Toshiba plans to hold EGM by April-end to address activist challenge

Toshiba Corp said on Friday it plans to hold an extraordinary shareholders meeting (EGM) by the end of April to vote on proposals from overseas hedge funds, in what would be a high-profile test case for shareholder activism in Japan.

Shareholders on the register as of Feb. 1 will be eligible for voting, the Japanese industrial conglomerate said in a statement.

The date of the EGM has not been decided, but it should be held within three months from the Feb. 1 reference data in accordance with regulations, it said. A source familiar with the matter told Reuters it is likely to be in March.

The decision follows separate EGM demands from two large shareholders. It is rare for Japanese companies to receive such requests from shareholders in a country whose corporate culture is widely regarded as complacent.

Singapore-based Effissimo Capital Management, Toshiba's biggest shareholder, is calling for an investigation into the firm's annual general meeting (AGM) last year, at which it said the voting rights of several shareholders were compromised.

Reuters reported a Japanese government adviser told the Harvard University endowment fund that its vote at Toshiba's AGM could be subject to a regulatory probe should it vote against the firm's management.

U.S. hedge fund Farallon Capital Management, which owns more than 5% of Toshiba, said the firm should seek shareholder approval over what it said is a change in investment strategy.

A third-party probe requested by Effissimo, if approved, could further delay Toshiba's return to the Tokyo Stock Exchange's prestigious first section, said another source.

The sources declined to be identified because talks on the matter are private.

Toshiba's application for the return has been under review since April. The company was relegated to the second section in 2017 after massive writedowns at its U.S. nuclear power business caused liabilities to exceed assets - a condition for automatic demotion.