Japan introduces reforms to boost asset management sector

December 21st, 2023

The Government of Japan has published a new policy plan to position the country as a leading asset management centre, including corporate governance reforms.

The ‘Policy Plan for Promoting Japan as a Leading Asset Management Center’ is part of Prime Minister Kishida’s initiative for a “new form of capitalism”.

Under this initiative, the government has introduced new policies and reforms to build public trust in the asset management sector and thereby encourage Japanese people to invest their savings productively.

The aim behind the corporate governance reforms is to promote sustainable corporate growth and increase corporate value over the medium- to long term. The measures include a program to assist new entrants to the asset management sector.

The plan also includes reforms to stewardship activities in Japan, promoting effective engagement efforts between institutional investors and companies, as well as a review of the largest shareholding companies.

The government will work with Tokyo Stock Exchange on the planning, disclosure and implementation of the stewardship activities of listed companies.

The plan also includes a call for major financial groups to develop principles for product governance, clarifying the intended customers for individual financial products and verifying the balance between expected returns and costs/risks.

It also introduces reforms for occupational pension funds, encouraging defined benefit pension schemes to review their selection of investment companies.

For defined contribution pension schemes, the plan promotes the disclosure of information on their investment policies and portfolios as well as other material factors, so pension beneficiaries can select the most appropriate funds.

The Cabinet Secretariat will conduct a review of progress in June 2024.