[Provisional Translation]

Prime Minister Shinzo Abe held the fourth meeting of the Council on Investments for the Future at the Prime Minister’s Office.

At the meeting, debate took place on the reform of systems related to companies and the restructuring of industries, joint promotion of regulatory reforms and the simplification of and greater use of IT in administrative procedures, the FY2016 Report on Important Measures for Strengthening Industrial Competitiveness (draft), the Action Plan for Strengthening Industrial Competitiveness (2017 draft), and the state of discussions up until now and directions for future discussions.

Based on the discussion, the Prime Minister said,

“Up until now, the Abe administration has worked boldly to strengthen corporate governance and industrial competitiveness. Compared to the time before the Abe administration, there have been steady improvements in the earning power of Japanese companies, including a rise in returns on equity (ROE) of more than 70%.

However, compared to companies in Europe and the United States, Japanese companies have still not made sufficient progress on the restructuring of their project portfolios. There is still a large gap in the profit margins of Japanese companies, and companies in Europe and the United States. With the fourth industrial revolution advancing swiftly, delays in bold management decisions could have fatal results.

Now is precisely the time that we must take corporate governance reforms towards increases in earning power and persistently develop them from being mere formalities to having substance. We need to improve the earning power of companies and use the profits from those improvements to invest in research and development, and human resources.

To that end, based on the issues we have identified today, we will eliminate the opaque influence of retired executives on their former businesses, and make it possible for companies to make bold business decisions by strengthening the supervisory functions of their boards of directors.

From the perspective of supporting improvements to mid- to long-term corporate value and avoiding the traps of extremely short-term or speculative transactions, we will reconsider the way that corporate information is disclosed, including quarterly reports. We will make it possible to effectively and efficiently disclose the information that investors are truly looking for.

Furthermore, through regulatory reforms, such as those related to tax systems and human resources, we will remove the obstacles that companies face when attempting mid- to long-term investments or business restructuring.

I would like all relevant ministers to immediately flesh these measures out in line with the direction that I have just set out.”