Japan's revised Corporate Governance Code has entered into force with a sharp reduction in principles, while Australia's ASX has commenced consulting on a new edition of its governance recommendations, signalling that APAC governance reform is increasingly focused on implementation rather than expanding requirements.

Taken together, the reforms suggest major APAC markets are moving into a new phase of corporate governance, where regulators are prioritising effective implementation, board judgement and credible disclosure over increasingly prescriptive rulebooks.

Japan refines corporate governance principles

A key aspect of the revisions to Japan's Corporate Governance Code is a major reduction in the number of principles it contains. The new version contains 30 principles, down from more than 80 in the previous edition, as regulators seek to promote more substantive implementation and reduce boilerplate disclosures.

Jointly overseen by the Financial Services Agency of Japan (FSA) and the Tokyo Stock Exchange (TSE), the revised code aims to encourage companies to prioritise medium- to long-term value creation. Under the "comply or explain" framework, the principles have been streamlined to focus on their core intent, while new Interpretive Guidance has been introduced to support more meaningful implementation.

The revisions also emphasise the code's role in promoting long-term investment and constructive dialogue with investors. Changes to the principles and guidance include measures aimed at strengthening board effectiveness, improving capital allocation and enhancing stakeholder engagement.

Draft revisions were subject to public consultation between 10 April and 15 May. According to the FSA, consultation responses broadly supported the streamlining of the code and its focus on growth investment, although some respondents cautioned that regulators should clearly communicate the reforms' objectives to avoid perceptions that governance standards are being weakened.

Virtual-only AGM mentions absent

One notable omission from the revised Corporate Governance Code is any explicit reference to virtual-only AGMs. The absence is significant because it suggests regulators have chosen not to use the latest revision to settle an increasingly important governance debate over how companies should engage with shareholders.

Earlier this year, Minerva Analytics reported that the International Corporate Governance Network had urged the code not to endorse fully virtual meetings, arguing that they could weaken shareholder rights. Consultation feedback similarly favoured hybrid AGMs, with respondents arguing that they can broaden participation while preserving opportunities for shareholders to attend in person, ask questions and hold boards accountable.

The debate is relevant because it reflects the same shift evident elsewhere in the reforms: the focus is increasingly on whether governance mechanisms genuinely facilitate oversight and engagement, rather than whether companies simply comply with formal requirements.

However, a separate development may prove more consequential for shareholder rights. A taskforce is expected to recommend raising the thresholds required for shareholders to submit shareholder proposals, a move that could significantly reduce the number of investors able to file resolutions.

ASX opens corporate governance consultation

The Australian Securities Exchange (ASX) has launched a public consultation on the fifth edition of its Corporate Governance Principles and Recommendations, with submissions open until 14 September 2026.

The new version of the principles would offer investors a long-awaited update, with the previous edition published in 2019 after the development of a fifth edition was delayed for several years because the ASX Corporate Governance Council was unable to reach consensus on proposed reforms.

"The 5th edition seeks to refine, but not redesign, the existing framework," said Philip Lowe, Chair of the ASX's Advisory Group on Corporate Governance. "The aim is a new edition that is clear, practical and better aligned with contemporary governance practice."

The consultation follows ASX's decision last October to assume responsibility for developing, approving and issuing the principles, effectively ending the long-standing Corporate Governance Council model.

The consultation is significant not because it proposes a wholesale redesign of Australia's governance framework, but because it reflects a broader shift towards implementation-focused governance. Like Japan's decision to streamline its Corporate Governance Code, the draft largely favours refining existing principles rather than adding new requirements, suggesting regulators are placing greater emphasis on board judgement, disclosure quality and the ability of companies to demonstrate how governance arrangements support long-term value creation.

Key investor takeaways

For investors, the significance of these developments lies less in new governance requirements than in a change in regulatory expectations. In both markets, policymakers are placing greater emphasis on governance effectiveness, board decision-making and the quality of corporate explanations. As a result, boards may increasingly be judged not simply on compliance, but on how convincingly they demonstrate that governance arrangements support long-term value creation.