JR Central's Board of Directors is composed of 13 members (including five outside directors) and chaired by the company chairman. JR Central also employs an auditor system, and its Audit and Supervisory Board consists of four members (three of whom are outside auditors). (The figures are as of June 26, 2023.)
As a general rule, the Board of Directors meets at least once a month to get the purpose and progress, etc. of the measures for important management matters, as well as statutory matters, carefully explained to deliberate thoroughly and make decisions lawfully and appropriately, and supervise the status of business execution of Directors. A Management Meeting is held for in-depth discussion of important management issues. Chaired by the president, the Management Meeting is attended by all full-time directors, Audit and Supervisory Board members, and some corporate officers. By deliberating on a wider range of management matters ahead of Board of Directors meetings, discussions at the subsequent Board of Directors meetings are enhanced. We request members of the Audit and Supervisory Board to attend meetings of the Board of Directors, the Management Meeting and other important meetings, as we endeavor to ensure the legality of management measures during the deliberation process. In addition, the Board of Directors analyzes and evaluates the effectiveness of the Board of Directors as a whole based on self-evaluation by each Director and Audit and Supervisory Board Member. Based on the results, the Board of Directors makes efforts to further enhance the functions of the Board of Directors. Further, JR Central strives to ensure the appropriate execution of business by managing and providing guidance to subsidiaries, etc. where necessary.
From the perspective of ensuring the improvement of objectivity and transparency in the determination of personnel and remuneration for officers, JR Central established the Personnel Remuneration Committee consisting of all independent outside directors (４ persons) and the president. The Committee deliberates attended by all committee members, prior to the decision related to personal and remuneration of the Board of Directors, and decisions made by the Board of Directors regarding the determination of personnel and remuneration are based on the content of deliberation by the Committee.
Although we introduced the corporate officer system in May 2003, we introduced an executive system in June 2012 with the aim of further accelerating decision-making, enhancing discussions, and further clarifying roles for directors and corporate officers, who are responsible for operation, in order to appropriately respond to changes in the business environment influencing our management decisions in a timely manner.
Audit and Supervisory Board Members not only attend important meetings such as the Board of Directors and the Management Meetings, but also inspect the state of execution carried out at head offices, railway operations divisions, branch offices, field offices, and subsidiaries, etc. based on plans enacted by the Audit and Supervisory Board to strictly promote their audit work. In addition, we confirm the effectiveness of the activities of the Audit and Supervisory Board Members and Audit and Supervisory Board through self-evaluations by each Audit and Supervisory Board Members. To ensure effective audits by the members of the Audit and Supervisory Board, JR Central also provides an assistant system in which our employees are assigned as full-time staff to support auditors work.
Internal audits are performed by the Audit Department on the overall work of JR Central, its major subsidiaries, and other related companies from the perspective of compliance, efficiency and effectiveness of operations. The Audit Department conducts audits of overall operations of the Company and its major subsidiaries from the viewpoints of compliance, efficiency, and effectiveness of business operations by reviewing documents such as business materials and contracts, checking actual work conditions, and interviewing relevant persons, and reports the results to management.
Based on generally accepted accounting standards, JR Central has appropriate accounting audits made by Deloitte Touche Tohmatsu LLC, which has been selected to be our accounting auditor. Audit and Supervisory Board Members, internal audit departments, and accounting auditors cooperate with each other by exchanging information periodically or as necessary and receive necessary information from each department involved in internal control to confirm the status of implementation of each item stipulated in the Fundamental Corporate Governance Policies.
JR Central makes decisions regarding the Fundamental Corporate Governance Policies, which includes the following items, in Board of Directors meetings.
System to ensure that the execution of duties by directors and employees is in accordance with laws and the articles of incorporation
The Board of Directors monitors the status of director management along with making legal and appropriate decisions upon fully discussing issues stipulated by the law and issues of importance to management.
The department in charge of internal audits performs internal audits of the work of directors, corporate officers and employees to determine whether their work is legal and appropriate based on laws, the articles of incorporation, and internal stipulations.
We set a system to obtain advice as necessary from external experts, such as retained lawyers, and strive to ensure legal execution.
We take action as necessary, such as by not giving in to unlawful demands, establishing departments to handle such issues and forming close relationships with external expert agencies, in order to shield ourselves from anti-social groups.
System related to storing and managing information concerning the execution of duties of directors
We properly store and manage documents for which storage has been determined as needed in accordance with internal regulations.
Stipulations and systems related to managing risk of loss
We make proper decisions regarding items for which each department is responsible in accordance with their importance, such as by seeking approval by upper managers and/or through meetings.
In regards to preventing train accidents, we actively promote effective countermeasures through discussion on Railway Safety Promotion Committees.
System to ensure that the duties of the director are executed efficiently
We introduce an efficient work system by clearly stipulating the duties of each department and its authority in accordance with internal regulations, and by properly assigning personnel in accordance with the task and work load.
System for ensuring the suitability of work performed by corporate groups comprised of JR Central and subsidiaries, etc.
The Board of Directors in each subsidiary, etc. monitors the work of directors along with making legal and appropriate decisions upon fully discussing issues stipulated by the law and issues of importance to management.
We make proper decisions regarding subsidiaries, etc. in accordance with their importance and established procedures, such as by seeking approval by upper managers and/or through meetings.
We introduce an efficient work system by clearly stipulating the duties of each department and its authority in accordance with internal regulations in subsidiaries, etc.
