BDTI’s “Director Boot Camp in SF” Report – Next Course, 27th October!


BDTI’s first overseas “Director Boot Camp” was successfully held on Tuesday, 13th September in San Francisco. Almost every participant was a fluent speaker of Japanese, which bodes well for the future of Japan’s director pool.

We would like to thank our co-sponsors, the Japan Society of Northern California, and the donor of the wonderful conference room we used, the law firm of Morgan, Lewis & Bockius.

Paper by Naoto Isaka – When Are Uninformed Boards Preferable?


In this paper, I analyze the optimal choice of board of directors using the dual role model of boards in Adams and Ferreira (2007). In my model, shareholders choose either an informed board that brings additional private information to the firm or an uninformed board that merely considers the inside information already available within the firm. The board then randomly chooses a good chief executive officer (CEO) with inside information or a bad CEO without such information, and the CEO decides whether to consult with the board when making a project decision. I show that shareholders generally choose the informed board to maximize firm value by utilizing the private information available to the board. However, the shareholders optimally select the uninformed board if the CEO is reluctant to communicate with the informed board for fear it will reject the CEO’s decision. The uninformed board is also optimal when the board has a sufficiently large private benefit of monitoring the CEO, the shareholders feel burdened by any conflict between the CEO and the board, or the firm is involved in many unrelated businesses, especially when the inside information is valuable and the firm needs many outsiders to observe useful outside information. I use some of these implications and casual observation of real-world data to discuss recent trends in the board structure of Japanese firms.

Intensive Mediation Skills Training, by Doshisha Law School and Pepperdine School of Law

For the first time in Japan, Doshisha Law School and Pepperdine School of Law’s Straus Institute for Dispute Resolution are jointly offering an international version of Straus’s acclaimed Mediating the Litigated Case ™ program.

An intensive course delivered from November 28-December 3 (no class on November 29), this program is an ideal opportunity for lawyers, administrators, conflict resolution specialists, educators and other professionals to learn U.S.-style mediation and the ways it is different from Japanese-style mediation and conciliation techniques.

The venue is Doshisha University’s Tokyo seminar center, conveniently located near Tokyo station and easily accessible to professionals working or staying in Tokyo.

You can download the program here.

”Corporate Governance: Tools for the job” by Arthur Michael Mitchell

Despite the fact that many still doubt how successful the Abenomics corporate governance reforms in Japan that led to the introduction of the Stewardship and Corporate Governance Code and the amendment of the Companies Act, Arthur Mitchell, a senior counselor with White & Case in Tokyo strongly believes otherwise. He writes an insightful article explaining that while the effectiveness of the reforms will largely depend on the way they are implemented, the reforms will certainly enable market participants to change their corporate performance and overall corporate culture. (Note: Arthur Mitchell has taken BDTI’s director training course in Japanese, and currently sits on the board of Mitsui Sumitomo Financial Group.)

Read full article here.

”Thoughts on the Business Roundtable’s Principles of Corporate Governance”

Following the release of the ”Commonsence Principles of Corporate Governance ”  by a diverse, twelve-member coalition of executives of major corporations, asset managers and one shareholder activist in America in July 2016, the influential Business Roundtable (“BRT”) recently released a set of corporate governance principles which are to provide guidance on governance disclosure.

Whereas the Commonsence Principles of Corporate Governance are mainly 8 recommendations on roles and responsibilities of the board, companies and shareholders, the BRT Principles extensively cover the key governance issues such as board responsibilities, roles of key corporate actors, committee responsibilities and other, elemental, governance concerns historically addressed by the organization.

In his article, Michael W. Peregrine, of McDermott Will & Emery LLP shares his thoughts on the BRT Principles that articulate these governance issues on  long term value sustainability, shareholder engagement, board diversity, committee practices and succession matters.

Read full article here.

Source: Havard Law School Forum on Corporate Governance and Financial Regulation

Report: Investor Obligations and Duties in Asian Markets

By Peter Knight, President, Generation Investment Management, Fiona Reynolds, Managing Director, PRI,  Nick Robins, Co-Director, UNEP Inquiry into a Sustainable Financial System and Eric Usher, Head, UNEP Finance Initiative

Executive Summary:

In China, Hong Kong, India, Malaysia, Singapore and South Korea there are compelling national interest reasons for policy makers to promote the incorporation of environmental, social and governance factors into investment practice. Issues include addressing air quality, improving citizens’ long-term health, reducing inequality, providing for an ageing population and attracting the international capital necessary to meet economic growth targets. Investing prudently requires ESG factors to be considered in investment decision-making and to be part of the dialogue between investors and companies. This is consistent with the legal framework in all the markets studied in this report.

However, despite growing awareness of responsible investment, many investors have yet to fully integrate ESG factors into their investment decision-making processes. Public policy and regulation are a key influence. Currently, these markets have few formal requirements to integrate ESG factors, but investor obligations and duties are dynamic concepts that continuously evolve as society changes.

By working together, policy makers and investors can shape investment frameworks to clarify the obligations and duties investors owe to beneficiaries – obligations to embed ESG factors into investment decision-making, ownership practices, and ultimately, the way in which companies are managed.

Principles of Corporate Governance 2016 by the Business Roundtable

”Foreword and Introduction

Business Roundtable has been recognized for decades as an authoritative voice on matters affecting American business corporations and meaningful and effective corporate governance practices. Since Business Roundtable last updated Principles of Corporate Governance in 2012, U.S. public companies have continued to adapt and refine their governance practices within the framework of evolving laws and stock exchange rules. Business Roundtable CEOs continue to believe that the United States has the best corporate governance, financial reporting and securities markets systems in the world. These systems work because they give public companies not only a framework of laws and regulations that establish minimum requirements but also the flexibility to implement customized practices that suit the companies’ needs and to modify those practices in light of changing conditions and standards.

Nicholas Benes : 「Whither Governance in Japan? Part 2- How the Code Is Intended to Function」

Executive Summary To me – the guy who proposed the code –  the most important logic of Japan’s corporate governance code is: Japan needs committees even more than other countries, because there are so few outside directors to set the base for “committees”, Japanese companies must first appoint “multiple” independent directors Japan needs any and […]

”Can Abe’s third arrow reforms benefit investors?”

Although the “third arrow” in Japan still has mixed reviews, it can not be denied that with the shift to deliberate improved corporate governance, there is more shareholder involvement in Japanese companies.

In this article, Mr. Naoki Kamiyama of Nikko Asset Management, describes some of the positive changes that now benefiti nvestors.

Read full article here.

Source: FE Trustnet