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JSS Newsletter International
(Vol.1 December 2015)
1. The Filing Status of Corporate Governance Reports Reflecting Compliance with the Corporate Governance Code (As of November 30, 2015)
Research was conducted on the filing status of Corporate Governance Reports in compliance with the
Corporate Governance Code.
(1) Filing Status by Market (As of November 30, 2015)
Market Division
Filing CompaniesNumber of
Companies in Full Compliance*
Number of Companies
offering Explanation
Other**
Number of Companies/
Number of Listed Companies***
Filing Rate
Number of Companies
Rate Number of Companies
Rate Number of Companies
Rate
TSE 1st Section
745/1,920 38.8% 160 21.5% 577 77.4% 8 1.1%
TSE 2nd Section
89/540 16.5% 4 4.5% 85 95.5% 0 0.0%
Mothers 41/216 19.0% 40 97.6% 1**** 2.4% 0 0.0%JASDAQ 192/799 24.0% 189 98.4% 1**** 0.5% 2 1.0%
OtherMarkets
22/124 17.7% 12 54.5% 10 45.5% 0 0.0%
Total 1,089/3,599 30.3% 405 37.2% 674 61.9% 10 0.9%* “Companies in Full Compliance” refers to cases where companies state that each principle of the Code (each general
principle of the Code for emerging markets) has been completely implemented.
** “Other” refers to cases where the column for “the reason why each principle of the Code was not implemented” is not
presented.
*** “Number of Listed Companies” does not include foreign companies.****“Companies offering Explanation” under Mothers and JASDAQ offer a voluntary explanation with respect to the
principles and supplementary principles other than the general principles.
(2) Number of Filing Companies by MonthThe number of filing companies significantly increased in November. In this month alone, 718 companies
filed reports in compliance with the Code, which is nearly double the total number of filing companies in the5 months between June and October (371 companies).
(3) Filing Status of Companies with March-end Financial Closing by Market (For TSE listed companies only)As shown in (1), the number of filing companies as of November 30, 2015 exceeds 1,000. Nonetheless, the rate of filing has not yet reached 50% (42.7%) even for companies with March-end financial closing. The majority of the companies, exceeding 1,300 in total, are expected to file in December.
Market Division
Filing CompaniesNumber of Companies/
Number of Listed Companies*
Filing Rate
TSE 1st Section
723/1,426 50.7%
TSE 2nd Section
88/376 23.4%
Mothers 25/73 34.2%JASDAQ 167/472 35.4%
Total 1,003/2,347 42.7%*“Number of Listed Companies” does not include foreign companies.
(4) Monthly Trend of the Number of Companies offering ExplanationSince the Code became effective in June, the ratio of Companies offering Explanation has been increasing.
In November, nearly 90% of the filing companies listed on the TSE 1st Section, TSE 2nd Section, NSE 1st Section and NSE 2nd Section offered an explanation.
Contributing factors can be a facilitated understanding of the Code, the accumulation of disclosure samples from other companies, and release of the “Revision of Practical Guidance on the Preparation of the Corporate Governance Code (FAQ and Answers) and Amendment to Procedures for the Preparation of‘Corporate Governance Reports’” by TSE on October 23, in which it was clarified that even if a company has a fixed policy on future implementation, if it is determined that the policy has not yet been implemented as
June July Aug Sept Oct Nov
TSE 1st
TSE 2nd
Mothers
JASDAQ
Other(than TSE)
52 companiesin total
47 companiesin total
33 companiesin total
63 companiesin total
176 companiesin total
718 companiesin total
of the report filing date, the company has to offer an explanation.
(For the TSE 1st and 2nd Sections, NSE 1st and 2nd Sections only)
*Of those who filed in June and October, two in each month stated that they would update their Corporate Governance
Reports in November to offer an explanation. Therefore the number of companies for June and October are increased by two
respectively compared with the number as of the end of October.
