II.Management Decision and Additional Corporate Governance System

Corporate Structure	Board of Auditors structure

Chairperson of Board of Directors	Representative Director
Number of board members	15
Current external directors	Not selected

Why have we adopted the current system?

We are convinced that the current system provides a managerial watchdog function and ensures objectivity and neutrality through audits conducted by auditors including 3 external members.

Current Auditors

Board of Auditors	Formed
Number of Auditors	4

Collaboration between Corporate Auditors and Accounting Auditors

Our corporate auditors and accounting auditors periodically hold meetings (five times a year) or whenever necessary.

Collaboration between Corporate Auditors and the Internal Audit Division

Our corporate auditors meet with the staff members of the Internal Audit Division. In cooperation with the Division, auditors review accountant reports, conduct internal inspections (twice a year) and observe checkups on the Division.

Current External Auditors

External auditors	Selected
Number of external auditors	3

Ties with our Company (1)

Name	Former status	Relation with company(*1)
		a	b	c	d	e	f	g	h	i
Takao Seki	From other company									○
Osamu Abe	From other company									○
Yuzuru Fujita	From other company									○

*1.Options showing the depth of involvement with the company

1. From the parent company
2. From other affiliated companies
3. One of the major shareholders of the relevant company
4. Concurrently serving as an external director or as an outside auditors of another company
5. Concurrently serving as an executive officer or as an operating officer of another company
6. A partner or a relative within the third degree of consanguinity, including those who pursuant to these persons, of an executive officer or an operating officer serving in the relevant company or a business entity having a particular relationship with the relevant company
7. A board member, receiving compensation or property from the parent of the relevant company or a subsidiary of the relevant parent
8. Concluded a limited contract with the relevant company
9. Others

Ties with our Company (2)

	Additional explanation	Reasons of selecting as an auditor
Takao Seki	Worked at Japan Tobacco Inc.	A person of integrity and insight with sufficient experience as a company director to monitor the management of all aspects of corporate affairs.
Osamu Abe	Worked at Mizuho Bank Ltd. Worked at Orient Corporation Inc.	A person of integrity and insight with sufficient experience as a company director to monitor the management of all aspects of corporate affairs.
Yuzuru Fujita	CEO of Asahi Mutual Life Insurance Company	A person of integrity and insight with sufficient experience as a company director to monitor the management of all aspects of corporate affairs.

Other Point to Note for External Auditors

• Current attendance of Board of Auditors for 101th term (April 1 2006 – March 31 2007)
• Takao Seki Attendance: 7 out of 7 board of auditors meeting
• Osamu Abe Attendance: 7 out of 7 board of auditors meeting
• Yuzuru Fujita Attendance: 7 out of 7 board of auditors meeting

Incentive for board members	None

Other Iinformation to Add

We have introduced stock options as part of director remuneration.

Disclosure measures	Financial Report
Disclosure situation	Each total amount of overall internal directors and external directors

Additional Explanation

• 101th term (From April 1 2006 to March 31 2007)
• Compensation for directors and auditors
• Directors： 502 million yen for 16 directors
• Auditors： 77 million yen for 5 auditors (Including 53 million yen for 3 external auditors)

The Audit Division, in charge of internal auditing and job-related communication, provides the necessary information that the occasion demands in order to support duties of corporate auditors including external auditors.

• Our business operation is executed by the Operating Officer, who is elected at the Board meeting to delegate assigned tasks, pursuant to decisions made at the Board meeting. The Board of Directors observe the performance of Operating Officer.
• In regards to the internal audit, we have set up the Audit Division at the head office and allocated auditing staff to each division and subsidiary. They conduct internal audits such as visiting audits to branches and paper audits in accordance with the audit program, and then report to corporate auditors accordingly.
• Our corporate auditors, in collaboration with the Audit Division and the staff members in charge of auditing at business divisions and branch offices, conduct inspections by visiting audits to main business divisions and the examination of subsidiaries.
• We have appointed Ernst & Young Shin Nihon & Co. as our accounting auditor to carry out audits from an independent, third-party perspective. Ernst & Young Shin Nihon performs audits of Nippon Express and its consolidated subsidiaries based on the annual accounting audit plan and in cooperation with the Internal Audit Division and the Board of Auditors.
• Through independent and mutually complementary internal audits, audits by corporate auditors and accounting audits, we are establishing an auditing framework that maintains objectivity.
• The Certified Public Accountants of Ernst & Young Shin Nihon engaged in the audit and the assistants to the audit in the Fiscal 2006 are as follows.

• Representative and Partner Certified Public Accountant ：Nobutaka Motohashi, Nobuyuki Ono, Akira Itukida

• As the years of continuous service in auditing are less than seven years for all the Certified Public Accountants, the relevant statement is omitted.
• Ernst & Young Shin Nihon has taken its own autonomous measures so that each engagement partner is not involved in the audit of the Company’s accounting for a period over a predetermined tenure.

• Assistants to the audit of the financial statements include 32 Certified Public Accountants, 25 junior accountants and three others.

• Frequently Asked Questions about IR (FAQ)

Related Information

• I.Basic Policy and Information on Corporate Governance
• III.Status of Policy Enforcement on Stakeholders
• IV.Basic Policy on Internal Control System and other Improvement
• V.Points to note concerning the counterplan against the acquisition of substantial holdings