Dear Fellow CII Members,
Japan has formally released and announced its revised growth strategy for 2014, which as expected includes:
1. A plan to have the FSA and TSE form a joint secretariat to convene a committee of experts and industry/financial leaders to advise on the principles for a corporate governance code, after which TSE will be charged with drafting the corporate governance code before the AGM season in 2015.
2. A general policy to increase the number of independent directors. In the case of banks, the government will promote the appointment of multiple independent directors at listed banks or holding companies, and at least one independent director at bank subsidiaries. (Both of these are signaling what the government would like to see in the corporate governance code that TSE produces.)
3. A policy to increase disclosure with respect to cross-shareholdings (for all companies), requiring companies to more clearly justify the purpose of each separate holding.
Today also, the American Chamber of Commerce in Japan released an additional Viewpoint addressed to the government of Japan, expanding on a number of measures it has recommended for several years, and adding some new ones:
Further Implement Corporate Governance Reform in Japan to Spur Investment and Encourage Sustained Economic Growth
http://www.accj.or.jp/images/140623_Corporate_Governance_FDI_GSTF.pdf
Implement a Corporate Governance Code to Encourage Listed Companies in Japan to Adopt Best Practices and Uniform Disclosure
http://www.accj.or.jp/images/140422_Corporate_Governance_FDI.pdf
Nicholas Benes
Representative Director
The Board Director Training Institute of Japan
From: list-manager@cii.simplelists.com [mailto:list-manager@cii.simplelists.com] On Behalf Of Nicholas Benes
Sent: Friday, June 20, 2014 4:28 PM
To: ciidiscussion@cii.simplelists.com
Subject: [CII Member Discussion] English Translation of Japan LDP's "Japan Revival Vision" -> Major Progress in Corporate Governance
Dear Fellow CII Member:
The “Japan Revival Vision” written by the LDP’s key growth strategy committee, has now been translated in full. It was released by dietman and co-chair Yasuhisa Shiozaki, and can be downloaded at this link:
https://www.y-shiozaki.or.jp/pdf/upload/20140620104142_aUVp.pdf
This important report serves as the base for the this year’s revision of the Abe administration’s growth strategy, which will be released soon, and future policy. Therefore it is striking that major reform of corporate governance, including a corporate governance code, rules about independent directors, and significant reduction in cross-shareholdings, constitutes most of the first and most prominent “pillar” of the “Vision”.
This is usually a more coherent piece than the actual (formal) growth strategy that is later released by the Cabinet Office. Last year this was the case. This is inevitable, because the latter is written by bureaucrats. As such, I believe this report will gives the best idea of where Japan is actually headed long term, and why – not only with respect to corporate governance, but in other areas as well.
Since the LDP’s ambitious goal is to have a corporate governance code that is well-received internationally in place within a year, it behooves investors to send their input on this topic to the right people soon. I would be pleased to help coordinate this process. Based on my own perspective and experience, in addition to multiple independent external directors, the most important provisions needed here are: a) a requirement to have board guidelines, including required formal committees (composed of INEDs) to handle decisions where managers have self-interest at stake; and b) rules regarding directorship training for internal executives who become directors, or at least required disclosure of company policy about it.
Those who are interested in the LDP report may also be interested in the following white papers and viewpoints issued by the American Chamber of Commerce in Japan. As the leader (or former leader) of the groups that produced these and many others, I’d be happy to respond to any questions:
Charting a New Course for Growth ~ Recommendations for Japan’s Leaders
http://www.accj.or.jp/images/downloads/public/en/ACCJ_CHARTING_A_NEW_COURSE_FOR_GROWTH.pdf
(As you will see, many of the strategy themes are the same.)
Implement a Corporate Governance Code to Encourage Listed Companies in Japan to Adopt Best Practices and Uniform Disclosure
http://www.accj.or.jp/images/140422_Corporate_Governance_FDI.pdf
Regards
Nicholas Benes
The Board Director Training Institute of Japan
1-30-20 Kaminoge
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Tel: 81-3-6432-2337
Fax: 81-3-6432-2338
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