Ogier attended the AIMA Japan Hedge Fund Forum last month, which
celebrated its 10th anniversary. The word on
everyone’s lips, “corporate governance”. It
seems late in the day to be talking about corporate governance but
here we are more or less 7 years on from the financial crisis and
in Asia it is an area of focus. Whereas the UK, which is said
to sit at number 1 on the corporate governance charts, instigated
its corporate governance policy back in 1992, the Asian markets are
now also picking up the pace. Singapore issued its new and
revised corporate governance code (CGC) in May
2012 including tighter standards for independent directors. Also in
2012, the Hong Kong Stock Exchange amended the Code of Corporate
Governance and Corporate Governance Report with respect to
remuneration committees, board independence and pay disclosures.
Japan’s first standalone CGC came into effect on 1 June this
Key themes discussed at the forum were the independence of
directors, the skill and experience of directors appointed to the
boards of funds, the structure of the board and the amount of time
and attention given to the company by its directors. The
intended output, good governance of companies by making directors
accountable and requiring companies to comply with a set of
policies and procedures with the aim to achieve medium to long term
success for the company. Of course in Japan we are more
used to seeing Japanese unit trusts serving as the vehicle of
choice for investment funds and so in fact these structures have
traditionally already had an independent body, the trustee,
overseeing the management and administration of the fund. The
message for trustees might be the importance of exercising this
role with true independence and not to hold themselves accountable
to the investment manager.
What we are seeing here in Asia generally accords with what our
counterparts are seeing in Europe and America. Independent
directors are now, more than ever, seen as an essential part of the
due diligence process for investors and not just for tax
structuring considerations, but corporate governance ones as
well. We expect the demand for truly independent,
professional, skilled and non-apathetic directors to continue to
rise in these markets.
Report by Kate Hodson who is based in Ogier’s Hong
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