Governance Briefing — April 4, 2022
Tokyo Stock Exchange completed its market restructuring and applied the revised Corporate Governance Code, tightening board independence and sustainability disclosure expectations for Prime Market issuers.
Executive briefing: On 4 April 2022 the Tokyo Stock Exchange (TSE) implemented its market segment restructuring, launching the Prime, Standard, and Growth markets. Prime Market companies must comply with enhanced corporate governance code requirements on board independence, diversity, and sustainability disclosures.
Key governance signals
- Board independence and diversity. Prime issuers are expected to maintain at least one-third independent directors, disclose skill matrices, and improve gender diversity on boards.
- Sustainability reporting. Companies must enhance sustainability disclosures, align with TCFD recommendations, and explain governance over climate risks.
- Capital efficiency focus. The restructure encourages boards to address cost of capital and capital efficiency metrics, linking governance with investor communications.
Action checklist
- Review board composition plans to sustain independence ratios and diversify skills in line with TSE expectations.
- Strengthen sustainability reporting processes, including scenario analysis governance and assurance for climate metrics.
- Prepare investor engagement materials covering capital efficiency strategies, governance enhancements, and roadmap milestones.
Sources
- JPX announcement on market restructuring
- TSE Corporate Governance Code (June 2021, applied to new market segments)
Zeph Tech helps Japan-listed companies track Prime Market governance expectations, expand sustainability oversight, and evidence capital efficiency strategies.