Thu, Apr 24 2014 By Noriyuki Hirata TOKYO (Reuters) – Japan's most powerful business lobby, Keidanren, plans to introduce corporate governance rules that will require better disclosure, a person familiar with the matter said, but they will stop short of bolder reforms sought by many investors.
The lobby, whose member firms include most of Japan Inc's biggest names such as Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) and Nippon Steel (5401.T: Quote,Profile, Research, Stock Buzz), will launch a study group later this year with an eye to announcing the new guidelines in 2016, the person said.
The Keidanren's rules will not require independent directors or any particular governance structure, reflecting its belief that such decisions should be left up to individual companies, the person familiar with the matter said.
But they will demand companies give a detailed explanation on a set of important matters, such as why it has or has not employed independent directors or adopted a company with a committee governance structure, the person said.
As such, the guidelines will effectively incorporate only the explain portion of the comply or explain regulatory approach common in Britain and other parts of Europe, the person said.
The move is an attempt by the conservative lobby to influence a growing debate in Japan over how to bolster corporate governance. Keidanren has traditionally opposed rules mandating independent directors and other reforms seen by some investors as vital to lifting Japan's corporate performance and protecting the interests of shareholders.
The ruling Liberal Democratic Party is working on a governance code that will be part of an economic growth strategy to be announced by Prime Minister Shinzo Abe in June. The government also recently introduced a stewardship code aimed holding institutional investors more accountable and encouraging better communication with corporate boards.
The rules will be applied to all of Keidanren's roughly 1,300 members.
(Writing by Nathan Layne; Editing by Chris Gallagher)