Corporate governance policy/basic concept

Regarding corporate governance
basic way of thinking

J-OIL MILLS Group has established a business execution system and monitoring/ Supervise system in accordance with the Companies Act in order to meet society's expectations and fulfill its responsibility to society by providing economic and environmental value.
The Group reliably operates an internal control system built in accordance with the Companies Act and the Financial Instruments and Exchange Act, conducts Internal audit, and improves the effectiveness of the system by correcting deficiencies.
In order to achieve honest and highly transparent management that earns the trust of stakeholders, we are Strengthen Corporate Governance and enhancing internal controls with the aim of improving its effectiveness.

The latest corporate governance report can be viewed below. (Updated December 2023)

History of initiatives to improve governance

Basic policy of capital policy

We will implement appropriate capital policies based on an understanding of capital costs in order to increase corporate value. In addition, we will allocate operating cash flow and external funding in a well-balanced manner to growth investments including M&A, capital investments, and shareholder returns.
By setting target values for ROE and ROIC as important management indicators, we aim to build an optimal capital structure that matches our business structure and to achieve a structure that stably exceeds the cost of capital.
Regarding dividends, we will allocate the cash flow generated through earnings expansion to investments for growth, and aim to stably and continuously strengthen returns to shareholders by setting a consolidated dividend payout ratio of 40%.

Presence of takeover defense

It was abolished at the conclusion of the regular The General Meeting of Stockholders for the fiscal FY2020.

Policy regarding cross-shareholdings

The Group has positioned "improving asset efficiency" as a key issues in its 6th Medium-Term Business Plan, and has set a policy of halving its cross-shareholdings by fiscal 2024 and allocating it to investments aimed at growth.
We will hold the minimum number of shares that are deemed to contribute to improving our corporate value, and when deciding whether or not to hold them, we will check the significance of each holding from a multifaceted perspective, including the economic rationality of the holding and the probability of improving profitability. However, stocks that are deemed to be meaningful to hold will be periodically verified by Board of Directors, and stocks for which the validity of holding cannot be confirmed will be sold after obtaining the full understanding of business partners.
In addition, even if there is a value in holding shares, we may sell them in accordance with our basic policy of reducing cross-shareholdings and taking into consideration the market environment, management/financial strategy, etc.

Criteria for exercising voting rights for cross-shareholdings

Based on the premise that it will contribute to improving our corporate value, we will comprehensively judge whether the investment will contribute to the sustainable growth and medium- to long-term corporate value of the investee company, based on the following criteria.

• Quantitative evaluation: safety, profitability, performance, dividend payout ratio, impairment risk due to stock price decline, etc.
• Qualitative evaluation: Important subsequent events, notes regarding going concern assumptions, unusual opinions from Accounting audit, serious illegal acts or anti-social acts, etc.

Status in 2022

We sold 6 stocks (sales amount: 474 million million yen) out of our cross-shareholdings, and sold all of 4 stocks.

Changes in balance sheet amount of securities (submitting company) and number of securities