Silviase/jgov_v1.4_full_ann huggingface dataset:
constructive dialogue with shareholders, and therefore ensure that such information, particularly non-financial information, is accurate, clear and useful.
Responsibilities of the Board
4. Given its fiduciary responsibility and accountability to shareholders, in order to promote sustainable corporate growth and the increase of corporate value over the mid- to long-term and enhance earnings power and capital efficiency, the board should appropriately fulfill its roles and responsibilities, including:
(1) Setting the broad direction of corporate strategy;
(2) Establishing an environment where appropriate risk-taking by the senior management is supported; and
(3) Carrying out effective oversight of directors and the management (including shikkoyaku and so-called shikkoyakuin) from an independent and objective standpoint.
Such roles and responsibilities should be equally and appropriately fulfilled regardless of the form of corporate organization - i.e., Company with Kansayaku Board (where a part of these roles and responsibilities are performed by kansayaku and the kansayaku board), Company with Three Committees (Nomination, Audit and Remuneration), or Company with Supervisory Committee.
Dialogue with Shareholders
5. In order to contribute to sustainable growth and the increase of corporate value over the mid- to long-term, companies should engage in constructive dialogue with shareholders even outside the general shareholder meeting.
During such dialogue, senior management and directors, including outside directors, should listen to the views of shareholders and pay due attention to their interests and concerns, clearly explain business policies to shareholders in an understandable manner so as to gain their support, and work for developing a balanced understanding of the positions of shareholders and other stakeholders and acting accordingly.

For more information on Japan’s Corporate Governance Code, please refer to the following website:

http://www.fsa.go.jp/en/refer/councils/corporategovernance/index.html
Box: Japan’s Stewardship Code

The Council of Experts Concerning the Japanese Version of the Stewardship Code requested the FSA to publish and periodically update the list of institutional investors who announced their acceptance of Japan’s Stewardship Code.

On June 11, 2015, the FSA published the updated version of the list of institutional investors who had notified the FSA of their intention to accept the Code as of the end of May 2015. There are 191 institutional investors from Japan and abroad on the list.

- Trust banks (Shintaku Ginko): 7

- Investment managers (Toshishintaku/Toshikomon Gaisha): 133

- Pension funds : 23

- Insurance companies : 21

- Others (service providers, etc.): 7

(Total) : 191

The FSA is planning to update the list quarterly. More specifically, the information as of the end of February, May, August and November respectively is due to be published early in the following month.

The principles of Japan’s Stewardship Code are as follows:

1. Institutional investors should have a clear policy on how they fulfill their stewardship responsibilities, and publicly disclose it.

2. Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.

3. Institutional investors should monitor investee companies so that they can appropriately fulfill their stewardship responsibilities with an orientation towards the sustainable growth of the companies.

4. Institutional investors should seek to arrive at an understanding in common with investee companies and work to solve problems through constructive engagement with investee companies.

5. Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist; it should be designed to contribute to the sustainable growth of investee companies.

6. Institutional investors in principle should report periodically on how they fulfill
their stewardship responsibilities, including their voting responsibilities, to their clients and beneficiaries.

7. To contribute positively to the sustainable growth of investee companies, institutional investors should have in-depth knowledge of the investee companies and their business environment and skills and resources needed to appropriately engage with the companies and make proper judgments in fulfilling their stewardship activities.

For more information on Japan’s Stewardship Code, please refer to the following website:

http://www.fsa.gov.jp/en/refer/councils/stewardship/index.html
### iii. Monitoring of Financial Institutions

## Financial Monitoring Policy

The FSA has been working to improve the quality of Japan’s financial regulations especially since the program year 2007. In the program year 2013, aiming for an in-depth understanding of the condition of financial institutions and the financial system, the FSA published “Financial Monitoring Policy” which includes focus of financial monitoring and measures regarding on-site and off-site monitoring process. The policy is implemented using a principles-based approach as opposed to a rule-based approach.

It is vitally important to give support from the financial sector to the real economy to overcome deflation and to maintain sustainable growth. Building a positive cycle among (i) financial institutions, (ii) their customers, and (iii) economy as a whole is significant. First, the financial institutions engage in financial intermediation in a way that provides financial products and services that are really beneficial for their customers. Second, proper financial products and services supplied to enterprise customers will lead these customers to enjoy sustainable economic growth, and those supplied to individual customers, investors or depositors will encourage stable asset formation. Third, growth or development of customers will bring financial institutions stable profit growth (See the figure below).

A vital prerequisite for effective financial intermediation is that the financial system and individual institutions maintain their soundness. Financial Monitoring Policy describes nine aspects on which the FSA places particular importance in conducting supervision and inspection.

