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The activist-backed proposal for the Toshiba probe obtained 58% of the shareholders' vote

© Reuters. FILE PHOTO: Reporters raise hands for a question during a press conference held by Satoshi Tsunakawa, CEO of Toshiba Corp, at the company's Tokyo headquarters

From Makiko Yamazaki

TOKYO (Reuters) – Approximately 58% of Toshiba (OTC 🙂 Corp shareholders voted last week to conduct an independent investigation into allegations that investors were pressured ahead of last year's general meeting. A breakdown of the results came out on Tuesday.

The gain for Effissimo Capital Management, Toshiba's largest 9.9% investor, was only the fourth time an activist's shareholder proposal was approved in Japan and the first with a big name.

The motion at the Extraordinary General Meeting last Thursday was approved that day, but Toshiba is announcing the voting results for the first time.

The results suggest that a significant number of passive Toshiba investors are on the side of activists. Singapore-based Effissimo and other activist investors make up an estimated 25% of Toshiba's shareholder base.

The vote is also noteworthy for the seriousness of the allegations that emerged after last year's general meeting. Some Toshiba shareholders had felt pressure after contact with a government adviser or the Department of Commerce to vote on director nominations according to management's wishes.

Pressure is expected to mount on Nobuaki Kurumatani, Toshiba's chief executive, who defied calls for an independent investigation, and some investors said any finding that shareholders were pressured could cost him his job.

Reuters reported that the Harvard University Endowment Fund has been informed by a Japanese government adviser that it may be subject to regulatory investigation if the fund does not follow management recommendations at its annual general meeting in July.

As a result, the Fund abstained and later learned that there was no basis for an investigation.

A second proposal from US hedge fund Farallon Capital Management, Toshiba's second largest shareholder, received 39% of the vote. The fund wanted the board of directors to come up with a five-year plan of capital policy or bring certain returns to shareholders.

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