Japan FSA: proposal of corporate governance disclosure items
19 February 2010
The Japanese FSA is proposing amendments relating to the disclosure of new items concerning corporate governance. These relate to corporate governance structure, directors’ and statutory auditors’ remuneration, and cross-shareholding.
The Financial Services Agency (FSA) is proposing amendments to disclose new items concerning corporate governance of a company in its securities report, as attached. The new rules will be effective on March 31, 2010. Comments on the proposal should be received by 5 PM on March 15, 2010 (JST), which may be submitted via post, fax or e-mail and should be accompanied by the name and postal address of the person and/or organization and the reasons for the comments. Comments by phone are not accepted. Please note that the received comments, including the name of the person and/or organization, may be published.
· Structure of Corporate Governance: Listed companies in Japan are required to disclose basic information of their corporate governance systems in their securities reports. Given that corporate governance structures are diverse across companies under the legal framework provided for in the Japanese Company Law, and that investors are increasingly attaching importance to the governance issues of companies, due consideration should be given to requiring the companies to disclose further information with respect to their corporate governance.
· Remuneration of Directors and Statutory Auditors. It is considered that the information concerning the remuneration for directors and statutory auditors is important for shareholders and investors as it would allow them to examine whether incentive structures for the management of the company and remuneration amounts are appropriate.
· Cross-shareholding. There has been a tradition of reciprocal and multilateral cross-shareholding among listed companies in Japan. Some investors take the negative view that such cross-holding by companies is not an efficient investment, while others make the point that the cross-shareholding has positive aspects, such as allowing companies to maintain and explore good business relationships, and further contributing to their profitability, which are not necessarily reflected in financial statements.
· Voting results. As to the results of resolutions at shareholders’ meetings, the current rule requires listed companies to disclose whether each resolution was accepted or rejected, but not the numbers of votes for support or objection. It is expected that disclosure of situations concerning votes cast for or against will give clearer picture of the decisions made by shareholders, which will entail a better functioning of the market pressure over the management
© FSA Japan