(1) Effective response to the needs of their customers

The FSA will review whether financial institutions provide financial products/services that are really beneficial for their customers, regardless of the level of commission and fees and the customer’s corporate group association. The FSA will
also review the adequacy of financial institutions’ governance, including the prevention of abuse of a dominant position of institutions and conflicts of interest between institutions and customers. Financial institutions are encouraged to review current business practice from this perspective and, if necessary, alter the mind-set of their officers and employees or their corporate culture.

(2) Lending based on customers’ business potential

With the tough memories of disposing of the non-performing loans in the 1990's and early 2000's, Japanese banks have been unwilling to lend without collateral or personal guarantees of company managers. For the purpose of providing smooth finance to the economy, fighting against deflationary pressure, the FSA will review whether financial institutions provide credits and other services based on appropriate appraisal of their customers' business potential, without depending excessively on collateral, guarantees or superficial financial data on their customers.

(3) Upgrading asset management capacity

To give support from the financial side to the steps being taken to overcome deflation and regenerate the economy, it is important to ensure that the financial assets held by the household sector are managed appropriately, in accordance with the needs of the asset owners. Financial institutions engaging in activities such as product development, sales and asset management are required to fulfill their roles and responsibilities. The FSA will review financial institutions' management approaches, the products and services they provide, and how they assess business performance.

(4) Macro prudence

It is necessary to pay attention to the change in financial markets. The FSA will make an analysis of the impact of the global economy and market trends on the safety and soundness of the Japanese financial system and institutions. With regard to the impact, the FSA will utilize stress testing to identify potential risks in a forward-looking manner, and address them as necessary. Based on these analyses, the FSA will review the risk management framework of individual financial institutions.

(5) Enterprise risk management (ERM) [Micro prudence]

Financial inspection had focused on asset assessment. However, in order to continuously ensure the soundness of overall business management in financial institutions, it is important to identify critical risks and vulnerabilities for financial institutions. The FSA will review the effectiveness of the ERM of each financial institution, including assessment of interest risk in banking account, credit concentration risk and the use of the stress testing.

(6) Sustainability of business model and corporate governance

The FSA will have discussions with financial institutions about the sustainability of their business model in cases where their business environment changes as a result of factors such as decreasing population in Japan. With regard to governance, the FSA will discuss not the nominal matters such as whether they have nominated outside and
independent directors to their boards, but substantial matters such as how their governance system functions.

(7) Ensuring customers’ trust/security

Since the financial system is an important element of the economic infrastructure, the FSA will review the effectiveness of internal controls at each financial institution to address the issues of information security, abuse of Internet banking, cyber-attacks, business continuity plans, Anti-Money Laundering and Countering Financing of Terrorism as well as other issues for the security of customers.

(8) Acceleration of recovery from the Great East Japan Earthquake

As the recovery from the Great East Japan Earthquake has advanced, it is important for financial institutions to support the development of industries/enterprises with significant roles in the regions as well as community development in the new financial environment. The FSA will urge financial institutions to support the recovery and continue to address the double loan problem of the disaster-affected people.

(9) Public finance and private finance

The FSA will develop better understanding of the competing and complementary relations between public and private finance through discussions with financial institutions and their customers, to be followed by discussions with relevant stakeholders on how better relations between the public and private financial systems could be established.

The measures for monitoring for the 2014-2015 period are characterized by the following four pillars.

(1) Integration of on-site and off-site monitoring process

Under the common policy, both Supervisory Bureau and Inspection Bureau will work together in close cooperation and mitigate the burden for financial institutions.

(2) Enhancement of constructive dialogues between the FSA and financial sector

The FSA will continue constructive and interactive dialogues with financial institutions. The FSA will give importance to exchanges of views that stimulate improvements in business management, rather than just compliance with regulations.

(3) Enhanced international cooperation

The FSA will participate more actively in the discussion on the international financial regulatory reforms, and make its supervision more effective and efficient through enhanced cooperation with foreign authorities.

(4) Enhancement of dialogues with stakeholders of financial institutions

The FSA will exchange views widely with stakeholders of financial institutions aiming to understand and analyze financial institutions from a variety of angles.