(10 companies*)(10 companies)
(9 companies) (18 companies)
(106 companies*)
(519 companies)
Ratio of Companies offering Explanation
Oct NovSeptAugJulyJune
(5) List of Codes for which Companies Offered an Explanation (From the Top) (More than 100 Companies)Code Description Number of
Companies
Supplementary Principle 4-11(3)
Analysis and evaluation of the effectiveness of the Board of Directors as a whole
469
Supplementary Principle 1-2(4)
The use of the Electronic Voting Platform and English translation of the convening notices of general shareholder meeting
358
Principle 4-8 Effective use of independent directors 296
Supplementary Principle 4-2(1)
Setting appropriate portion of performance-linked remuneration and stock-based remuneration
183
Supplementary Principle 4-10(1)
Involvement and advice from independent directors on matters of nomination and remuneration
171
Principle 3-1(v) Explanation on the reason of the appointments and nominations of senior management and directors
168
Supplementary Principle 3-1(2)
Providing information disclosures in English 124
Supplementary Principle 4-8(2)
Independent directors’ cooperation with the management and kansayaku (corporate auditor)
119
Supplementary Principle 1-2(2)
Early distribution of convening notices for general shareholder meetings and posting the notice on the website prior to distribution by mail
103
Supplementary Principle 4-8(1)
Exchanging information and sharing awareness among independent directors
100
(For the TSE 1st and 2nd Sections, NSE 1st and 2nd Sections only. Provided that it includes two companies in emerging
markets that offer voluntary explanations with respect to the principles and supplementary principles other than the
general principles.)
2. On the establishment of the “Guidelines on Shareholder Meeting Attendance by Global Institutional Investors, etc.,” by the National Kabukon Federation
At present, since global institutional investors (known as actual shareholders) are not shareholders on
registry (nominee shareholders), they cannot attend the shareholder meeting as a shareholder.
On the other hand, the Corporate Governance Code, which became effective on June 1, 2015, states with
respect to global institutional investors’ attending the shareholder meeting, under supplementary principle
1-2-(5), that “in order to prepare for cases where institutional investors who hold shares in street name
express an interest in advance of the general shareholder meeting in attending the general shareholder
meeting or exercising voting rights, companies should work with the trust bank and/or custodial
institutions to consider such possibility.”
Also, the Study Group concerning Promoting Dialogue between Companies and Investors for Sustainable
Growth released a report on April 23, 2015, titled “Report on the Study Group concerning Promoting
Dialogue between Companies and Investors for Sustainable Growth: On Corporate Information Disclosure
toward a Dialogue-Rich Nation and on the General Shareholder Meeting Process,” in which it concluded
that “the preparation of guidance for practical procedures by relevant organizations is desired.” Similarly,
the 2015 Revised Japan Revitalization Strategy, which was approved by the Cabinet on June 30, 2015, states
that “Furthermore, in order to help companies to smoothly create their basic policies for the participation of
global institutional investors, etc. not on the shareholders registry, at shareholders' meetings, the
Government will encourage relevant organizations to establish guidelines by the end of 2015.”
In light of these trends, the National Kabukon Federation has established the “Guidelines on Shareholder
Meeting Attendance by Global Institutional Investors, etc.,” this November, to serve as a reference for listed
companies to develop basic policies on shareholder meeting participation by global institutional investors.
[Fig. 1] How the Guidelines came to be established (Conceptual image)
As a method for global institutional investors to attend the general shareholder meeting, proxy
(政府の政策)
Corporate Governance Code(Securities Exchange)
Report on the Study Group concerning Promoting Dialogue
2015 Revised Japan Revitalization Strategy
Relevant organizations
Listed companies
National Kabukon Federation
Demand consideration of meeting attendance
by “actual shareholders”
Demand guidance preparation
Provide guidance
Expect guidance preparation
participation and voting at the general shareholder meeting is currently considered to be a possibility.
However, a number of listed companies in Japan require a proxy to be a nominee shareholder under their
Articles of Incorporation.
Based on the above, these guidelines explain four ways for global institutional investors to attend the
general shareholder meeting, and illustrates a practical case example and templates for the required
document for reference. The four ways are: (Route A) to become a nominee shareholder by the record date,
(Route B) to observe the general shareholder meeting after accepting the company’s reasonable discretion,
(Route C) to attend the general shareholder meeting as a proxy after proving “exceptional circumstances” to
the issuing company, and (Route D) to attend the general shareholder meeting as a proxy after the company
changes its Articles of Incorporation.
These guidelines were established to serve as a reference for listed companies to develop basic policies on shareholder meeting attendance by global institutional investors, and they are available on the Kabukon website (http://www.kabukon.net/). As the website states that they “are in the process of preparing the outline of these guidelines in English, to serve as a reference along with these guidelines,” the English version of this guidance may be available in the near future.
*: National Kabukon Federation
A voluntary organization of business securities practitioners from Japanese listed companies for the purpose of legal and
practical research and study on securities, as well as for information exchange and interaction.
Actively interacts with the Ministry of Justice, legal academics, securities exchanges, the KEIDANREN (Japan Business
Federation), and lawyers, while it exchanges opinions on legislative aspects such as amendment of the Company’s Act, etc.,
submits feedback to public comments, and makes proposals on the desired securities practices for issuing companies, to
contribute to the facilitation of securities practices for listed companies.