View
2
Download
0
Category
Preview:
Citation preview
February 2015 Shunsuke Shirakawa
Financial Services Agency
JFSA in Japan’s Growth Strategy
Strategic financing for growth-oriented businesses is the key to successful implementation of initiatives for overcoming deflation and achieving sustainable economic growth under Abenomics.
End of deflation (2% inflation target)
Funds shift to assets yielding higher than
the inflation rate
Financing to growing sectors
Realizing Virtuous Cycle for Sustainable Economic Growth
Deflation Funds held as cash or deposits
Insufficient Financing to
growing sectors
Vicious cycle
Virtuous cycle
1
Drafting the Corporate Governance Code, etc.
Securing Japan’s status as an international financial center and realizing Asia’s growth potential
• Improve financial infrastructure (e.g. securities settlement systems) • Promote the standardization of bond issuance documentation and procedures in Asian
markets
Enhancing settlement systems • Realize real-time money transfers by financial institutions and companies.
Overview of FSA-related measures in Japan’s Growth Strategy (1)
FSA related Measures in “Japan Revitalization Strategy Revised in 2014”
Accelerating structural reform program (Vitalizing industries)
Stimulating financial and capital markets
2
Establishing a cycle in which abundant household assets flow into growing sectors
• Promote the use of NISAs • Enhance efficiency and transparency in the management of investment funds
Promoting voluntary adoption of the IFRS • Publish “the IFRS Adoption Report (tentative name)”, as a useful reference for
companies considering adoption of the IFRS.
Initiatives aimed at enhancing the competitiveness of companies • Encourage more widespread use of the JPX-Nikkei Index 400 (which consists of
companies selected with a focus on profitability and corporate governance).
Overview of FSA-related measures in Japan’s Growth Strategy (2)
Stimulating financial and capital markets (cont.)
3
Responsibilities for shareholders
Corporate Governance Code
♦ Principles of good practices for companies
♦ Responsibilities for shareholders and other stakeholders
Company
Shareholders Other Stakeholders (employees, creditors,
customers, etc.)
Ultimate fund providers (individuals, pensioners, insurance policyholders, etc.)
Institutional investors (shareholders)
Stewardship responsibilities
Constructive dialogues
Stewardship Code
♦ Principles of good practices for institutional investors
♦ Responsibilities for the ultimate fund providers (thruster)
Company
The Stewardship Code was finalized in February 2014 under the Japan Revitalization Strategy (Cabinet decision in June 2013). As many as 175 institutional investors have signed up to the Stewardship Code as of the end of Nov 2014.
⋅ The FSA and the Tokyo Stock Exchange (TSE) published the key elements of the Corporate Governance Code in Dec 2014.
⋅ The Code is consistent with the OECD Principles of Corporate Governance, and easy to use for Japanese companies
⋅ The TSE will formulate the Corporate Governance Code by June 2015.
Promoting Growth Oriented Corporate Governance
4
・ Promoting “growth-oriented corporate governance” which stimulates healthy entrepreneurship ・ Enhancing corporate value through cooperation with a variety of stakeholders including shareholders ・ Facilitating constructive dialogue between companies and their shareholders
<Securing the Rights and Equal Treatment of Shareholders> Companies should fully secure the rights and equal treatment of shareholders.
Securing the rights of shareholders effectively ⇒ Measures for giving shareholders sufficient time to consider the agenda of general shareholder meetings (e.g. Early delivery of convening notices of GSMs)
Explanation of cross-shareholdings ⇒ Disclosing a policy of cross-shareholdings Explanation of its objective and rationale based on examination of economic rationale
Establishment & disclosure of standards of the voting rights
<Cooperation with Stakeholders Other Than Shareholders> Companies should cooperate with stakeholders including employees, customers, business partners and local communities.
<Ensuring Appropriate Information Disclosure and Transparency> Companies should appropriately conduct statutory disclosure and also provide accurate & useful information beyond that required by law.
<Dialogue with Shareholders> Companies should engage in constructive dialogue with shareholders in order to contribute to sustainable growth.
