Legal and Regulatory Framework for Corporate Governance: A Japanese Perspective

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Legal and Regulatory Framework for Corporate
GovernanceA Japanese Perspective

• December 14, 2001
• Hideki Kanda
• Professor of Law
• University of Tokyo

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Major Topics

• Basics
• Where do laws and regulations matter?
• Four areas
• (1) illegal activities and conflict of interest
  transactions
• (2) investor protection
• (3) shareholder activism
• (4) recent reforms of company law in Japan

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Basics (1)

• What is corporate governance?
• (1) a mechanism for preventing and controlling
  illegal activities (such as fraud, stealing and
  waste of assets) by managers, employees and
  others
• (2) a mechanism for enhancing company performance

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Basics (2)

• What laws and regulations matter and how?
• Basic laws and regulations are important, such as
  company law, insolvency law, securities
  regulation and criminal law.
• Laws and regulations must be enforced.
• Laws and regulations are not everything, and thus
  shape only part of the entire system of corporate
  governance.

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Four Topics

• (1) illegal activities and conflict of interest
  transactions
• (2) investor protection (capital market
  regulation)
• (3) shareholder activism
• (4) recent reforms of company law in Japan

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Topic 1 Illegal Activities and Conflict of
Interest Transactions

• Japanese experience two types of illegal
  activities
• illegal payment to disrupting shareholders at
  shareholders