トピックス・法律情報

MIYAKE  CORPORATE  GOVERNANCE  NEWSLETTER

Japan’s Corporate Governance Code — The 2026 Revision: PDF format

A plain-English guide for international readers: what changed, why it matters, and what to do before July 2027

22 July 2026

Miyake & Partners (Miyake Law Office)

On 21 July 2026, the Financial Services Agency (FSA) and the Tokyo Stock Exchange (TSE) finalised the 2026 revision of Japan’s Corporate Governance Code (the Code). This is the third revision since the Code first took effect in 2015, and the most structural: an entire category of provisions has been abolished and the Code has been re-organised into three tiers. This newsletter explains the revision from the ground up, so that readers who are not already familiar with Japanese corporate governance can follow what changed and why it matters.[1]

THE 2026 REVISION AT A GLANCE Finalised / in force:  21 July 2026 (TSE listing-rule amendments took effect the same day). First compliance deadline:  Corporate Governance Reports reflecting the revised Code are due by end-July 2027. Headline change:  the “Supplementary Principles” category is abolished; the Code now has three tiers — Basic Principles, Principles, and (new) Interpretive Guidelines. Nature of the change:  a “slimming down” aimed at substance, not deregulation. Provisions moved or deleted have not lost their importance.

1.  First, the basics: what is Japan’s Corporate Governance Code?

The Code is a set of principles of good governance for companies listed on the Tokyo Stock Exchange. It was introduced in 2015 by the TSE and the FSA, drawing on the OECD Principles of Corporate Governance, and has been revised in 2018, 2021 and now 2026. Its stated purpose is to support companies’ sustainable growth and the enhancement of corporate value over the medium to long term.

Crucially, the Code is not legislation. It is a form of “soft law” applied on a “comply-or-explain” basis. A listed company is not legally obliged to follow every principle. Instead, for each principle it must either comply, or—if it chooses not to—explain its reasons in a document called the Corporate Governance Report, which it files with the TSE. Investors and the market then judge whether the explanation is persuasive. There is no fine for non-compliance; the discipline is reputational and comes through dialogue with shareholders.

BACKGROUND — Three things a non-Japanese reader should know 1.  Market segments.  Since the TSE’s 2022 market restructuring, listed companies sit in one of three segments — Prime (larger companies oriented toward global investors), Standard, and Growth. Some principles apply only to Prime-market companies; this newsletter flags those. 2.  Two different “reports.”  Japan has parallel disclosure systems. The “securities report” (yūkashōken hōkokusho) is a detailed annual filing under the Financial Instruments and Exchange Act (FIEA). It is separate from the materials sent to shareholders for the annual general meeting (AGM) under the Companies Act. Historically, the securities report is filed shortly after the AGM — a timing issue the 2026 revision addresses (see Section 4). 3.  Cross-shareholdings.  Many Japanese companies hold shares in their business partners to cement relationships rather than purely for investment return (seisaku-hoyū kabushiki, “strategic” or “policy” shareholdings). Reducing these holdings has been a central theme of Japanese governance reform, and the 2026 revision tightens the rules (see Section 5).

2.  The headline change: goodbye to “Supplementary Principles”

Until now, the Code was built in three layers: Basic Principles, Principles, and Supplementary Principles (more detailed rules sitting under the Principles). All three were subject to comply-or-explain. The 2026 revision abolishes the Supplementary Principles as a category. Their content has been handled in one of three ways: the important parts were “promoted” up into the Principles; parts that merely duplicated other rules or laws were deleted; and the background, purpose and best-practice explanations were gathered into a newly created tier called Interpretive Guidelines.

The result is a cleaner, three-tier structure — Basic Principles, Principles, and Interpretive Guidelines. Importantly, comply-or-explain now applies only to the Basic Principles and the Principles. The Interpretive Guidelines are not subject to comply-or-explain; they exist to help companies understand and implement the Principles in substance.

BEFORE  →  AFTER Before:  Basic Principles + Principles + Supplementary Principles (all comply-or-explain). After:   Basic Principles + Principles (comply-or-explain)  +  Interpretive Guidelines (guidance only, not comply-or-explain).

