Tokyo Stock Exchange pledges to work on improved governance

The Tokyo Stock Exchange (TSE) has called on listed companies to strengthen their corporate governance practices.

In a statement, the exchange said it will redouble its efforts to cooperate with Japan's Financial Services Agency and Securities and Exchange Surveillance Commission to ensure compliance rules are not breached.

The pledge was made following the recent scandal at Olympus Corp regarding accusations of improper payments, which has placed the traditional structure of Japanese boards under fresh scrutiny.

Listed firms have been asked by the TSE to "focus on enhancing corporate governance and reconfirming the thoroughness of internal compliance systems and their execution".

Companies should also remember that their directors are primarily responsible to "shareholder interests and improving corporate value", the statement noted.

Governance experts believe Japan's boards are fundamentally weak because there is no requirement for them to appoint independent directors. Critics have also pointed to the lack of foreigners and women at the top level of Japanese companies.