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nid 94151
Jul 21, 2026
kgurnani@vixio.com
Japan
Financial Services Agency
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1557 charsJapan's Financial Services Agency Finalises 2026 Corporate Governance Code Revision
On July 21, 2026, Japan's Financial Services Agency (FSA) and Tokyo Stock Exchange (TSE) finalised the 2026 revision of the Corporate Governance Code. The revision followed discussions by an expert panel that commenced in October 2025, chaired by Yuri Ono, senior fellow at Japan Research Institute.
The FSA and TSE conducted a public consultation on the revised code from April 10, 2026 to May 15, 2026, receiving feedback from 147 individuals and organisations. The finalised 2026 Corporate Governance Code incorporates this feedback and addresses key amendments from the previous version. The revision aims to promote growth investment through enhanced corporate governance practices.
Key documentation accompanying the finalised code includes a summary of amendments from the previous version, the rationale for the revision, an overview of the 2026 changes, and a comprehensive analysis of public comments received alongside the FSA and TSE's responses. The FSA and TSE also published a case study collection highlighting examples of efforts to strengthen board of directors functionality, intended to serve as practical guidance for listed companies implementing the revised code.
The revised code applies to listed companies on the TSE and stewardship code signatories. Supporting materials have been prepared for listed company executives, compliance personnel, and stewardship code signatory institutions to facilitate implementation.
The finalised 2026 Corporate Governance Code and all accompanying materials are available on the TSE website.
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2729 charsJapan's Financial Services Agency Finalises 2026 Corporate Governance Code Revision
On July 21, 2026, Japan's Financial Services Agency (FSA) and Tokyo Stock Exchange (TSE) finalised the 2026 revision of the Corporate Governance Code, which places emphasis on substantive governance, growth investment and board accountability, rather than formal or template-based compliance.
Key changes made to the code are:
1. The Code has been “principled” and streamlined: The 2026 revision reorganises previous supplementary principles, elevates core governance matters into the main principles and removes provisions that duplicate legislation or other parts of the Code. However, companies should not assume that matters moved into the interpretation guidelines or removed from the main Code are no longer important.
2. Stronger focus on growth investment and capital efficiency: Boards should publish management strategies based on a clear understanding of the company’s cost of capital. Companies should set profitability and capital-efficiency targets and explain how they will allocate resources to meet them.
3. Earlier disclosure before shareholder meetings: The revised Code identifies filing the securities report before the general shareholders’ meeting as an important means of enabling shareholders to exercise their rights. The FSA considers submission at least three weeks before the meeting to be the preferred approach, although the document acknowledges that this may be operationally difficult under current reporting practices.
4. Shareholder rights and cross-shareholdings: Companies must protect minority and foreign shareholders, manage conflicts involving controlling shareholders and maintain constructive dialogue outside formal shareholder meetings. Boards must annually review strategic or policy shareholdings, assess whether their benefits and risks are proportionate to the cost of capital, disclose reduction policies and establish criteria governing the exercise of voting rights.
5. Expanded board accountability: Boards are expected to:
Set the company’s strategic direction and growth path.
Oversee capital allocation and appropriate risk-taking.
Establish objective CEO appointment, dismissal and succession procedures.
Align executive remuneration with medium- and long-term performance.
Establish internal controls and group-wide risk-management systems.
Oversee related-party transactions and conflicts of interest.
Ensure timely and accurate disclosure.
6. Sustainability and stakeholder governance: Boards should treat sustainability as a management issue affecting long-term value. Relevant matters include climate change, human rights, employee health and working conditions, diversity, natural-disaster preparedness and emerging sustainability-reporting standards.