3.  “Slimming down” means substance — not deregulation

It would be a serious mistake to read the slimmer Code as a relaxation of expectations. The regulators have been explicit: the aim is to make the Code work in substance, and the importance of provisions that were moved into the Interpretive Guidelines or deleted has not been lost. A company that treats “no longer comply-or-explain” as “no longer our concern” is likely to be caught out in the regulators’ follow-up.

Several disclosure items were removed from the Code — for example, disclosure of sustainability information, of the scope of authority delegated to management, of independence standards for outside directors, and of directors’ and auditors’ concurrent positions. In each case the reason was duplication: the same information is already required in the securities report or other statutory filings, or the practice is already well established. The underlying expectation remains.

Disclosure item removed from the Code	Why it was removed
Sustainability information (former Supp. Principle 3-1(iii))	Overlaps with what the securities report already requires.
Scope of authority delegated to management (former Supp. Principle 4-1(i))	The practice is now well understood and established.
Independence standards for outside directors (former Principle 4-9)	Overlaps with the securities report.
Directors’ / auditors’ concurrent positions (former Supp. Principle 4-11(ii))	Overlaps with the business report, meeting materials and securities report.

Read the table the right way round: these items were removed because the information appears elsewhere or the practice has settled — not because it stopped mattering.

4.  Three things practitioners should act on now

The 2026 revision touches many topics, but the practical urgency is not evenly spread. Three items stand out — because they take the longest to implement, because the gap between what a company says and what it does is most dangerous, or because they change what the board actually discusses. The deadline (Corporate Governance Reports by end-July 2027) looks distant, but items (1) and (3) below can take one to two financial years to put in place. The starting point for working backwards is this financial year.

Priority 1 — Filing the securities report before the AGM (Principle 1-2)

The Code now encourages listed companies to file the annual securities report before the AGM — ideally at least three weeks before — so that shareholders can use its detailed information when they vote. This is described as “most desirable,” not a firm obligation, and the regulators acknowledge it is not easy under current practice. Achieving it may require moving the AGM date or the record date for voting rights, and the FSA is separately advancing legislative work to integrate the securities report with the Companies Act business report, to unify the two audit regimes, and to streamline disclosure. Practical point: even if earlier filing is not yet feasible, the board should examine what can be brought forward, and keep a record of that examination.

Priority 2 — Cross-shareholdings and the “pressure not to sell” (Principle 1-4)

The rules on cross-shareholdings have been promoted into the body of the Principles and expanded. A company must disclose its reduction policy and, every year, have its board verify whether each holding is justified (weighing purpose, benefits and risks against the cost of capital). Two points are new in emphasis: a company must not, by hinting at reduced business, pressure a counterparty that wishes to sell its shares in the company; and it must not continue uneconomic transactions that harm the interests of the company or its shareholders. The “pressure not to sell” point is the biggest trap: if a company reports compliance but, in practice, its staff or executives lean on counterparties not to sell, that gap can be treated as a serious governance failing. The immediate task is to put in place an internal policy for handling sell requests.

Priority 3 — Growth investment and allocation of resources (Principles 4-1 and 4-2)

The board is expected to explain, in language shareholders can follow, how the company allocates its resources toward growth — capital expenditure, R&D, human capital, intellectual property, business-portfolio reshaping, and the balance between shareholder returns and retained earnings. Importantly, the regulators confirmed that the Code does not require any uniform “capital-allocation” or “cash-allocation” disclosure. What matters is not a set format but whether the company can articulate the logic of its resource allocation along the “path to growth” it has set for itself. In practice this means turning the board agenda from a report on the mid-term plan into a genuine discussion of investment and portfolio choices.

5.  The revision theme by theme

Beyond the three priorities above, the revision reorganises thirteen themes. Chapters 1-2 concern shareholders and stakeholders; Chapter 4 concerns the board. For each theme below we set out what changed, how the regulators responded to public comments, and one practical point. (Priorities already covered — the securities report (Principle 1-2), cross-shareholdings (1-4) and growth investment (4-1/4-2) — are not repeated here.)

Chapter 1 — Shareholders and dialogue

1-1   Constructive dialogue with shareholders

• The old Chapter 5 (“dialogue with shareholders”) has been merged into Chapter 1, and dialogue is now the very first Principle — signalling that engagement is the starting point of governance.
• The board must set, approve and disclose a policy for promoting dialogue; and, depending on the topic, outside directors — not only the IR department — should take part.

