Stewardship Code revision: FSA to release draft of revised Stewardship Code for public comments [March ’25]

1. Transparency of Beneficial Shareholders (Principle #4)

1-1. The current Code includes the following statement in a footnote:

“Regardless of the size of the shareholding, there should be constructive dialogues between institutional investors and investees. However, there may be situations where it would be desirable for the institutional investor to disclose how many shares it holds.”

The FSA proposes to revise the statement to read as follows, and relocate it from the footnote to the main body of the guideline:

“To facilitate constructive dialogue with the investee, an institutional investor should disclose to the investee how many shares it holds, if requested by the investee company.”

Please provide your comments on this proposal, along with your reasoning.

1-2. In addition to the above, the FSA proposes to include a statement in the Code indicating that institutional investors should publicly disclose their policies regarding their response when an investee requests information about the number of shares held. Please provide your comments on this proposal, along with your reasoning.

2. Encouragement of Collaborative Engagement (Principle #4)

2-1. The current Code includes the following guideline:

“When an institutional investor engages in dialogue with an investee, there may be situations where it would be beneficial to collaborate with other institutional investors (referred to as ‘collaborative engagement’), as necessary, in addition to having a dialogue independently from other investors.”

The FSA proposes to revise the guideline to read:

“When an institutional investor engages in dialogue with an investee, it is important to consider the choice of having the dialogue in collaboration with other institutional investors (referred to as ‘collaborative engagement’), in addition to having a dialogue independently from other investors. When determining how to engage in these dialogues, institutional investors should keep in mind that the dialogue should be constructive and contribute to the sustainable growth of the investee.”

Please provide your comments on this proposal, along with your reasoning.

2-2. Please outline any considerations that, in your view, institutional investors should keep in mind in collaborative engagements, along with your reasoning.

3. Streamlining and Simplifying the Code

The FSA proposes to delete, integrate, or simplify certain sections of the Code that have become standard practice since its introduction and subsequent revisions, as indicated in the proposed draft. Please provide your comments on this proposal, along with your reasoning.

4. Others

Please provide any additional comments on the proposed draft, along with your reasoning.

*Please note that this is not an official translation by the FSA.