1.Basic Policy

JAPEX recognizes the importance of corporate governance in increasing earnings through more efficiency management and ensuring that the Company continues to play a valuable role in Society. We have therefore adopted an executive officer system, appointed outside directors and corporate auditors who bring to the Company external perspectives, established an internal audit division and put in place an effective audit and other systems to further enhance corporate governance.

2.Corporate Governance Structure

As well as the representative directors, JAPEX's directors and/or executive officers whose duties are assigned by the Board of Directors, serve as the Company's operating officers. The Board of Directors and corporate auditors (including the Board of Corporate Auditors consisting of all corporate auditors) in turn supervise the execution of these responsibilities. JAPEX has adopted the Corporate Auditor System.

JAPEX has appointed 13 directors, one of whom is selected from outside the Company. The Board of Directors meets regularly once per month, and retains decision-making authority over important decisions. It also serves in a supervisory role by receiving reports on the status of operations submitted by directors and executive officers. Furthermore, from the perspective of increasing the speed of decision-making, an Executive Committee composed of directors and other executives based at the Company's headquarters has been established. This Committee meets in principle twice per month to make decisions on matters that are not the responsibility of the Board of Directors and to conduct discussions to support the decision-making of the Board of Directors.

JAPEX appoints four corporate auditors, two of whom are outside corporate auditors. Corporate auditors attend meetings of the Board of Directors. Standing auditors attend meetings of the Executive Committee and other important meetings, and fill a supervisory function through exchanges of opinions as necessary with the various directors and executive officers responsible for business execution.
Although each corporate auditor commands independent auditing authority, auditing policy and the assignment of auditing responsibilities are decided by the Board of Corporate Auditors.

The outside director and two outside corporate auditors have no personal, financial, business relationship or other interests with the Company.
The outside director and outside corporate auditors must not possess a conflict of interest with ordinary shareholders and must have a neutral and equitable status to pursue profits on behalf of the Company's shareholders. Each of the current three outside officers meets these conditions.
In addition, the selection of the current outside director and outside corporate auditors has been determined to be valid based on a corporate governance perspective that accounts for the mix and number of directors and corporate auditors of the Company.

The Auditing Department, headed directly by the president, oversees business execution in all departments in terms of compliance with laws and internal Company regulations.
The internal audit is conducted sequentially based on an annual plan, with the results reported to the president each time. When necessary, guidance and advice are also provided to relevant business departments.

The accounting auditor who conducted the audit of the Company's financial statements and the internal control practices for the fiscal year under review was Ernst & Young ShinNihon LLC. The names of the individual accounting auditors who executed the audit are listed below:
Accounting auditors: Kazuhiko Umemura, Hiroaki Kosugi
Composition of auditors: 8 certified public accountants, 15 assistant auditors

The Board of Corporate Auditors receives prior explanations on the audit plan and explanations of audit implementation at the time of receipt of the audit report from the accounting auditor, while full-time corporate auditors also receive implementation status reports of the accounting audit, when necessary.
The internal control report compiled by the Internal Control Department is submitted to the president, Board of Corporate Auditors and the accounting auditor. The department also provides regular explanations on the status of the audit to fulltime corporate auditors.

As well as the representative directors, JAPEX's directors and/or executive officers whose duties are assigned by the Board of Directors, serve as the Company's operating officers. In order to strengthen the oversight function of the Board of Directors, JAPEX also appoints an outside director with a high degree of independence and insight. The outside director and outside corporate auditors stand in an independent position from the Company's executive management team to actively offer ideas on resolution proposals and deliberations, provide advice and engage the Board of Directors in dynamic discussion.
Through an oversight structure where outside directors and outside corporate auditors provide ideas and opinions to the representative directors and executive officers who are familiar with each delegated responsibility and act with responsibility, JAPEX believes objectivity and fairness are guaranteed in the decision-making process.

3.Structures regarding Internal Control and Risk Management Systems JAPEX

Structures regarding Internal Control and Risk Management Systems JAPEX, with the Internal Control Committee and the Internal Control Department as its main organs, continually conducts reviews of and implements improvements to its internal control and risk management structures in order to ensure operations are executed appropriately. In compliance with the Companies Act and its enforcement regulations, JAPEX has developed the required structures to ensure operations are conducted appropriately according to the following policy.

In accordance with regulations and resolutions of the Board of Directors, each director, based on their individual responsibilities and authority, promotes mutual supervision through discussions within and reports to the Board. Corporate auditors may offer their opinions to the Board where necessary.