Regulator’s view.  The merger drew support as a step toward substantive reform. The guidance stresses that, depending on the main agenda of a meeting, an outside director may be the appropriate person to engage.

Practical point.  Map which topics (nomination and remuneration, succession, sustainability, related-party transactions, takeover proposals) warrant an outside director at the table, and build a route for feeding dialogue back into the board.

1-3   Company proposals that drew significant opposition

• If a company proposal passes but attracts a significant number of “against” votes, the board should analyse why and respond appropriately — for example, by explaining the analysis and its response to shareholders.

Regulator’s view.  Asked to set a numerical threshold (e.g., 20% against), the regulators declined — what counts as “significant” varies with the shareholder base — but added that a company may usefully set its own objective yardstick.

Practical point.  Do not treat “the resolution passed” as the end. Build an internal process to analyse dissent and to reflect it in the next year’s proposals and disclosure.

Chapter 2 — Stakeholders

2-2   Diversity in core talent

• Companies should set their own measurable goals for promoting diverse people into core positions — across gender, international experience, career background (including mid-career hires), age and cultural background — and disclose progress, together with human-resource development and internal-environment policies.
• The former reference to “nationality” was reframed as “international experience.”

Regulator’s view.  The listed attributes are examples, not a checklist: the regulators confirmed that separate disclosure and targets are not required for each attribute, and that “core talent” is not meant to confine diversity to that group.

Practical point.  Tie diversity goals to your actual talent strategy rather than treating the attributes as boxes to tick.

Chapter 4 — The board

4-3   CEO appointment and dismissal, succession, and conflicts of interest

• The board should appoint and dismiss senior management through objective, timely and transparent procedures, and be actively involved in CEO succession planning.
• It should oversee timely and accurate disclosure, and manage conflicts of interest with related parties (the former Principle 1-7 has been folded in here).

Regulator’s view.  Some asked to split these different duties into separate principles; the regulators kept the original design, treating the appointment/dismissal of the CEO as the single most important strategic decision the board oversees.

Practical point.  Document the succession process — candidate development, selection criteria, procedure — and make the board’s and nomination committee’s involvement visible in the minutes.

4-4   Internal control and enterprise-wide risk management (new stand-alone Principle)

• Previously folded into the board’s monitoring role, this is now a stand-alone Principle. The board should build group-wide internal-control and risk-management systems and oversee their operation using the internal-audit function.
• The guidance frames these not as mere “defence” but as the foundation that lets management take decisive risks, and lists cybersecurity, supply-chain disruption from economic-security/geopolitical factors, and technology-leakage as matters to consider.

Regulator’s view.  Asked to define “enter​prise-wide risk management” or cite frameworks (e.g., COSO), the regulators declined to prescribe, but confirmed that group governance — including overseas subsidiaries — falls within the “group-wide” system.

Practical point.  Put cyber, economic security, supply chain and information leakage on the board’s standing agenda, and connect internal audit directly to the board and the auditors.

4-5   Sustainability

• The board should set basic policy and engage actively on sustainability. The guidance reflects the ISSB’s global disclosure standards and Japan’s SSBJ standards (which certain Prime-market companies must apply in their securities reports).
• Climate, human rights, employee health and fair treatment, disaster preparedness and diversity are treated as material management issues — sources of opportunity, not only risk.

Regulator’s view.  Asked to add specific steps (e.g., human-rights due diligence), the regulators said such steps may be taken as part of an “appropriate response,” while leaving the method to each company under the principles-based approach.

Practical point.  Note the paradox: the Code’s wording on sustainability is now shorter, but the real disclosure burden is rising because of ISSB/SSBJ — do not read “shorter” as “lighter.”

4-7   Nomination and remuneration committees

• Where independent outside directors are not a majority of the board, a company should set up independent nomination and remuneration committees with independent directors as their main members.
• A Prime-market company should, in principle, make a majority of each committee’s members independent, and disclose the committees’ composition, authority and role.

Regulator’s view.  Asked to spell out committee functions in detail (as some overseas codes do), the regulators kept a principles-based approach, expecting effective use of statutory or voluntary committees suited to each company.

