Uncertainty hampering Japan’s corporate governance code

Author: Brian Yap | Published: 6 Oct 2015

Counsel in Japan have questioned the country’s corporate governance code, at a time when Prime Minister Shinzo Abe has reiterated his intention to clean up the country’s corporate sector.

Speaking at Bloomberg’s New York Headquarters last Tuesday, Prime Minister Shinzo Abe vowed to strengthen corporate governance by putting an end to cross-shareholding.

But uncertainty surrounds the short-term effectiveness of the new regime, with no concrete actions having been taken by firms to unload cross-held shares four months after its introduction.

"We have felt that many listed companies are beginning to think about the reasonableness of cross-shareholding, but we are not quite sure about the effectiveness of the governance code itself," said Shuhei Uchida, partner of Mori Hamada & Matsumoto.