Learning Corporate Governance

Learning about Corporate Governance.

It seems that it does differ by juristic and Japan has a very unique system or practices. This seems to be related to historical events on how it developed.

Japan's stock market had lost a lot of trust as a result of the of courts decision on Bull-Dog vs. Steel Partners. (And the Great Recession that happened the next year, 2008)

Bull-Dog wins court case vs Steel Partners

Japan’s Bull-Dog Sauce has won a court case to erect anti-takeover defenses aimed at thwarting a $260 million bid by U.S. hedge fund Steel Partners, according to a court document obtained by Reuters on Thursday.

ReutersAlison Tudor

Many scandals in the corporate world, such as Daio Paper and Olympus (2011), made it clear that something was needed to be done to retain trust in the Tokyo Stock Market.

The Fourth Abe Cabinet (November 2017 to September 2020) introduced a plan called the "tree arrows". The third arrow, a growth strategy known as the “Japan Revitalization Strategy”, pushed to amend "Companies Act", setup the Japanese version of Stewardship Code and Corporate Governance Code.

For the "Companies Act" the following

Board of Corporate Auditors
Committees
External Board Members

Were the main changes.

The Board of Corporate Auditors do not have voting rights in the Board.

On the other hand, the US best practice for Corporate Governance also has some weak points.

CEO and Chairman, same person
Responsibly for check is passed to Directors, then to the shareholders
Too much money goes to CEO and Executive Search company

"Comply or explain" gives companies room to structure their own Corporate Governance. Need to structure our own Corporate Governance.

Will continue to read and research, especially around ESG.