Japan

The Japan Corporate Governance Code represents a modern “soft law” that lays down the basic principles of sustainable development and the creation of mid-to-long-term value among listed companies. Managed jointly by the Financial Services Agency and Tokyo Stock Exchange, the Code operates under a non-binding “Comply or Explain” model included in the listing rules of exchanges, obliging listed companies either to apply the principles of governance or explain their deviations from the established norms. With the recently adopted 2026 Revision, an efficient streamlining of the model was achieved by discarding the complex set of supplementary principles and developing the transparent system of General Principles, Principles, and Interpretive Guidance. Such an active revision compels listed companies to take responsibility and use idle cash to grow, increase diversity to 30% women officers by 2030, and provide maximum transparency through issuing an annual securities report (Yuho) three weeks before the annual general meeting, with all listed companies being obliged to issue the report by July 2027.