TOKYO : 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.