The spread of the novel coronavirus has restricted general shareholders meetings. But the trend of enhancing corporate value through dialogue with shareholders should not be stopped.
The season for general meetings of shareholders for companies that closed their books in March has passed its peak. Many companies have scaled down their meetings to prevent infections.
Toyota Motor Corp. requested its shareholders not to attend, and managed to reduce the number of participants to fewer than 10% of the previous year. The content of the meeting was released in a video. Attendance at Sony Corp.'s shareholders meeting was also reduced to about one-seventh of the previous year. NTT Corp. broadcast its meeting live over the internet.
In many cases, questions were limited and time was shortened compared with previous meetings.
This is to some extent inevitable to prevent infections. However, the meetings are important opportunities for shareholders to listen to explanations about management policies and the selection of directors. It is important that companies secure opportunities for dialogue with shareholders as much as possible.
Although an increasing number of companies used online video this time, in many cases the non-present shareholders could only watch. Only a few companies, such as SoftBank Group Corp., enabled them to ask questions and exercise their voting rights. It seems that companies are cautious due to fear of problems such as communications trouble.
It is said that shareholders are also concerned about being hindered from freely expressing their opinions. It is essential for companies to expand their information technology infrastructure and to devise ways to operate the meetings, aiming to step up their use of the internet.
One worry is that the coronavirus pandemic caused the meeting dates, which had been spread out, to converge again.
About 750 companies, or slightly more than 30% of the total, held their meetings on Friday, the peak day. This was up from last year's figure of 719 companies. If they are held on the same day, opportunities to attend and exercise voting rights could be restricted. How to spread out the dates of the meetings should be reviewed.
Such a meeting must be held within three months from the base date on which voting rights of shareholders are determined. Many companies set the base date at the end of March, to coincide with the end of their fiscal year. Companies hesitated to change the base date because those who sold their stocks after April might object to a change that aims to hold the meeting later.
It would be a challenge to make it easier to hold the meeting in July or later by extending the period between the end of the fiscal year and the meeting.
In 2014, guidelines were established to encourage institutional investors to actively exercise their voting rights. It is not rare now that life insurance companies and others cast negative votes after strictly examining proposals submitted by management. This should heighten a sense of alert in management and strengthen corporate governance.
Reforms should not be stalled by the influence of the coronavirus.
In the United States, calls have been made to break away from the shareholder-first principle. At the general meetings in that country, a growing number of shareholders are calling for consideration of the environment and tapping female talent. The meetings should function effectively to examine corporate management from a broad perspective.
-- The original Japanese article appeared in The Yomiuri Shimbun on June 27, 2020.
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