TOKYO May 23 A U.S. investor group has urged
Japan's government to require companies to appoint multiple
independent directors, putting pressure on lawmakers to push
ahead with corporate governance reforms that have met opposition
In a letter addressed to Prime Minister Shinzo Abe, the
Council of Institutional Investors (CII), whose members include
state pension funds, endowments and others with combined assets
of more than $3 trillion, applauded efforts to boost governance
and called for more rigorous steps.
"CII encourages the Japanese government to further expand
the independent director requirement in the future," said the
letter, signed by CII Executive Director Ann Yerger and sent to
other senior lawmakers as well.
Japanese companies are currently not required to appoint
independent directors, although a corporate law revision
expected to be adopted in the current parliamentary session will
encourage listed companies to hire at least one outside
Foreign investors have often blamed insiders' domination of
corporate boards for low shareholder returns and a lack of
The politically powerful Keidanren business lobby has
opposed the proposed reforms, arguing that simply hiring outside
directors who may not understand a company's business would not
necessarily be in investors' interests. It is drawing up its own
proposals in a bid to stave off pressure for change.
Abe, who has pledged to double the amount of foreign direct
investment (FDI) into Japan by 2020 to help offset the impact of
a shrinking population, is eager to promote reform. Japan's
inbound FDI is currently the lowest among OECD countries at
around 3.5 percent relative to GDP.
Lawmakers are compiling a corporate governance code that
would bring Japan in line with international standards. Masahiko
Shibayama, a member of the ruling Liberal Democratic Party who
is leading those efforts, has said all companies should be
required to hire multiple independent board members.
(Reporting by Ritsuko Ando; Editing by Edmund Klamann)