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Toshiba Board Chairman Ousted By Shareholders Over Company Pressure On Foreign Investors

Toshiba Board Chairman Ousted By Shareholders Over Company Pressure On Foreign Investors
Following confirmation that Toshiba Corp had colluded with the Japanese government to suppress interests of its foreign investors, shareholders of the company voted out its board chairman and one other director on Friday dealing a decisive blow in opposition to the company’s corporate governance and policies.
Analysts and market watchers described this event at the annual general meeting of the company as a watershed moment in the corporate governance history of Japan after insistence and pressure from activist Toshiba shareholders forced the company to start a probe into the pressures imposed by the company on overseas investors.
It is extremely rare for board members of Japanese companies, specifically those that are household names such as Toshiba, to be ousted in this manner.
"This result is a sign of a paradigm shift in Japan and will only embolden activist investors whether foreign or domestic," said Justin Tang, head of Asian research at United First Partners in Singapore.
However those supporting the board members at Japanese companies, particularly household names like Toshiba have argued that the company would ne be pushed back further by the failure of Nagayama to win re-election. The ouster, they argue, deprives the industrial conglomerate, which has been facing one crisis after another since 2015 when an accounting scandal severely hit the company, of experienced leadership.
After the departure of the company's previous controversial leader, the current CEO Satoshi Tsunakawa retook the post in April but has also said that he does not intend to remain on the post for long.
There was no disclosure of the breakdown of the vote. The company is still to name the head of the new board.
Compared to previous shareholder meetings of the company, the participation of foreign investors was much greater this time around as they viewed this opportunity as an important test case of corporate governance in Japan, said reports quoting unnamed sources within Toshiba.
Analysts and market watchers now are awaiting to see the government’s reaction to the AGM voting.
Japanese government has identified Toshiba to be of strategic importance as it is involved in manufacturing of defence equipment and nuclear reactors. The interference of the Japanese government in the corporate affairs of the company have been previously justified by Japan’s Trade Minister Hiroshi Kajiyama who has said that the policies implemented by the ministry with respect to the company were natural ones for the ministry to take.
"In general the hope is that corporate governance can be improved through discussions with shareholders and at the same time we work to secure the stable development of businesses and technology that are important from a national security standpoint," he told a regular news conference ahead of the AGM.
Activist investors of Toshiba were solely focused on short-term profits, accused Akira Amari, a former economy minister and an influential lawmaker in the ruling Liberal Democratic Party, on Thursday. Amari even suggested greater monitoring of such investors to ensure economics security of Japan.

Christopher J. Mitchell

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