Corporate Governance Reform (4) -Outside Directors-

May make outside directors mandatory, increase their independence


March 12, 2009

  • Yutaka Suzuki


◆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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