Financial Regulatory Forum

Tokyo Stock Exchange to require independent directors

September 30, 2009

A man looks at an electronic board displaying news and share prices outside a brokerage in Tokyo September 9, 2009. The Nikkei stock average fell 1.2 percent on Wednesday, with Canon Inc and other exporters hit by a stronger yen while bank shares slid after a brokerage downgraded two of Japan's megabanks.   REUTERS/Yuriko Nakao (JAPAN EMPLOYMENT BUSINESS)    TOKYO, Sept 30 (Reuters) – The Tokyo Stock Exchange [TSE.UL] said it plans to require listed companies to have at least one independent director, aiming to address a key hole in the country’s often-criticised corporate governance standards.
   The TSE will also look into simplifying quarterly earnings reporting to lighten the burden on companies, a spokesman for the world’s second-largest equities exchange said, confirming a plan announced by the bourse on Tuesday.
   Most Japanese firms do not have independent or external directors, which governance critics say leaves boards without a sufficient check on management to ensure they act in the best interest of shareholders.
   Japan was ranked 36th among 39 nations by GovernanceMetrics International in its latest corporate governance report.
   The TSE plans to compile a rule requiring listed firms to have at least one independent director by the end of the current financial year to March. It has not yet decided on details, such as when the requirement would take effect, the spokesman said.
   Japan’s trade ministry, the financial regulator and the newly elected Democratic Party have also been pushing for greater independence in Japanese boardrooms, eager to attract capital to the country’s financial markets. [ID:nL2604222]
   The TSE is also exploring how it can lighten the financial reporting burden on companies, which have been required to publish detailed financial statements every quarter since 2004.
   Possible changes would include limiting the number of financial and performance measures that must be reported on a quarterly basis. A scrapping of the quarterly reporting requirement is unlikely, the spokesman said. (Editing by Chris Gallagher)
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    Keywords: TOKYO EXCHANGE/
  
Wednesday, 30 September 2009 04:50:22RTRS [nT62364   ] {C}ENDS

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