Companies listed on the Tokyo Stock Exchange must have at least two outside board members from June, the bourse’s operator said, under new rules aimed at improving corporate governance and attracting foreign investors.
Japan Exchange Group Inc Chief Executive Atsushi Saito called the move a “cultural turning point” in a country where companies are widely criticised for prioritising employee welfare and business relationships over shareholder returns.
The announcement comes as the government of Prime Minister Shinzo Abe seeks to change corporate culture to attract double the amount of foreign direct investment by 2020. It also comes days after U.S. investor Daniel Loeb criticised the allocation of capital at robot maker Fanuc Corp.
Efforts to increase the number of outside directors have met opposition over the years. The Keidanren business lobby has long argued that appointing people who may not understand a company’s business would not necessarily boost profitability. Read more.