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TOKYO, July 5 (Reuters) - The Tokyo Stock Exchange (TSE)
wants Toshiba Corp to make "prompt and appropriate"
disclosure about its widening governance scandal, including who
was responsible, the head of the bourse said, adding
transparency remained a problem.
Hiromi Yamaji also told Reuters that activist investors -
who have been in focus because of Toshiba - can be a force for
better shareholder engagement at Japanese companies and help
His comments reflect both a shift in attitude toward
activist investors in Japan, and the extent the Toshiba scandal
has raised concern within corporate Japan about governance,
something shareholders have said is long overdue.
"The lack of transparency is the biggest problem at
Toshiba," Yamaji said in an interview late on Friday, adding
that investors are eager to know if shareholders were treated
"We strongly request Toshiba make prompt and appropriate
disclosures of its own inquiries such as who was responsible,"
An independent probe revealed last month that Toshiba had
colluded with the government to put pressure on foreign
Overseas investors account for 65% of trading volume on the
TSE, owned by Japan Exchange Group Inc (JPX).
While some activists focus on short-term profits, Japan is
seeing an increasing number of those with more constructive
approaches, Yamaji said.
"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.
Yamaji said the bourse could further tighten the criteria
for companies to stay on its main board after an initial revamp
in April next year.
The change is aimed at improving companies' profitability
and governance, by raising the requirements to remain on the
bourse's first section, which will be renamed the "prime
Companies will be required to have a free-floating market
capitalisation of more than 10 billion yen ($90 million), and at
least 35% of their total shares free-floating. They will also
need to adopt a more stringent governance code in areas such as
disclosure and board diversity.
He declined to say how many companies would be downgraded.
Analysts expect about 30% of the nearly 2,200 listed companies
could be forced from the first section.
Many investors think the exchange could set higher
standards, a point Yamaji acknowledges.
"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
He also expects more Asian companies to list in Tokyo after
the debut this year of Appier, an AI technology firm
founded in Taiwan, and Omni Plus System, a Singapore
Japan's political stability, predictable regulatory
environment and vast household savings make Tokyo an attractive
place for fundraising for Asian firms, he said, adding the
bourse was doing more marketing in places such as Hong Kong and
"More Asian companies are starting to think of Japanese
markets as an option for IPO," he said.
(Reporting by Makiko Yamazaki, Hideyuki Sano and Noriyuki
Hirata; Editing by David Dolan and Jacqueline Wong)