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영어

On December 4, 2019, in Japan, a bill to amend the Companies Act passed the Diet and was enacted. This amendment includes a wide variety of adjustments to the current legislation, primarily aiming to introduce more transparency in corporate governance of large Japanese corporations. Nevertheless, some of the amendments have impacts on managing wholly-owned subsidiaries of multinational corporations or other closed companies. Of a variety of amendments introduced in the new legislation, we focus on the topics relevant to private Japanese corporations. While the reform bill covers many subjects (such as the power of bondholders’ meeting), it mainly focuses on improving corporate governance of Japanese companies by: 1) requiring listed companies to appoint at least one outside director; 2) prompting communications with shareholders through adoption of the so-called ‘notice and access’ system for shareholders’ meeting; and 3) improving disclosure regarding director’s compensation. The Legislative Council concluded that the Companies Act should be revised to require listed companies to have at least one outside director. Interestingly, this decision, which was a response to investors’ demand, was made overriding the oppositions not only from the industries but also from some academic members of the Working Group: they had argued that the soft-law approach taken by the 2014 reform had worked well, nudging more than 90% of listed companies into appointing one or more outside directors (for recent statistics, see here), and that there was not enough compelling data showing that the merits of introducing uniform requirement on the board structure exceed its demerits especially for small-sized listed companies that have not appointed one outside director yet. As such, the proposed requirement might be better understood as a declaration of Japan’s commitment to promote board independence to bolster investor confidence in capital markets in Japan rather than as a precise measure to promote corporate value. The Legislative Council also proposed to introduce a Japanese version of the ‘notice and access’ system on provision of information regarding shareholders’ meetings, which would allow shareholders to obtain information in a more prompt and convenient way. To call a shareholders’ meeting, the current Companies Act requires companies to send paper documents including annual business reports and financial statements, which tend to be very thick. Under the new rule, listed companies instead may send a simple notice providing the URL of the website where the relevant materials are uploaded. This would save companies the time and cost of printing large amounts of documents. In addition, the new rule requires companies to upload and disclose the relevant materials on their websites at least three weeks before shareholders’ meetings, whereas the current rule requires companies to send the documents only two weeks in advance. The new rule would thus give shareholders more time to consider the agenda of meetings. The Japanese Companies Act requires directors’ compensation to be determined either by a decision of the shareholders’ meeting or by the articles of incorporation. Although this may sound like a strong form of ‘say on pay’, the Japanese Supreme Court has held that this requirement is only applicable to the total amount of compensation for all directors, that once the maximum amount of total compensation is fixed, the board of directors may decide how to divide that amount among directors, and that boards are allowed to delegate the decision of compensation of each director to a representative director, who is often the CEO. While Japanese corporate law traditionally has not paid attention to the appropriateness of compensation for each director, recent discussions on corporate governance are placing more emphasis on directors’ compensation as a means to incentivize top management. From this standpoint, the Working Group discussed various proposals to reform rules on directors’ compensation.

한국어

일본회사법이 2019년 12월 4일 개정되어 2019년 12월 11일 공포되었다. 이번 개정 내용은 주주총회의 규정 개선 및 이사 등의 규정의 개선 등 지금까지의 기업지배구조를 더욱 투명하게 하여는 것이다. 이번 개정 내용은 크게 주주총회에 관한 규정의 개선, 이사 등에 관한 규정의 개선, 사채의 관리 및 주식교부제도 등 기타 규정의 개선 등으로 구분할 수 있다. 주주총회에 관한 규정의 개선으로서 주주총회자료의 전자제공제도와 주주제안권의 남용적 행사의 제한이 신설되었고, 이사 등에 관한 규정의 개선으로서는 이사의 보수 등에 관한 규정의 개선, 회사보상 과 D&O보험에 관한 규정의 신설, 사외이사에 관한 규정의 정비 등이 이루어졌다. 기타의 규정의 개선중 주요한 것으로 사채의 관리에 관한 규정의 개선과 주식교부 제도의 신설이 이루어졌다.