The followings are what I learned from seminar organized by Mr. Hiro Kobayashi, the president of Social Capital Management Co.,Ltd. (https://www.social-capm.com/ )
In Japan, many of you know that each emperor has its own Era. During the World War II and the following economic growth, we, Japanese lived in the Showa Era. The lost decades were a part of Heisei Era. During the transition of era, which means 2015, the Corporate Governance Code was introduced in Japan under the guidance of FSA and Tokyo Stock Exchange.
Looking back Showa and following Heisei Era, Japanese companies had been governed by so called business groups. A sort of conglomerates had been dominating in most of industries.
The affiliated companies had to follow and be “obedient” to the dominating shareholder, which means the parent company. The power balance was obvious and minor shareholder could hardly influence to the corporate direction.
Since 2019, we have been in the Reiwa Era, our business trends have distinctly been changing. Minority shareholders have been more respected than they were in previous eras. Most listed companies have at least one female director in the management bord, and people pay attention to more transparent and convincing decision-making processes.
Hiro also mentioned the Stewardship Code also governs Japanese institutional investors as a edge of the double-edged sword whereas the Corporate Governance Code leads listed companies in terms of their behavior for them to be a good social component.
This reminded me of the introduction of J-REIT, a part of real estate securitization in early nineties. This contributed a lot to resolve NPL-Non Performing Loan- issues in Japan and to provide financial products to be invested for global institutional investors.
Presumably after Corona, we will see another financial and structural dynamism not only in Japan but also many regions in the world. This Code would work as wheel track for Japanese companies to follow.
