April 6, 2021
（Updated April 7, 2021)
The Council of Experts Concerning the Follow-up of Japan's Stewardship Code
and Japan's Corporate Governance Code
Revisions of Japan's Corporate Governance Code and Guidelines for Investor and Company Engagement
The Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code (Chairperson: Hideki Kanda, Professor of Gakushuin University Law School) has now published an important proposal for the revisions of Japan's Corporate Governance Code and Guidelines for Investor and Company Engagement.
Japan's Corporate Governance Code (the "Code") was compiled in 2015 and revised in 2018, and the Guidelines for Investor and Company Engagement (the "Guidelines") were compiled in 2018. The Council's proposal this time is intended to bring about the second revision of the Code and the first revision of the Guidelines.
The main points of the proposed revisions of the Code and the Guidelines are as follows*.
1. Enhancing Board Independence
- Increase in the number of independent directors from at least two to at least one-third of the board for Prime Market listed companies (where necessary, a majority of the board members should be elected as independent directors)
- Establish a nomination committee and a remuneration committee (appointment of independent directors enough to have them form a majority of the committee members for Prime Market listed companies)
- Disclose a skill matrix of board members conforming to the company's business strategy
- Appoint independent directors having managerial experiences at other companies
2. Promoting Diversity
- Disclose a policy and voluntary measurable targets in respect of promoting diversity in senior management by appointing females, non-Japanese and mid-career professionals**
- Disclose human resource development policies ensuring diversity, including the status of implementation
** With respect to board diversity, the current version of the Code already requires companies to ensure the diversity in terms of gender and internationality.
3. Attention to Sustainability and ESG
- Develop a basic policy and disclose initiatives on the company's sustainability
- Enhance the quality and quantity of climate-related disclosure based on TCFD recommendations or equivalent international frameworks at Prime Market listed companies
4. Other Major Points
- Appoint independent directors enough to have them form a majority of the board or establish an independent special committee at Prime Market listed subsidiaries so as to cope with conflicts of interest between their parent company and minority shareholders
- Promote the use of electronic voting platforms and disclosure in English at Prime Market listed companies
The Council anticipates that, in accordance with its proposal, the Tokyo Stock Exchange and the Financial Services Agency will make revisions of the Code and the Guidelines promptly.
Revisions of Japan's Coporate Governance Code and Guidelines for Investor and Company Engagement（including Appendix1 and Appendix2）
（Appendix1）Japan's Corporate Governance Code (Draft Revision)
（Appendix2）Guidelines for Investor and Company Engagement (Draft Revision)
Call for Public Comments on the "Revision Draft of Guidelines for Investor and Company Engagement" is here.
Call for Public Comments on the "Revision Draft of the Corporate Governance Code" is here. (TSE website)
Corporate Accounting and Disclosure Division, Policy and Markets Bureau, Financial Services Agency
Tel +81 -(0)3-3506-6000(Ext.3659 3849)
- Laws & RegulationsPage list
- Name of Laws and Regulations(PDF)
- Financial Instruments and Exchange Act
- Recent Changes
- Public Comment
- No Action Letter System
- Procedures concerning Foreign Account Management Institutions
- PrinciplesPage list
- Strategic Directions and Priorities
- Progress and Assessment of the Strategic Directions and Priorities
- Policy Approaches to Strengthen Cyber Security in the Financial Sector
- Financial Monitoring Policy
- AnnouncementsPage list
- Press Conferences
- Press Releases
- Official Statements
- Great East Japan Earthquake-Related Information
- The Earthquake Centered in the Kumamoto Region of Kumamoto Prefecture 2016-Related Information
- List of Institutions
- For those engaging in High Speed Trading
- To Operators of Specially Permitted Businesses for Qualified Institutional Investors, etc.