April 05, 2012
Summary
◆On 28 February, the Tokyo Stock Exchange released a set of proposed rule changes to improve corporate governance among listed firms.
◆The specific reforms include greater disclosure when independent director or auditor (in this report, collectively referred to as “independent officers”) (1) is an officer, board member, or employee of the listed company’s client (incl. banks and other transaction parties), (2) is part of a cross-directorship arrangement, or (3) is the recipient of the listed company’s charitable donations. The TSE will also require listed firms to actually set up and operate internal control systems, a step up from the current requirement only to “decide on” them.
◆Also, the exchange called for a “best-effort” rule to name outside directors as independent officers and not just outside auditors.
◆The new rules are set to come into effect from around May 2012.
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