The Pension Fund Association (PFA), the largest and most influential institutional shareholder body in Japan, has published guidelines for its members when exercising voting rights against anti-takeover strategies adopted by Japanese companies without shareholder consent.
The guidelines suggest pension funds approve anti-takeover measures only when a company provides an explanation as to how they will increase shareholder value; the measures are approved by a meeting of shareholders; the measures are assessed by an independent third party, such as external board members; and, lastly, when the measures are subject to renewal by a shareholders’ meeting every two to three years.
The guidelines suggest shareholders resist anti-takeover measures introduced solely by the resolution of board members – indeed, in such cases, the PFA advises its members to vote against the reappointment of directors, unless they explain the strategy behind the measures – or by the issuance of golden shares or non-voting stocks, or through the issuance of shares whose record date can be determined by the company.
“The PFA guidelines make clear that it approves only anti-takeover strategies with sufficient explanation about how it would increase long-term shareholder value, and the details of the strategies exclude unfair intention of the management,” explains a spokesman for Mizuho Corporate Banking in Tokyo.