Activist-backed proposal for Toshiba probe received 58% of shareholder votes By Reuters

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© Reuters. FILE PHOTO: Reporters raise their hands for a question during a news conference by Toshiba Corp CEO Satoshi Tsunakawa at the company headquarters in Tokyo

By Makiko Yamazaki

TOKYO(Reuters) – About 58% of Toshiba (OTC:) Corp shareholders last week voted in favour of an independent probe into allegations that investors were pressured ahead of last year’s annual general meeting, a breakdown of the results showed on Tuesday.

The win for Effissimo Capital Management, Toshiba’s biggest investor with a 9.9% stake, marked only the fourth time an activist shareholder motion has won approval in Japan and the first at a major household name.

The motion at last Thursday’s extraordinary general meeting was passed on the day but Toshiba is disclosing the voting tally for the first time.

The results suggest that a substantial number of passive Toshiba investors sided with activist investors. Singapore-based Effissimo and other activist investors are estimated to account for about 25% of Toshiba’s shareholder base.

The vote is also notable for the gravity of allegations that emerged after last year’s AGM. Some Toshiba shareholders had felt pressure to vote in line with management’s wishes on director nominations after contact from a government adviser or the trade ministry, sources have previously told Reuters.

Pressure on Toshiba Chief Executive Nobuaki Kurumatani, who resisted calls for an independent probe, is expected to grow and some investors have said any finding that shareholders were pressured could cost him his job.

Reuters has reported that the Harvard University endowment fund had been told by a Japanese government adviser it could be subject to a regulatory probe if the fund did not follow management’s recommendations at last July’s AGM.

As a result, the fund abstained from voting and later learnt there was no basis for any probe, sources have said.

A second proposal from U.S. hedge fund Farallon Capital Management, Toshiba’s second largest shareholder, received 39% of shareholder votes. The fund wanted the board to present a five-year capital policy plan or make certain returns to shareholders.

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