity (ROE) is 36.4% at the end of FY2023, far exceeding our cost of capital. Our ROE results for the past 10 years have also remained at a high level of 28-40%, except for the COVID-19 crisis in 2020. In addition, the market-to-book value ratio (PBR) at the end of FY2023 was 6.02 times, maintaining a high level of 5-7 times in the past 10 years.
    Our core business is the recruitment consulting business, which requires little funding for capital expenditures. We have virtually no interest-bearing debt and the cost of capital is composed entirely of the cost of equity capital. To maintain and improve our high level of ROE and PBR in the future, we recognise that the growth rate of operating income margin and net income will be the most critical financial indicators. We aim to maintain a high dividend payout ratio and maintain a certain level of internal reserves for business investment for future growth, while achieving profit growth that exceeds the expansion of shareholders' equity. We view the human resources business as a single business portfolio. When investing in a new business, we use the minimum hurdle rate to realise a return on investment (ROI) that exceeds the cost of capital as one of our criteria for determining the level at which we can maintain our current capital efficiency.
    In the future, we will further disclose the social impact of our efforts to enhance non-financial capital and strive to spread shareholder value (equity spreads).

 

Resolution of the Board of Directors, 11 December, 2023
 

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In accordance with the Companies Act and the Enforcement Regulations of the Companies Act, the Board of Directors resolved the following Basic Policy for Establishing and Organizing an Internal Control System, as well as matters necessary for the development of the system.
We strive to build an excellent internal control system by continuously monitoring and constantly reviewing the operation of our internal controls.
 

