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Toshiba decision a landmark for Japanese governance

Activist investor victory may open the floodgates for shareholder challenges against Japanese corporate management.

Toshiba CEO Nobuaki Kurumatani. Photo: Reuters

Toshiba shareholders voted on Thursday to go ahead with an independent investigation into claims that some investors were pressured on how to vote at least year’s annual general meeting (AGM).

As Euromoney reported in January, the case was considered a bellwether for corporate governance and shareholder activism in Japan.

Several shareholders, including the endowment fund of Harvard University, were allegedly pressured to follow management recommendations at the AGM, including on the reappointment of the CEO and other board members.

Harvard abstained as a result, potentially changing the general meeting’s outcome.

It is a terrible look for Toshiba

Consequently, Toshiba’s biggest shareholder Effissimo Capital Management called an emergency general meeting seeking an independent review of what happened.

Thursday’s successful vote was only the fourth time a shareholder motion had won approval in Japan, and by far the most significant, given the scale of Toshiba’s business, brand and history.

Some of Toshiba’s recent management decisions already seemed out of step with a new mood in Japan towards shareholder value, better governance and the divestment of non-core assets.


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