Japan Small & Mid-Cap Sector "Shareholder voting at companies with March..."

Research evidence excerpt

Japan Small & Mid-Cap Sector "Shareholder voting at companies with March..."

Global Research

30 June 2026ab

Japan Small & Mid-Cap Sector Equities

JapanShareholder voting at companies with March

fiscal year-ends Industrial

Mariko Watanabe

Analyst

mariko.watanabe@ubs.com

Low approval of directors at companies with weak share price performance +81-3-5208 6297

At shareholder meetings of all listed companies held between July 2024 and June 2025,

the average director approval rate was 95.8%, with a median of 97.78%. In

stewardship practice, director appointments with approval rates of 90% or higher, a

benchmark indicating shareholder confidence, accounted for 89.5% of the total, while

directors with approval rates below 80%, a level often viewed as raising no-confidence

concerns, represented 2.7%.

Companies that ended their fiscal years in March 2026 held their general shareholder

meetings by the end of June, and among our coverage of small & mid-cap companies,

the median approval rate for proposals to appoint directors declined to 96.57% from

97.45% a year earlier. Over the past year, eGuarantee (8771, Buy, ¥2,000 price target)

recorded the largest increase in approval rates, while Sanwa Holdings (5929, Buy,

¥5,000 price target) recorded the largest decline. From a governance perspective, none

of the companies had an approval rate below 80%, a level that may indicate shaky

shareholder confidence in management, but many companies with declining share

prices, directors from founding families, directors who are also officers at major

shareholding companies and directors from business partners had approval rates in the

80-90% range. Director approval rates were generally up at companies whose share

prices rose or that significantly enhanced shareholder returns.