Out of the 2,550 companies who submitted a corporate governance report as of the end of March 2017, 58.2% are conducting board evaluations. Only ~10% of these companies have engaged a third-party to conduct or participate in their company’s board evaluations (according to IR Japan research).
In addition to the increasing demand from overseas institutional investors to conduct third-party board evaluations, the number of activists targeting governance-related issues has increased and one of the countermeasures for activism is to improve governance through board evaluations. Furthermore, METI’s CGS (Corporate Governance System) Study Group is also calling for the use of third-parties and emphasized the need for incorporating third parties’ opinions in board evaluations by incorporating it into their Practical Guidelines.
Distinctive Features of Our Board Evaluations
We have a precise understanding of the problems in our clients’ corporate governance based on our extensive experience and institutional investors’ points of view and the main feature of our service is that we can provide recommendations on governance reform including examples of successful case studies at other companies.
Track record of providing support in evaluating the effectiveness of a Japanese company’s board evaluation
Regardless of company’s market capitalization or organizational style, we have a wealth of expertise and a proven track record of providing support in conducting board evaluations. (A partial record is included at the bottom of this material.)
Support in conducting evaluations that assess the effectiveness of the board from institutional shareholders’ point of view
We can provide advise on proper disclosure and what type of questions institutional investors, particularly foreign investors, are interested in. (※IR Japan mainly provides SR (Shareholder Relations) services and we gather information by maintaining contact with institutional investors and exchanging opinions on corporate governance issues on a regular basis.)
Recommendations for improving governance based on a global perspective
We can provide recommendations tailored to each company’s governance structure, and provide examples not only from Japanese corporations but also examples of best practices from European and American companies.
Reasons for Utilizing IR Japan’s Service and Our Track Record
- Company A:
Due to the globalization of our business, we wanted to ensure that our system of governance was up to date and was not inferior in comparison to other global businesses.
- Company B:
We received multiple questions regarding board evaluations when we engaged with our overseas shareholders.
- Company C:
An activist held our shares and we wanted to close the gaps in our corporate governance.