Corporate Governance

Basic Stance

We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. To become a company which enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, improve management efficiency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the transparency of management for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in investor relations' activities by holding meetings with shareholders and investors.

Establishment and Improvement of Corporate Governance

In 1999 Komatsu Ltd. introduced the Executive Officer System and has been working to separate management decisionmaking and supervisory functions from executive functions to the extent permitted by laws and regulations. At the same time, we also limit the Board of Directors to a small number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough discussions of important management matters and prompt decision making. We have also established the International AdvisoryBoard (IAB) as a means to supplement executive functions.

Corporate Governance of Komatsu

Corporate Governance of Komatsu

Organizational Profile

Board of Directors

Komatsu Ltd. holds Board of Directors' meetings periodically once or twice every month as a general rule. The Board of Directors deliberates and makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of duties by all members of the executive management team, including Representative Directors. Of the 10 Directors on the Board, three are Outside Directors to ensure transparent and objective management.

Outside Directors ( As of June 18, 2014 )

NameTitleReasons for Selection
Kouichi IkedaCorporate Advisor of
Asahi Group Holdings, Ltd.
Having served as Representative Director of Asahi Breweries, Ltd. (name then), Mr. Kouichi Ikeda has considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director.
Masayuki OkuChairman of the Board of Sumitomo Mitsui Financial Group, Inc.Having served as Representative Director of Sumitomo Mitsui Banking Corporation, Mr. Masayuki Oku has been active internationally in the financial field and has considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director.
Mitoji YabunakaAdviser to the Ministry of
Foreign Affairs
Having served as Vice-Minister of the Foreign Affairs, Mr. Mitoji Yabunaka has been active in such fields as international policy coordination and overseas consular work, and has considerable insight and rich experience in international relations. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to the mitigation and avoidance of risk in the Company's global business operations, and to the enhancement of the Company's medium- and long-term corporate value. Therefore, we have elected him as an Outside Director.

Audit & Supervisory Board

The Audit & Supervisory Board determines such matters as audit policies and the division of duties among Audit & Supervisory Board Members. Each Audit & Supervisory Board Member attends meetings of the Board of Directors and other important meetings, and audits the execution of duties by Directors. Meetings of the Audit & Supervisory Board are in principle held periodically once or twice every month as a general rule, and the Board performs appropriate audits by such means as hearing reports from members of the executive management team on their execution of duties. The Company has also established the Office of Corporate Auditors' Staff to assist the Audit & Supervisory Board Members in their duties. At least half of the five Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members.

Outside Audit & Supervisory Board Members ( As of June 18, 2014 )

NameTitleReasons for Selection
Hiroyuki KamanoPartner (Attorney at law) of Kamano Sogo Law OfficesHaving served as an international attorney at law, Mr. Hiroyuki Kamano has rich experience in the field of international legal affairs. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member.
Kunihiro MatsuoAttorney at lawHaving served as Prosecutor-General of the Supreme Public Prosecutors Office, Mr. Kunihiro Matsuo has rich experience in the legal profession. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member.
Hirohide YamaguchiChairman of the Advisory Board of Nikko Financial Intelligence, Inc.Having served as Deputy Governor of the Bank of Japan, Mr. Hirohide Yamaguchi has been active internationally in the financial field and has considerable insight and rich experience in the finance world. Using this insight and experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member.

Compliance

Komatsu Ltd. has established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. The Company has also established a system to ensure Directors and employees thorough compliance to business rules as well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment of the Executive Officer in charge of compliance, and establishment of the Compliance Department. Through all of these, the Company works to supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, the Company has established the internal reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be penalized.

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