Japan should enhance corporate governance standards by penalizing publicly listed companies that fail to be transparent when they raise capital, a government research committee said Wednesday.

"To create a fair and transparent market and win back investors' trust, strengthening oversight of raising capital through private placements is an urgent matter," the research committee of the Financial System Council said in a draft report.

Regulators want to spur improvements in governance practices to attract capital after the global credit crisis damaged company earnings and pushed the Nikkei average to a 26-year low earlier this year.