The Journal The Authority on Global Business in Japan

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Recent changes to Japan’s governance rules have increased demand for independent directors. As of June 2016, 96 percent of companies listed on the Tokyo Stock Exchange (TSE) First Section had independent directors (up from 47% in 2013), but more than 400 still have none.

The American Chamber of Commerce in Japan (ACCJ) has responded to this need with its Director Database project. Launched on September 1, the database provides interested companies a list of experienced ACCJ members who have an interest in serving as independent directors.

Since December 2012, both the Japanese government, under the leadership of Prime Minister Shinzo Abe, as well as the TSE and other groups have updated corporate governance standards in the Companies Act, the Corporate Governance Code, the Stewardship Code, and the Revitalization Strategy. These new governance standards, which are key elements of Abenomics, are pushing publicly listed companies to elect independent directors and to promote diversity by including, for example, non-Japanese and women.

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The United States has a history of independent directorships, and the Director Database project is a concrete way for the ACCJ to leverage this history to support the principles of Abenomics. These new standards are in line with ACCJ advocacy efforts to promote international corporate governance standards in Japan.

The Director Database is a free service to ACCJ members, and is open to all membership categories and nationalities in all ACCJ chapters. The Chamber hopes to facilitate grassroots interaction with the Japanese business community. In addition, the ACCJ hopes Japanese companies will use the database to find real and diverse solutions to meet the evolving governance standards.

In the current legal environment, a company directorship is a serious matter. Independent directors have particular legal roles, responsibilities, and liabilities. The ACCJ will not endorse any candidate or company involved in the Director Database project. Training is essential, and candidates and companies must take responsibility for conducting due diligence.

One of several dedicated training groups is the Board Director Training Institute of Japan (BDTI), run by Nicholas Benes. He says, “Greater diversity in company boards opens more opportunities for ACCJ members, but they need to understand their responsibilities and the law.” Having taken three different BDTI courses myself, I can vouch for their high quality and valuable teaching.

ACCJ members interested in joining the Director Database should send an email to DirectorDB@accj.or.jp Interested companies should send an email to the same address. The ACCJ office will respond with instructions about how to proceed.

Frank Packard is co-chair of the ACCJ Alternative Investment Subcommittee and president of Triple A Partners Japan
The ACCJ hopes Japanese companies will use the database to find real and diverse solutions to meet the evolving governance standards.