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Clifford Chance

Regulatory Investigations and Financial Crime Insights

Recent moves in Japan towards tougher corporate compliance

"Japan Inc" is now back on the front pages with many Japanese corporations increasingly pursuing significant M&A opportunities internationally given the mature market at home and high levels of cash reserves.

The corporate landscape in Japan has also been changing in other ways in recent years. As a consequence of a number of high-profile corporate scandals, Japanese legislators have been busy revising legislation to further improve corporate governance in the world's third biggest economy.

This article focuses on three such reforms:

  • the bolstering of the role of independent outside directors;
  • the introduction of Japan's first ever plea-bargaining regime; and
  • the release of Japan's "Principles for Listed Companies Dealing with Corporate Malfeasance".

For the reasons explained below, global companies with operations in Japan should keep in mind this shift towards more regulation.