Kazuhiko Toyama, Chairman
Japan Association of Corporate Directors
I am Kazuhiko Toyama, the newly appointed Chairman of the Board.
Last year, the Japan Association of Corporate Directors (JACD) celebrated its 20th anniversary. About 20 years ago, I was involved in the restructuring of Kanebo and other companies that were in financial difficulty at the Industrial Revitalization Corporation of Japan (IRCJ). I had the opportunity to witness and be involved in the process of many companies going into bankruptcy, and recognized that while there may be individual direct causes, the common denominator is governance, and the greatest cause is the basic governance mechanisms that run the company. I realized that a mismatch was occurring between the current era and the traditional governance model of Japanese companies.
The question of what should be done about corporate governance in Japan became a fundamental concern for me, and I became keenly aware that it was a theme that I should pursue as my life's work. It was around this time that JACD was launched and I was invited by Mr. Miyauchi, a business executive whom I greatly admire and respect. I completely agreed with the intentions of the association, and since then, I have had the opportunity to be involved in JACD in a variety of ways and in various phases. When I was asked to serve as the chairman of the association, I decided to take up the position with the hope of doing all I can as a person who has focused on this area for a long time. I look forward to your continued support.
Twenty years ago, I believe that many people in the Japanese business community at that time were not aware of the issues involved in governance. Over the past 20 years, partly as a result of the activities of JACD, the way we look at and think about things has changed, and the importance of governance is now fairly well shared. The problem, however, is the substance. Corporate governance is understood as a term, and in terms of institutional theory, the development of systems on the part of the government has progressed rapidly since the time of the second Abe administration. However, as a result of the system taking precedence, it is noticeable that formalization, such as "we have no choice but to increase the number of outside directors," has occurred, and the actual situation has not caught up.
Since the world is originally a world of private autonomy, I believe that the original form of a free economic system is for private companies themselves to move ahead and for the system to catch up with them. Although I have been involved in institutional reforms on the government side, I am originally from the private sector, and I believe that unless we can create a situation in which each company and investor moves ahead, we have not yet reached the point of "becoming the real thing."
What do outside directors do? I often say "preparedness and competence." Do they have the determination and competence to do their jobs as outside directors, and does the company welcome and accept outside directors with such determination and competence? I must say that there is still a long way to go regarding these issues.
The ultimate goal is not to reform governance for the sake of form, but rather, of course, to revitalize corporate activities, make them more efficient, and contribute to growth as a result of such reforms. The question is whether the governance system is functioning in such a way that the company is managed and operated in a realistic manner. Then, in the end, it becomes a matter of who is in charge. It is people who are driving the reality of management.
The entity that is in charge of governance, the governance body, is the board of directors, and the most important role is played by the independent outside directors. The question now is how effective each of these players can be in promoting corporate governance.
As the name suggests, JACD is a group of directors, especially those who will become outside directors, managers who use outside directors to their fullest potential, and institutional investors who select directors. Specific activities of our association include: seminars on various governance-related topics, training for outside directors and boards of directors, awards for excellence in governance, policy advocacy, and publication of a magazine.
As governance becomes more and more important, I believe that JACD will play an increasingly important role in the future.
"We must make governance reform a movement." In short, we must change the atmosphere of society as a whole, Mr. Miyauchi told me when he invited me to join the association, and I have worked to keep his words in mind. I think it is important to further create a movement for the sustainable growth of Japanese companies and the economy, focusing on improving the quality of the board of directors, especially outside directors, who are increasingly responsible for the substance of governance in the future. The bearers of the capital market are the institutional investors, the managers themselves, and each of the individuals who make up the board of directors. Our biggest mission is to raise the level of each individual and to raise the level of their colleagues, and to make this kind of movement more active.
An incorporated association is a group of people, each on an equal footing, and each individual is a component. It is important for each of us to use JACD as a stage to engage in activities that are more useful and beneficial to the company, the organization, and society, and that help promote corporate governance in Japan, and I will do my best to support and assist your activities. I will make various efforts and devices to enhance the capacity and number of governance leaders in various capacities, including outside directors, outside corporate auditors, internal directors, and the board secretariat, as well as to enhance the sustainability and continuity of JACD itself.