VIDYASAGAR UNIVERSITY JOURNAL OF COMMERCE

CORPORATE GOVERNANCE AND TRANSPARENCY SCENARIO IN ASIA
always consistent or fairly applied.
• Disclosure of public enforcement activities is relatively good, while private
enforcement by the market is on the rise (e. g, through the voting of shares at
AGMs and investor engagement with companies).
• Japan has an active Pension Fund Association and is the only country in Asia
to have a working electronic voting system.
Weaknesses
• While listed companies have been willing to improve their disclosure practices
and enhance communication with shareholders, they have felt less compelled
to change their organizational structures and open themselves to outside
scrutiny by, for example, independent directors and minority shareholders.
• Japan has no real concept of “independent director”, nor does it have a proper
national code on CG (unlike other Asian markets).
• It promotes modern CG ideas in a rather fragmented way through various parts
of its company and securities laws, regulations and listing rules. This may be a
necessary compromise, but it creates a fair degree of ambiguity around
government policy.
• There are many areas where standards could be improved, but which appear to
be neglected at present, including: cutting the deadline for releasing audited
annual results from the current 90 days to 60 days; requiring all listed
companies to publish their AGM agendas earlier (the rule is still 14 days);
requiring the results of poll votes to be published; and so on.
South Korea
Strengths
• Financial and non-financial reporting practices among the larger listed
companies have improved. Government has been taking notice of new
international best practices on auditor independence and whistle blowing
protections.
• Public enforcement, most noticeably in the activities of public prosecutors and
the judiciary, has also improved.
• Korea is unusual in having had a vigorous retail activist movement and
minority shareholders willing to take companies to court.
• One of the few countries to pass a law permitting class-action lawsuits for
accounting fraud.
• Media is quite free to report on CG issues, although not always impartial.
• Korea now has a corporate governance focus fund.
Weaknesses
• Financial reporting and accounting standards still some way from international
norms (e. g, lack of consolidation for interims and quarterly reports; deadline
for audited annual results is still 90 days; valuation still based on cost rather
than fair value).
30 Vidyasagar University Journal of Commerce