Imperial Hotel Tower 6F
1-1-1 Uchisaiwaicho
Chiyoda-ku, Tokyo 100-0011 Japan
paul.hunter@ibajapan.org(03) 6205-7531

29 April, 2018
Japan Exchange Group
Secretariat of the Follow-up Council
Corporate Accounting and Disclosure Division, Planning and Coordination Bureau,
Financial Services Agency
Dear Secretariats,
Revision of Japan’s Corporate Governance CodeEstablishment of Guidelines for Investor and Company Engagement
The International Bankers Association of Japan (IBA Japan) is supportive of the various interconnected
measures that have been introduced in recent years to help develop a more dynamic and transparent
business environment that will be attractive to investors, including attracting capital inflow, and bringabout sustainable economic growth in Japan.
It has been three years since the Corporate Governance Code was introduced in 2015 and, together
with a number of other measures, it has helped contribute to a more attractive investment
environment. The other complementary and interconnected measures are: the Stewardship Code; theestablishment of the JPX400; changes to the mandate of the Government Pension Investment Fund(GPIF); and associated changes to other pension funds. We are pleased that since April 2018 a Fair
Disclosure regime has been added to this framework which will bring greater transparency to themarket and should help foster greater confidence amongst investors including those based overseas.
IBA Japan welcomes the 2018 revisions to the Corporate Governance Code and also the Guidelines for
Investor and Company Engagement. Directors have an important role to play in shaping the strategic
direction of a company and amongst board members there should be an appropriate range of skills anddifferent perspectives and specialisms. The appointment of an effective CEO is a major strategic
decision for any board and we welcome the Code measures surrounding appointment and dismissal
procedures. External board members play an important challenge function to company boards and weare also supportive that there should be a suitable proportion of independent directors to carry out
this function.
We welcome the suggestion that there should be a greater diversity of backgrounds amongst directors.
Boards of Japanese companies have been slow to harness the talents and experiences of well-qualified
women and experiences from other markets have indicated a more diverse gender balance will result

in positive benefits. Japanese corporates are increasingly competing in a global markets and thisrequires an understanding of different operating environments and more international experience. We
would encourage Japanese corporations to consider incorporating a greater diversity of national
backgrounds within their board membership to help prepare companies for the challenges ofcompeting in overseas markets.
IBA Japan is also supportive of greater rigor being applied as part of strategic decision making and thatthe cost of capital should be factored into corporate decisions, including business portfolio and fixed
assets investments.
The Corporate and Stewardship Codes measures provide an important framework to help revitalize
Japanese markets but it is only if market participants abide by the spirit and intention of thesemeasures, rather than treating them as a ‘tick box’ requirement, that success will follow. IBA Japanwelcomes the ongoing commitment to review these measures to ensure their relevancy.
Yours faithfully,Paul Hunter
Secretary General