For more information on Financial Monitoring Policy for 2014-2015, please refer to the following: http://www.fsa.go.jp/en/news/2014/20141225-1.html
## Financial Monitoring Report

In order to encourage every financial institution to adopt the best practice and to foster the sound development of the financial system and financial markets, the FSA compiled and published “Financial Monitoring Report” starting from the program year 2013. This report contains results and issues identified through financial monitoring (See paragraph 56 in Chapter IV of this document for more information).
### iv. Growing together with Asia

## Support for developing the financial infrastructure in Asia

In recent years, Japanese companies and financial institutions have accelerated their business expansion in Asia. As a result, it has been increasingly necessary for them to receive governmental support for their entry into the Asian markets through the financial infrastructure development. The “Japan Revitalization Strategy - JAPAN is BACK” (Cabinet decision: June 14, 2013) includes promoting the development of the financial infrastructure in Asia. “Japan Revitalization Strategy (Revised in 2014) - Japan’s challenge for the future” (Cabinet decision: June 24, 2014) also mentions measures “to promote the organizational fortification to support the activities of Japanese financial institutions in Asia in order to improve the business environment for Japanese companies and financial institutions operating in Asian countries.”

Through financial consultations with the financial supervisory authorities in Asian countries, the FSA has been actively engaged in concluding a Memorandum of Understanding (MOU) and Exchanges of Letters (EOL) for financial technical cooperation, etc. to build a long-term framework for cooperation.

Box: Signing of MOU / EOL with Asian Countries (As of June 2015)
October 2013	Financial Services Authority of Indonesia (EOL)
January 2014	Financial Regulatory Commission of Mongolia (EOL)
January 2014	Ministry of Finance of Myanmar (MOU)
February 2014	Securities and Exchange Commission Thailand (EOL)
March 2014	State Securities Commission of Vietnam (EOL)
May 2014	Bank of Thailand (EOL)
June 2014	Insurance Supervisory Authority of the Ministry of Finance of Vietnam (EOL)
June 2014	State Bank of Vietnam (EOL)
June 2014	Financial Services Authority of Indonesia (EOL)
June 2014	Bank of Mongolia (EOL)
July 2014	Ministry of Finance Thailand (EOL)
August 2014	Office of Insurance Commission of Thailand (EOL)
December 2014	Bangko Sentral ng Pilipinas (EOL)
June 2015	National Bank of Cambodia (EOL)
June 2015	Securities and Exchange Commission of Cambodia (EOL)

Based on the MOU / EOL, the FSA has run seminars in Japan or the partner countries and received the delegations in Japan, etc., thereby formulating and implementing concrete cooperative projects such as assisting the development of the
legal and regulatory systems and sharing expertise and experiences pertaining to the financial administration with Asian countries, while fully taking their needs into consideration. The FSA has proactively pushed forward such technical cooperation for financial infrastructure development in partnership with relevant organizations. In doing so, the FSA has further strengthened the relationships with the financial authorities in each country and significantly contributed to the financial sector development of Asian countries.

A number of consultations have been held to reinforce the ties with the financial authorities in Asia in FY 2014. The FSA had top-level bilateral meetings with the counterparts of Indonesia (June 2014/January 2015), Thailand (August/October/December 2014 and March 2015), Vietnam (June 2014), Myanmar (April/June/August/November/December 2014 and January/February 2015), and Mongolia (May/July 2014 and March 2015) to exchange views on the enhanced partnership in the arena of financial sector supervision.

Multilateral talks went along with the above-mentioned bilateral efforts. Japan hosted meetings of the Financial Stability Board Regional Consultative Group for Asia (co-chaired by the FSA), as well as the Asia-Pacific Regional Committee of the International Organization of Securities Commissions. The FSA played a leading role in promoting information sharing and enhancing cooperation on various issues related to the financial system in the Asian region and on countermeasures for them.

Moreover, since it has become increasingly important to achieve the sound development of the financial system in emerging Asian countries that have close relations with Japan in order to enhance the stability of the international financial system, including Japan, the FSA held seminars for government officials responsible for financial administration in emerging Asian countries, which would lead to the improvement of supervisory capabilities in the banking, securities, and insurance sectors there.

## The Asian Financial Partnership Center

(1) Main objectives and activities of the Asian Financial Partnership Center

The FSA established the Asian Financial Partnership Center (“AFPAC”) on April 30, 2014, to address the issues related to the financial markets in Asia, to review our financial sector technical assistance for infrastructure development, and to further strengthen cooperative relationships with Asian financial authorities.

The AFPAC invites government officials from Asian financial authorities as visiting fellows and offers training programs tailored to the areas of interest of each visiting fellow. The outcomes of the programs are expected to be disseminated at seminars/symposiums and to be utilized for financial infrastructure development in Asia and contribution towards global financial regulatory reforms.
Through offering the programs, the AFPAC aims to build stronger networks with Asian financial authorities.

