Companies should use internet to deepen dialogue with shareholders

The Yomiuri Shimbun

12:58 JST, June 30, 2021

The number of companies that hold their general shareholders meetings online has rapidly been increasing as a measure against the novel coronavirus. Each company should carefully explore ways to ensure smooth dialogue with shareholders.

The season for general shareholders meetings for listed companies reached its peak on Tuesday, with about 630, or nearly 30% of the about 2,300 companies that closed their books in March, holding their meetings on that day.

This year, 320 companies — already about 2.6 times more than last year — have allowed their shareholders to participate in their general shareholders meetings via the internet. This reportedly caused no major confusion on Tuesday.

General shareholders meetings are a valuable forum for management and investors to actively discuss ways to improve corporate value.

Using the internet not only makes it possible to limit the number of visitors to prevent coronavirus infections, but also enables participation from distant locations, including overseas. Such online meetings can be said to have the potential to broaden the base of participants and vitalize the meetings themselves.

Conventionally, companies are required to set a physical venue for their general shareholders meetings. Even when they hold the meetings online, they need to use both the physical venue and online meetings at the same time.

In mid-June, part of the revised Industrial Competitiveness Enhancement Law went into effect, allowing companies to hold fully online general shareholders meetings without physical venues. The revised law was too late for the general meetings held in June, but there is a possibility that more companies will hold their meetings in such a manner in the future.

Some companies, including Sumitomo Mitsui Financial Group Inc. and SoftBank Group Corp., have passed resolutions to change their articles of incorporation so that they can hold fully online general shareholders meetings.

However, there is concern that sufficient communication will be difficult at the fully online type of meeting. When accepting questions via the internet, depending on the method, this type of meeting can be used as a way to avoid inconvenient questions and dodge the pursuit of shareholders regarding companies’ responsibility.

It is also necessary to give consideration to elderly shareholders who may be less tech-savvy, and to prepare for possible communication failures.

Holding general shareholders meetings online should not infringe on the rights of shareholders. It is hoped that companies will listen to their shareholders’ intent and find ways to run their general shareholders meetings that are suitable for them, while identifying the benefits and challenges of using the internet for such meetings.

It should also be noted that the growing tendency in the United States to break away from the “shareholder-first principle” is diversifying shareholders’ demands. In addition to maximizing their own profits, companies are also being tested as to whether they place importance on the interests of their employees and local communities, among other concerns.

At general shareholders meetings of Mitsubishi UFJ Financial Group Inc. and Sumitomo Corp., shareholders called for the reduction of greenhouse gas emissions through decarbonization. An increasing number of institutional investors are also placing importance on the appointment of female executives and the consideration of human rights issues.

Companies should focus on reforms that reflect the voices of their shareholders.

— The original Japanese article appeared in The Yomiuri Shimbun on June 30, 2021.