Tokyo Stock Exchange Chief Wants Toshiba To Made ‘Prompt, Appropriate’ Disclosure On Its Scandals

The head of the Tokyo Stock Exchange (TSE) said that the bourse has asked Toshiba Corp to make “prompt and appropriate” disclosure about the expanding governance scandal and such a disclosure should include the persons responsible for the scandal.

Hiromi Yamaji said that one of the major consistent problems for the company was transparency in its corporate governance.

Corporate governance at Japanese companies can be enhanced by the influence of activist investors, who have been at the center of the controversies surrounding Toshiba, said Yamaji in a media interview, and added that such investors can also have a major influence in achieving better shareholder engagement at Japanese firms.

The comments from Yamaji clearly indicate that there has been a change in the manner in which activist investors are viewed in Japan as well as reflects the degree to which the governance scandals at Toshiba have increased the concerns around corporate governance within corporate Japan – an issue that has for long been raised by shareholders.

“The lack of transparency is the biggest problem at Toshiba,” Yamaji said in an interview.  He added that there is an eagerness among investors to know whether there was unfair treatment of shareholders by Toshiba. 

“We strongly request Toshiba make prompt and appropriate disclosures of its own inquiries such as who was responsible,” he said.

Findings of an independent probe which was conducted last month showed that a collusion between Toshiba and the Japanese government for putting pressure on the company’s foreign shareholders.

About 65 per cent of the trading volume on the TSE, which is owned by Japan Exchange Group Inc (JPX), is accounted for by overseas investors.

Yamaji said there is an increasing number of activist investors in Japan that are keen to see long term sustainability of companies even though there are some that always tend ot focus on short-term profits.

“The presence of such activists could be positive in a sense that they can foster dialogue between shareholders and companies, as encouraged by Japan’s corporate governance code,” the former Nomura Holdings banker said.

Following an initial shakeup in rules in April next year, the criteria for companies to stay on its main board could be further tightened by the bourse, Yamaji said. The proposed change next year targets ensuring improvement in profitability and governance at listed companies through enhancing the requirements for companies to remain on the bourse’s first section which the exchange wants to rename as the “prime market”.

The changes will entail companies being mandated that they should have more than 10 billion yen ($90 million) as free-floating market capitalisation and have at least 35 per cent of the total shares as free-floating. A tougher governance code in areas such as disclosure and board diversity will also have to be adopted by the companies listed on the exchange.

Yamaji did not say anything about the number of companies that would be downgraded. But according to estimates of analysts, about 30 per cent of the almost 2,200 companies listed on the exchange could be downgraded from the first section.

“We don’t think (the current criteria) is our final goal,” he said. “The corporate governance code will be reviewed every three years. So that might be a good time to re-evaluate our criteria too.”

(Adapted from


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