According to Mr Bonnar, who has just rebuilt one in another thread, there is a seal on the governor shaft where it passes through the crankcase. See post #37739 in:
https://www.outdoorking-forum.com.au/forum/ubbthreads.php?ubb=showflat&Number=37772#Post37772

There is some interesting variation in common practice on whether to seal that shaft. I notice Honda uses seals on the governor shafts of GXV engines but not on the GCV engines. We have had a thread on the resulting problem of oil leaks:
https://www.outdoorking-forum.com.au/forum/ubbthreads.php?ubb=showflat&Number=32871#Post32871
Just one more nail in the coffin of the GCV engine design, along with a cam belt that doesn't last all that long and is very difficult to replace, and an integral cylinder head so lapping valves and installing pistons are both rather awkward as well. The idea of the throwaway engine seems to have even reached Honda, these days.