Summary of Opinions at the 1st Meeting of the Expert Panel
- A general consensus was formed on the direction to streamline the Corporate Governance Code (the “Code”)
- The Code should be reclassified to promote corporate governance reform in substance.
- The revised Code should not reduce the importance of dialogue with shareholders
- Be cautious of slimming down, deleting and classifying “too much.” Care should be taken not to delete important provisions that could be perceived as reduced policy importance.
- Provisions should remain in “Guidance” sections to the extent possible, as deletion from the Code could be perceived as “no longer necessary in governance practice.” Effective communication is necessary to avoid misunderstanding between companies and investors with respect to provisions to be deleted.
- Clear organization of “Principles” subject to “Comply or Explain” and “Guidance” not subject to “Comply or Explain” is crucial. Going back to the spirit of the “principles-based approach,” the standard of reclassification should be that certain provisions, which companies should use as principles for their governance practices, should be upgraded to “Principles.”
- With respect to “reducing burdens” for companies, simply taking into account costs and manpower for disclosure burdens is misleading since companies are putting resources into integrated reports. If companies feel more “burdened” when they are unsure how they should implement it or how investors will evaluate an “Explain,” the streamlining of the Code could end up creating new burdens, as it will require companies to think on their own.
- The current Code contains some statements resembling how-to manuals. The Code should show basic principles of corporate governance. Statements focusing on details or items that should be implemented differently by companies and investors depending on their characteristics, should be covered in guidelines, advisory materials or case studies of good practices.
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