Corporate Governance - Astellas Pharma

I've already mentioned that corporate governance is my main concern investing in Japan (click following link on my previews thoughts touching on that matter).

The main problem with japanese equities

Having said that, I do have to stress that in the end it is intrinsic value and margin of safety which is of utter importance for me when buying into a stock. I would never dismiss a stock, only because weak governance of the management or buy into a stock because they have great corporate governance. But it definetely is comforting to know that management isn't complacent about the principle agent problem inherent in (minority) stock investing.

Although in aggregate there is a lot to wish for in Japan regarding corporate governance, a few gems exist.

One of those definetely is Astellas (click link to get to the (brief) fundamental analysis).

Astella Pharma - Just for the Record

Let's see what Astellas has to say on this issue.

Four (independent) outside directors at a seven member board (=majority of board is independent!!!; extremely rare in Japan!!!). That is astounding, as recent discussion in Japan is about making two independent directors a compulsory requirement, at much larger boards. Toyota Motors hasn't even got one independent director.

Also worth taking notice of is the Corporate audit system with indpendent auditors at par.

Also watch out if independent directors are skilled. I mean you don't want to see a Ph.D of history on the board of a pharmaceutical company. That would do more harm than any good :)

In Astellas case the independent directors seem to be very knowlegable.

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And last but not least it is always a good sign if independent directors comment on their role on the board.

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It's not easy to find undervalued stocks with good coporate governance in Japan. But they do exist.

Make sure you let me know when you found one.