Toyota's controversial new share class approved despite concerns of foreign funds
Toyota Motor shareholders approved a controversial new class of stock on Tuesday that will bring in more long-term investors, but which faced opposition from foreign funds as the shares are only readily available in Japan.
About 75 per cent of shareholders voted in favour of allowing the new shares, which will be unlisted and must be held for five years. After that, shareholders can convert them into common stock or have Toyota buy them back at their issue price.
Toyota has argued its business requires long-term product planning and has designed the plan to lift its ratio of retail investors committed to the company. Individual investors account for 10.5 per cent of its shares, below the 20 per cent average for listed Japanese firms.
"The approval rate is quite high," said Yo Ota, a corporate lawyer at Tokyo-based law firm Nishimura & Asahi. "If this move leads to further diversification, that would be welcome."
But the controversy over the scheme is likely to discourage others, analysts said, adding that any company planning a similar move would also need a robust balance sheet. To prevent dilution of common stock, Toyota will buy back the same number of shares.
The approval rate is quite high. If this move leads to further diversification, that would be welcome
Japan's biggest carmaker required a two-thirds majority for approval and the vote had been seen as close as foreign investors account for about 30 per cent of its shares.
