Global investor group recommends cross-shareholdings in Japanese companies to be reduced to zero in principle | Reuters

TOKYO (Reuters) – The Asian Corporate Governance Association (ACGA), which includes institutional investors from around the world, said on the 26th that Japanese companies should accelerate the reduction of cross-shareholdings and, in principle, reduce their holdings to zero. We have summarized the recommendations.

Based on the securities reports of TOPIX 500 companies, ACGA states that as of the end of March 2023, 460 companies hold cross-shareholdings, and 28% of companies have a ratio of over 10% of their net assets. pointing out. Although reductions are progressing, the pace is slow and “this could hinder improvements in capital efficiency.”

The government also expressed concerns from a corporate governance perspective, such as the possibility that shareholders might not strictly hold management accountable, and recommended establishing a special committee for companies with cross-shareholdings of 5% or more of their net assets. I suggested it as an idea. It recommends that the board of directors and auditors take on the role of scrutinizing plans for selling stocks, how they will be achieved, and how proceeds from sales will be used.

It also called for disclosure of more specific information on cross-shareholdings and the status of board supervision.

ACGA includes 101 organizations from around the world that engage in business and investment in Asia, including pension funds and sovereign wealth funds. In October 2022, we compiled recommendations regarding the diversification of boards of directors of companies listed on the Prime List of the Tokyo Stock Exchange. More than 20 organizations have co-signed the proposal, including Japan’s Corporate Pension Fund Association, Hong Kong investment fund Oasis, and British asset management firm Schroders.

Our Code of Conduct: Thomson Reuters “Principles of Trust” New Tab opens new tab