<Responsibilities of the Board> To promote sustainable corporate growth and enhance earnings power & capital efficiency, the board should appropriately fulfill its roles and responsibilities, including: (1) Setting the broad direction of corporate strategy (2) Establishing an environment where appropriate risk-taking by the senior management is supported (3) Carrying out effective oversight of directors & the management
Actions on sustainability issues including ESG matters
Ensuring diversity including active participation of women
Effective use of independent directors
⇒ Appointment of at least 2 independent directors who are able to contribute constructive discussions
※ Disclosing a roadmap for appointment of at least 1/3 of directors as independent directors if the company believes it necessary to do so in its own judgment
The Code adopts the “comply or explain” approach (either comply with a principle or, if not, explain the reasons why not to do so).
Proactive information disclosure including business principles & strategies Establishment of organizational structures for promoting constructive
dialogue with shareholders
◎ The management may become risk-avoiding due to concerns about unexpected losses resulting from its business judgment.
⇒ The Code contributes to secure the reasonableness of management’s decision-making processes and supports appropriate risk-taking by companies.
Outline of Japan’s Corporate Governance Code [Exposure Draft]
5
Item Outline
Timing of the Introduction January 1,2014
Investment period 10 years(2014~2023)
Scope Dividends and capital gains derived from listed shares and publicly-offered stock investment funds in NISA account
Annual investment limit JPY 1 million (USD 9,800)
Tax-exempt period 5 years
Eligible persons Residents of Japan(20 years old and above)
Withdrawing Free(Reinvestment is not allowed)
Profit/loss offset Tax losses generated in NISA accounts are not available
Number of accounts Only 1 account per person
NISA stands for “Nippon Individual Savings Account”, and gives individual investors a tax exemption on dividends and capital gains derived from listed shares and investment trusts.
① Support of asset formation for households ② Supply of risk money for economic growth 【Purpose】
NISA(Nippon Individual Savings Account)(1)
6
* Income/capital gain from NISA is exempted from taxation for a maximum of 5 years. * After the 5-year exemption period, investors can: > continue tax exemption through newly available investment limit; or > transfer securities into an ordinary account.
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ・・・
2023 JPY1M
2022 JPY1M
2021 JPY1M
2020 JPY1M
2019 JPY1M
2018 JPY1M
2017 JPY1M
2016 JPY1M
2015 JPY1M
2014 JPY1M
Investment Period: 10 years
from 2014
Tax-exempt period : 5 years
NISA(Nippon Individual Savings Account)(2)
7
NISA has made a successful start in attracting individual investors. JFSA continues efforts to improve the framework of NISA.
Number of NISA accounts: Approx. 7.3 million (as of June
2014) Total amount in NISA accounts: Approx. 1.6 trillion JPY (as of June
2014)
i) Changing households’ financial asset allocation
ii) Increasing the number of individual investors
iii) Enhancing financial literacy of households (long-term impact)
Amendment to Income Tax Act: (1) Creation of Junior NISA (2) Increasing the annual investment
limit for NISA
i) Aiming to JPY25 trillion in investment under NISA by 2020
ii) Further effort to improve the framework of NISA
1. Purpose 2. Progress
4. Forward Perspectives 3. Improvement
NISA(Nippon Individual Savings Account)(3)
8
○ Total amount in NISA accounts: ¥1,563,122.26m Breakdown: Listed stocks: ¥494,914.94m (31.7%) Investment trusts: ¥1,039,599.73m (66.5%) ETFs ¥14,029.79m (0.9%) REITs ¥14,577.85m (0.9%)
○ 63.5% of total amount invested owned by people over 60 years old
80s + ¥104,734.87m
70s ¥379,436.33m
60s ¥508,107.71m
50s ¥256,228.04m
40s ¥172,183.53m
30s ¥108,261.85m
20s ¥34,169.98m
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
20歳代
30歳代
40歳代
50歳代
60歳代
70歳代
80歳以上
2.2%
6.9%
11.0%
16.4%
32.5%
24.3%
6.7%
63.5% (above 60)
Above 80
70’s
60’s
50’s
40’s
30’s
20’s
Breakdown of NISA accounts (30 June 2014)
9
Improvement 1: Creation of Junior NISA (tentative name) - It will be possible for minors aged 0 to 19 to open Junior NISA accounts.
