Japan Inc faces stormy AGMs in governance shake-up

Sun Jun 14, 2015 5:09pm EDT
 
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By Ritsuko Ando

TOKYO (Reuters) - Japan's normally sleepy shareholder meetings are set for a shake-up this year as a new corporate governance code encourages disgruntled investors to speak out and forces companies to take demands for better returns more seriously.

Combined with a separate "stewardship" code, which holds fund managers accountable for how they vote, the new rules mean CEOs of poor market performers like electronics maker Sharp Corp (6753.T: Quote) may face unusually strong dissent in the proxy season starting on Tuesday.

"The weight of any opposition vote is now heavier," said Nomura Securities analyst Kengo Nishiyama, who specializes in corporate governance issues.

The governance code which took effect this month requires listed firms to appoint multiple outside directors and calls for shareholder engagement, addressing longstanding criticism that Japan's firms neglected investors.

It also says companies must consider the views of shareholders who oppose management-backed proposals but are out-voted. While the guidelines are not legally binding, the Tokyo bourse requires listed companies to "comply or explain".

SHARP CRITICISM

Sharp CEO Kozo Takahashi will come under particularly strong pressure at the company's June 23 meeting, after weak sales of smartphone displays and TVs forced it to seek a second major bailout from its creditors.   Continued...

 
Toshiba Corp President and Chief Executive Officer Hisao Tanaka (L) bows deeply as the start of a news conference on panel to examine accounting issues in Tokyo, Japan, in this May 15, 2015 file photo. REUTERS/Issei Kato/Files