Key Points Concerning The Revision To Japan's Corporate Governance Code

In June 2021, the revision to Japan's Corporate Governance Code (CGC) was released.¹ The CGC is a set of corporate governance guidelines for companies listed on the Tokyo Stock Exchange (TSE). The revisions mainly focus on promoting board independence and enhancing diversity and sustainability efforts, and have been made in advance of the upcoming restructuring of the TSE, which is scheduled for April 2022.

This post outlines the key points of the CGC revisions and steps companies can take to comply.

OVERVIEW OF THE CGC

The CGC is a set of principles for listed companies in Japan, aiming to ensure their sustainable growth, as well as to enhance their mid- to long-term corporate value. Companies listed on the TSE are required to comply with the CGC or explain why they are not in compliance (comply-or-explain approach). In addition, the CGC is a counterpart to the Stewardship Code-a set of principles for institutional investors-and both codes serve to promote