As the final chapter of corporate governance reform, the Corporate Governance Code will be revised to emphasize practical effectiveness, with the revision expected to be implemented by July 2026. After the revision, companies' reporting obligations and the approach to evaluation will be reviewed, with emphasis placed on improving ROE and investing in human capital. The revision is expected to have the potential to enhance the growth capacity of Japanese equities.
Corporate governance reform, a key element of Japanese companies' growth strategies, is expected to be implemented by July 2026 as part of the third revision of the Corporate Governance Code. Listed companies are expected to be required to submit corporate governance reports reflecting the revised provisions by the end of July 2027. The aim of the revision is to move beyond formal compliance and "substantialize" corporate initiatives by ensuring that they have practical effectiveness.
The draft revision will reduce the number of basic principles and principles and reorganize the interpretive guidelines. As a result, the items subject to comply-or-explain requirements are expected to be substantially reduced from 83 to 30, changing the way companies are expected to fulfill their accountability.