Japan financial regulator plans 'action programme' to boost shareholder engagement
08/02/2023 03:45
By Makiko Yamazaki and Ritsuko Shimizu
TOKYO, Feb 8 (Reuters) - Japan's financial regulator
plans to compile an "action programme" in the first half of this
year, with a set of measures to promote deeper company
engagement with investors and to enhance board capabilities, a
senior official said.
The move comes as the Financial Services Agency (FSA) bids
to accelerate a corporate governance reform drive as it seeks to
promote more efficient use of capital by companies in the
world's third-biggest economy.
With about half of listed companies still trading below book
value in Japan, global investors say they want to see the
ongoing governance reform leading to tangible improvements in
corporate value.
"The last eight years of reform has boosted corporate
governance nominally, in terms of the number of independent
directors for instance," said Toshitake Inoue, deputy
director-general of the FSA.
"But those changes have yet to be fully translated into
higher corporate value," said Inoue, who is in charge of
corporate governance at the FSA, speaking in an interview with
Reuters.
"Our next challenges include how to ensure effective
dialogue between companies and investors to achieve higher
corporate value."
The FSA's push chimes with plans announced by the Tokyo
bourse last month to urge companies with underperforming stocks
to come up with measures to improve capital efficiency.
Its action programme could include clearer rules over
allowing institutional investors to come together to make joint
proposals to companies without infringing disclosure
regulations, he said.
Under current regulations, investors deemed to be "acting in
concert" can be required to submit ownership disclosure filings.
Some investors say ambiguity in the rules has the effect of
discouraging shareholders from working together to improve
governance at companies.
Inoue also said growing shareholder activism in Japan is
testament to global investors' interest in the Japanese market.
"It may be hard for companies being targeted, but from
overall market perspectives, it's not necessarily a bad thing,"
he said.
(Reporting by Makiko Yamazaki and Ritsuko Shimizu; Editing by
Kenneth Maxwell)
((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))