Below are key takeaways from ISS’ recently released 2025 Japan Proxy Season Review. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Knowledge Center and its Library tab and to corporate subscribers by logging into Compass then selecting Governance and the Governance Library or Governance Exchange tab.
- Board Independence: The number of outside directors at Japanese companies has increased in recent years, but further increases were not observed this year, as most companies are now in compliance with the Corporate Governance Code requirements.
- Board Gender Diversity: Meanwhile, a continued uptick in female board representation is observed. The number of boards with at least one female director rose to 82.4 percent as of June 2025, up from 76.3 percent in 2024.
- Shareholder proposals surge: The number of shareholder proposals voted upon at Japanese meetings from January to June 2025 was 514, a record high. These proposals have been submitted by activist shareholders, environmental NGOs, local governments, and individual shareholders. Vote No campaign.
- Tokyo Stock Exchange (TSE) continues questioning low price to book ratios: TSE shed light on the low capital efficiency of Japanese companies and urges companies to take measures to improve valuation if their price-to-book ratio is below one. This development appears to account for an increase in the number of shareholder proposals calling on companies to increase capital efficiency.
- ISS Japan Policy Change: Starting in February 2026, a new independence criterion will become effective, under which individuals who have served on the board for 12 years or more will not be considered independent. This is intended to address the independence concerns arising from long-serving board members. Other changes, if any, will be announced before February 2026.
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By: ISS Japan Research