Minutes of meetings of the Board of Directors, management approval documents, contracts and important documents that show the status of the execution of business matters are stored. The details of how these documents are handled are determined by specific document handling regulations.

Credit management regulations, market risk management and derivative trading regulations and emergency response procedures are reviewed, and where necessary, procedural manuals created and other steps taken from the perspective of risk management.

In principle, the Board of Directors meets monthly, to conduct swift decision-making on matters requiring a resolution of the Board of Directors as determined in advance through discussion by the Executive Committee. The Board also ensures efficient business execution by delegating authority in accordance with decisions and authorization regulations.

The duties of employees are managed in accordance with regulations for each administrative process and procedural manuals in each department; the Auditing Department monitors the effectiveness of internal control systems and reports the results to the president.

The parent company's Internal Control Committee is responsible for communicating JAPEX's internal control policy to principal Group companies, and manages Group companies in accordance with the rules for administering subsidiaries and affiliated companies. In addition, the parent company's Auditing Department conducts regular audits of principal Group companies.

At least one employee must be assigned to the secretariat of the Board of Auditors to perform duties as instructed by the Board of Auditors.

Appointment, transfer and other personnel matters related to the employee(s) appointed to the secretariat of the Board of Auditors require the prior approval of the Board of Auditors.

The directors must submit reports to the corporate auditors at monthly meetings of the Board of Directors, and refer the corporate auditors to management approval documents. In the event that directors discover facts that could lead to substantial damages to the Company, they must immediately report them to the Board of Auditors.

The Auditing Department and the accounting auditor must regularly provide information to the corporate auditors.

To ensure the reliability of financial statements, an internal control system related to financial statements will be established and effectively operated, and its effectiveness will be evaluated.
In addition, JAPEX, in executing decisions regarding business matters, makes organizational decisions at the Executive Committee or when necessary at the Board of Directors, under the responsibility of directors and executive officers in charge of each business group, based on an assessment of operational risk (planning, strategy, finance and credit risk). JAPEX conducts business operations according to this phased approach to decision making, and has developed a framework for managing operational risk, including the creation of various operating manuals developed for the execution phase. In addition, the Internal Control Committee and Internal Control Department create risk-mapping scenarios for specific operational risks and conduct reviews of risk management structures that include principal Group companies.

4.Details about Remuneration and Compensation

For the fiscal year under review, remuneration provided to directors and corporate auditors as well as compensation provided to the accounting auditors are presented as follows.

1.Total Remuneration, Breakdown of Remuneration and Number of Applicable Officers by Classification

Class	Total Remuneration （Millions of yen）	Breakdown of Remuneration（Millions of yen）			Number of Officers (Persons)
		Base  Pay	Bonus	Retirement Benefit
Directors （Excluding the outside director）	544	359	64	119	16
Corporate auditors （Excluding the outside corporate auditors）	42	29	4	8	2
Outside director and outside corporate auditors	46	36	－	10	3

Note: The number of officers above includes one director who retired(passed away) as of April 6, 2010 and three directors who retired at the conclusion of the 40th Annual General Meeting of Shareholders held on June 23, 2010.

2.Director Remuneration Policy

Monthly remuneration for each director is determined based on a resolution passed by the Board of Directors, while monthly remuneration for each corporate auditor is determined based on discussions among corporate auditors. Monthly remuneration is set within the ceiling determined by the resolution passed at the General Meeting of Shareholders (directors: 40 million yen; corporate auditors: 5 million yen).
Based on approval received at the General Meeting of Shareholders, as well as monthly remuneration, the total bonus paid to directors is determined based on a resolution passed by the Board of Directors, while the total bonus paid to each corporate auditor is determined based on discussions among corporate auditors.
Based on a resolution passed at the General Meeting of Shareholders, the retirement benefit is awarded to a retiring director or corporate auditor following the prescribed standard of the Company with the specific amount, payment date and method determined voluntarily for a retiring director by the Board of Directors and through a discussion among corporate auditors for a retiring corporate auditor.

1.Compensation based on auditing and attestation JAPEX: ¥60 million Consolidated subsidiaries: ¥26 million

2.Compensation based on other services

JAPEX: ¥1 million
Consolidated subsidiaries: ¥2 million

Other services encompass advice and instructions regarding internal controls as they relate to financial reporting as well as the application of International Financial Reporting Standards.
Compensation provided to accounting auditors is determined dased on such factors as the number of auditing days.