Corporate Governance Reform (4) -Outside Directors-
May make outside directors mandatory, increase their independence
March 12, 2009
Summary
◆Japan’s Ministry of Economy, Trade and Industry (METI), Financial Services Agency (FSA), and the Tokyo Stock Exchange (TSE) have set up investigative committees to examine the corporate governance of listed companies.
◆Although many listed companies are under no obligation to appoint outside directors, nearly half do so. Still, there is a view that such directors should be mandatory for all listed firms.
◆There are also calls for standards regarding the independence of outside directors, since many institutional investors question whether they are genuinely separate from management.
◆This report looks at current issues regarding outside directors, and outlines the investigative committees’ deliberations.
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