Update : Aug. 11, 2005
To provide a common online voting platform for all public companies and their institutional and foreign shareholders. Ideally, this should offer "straight-through processing."
TSE, Japan Securities Dealers Association and Broadridge Financial Solutions, Inc.
The platform has been in operation from companies with 2005 December Year-end.
Japanese law states that only registered shareholders have the right to vote. Most institutional investors cannot vote legally, but only instruct their tabulated ballots to registered shareholders. For overseas institutional shareholders, it has been extremely hard to vote for Japanese equities, because 1) information is very limited, 2) the voting season is abnormally concentrated in June, and 3) meeting information is generally received only a couple of weeks before the meeting. The difficulty is the same for Japanese institutional investors, who are gradually increasing as a proportion of the market.
In these circumstances in Japan , Japanese institutional investors have been under much pressure to vote from pension plan sponsors, particularly the Pension Fund Association, the most enthusiastic supporter of this project. Therefore, TSE considers it essential to provide an electronic tool for voting, particularly for institutional investors.
In 2002, the Commercial Law was revised to allow electronic voting. In response to this change, transfer agents developed systems using Internet tools. As of June 2009, approximately 600 issuers adapted to these new systems provided by their transfer agents. However, these systems are, as specified in the Commercial Law, designed for use by registered shareholders, and not for institutional investors whose names are not registered.
The system which TSE intends to provide is for institutional and foreign investors and therefore it will be necessary to consider particularities of voting operations for both institutional investors and foreign investors carefully. TSE has held discussions and intends to cooperate with Broadridge Financial Solutions, Inc. (Broadridge), a US company, which has an extensive experience in this field. Legal context in US and Japan is very different; however, operational flows are quite applicable to the Japanese market.
Broardige has been providing an Internet voting tool called ProxyEdge. Since this project was implemented, custodian banks have been enjoying an advantage of expense savings. However, corporate participation has been the key to maximum efficiency, and TSE and ICJ have spoken with more than 1700 issuers about our program. Investors also desire broad corporate participation.
TSE considers this is a national infrastructure-type project, though it is not mandatory for issuers to participate. Since TSE intends to build the global network for shareholders of Japanese equities, TSE hopes that the goal of this project of improving communication between issuers and investors. TSE also expects that this project will make a significant contribution to improving Japanese corporate governance.