JAPANESE

MODEL
of
CORPORATE GOVERNANCE
Corporate governance
is the process and rules under
which a company is managed on
the behalf of shareholders and
stakeholders. The board of
directors is primarily responsible
for applying and maintaining a
company's corporate
governance.
  Bank- based
 Relationship- oriented
 Network
KEIRETSU  Stakeholder
 Coordinate model of Corporate Governance
 Insider

Long- term
relationship
 OUTSIDE INDEPENDENT
SHAREHOLDE DIRECTORS
RS
KEY PLAYERS:
GOVERNMEN KEIRETS
1. MAIN BANK (major inside
T U
shareholders)
2. KEIRETSU (major inside BANK
shareholders) MANAGEMENT
3. MANAGEMENT
4. GOVERNMENT
 INSURANCE
COMPANIES
BANKS
43%

FOREIGN
SHARE 25%
CORPORATIONS
OWNERSHIP 3%

PATTERN
OKEH PA BA
KEYOH ??
 Consensual
Decision Making
Mostly 50
Conditional members

B
Slow
Evaluation
oard Lifetime
and

O
Promotion
Mostly insiders
Employment
f Non-specialized

D
career path
irector
Holistic Concern
s Implicit,
Informal
Control
 Factors:
 Due to the growing role of Japanese corporations at home
and abroad.
The increasing internationalization of Japanese corporations.
The growth of Japanese capital market.

Regulatory The primary regulatory bodies:

Framework
 Securities Bureau of the Ministry in Finance
 Securities Exchange Surveillance Committee
 Corporations are required to disclose a wide range
of information in the annual report and or agenda
for the AGM:
• including: financial data on the
corporation (required on a semi-annual
basis)
• data on the corporation’s capital structure
• background information on each nominee
to the board of directors (including name,

Disclosure occupation, relationship with the

corporation, and ownership of stock in the
corporation)

Requirements • aggregate date on compensation, namely

the maximum amount of compensation
payable to all executive officers and the
board of directors
• information on proposed mergers and
restructurings
• proposed amendments to the articles of
  In Japan routine corporate
actions requiring share holder
are: payment of dividends
Corporate and allocations of reserves;
election of directors; and
Actions appointment of auditors
  non-affiliated shareholders have
little or no voice in Japanese
Governance ;
 as a result, there are few truly
Interaction independent directors
(representing outside
among these shareholders).
Serves to Link
Players
Relationship rather
than Balance
Power