Japan Banks Botch Postal Shareholder Votes for 1,300 Firms
Japan Bank Mishandles Postal Shareholder Votes for 1,000 Firms
(Bloomberg) -- Two Japanese providers of shareholder services mishandled postal votes for more than a thousand companies ahead of annual general meetings held this year, underscoring risks stemming from the nation’s continued reliance on manual processes.
Sumitomo Mitsui Trust Bank Ltd. failed to count all mailed-in ballots for 975 companies, while Mizuho Trust & Banking Co. found omissions affecting 371 firms, the lenders said Thursday. Both said the errors didn’t affect the results of resolutions adopted at the meetings.
New Prime Minister Yoshihide Suga has vowed to accelerate his predecessor’s efforts to adopt digital technology in a nation where physical paperwork remains rife. The incident also potentially undermines efforts by the government and businesses to bolster corporate governance and give shareholders a bigger voice.
Japan remains heavily reliant on postal voting for shareholder meetings. Only 14% of institutional investor votes were cast digitally in the nation in 2017, while more than 90% were done that way in the U.S. and U.K., according to the Ministry of Economy, Trade and Industry.
Shareholder services are a key business for trust banks in Japan. The two lenders -- units of Sumitomo Mitsui Trust Holdings Inc. and Mizuho Financial Group Inc. -- operate a joint venture that handles vote counting and other processes.
Sumitomo Mitsui Trust began investigating the issue after a Toshiba Corp. shareholder said its vote wasn’t reflected in the tally, even though it sent the ballot three days before the deadline.
The bank said it should have counted votes that arrived before deadlines but were deemed null because they were post-dated as part of a long-standing arrangement with the postal service.
Japan Post expedites mail delivery during the shareholder meeting season so that the votes are handled on time. Deliveries take place a day ahead of the usual time, but the mail is still recorded as arriving on the originally scheduled date.
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