On 26 April 2024, ACGA released an open letter on strategic shareholdings in corporate Japan.

ACGA and its undersigned members are issuing this letter to underscore the need to accelerate the further reduction of strategic investments, which we believe in principle should be zero for most companies. We believe strategic investments can have a detrimental impact on companies’ capital efficiency, lead to weak corporate governance, and in some cases result in anti-competitive company behaviour.

We have made key recommendations to advance the governance of companies with strategic investments that we believe would help improve the governance and financial returns of the relevant companies, which would ultimately be positive for the overall Japanese economy. Examples include but are not limited to:

1. Implementation of clear targets to reduce strategic shareholdings to zero.
2. Proposal to strengthen Board of Directors and Audit Board Members’ roles in the oversight of strategic shareholdings.
3. Improved disclosure on state of strategic shareholdings including the rationale for maintaining the holdings.
4. Declaration that any divestment by the counterpart would not be met by a loss of benefit or detriment to shareholders.
5. Disclosure of policies and decisions with regards to voting of strategic shareholdings.
6. Disclosure of plans on how to utilize proceeds from the divestments as part of a mid-term capital management plan.

ACGA Open Letter (English)

ACGA Open Letter (Japanese)