Shareholder rights in Japan must be upheld – ACCR comment

ACCR is responding to comments made by Nippon Steel’s CEO advocating for the abolition of certain shareholder rights in the Companies Act, as an interim draft proposal for changes to the legislation was published yesterday.

The Japanese Ministry of Justice’s Legislative Council met on 18 March to agree options for changes to the Companies Act that would make it harder for shareholders to file proposals at company AGMs. Options reportedly include abolishing the “300 voting rights” threshold, a key right of shareholders.

Last week at the Council for Japan’s Growth Strategy meeting, hosted at the Prime Minister's Office, Nippon Steel’s CEO Mr Eiji Hashimoto also advocated to remove this right. He called it “unreasonable, forcing unnecessary responses to proposals that are almost never passed,” saying “it should be abolished promptly.”

ACCR is concerned that scrapping the 300 voting rights threshold will significantly constrain the ability of even large institutional investors to file proposals. Very few investors have holdings in Nippon Steel over 1% and foreign investors filing proposals via the 1% threshold, individually or as a group, must make complex submissions under the Foreign Exchange and Foreign Trade Act prior to making a proposal.

Commenting on the statements by Nippon Steel, Martin Norman, Head of Stewardship, Global, ACCR, said:

“Large institutional investors have a mandate to invest over the long term. It is counterproductive to restrict their rights to file proposals on issues that are highly relevant to shareholders. This also goes against the spirit of Japan’s Corporate Governance Code, which prioritises ‘securing the rights and equal treatment of shareholders, and dialogue with shareholders.’

“Rules for filing shareholder proposals in Japan should align with international best practice, as was intended when they were designed. Other jurisdictions have developed effective checks and balances to ensure that shareholder proposals are appropriate while protecting shareholders’ rights.

“ACCR has filed and co-filed shareholder proposals in Japan, including with Nippon Steel, facilitating sincere and productive dialogue between companies and shareholders, for the benefit of all parties involved.

“Given ACCR’s recent history of engagement with Nippon Steel, we are concerned to see these comments from the company’s CEO, which create unnecessary friction between shareholders and Nippon Steel when investors in Japanese equities are seeking certainty during significant domestic and global upheaval. We believe Nippon Steel could use its privileged position, as one of only eight committee members at the Cabinet-level meeting, to advocate for matters which more clearly contribute to Japan’s growth strategy.”

Background

On the changes to the Companies Act

The Japanese Ministry of Justice’s Legislative Council is currently considering multiple proposed changes to the Companies Act which may negatively impact shareholder rights in Japan. A meeting to approve an interim draft of proposed changes to the Companies Act was held on 18 March. The interim draft is likely to be available for public comment from late March to early May. For further information on proposed changes to shareholder rights in Japan, please refer to Client Earth’s briefing.

On the “300 voting rights” threshold

300 voting rights equate to 30,000 shares at JPX-listed companies, including Nippon Steel. One unit of 100 shares equals one voting right. Under the Companies Act, shareholders may currently file a proposal if they continuously hold at least 1% of the total voting rights or at least 300 voting rights in the preceding six months.

On Nippon Steel’s recent advocacy regarding changes to shareholder rights in Japan

Nippon Steel also advocated in July 2025 for the same voting rights to be abolished, and for changes which could permit companies to limit discussion of shareholder proposals at AGMs based on the results of prior electronic voting or for procedural reasons.