Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>There is a discrepancy between the prime market concept and the listing criteria of 10 billion yen in tradable market capitalization.</li>
<li>The most significant effect of the market restructuring was the elimination of parent-subsidiary listings, but companies are reluctant to discuss matters not explicitly addressed in the corporate governance code.</li>
<li>Increasing market capitalization is not an overnight solution, but companies should study the initiatives advanced by companies that have increased valuations and implement those initiatives.</li>
</ul>


There is a discrepancy between the prime market concept and the listing criteria of 10 billion yen in tradable market capitalization.
The most significant effect of the market restructuring was the elimination of parent-subsidiary listings, but companies are reluctant to discuss matters not explicitly addressed in the corporate governance code.
Increasing market capitalization is not an overnight solution, but companies should study the initiatives advanced by companies that have increased valuations and implement those initiatives.


Prime Market Should Raise Market Cap Standards. Companies Should Take Measures to Raise Valuations

<ul>
<li>The Company's Nominating Committee is not a statutory committee and is chaired by an in-house director, which means that the Nominating Committee is not independent.</li>
<li>The lack of compliance and dysfunctional governance is that the president continued in his position and was reappointed as a director after the incident was discovered.</li>
<li>There's suspicion that the parent company was involved in this case, since it has sent 2 inside directors to the subsidiary and voted in favor of re-electing the former president.</li>
</ul>


The Company's Nominating Committee is not a statutory committee and is chaired by an in-house director, which means that the Nominating Committee is not independent.
The lack of compliance and dysfunctional governance is that the president continued in his position and was reappointed as a director after the incident was discovered.
There's suspicion that the parent company was involved in this case, since it has sent 2 inside directors to the subsidiary and voted in favor of re-electing the former president.


The Question of Whether the Parent Company Was Aware of Legal Compliance and Corporate Governance

<ul>
<li>It is useful for statutory documents disclosing a company's medium-to-long-term management strategy to include information on "human capital," which plays a role in sustainable growth.</li>
<li>If the mandatory timing of the information to be disclosed in annual securities report is accelerated, there is risk that the information will be similar to that of other companies.</li>
<li>The government should not stick to 2023 for the mandatory inclusion in annual securities reports, but should give companies time to encourage them to deepen what they include.</li>
</ul>


It is useful for statutory documents disclosing a company's medium-to-long-term management strategy to include information on "human capital," which plays a role in sustainable growth.
If the mandatory timing of the information to be disclosed in annual securities report is accelerated, there is risk that the information will be similar to that of other companies.
The government should not stick to 2023 for the mandatory inclusion in annual securities reports, but should give companies time to encourage them to deepen what they include.


The Timing of the Mandatory Disclosure of Human Capital Information Should Not Be a Sticking Point

<ul>
<li>TSE published "English Disclosure Practice Guide" for companies with the aim of promoting disclosure in English for communicating with foreign investors, who have significant presence in TSE and Japanese companies.</li>
<li>The purpose of English-language disclosure is to attract investment from overseas investors and improve valuations, but there is mismatch between information needs of overseas investors and English-language disclosure of companies.</li>
<li>While this handbook is helpful for companies attempting to disclose in English for the first time, in-depth approach may be necessary for companies that need further communications with overseas investors.</li>
</ul>


TSE published "English Disclosure Practice Guide" for companies with the aim of promoting disclosure in English for communicating with foreign investors, who have significant presence in TSE and Japanese companies.
The purpose of English-language disclosure is to attract investment from overseas investors and improve valuations, but there is mismatch between information needs of overseas investors and English-language disclosure of companies.
While this handbook is helpful for companies attempting to disclose in English for the first time, in-depth approach may be necessary for companies that need further communications with overseas investors.


In-Depth Approach Is Necessary for Companies Seeking Further Communication with Overseas Investors

<ul>
<li>Prime market was conceived as a market for institutional investors to invest in, but the problem is that little has changed in substance as a result of the market reclassification.</li>
<li>The current discussion hasn't raised any debate on raising the market cap-threshold for prime market. To keep up appearances as a global market, TSE will proceed with disclosure in English.</li>
<li>TSE will probably set 5-year exit deadline for companies that don't meet the listing criteria  within the next year, and will prepare a market for those companies.</li>
</ul>


Prime market was conceived as a market for institutional investors to invest in, but the problem is that little has changed in substance as a result of the market reclassification.
The current discussion hasn't raised any debate on raising the market cap-threshold for prime market. To keep up appearances as a global market, TSE will proceed with disclosure in English.
TSE will probably set 5-year exit deadline for companies that don't meet the listing criteria  within the next year, and will prepare a market for those companies.


Review of TSE Market Reclassification Requires a Big Cleanup, Not a Small Cleanup as It Should Be

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

Prime Market Should Raise Market Cap Standards. Companies Should Take Measures to Raise Valuations

This article will discuss the article, "6 months after TSE market reclassification, only about 10% of the companies that have been applied...

Metrical Inc

The Question of Whether the Parent Company Was Aware of Legal Compliance and Corporate Governance

I would like to discuss the Nikkei article regarding the "President of Kappa Create, who was arrested for illegally obtaining competitors' data,...

Metrical Inc

The Timing of the Mandatory Disclosure of Human Capital Information Should Not Be a Sticking Point

I would like to discuss the issues on the Nikkei article "What is Human Capital? Disclosure to be Mandated in 2023, Many Companies Confused."

Metrical Inc

In-Depth Approach Is Necessary for Companies Seeking Further Communication with Overseas Investors

TSE disclosed the English Disclosure Practice Handbook on September 22, 2022, and I would like to summarized the contents and discuss the issues in...

Metrical Inc

Review of TSE Market Reclassification Requires a Big Cleanup, Not a Small Cleanup as It Should Be

I would like to consider the issues on the discussions at the July 29th Follow-up Meeting on the Revision of Market Segmentation, which were...

Metrical Inc