Corporate Governance and Laws of Corporation

While “corporate governance” has different meanings, the Commercial Code has been revised many times to achieve corporate governance and the Company Law was finally enacted in 2005. Since then strenuous efforts for realizing corporate governance have continued. The “Stewardship Code”（SSC）and the “Corporate Governance Code”（CGC）were officially promulgated by the Financial Services Agency（FSA）in 2014, and by the FSA and Tokyo Stock Exchange（TSE）in 2015, respectively. SSC stipulates the guidelines in order for institutional investors to fulfill stewardship responsibilities. CGC establishes the guidelines in order for listed companies to realize efficient management（i.e., “offensive corporate governance”）. Both SSC and CGC are meant to operate hand-in-hand. FSA also published the “Customer-oriented Business Conduct Principles”（CBCP） to reform the financial market in 2017. CBCP targets financial service providers（FSPs） and highlights the monitoring system incorporating Key Performance Indicators（KPIs）. Each FSP is strongly encouraged to measure their customer-oriented performance based on KPIs. This article argues that SSC, CGC and CBCP cooperate trilaterally to advance corporate governance of listed companies. More specifically, FSA should introduce a KPI-based monitoring system into SSC, and TSE should adopt a KPI-based enforcement system, by which the efforts of listed companies for efficient management can be assessed objectively and numerically