1. A system to ensure that the execution of duties by the directors and employees of the Company, as well as the directors, executive officers, members who execute the business, persons who are to perform the duties set forth in Article 598 Paragraph 1 of the Companies Act, and other persons equivalent thereto (hereinafter referred to as "Directors, etc.") and employees of the Company’s subsidiaries comply with laws and regulations and the articles of incorporation
   1. The Code of Ethics shall be established to ensure that directors, officers and employees of the Company and its subsidiaries (hereinafter referred to as the "Company Group") are fully aware of their corporate social responsibilities, comply with laws and regulations and the articles of incorporation in the performance of their day-to-day management and business activities, and conduct themselves in conformity with social ethics. Directors, officers and employees who serve in management duties of the Company Group are aware that their role is to realize the spirit of the Code of Ethics, and are committed to taking the initiative in putting this code in mind and ensuring that all concerned parties are fully aware of it.
   2. The Company shall establish policies and plans for the development of the internal control system as a company with an audit and supervisory committee.
   3. The Company shall establish the board of independent officers as an advisory body to the board of directors from an independent and objective standpoint.
   4. In the event a director of the Company Group discovers a violation or an act that is likely to become a violation of the laws and regulations or the articles of incorporation by another director, such director shall immediately report such violation to the audit and supervisory committee member appointed by the audit and supervisory committee (hereinafter referred to as "appointed committee member") and the board of directors.
   5. The Company’s department in charge of compliance shall endeavour to establish the management of the Company Group's compliance system. In addition, each of the Company Group’s companies shall manage its system.
   6. The Company shall establish an internal audit office, under the direct control of the audit and supervisory committee, which verifies, evaluates and advices whether the internal controls are effectively and efficiently functioned and operated. The appointed committee member and the internal audit office shall conduct audits on a regular basis or on a depending-on-the-situation basis, as the case may be.
   7. The Company Group shall work with lawyers and police to respond systematically, and in a resolute manner, to anti-social forces and organizations that pose a threat to the order and safety of civil society.
   8. In accordance with the Whistleblower Protection Act, the Company Group shall establish the whistleblower protection system to establish a mechanism for the proper handling of reports and consultations concerning systematic or personal violations of laws and regulations from our and domestic subsidiaries' officers, employees (permanent employees, contract employees, part-time employees, dispatched employees, etc.) and retirees. 
      In addition, as a person engaged in Whistleblower Response Services, the Company shall designate persons engaged in Whistleblower Response Services, including a full-time member who is appointed committee member. Foreign subsidiaries shall comply with the Rules for Internal Reporting in accordance with the laws and regulations of each country.
   9. The Company Group shall establish an internal system to ensure compliance with accounting standards and other relevant laws and regulations and to ensure the legality and appropriateness of financial reporting.
2. System for the preservation and management of information related to the execution of duties by the Company’s directors
   1. The Company shall establish document management regulations that provide for the preservation and management, etc. of information pertaining to the execution of duties by directors, such as records pertaining to decision-making at important meetings including the board of directors meeting and documents approved by each director in accordance with the administrative authority regulations, and shall organize an appropriate system for the preservation and management of information.
3. Regulations and other systems for managing the risk of loss for the Company Group
   1. The Company Group recognizes that the identification, assessment, and management of risks that may have a significant impact on corporate management and business continuity are important issues, and in order to properly manage these issues, each executive director shall establish and organize systems to manage risks, and establish regulations, rules and guidelines, etc. in accordance with the content of the risks. 
   2. The Company Group conducts training and enlightenment for directors, officers and employees on risks that have a significant impact on corporate management and business continuity (information security management, protection of personal information, etc.), and spread awareness about and promotes mindset for matters related to risk management.
   3. In order to appropriately manage the risk of loss to subsidiaries, the Company shall establish the subsidiary management regulations and conduct risk management of subsidiaries in accordance with said regulations.
   4. In order to understand the actual status of the Company Group's operations and assets, as well as the envisaged risks and their management, and to ensure management efficiency, and based on the audit plan of the audit and supervisory committee's and the established internal audit regulations, the internal audit office shall audit the status of risk management and evaluate the effectiveness of each of the Company Group’s companies, report to the audit and supervisory committee and the board of directors. The Company Group shall organize a system for taking improvement measures.
4. System to ensure the efficient execution of duties by the directors of the Company and the Directors, etc. of the Company’s subsidiaries
   1. Each company in the Company Group shall establish organizational rules, administrative authority rules, and a list of administrative authority to clarify the execution of duties and administrative authority of the boards of directors, etc. of each company and to ensure the efficiency of execution.
   2. In order to ensure the efficient execution of duties by directors, the Company Group shall hold the Board of Directors meetings and the management report meetings in each company once a month in principle, and extraordinary meetings shall be held whenever necessary.
      In addition, progress toward annual targets, etc. will be periodically verified through performance reports at the Board of Directors meeting.
   3. The Company shall regularly hold executive meetings with the members composed of each director in charge of operations and associate directors for the purposes of disseminating management strategies as well as timely and appropriately reporting the current status of each department.
