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The Corporate Governance System Study Group will Start a New Round of Discussions

Following the publication of the interim report on June 30, 2014, the Corporate Governance System Study Group (chair: Mr. Hideki Kanda, professor at the University of Tokyo Graduate Schools for Law and Politics/Faculty of Law; hereinafter referred to as the “study group”) decided to resume a series of discussions, starting at the ninth meeting on December 15, 2014, taking into consideration a recent new move toward formulating corporate governance codes as well as new practical and legislative issues.

1. Previous actions

In March 2012, the study group started streamlining the expected roles of non-executives, including outside directors, and discussed the ideal approaches to creating corporate systems in a broad sense. As an achievement of the series of meetings, on June 30, 2014, the study group publicized “Interim Report on the Roles of and Support System for Non-Executives including Outside Directors and Kansayaku,”* and “Guidelines on Outside Directors and Kansayaku,”** in response to the enactment of the Revised Companies Act in June 2014, aiming to promote the introduction of outside directors into companies.

*1: A collection of best practices of Japanese companies concerning the roles expected of outside directors and Audit & Supervisory Board Members (Kansayaku) and a support system provided by such companies, as a reference for the public
**2: A collection of guidelines in which key points of the interim report are summarized, aiming to help the public utilize the report in a wide variety of businesses

2. Background of starting a new round of discussions

The Japan Revitalization Strategy, which was revised in June 2014, states that it is important to achieve sustainable increases in corporate value by enhancing corporate governance. In response, the Council of Experts Concerning the Corporate Governance Code, organized by a Secretariat jointly operated by the Tokyo Stock Exchange (TSE) and the Financial Services Agency, has been discussing corporate governance codes,*** and will compile the results of the meetings into key elements of the code. Based on this, the TSE is to formulate new corporate governance codes before the arrival of the season of annual general shareholders’ meetings in (June.) 2015.

***Note 3: Corporate governance codes refer to a collection of major principles, which contributes to helping companies realize effective corporate governance systems.

Facing the current advancement of Japan’s initiatives for enhancing corporate governance and taking into consideration such a new move toward formulating corporate governance codes as well as new practical and legislative issues, the Ministry of Economy, Trade and Industry (METI) decided to stand on the viewpoint of enhancing corporate value and fortify the “proactive ” corporate governance system, in which METI will encourage business owners to take appropriate risks and help them make bold decisions, while also keeping the “defensive” corporate governance system to control illegal behavior and misconduct by companies. To achieve the goal, the study group will start a new round of discussions.

3. Topics to be discussed at the meetings

The study group will discuss the following topics, aiming to fortify the “proactive ” corporate governance system:
[i] Roles of the board;
[ii] Appropriate compensation for board members;
[iii] Appropriate reduction of liability by insurance and other measures;
[iv] Defining the roles and responsibilities of outside directors;
[v] Utilization of committees consisting of outside directors as members; and
[vi] Roles of Audit & Supervisory Board Members (Kansayaku), considering the introduction of outside directors.

Release date

December 12, 2014

Division in charge

Corporate System Division, Economic and Industrial Policy Bureau

Related Information

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