Tokyo Stock Exchange to Create IT Platform to Allow Online Proxy Voting
The TSE and the Japan Association of Securities Dealers plans to build an IT platform to allow domestic and overseas investors to vote their proxies online, in conjunction with Automatic Data Processing (ADP) of the US, covering some 2,000 companies. The TSE, JSDA and ADP are expected to form a joint-venture within 2003, and to have the system up and running by June of next year, in time for next year's shareholder meetings. Ostensibly, investors will be able to vote their proxies for 1,500 TSE listed companies and 500 JASDAQ listed companies. Basically, however, it will be the companies themselves who apply for inclusion in the system, ostensibly at a cost which would represent less expenses than are currently being incurred by distributing printed proxy materials. Proxy voting via the internet first became legal from April 2002.
(TT's Take) According to the Shoji Homu Kenkyukai (Commercial Law Research Association), the most active opposing votes for shareholder proposals in 2002 were retirement payments for retiring directors (61.2% voted against), followed by profit distributions (40%-plus), elections of directors (40%-plus), payments for retiring statutory auditors (just under 40%), and selection of statutory auditors (30%-plus). For example, the PFA (Pension Fund Association) voted against retirement payments for directors for 212 companies last fiscal year, and voted against some 234 of a total 970 proposals.
William Christ, ex CalPERs director, called for an alliance between Japan's Welfare Pension System and US pension funds to exchange know-how on corporate governance and asset management. Christ is currently chairman of the Pacific Pension Institute, which has major Canadian pension funds and investment banks as members, such as CalPERs, British Columbia Public Pension, the Thailand Government Pension Fund, and JETRO as an honorary member. CalPERs has already funded some US$200 million in a joint venture with Sparx Asset Mangement to set up a "corporate governance" fund in Japan, and has been talking to the PFA (Pension Fund Association) about joint activities.
Such global coordination among pension funds, combined with online proxy voting, could place significantly more pressure on poorly performing mangement, and on Japan's corporate governance practices, to adopt practices more along the lines of global standards. Thus while Japanese companies ostensibly subject to the new Sarbanes-Oxley rules have been resisting, the same pressure is being applied from the private sector in general, and domestic as well as foreign pension funds in particlar.
