On January 19, 2010, ACGA launched a new policy document on India, the "ACGA White Paper on Corporate Governance in India".

The launch was held at the Taj Mahal Palace and Towers in Mumbai. Forty people, including approximately 34 guests and six press, attended. Among the guests were fund managers, company officials, auditors, accountants and risk management consultants.

The "India White Paper" was compiled with the support and input of ACGA members and friends in India and around the globe, and is the first effort of its kind focussing on corporate governance issues in India. The paper makes a series of recommendations for reform in five key areas:

• Shareholder meetings and voting;
• Related-party transactions;
• Preferential warrants;
• Corporate disclosure; and
• The auditing profession.

ACGA believes these reforms are necessary to strengthen the long-term competitiveness of India's capital markets and the accountability of its listed companies.

Prior to and after the launch, we talked to a number of regulators, fund managers, analysts, government officials and business federations about the White Paper, including: the National Stock Exchange; the Securities and Exchange Board of India (SEBI); Ministry of Finance; Institute of Company Secretaries of India; Ministry of Corporate Affairs; and the Federation of Indian Chambers of Commerce and Industry.

On December 15, ACGA released its new "ACGA Statement on Corporate Governance Reform in Japan" in both Japanese and English. A press release was also released to the media.

The Statement is a follow-up to the 2008 ACGA "Japan White Paper" and a response to the various corporate governance policy papers produced this year by leading business and government agencies in Japan -- namely, the Nippon Keidanren, Ministry of Economy, Trade and Industry (METI), Financial Services Agency (FSA), and Tokyo Stock Exchange (TSE).

The aim of the Statement is to provide constructive input into the ongoing corporate governance policy and rule-making process in Japan and the basis for further engagement with officials, regulators, companies and investors. The Statement is being endorsed by many of ACGA’s largest institutional investor members from Asia, Canada, Europe, the UK and US.

The statement analyses and offers reform recommendations on five main issues:

• The role of independent directors vis-à-vis “statutory auditors” (Kansayaku);
• Shareholder meetings and proxy voting;
• Private placements and other capital-raising issues;
• Cross-shareholdings and other equity investments;
• Company-investor dialogue.

Key recommendations include:

• Amend the definition of “outside directors” in Japan’s Companies Act to introduce the concept of “independent directors” and put it on a firm legal foundation.
• Move towards full voting by poll at shareholder meetings as soon as possible.
• Require full disclosure of listed company cross-shareholdings and major equity holdings in outside companies.
• Adopt a national code of corporate governance setting down best-practice principles to augment existing laws and regulations.

On May 15, 2008, the "White Paper on Corporate Governance in Japan", a new policy document on corporate governance in Japan published by ACGA, was launched. The Japanese version of the paper can be downloaded here.

The “Japan White Paper” is the first collaborative effort of its kind focussing on corporate governance issues in Japan and involving global institutional investors. It has been compiled with the support and input of ACGA members and is endorsed by leading global pension funds and fund mangers, including: Aberdeen Asset Management, Singapore; Alliance Trust Asset Management (Asia-Pacific), Hong Kong; British Columbia Investment Management Corporation, Canada; the California Public Employees’ Retirement System (CalPERS), USA; F&C Asset Management, UK; Hermes Fund Managers, UK; RAILPEN Investments, UK; and the Universities Superannuation Scheme, UK.

The paper states that sound corporate governance is essential to building a more internationally competitive corporate sector in Japan and to the longer-term growth of the Japanese economy and its capital markets. It argues that while a number of leading Japanese companies have improved their corporate governance practices in recent years, the system of governance in most Japanese listed companies fail to meet the needs of stakeholders or the nation in three ways:

• By not providing for adequate supervision of corporate strategy;
• By protecting management from the discipline of the market, thus rendering the development of a healthy and efficient market in corporate control all but impossible;
• By failing to provide the returns that are vitally necessary to protect Japan's social safety net—its pension system.

Accordingly, the White Paper makes recommendations on six key issues:

1. Recognition of shareholders as owners of listed companies
2. Efficient use of capital
3. Independent supervision of management
4. Pre-emption rights and third-party share placements
5. Poison pill takeover defences
6. Fairness and transparency in shareholder voting

In October 2007 ACGA submitted a paper to the Singapore Government on “Opening Shareholder Meetings to Fund Managers in Singapore”. It addresses certain legal obstacles that stand in the way of institutional investors who want to attend shareholder meetings in Singapore, known as the “two proxy card issue”. The paper offers recommendations on how to resolve the issue, namely to amend both the Companies Act and the Listing Manual of the Singapore Stock Exchange.

Premium Content
In collaboration with CLSA Asia-Pacific Markets, ACGA has produced "CG Watch 2007", our fourth survey of corporate governance in Asia. Titled "On A Wing And A Prayer: The Greening of Governance", the report assesses the quality of corporate governance in 11 Asian markets and provides aggregate data from 582 listed companies.

This is our first regional "CG Watch" survey since October 2005 and the first to incorporate Japan. We expanded the survey, tightened the scoring and focussed more closely on how corporate governance rules and best practices were being implemented by companies. There are now 87 questions under five categories: "CG Rules and Practices", "Enforcement", "Political and Regulatory Environment", "Accounting and Auditing Standards", and "CG Culture". At the beginning of the report a regional overview written by Jamie Allen, Secretary General of ACGA, discusses the strengths and weaknesses of the corporate governance regime in each market, while each country chapter now also includes a short regulatory overview written by the ACGA team.

ACGA members may download the full report, as attached. (Please note: Since the file size is large, download times may be slow.)

Non-members may purchase the full report. For further details, contact Barbara Ko at: barbara@acga-asia.org or download the purchase form and fax it to Barbara at 852-21473818.

In mid-September, ACGA published its inaugural report on proxy voting systems in Asia. Titled, "Voting for Change: Bringing Proxy Voting Systems in Asia into the 21st Century", the report examines the many impediments to effective and efficient voting in the region and makes a series of practical recommendations for companies, investors, regulators and custodians to implement.

The report also includes a detailed survey of the voting experiences of major institutional investors in 11 Asian markets and three benchmark economies--Australia, the UK and the US. It finds Hong Kong the clear leader in Asia, but well behind the benchmark markets.