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  • Organizational Governance

Organizational Governance

Last updated on October 5, 2017

Basic Concepts

In order for an organization as a collection of people to meet its social responsibility, it is essential to have an effective decision-making system to fulfill its purposes and roles. If clear and transparent decision-making is not conducted as an organization and its conduct is isolated even though each member thinks he/she judges and acts rightly, it cannot be said that organizational governance is enough. If organizational governance is not enough when addressing other six subjects, they will lack substance and it will be difficult to implement them. Accordingly, organizational governance is the basis for ensuring CSR.
J. Front Retailing’s efforts to firmly maintain sound management, create economic value such as profit return to society through the creation of employment and tax payment, and ensure appropriate management and disclosure of corporate information include the improvement of corporate bodies and internal control systems, risk management, the implementation of compliance management and proper accounting and tax procedures.

J. Front Retailing (the “Company”) is committed to reinforcing corporate governance to ensure sustainable growth of J. Front Retailing Group (the “Group”) and medium- to long-term enhancement of corporate value. The establishment of a corporate governance structure that is optimal for the Company is one of its important tasks, and as part of further strengthening of systems, the Company transitioned from a company with Audit & Supervisory Board to a company with three committees with approval at the Company’s Annual Shareholders Meeting held on May 25, 2017.

 The purposes of transition to a company with three committees are as follows:

1) Strengthening of the management oversight function by separating oversight from execution

The Company will strengthen the oversight function for business execution of the Board of Directors by separating oversight from execution.
In addition, the Company aims to promote sophistication of strategy by having the Board of Directors actively include the insights of external persons in order to hold rigorous discourse on important issues relating to the Group management.

2)Greater clarity of authority and responsibility in business execution and promotion of agile management

The Company will enable decisions of business execution to be delegated to Executive Officers, clarify the authority and responsibility between the Board of Directors and Executive Officers and between the holding company and the operating subsidiaries, and carry out speedy management decision making.

3)Improvement of transparency and objectivity of management

The Company will improve the transparency and objectivity of management by transitioning to a company with three statutory committees including Nomination, Audit and Remuneration Committees. The majority of the members of each of these committees are Outside Directors.

4) Building of an organizational structure compatible with global perspectives

The Company will build a governance structure that is easy to understand from global perspectives, such as those of overseas investors.

Corporate Governance Structure

As the core of the unified governance of the Group, J. Front Retailing as a holding company puts the strengthening of corporate governance at the top of its business agenda to ensure transparency, soundness and legal compliance of the management of the whole Group and focus on and thoroughly fulfill its accountability to its stakeholders (customers, shareholders, employees, business partners, communities and others).
The Company has four supervisory units (Management Strategy Unit, Affiliated Business Unit, Financial Strategy Unit and Administration Unit) in its corporate organization to clarify each organization’s roles, responsibilities and authorities, thereby improving supervisory function and the internal control systems of the whole JFR Group. In addition, an executive officer system is in place to separate between decision-making and implementation, which facilitates speedier decision-making and implementation.
The term for Directors and Executive Officers is one year and the Human Resources and Remuneration Committee, on which Outside Directors sit, is entrusted to determine their remuneration based on their individual annual performance to clarify their responsibilities for the enhancement of management and business results.
The Company is a company with an Audit & Supervisory Board and it has a Shareholders Meeting, a Board of Directors, an Audit & Supervisory Board and Accounting Auditors as the company organizations provided in the Companies Act, while adopting an executive officer system as a body to perform operations. The Compliance and Risk Management Committee is also in place as an advisory body to the Board of Directors and a whistleblowing system is adopted to resolve various issues related to compliance and risk management. A post in charge of Corporate Governance Promotion was created in the Management Strategy Unit to address the sustainable growth of the Group and the medium- and long-term enhancement of corporate value.


Corporate Governance Guidelines(PDF 558KB)

Corporate Governance Report(PDF 1.2MB)


Risk Management / Compliance

The “Risk Management Committee” systematically manages and deals with overall risks mainly including strategy risk from a company-wide perspective and makes decisions from a perspective focused on risk management. The Committee is chaired by President and Representative Executive Officer and consists of senior executive general managers of supervisory units, presidents of major subsidiaries and other members. Using extensive expertise of the members elected from supervisory units, the Committee assesses various risks, develops measures against them and manages its progress.
In addition, the Company has established a “Compliance Committee” (whose membership includes a legal advisor) to properly address the issues on the Group’s compliance management. The Committee draws up policies for addressing serious compliance-related violations, and in close cooperation with departments in charge of compliance promotion, builds a base for compliance structure (development of promotion system and promotion plan, etc.) and continuously oversees its operation to promote compliance with laws and regulations, business ethics and others.
The content of discussions at the meetings of the Risk Management and Compliance Committees is reported to the Audit Committee on a regular (twice or so a year) and timely basis.

Compliance and Risk Management Manual

The basic framework of the compliance system is based on a binary structure consisting of “voluntary compliance with laws and regulations, corporate ethics and others in conducting business in all companies and divisions in the Group” and “guidance, supervision and strict audit by compliance divisions, operational audit divisions and others.”
And we have developed JFR Group Compliance and Risk Management Manual to be followed by all executives and employees of J. Front Retailing Group, which clarifies the systems, the principles of action and the code of conduct to implement compliance management.
The principles of action consist of four perspectives and specify the code of conduct in each of these perspectives. Each employee carries a Compliance Self-check List to self-check his/her daily behavior and the List is displayed on a poster at each company to promote daily compliance behavior.

Four perspectives of compliance principles of action and code of conduct

1. Always put customers first

We will always put the realization of customer satisfaction first and gain trust and support from customers through faithful actions in compliance with laws and regulations, the Company’s regulations and other rules such as the fulfillment of promises with customers, the development and provision of socially useful and safe products and services and the ensuring of fair labeling.

2. Promote high quality management for sound growth and development

With the aim of becoming an open corporation that communicates with society at large, we will promote high quality management for sound growth and development by conducting fair, transparent and proper corporate activities, while maintaining fair relations with business partners whereby both grow together.

3. Create a fair and vibrant organization where individuality and ability are respected

With respect for each individual’s basic human rights, we will form a vibrant organization where workers can be motivated to use their ability by creating a safe and secure work environment in compliance with labor-related laws and treating them based on a fair and equal evaluation.

4. Contribute to society (good corporate citizen living in harmony with society)

As a good corporate citizen living in harmony with society, we will actively conduct creative business activities that contribute to society at large including the contributions to communities and environmental initiatives to achieve sustainable growth.