## (2) Details of the activities

Since July 2014, 22 officials from Cambodia, Mongolia, Myanmar, Thailand and Vietnam have participated in the program as visiting fellows and student interns.

The visiting fellows attended basic lectures on the FSA’s organizational structure, financial regulatory framework and supervisory practices and visited other relevant organizations. Some of the visiting fellows also visited regional areas and exchanged views with regional financial institutions on their business strategies in Asia and on the outlook of the regional economy.

In addition, the visiting fellows undertook customized sessions at relevant divisions of the FSA, focusing on respective areas of interest, such as supervisory and inspection practices, market surveillance and fraud investigation practices.

During their stays, they made interim presentations on their home organizational structures, financial regulatory frameworks, and details of their areas of interest. At the end of the program, they delivered final presentations on their outcomes of the program; what they learned, how they would utilize the learnings, and the challenges that may lie ahead.

Some of the visiting fellows spoke at international symposiums held in Japan and made presentations on issues related to the financial sectors of their countries. On October 30, 2014, a visiting fellow from the State Bank of Vietnam participated in a symposium entitled “Financial Activity of Households and SME Financing in the Regional Economy.” He made a presentation on SME activities and financing in Vietnam, and described the current status of Vietnamese SMEs and challenges in supporting their development. On January 23, 2015, a visiting fellow from the Securities and Exchange Commission of Thailand also spoke at a symposium entitled “ADBI-Japan-OECD High-level Global Symposium: Promoting Better Lifetime Planning through Financial Education.” She delivered her presentation on the Thai SEC’s measures to promote access to the capital market.

Through the program, the visiting fellows are expected to acquire knowledge, enhance understanding, and develop expertise in areas of their interests, eventually contributing to the development of the financial systems in their home countries.
### I V. Policy Developments

### i. Overview

The FSA adopted several important policy measures during the program year 2013 (July 1, 2013 to June 30, 2014). The policy measures contain updating rules and regulations to establish fair, transparent, and vibrant markets, improving of inspection and supervision, and contributing to international discussions between financial regulators.

Policy Measures for the Establishment of Fair, Transparent, and Vibrant Markets
- Revising the Act for Partial Revision of the Financial Instruments and Exchange Act, etc. and relevant Cabinet Orders and Cabinet Office Ordinances
- Improving disclosure system, financial tax system, and other systems related to financial markets
- Developing regulatory and institutional reforms

Inspection and Supervision
Promoting the financial institutions
- to play appropriate roles as financial intermediaries so that funds are supplied smoothly
- to make efforts to manage risks and maintain the stability of the financial system
- to protect customers and improve their convenience

Trends in the Development of International Relations
- Actively contributing to global financial regulatory reform
- Making efforts to provide financial sector technical assistance to other Asian countries for their development of financial infrastructures
### ii. Establishment of Fair, Transparent, and Vibrant Markets

a. The Act for Partial Revision of the Financial Instruments and Exchange Act, etc. (enacted on May 23, 2014)

### 1. Aim of the amendment

The “Act for Partial Revision of the Financial Instruments and Exchange Act, etc.” was enacted on May 23, 2014 and promulgated on May 30, 2014. The FSA developed comprehensive measures to improve the attractiveness of financial and capital markets in Japan, including measures to allocate households assets into growing businesses, and accelerate and strengthen the growth strategy from a financial aspect, for the revitalization of the Japanese economy. Specifically, the amendment aimed at (i) promoting the provision of risk money to emerging and growing companies; (ii) promoting new listings and facilitating financing by listed companies; and (iii) improving market reliability.

### 2. Review of regulations relating to the financing of listed companies

(1) With regard to the submission of an annual securities report containing false statements, persons who disposed of the relevant securities are added as parties who may claim damages in relation to such false statements. Furthermore, in relation to submitter’s liability for such damage, in the case where the submitter certifies that he/she had no intention or negligence, he/she is not liable for the damage.

(2) In the case where the legal submission deadline for a reference document is stated in the shelf registration statement and the reference document is submitted by the deadline, it is not necessary to submit an amended shelf registration statement.

(3) The number of treasury shares is exempted from the total number of shares that serves as a basis to judge necessity for submission of large shareholding reports.

(4) Matters relating to recipients of small numbers of shares are excluded from the matters that must be included in short-term large volume transfer reports.

(5) In the case where a new cause for submission occurs by the day before the filing date of the large shareholding report or change report, the additional change report relating to the new cause for submission needs to be submitted within five business days from the date on which the new cause for submission occurred, instead of simultaneously submitting with the large shareholding report or change report (simultaneous submission of a