One of Japan’s biggest providers of shareholder services failed to count some postal votes for about 1,000 companies ahead of annual general meetings, a person with direct knowledge of the matter has said.
Sumitomo Mitsui Trust Bank Ltd.’s omission to tally all mailed-in ballots for firms including Toshiba Corp. didn’t affect the results of shareholder resolutions at the gatherings, said the person, who wasn’t authorized to discuss the matter publicly ahead of an official disclosure.
The Sumitomo Mitsui Trust Holdings Inc. unit is expected to admit that its vote-counting procedure was inappropriate and may have infringed on shareholders' rights. It is believed that such errors have persisted for over 20 years.
The trust bank has been outsourcing the vote-counting work to Japan Stockholders Data Service Co., a joint firm set up with Mizuho Trust & Banking Co., a unit of Mizuho Financial Group Inc.
Japan remains heavily reliant on mail-in voting for shareholder meetings. Only 14 percent of institutional investor votes were cast digitally in the nation in 2017, while more than 90 percent were done that way in the U.S. and U.K., according to the Economy, Trade and Industry Ministry.
Sumitomo Mitsui Trust will hold a news conference to explain its findings, the Nikkei newspaper reported earlier.
"We will make an announcement as soon as our investigation is completed,” bank spokesman Masaki Iwatsu said by phone.
The bank has been investigating the vote-handling process after a Toshiba shareholder said their ballot wasn’t reflected in the tally even though they sent it three days before the deadline for the July 31 meeting.
In order to streamline operations during an intensive period when many firms hold their general shareholder meetings, Japan Stockholders records mail items as having been received the day after they were actually delivered.
As a result, voting cards delivered on a cutoff date were excluded as they were recorded as being received the next day.
The company has been using the same counting procedure for work outsourced by Mizuho Trust.
In addition to the intensive period, Japan Stockholders adopted the practice in July this year due to the spread of the new coronavirus.