Practical point.  Test substance, not form: whether the committees are genuinely involved in succession planning and pay design — not merely whether a majority is independent.

4-8 to 4-12   Independent outside directors — quality over quantity

• Expectations are re-organised into five Principles: role and duties (4-8, with the monitoring role now placed ahead of the advisory role); quality of the individuals selected (4-9, new); number (4-10); independence (4-11); and how they actually function (4-12, new — e.g., meetings of the independent directors alone, and a “lead independent director”).
• The required numbers are unchanged (see table). For a Prime-market company with a controlling shareholder, a majority of independent directors is expected — or, alternatively, a special committee of independent members to review conflicted transactions.

Regulator’s view.  Some wanted a higher headcount; the regulators kept the existing thresholds because quality matters as much as number, and re-emphasised role, quality, number, independence and functioning together.

Segment / situation	Independent outside directors expected
Prime market (baseline)	At least one-third of the board.
Other markets (baseline)	At least two directors.
Prime market with a controlling shareholder	A majority (independent of the controlling shareholder) — or a special committee instead.
Other markets with a controlling shareholder	At least one-third — or a special committee instead.

One point is easily missed: a company that has no formal “controlling shareholder” but does have a shareholder with effective control is still expected to act in the spirit of this principle. The “lead independent director” actually functioning — and periodic meetings of the independent directors alone — is the real test of whether the board has moved from “filling seats” to substance.

4-13   Board effectiveness — the skills matrix and the annual evaluation

• The board should be composed with a balance of knowledge, experience and ability, and with diversity and appropriate size; it identifies the skills it needs and discloses a “skills matrix.”
• It should analyse and evaluate the effectiveness of the board as a whole every year, and disclose an overview of the results (both promoted from former Supplementary Principles).

Regulator’s view.  The regulators welcomed the emphasis on the skills matrix and on diversity, confirming that the board should be composed to combine balanced skills, diversity and appropriate size.

Practical point.  Redesign the evaluation questionnaire itself to track the new themes, and move to a two-layer approach — each director’s self-assessment plus an assessment of the whole board.

4-14   Livelier deliberation and the board secretariat

• The board should foster candid, constructive discussion; directors and auditors should obtain information proactively; and the company should build a support structure, including the people who support the board.
• The corporate secretariat should do more than administrative work — helping to shape the agenda so that meetings are substantive.

Regulator’s view.  To concerns about directors holding too many concurrent posts, the regulators pointed to the guidance that independent directors should devote sufficient time and keep concurrent positions within a reasonable range.

Practical point.  Review the secretariat’s people, authority and remit — agenda-setting, material quality, briefing outside directors, and feeding back the results of shareholder dialogue.

6.  How the regulators approached public comments

The revised Code was finalised after a public-consultation process in which 147 individuals and organisations submitted comments. The direction of travel drew broad support from Japanese and overseas institutional investors, proxy advisers, business associations and practitioners — though some worried that a slimmer Code could reduce comparability or be read as a step back. The regulators’ responses (published as an official Q&A) repay reading; the recurring messages are:

• Substance, not cost-cutting. Slimming down is not a burden-reduction exercise; the importance of provisions moved to the guidance or deleted has not been lost.
• Not the finish line. Filing the 2027 Corporate Governance Report does not close the matter — the regulators will keep publicising good practice and following up, and peers’ good examples will become the practical benchmark.
• Form over substance backfires. Where a company reports “comply” but the underlying reality differs — most visibly on cross-shareholdings — that gap can be treated as a serious governance problem.
• No uniform templates. On several points (capital allocation, risk-management frameworks, committee functions) the regulators deliberately declined to prescribe a format, leaving each company to explain its own approach.

7.  A roadmap to end-July 2027 — and how “explaining” goes wrong

Treat the July 2027 filing deadline as a starting point for working backwards, not as a distant due date. A workable sequence is:

Timing	What to do
This financial year (FY2026)	Take stock of the revision and analyse gaps; make sure moved or deleted items are not mis-read as “no action needed”; begin reviewing the AGM / record-date / audit schedule for earlier securities-report filing; put in place a policy for cross-shareholding sell requests; and redesign the board agenda around growth investment.
First half of 2027	Revise and run the board-effectiveness evaluation (self-assessment plus whole-board assessment); check the real involvement of the nomination and remuneration committees; and draft the Corporate Governance Report with genuine, company-specific explanations.
End-July 2027	File the Corporate Governance Report reflecting the revised Code (with regulator follow-up continuing thereafter).

