GuidelinesSustainability / Corporate Governance

1. GENERAL PROVISIONS
2. BASIS OF ORGANIZATIONAL STRUCTURE
3. BOARD AND DIRECTORS
4. CORPORATE AUDITORS
5. COMMITTEES
6. SHAREHOLDERS AND OTHER STAKEHOLDERS
7. OTHERS

1. GENERAL PROVISIONS

1-1. Purpose

These Corporate Governance Guidelines (these “Guidelines”) set forth the fundamental principles and framework for the corporate governance of JERA Co., Inc. (the “Company”), and outline the actions to be taken in support of effective governance of the Company. The Guidelines are designed to promote the Company’s sustainable growth and enhance its long-term enterprise value.

1-2. Basic Concepts concerning Corporate Governance

The Company’s fundamental philosophy is to cultivate a vibrant, self-sustaining business culture with a strong financial foundation that earns trust in the global energy market. It also seeks to build corporate governance capabilities that support independent business management and fair, timely decision-making. In line with this philosophy, the Company will establish and implement an appropriate corporate governance system based on these Guidelines and shall work continuously to enhance and strengthen such system.

2. BASIS OF ORGANIZATIONAL STRUCTURE

2-1. Outline of Organizational Structure of the Company

The Company has adopted an organizational structure comprised of:

(i) a board of directors (the “Board”), consisting of directors from the Company (the “Internal Directors”) who are familiar with the Company’s operations, and outside directors (the “Outside Directors”, and together with the Internal Directors, the “Directors”). The Directors, each of whom must have extensive knowledge and experience, are responsible for making key business decisions and overseeing the execution of the Company’s business operations; and
(ii) corporate auditors (the “Corporate Auditors”), serving as independent officers tasked with auditing the Directors’ execution of duties.

To separate the decision-making and management supervision function from the operational execution function, and to promote timely, effective decision-making, the Company has also implemented an executive officer system, whereby executive officers are responsible for executing business operations in accordance with decisions made by the Board.

Furthermore, to strengthen the Board’s supervisory functions and enhance management transparency, the Company will continue to refine its governance framework. This includes leveraging the expertise of the Outside Directors, establishing voluntary committees, and regularly reviewing its organizational design to optimize its management structure.

3. BOARD AND DIRECTORS

3-1. Roles and Responsibilities of Board

The Board is responsible for establishing the Company’s fundamental management policies, including its business strategies and plans, and for overseeing the execution of operations. These responsibilities shall be carried out in accordance with applicable laws and regulations (the “Laws and Regulations”), the Company’s Articles of Association, and any other internal rules prescribed by the Company.

3-2. Structure of Board

The Company has established a Director skills matrix to support the formation of a well-balanced Board, ensuring the collective knowledge, experience, and capabilities necessary for the Board to effectively fulfill its responsibilities. To earn stakeholder trust through objectivity, transparency, and fairness, and to incorporate diverse perspectives into management decisions, the Board also strives to maintain diversity within its overall composition. This includes diversity in professional background, expertise, international experience, work history, gender, age, and other relevant attributes. Accordingly, in addition to the executive Directors from the Company and Directors from its shareholders (the “Shareholders”), independent Directors shall also be appointed.

3-3. Appointment of Directors

Candidate Directors shall be appointed by resolution of the Board following deliberation by the Nomination Committee and with due consideration of the personal attributes and core competencies appropriate for the role, as well as the overall composition of the Board outlined in section 3-2. The Company shall also disclose the independence of Outside Directors and candidates nominated for such positions.

3-4. Directors’ Duties

Each Director owes a fiduciary duty to the Company, as stipulated under the Companies Act, and shall at all times act in accordance with such duty and all applicable Laws and Regulations.

Each Director shall proactively collect relevant information and consider agenda items prior to Board meetings. Directors are expected to seek clarification when needed, contribute informed opinions, and make every effort to support prompt, transparent decision-making through fair and appropriate procedures. Furthermore, when evaluating candidates for Director positions, both their annual attendance rate at Board meetings and the number of concurrent positions at other companies shall be taken into account to ensure they can dedicate sufficient time and attention to their responsibilities at the Company.

3-5. Directors’ Compensation

Directors’ compensation shall be decided by a resolution of the Board, within a range approved at a Shareholders’ meeting following the deliberation and advice of the Compensation Committee.

In order to provide sound incentives for the Company’s sustainable growth, performance-linked compensation may be offered to Directors in addition to fixed compensation.

3-6. Directors’ Support

The Company shall establish a system to support the Directors so that they can properly perform their expected duties relating to the Company’s core business by providing each of them with necessary training programs, appropriate and abundant information, and opportunities to obtain knowledge and advice from international external experts.

In addition, the Company shall convene a “Directors’ Discussion,” a dedicated forum where Directors can freely exchange opinions on a broad range of agenda items concerning the Company’s business challenges. This forum is intended to foster open and transparent dialogue among the Directors and to leverage the expertise of Outside Directors, thereby enhancing the quality of Board discussions and strengthening the Board’s supervisory functions over the execution of the Company’s business.

3-7. Evaluation of Effectiveness of the Board

The Board shall conduct an annual evaluation of its effectiveness and disclose the results. Based on these findings, it shall continuously strive to enhance its operations, including its composition and the quality of its deliberations.

