Proposed Changes to Japanese Shareholder Proposal Rules

Apr 27, 2026, 05:20

Introduction

The Japanese government is considering changes to the law to increase the requirements for shareholders who want to submit formal proposals, following requests from companies and legislative groups.

Main Body

Currently, shareholders can submit proposals if they hold either 1% of voting rights or 300 voting units for six months. However, critics argue that the 300-unit limit is no longer strict enough because stock splits and smaller share sizes have made it cheaper to enter. As a result, a record 52 companies received activist proposals last June, continuing a trend that began with corporate governance reforms in the mid-2010s. To address this, a parliamentary group plans to advise Prime Minister Sanae Takaichi on raising these limits and restricting proposals related to business operations. A Justice Ministry panel has suggested two main options: removing the unit-based rule entirely to require a strict 1% voting share, or increasing the 300-unit minimum. While some business groups have asked for a higher 5% threshold, these specific suggestions are not currently being considered. Opinions on these changes are divided. Some investment firms, such as Maso Capital, claimed that limiting shareholder engagement could slow down corporate reform. On the other hand, analysts from the Daiwa Institute of Research asserted that removing the unit-based rule would mainly affect individual investors rather than large institutional activists. Meanwhile, the Takaichi administration is trying to balance attracting foreign investment with long-term domestic growth, emphasizing that companies should invest more in wages and human capital rather than focusing only on short-term investor returns.

Conclusion

The Japanese Justice Ministry is now seeking public feedback before introducing a bill to parliament next year to update the Companies Act and tighten the rules for shareholder proposals.

Vocabulary Learning

activist (n.)

proponent of change / a person who campaigns for political or social change活躍分子

Example:A record 52 companies received activist proposals last June.

engagement (n.)

participation or involvement / the act of being involved in an activity參與

Example:Limiting shareholder engagement could slow down corporate reform.

institutional (adj.)

relating to an organization or institution機構的

Example:Large institutional activists.

proposal (n.)

suggestion / a plan or idea presented for consideration建議

Example:Shareholders can submit a proposal if they hold either 1% of voting rights or 300 voting units.

threshold (n.)

minimum level / the point at which something begins to happen門檻

Example:Some business groups have asked for a higher 5% threshold.

Sentence Learning

As a result, a record 52 companies received activist proposals last June, continuing a trend that began with corporate governance reforms in the mid-2010s.

Relative Clause: The clause 'that began with corporate governance reforms' provides essential background information about the trend, specifying when it started. It is a restrictive relative clause that modifies 'trend'.關係子句: 此子句為關於趨勢何時開始的必要補充資訊，作為限制性關係子句修飾 'trend'。

While some business groups have asked for a higher 5% threshold, these specific suggestions are not currently being considered.

Passive Voice: The phrase 'are not currently being considered' uses passive voice, indicating that the suggestions are the object of the action, not the subject. It emphasizes the state of the suggestions rather than who is acting.被動語態: 此句使用被動語態，表示建議是動作的受詞，而非主語，強調建議目前的狀態。

On the other hand, analysts from the Daiwa Institute of Research asserted that removing the unit-based rule would mainly affect individual investors rather than large institutional activists.

Contrastive Conjunction: The sentence uses 'On the other hand' and 'rather than' to contrast two viewpoints. 'On the other hand' signals an alternative perspective, while 'rather than' compares two options, showing preference.對比連詞: 此句使用 'On the other hand' 與 'rather than' 來對比兩種觀點，前者表示另一種看法，後者比較兩個選項並表明偏好。

Meanwhile, the Takaichi administration is trying to balance attracting foreign investment with long-term domestic growth, emphasizing that companies should invest more in wages and human capital rather than focusing only on short-term investor returns.

Temporal Linking Word: The word 'Meanwhile' functions as a temporal connector, indicating that the following information occurs at the same time as the previous context. It sets the scene for the administration's actions.時間連詞: 此句使用 'Meanwhile' 作為時間連詞，表示後續資訊與前文同時發生，為行政行動設定背景。

However, critics argue that the 300-unit limit is no longer strict enough because stock splits and smaller share sizes have made it cheaper to enter.

Cause-Effect Conjunction: The conjunction 'because' introduces a reason for critics' argument. It links the cause (stock splits and smaller share sizes) to the effect (the limit being less strict) in a causal relationship.因果連詞: 此句使用 'because' 來說明批評者的理由，將原因（拆股與較小股額）與結果（限制不夠嚴格）連結，形成因果關係。