ACCJ Releases Viewpoint on Amendment of the Company Law

The ACCJ has released a Viewpoint with recommendations regardingamendment of the Japanese Company Law, focusing on the need for independent directors on boards and proposing concrete ways to introduce legally valid board committees comprised by them to Japanese corporate governance.The full Viewpoint is on BDTI's Data Library, in the ACCJ Folder.Itsmost importantrecommendations are:

(1) amend the Company Law and/or listing rules of Japanese stock exchanges to require that at least one-half of a listed company’s board of directors be independent outside directors… 

If this is not politically feasible – and as a minimum measure –,…

(2) amend the Company Law to permit a board of directors to formally delegate decision-making authority on specific matters to a “special board” comprised entirely of independent outside directors, along the lines of Article 373 of the Company Law; and

(3) where no such “special board” consisting solely of at least three independent outside directors is utilized with regard to specified types of board resolutions where the risks of self-interest and conflicts of interest are inherently high, amend the Company Law to shift the burden of proof to the board of directors with regard to satisfaction of their duty of due care and duty of loyalty.

As noted above, the ACCJ strongly supports a mandatory requirement that all Japanese public companies appoint a majority of independent outside directors.

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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