The Corporate Governance Code was revised for the first time in 5 years, emphasizing a policy of encouraging investment aimed at medium- to long-term growth. The revision positioned the effective use of assets, including cash and deposits, as a responsibility of the board of directors and set out a direction for correcting excessive focus on shareholders.
The Corporate Governance Code, which sets out principles of conduct for listed companies, was revised for the first time in 5 years, signaling a review of its previous tendency to encourage an emphasis on shareholder returns. The aim of the revision is to promote investment that supports medium- to long-term growth, and it is positioned as an opportunity to correct the growing excessive focus on shareholders.
The background to the revision includes the observation that, while the spread of shareholder-focused thinking increased shareholder returns such as dividends, capital investment and investment in human resources did not advance sufficiently, and progress toward long-term growth slowed.
The revision emphasizes the intention to redefine the guidelines not as a means of restraining management, but as a framework for supporting decision-making and risk-taking. It also sets out an explanatory rationale warning companies against a short-term focus dependent on shareholder returns.
As a related government initiative, the Growth Investment Guidance published by the Ministry of Economy, Trade and Industry recommends that companies pursue not only capital efficiency but also growth in the value added generated by business activities. It also states that sharing management's vision for supporting long-term growth is important.