Japan govt, ruling LDP plan to raise requirement for requesting extraordinary shareholders meeting to over 5% voting rights from current 3%, Nikkei re...

Japan’s government and the ruling Liberal Democratic Party (LDP) are reportedly considering raising the threshold for requesting an extraordinary shareholders meeting from the current 3% of voting rights to over 5%, according to the Nikkei. The proposed change reflects growing concerns among corporate leaders and lawmakers about the increasing influence of activist investors, who have pushed for governance reforms.

The move aligns with broader efforts to revise shareholder proposal rules, including potential changes to the eligibility criteria for submitting proposals. Currently, shareholders with either 1% of voting rights or 300 voting units—often equivalent to a small number of shares—can submit proposals. Critics argue that the low threshold has enabled activists to push for short-term gains at the expense of long-term corporate strategy.

The Ministry of Justice is still seeking public input before drafting a formal bill, with no timeline yet announced for legislative action. Analysts remain divided on the potential impact of the proposed changes. Some suggest that raising the threshold may limit the influence of smaller investors and activist funds, while others argue that most major activists hold more than 1% of target companies.

The debate highlights the tension between shareholder engagement and corporate governance in Japan, as companies balance investor demands with long-term strategic goals.