Electronic Voting Platform, etc.
Benefits for Institutional Investors
There are four possible benefits of participation by institutional investors.
Centralized Portfolio Management
Institutional investors participating in the platform will use a dedicated screen to give instructions for the exercising of voting rights, as described above. The site allows institutional investors to access information on the AGMs of all participating issuing companies in which they hold shares with a single login, eliminating the need to repeatedly log in and log out. On the screen, only the issuing companies in which shares are held are listed, and by clicking on the company name, the number of potential shares can be confirmed and instructions for the exercising of voting rights can be given for each account held in relation to the issuing company's general meeting of shareholders.
In addition, institutional investors will be able to start the process of confirming their accounts and the number of potential shares ahead of schedule. Previously, these checks were conducted immediately prior to the dispatch date of the notice of convocation, but now they can be conducted using CSV files provided by the platform from approximately 10 days after the record date, enabling the workload to be spread out.
Extension of the Period for Reviewing the Agenda through Realization of STP
The platform allows institutional investors to start giving instructions from the day the notice of convocation is sent out. In addition, since the results of instructions for the exercising of voting rights are directly sent to the administrator of the shareholder register, instructions can be given until the exercise deadline set by the issuing company. Therefore, institutional investors have more time to consider proposals than before.
Ability to Confirm Exercise Status
Since instructions for the exercising of voting rights sent through the platform are recorded on the site, institutional investors can check the contents at any time. In addition, since the transmission status can be checked at any time to see if it was correctly processed by the system, the traceability aspect in particular has been greatly improved compared to conventional exercising of voting rights that were written.
Aggregation and Reporting Support
Institutional investors can aggregate the content of instructions for the exercising of voting rights according to conditions set at their own discretion. This report can be downloaded electronically (e.g., in Excel format) or printed out on paper.
Advantages for the Issuer
There are four main advantages for the issuing company.
Early Understanding of Exercise Results
Although the rate at which institutional investor votes are collected on the platform, from the perspective of the issuing company, varies depending on the shareholder composition of the issuing company, in general it is as shown in [Figure 1]. When exercising voting rights in writing, most institutional investors' votes are exercised immediately before the general meeting, making it difficult for the issuing company to understand the approval or disapproval trends at an early stage. The platform sends the results of instructions (progress) to the administrator of the shareholder register twice a day, making it possible for the issuing company to, for example, check the daily increase in the number of times a particular shareholder has exercised their rights, and quickly understand the results at an early stage.
The platform transmits voting results to the administrator of the shareholder register, but in response to requests from many participating issuers to provide information directly to them, the ICJ launched "ICJ Online" from the March 2008 General Meeting to provide voting results directly on the Web as preliminary reports based on data processed independently from the platform.
The website provides twice daily information on the aggregate number of votes for and against each agenda item and each nominee shareholder, as well as the status of changes in the number of times voting rights are exercised. We have received positive feedback from institutional investors that the site is helping to improve the efficiency of shareholder meeting operations by making it easier for them to understand the approval or disapproval trends for each agenda item.
[Figure 1] Graph of the Change in Institutional Investor Votes on the Platform
Enhancement of Information Dissemination
In recent years, we have seen issuers post additional information on the convocation notice during the AGM period via platforms, their own websites, or the TDnet system of the stock exchange (see [Figure 2]).
The platform allows issuers wishing to post additional information to communicate it to their beneficial shareholders through the screen for exercising rights within 24 hours of receipt of the additional document, in principle. The platform is an ideal medium for issuers wishing to deliver information to beneficial shareholders quickly and reliably, for example, when making web amendments to the notice of convocation communicated on the website, or when preparing non-statutory supplementary information in preparation for opposing votes.
[Figure 2] Examples of Additional Information
| 1 |
Supplementary Explanation on Proposal for Election of Directors |
| 2 |
Supplementary Explanation on Termination Payment due to Abolition of Retirement Benefits for Directors and Corporate Auditors |
| 3 |
Supplemental Explanation to the Opposition Recommendation of the Advisory Company (Appointment of Auditors) |
| 4 |
Opinion expressed in Opposition to the Reappointment of Certain Officers (Election of Directors) |
| 5 |
Supplementary Explanation on Independence of Candidates for Outside Corporate Auditors |
| 6 |
Issuance of Stock Acquisition Rights as Stock Options |
| 7 |
Revision of Remuneration Limit for Directors |
- For handling on the platform, the title of each document has been modified.
Enhancement of Shareholder Services
As mentioned in the institutional investor benefits section, the platform will provide institutional investors with more time to consider proposals than ever before. In other words, the participation of issuers on the platform improves the environment for institutional investors to exercise their rights, and thus provides an opportunity to enhance shareholder services.
It should be noted that in recent years, institutional investors are said to be required to provide rational reasons even when voting in favor of a proposal. It has been pointed out that in cases where there is not enough time and information to consider a proposal, there has been an increase in the number of cases where institutional investors are forced to vote against the proposal.
This trend is expected to intensify in the future, partly due to the impact of the publication of voting instructions by domestic institutional investors that started in 2010. Thus, the enhancement of shareholder services through platform participation will also lead to efforts by issuing companies to reduce the risk of opposing votes due to reasons unrelated to the content of the proposal.
Increasing the Rate of Use of Electronic Voting
In Japan, the electronic voting system for general shareholders' meetings started in 2002, and the number of issuing companies adopting this system has increased significantly since 2006, when the current platform started operating. Of these, approximately 60% (390 companies) are using both the platform and the electronic voting system.
Because the electronic voting system grants access to shareholders on the shareholder register, institutional investors who are not nominee shareholders cannot use the system, and the users of the electronic voting system operated by the shareholder register administrator had to be mainly individual shareholders.
However, since institutional investors are now able to use electronic voting systems via the current platform, the percentage of electronic voting in the exercise of voting rights has dramatically increased for companies adopting the platform.
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