Japanese corporate law is undergoing a transition with new Commercial Code amendments in 2003 that allow corporations to opt for an Anglo‐American model of governance. Combined with shifts in securities regulation, shareholder activism, and the notion of Japanese lifetime employment, there is an important issue of whether these shifts represent a move towards an optimal corporate governance paradigm. The evolution is tempered by particular cultural norms that drive Japanese corporate law. While there is a perception in North America that Japanese corporations have shifted to an Anglo‐American model of corporate governance, the reality is more layered. It may be that ultimately, the governance model that evolves will adopt the best elements of increased transparency, corporate accountability, enhanced shareholder protection, employee long‐term employment protections, and production synergies, that would allow Japanese corporations to compete internationally, but retain those elements of corporate community that have long been considered a primary objective of the social and economic life of Japan.