Corporate Japan is changing. When the corporate governance code was introduced in Japan in 2014, companies scrambled to find independent directors to put on the board and were more concerned with complying with the letter rather than the spirit of the law.
However, over the ensuing years, the quality of directors has improved significantly and companies have taken the opportunity to improve the functioning of the board by having it take more of an oversight role and focus on strategy rather than operational issues.
One aspect of the corporate governance code is the need to justify cross-shareholdings. The unwinding of cross-shareholdings started during the Japanese financial crisis in the early 2000s, but was running out of steam before the code was introduced.
It has given renewed impetus to the unwinding, particularly given that the latest version of the code is even stricter on this point.
At the same time, the code has emboldened activists to challenge companies which are seen as being inefficient from a balance sheet perspective.
The stewardship code, which was introduced in 2013, means Japanese institutional investors can no longer ignore the activists entirely.
And we have seen some interesting examples of companies taking a more robust approach with other listed companies.
For example, Itochu, the trading house, raised its stake in Descente, a sportswear manufacturer from 30% to 40% in a hostile move and then forced out the board because it felt that Descente's management was underperforming.
Yahoo Japan forced out the CEO of Askul, a company in which it owned a 45% stake, because it was dissatisfied with the company's deteriorating business.
And the shareholders in Japanese bathroom equipment company Lixil, led by Marathon Asset Management, forced the CEO, who was from the founding family, to resign, when he failed to secure sufficient votes at the shareholders' meeting.
Perhaps corporate Japan is the one leopard who can change its spots.
Ruth Nash is manager of the JOHCM Japan fund
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