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Compliance in Japanese Companies

By Mitsuhiro Hirata


The purpose of this paper is to clarify how large Japanese companies have coped with the compliance and governance problem. Figuratively speaking, compliance lays rails on which a train runs safely, whereas governance has interest in how fast the train can run on safe rails. While compliance aims at creating a healthy business entity by preventing the recurrence of corporate misdeed, governance intends to create an efficient business entity by strengthening its competitiveness. Firstly, the author deals with the Charter of Corporate Behavior of Nippon Keidanren, and top manager's attempt to eliminate corporate misdeed. Secondly, he treats legal reforms on governance since 1990, some proposals for reforming governance systems, and the large-scale revision of the commercial law in 2002 inclusive of the new board system. Lastly, the author emphasizes that compliance and governance must work together to run the business effectively, and that every company should create the most suitable governance system for itself after due deliberation on its own history, corporate culture and so forth

Topics: compliance, governance, corporate misdeed, Charter of Corporate Behavior, commercial law in 2002, the traditional board system, the new board model I
Year: 2011
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