Because redesigning the meeting/audit calendar and shifting the board agenda can take one to two financial years, starting this year is the dividing line between a substantive response and a last-minute one.

Four ways a “careful explanation” becomes an empty one

• Boilerplate:  copying another company’s wording without addressing your own situation.
• Hollow “comply”:  declaring compliance without the underlying structure or board discussion — most dangerous for cross-shareholdings, effectiveness evaluation and CEO succession.
• After-the-fact reasons:  explaining only that something is “difficult for now,” without saying what will be improved, and when.
• Ignoring the guidance:  disregarding the Interpretive Guidelines because they are not comply-or-explain — and so drifting away from the purpose of the Principle.

The antidote is simple to state and harder to do: for each principle, tell one connected story — your current position, the issues, and your plan.

8.  Check your understanding

A short self-test on the points that most affect practical decisions.

Q1.  Are provisions moved to the Interpretive Guidelines, or deleted from the Code, now safe to ignore?

A.  No. Their importance is not lost; the same expectations continue through other filings, settled practice, or the purpose of the Principle.

Q2.  Is filing the securities report at least three weeks before the AGM a firm obligation?

A.  No. It is described as “most desirable,” not a uniform obligation, and the regulators acknowledge it is not easy under current practice.

Q3.  Must a company make a uniform “capital-allocation” disclosure?

A.  No. What matters is whether it can explain the logic of its resource allocation along its own “path to growth.”

Q4.  What must a company not do when a counterparty wants to sell its cross-held shares?

A.  It must not pressure the counterparty — for example by hinting at reduced business — to prevent the sale.

Q5.  What level of independent directors is expected at a Prime-market company with a controlling shareholder?

A.  A majority independent of the controlling shareholder — or, alternatively, a special committee of independent members.

Q6.  Does diversity under Principle 2-2 require a separate disclosure and target for each attribute?

A.  No. The attributes are examples; separate disclosure and targets for each are not required.

9.  Glossary of key terms

Term	Meaning
Comply or explain	The Code is not law. For each principle a company either complies, or explains in its Corporate Governance Report why it does not. The market judges the explanation.
Corporate Governance Report	A document each listed company files with the TSE, setting out how it complies with (or explains departures from) the Code.
Prime / Standard / Growth	The three TSE market segments since 2022. Some principles apply only to Prime-market companies.
Securities report (yūkashōken hōkokusho)	A detailed annual filing under the Financial Instruments and Exchange Act (FIEA), separate from AGM materials under the Companies Act.
AGM	Annual general meeting of shareholders. In Japan it is typically held about three months after the fiscal year-end.
Cross-/strategic shareholdings (seisaku-hoyū kabushiki)	Shares held to support a business relationship rather than purely for investment; a focus of governance reform.
Interpretive Guidelines	The new tier introduced in 2026, giving background and best practice. Not subject to comply-or-explain.
ISSB / SSBJ	The global (ISSB) and Japanese (SSBJ) sustainability-disclosure standard-setters. Certain Prime-market companies must apply SSBJ standards in their securities reports.

10.  How we can help

Our firm advises Japanese and international companies and investors on the full range of issues raised by the 2026 revision — from board-agenda design and effectiveness evaluation to cross-shareholding policies, securities-report timing, and the drafting of Corporate Governance Reports. We are happy to brief boards and management, in English or Japanese.

Contact Miyake & Partners (Miyake Law Office) Masayuki Watanabe, Attorney-at-law (author) Tel  +81-3-5288-1021    Fax  +81-3-5288-1025 Email  m-watanabe@miyake.gr.jp

This newsletter is provided for general information only and does not constitute legal advice on any specific matter. Unofficial English summary; in case of any discrepancy, the original Japanese texts prevail.

---

[1]FSA and Tokyo Stock Exchange, “On the finalisation of the Corporate Governance Code (2026 revision)” (21 July 2026): https://www.fsa.go.jp/news/r7/singi/20260721.html (Japanese).