Corporate Japan and its investors are bracing for a brave new world this week: The nation’s landmark Financial Instruments and Exchange Law—a precursor to Japan’s own Sarbanes-Oxley reforms—finally goes into effect.
Dubbed informally in Japan as kinshohou (an abbreviation of the law in Japanese), it is a fundamental reform of investment law that touches on all securities outside the banking and insurance sectors. Japanese officials are quick to distinguish between kinshohou and J-SOX in the strictest meaning: J-SOX refers specifically to the internal control provisions of the law, which won’t take effect until next April 1. Kinshohou encompasses the rest, and becomes active on Sept. 30.
