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Frequent visitors to our blog are likely aware of Japan’s major corporate governance reforms, but not everyone is familiar with the story behind how these reforms were crafted. The eminent Steven K. Vogel (Professor of Political Science at the University of California, Berkeley), recently wrote a concise and easy-to-follow history of the major reforms to Japanese corporate governance practices since the 1990s, describing how and why they came to pass.
Preparing well for recording board meetings is not only a wise practice; it can serve as the foundation for accurate, concise minutes. Spending time before the meeting to get ready for note taking will help avoid confusion during board discussions, reduce errors in the recording process and increase overall efficiency. Follow these steps to take clear, forward-moving minutes.
As the person who initially proposed the Corporate Governance Code to the LDP in 2013 and 2014, I am well aware of its limitations in various areas. For this reason, I am very pleased that Fair M&A Study Group have decided that its discussions should cover not only MBOs, but also ”cases which are likewise significantly affected by the issues of conflict of interest and information asymmetry”[1], including “cases of acquisition of a controlled company by its controlling shareholder.”[2]
This indeed an important mission, because these topics include virtually all types of M&A transactions and the public statements of executives and boards with regard to them. For many years in the post-war era, the failure of the government and the JPX/TSE to set forth clear bright-line rules that facilitate a fair, robust M&A market in Japan has stunted productivity, dynamism and growth in the Japanese economy.
Our joint research – “Linkage Between Corporate Governance and Value Creation” – between BDTI and METRICAL has been updated as of January 31. The most important inferences are summarized below.
(1) Correlations: Board Practices
and Performance
Significant correlation between board practices and performance continues.
(a) ROE: Nominations Committee existence, the number of female directors and percentage of INEDs show a significant positive correlation.
(b) Tobins Q: Nominations Committee, retired top management “advisors” (ex-CEO “advisors”), and percentage of INEDs show significant positive correlation.
(c) ROA (actual): Compensation Committee existence (negative correlation), Incentive Compensation Plan disclosure, and retired top management (ex-CEO) serving as advisors show significant correlation.
今から40年前、50年前に松下幸之助が語ったコーポレートガバナンスとスチュワードシップの考えが、今注目されています。昨年月刊誌『Voice』で松下幸之助の「株式の大衆化で新たな繁栄を」と題する文章が紹介されました。 同氏の『実践経営哲学』からの引用と併せて紹介します。
曰く、株式会社は、社長や重役のものではなく、 株主のものであると同時に、社会の「公器」でもある。 決算期ごとに株主総会で業績を報告し、業績が良いモノは 株主から称賛とねぎらいの言葉を頂戴する。 充分な成果が上がらなかった時には、 謹んでお叱りを被る。これが、本来の姿であり、 株主は経営者の御主人である事を決して忘れてはならない。 株主は短期的な売買姿勢をとらず、むしろ「主人公」として毅然とした態度を保つ事が大事である。 単に株式を保有して配当を受け取るだけでなく、株主としての権威、見識をもって 経営者を叱咤激励する事も望ましい。（BDTIによる要約。以下は各出典本文から引用。）
NOTE: This public comment supersedes and replaces the one that I, Nicholas Benes, submitted on January 12, 2019)
As the person who initially proposed the Corporate Governance Code to the LDP in 2013 and 2014, and suggested a number of principles in it, I am well aware of its limitations in various areas and the fact that Japan has not yet attained the quality level for an equity market that is expected by global investors. In this sense I am very pleased that the JPX has decided to review its equity market structure and related standards.
Challenges and Realities
This indeed an important mission, for which is it essential to recognize and discuss the impact of a number of challenges that Japan faces in improving governance, efficiency, and trustworthiness of its equity capital markets. These challenges include:
(As submitted to the JPX on January 12, 2019)
There should be only two sections of the JPX: (1) a TSE Premium Section and (2) an Emerging Companies Section.
Listing on the Premium Section should have the following requirements in addition to the existing TSE1 listing criteria:
(a) a five-year average market capitalization exceeding 50 Billion yen; (b) the ratio of total “policy holding stocks” (seisakuhoyukabu, 政策保有株) to [net assets less cash equivalents（純資産ー現金等）] as of the most recent FYE “yuho” financial report (or the one submitted just after any AGM) must not be more than 15%（10% in 2022, and 5% in 2024); (c) use of the electronic voting platform; (d) convocation notices must be sent out by both post and electronic methods at least four weeks before each AGM; (e) production of financial reports, kessan tanshin, corporate governance reports, convocation notices, and jigyou hokokusho in both Japanese and English, in all cases using XBRL formats using the same XBRL tags as those used for the respective Japanese materials…
Average CG rating score for the 1,800 Japanese companies slid 3.6pt to 50.01 for December 2018 from 53.61 for the previous month.
Mr. Ghosn and Nissan are charged with misrepresentation of securities reports. The Financial Instruments and Exchange Act provides for civil liability as well as criminal liability for acts of misrepresentation of securities. Nissan will face a civil lawsuit seeking damages from investors in no distant future. One of the issues that will be argued in civil lawsuits […]
Mr. Ghosn’s criminal cases are ongoing. But the criminal cases alone will not put a close to this entire ordeal. It is a matter of time for Nissan to face civil cases filed by investors. Due to Mr. Ghosn’s understated compensation, it is anticipated that a considerable amount of assets will flow out of Nissan. The largest part of this outflow will be accounted for the damages claimed by and awarded to investors in civil lawsuits. What amount of assets will flow out of Nissan? This memo is an attempt to estimate the probable size of these damages.