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Japan is moving to tighten the criteria for submitting shareholder proposals, signaling a growing backlash from companies frustrated by intensifying pressure from activist investors calling for change.
The push for legislative change is being driven by lawmakers and business lobbies who argue that current rules have allowed what they describe as abusive proposals, forcing companies to divert resources away from long-term growth to deal with short-term investor demands.
An influential group of lawmakers from Japan’s ruling party plans to recommend raising shareholder proposal thresholds and restricting proposals on business execution to Prime Minister Sanae Takaichi next month.
“Japan’s rules on shareholder proposals and activism may be too lax, leaving more companies facing tough demands at shareholder meetings,” Junichi Kanda, a key member of the parliamentary group, told reporters last week.
