JAPAN Law and Practice Contributed by: Hiroshi Mitoma, Tomohiko Iwasaki and Kosuke Hamaguchi, Nagashima Ohno & Tsunematsu
pendent outside directors in the Prime Market (or two or more directors must be independ - ent outside directors in the other markets). If a listed company has a controlling shareholder, enhanced requirements regarding independent outside directors will apply in order to protect the interest of minority shareholders. Shareholder Proposal Right Shareholders who hold 1% or more of the total voting rights or 300 or more of the votes for six months or longer may make a proposal of up to ten agenda (including appointment and dis - missal of directors) by notifying the company at least eight weeks (or a shorter period if so pro - vided in the articles of incorporation) prior to a shareholder meeting. 2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance In December 2023, the Financial Services Agen - cy amended the subordinate regulations under the FIEA to enhance disclosure requirements related to: • agreements between a listed company and its shareholder regarding the governance (eg, director nomination right); • agreements between a listed company and its major shareholder regarding disposal or additional acquisition of shares (eg, stand - still); and • financial covenants included in loan agree - ments or bond indentures. Most of these amendments became applicable from April 2025. In February 2024, the Tokyo stock exchange issued a notification which requires companies
listed at its Prime Market to make public disclo - sures in English (in addition to Japanese), effec - tive from April 2025. Recent significant increase of shareholder activ - ism and hostile takeovers in Japan reveals that some updates and reforms are necessary in the regulations regarding the takeover bids and the bulk shareholding reports in the FIEA. In May 2024, the Diet passed the amendment to the FIEA to reform the rules for takeover bids and the bulk shareholding reports. These amendments are expected to become applicable in 2026. Draft amendment to the Stewardship Code is being reviewed taking into account this amend - ment to the FIEA. The Legislative Council of the Ministry of Justice started to discuss amendment to the Companies Act, which is to cover some corporate govern - ance issues, including: • introduction of virtual/online shareholder meetings; • introduction of the system for confirming the identity of beneficial owners; and • amendment to the rules applicable to compa - nies with nominating and other committees. 2.2 ESG Considerations The Corporate Governance Code suggests that a listed company: • take appropriate measures to address sus - tainability issues, including social and envi - ronmental matters; • develop a basic policy for the company’s sustainability initiatives from the perspective of increasing corporate value over the mid- to long-term; and • appropriately disclose its initiatives regarding sustainability in its management strategies
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