Japan: governance, international accounting standards and financial regulation reform

Three devolopments to report. [1] The Financial System Council study group on the internationalisation of Japanese financial and capital markets has published recommendations for improving the governance of listed companies in "Toward Strong Corporate Governance of Publicly Listed Companies"  (an overview is available here). These are being considered by the Financial Services Agency. The better protection of minority shareholders is an important theme (as it was in the Asian Corporate Governance Association's 2008 white paper), the study group noting:

... there seems to be no end to instances where the interests of minority shareholders are severely undermined when companies raise additional capital from the market. The strengthening of governance in connection with capital policies of listed companies has become a pressing issue".

[2] The Business Accounting Council's Planning and Coordination Committee - which advises the FSA - has published an interim report in which it recommends that companies be permitted to use International Financial Reporting Standards. This is a "landmark decision" according to Professor Sir David Tweedie, chairman of the International Accounting Standards Board.

[3] In a speech delivered earlier this week, Dr. Takafumi Sato, Commissioner at the FSA, described recent and proposed changes to financial regulation in Japan. He noted, inter alia, the increases in disclosure required by financial firms and reported that greater regulation of credit rating agencies was being introduced.