Market Report

Japan – Activists & the AGM season cheat sheet

by Nicholas Smith / Jun 5, 2019


Japan’s AGM season matters more than ever: last year had lots of proposals and almost all of them failed. This year seems to have fewer proposals – much more are getting settled through quiet engagement, allowing proposals to be retracted. When this quiet and reasonable approach fails, it is crucial that AGM proposals aren’t a paper tiger.

Why it matters: quiet engagement is best, so crucial proposals no empty threat
Last year, most, often eminently sensible, proposals were rejected. This year, Benthos is aware of large numbers of proposals being retracted after companies gave activists what they wanted to obviate the need for an AGM face-off. For the quiet and reasonable approach to work, it is crucial that AGM proposals aren’t made an empty threat by investors that meekly vote with management – foreign investors criticise but are demonstrably at least as guilty.

There’s no list of AGM proposals; Benthos searched out the best
Amazingly, the proxy giants don’t provide a list of proposals ahead of time – and nor can the TSE help. Benthos trawled through convocation documents so you don’t have to. JR Kyushu could slash WACC with more cheap debt, and as predominantly a real-estate play, could safely utilise it. Yorozu is interesting – and worrying – as a Murakami poison-pill removal proposal that’s getting rejected accusing “abusive acquirer”. Shinsei Bank is also of interest. There is disappointment in the proposals that didn’t happen: nobody proposed again that TBS trim its equity mountain or that megabanks vote the shares in their cross-shareholding hoards.