In accordance with internal regulations, we manage and provide guidance for subsidiaries, etc. as needed based on agreements signed with the companies that stipulate that certain important issues should be discussed and reported.
Our Internal Audit Department performs internal audits of the work of directors, corporate officers, and employees in major subsidiaries, etc. to determine whether their work is legal and appropriate based on laws, the articles of incorporation, and internal stipulations.
Subsidiaries, etc. establish a necessary system, such as not giving in to unlawful demands, establishing departments to handle such issues, and forming close relationships with JR Central and external expert agencies, in order to shield themselves from anti-social groups.
System related to employees that have been assigned to support Audit and Supervisory Board Members at their request and matters related to the independence of those employees from directors, and matters to ensure the effectiveness of orders given to employees
Some of JR Central's employees will be designated as auditor staff for the purpose of assisting such auditors with the execution of their duties.
The Personnel Department obtains the opinion of auditors in advance in regards to auditor staff personnel.
System to enable directors and employees to report to an auditor, and other systems for reporting to auditors
If directors, corporate officers or employees discover facts that may cause great loss to the corporate groups comprised of JR Central and subsidiaries, etc. or important facts that infringe upon laws or the articles of incorporation of the JR Central or subsidiaries, etc., they must immediately report to an Audit and Supervisory Board Member or the Audit and Supervisory Board in accordance with internal regulations.
Directors, corporate officers and employees report on the execution of their duties if requested by an Audit and Supervisory Board Member or the Audit and Supervisory Board.
Directors, corporate officers, and employees who made the above report are not subject to disadvantageous treatment for making the said report.
System to enable directors, Audit and Supervisory Board Members, and employees of subsidiaries, etc. to report to an Audit and Supervisory Board Member of JR Central
If directors, corporate officers, and employees of subsidiaries, etc. discover facts that may cause great loss to the subsidiary, etc. or important facts that infringe upon laws or the articles of incorporation, they must immediately report to an Audit and Supervisory Board Member of the subsidiary, etc. in accordance with the internal regulations of the subsidiary, etc. An Audit and Supervisory Board Member of the subsidiary, etc. reports to an Audit and Supervisory Board Member of JR Central if he/she receives a report regarding the above fact or discovers the above fact.
Directors, Audit and Supervisory Board Members, corporate officers, and employees of subsidiaries, etc. who made the above report are not subject to disadvantageous treatment for making the said report.
Other systems to ensure that audits of auditors are performed effectively
Audit and Supervisory Board Members attend important meetings, such as Management Meetings, in addition to Board of Directors meetings to ensure the legality of management measures, beginning with the deliberation process.
The department in charge of internal audits strengthens its links with Audit and Supervisory Board members and accounting auditors in an effort to enhance audits.
Expenses, etc. resulting from the execution of duties of Audit and Supervisory Board Members are appropriately processed according to the internal regulations.
JR Central not only stipulates internal regulations based on the law, etc., but also conducts employee education on various occasions with the aim of thoroughly complying with the law, etc., when executing work. In addition, we also have established a whistle-blowing system. We have whistle-blowing windows not only within the Company but also in an external law firm in order to establish a system in which employees, etc. can report any violation of the law, etc., at work. Employees may report an incident anonymously, and it is clearly stated in the internal regulations to protect informants that the name of an informant will not be disclosed and they will not be treated disadvantageously for reporting the incident. We also post flyers describing the whistle-blowing system and contact information for the contact points in all workplaces with the aim of widely disseminating the system.
JR Central has established the Railway Safety Promotion Committees, etc. at the head office, railway operation divisions, branch offices, and in each area from the perspective of preventing railway accidents, labor accidents and disasters. Through these efforts, JR Central formulates and promotes safety countermeasures through an integrated organization that stretches from the head office to each field office.
JR Central also manages a control center, which plays a key role in information communication, on call 24 hours a day at each railway operation division to respond emergencies, such as accidents or disasters, and has also established a fast-response restoration structure in which employees can be gathered anytime according to the scale or impact of an accident or disaster.
Additionally, in preparation for emergencies of the Tokaido Shinkansen such as large-scale natural disasters, we established the second Shinkansen General Control Center that can substitute for the Shinkansen General Control Center for the Tokaido Shinkansen.
We periodically investigate the system and execution situation, etc., within JR Central and JR Central Group companies in accordance with a basic framework offered by the Business Accounting Council in order to confirm that they are effectively functioning. JR Central also engages in efforts to maintain the level of internal control related to financial reporting by providing feedback from these investigations to duties.
We will finance our projects by issuing corporate bonds and borrowing, in addition to the long-term loan totaling 3 trillion yen acquired using the Fiscal Investment and Loan Program (FILP) to promote the construction of the Chuo Shinkansen, and we do not plan to use treasury shares or pursue capital increase at this point.
Due to the nature of the railway business, which operates from a long-term perspective, a specific dividend amount is determined considering the business environment and results of each fiscal year based on the Company’s consistent and basic policy for the continuation of stable dividends. JR Central considers that shareholder returns through dividends are appropriate in principle, and we do not plan to purchase additional treasury stock at this point.
When we say “from a long-term perspective,” we mean that we will not cut corners as we use current proceeds from our business to take necessary steps to ensure that our rail services continue to operate steadily over the long term. For example, we will undertake such measures as large-scale renovations as well as derailment and deviation countermeasures for the Shinkansen along with working on the Chuo Shinkansen, a major long-term project. We believe that continuing a stable dividends policy will best meet the long term benefits of our shareholders. We will maintain this principle of stable dividends during the construction of the Chuo Shinkansen.