On 12 December 2014, Japan's Financial Services Agency released and solicited comments on an exposure draft of a new corporate governance code to be made applicable to listed companies in Japan. The draft was prepared by a cabinet-appointed council of experts, with the Financial Services Agency and the Tokyo Stock Exchange serving as joint secretariat.
The draft code will be of significant interest to current and prospective investors in Japanese listed companies. The draft code enumerates principles of governance with respect to which each listed company must either comply or explain its non-compliance. These principles include significant new additions, including recommendations that each listed company appoint at least two independent outside directors and obtain the appropriate participation and advice of the independent directors in respect of important decisions where the independence and objectivity of the board is of great importance, such as the selection and compensation of management or board nominees. The draft code also recommends training for all directors and statutory auditors, ongoing updates and training for continuing board members and evaluation of directors and the board as a whole.
The draft code is open for comment until 31 January 2015 and is available at: http://www.fsa.go.jp/en/refer/councils/corporategovernance/20141226-1.html.
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