5. System for reporting to the Company any matters related to the execution of duties by Directors, etc. of the Company’s subsidiaries and other systems for ensuring the appropriateness of the business operations of the Company Group.
   1.  In order to ensure the appropriateness of the Company Group business operations, the Code of Ethics shall be established, which applies to all companies of the Company Group, and each company shall stipulate its regulations.
   2. In order to ensure the proper and efficient operation of the Company’s subsidiaries, the Company shall establish the subsidiary management regulations and manage subsidiaries in accordance with said regulations.
   3. The Company Group shall hold regular liaison meetings to share information, communicate with each other, and unify the group management policies among the group. At the same time, we dispatch officers to our subsidiaries as necessary.
   4.  Internal Audit Office shall conduct internal audits of subsidiaries in cooperation with the Audit & Supervisory Board Member(s) of subsidiaries as appropriate and reports the results of such audits to the Audit & Supervisory Committee.
6. Matters related to directors and employees who assist the audit and supervisory committee (hereinafter referred to as "Duty Assisting Employees, etc.")
   1. In the event that the audit and supervisory committee requests that Duty Assisting Employees, etc. be appointed to assist in the performance of its duties, the Duty Assisting Employees, etc. shall, upon discussion with the board of directors, be appointed to assist the audit and supervisory committee in the performance of its duties.
7. Matters ensuring the independence of Assisting Employees, etc. from the Company’s other directors (excluding directors who are audit and supervisory committee members) and the practicability of instructions given to Duty Assisting Employees, etc. by the Company’s audit and supervisory committee
   1. Duty Assisting Employees, etc. shall not concurrently serve as an employee of another department nor shall be directed or ordered by a person other than the directors who are audit and supervisory committee members (hereinafter referred to as an "audit and supervisory committee member").
   2. During the period of assistance designated by the audit and supervisory committee, the authority of direction and supervision, personnel transfer, personnel evaluation, etc. towards Duty Assisting Employees, etc. shall be transferred to appointed committee member designated by the audit and supervisory committee, and the Duty Assisting Employees, etc. shall not be subject to the instructions and orders of directors who are not audit and supervisory committee members, thereby ensuring the independence of, and the practicability of instructions towards, Duty Assisting Employees, etc.
8. System for the directors (excluding directors who are audit and supervisory committee members) and employees of the Company as well as Directors, etc. and other persons equivalent thereto and employees of the Company’s subsidiaries, or persons receiving reports from such persons, to report to the audit and supervisory committee of the Company, as well as other systems related to reports to the audit and supervisory committee of the Company
   1. The Company Group’s directors (excluding directors who are the Company’s audit and supervisory committee member) and directors in charge of business execution shall, from time to time, report on the status of the business execution for which they are in charge at important meetings such as the board of directors meeting attended by the audit and supervisory committee member.
      If requested by the audit and supervisory committee, they shall attend the committee and report the matters which the committee requests, etc.
   2. All employees of the Company Group shall immediately report to the appointed committee member upon discovering any other fact that may cause serious damage to the Company Group such as any violation of laws and regulations.
   3. The status of whistleblowing under the whistleblowing system shall be reported promptly to the appointed committee member.
   4. The Company Group shall prohibit any employees of the Company Group who has reported to the audit and supervisory committee from being treated disadvantageously on the grounds of making such report, and shall ensure that all employees of the Company Group are fully aware of such prohibition.
9. Matters concerning the procedures for advance payment or reimbursement of expenses or any other policy concerning the disposal of expenses or liabilities arising from the execution of the duties of our Audit and Supervisory Committee Members (limited to those relating to the execution of the duties of the Audit and Supervisory Committee)
   1. Where an Audit and Supervisory Committee Member demands prepayment of expenses or reimbursement of expenses from the Company for the performance of their duties, the Company may not promptly dispose of such expenses or liabilities or refuse such reimbursement, except in cases where it is found that the expenses relating to such demand are not necessary for the performance of the duties of the Audit and Supervisory Committee Member.
10. Other systems to ensure effective audits by the Company’s audit and supervisory committee
    1. Directors (excluding directors who are the Company’s audit and supervisory committee member) and employees of the Company Group shall cooperate in the implementation of audits based on the audit plan prepared by the audit and supervisory committee every fiscal year.
    2. The Company’s representative director shall meet and exchange opinions with the appointed committee member or audit and supervisory committee on a regular basis or at the request of the audit and supervisory committee.
    3. In order to improve the effectiveness of audits by the Audit and Supervisory Committee and to conduct audits efficiently and smoothly, Internal Audit Office shall perform auditing operations in accordance with the instructions and orders of the Audit and Supervisory Committee. The Internal Audit Office personnel shall be subject to Section 7 above.
    4. Internal Audit Office shall report the results of the audit to the Audit and Supervisory Committee. The Audit and Supervisory Committee shall report the results of audits by the Internal Audit Office to the Board of Directors.
    5. Decisions on the appointment or transfer of Internal Audit Office personnel shall be subject to the consent of the Audit and Supervisory Committee.
    6. The Audit and Supervisory Committee shall regularly hold exchanges of opinions with accounting auditors in order to strengthen cooperation. 
       Audit and supervisory committee shall seek the opinions of outside experts as necessary.

 
January 23, 2007: approved by the Board of Directors
January 22, 2008: revised
January 27, 2009: revised
January 26, 2010: revised
January 27, 2011: revised
August 24, 2011: revised
March 27, 2012: revised
May 15, 2015: revised
January 24, 2018: revised
March 24, 2022: revised
March 28, 2023: revised

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