4. CORPORATE AUDITORS

4-1. Corporate Auditors

The Corporate Auditors shall include at least one member who is independent of both the Company and its Shareholders. In addition, the Company has established the Corporate Auditors Council as a voluntary body to promote communication among the Corporate Auditors and to facilitate the sharing of information and to exchange opinions on matters relating to auditing, management, business operations, and other related matters.

4-2. Appointment of Corporate Auditors

Candidates for the role of Corporate Auditor shall be selected by resolution of the Board, based on the outcome of deliberations by the Nomination Committee and with the consent of a majority of the current Corporate Auditors. Such resolution shall consider whether the candidates possess the requisite knowledge, experience, performance record, and specialized expertise necessary for effective corporate auditing. In addition, the Company shall disclose the independence of outside Corporate Auditors and candidates nominated for such positions.

4-3. Roles of Corporate Auditors

Each Corporate Auditor shall audit the execution of Directors’ duties, acting independently and drawing upon their professional knowledge and experience. To enhance the efficiency and effectiveness of audits, Corporate Auditors shall coordinate closely with the Company’s internal audit department and external accounting auditors.

4-4. Compensation for Corporate Auditors

Compensation for Corporate Auditors shall be determined through discussions among the Corporate Auditors, within the total amount approved at a Shareholders’ meeting and based on the outcome of deliberations by the Compensation Committee. To safeguard their independence, Corporate Auditors shall receive fixed compensation only.

4-5. Support for Corporate Auditors

The Company shall establish a support system for Corporate Auditors to ensure they can obtain the information necessary to fulfill their duties. This includes providing appropriate training programs and establishing a Corporate Auditors Office to offer administrative and operational support.

5. COMMITTEES

To supplement the functions of the Board and to enhance the effectiveness of the Company’s governance, the following committees shall be established as voluntary bodies:

(i) Nomination Committee and Compensation Committee; and
(ii) Leadership Panel and Expert Committees.

5-1. Nomination Committee and Compensation Committee

The Nomination Committee and the Compensation Committee shall be established to deliberate on matters relating to the appointment and compensation of Directors, Corporate Auditors, and executive officers. Each committee shall consist of at least three (3) Directors, including at least one (1) independent Outside Director, appointed pursuant to a resolution of the Board.

5-2. Leadership Panel and Expert Committees

The Leadership Panel shall serve as a forum for deliberating and deciding management issues, and for receiving necessary reports, in accordance with policies set by the Board. The Leadership Panel shall consist of the Global CEO and Chair, the President, Director, CEO and COO, and C-suite executives and officers.

To support its deliberations with specialized insight, Expert Committees may be established to cover all major areas under the responsibility of the Leadership Panel. These committees shall provide professional advice to inform the Leadership Panel’s decision-making.

In principle, and to the extent practicable, all matters to be considered by or reported to the Board shall first be deliberated and resolved by the Leadership Panel, taking into account the advice of the relevant Expert Committees. The outcomes of these deliberations, along with any significant committee advice, will be reported to the Board.

6. SHAREHOLDERS AND OTHER STAKEHOLDERS

6-1. Ensuring Shareholders’ Rights and Equality

The Company shall endeavor to foster an environment that enables Shareholders to exercise their rights appropriately and effectively, thereby ensuring full protection of their rights and equitable treatment.

6-2. Dialogue with Shareholders and Provision of Information

The Company shall ensure that Shareholders receive information relevant to their interests in accordance with the Laws and Regulations. The Company shall also engage in regular dialogue with Shareholders to report on business performance and to foster a shared understanding of key management issues.

6-3. Transactions with Related Parties

The Company shall establish appropriate procedures and monitor transactions with related parties, including Directors and affiliated companies, to ensure such dealings do not compromise the interests of the Company, the Shareholders, or other stakeholders.

The Company shall conduct all transactions with its Shareholders and other affiliates on a fair and equitable arm’s-length basis, recognizing each party as mutually independent.

6-4. Relationships with Other Stakeholders

6-4.1. Policy

In order to fulfill its social responsibilities and achieve sustainable growth and long-term enterprise value, the Company shall foster strong relationships and pursue meaningful collaboration with stakeholders.

6-4.2. Compliance

The Company shall adhere to the JERA Group Compliance Policy and the JERA Group Compliance Code of Conduct, and shall strive to earn and maintain the trust of all stakeholders. Directors and executive officers are expected not only to comply with these standards and serve as role models for employees, but also to actively promote them within the Company and ensure that all employees conduct themselves accordingly.

6-4.3. Whistleblowing

The Company shall establish and effectively operate a whistleblowing system in accordance with internal regulations to promptly identify and address any illegal or improper conduct related to the JERA Group’s business activities. This initiative supports the Company’s commitment to conducting operations in full compliance with all applicable Laws and Regulations.

6-4.4. Sustainability

The Company is committed to contributing to the sustainable development of society and actively addressing key sustainability challenges, including social and environmental issues.

6-4.5. Diversity

The Company is committed to encouraging active participation by diverse talent, and cultivating a corporate culture that values and respects diversity in all its forms, including gender, nationality, age, and professional experience.

7. OTHERS

7-1. Amendment

These Guidelines may be revised, amended, supplemented and/or rescinded by resolution of the Board in response to future changes in the Company’s business or management environment.

7-2. Publication and Language

These Guidelines are prepared and posted on the Company’s website in both Japanese and English. In the event of any discrepancy between the Japanese version and the English version of these Guidelines, the Japanese version prevails.