Policy Briefing — Tokyo Stock Exchange Corporate Governance Code Revision
Japan’s Financial Services Agency and Tokyo Stock Exchange revised the Corporate Governance Code on June 11, 2021, tightening independence, sustainability, and diversity expectations ahead of the April 2022 market re-segmentation.
Executive briefing: On 11 June 2021 the Financial Services Agency (FSA) and Tokyo Stock Exchange (TSE) published the revised Japan’s Corporate Governance Code and updated Guidelines for Investor and Company Engagement. The refresh prepares issuers for the April 2022 launch of the Prime, Standard, and Growth markets by elevating board independence requirements, embedding sustainability and TCFD-aligned disclosure expectations, and calling for measurable diversity on boards and in the executive pipeline.
What changed
- Higher independence thresholds. Prime Market companies must appoint at least one-third independent outside directors, while companies with controlling shareholders must majority-independent boards.
- Sustainability governance disclosure. Prime Market issuers are asked to provide enhanced sustainability reports and TCFD-aligned climate disclosures, including board oversight descriptions and scenario analysis.
- Human capital and diversity focus. The Code now expects boards to set and publish policies and voluntary goals for diversity in senior management, including gender and international experience.
Implications for operators
- Public-sector linked entities. Government-affiliated corporations seeking Prime listings must demonstrate independent oversight and transparent nomination processes.
- Financial institutions. Mega-banks and insurers must align stewardship commitments, climate stress testing, and disclosure pipelines with the Code’s sustainability mandate.
- Technology and growth issuers. High-growth firms transitioning to the Prime Market need board refresh plans, diversity roadmaps, and climate governance reporting structures.
Action checklist
- Reconstitute boards to meet one-third independence and document succession plans for outside directors.
- Build integrated sustainability reporting calendars that deliver TCFD-aligned disclosures and human capital metrics.
- Formalise engagement frameworks with investors in line with the updated Guidelines for Investor and Company Engagement.
Sources
Zeph Tech supports Japan-listed boards with independence benchmarking, sustainability controls, and investor engagement tooling for the Prime Market era.