Sekisui House, shareholders' meeting to be held under a declaration of emergency
April 16, 2020
For Sekisui House's meeting of shareholders scheduled for April 23, 2020, the shareholders making a shareholder proposal to the company made on April 16 a provisional disposition to the Osaka District Court for the postponement of the shareholders’ meeting. Osaka Prefecture is one of the designated areas for a state of emergency, and the shareholders have argued that it is disrespectful to hold the event while shareholders are less likely to join. The company is however poised to hold the event, saying that the postponement will have a significant impact.
Sekisui House originally planned to hold the general meeting of shareholders at the Westin Hotel Osaka, which is adjacent to its head office in Kita-ku, Osaka. However on April 15, 2020, the company received a notice from the hotel saying that the hotel would not be able to provide a place, so the company secured a venue in Umeda Sky Building where the head office is located.
The new venue will have a very limited number of seats available compared to last year due to social distancing required. Mr. Fumiyasu Suguro, one of the shareholders making the shareholder proposal and a director of Sekisui House, said, "It is unfair to limit the number of seats and the meeting should not be held in the first place under this situation."
Even after the surge in infections of COVID-19, Rakuten (March 27) and GMO Internet (March 30) held a shareholders' meeting by putting in place stricter restrictions and checks on shareholders. However, both shareholders’ meetings were held before the declaration of a state of emergency on April 7, 2020. Osaka Prefecture is one of the seven prefectures designated for a state of emergency. The Osaka government is calling for “stay at home” prefecture-wide and for an eight-percent reduction in human contact.
Shareholder proposal attracting overseas shareholders
Why is the company so insistent on holding it? One of the reasons is that the shareholder proposal is gaining momentum. It was in mid-February when the shareholder proposal was made. U.S.-based slate directors have helped to take in overseas shareholders who account for thirty percent of the shareholder base, and also from within Japan Sharp Corp. has decided to vote for them.
Earlier this month, Glass Lewis, a leading U.S. voting advisory firm, recommended to vote against the four representative directors including Chairman Toshinori Abe and Vice Chairman Shiro Inagaki. The Institutional Shareholders Services (ISS) also recommended that shareholders vote against Mr. Abe and Mr. Inagaki. On the other hand, both companies recommended to vote for Mr. Brady from the dissident slate.
The shareholder proposal seeks to replace the entire board, but "the real objective is to normalize the company situation in which the four representative directors control the company as they like," said Mr. Suguro. The focus is whether Mr. Abe and Mr. Inagaki will be reelected. Since the shareholder proposal is gaining momentum, if the meeting of shareholders is postponed, it could benefit the shareholders.
The key to the proxy fight is floating voters that have not yet made their voting decisions. However, some shareholders may not want to attend the shareholders' meeting where hundreds of people will gather, and some shareholders will not be able to vote online. Sekisui House may have to learn to better treat its stakeholders.