Shareholder activism has surged in Japan over the past few years. In addition to the increasing number of activist campaigns, a record 65 Japanese companies received shareholder proposals during this year’s AGM season. This is reflective of the government’s corporate governance reform, such as the introduction and revision of the stewardship code and corporate governance code serving as a tailwind. Moreover, the shareholder composition of several Japanese listed companies has significantly changed in the past few decades, with more foreign investors having substantial holdings, implying Japanese companies are engaging more with the international investor audience and media.
Our Tokyo office was invited by Keizai Koho Center (Japan Institute for Social and Economic Affairs, KKC), an organization of Keidanren (Japan Business Federation), to speak on shareholder activism in Japan and its implications. The lecture was part of KKC’s international communications series and attracted strong attendance by nearly 70 representatives, mainly from the Corporate Communications and Investor Relations department of leading Japanese companies.
Jochen Legewie and Minako Otani of Kekst CNC gave a presentation on the globalization of Japanese companies' Investor Relations and PR functions, an overview of shareholder activism in Japan, global shareholder activism trends, prevention and preparation for dealing with activism and challenges and recommendations for Japanese companies.
The presentation emphasized three crucial steps for Japanese companies to consider to best prepare for an activist situation:
- Become your own activist and assess vulnerabilities
- Enhance Investor Relations programs
- Develop scenario-based preparedness programs.
We underlined that thorough preparation is key in dealing with activists and that other shareholders are the most important shareholders in such situations. By considering these factors and taking appropriate measures, Japanese companies can turn a potential activist “threat” into a growth opportunity and secure stronger global competitiveness.