Publication of the „Action Program for Accelerating Corporate Governance Reform: From Form to Substance“

The Council of Experts published Opinion Statement No. 6 titled Action Program for Accelerating Corporate Governance Reform: From Form to Substance.
The opinon highlights the importance of substance over form in corporate governance reform, stresses the need for self-motivated changes in the mindsets of companies and investors, and offers practical measures to achieve this goal. The document suggests identifying individual issues through constructive dialogues between companies and investors and implementing effective solutions in the context of reality.
The document identifies three main issues that need to be addressed in order to promote sustainable corporate growth and increased corporate value over the mid- to long-term. These issues include management issues, such as encouraging the management with an awareness of profit-making and growth based on the cost of capital and promoting initiatives relating to sustainability, including investment in human capital; issues related to the effectiveness of independent directors, such as improving the effectiveness of the board, the nomination committee and the remuneration committee, and improving the quality of independent directors; and issues related to dialogues between companies and investors, such as enhancement of information disclosure as well as dealing with legal issues, and market environment issues.
To address these issues, the document recommends specific measures and considerations. For example, to encourage the management with an awareness of profit-making and growth, the document recommends encouraging the proper allocation of management resources toward risk-taking, including a business portfolio review and investments in human capital, intellectual property and R&D. To improve the effectiveness of independent directors, the document recommends conducting educational activities, including skill development through training, to promote understanding of the roles expected of independent directors. To enhance the quality of disclosure as a basis for dialogue, the document recommends requesting companies listed in the Prime Market to disclose the status of dialogues with their investors and the content of such dialogues.