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Second Round of Meetings of the Corporate Governance System (CGS) Study Group Starts

The Ministry of Economy, Trade and Industry(METI)established a Corporate Governance System(CGS)Study Group in July 2016 and formulated CGS Guidelines in March 2017 based on the discussion results of the study group. Following on from these efforts, METI decided to start the second round of meetings of the CGS Study Group to follow up the guidelines. This effort is based on the standpoint that METI should hold discussions of practical matters regarding ideal approaches to the issue of group governance presented at the meetings of the study group and that it should develop points of contention concerning cooperate governance reforms from formality issues to substantiality issues.

1. Background

Discussions surrounding the issue of corporate governance reforms have conventionally been held based on company-based systems, e.g., boards of directors. However, many listed companies operate group-based management. In light of this situation, Japanese companies should streamline ideal approaches to group-based governance, as well as company-based ones, so as to improve corporate value across groups of companies.

Moreover, as changes in market environments and the speed of technological innovations have been dramatically accelerating with the advent of economic globalization and the fourth industrial revolution, it is becoming important for companies more than ever to proactively be involved in business portfolio management, in which companies should design management strategies for their groups as a whole and appropriately allocate limited management resources to these groups, so as to accomplish the mid- to long-term improvement of corporate value.

Based on the recognition of this issue, METI considers it important to discuss best practices concerning ideal approaches to group governance, including: approaches to exercising governance from both viewpoints of defense and offense in terms of group management including management of affiliated companies inside and outside Japan; and those to shuffling business portfolios, based on which groups are composed, in a mobilized manner to optimize such portfolios, and also considers it significant to develop points of contention concerning corporate governance reforms from formality issues to substantiality issues. From these standpoints, METI decided to start the second round of meetings of the CSG Study Group, aiming to follow up the CSG guidelines.

2. Study group's initiatives

Collecting and analyzing best practices, the CSG Study Group will hold discussions concerning ideal approaches to concepts and practical matters concerning group governance, such as concepts in designing composition of groups, approaches to management of group companies, and optimization of business portfolios. In addition, it will also hold discussions for the enhancement of effectiveness of corporate governance, in light of the current situation of companies engaging in efforts according to the CGS guidelines.

3. Future schedule

The CSG Study Group will hold its first meeting as below:
First meeting: December 8(Fri.), 2017; from 5:30 p.m. to 7:30 p.m.
The meetings will not be open to the public, but a summary of the minutes of the meetings will be made public on the METI website at a later date.

Note: The second and following meetings will be held once a month and the study group will compile an interim report around spring of 2018 and a final report by around March 2019.

4. List of study group members

See the appendix of the Japanese language press release.

Release date

December 6, 2017

Division in Charge

Corporate System Division, Economic and Industrial Policy Bureau

Related website

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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