Last month, Japan's Financial Services Agency (FSA) published proposals for new legislation to protect investors. The summary is available in English here. Of particular interest to those who follow developments in international corporate governance are the following features of the proposed legislation:
1. Disclosure will be strengthened through introduction of a quarterly reporting system for listed companies (effective for FYE after April 1, 2008;
2. Disclosure will also be strengthened through enhanced internal controls over financial reporting;
3. Regulations on tender offers and large shareholding reports will be reviewed and amended as needed (to be handled via cabinet order within the next few months); and
4. Criminal penalties for fraud and market manipulation will be increased from 5 years to 10 years (effective July 4, 2006).
The scope of the proposed changes is ambitious, involving amendments to 89 different laws and the abolishing of 4 laws.
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