JAPAN’S normally sleepy shareholder meetings are set for a shake-up this year as a new corporate governance code encourages disgruntled investors to speak out and forces companies to take demands for better returns more seriously at the annual general meetings (AGMs).

    Combined with a separate “stewardship” code, which holds fund managers accountable for how they vote, the new rules mean CEOs of poor market performers like electronics maker Sharp Corp. may face unusually strong dissent in the proxy season starting today.

    “The weight of any opposition vote is now heavier,” said Nomura Securities analyst Kengo Nishiyama, who specializes in corporate governance issues.

    The governance code which took effect this month requires listed firms to appoint multiple outside directors and calls for shareholder engagement, addressing criticism that Japan’s firms neglected investors.

    It also says companies must consider the views of shareholders who oppose management-backed proposals but are out-voted. While the guidelines are not legally binding, the Tokyo bourse requires listed companies to “comply or explain.”

    Sharp CEO Kozo Takahashi will come under particularly strong pressure at the company’s June 23 meeting, after weak sales of smartphone displays and TVs forced it to seek a second major bailout from its creditors.

    Takahashi won 97 percent support for election last year, so a significant drop could raise doubts over his leadership.

    Toshiba Corp., generally considered a well-run conglomerate, is also in hot water as a probe of past accounting irregularities has kept it from closing its books for the year through March and forced it to suspend a year-end dividend.

    To appease investors, sources have told Reuters, Toshiba is considering a special dividend later. (SD-Agencies)