Toshiba Corp’s top investor has called for an investigation of a botched meeting in July at which it says several shareholders were deprived of their vote, according to a letter to the conglomerate’s board seen by Reuters.
What began as a problem at Toshiba has widened into a larger scandal for corporate Japan, with the bank hired to count the votes, Sumitomo Mitsui Trust Bank, and Mizuho Trust & Banking Co. revealing details of counting errors at more than 1,300 firms.
Singapore-based Effissimo Capital Management, which owns around 10 percent of Toshiba, is the latest investor to join the outcry over the meeting, which has drawn attention to concerns about governance and treatment of foreign shareholders.
Effissimo and Toshiba both declined to comment Thursday.
The letter from Effissimo comes after Toshiba this month said more than 1,000 postal voting forms for its July 31 meeting went uncounted. Another Singapore-based fund, 3D Investment Partners, has already called for an investigation, saying its vote had not been fully recognized.
Effissimo said in its letter, which was dated Sept. 23., that Toshiba’s board should establish a committee made up exclusively of independent members to investigate whether the July meeting was conducted fairly.
“We have surveyed several dozen shareholders regarding this matter, and were able to confirm that there are in fact several shareholders that were unable to vote in a manner consistent with their intentions,” Effissimo said.
Sumitomo Mitsui Trust Bank, which was entrusted with counting the shareholder mail-in votes for the Toshiba meeting, said Thursday it had found 3.4 million uncounted shareholder votes at 975 client firms.
The trust banking arm of Mizuho Financial Group said it had found 22,848 voting forms were uncounted at 371 shareholder meetings where it had been involved in a joint venture with Sumitomo Mitsui Trust. Japan Stockholders Data Service Co., a company equally held by the trust banks, was in charge of handling voting forms.
Although both banks said the uncounted votes would not have impacted the outcome of any shareholder meetings, the scale of the miscounting is likely to concern investors.
The 1,346 companies at which vote-counting problems were found were almost all listed companies, the banks said, or roughly one-third of listed companies in Japan.
“We deeply apologize for the mishandling of the vote counting,” said Atsushi Kaibara, senior managing executive officer at Sumitomo Mitsui Trust, as he and another executive bowed in front of reporters at a news conference.
The bank attributed the miscounts to procedures during the peak season for shareholder meetings. To get more time to count the forms, it usually asks the post office to deliver them a day earlier, it has said.
But it would not issue receipts until the day after forms were delivered, meaning that some were mistaken for being past the deadline even though they were delivered on time, it said.
The procedure has been used for a “significantly long time,” Kaibara said, adding that the bank was now changing it.
Sumitomo Mitsui and Mizuho said separately that vote-counting should have been done based on the day when voting forms were actually received.
The practice has continued for about two decades but a lack of relevant past data is making it difficult for the banks to conduct a thorough review.
The revelation will raise concern about the handling of shareholders’ rights at a time when Japanese companies are seeking to improve corporate governance. It also underscores corporate Japan’s heavy reliance on paper.
Sumitomo Mitsui plans to consult with its client firms over possible compensation for the mishandling of votes.