By Kaname Sugimoto and Yusuke Fukuhara / Yomiuri Shimbun Staff Writers

The number of shareholder proposals submitted to the companies listed on the Tokyo Stock Exchange $(TSE)$ at general shareholder meetings held in June hit 398, breaking the record for the month, according to a survey conducted by Mitsubishi UFJ Trust and Banking Corp.

A total of 113 companies received shareholder proposals, which was also a new record for the month. Last June, 91 companies received 336 shareholder proposals.

The increase reflects the growing influence of activist shareholders. Some shareholder proposals have been approved at the shareholder meetings, indicating a tendency for shareholders to scrutinize the governance of companies more strictly.

The number of companies that held general shareholder meetings hit a peak on Friday, with about 560 companies -- which accounts for about 25% of companies with March year-end accounting -- holding meetings on the day. About 2,200 companies, or about 60% of the companies listed on the TSE, are set to hold general shareholder meetings in June.

At the general shareholder meeting of ANA Holdings Inc. held Friday, a Hong Kong-based investment fund submitted a proposal to amend the airline's articles of incorporation to prohibit senior officials from being rehired at group companies. The proposal was rejected at the meeting, but the investment fund has succeeded in sharing its concerns widely to other shareholders.

In recent years, the content of activist proposals has shown more variety. In addition to the traditional demands that seek short-term distribution of profits, there has been proposals dealing with the management of companies with sharp viewpoints. According to Sumitomo Mitsui Trust Bank Ltd., 104 shareholder proposals submitted in June were related to corporate governance, such as a proposal to elect board members and a suggestion to revise the compensation system. This figure is an increase of nearly 90% from the previous year's 56 proposals.

At the general shareholder meeting of Fuji Media Holdings Inc., Dalton Investments Inc., a U.S. investment fund that has been criticizing the media company's poor governance, submitted its own proposal to elect 12 board of directors. At the meeting of chemical company Adeka Corp., an investment firm linked to the former Murakami Fund, called for Adeka to increase the value of a listed subsidiary in its proposal.

Most activist proposals are set to be rejected at general shareholder meetings, but the number of proposals have been steadily rising. A senior official of an investment firm explained the reason, saying, "Discussions with the management team will progress (through shareholder proposals)."

At this year's general shareholder meetings, some of the activist shareholders' claims has been accepted by other shareholders. At the meeting of Hogy Medical Co., a company that manufacturers surgical products, a shareholder proposal to elect James Rosenwald, chief investment officer at Dalton Investments, as a board director was accepted with an approval rate of 52.1%.

"At recent general shareholder meetings, ordinary shareholders are also keen to raise questions on strengthening corporate governance," said Mizuki Suma of Sumitomo Mitsui Trust Bank. "The meetings are no longer a mere formality -- it has become more of a place to exchange substantive discussions on management."

On the other hand, some companies argue that requirements for making shareholder proposals, which are generally regarded as looser than those in other countries, should be tightened. Under the Companies Law, shareholders need to possess at least 1% of the total voting rights or at least 300 voting rights to make a shareholder proposal. The hurdle is low compared to countries like the United Kingdom, where at least 5% of the total voting rights is required.

In February, the Kansai Economic Federation submitted a written statement to the Justice Ministry and other entities to review requirements for shareholder proposals at general meetings. The federation called for giving preferential treatment to long-term shareholders and decreasing the burden on companies in disclosing information.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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July 01, 2025 06:50 ET (10:50 GMT)

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