Issue: The current state of NISA usage is such that the great majority of accounts are held by middle-aged or elderly investors. There is a need to facilitate inter-generational transfer of assets and to create opportunities for minors to start long-term investment.
Image of Junior NISA
Adult NISA Junior NISA Account
It is not possible to withdraw funds midway
Taxes will be applied to past interest if funds are withdrawn
Withdrawal restrictions
Automatic shift to adult NISA
・・・ Long-term investment for the child’s/grandchild’s future
0 to 17 years old 18 years old
20 years old
After age 18, it is possible to withdraw funds
Funding
Parents, grandparents, etc.
Child, grandchild, etc.
Investment trust / shares, etc.
A person with parental authority can manage the accounts as representatives of minors
Manager (A person with parental
authority, etc.)
Creation of Junior NISA – 1
10
Item Outline People able to use this
system Residents aged 0 to 19
Annual investment limit 800,000 yen
Investments eligible for tax exemptions
Listed shares, publicly-offered stock investment funds, etc. (in line with adult NISA)
Investable period Until 2023 (in line with adult NISA)
Tax exemption period From the time of investment for a period of five years (in line with adult NISA)
Investment management and control
Investment is subject to the proxy of people with the parental authority, etc. or their consent. In principle, the investments in Junior NISA accounts cannot be withdrawn until the account holders turn 18.
Creation of Junior NISA – 2
11
Improvement 2: Increasing the annual investment limit for NISA - The annual investment limit will be revised to be suitable for monthly fixed-amount
investments (1.2 million yen: 100,000 yen per month * 12 months)
A. I want to save every month
9%
Between the two choices, I agree with A more
31% Between the two choices,
I agree with B more 36%
B. In regard to the tax exemption framework of 1 million yen per year, I intend to invest that amount all at once
24%
Source: Nomura Asset Management Division, “Fifth Opinion Survey on NISA (research conducted February 2014)”
Sample: 40,000 men and women aged 20 and up across Japan
- Approximately 40% of people say they would like to use the account to save money every month, with this trend being particularly strong among the young.
Increasing the NISA annual investment limit
Reference Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.
IV-3-1-2 (8)
Points of Attention Regarding Solicitation of Transactions That Use Tax Exemption for Small-Amount Investments (excerpt)
(ii) Provision of Financial Instruments in Ways That Take into Consideration the Design and Purpose of the System
Whether the operator takes into account the purpose of NISA, which is to encourage asset building in the medium- to long-term by households, and provides financial instruments, etc., to NISA-using customers in ways that reflect NISA's design and purposes, for example by providing a scheduled fixed-amount investment service in which the effect of time-diversified investment can be obtained by dividing investments into portions executed at specific intervals… (abridged).
12
Companies Voluntarily Applying IFRSs in Japan
13
Adoption of New Policy Asset mix (October 31, 2014) As Japan is now on coming out of the long-term deflation, GPIF accelerated review process of its policy asset mix, which
should be more compatible with the changes of long-term economic prospect. Enhancing the governance structure of the GPIF In addition to the new policy asset mix, the Investment Advisory Committee adopted a resolution as to the reinforcement of the governance structure, which includes...
① Reinforcement of the internal control (creating “Governance Council” under the Investment Advisory Committee) ② Reinforcement of the risk management capabilities ③ Enhancement of human resource management
Domestic bonds Domestic stocks International bonds
International stocks
Short-term assets
Target allocation 60%(±8%) 12%(±6%) 11%(±5%) 12%(±5%) 5%
New portfolio 35%(±10%) 25%(±9%) 15%(±4%) 25%(±8%)
○New investment policy on domestic equity announced on April 4, 2014
3 new indices including JPX-Nikkei 400 were employed. ○A Reshuffle of Members of Investment Committee of the GPIF on April 22, 2014
6 new members were appointed (1 reappointed), most of whom are experts on asset management and/or international business.
○The GPIF adopted the Stewardship Code on May 30, 2014
Measures already adopted
Recent Measures (conducted after the “Japan Revitalization Strategy Revised in 2014”)
Government Pension Investment Fund (GPIF) Reform
14
Recommended