Corporate Governance

The following is a description of the basic policy of ValueCommerce on corporate governance and the execution of the policy.

1. Corporate governance

1-1. Fundamental policy

ValueCommerce prescribes that corporate governance represents earning the trust of all stakeholders and maximizing their benefits by establishing a corporate organization for achieving transparent and healthy operations and for maintaining operational efficiency and strong competitiveness. To make the policy effective, we seek to raise awareness among all officers and employees of our legal, social, and ethical responsibilities under internal Compliance Charter, Risk Management Charter, and other charters, and to have them fulfill those responsibilities. We will thereby carry out fair and sound corporate activities.

1-2. Governance system

The following chart illustrates the organizational structure for corporate governance.

Corporate governance system image

1-3. Business execution and oversight system

The Board of Directors consists of three directors, of whom one director is an outside director. The board supervises decision making concerning business operations, business execution, and the directors' performance of their duties and monitors the legitimacy of business operations and compliance with the Articles of Incorporation and the Company's operating policies. In principle, regular Board meetings are held once a month, and extraordinary Board meetings are held as needed when there are urgent matters to discuss.

1-4. Auditing system

The Board of Statutory Auditors consists of four statutory auditors, all of whom are outside statutory auditors. One is a full-time statutory auditor. The statutory auditors attend meetings of the Board of Directors and monitor the legitimacy and adequacy of the directors’ performance of their duties. They also peruse important documents, consider the adequacy of decision making, and monitor the adequacy of accounting procedures as needed.

1-5. Directors and statutory auditors' remuneration

The following table represents the directors and statutory auditors' remuneration for FY2010.

Classification	Number	Total remuneration
Inside directors	4	¥90,881,000
Outside statutory auditors	4	¥15,348,000

(Notes)
(1) The officers above are officers in FY2010 and include one director who retired at the end of the 14th annual shareholders meeting held on March 25, 2010.
(2) The directors' remuneration does not include remuneration for employees who are also directors.

2. System for ensuring the appropriateness of business operations

(1) System relating to preservation and control of information on the directors' performance of their duties
The company appropriately preserves and controls information on the directors' performance of their duties under Document Control Charter. There is a system allowing the directors and statutory auditors to review information on the directors' performance of their duties when they want.

(2) Regulations and other structure for managing risk of loss
To manage cross-functional risks, the president has appointed a risk management supervisor, who has established Risk Management Committee and prepared Risk Management Charter. A risk management system is established under the Risk Management Charter. Each division is developing guidelines and manuals for dealing with risks accompanying business operations.

(3) System for ensuring the directors performing their duties effectively
In principle, the Board of Directors meets once a month, with extraordinary meetings held when necessary. For business execution based on decisions made by the Board of Directors, Segregation of Duties Charter and Job Classification and Administrative Authority Charter set out the persons in charge, their responsibilities, and the details of execution procedures. For performance management, a business plan and a budget are developed, and Corporate-wide targets are established each fiscal year. The directors and division heads review performance and report improvement plans regularly.

(4) System for ensuring the appropriateness of business operations within the corporate group consisting of the company and its subsidiaries
The company controls the management of the croup companies, by having them report to the company and granting approval under the Subsidiaries and Equity Companies Management Charter. The Internal Audit Office conducts regular audits.

(5) Matters relating to employees assisting the statutory auditors in performing their duties and to the independence of such employees from the directors
When the statutory auditors ask for employees to assist them in performing their duties, the directors may appoint employees to assist the statutory auditors through consultation with the statutory auditors. The statutory auditors have control over the appointed employees during the periods specified by the statutory auditors, and the employees shall not receive instructions from the directors.

(6) System for directors and employees reporting to the statutory auditors, system for other reporting to the statutory auditors, and system for ensuring effective audits by the statutory auditors
The directors and employees shall report to the statutory auditors without delay important matters that may affect the business operations or performance of the company and group companies. Irrespective of the above, the statutory auditors may request the directors and employees to report to them as necessary. The statutory auditors seek to exchange information with external auditors, the Internal Audit Office, and the statutory auditors of the group companies and ensure the effectiveness of audits at the company and group companies in cooperation with them.

3. Matters with controlling ownership

Yahoo Japan Corporation held 43.61% of the voting rights of the company as of December 31, 2010, and the company is an equity company of Yahoo Japan Corporation. The company has formed a business alliance with Yahoo Japan Corporation primarily to expand business by strengthening ties with Yahoo.
The company synergizes the businesses by linking its services, especially its affiliate marketing service, to the businesses of Yahoo including the shopping business.
One of the three directors of the company and one statutory auditor of the four statutory auditors of the company are invited from Yahoo Japan Corporation to give advice, based on their considerable experience, about business operations. Although the company receives advice and recommendations from those officers to ensure the adequacy of its decision making, the company makes decisions on its own accord. The company maintains independence in its management judgments.

4. Compliance

The company has established a Compliance Charter to ensure that directors and employees comply with laws and regulations and the Articles of Incorporation and respect ethics. To enforce compliance, the company has set up a Compliance Committee, which deliberates on important compliance matters. The company provides in-house education opportunities to maintain and improve its compliance system. The company has a whistleblowing system that enables directors and employees to report compliance issues to the company.

5. Information control system

To comply with the Personal Information Protection Law, which went into effect in April 2005, the company obtained the certification of TRUSTe in February 2005.
TRUSTe was enacted in the United States in 1997 principally to promote personal information protection and the proper use of personal information on websites. The Japan Privacy Accreditation Council is the sole agency of TRUSTe in Japan. Websites that have achieved the certification mark can earn the trust of users and consumers as websites meeting certain criteria in terms of the handling of personal information.
Based on business support from TRUSTe, the company carries out personal information protection activities as part of its CSR activities, considering not only compliance but also business ethics and social norms.
To promote personal information protection activities, the company has constructed an internal organization and is continuing with safety control initiatives and in-house education.

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