Urgent Motion on Revised Corporation Act:

We oppose adverse reform that prevents promotion of outside board member

We request legal obligation through legislation

November 15, 2013

While there are media reports saying that the Cabinet plans to submit a bill to amend the Corporation Act to the Diet soon, the outline of the bill now under discussion within the government is almost the same as that of bill being drafted under the former Democratic Party of Japan government. It is by no means in line with the policy to “promote introduction of outside board members” entailed in the “Japan Restoration Strategy” approved by the Cabinet in June as its growth strategy.

If the bill is to be passed into legislation without changes, it will be considered as a release of message that “the Abe Cabinet postponed mandating introduction of outside board members” to the world, largely betraying many international investors’ expectation toward the reform-minded standing of Prime Minister Shinzo Abe.

Currently discussed provision obligates stock offering corporations without outside board members to state reason that it is not appropriate to inaugurate outside board members in their business report; it is important, indeed. However, it does not automatically lead to a “promotion of introduction of outside board members.”

First, at least, it is necessary to explicitly provide legal obligation in principle by stating in the legislation that stock offering corporations “must inaugurate outside board members.” On that basis, we think that it should add a provision that “exceptional measures may be applied if reasons that it is not appropriate to inaugurate outside board members are specified.”

In recent years many companies have increasingly introduced outside board members, therefore the situation is very different from one and a half year ago when amendment draft of the Corporation Act was under discussion in the advisory panel. In order to make the legal revision one that addresses clearly the direction of Japan to move forward without turning back the clock, we strongly request that revision should be made to the bill currently under discussion.

Proposers

Representative: Hideaki KUBORI, layer

Takeshi KADOTA, Representative Director, Institute of Corporate Governance (as corporate status)

Hiroyuki KISHI, Professor, Keio Gijuku University Graduate School of Media Design

Shigeaki KOGA, former official, Ministry of Economy, Trade and Industry

Yoichi TAKAHASHI, Professor, Kaetsu University

Kazuhiko TOYAMA, former COO, Industrial Revitalization Corporation of Japan

Eiji HARA, President, Public Policy Planning and Consulting Co.

Robert A. Feldman, Chief Analyst on Japan and Managing Director, Morgan Stanley MUFG Ltd.

(note) proposers are in individual status therefore do not represent view of their affiliated organization are in individual, unless otherwise noted.