ISS has prepared this memo to explain how its policies will change (or not) as a result of the adoption by Japan of its new corporate governance code:
Month: March 2015
Sir Stephen Gomersall: Globalization and the Art of Tea (speech by the ex-Hitachi director and executive)
Sir Stephen Gomersall,Hitachi Chief Executive for Europe and subsequently Hitachi Board Director (2004-2014) — >Princess Chichibu Memorial Lecture to the Japan British Society at Ueno Gakuen, Tokyo, 5 March 2015
Deloitte: “The GPIF and its Reform”
As perpective regarding, postponement (abandonment?) of GPIF governance reform, we recall thatthis January Delloitte wrote in its memo The GPIF and its Reform:
“ The Japanese FSA will soon publish a code for a higher level of corporate governance for Japanese companies. These two codes (CG + stewardship) are seen as essential for achieving sustainable growth of the Japanese equity markets. The GPIF must, in this context, have better governance. “
Wall Street Journal: ” Japan Puts Off Overhaul of $1.1 Trillion Public Pension Fund”
WSJ: Japan Puts Off Overhaul of $1.1 Trillion Public Pension Fund -Move Signals Prime Minister in No Hurry to Change Governance at GPIF
http://www.wsj.com/articles/japan-puts-off-public-pension-fund-overhaul-1424756051
BDTI's Representative Director Nicholas Benes was quoted in the article as follows:
CFA Institute’s Public Comment on the Corporate Governance Code
With apologies for the delay in posting this! – here it is:
Blackrock’s Proxy Voting Guidelines for US Securities
Blackrock new proxy voting guidelines for US securitiesadd considerable detail. With the promulgation of the new corporate governance code, it will be interesting to see if the firm comes up with guidelines for Japan that have a similar level of concreteness.
Final Version of the Japan’s Corporate Governance Code
On March 5th, the advisory panel forthe corporate governance code finalized its proposal, which effectively is now the final version.
Accenture: “How Japanese Companies Can Succeed in Today’s Diverse Global Markets”
Fascinating report by Accenture on the challenges faced by, and methods needing improvement at, Japanese companies seeking to globalize. The report is based on a survey of 250 executives in Japan, and many others in Asia. It also compares the above topics to the same issues for non-Japanese companies in Asia.
Paper: “Legal Background to the Low Profitability of Japanese Enterprises”, by Nobuyuki Kinoshita
Abstract: Japanese enterprises have shown low profitability for quite some time now. This paper presents several hypotheses regarding the influence of Japan’s legal systems on this phenomenon. The laws discussed in this paper cover not only corporate law but also ‘enterprise law’ as a whole, including bankruptcy law, capital markets law and civil litigation law.
How Japan’s Corporate Governance Code Was Born
On October 3rd, 2013, I wrote this article in the Asian Wall Street Journal, proposing that Japan promulgate a corporate governance code as part of its growth strategy. Soon after that I met with a senior official of the Bank of Japan, and then several times with Yasuhisa Shiozaki, one of the most senior politicians in the ruling party (the LDP), to propose that Japan promulgate a corporate governance code as part of its emerging growth strategy. Mr. Shiozaki was a senior member of the LDP’s growth strategy committee, and was close to Prime Minister Abe.
It was the optimal time to do this because earlier in the year the Japanese government had announced its first “Abenomics” growth strategy, which was largely modeled off of the White Paper published by the American Chamber’s “Growth Strategy Task Force“, which I had proposed and led in 2010. This Task Force was far more successful than I every dreamed it could be. Almost all of the themes in the “third arrow”, including the very concept of a coherent analysis-based growth strategy for Japan, the vital need to enhance productivity growth and economic metabolism, the importance of corporate governance and labor mobility, were identical to to the central themes of this White Paper. This was not surprising, because the LDP had even hired the same economist that we had hired, Professor Kyoji Fukao of Hitotsubashi University. (See: “Charting a New Course for Growth: Recommendations for Japan’s Leaders“.)
The report was very widely read, and its concepts seeped into the bedrock of policy-making circles. A book written by Professor Fukao based on the analysis we had commissioned, won the most prestigious prize for an economics book in Japan. In particular, the fact that by 2013 many in the government had come to agree that reigniting productivity growth was essential, made this the ideal time to propose significant corporate governance reform.
I then wrote an article about describing my proposal in the Japanese-language Asahi Journal -法と経済 at the end of January, 2014. This followed upon my October, 2013 article on the same topic in the Wall Street Journal.
Subsequently, I was asked to make a formal presentation of my ideas to the LDP’s growth strategy committee (the Japan Economic Revival Headquarters), and did so on February 7th, 2014. Here are my presentation materials, with the most important first two pages translated into English.
It was the optimal time to do this because earlier in the year the Japanese government had announced its first “Abenomics” growth strategy, which was largely modeled off of the White Paper published by the American Chamber’s “Growth Strategy Task Force“, which I had proposed and led in 2010. This Task Force was far more successful than I ever dreamed it could be. Almost all of the themes in the “third arrow”, including the very concept of a coherent analysis-based growth strategy for Japan, the vital need to enhance productivity growth and economic metabolism, the importance of corporate governance and labor mobility, were identical to the central themes of our ACCJ White Paper; and the LDP even hired the same economist that we had hired, Professor Kyoji Fukao of Hitotsubashi University. (See: “Charting a New Course for Growth: Recommendations for Japan’s Leaders“.)
The report was very widely read, and its concepts seeped into the bedrock of policy-making circles. A book written by Professor Fukao based on the analysis we had commissioned, won the most prestigious prize for an economics book in Japan. In particular, the fact that by 2013 many in the government had come to agree that reigniting productivity growth was essential, and was on track to put in place a “Stewardship Code”, made this the ideal time to propose significant corporate governance reform.
Later that month, I proposed to a senior person at the BOJ and then to key LDP dietmen (mainly Mr. Yasuhisa Shiozaki, who was a leader of the LDP’s growth strategy “Headquarters”) that the LDP create a corporate governance code in order to (a) expand upon (many times over) the comply-or-explain principle that was about to be set forth in the new Company Law in a very limited context; and (b) ensure that the Stewardship Code would have its intended positive impact, by requiring standardized, comparable disclosure about governance practices at each company. I proposed that the new governance code should be drafted by a panel organized by the FSA , the agency that should logically be held accountable for the result because the FSA’s Establishment Law puts it in charge of investor protection, capital markets efficiency, and regulation of the stock exchanges (the listing rules of which are the place where most CG codes principles are reflected). I presented a detailed memo proposal to the dietmen. （Here are the memos that I submitted to Mr. Shiozaki: