Below is BDTI’s recent report to its Sustaining Donors , who are listed here and described in Note 1 below. BDTI is certified as a “public interest” non-profit by the Japanese government, and is now raising funds for FY2016. If you are interested to support the cause of injecting deep understanding and substance into Japan’s recent governance reforms, please consider making a donation.
- We aggressively followed up on my proposal to create a Corporate Governance Code for Japan, which became a reality in June thanks to the fine efforts of many others (See Note 2) over many years. We gave a number of seminars (and still are) on the most important aspects of the CG Code, how to approach compliance with it, and the need for companies to produce their own “CG Guidelines” in order to actually have the policies (and substance) they claim they have in TSE governance reports. This was a concept that BDTI (myself) had proposed and promoted from the very start, a year before the CG Code came into effect.
Our activities last year included producing example CG Guidelines, numerous BDTI seminars or speaking engagements, and a large joint seminar with Mizuho Research (we will have another soon.) These efforts were successful in encouraging approximately 30% of Japanese companies to produce corporate governance guidelines, even thought the quality of many of these still needs to be improved. See the results of this survey.
- Despite all the other investments of time and other resources required by the other items set forth below, we increased the number of sessions of our various training programs. Although the number of persons trained in our director training courses (236) was roughly the same as last year, we had more customized corporate programs that had more than one session. Total “session–persons” for our director training courses rose to 273 from 238 the year earlier. This does not count seminars (340 persons), compliance training (85 persons), and 854 persons who attended various speaking events. BDTI now needs to expand staff in order to “scale up” more. As well, e-Learning is also very important as a means to scale our activities, to reach areas outside of Tokyo most efficiently, and to promote governance training at an early stage, such as the general manager rank.
- We completed our first assignments for governance consulting and “board evaluation” services, including one very extensive project to help a major listed company create high quality bilingual “corporate governance guidelines” and describe them in its TSE governance report.
- We increased the number of our “Sustaining Donors” and other supporters. In particular, we added Prudential Holdings of Japan, State Street Trust and Banking Co., and the large Canadian fund La Caisse de dépôt et placement du Québec (CDPQ).
- We renewed our web site to make it more user-friendly and visually attractive, and to add new features, some of which are set forth below. See: http://bdti.or.jp/en/ .
- New e-Learning modules: We (a) updated our Company Law module to reflect changes in the amended Company Law, and (b) developed a module on securities law, which is especially timely because of the Toshiba incident. We retired our former corporate governance module (which was rendered obsolete by the CG Code), but (c) will soon finish development of a new corporate governance “introductory knowledge” module, and later this year (d) will add an additional module on “corporate governance practices.“ If resources permit, next year we will also develop a module on “building corporate value”, which will cover certain fundamental finance concepts that directors should know about. We also upgraded the learning management system for our e-Learning modules, and can now offer an “unlimited e-Learning” package” for 300,000 Yen, which should make purchasing decisions easier for HR divisions.
- We have developed an IT system for a “BDTI Director Bank”, which is now being populated by our past “graduates”. This was mentioned in the attached Nikkei article, and is attracting interest in both the “Bank” and also our director training programs. It will promote the concept of “skill-based search” for directors who have received director training and are truly independent. The searching company (or sustaining donor investor, such as yourself) will not see names or proper nouns until it asks for the full resume of a registrant (and it can only ask for a certain number, say 25, per year). Recruitment firms will be allowed to become corporate participating members and use the system, but they must abide by the same rules. (Our purpose is to countervail against the tendency for Japanese companies to gather internal lists of potential director candidates who are friends or “friends of friends”, a search process which is not based on skills which the board needs going forward (a rational “needs matrix”), and which inevitably results in docile outside director candidates who are not truly independent in terms of mindset.) (Director Bank pages: http://bdti.or.jp/en/bdti-director-bank/ – and then press the buttons at the bottom to go to the pages that follow. So far, we have opened the site to registration by individuals.)
- We produced detailed research reports on initial compliance with the Corporate Governance Code in crucial areas of Nominations Policy and Director Training Policy, disclosure of which is required by the Code. The results indicated that there is much room for improvement.
- We have improved our corporate membership program, which now waives fees for purchasers of the “unlimited e-Learning” package.
- We are about two-thirds finished developing a search engine for CG documents. If we can make the technology work, which is highly likely based on progress so far, this will allow investors to quickly locate and download (to CSV files, etc.) the exact sections of various CG-related documents much more conveniently than is possible at present, thereby enabling much easier comparisons and analysis. We expect this search engine to bring more visitors to our web site, which will increase visibility of BDTI, usage of its programs, and donations.
- Although we do not keep detailed records on this sort of thing, BDTI received considerably more press coverage this year as opposed to last year.
Representative Director, BDTI
(Note 1) “Sustaining Donors” are those sponsors who have donated more than 300,000 per year on average since they first donated to BDTI. We greatly appreciate their continuing, recurring support, which helps BDTI plan its budgets each year and meet expenses in a predictable manner. Their names appear prominently on various pages of BDTI’s web site
It is also possible to make a donation by credit card, or to make a donation that will be tax-deductible in the U.S. Please see here for an explanation of the various alternatives for making donations.
(Note 2) – Among many others that would become a much longer list, the work of the following groups and persons should be given great credit: the Secretariat and investor members of the Asian Corporate Governance Association, CG-net, Toshi Oguchi of Governance for Owners, Kazuhiko Toyama of IGPI, Yoshihiko Miyauchi of ORIX, Scott Callon of Ichigo Asset Management, Charles Lake at AFLAC, the Council of Institutional Investors, the ICGN, and the American Chamber of Commerce in Japan. Most of all, the hands-on leaders and policymakers who made it happen, – especially, lead dietman Yasuhisa Shiozaki and Masahiko Shibayama of the LDP, and Motoyuki Yufu of the FSA (and the entire FSA team) – should be highly commended.
BDTI’s “Sustaining Donors”
Aberdeen Investment Management K. K.
Baillie Gifford & Co
La Caisse de dépôt et placement du Québec (CDPQ)
Cosmo Public relations
Dalton Advisory KK
Fidelity Worldwide Investment
Ichigo Asset Management
Indus Capital Partners, LLC
Prudential Holdings of Japan, Inc
Russell Investments, Japan
Shearman & Sterling LLP
State Street Trust and Banking Co., Ltd.
Symphony Financial Partners
TANABE & PARTNERS
Third Point, LLC
Regional Fund Manager (US$25 Bln AUM)
Institutional Investor (US$3 Bln AUM)
Nicholas E. Benes