General Shareholders Meetings: Discussions on Corporate Management Have Become More Lively

Editorial

17:38 JST, June 30, 2025

General shareholders meetings were once referred to as “shan shan sokai,” which describes an assembly where company proposals are almost always approved. However, meetings have nowadays become established as opportunities for participants to seriously debate the performance of corporate management.

Management must deepen dialogue with shareholders and present convincing mid- and long-term growth strategies.

The peak period for listed companies to hold shareholders meetings has already passed this year. Sessions were concentrated on June 27, when about 560 companies, or about 25% of firms whose business year ends in March, held their meetings. Of them, 113 companies, an increase of 22, received proposals from shareholders, and the number of proposals increased to 398, up 62. Both figures have reached record highs.

As many as 137 proposals were submitted by institutional investors, including activist shareholders who strongly press for reform.

The trend of questioning how companies should be managed seems to be gaining further momentum. This year, too, disruption arose at shareholders meetings.

At the shareholders meeting of chemical manufacturer Taiyo Holdings Co., a Hong Kong investment fund proposed the dismissal of its board directors, and the president’s reappointment as a director was rejected, bringing about an unusual situation.

Despite solid overall business results, shareholders raised questions over the future prospects of the company’s medical and pharmaceutical businesses and the dysfunctional state of the board of directors.

Meanwhile, at the shareholders meeting of surgical supplies company Hogy Medical Co., an executive of a U.S. investment fund proposed appointing himself as an outside director, which was approved by a majority vote of 52.1%.

Companies are working to end cross-shareholding, which is seen as an indirect cause of inefficient management, and they can no longer rely on shareholders holding stocks over the long time. It is important to build dialogue with shareholders and leverage it to drive management reforms.

On the other hand, activist shareholders continue to submit a number of proposals aimed at securing short-term profits, such as share buybacks, dividend increases and business unit sell-offs. Management should neither be swayed by nor preoccupied with such proposals.

Additionally, it has been pointed out that companies nowadays tend to reduce the number of shares circulating in the market and engage in share buybacks, which can lead to short-term increases in stock prices. If companies are unable to allocate sufficient funds for wage increases and investment because of such behavior, they cannot be said to be fulfilling their social responsibilities.

For the overall development of the Japanese economy, it is crucial that companies continue to achieve mid- to long-term growth.

At the shareholders meeting of Nippon Steel Corp., three proposals were submitted by shareholders, including a demand for corrective measures regarding the negligent management of listed subsidiaries and a review of the remuneration for the president and others. However, all of the proposals were rejected.

Now that the acquisition of United States Steel Corp. has been successfully completed, the company has been proceeding with its growth strategy, and this probably resulted in a greater understanding among shareholders.

Companies should devise strategies that will allow them to break out of the current situation in which they settle for low profits.

(From The Yomiuri Shimbun, June 30, 2025)