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ACGA response to proposed Japan CG Code revisions

On 15 May 2026, ACGA submitted our comments to Financial Services Agency (FSA) on the proposed revisions to Japan's Corporate Governance Code. 

We commend the FSA and the Expert Panel for the considerable work undertaken to streamline the Code, introduce a comprehensive Preamble, and reorient corporate governance toward “growth-oriented” objectives. The changes signal continued regulatory ambition and help reinforce Japan’s reform trajectory at a time when global investors are closely watching the substance of implementation. 

At the same time, we are concerned that the final draft is ultimately under-reaching relative to the expectations of many long-term institutional investors and the readiness of the Japanese market. In several critical areas, the revised Code stops short of establishing the clearer, outcome-focused expectations that are now necessary to move beyond formalistic compliance toward genuine governance impact. 

Summary of ACGA’s principal recommendations and concerns

• Positive developments we strongly support include: the elevation of shareholder dialogue to Principle 1.1, the new standalone Principle on internal control and enterprise risk management (4.4), the more explicit diversity dimensions (including references to cultural diversity and career experience), the clearer language on growth investments and capital allocation under Principles 4.1 and 4.2, and the alignment with ISSB standards on sustainability. 

• Areas of material concern include: the downgrading of Interpretive Guidance from integral to the Code to mere “reference” material; the dilution of cash-holding scrutiny by subsuming it under broader “financial and real assets” the removal or softening of several minority-shareholder protection provisions (1.5–1.7); the continued vagueness around board evaluation follow-up, Lead Independent Director expectations, and skills-matrix rigour; and the modest expectations on Yuho/AGM timing and English disclosure. 

Please click here to view the full letter we submitted.