Top Message FAQ policy notes

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 decision making and supervisory functions from executive functions. At the same time, the Company has maintained the Board of Directors with a small number of members and appointed outside directors and auditors. To improve the effectiveness of discussions in Board meetings, we have promoted reforms in the operational aspect of Board meetings to ensure thorough discussions of important management agendas and quick decision-making. We have also established the International Advisory Board (IAB) as a means to supplement executive functions.

Corporate Governance of Komatsu

Organizational Profile

Board of Directors

Komatsu Ltd. holds Board of Directors’ meetings every month. The Board of Directors reviews and resolves important management matters, makes decisions on management policies of the Komatsu Group, and strictly controls and supervises the execution of management duties by all executive management personnel including the representative directors. Of the 10 directors on the Board, there are three outside directors to ensure transparent and sound management.

Outside Directors (As of June 22,2011)

Name	Title	Main Areas of Contributions
Kensuke Hotta	Chairman and Representative Director of Greenhill & Co. Japan Ltd. Chairman and Representative Director of Hotta Partners Inc.	Having served as Representative Director of The Sumitomo Bank, Ltd. (now Sumitomo Mitsui Banking Corporation) and as Representative Director of Morgan Stanley Japan Securities Co., Ltd. (now Morgan Stanley MUFG Securities Co., Ltd.), Mr. Kensuke Hotta speaks at the Board of Directors on the subject of management overall based on his profound experience in the business world.
Noriaki Kano	Professor Emeritus at Tokyo University of Science	Having served as President of the Japanese Society for Quality Control, Dr. Noriaki Kano speaks at the Board of Directors especially on the subject of quality control and production from his standpoint as a specialist of quality control.
Kouichi Ikeda	Corporate Advisor of Asahi Breweries, Ltd.	Having served as Representative Director of Asahi Breweries, Ltd., Mr. Kouichi Ikeda speaks at the Board of Directors especially on the subject of operation strategy based on his profound experience in the business world.

Outside Directors

The Board of Corporate Auditors makes decisions concerning audit policies, duty assignments and other relevant matters. Each corporate auditor attends Board of Directors’ meetings and other important meetings, and audits the execution of duties by directors. The Board of Corporate Auditors meets every month, hears the conditions of execution of duties from the directors, and conducts appropriate audits. We have also established the Office of Assistants to Auditors to exclusively assist auditors. Of the five corporate auditors, we have consistently ensured that the number of outside corporate auditors represents at least half of the Board of Corporate Auditors.

Board of Corporate Auditors (As of June 22,2011)

Name	Title	Main Areas of Contributions
Makoto Okitsu	Advisor of Teijin Limited	Having served as Representative Director of Teijin Limited and as Representative Director of Nabtesco Corporation, Mr. Makoto Okitsu speaks on the subject of management overall and corporate governance etc. at the Board of Corporate Auditors and the Board of Directors based on his profound experience in the business world.
Hiroyuki Kamano	Partner (Attorney at law) of Kamano Sogo Law Offices	From his professional standpoint based on his profound experience in cross-boarder transactions as a lawyer, Mr. Hiroyuki Kamano speaks on the subject of risk management and corporate governance etc. at the Board of Corporate Auditors and the Board of Directors.
Kunihiro Matsuo	Attorney at law	From his professional standpoint based on his profound experience in the legal profession, Mr. Kunihiro Matsuo speaks on the subject of the risk management and the compliance system of Komatsu and other issues at the Board of Corporate Auditors and the Board of Directors.

Compliance

We have established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. We have also established a framework to ensure thorough compliance with business rules by all directors, executive officers and employees of the Komatsu Group. Related specific measures include the provision of KOMATSU's CODE OF WORLDWIDE BUSINESS CONDUCT (revised 7 times since its establishment in 1998) which stipulates the business rules to be strictly followed by all directors, executive officers and employees, appointment of the executive officer in charge of compliance, and establishment of the Compliance Department. Through these measures, we are working to supervise, educate and train all members of the Komatsu Group. We have also established the internal reporting system for employees to consult with or report questionable actions in light of the laws and business rules. This internal reporting system guarantees that no employees will be penalized by using the system.