Japan's asset managers seek to vote more independently
Outside advisers, limited personnel moves could contribute to better corporate governance
TOKYO -- Japanese asset management firms are taking steps to vote more impartially as shareholders at members of the same corporate group or companies with which they do business.
Asset Management One, Nissay Asset Management and others have established third-party committees that give independent advice related to voting issues involving group companies and clients, hoping to eliminate possible conflicts of interest. At some money managers, including Mitsubishi UFJ Trust and Banking, third-party committees oversee all exercises of shareholder voting rights.
These committees often include outside directors and experts. Two of the three members on Nissay's third-party panel established in May are independent outside directors. Insurer Dai-ichi Life Holdings will add two outside directors to its committee in July, a management consultant and a lawyer.
Asset managers often consult proxy advisers when voting as shareholders in group companies and clients. Daiwa Asset Management considers a proxy adviser's opinion before voting on issues related to parent Daiwa Securities Group as well as companies to which it consigns sales of investment trusts. When voting records are released the month after shareholders meetings, such votes are marked to show that different voting procedures were used than for other investments.
Asset managers also are restricting personnel changes to limit conflicts of interest. Nomura Asset Management in September prohibited personnel reshuffling between its investment and research divisions and Nomura Securities' investment banking arm. The latter has deep ties to companies it helps with fundraising or acquisitions, creating potential for conflicts of interest should bankers move into fund management. Sumitomo Mitsui Trust Bank has limited the reassignment of personnel between its corporate sales and investment divisions.
Asset management companies are urged to adopt safeguards against conflicts of interest as part of the stewardship code for institutional investors, which the Financial Services Agency revised last month. The hope is that having more impartial asset managers will contribute to better corporate governance by ensuring that shareholder decisions are based on actual earnings and management performance rather than other considerations.
Adhering to the stewardship code offers other benefits as well, such as boosting the credibility of an asset management firm, which can yield can more contracts from pension funds and other institutional investors.