Yomiuri Shimbun Staff Writer

A project team of Japan's ruling Liberal Democratic Party on corporate governance will call for raising the threshold for shareholder proposals, according to a draft proposal to be compiled by the task force soon.

The draft aims to prevent activist shareholders from abusing their rights.

The draft also calls for stricter rules on convening extraordinary general meetings of shareholders and stronger systems that monitor law and regulation violations.

To bring the systems concerned in line with those in the United States and Europe, the draft calls for considering changing the requirements on shareholders' rights to make proposals -- from having "at least 1%" of the total voting rights or "at least 300" voting units to having "at least 1%" only.

Regarding demand for calling extraordinary shareholders meetings, the draft suggests that the voting rights requirement be raised from having "at least 3%" to roughly "at least 5%."

The draft also proposes that a system be created to identify beneficial owners behind the shareholder registry.

To enhance corporate management capabilities, the draft says that replacing directors and management based on performance "should not be considered taboo."

Regarding guidelines such as the Economy, Trade and Industry Ministry's so-called Ito Report, which served as the impetus for listed companies to adopt a return on equity $(ROE)$ of 8% or higher as a benchmark, the draft suggests that efforts be made to publicize a collection of case studies to ensure the guidelines' intent is accurately conveyed.

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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 17, 2026 05:13 ET (09:13 GMT)

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