Japan: shareholder meetings

The majority of listed companies in Japan hold their annual general meeting in the last week of June. This concentration of meetings was described by the Asian Corporate Governance Association, in its 2008 white paper (here, pdf), as being a "major obstruction to the exercise of shareholder rights and good corporate governance, and is unnecessary".

The annual general meeting period remains concentrated although the proportion of meetings held on the same day has fallen in recent years. Yesterday was nevertheless a popular day: 40% of companies listed on First Section of the Tokyo Stock Exchange held their AGM (see here).

Japan: remuneration disclosure

Earlier this year, Japan's Financial Services Agency adopted new rules increasing the disclosure obligations of listed companies with regard to governance structure, directors' remuneration, cross-shareholdings and voting results: see here (pdf). The BBC News website reports - see here - on the disclosures which are beginning to be made with with regard to remuneration.

Japan: activist shareholder secures board's removal

The Economist and Financial Times have reported what is said to be a first for activist shareholders in Japan.  According to the FT's report (online, May 29):

Shareholders led by Warren Lichtenstein’s Steel Partners on Thursday ousted the president and board members of Aderans, a Japanese wigmaker, the first time activist investors have successfully expelled management in a country often criticised for ignoring their wishes. The event is something of a coup for US-based Steel Partners, which owns 26.7 per cent of Aderans. The wigmaker is just one of nearly 30 Japanese companies the private equity group has been pushing to improve investor returns and corporate governance"

The Economist report is available here and the Financial Times report can be found here.  In this earlier post, proposals for the reform of corporate governance in Japan were noted. 

Japan: corporate governance reform - ACGA statement

The Asian Corporate Governance Association has published a statement setting out its position on various governance issues. The statement provides a useful overview of recent business and government agency publications in the governance area. The ACGA recommends, inter alia, a greater role for independent directors and that Japan should adopt a national corporate governance code.

Japan: White paper published by ACGA

The Asian Corporate Governance Association has published a white paper in which recommendations are made for the reform of corporate governance in Japan. In the executive summary it is stated:

While a number of leading companies in Japan have made strides in corporate governance in recent years, we submit that the system of governance in most listed companies is not meeting the needs of stakeholders or the nation at large in three ways:

• By not providing for adequate supervision of corporate strategy;
• By protecting management from the discipline of the market, thus rendering the development of a healthy and efficient market in corporate control all but impossible;
• By failing to provide the returns that are vitally necessary to protect Japan’s social safety net—its pension system.

This White Paper focuses on, and makes recommendations with regard to, six key corporate governance issues".

For further information about corporate governance in Japan, including recent reforms, see: Buchanan, J. and Deakin, S., "Japan's Paradoxical Response to the New 'Global Standard' in Corporate Governance", September 2007, CLPE Research Paper No. 26/2007, available on SSRN here.

Japan: international financial reporting standards

Japan's Financial Services Agency has announced that certain companies will have the option to prepare their consolidated financial statements, for fiscal years ending on or after 31 March 2010, using international financial reporting standards. Further information is available here (pdf). 

EU: IFRS and GAAP convergence

The European Commission has published a report considering the convergence between International Financial Reporting Standards and Generally Accepted Accounting Principles in several countries including the US, China and Japan. The report begins:

"In July 2007 the Commission reported on the respective work timetables envisaged by national authorities of certain third countries for converging their national Generally Accepted Accounting Principles (GAAPs) towards International Financial Reporting Standards (IFRS). In this second report the Commission services now examine the actual progress made by third countries, firstly, on their convergence programmes and, secondly, towards eliminating any rules on reconciliation requirements that apply to Community issuers listed in the jurisdictions of these third countries. In preparing this report emphasis has been placed on assessing third country GAAPs which are being used by a large number of issuers listed on EU markets (as identified by CESR) and whose respective national authorities have clearly demonstrated their commitment towards IFRS."

Japan: FSA proposes greater governance disclosures by listed companies

Japan's Financial Services Agency has published for consultation rules which will increase the disclosure obligations of listed companies with regard to their adopted governance structure, directors' remuneration, cross-shareholdings and voting results. It is proposed that the new rules will come into force on 31 March. Further information is available here (pdf).

Australia: Company boards and directors: corporate social responsibility

The UTS Centre for Corporate Governance has published the results of a three year study of the role and responsibilities of company boards and directors. The project was funded by the Australian Research Council and Dibbs Abbott Stillman Lawyers. The report is generally supportive of the Australian corporate governance framework but in one respect it reports an area of concern:

“The one field in which Australian business appears to be falling behind the performance of other countries is in the reporting of corporate social responsibility and sustainability. The research discovered many examples of extensive commitment to corporate social responsibility and sustainability in both large corporations and in small enterprises. Though the balance of opinion remains in favour of voluntary rather than mandatory reporting, the lack of a framework for reporting and greater impetus to use this, suggests businesses here will not be reporting as comprehensively as in the UK, Europe and Japan”..

The report is available here.

Japan: corporate governance reform

Following last week's dramatic election in Japan, Reuters is reporting - on the basis of an interview with a member of the new Government - that corporate governance reforms are likely, including legislation on the composition of listed company boards. Elsewhere, The Economist suggests that "[t]he effect on business of the change of government in Japan is likely to be subtle but profound".