The Council of Experts has published a proposal for the revisions of Japan’s Corporate Governance Code and the Guidelines for Investor and Company Engagement. Japan’s Corporate Governance Code was originally published in 2015 and revised in 2018, and the Guidelines for Investor and Company Engagement were published in 2018. The Council’s proposal 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 include:
- Enhancing Board Independence
・An increase in the number of independent directors from at least two to at least one-third of the board for Prime Market listed companies
・Establish a nomination committee and a remuneration committee
・Disclose a skill matrix of board members conforming to the company’s business strategy
・Appoint independent directors having managerial experiences at other companies
- 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
- 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
- Other Major Points
・Appoint independent directors sufficient to form a majority of the board or establish an independent special committee to deal with conflicts of interest between the parent company and its minority shareholders
・Promote the use of electronic voting platforms and disclose in English for Prime Market listed companies
For more details, please see the below link and Appendix(1 & 2).
〈in English〉
https://www.fsa.go.jp/en/news/2021/20210406.html
Based on this proposal, the Tokyo Stock Exchange will finalize a revised draft of the Corporate Governance Code, which will be submitted for public comment and is expected to be amended by June 2021.