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- Governance in Japan continues to evolve, with female board representation reaching record levels and audit committee structures becoming the dominant governance model, while gains in board independence appear to be slowing as most companies now comply with Corporate Governance Code requirements.
- Shareholder activism remains a major force despite a modest decline in proposal volume in 2026, with capital efficiency, dividends, share buybacks, governance reform, and disclosure continuing to be the most common themes, supported by the Tokyo Stock Exchange’s focus on low PBR companies.
- METI’s takeover guidance emphasized that the highest bid alone does not determine a ‘desirable acquisition,’ potentially giving boards greater discretion in resisting shareholder and takeover pressure.
- Several high-profile governance failures were observed in the 2026 proxy season, including accounting misconduct at NIDEC, Air Water, and KDDI, data manipulation issues at Chubu Electric Power, and customer information handling failures across the insurance sector, which resulted in regulatory sanctions, management turnover, and governance reforms.
- Looking ahead, activism is expected to remain a defining trend in Japan, driven by continued pressure to improve capital efficiency and unwind cross-shareholdings.
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Authored By
Japan Research Team
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