会社法1/Company Act1
#企業 #法律 #日本 #Japan #Chibil #国際
The Companies Act of Japan continues to evolve to keep pace with international corporate governance standards and modern business practices. Major amendments, most recently implemented in 2023-2024, highlight the ongoing reform of corporate structures, governance, and shareholder rights, aiming to bolster transparency and sustainability. This article updates key aspects of Japan's company law and compares it with corporate laws in other countries, highlighting emerging global trends.
Overview of Japan’s Updated Company Law (2024)
Legal Classification
Civil Law System: Japan's Companies Act operates within a civil law framework, largely influenced by German and French legal traditions but with elements from Anglo-American corporate governance practices.
Comprehensive Amendments: Recent reforms, particularly the 2021-2024 changes, emphasize board independence, sustainability, and shareholder engagement.
Historical Context
Recent Developments: The 2019 amendments to the Companies Act introduced measures to increase board transparency and strengthen corporate governance. Key reforms included mandatory disclosures, limits on shareholder proposals, and stronger shareholder rights to demand meetings and enforce accountability. The 2023-2024 changes further integrate environmental and social governance (ESG) principles into corporate decision-making.
Key Provisions
Governance Changes:
All companies listed on the TSE Prime market must now comply with stricter governance requirements. These include ensuring that at least one-third of the board consists of independent directors and enhancing transparency regarding executive compensation and decision-making.
Companies are encouraged to adopt skills matrices to evaluate board members’ qualifications, ensuring that board diversity and expertise align with the company’s long-term goals.
Sustainability: Companies are now required to disclose how they manage sustainability risks, particularly in relation to climate change, in line with international frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD).
Global Comparisons of Company Law
Similar Laws to Japan
Germany:
Germany’s corporate law, rooted in civil law, has greatly influenced Japan. Like Japan, Germany requires a two-tier board structure for larger corporations, separating the management and supervisory functions. Both countries also emphasize long-term stakeholder value over short-term shareholder returns.
United Kingdom:
The UK, following common law traditions, places greater emphasis on shareholder primacy. Unlike Japan’s codified approach, UK corporate governance is more flexible, allowing for greater shareholder influence through judicial mechanisms and regulatory bodies like the Financial Conduct Authority (FCA).
Key Differences in Company Law
Board Independence:
In Japan, one-third of the board must be independent for companies listed on the Prime market, whereas the UK and the U.S. have no set ratios but require sufficient independence to ensure objective oversight.
Shareholder Engagement:
In the U.S., shareholder activism is common, with institutional investors playing a key role in corporate governance. Japan’s corporate landscape, by contrast, is more conservative, with institutional investors expected to follow the Stewardship Code, which emphasizes long-term growth.
Table 1: Comparison of Governance Structures
Global Trends in Company Law
Influence of ESG and Digitalization
Sustainability: Japan’s corporate governance reforms place greater emphasis on addressing environmental, social, and governance (ESG) issues. Companies listed on the Prime market must now disclose sustainability initiatives, including climate risks, mirroring trends in the EU and UK, which have implemented stricter non-financial reporting requirements.
Digitalization: Japan has been slower than countries like the U.S. and Germany to adopt digital governance tools, though the pandemic accelerated the shift toward virtual shareholder meetings and digital oversight mechanisms.
Table 2: Global Corporate Governance Trends
Key Differences in Company Law
Cultural and Structural Influences
Japan: The ringi system of consensus-based decision-making reflects Japan’s corporate culture, which emphasizes harmony and long-term planning over short-term profits. In contrast, the U.S. corporate system emphasizes rapid decision-making and shareholder primacy.
Enforcement and Transparency: Enforcement of corporate law violations in Japan is less aggressive compared to the U.S., where class-action lawsuits and regulatory enforcement by the Securities and Exchange Commission (SEC) are more common.
Advice for Foreigners Navigating Japan’s Company Law
Choosing a Business Structure:
Foreigners setting up businesses in Japan can choose between Kabushiki Kaisha (KK) for larger ventures or Godo Kaisha (GK) for smaller, flexible structures. The GK is akin to the U.S. LLC, offering limited liability without the rigid governance requirements of a KK.
Board Governance:
Companies aiming for the Prime market must comply with the new independent director rules. Foreign investors should be prepared to appoint local professionals with a deep understanding of Japan’s corporate environment.
Compliance with ESG:
Companies must now address sustainability risks in their business operations. Foreign firms in Japan should align their ESG strategies with international standards, such as the TCFD framework, which is increasingly integrated into Japanese corporate law.
Table 3: Key Considerations for Foreign Investors in Japan
References
Companies Act of Japan (2024 Updates)
The latest updates to the Companies Act reflect Japan’s shift toward stricter governance and sustainability standards.
URL: Japanese Law Translation(Corporate Governance Laws and Regulations Report (2024)
A detailed analysis of recent corporate governance reforms in Japan, focusing on board independence, ESG, and shareholder rights.
URL: ICLG - Corporate Governance 2024(Japan’s Coming Wave of Reform (2024)
Insights into the Tokyo Stock Exchange reform and its impact on corporate governance, focusing on the Prime market and board structures.
URL: Harvard Law School Forum on Corporate Governance(
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