Stewardship Code: FSA releases draft of revised Stewardship Code for public comments [March ’25]

1. Transparency of Beneficial Shareholders (Principle #4)

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, institutional investors should inform the number of shares they hold if requested by the investee company. Institutional investors should publicly disclose their policies regarding their response when an investee requests information about the number of shares held.”

2. Encouragement of Collaborative Engagement (Principle #4)

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, an important alternative to conducting the dialogue independently from other investors is to collaborate with other institutional investors (referred to as ‘collaborative engagement’). In 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.”

3. Streamlining and Simplifying the Code

The FSA is also proposing to delete, integrate, or simplify certain sections of the Code that have become standard practice since its introduction and subsequent revisions.

*Please note taht this is not an official translation by the FSA. Please refer to the FSA’s announcement (available in English) on 21 March 2025 under “What’s New” on the FSA website.