Corporate Governance and Disclosure

Tatsuya Kanai
Director for International Financial Markets Financial Services Agency, Japan
IOSCO APRC Conference, Kuala Lumpur March 12, 2001

Presentation outline
Purpose of corporate governance Measures to enhance corporate governance and disclosure in Japan
corporate structure use of stock exchanges disclosure and transparency

Purpose of corporate governance 1

to improve management efficiency to implement policies giving greater priority to stock holders interests to establish corporate ethics to ensure sound management These lead to

Purpose of corporate governance 2

These lead ultimately to:

protection of shareholders more effective market function

Measures to enhance corporate governance and disclosure in Japan

corporate structure use of stock exchanges disclosure and transparency

Corporate structure
strengthening of audit function operation of general meeting of shareholders
notification and enforcement of shareholder rights via the Internet (under consideration)

...Matters of corporate(commercial) laws

Use of stock exchange

In 1999, Tokyo Stock Exchange(TSE) decided to help improve corporate governance of listed companies requested listed companies to disclose
their corporate governance policy state of corporate governance implementation

Disclosure and transparency-1

Existing disclosure relating to corporate governance major shareholder report and disclosure system
shareholders more than five percent

board member information in annual financial statements

Disclosure and transparency-2

Recent development: further transparency full switch of focus to consolidated information introduction of market value measurement for
financial products liabilities relating to retirement benefits adoption of tax effect accounting for financial statements

Disclosure and transparency-3

EDINET (Electronic Disclosure for Investors' NETwork)
External providers of periodic reports, etc. Local finance bureau Made available to public (reading rooms) Information disclosure Review operations support Exchanges and securities dealers associations Display Investors, etc.

Internet Receipt Periodic report database

Internet

END