John Vail writes in Forbes that improvements in Japanese corporate governance have led to increased profitability.

[W]hile increasing the number of independent directors and other recent governance issues are very important in the intermediate term for Japan, it is crucial for investors to understand that the profitability message has actually been understood by most Japanese corporates for over a decade. This is shown by the divergence in the profit margins from the trend in GDP growth in the charts above, showing that even though GDP growth has remained subdued, profit margins have surged.

Source: Japan’s ‘Show Me The Money’ Corporate Governance

Thina Siwendu, Judge of the South African High Court: Gauteng local division was the guest speaker at an Africa Directors Programme (ADP) certificate award ceremony recently held in Johannesburg for the class of 2016. Her comments included:

Good corporate governance offers the ability to generate and create, to produce wealth and products. To solve human problems is one of the greatest human endeavours and is an incredible gift of humanity.“The danger to corporate governance is that it is sometimes still seen as an ‘after the fact process’, unrelated to the day to day being of corporate life. This lack of integration in thinking and behaviour has led to many instances of the slowing down of things, or just the ticking of boxes.“The separation between business, politics and the state has narrowed significantly. The common denominator is the constant distant demand for leadership.“Not just any leadership, but ethical, sound and courageous leadership. This is what we need in boardrooms.“In the context in which we operate, we have noticed a trust deficit and a challenge of a social contract that has collapsed.”

Source: Directors must stand their ground with governance | Netwerk24

MSCI, a global provider of research-based indexes and analytics, has raised concerns over corporate governance structure and role of independent director in Indian companies, especially the family run ones. In its first ever corporate governance report of any country, MSCI said that governance risks vary widely in India depending on the nature of the company’s ownership and the design of capital structure along with the impact on shareholders’ voting rights. Concentrated ownership dominates in India with 82.7% of MSCI ACWI (all country world index) constituents include a shareholder or shareholder group who control 30% or more of the voting rights. In case of family run companies, the separation of ownership and management remain a key challenge in majority of companies including some of India’s top ones. Family firms represent 49.3% of Indian MSCI ACWI constituents.

Source: MSCI report points out weak corporate governance practices in India – The Economic Times

Nicholas Benes writes about significant steps forward in Japanese corporate governance:

The good news is that Japan’s corporate governance code set a base that can be improved upon and has given a firm foothold to the aspirational concept of ‘best practices’ in Japan.This by itself is historic, especially when you consider that some of the practices were totally new here. For instance, after I proposed the concept to the Financial Services Agency, a Japanese word had to be invented for ‘lead independent director’. Similarly, at the time, few here would have understood what was meant by ‘executive sessions’ or ‘board evaluation’.

Today, Japan has made significant progress:About 80 per cent of companies listed on the first level of the Tokyo Stock Exchange (TSE1) now have two or more independent directors (INEDs) on their boards, according to ascertainable criteria for ‘independence’. This is almost four times the percentage recorded only two years ago. At almost 23 per cent of TSE1-listed firms, INEDs make up one-third or more of the board.

Approximately 40 per cent of TSE1 companies now have a voluntary ‘nominations committee’ of some form, a level which is eight times as high as it was 2014. Voluntary compensation committees are also increasing in number.

About one-fourth of TSE-1 companies claim to fully comply with the code and 90 per cent have implemented at least 90 per cent of its 73 provisions. There is now vastly more disclosed information about actual governance practices and policies at each company. This is because the code not only requires ‘comply or explain’ statements, but also (irrespective of that) disclosure about each company’s policy on 11 different topics. Even when such disclosure is shoddy, at least one can confirm that those companies lack rigor and substance. Investors now have so much to shoot darts at that my organisation has constructed a special search engine.About 40 per cent of TSE1 companies have some form of voluntary ‘corporate governance guidelines’, although that is not required by the code. Even if many of them need more detail, this self-disciplining concept has taken hold. (I proposed it to Japan’s Financial Services Agency for the code, but to no avail; but the Board Director Training Institute  gave several free seminars explaining why ‘policies’ have to actually exist in order to be ‘disclosed’.)

Most Japanese companies are more open to engagement by investors than before, a trend that is supported by the stewardship code. The ecosystem is improving.

He cautions, however:

The reforms were put in place so fast that companies need more time to understand what the principles of the code require in terms of detailed practices and mindset. At the same time, investors also need to learn how to leverage the code’s principles, by considering with experts how its principles can be reflected in granular procedures in the context of Japanese law and telling companies exactly what they expect. There’s actually a lot to mine in the code.

Source: Corporate governance in Japan now | Ethical Boardroom