Based on the Corporation Law of Japan, the Company’s organization for management decision making, execution of business operations, and auditing comprises the Board of Directors, the Board of Corporate Auditors, and an independent auditor. The Board of Directors is composed of 11 members, and 2 of these are independent, outside auditors who have no special relationship interests with EBARA. Under the rules that have been established for the activities of the Board of Directors, EBARA endeavors to ensure that Board members will act in compliance with relevant laws and the Company’s Articles of Incorporation in the conduct of their duties.
　In addition to its regular monthly meetings, the Board meets in special sessions when necessary.
　The Board of Corporate Auditors comprises five corporate auditors, three of whom are outside auditors who have no special interest relationships with EBARA. In addition to establishing rules for the Board of Corporate Auditors, each of the Corporate Auditors, in addition to conducting his required auditing duties, meets every three months with the EBARA president and representative director and with the independent auditor to exchange opinions and ensure the effectiveness of auditing activities.
　Under the Corporation Law of Japan and Japan’s Financial Instruments and Exchange Law, the Company appoints an independent auditor under contract to conduct audits of its accounts. Based on the annual audit plan proposed by the independent auditor, the Company’s financial accounts are audited efficiently by a team of certified public accountants and other professionals.
　In addition to the Board of Directors, the Company has established rules for its monthly Management Meeting. The purpose of this meeting is to conduct broad-ranging discussions of management policy and management strategy. In addition, to ensure the clarity and objectivity of the processes of selecting Directors and making decisions on the compensation of Directors and others, the Company has appointed a Nominations Committee responsible for selecting candidates for Director and a Compensation Committee, both of which comprise a majority of outside directors.

　Going forward, the Company is aware of the importance of corporate governance and intends to continue to work to draw on the capabilities of individuals inside and outside the Company, enhance the soundness of management, and strengthen the Company’s operating and financial positions by drawing on its effective management supervisory organization.

The Company’s Board of Directors, based on the Corporation Law of Japan, has decided on a policy for internal controls and made this policy an integral part of the Company’s basic regulations. These basic regulations cover a range of management issues and set forth a compliance system for the conduct of duties by directors and employees, systems for controlling risk, and systems for the supervision of the behavior of Group companies and management as well as other systems. These regulations have the objective of clarifying policy initiatives to create regulations and systems to ensure the proper conduct of operations in each of these areas. To manage risks, the Company has established a Risk Management Panel to manage risk in the EBARA Group as a whole, including compliance risk. For strategic risks, regulations have been established and the Risk Management Panel makes decisions regarding companywide risk management systems and undertakes risk management activities for projects and matters that have particularly high risk. Based on the Financial Instruments and Exchange Law, the Company has also established internal controls related to financial reporting to put in order the processes related to the preparation of appropriate financial statements with the objective of thereby creating the basis for reliable financial reporting. The Company has created the Internal Control Improvement Promotion Headquarters to serve as the organizational unit that takes the leadership role in designing and promoting specific measures related to internal controls. Based on the Financial Instruments and Exchange Law, beginning in April 2008, the system for reporting on internal controls related to financial reporting was applied to all listed companies in Japan. The Company has also created and assessed its internal controls in four specified areas, namely: “company level controls,” “financial closing and reporting processes,” “business processes,” and “IT general controls.” With these initiatives as a foundation, the Company is working to create systems for timely and accurate information disclosure to its wide range of stakeholders.
　In its internal control systems, the Company has established a Corporate Audit Department as an independent unit reporting to the president. Based on the Company’s internal audit regulations, this unit conducts internal audits with the aim of evaluating the internal control methods of the compliance, risk management, and other internal control functions in the Company’s operating divisions. In addition to these auditing activities, the Corporate Audit Department has formed an internal unit for auditing the appropriateness of transactions. This unit audits and supervises the Company’s participation in bidding activities for public works projects and its transactions with subcontractors. Through this auditing and supervision of operating divisions, this unit provides advice to the divisions it examines and monitors, issues directives for making improvements in activities, and reports the results of these activities to the president. In addition, as deemed necessary, the Corporate Audit Department exchanges information and opinions with the Corporate Auditors as well as participates in meetings of the Board of Corporate Auditors with the representative directors and attends meetings of the Group auditors to improve teamwork with other units responsible for auditing activities.

The Company is fully aware that unethical behavior due to the lack of adherence to high standards of compliance may damage its management foundation. Accordingly, the Company positions full compliance with laws and regulations as one of its most important internal control objectives. In addition, to fulfill its many social responsibilities as well as conduct its corporate activities in accordance with social mores, including ethical and moral practices, the Company has formed the CSR Division, which has internal units specializing in compliance, management of trade under security and defense agreements, environmental preservation, promoting understanding of human rights, making a contribution to society, appropriate procurement practices, quality control, and other CSR-related initiatives. In addition, the Company has formed a Corporate Ethics Committee, which is chaired by the president, and, in addition to including outside legal counsel among its members, this committee is responsible for discussing appropriate courses of action from an overall perspective related to legal provisions for internal controls, appropriateness of transactions, environmental preservation, human rights, the EBARA Group Code of Conduct, and other similar matters. At the same time, by performing periodic checks on the state of compliance promotion from a Company perspective, this committee monitors the execution of business activities and contributes to improvement in activities.
　The Company’s Compliance Department acts as the focal point for these various initiatives by providing advice and building the base for promoting compliance and ethical behavior in the Company’s overall activities. In addition, to ensure that the various measures decided by the Corporate Ethics Committee are applied and implemented in Group companies, EBARA has formed the Group Compliance Network, which includes personnel in charge of corporate ethics at related companies. With the goal of ensuring that the awareness of the importance of compliance is communicated to each and every employee, EBARA has also established its Compliance Liaison System under which about one employee in 100 is assigned liaison functions. In addition, the Compliance Department conducts a compliance survey once a year, and, by assessing how well the spirit of compliance has permeated the organization from the survey results, the office contributes to the improvement of related systems and policies.
　Moreover, to address potential violations of legal provisions and other ethical issues, the basic understanding is that personnel will receive advice from their supervisors and others in the normal course of business operations. However, in addition, the Company provides for consultation with qualified persons, including a compliance consultation function outside the Company conducted by outside legal counsel. Under this “whistle-blower” system, measures have been adopted to preserve the confidentiality of personnel providing such compliance-related information and prevent them from being disadvantaged. This system is designed to actively solicit compliance-related information from internal sources and thereby prevent unethical behavior as well as discover improper behavior as quickly as possible.
　Going forward, the Company will continue these activities to further heighten the awareness of the importance of compliance and thereby endeavor to create a corporate culture where compliance matters have been fully internalized.