Proxy voting rights in investee companies are the most important right granted to shareholders in order to increase investee companies’ medium to long-term corporate value. Nikko AM Group exercises proxy voting rights independently and solely in the interests of our clients and beneficiaries in order to fulfill our fiduciary responsibilities. We believe that the three core factors behind sustainable, responsible investing - environmental, social, and governance (“ESG”) - are inherent to long-term value creation.
Nikko AM Group is an active owner, through its proxy voting process and engagement with its invested companies. As a long term investor, we believe an active dialogue and engagement with the management team, where appropriate, can both improve ESG performance and sustainability, and help an investor to more fully understand these efforts. Where we invest through passive strategies, we strive to incorporate ESG through the voting of proxies and the engagement process, where appropriate.
When conducting appropriate engagement or exercising voting rights, for example, if Nikko AM Group invests in an affiliated company, an supplier or a client (including companies with connections to a client), the possibility of conflicts of interest cannot be ruled out.
Nikko AM Group has established appropriate risk management and compliance frameworks to ensure that the interests of clients and beneficiaries are the top priority and that such conflicts of interest are appropriately managed if they arise. Portfolio managers, research analysts and governance specialists aim to avoid the occurrence of any conflicts of interest in compliance with our internal regulations.
In order to manage conflicts of interest and enable objective decision making in our exercise of voting rights, Nikko AM Group companies have established the control framework by combining means such as the advice of an independent third party, disclosure of proxy voting results to a customer (and obtaining of customer’s consent, as the case may be), segregation of divisions (seclusion of information), and management by installation of monitoring organization etc. to maintain appropriate voting decisions.
Nikko AM Group focuses in particular on the following criteria when exercising voting rights in order to conduct appropriate monitoring of corporate governance at each investee company and to increase shareholder value.
1. Shareholder Return
With regard to the disposition of surplus, Nikko AM Group places emphasis on ways to provide sufficient returns to shareholders over the medium to long-term and to provide adequate accountability to shareholders, taking into consideration not only total return ratio levels, such as shareholder dividends and stock purchase plans, but also the extent of internal reserves and investment plans based on future business plans.
2. Directors’ Execution and Supervisory Functions
The separation of execution and supervisory functions in management is necessary to realize good corporate governance. A company's board of directors must be appropriate in size and composition so as to ensure that thorough, balanced discussions take place and that appropriate decisions are made. Some of the directors should be independent directors.
3. Executive Compensation System
Nikko AM Group positively assesses executive compensation systems that offer incentives and increase shareholder value, such as those linked to company performance. At the same time, appropriate levels of compensation in terms of company performance and profit distribution to shareholders should be required while the system itself should ensure sufficient accountability to shareholders.
4. Company Control and Takeover Defenses
Nikko AM Group is basically opposed to resolutions aimed at maintaining company control or preventing the acquisition of company control. On the other hand, because acquisition proposals that may damage shareholder value cannot be assessed positively, takeover defenses may be assessed positively to the extent that the existence of such acquisition risks are clear and existing shareholder value would not be damaged.
5. Business Restructuring
Nikko AM Group scrutinizes whether or not the restructuring of business through mergers and acquisitions is the best option for a company from the view point of consistency with its management strategy and enhancement of shareholder value in the medium to long-term. In addition, the valuation of a company's acquisition price must be a fair price calculated by a neutral third party.
6. Capital Policy
Whether or not resolutions on the issuing of company stock are appropriate capital policy should be determined cautiously, taking into account the investee company's management strategy, financial standing and market environment. In particular, Nikko AM Group does not evaluate such capital increases positively if there is a possibility that they will significantly dilute the equity of existing shareholders and place them in a disadvantageous position overall.
7. Other Resolutions
Other resolutions shall be examined and considered from the standpoint of maximizing shareholder value.
Guidelines on Exercising Voting Rights
Nikko AM exercises proxy voting rights independently and solely in the interests of our clients and beneficiaries in order to fulfill our fiduciary responsibilities. In line with the "Nikko Asset Management Group Proxy Voting Policy", we establish "Guidelines on Exercising Voting Rights" and makes decisions on the exercise of voting rights in compliance with the Guidelines.
Article 1 - Purpose
- The purpose of these Guidelines on Exercising Voting Rights (“Guidelines”) is to set forth the basis for decision-making at Nikko AM when exercising proxy voting rights, to promote the systematic and consistent exercise of voting rights, and assure the faithful execution of Nikko AM's fiduciary responsibilities.
Article 2 - Definitions
- In these Guidelines, "voting rights" shall refer to all shareholder rights under the Companies Act, including voting rights.
- In these Guidelines, "beneficiary" shall refer to the beneficiaries of managed investment trust funds.
- In these Guidelines, "client" shall refer to investment advisory contract clients.
- In these Guidelines, "beneficiary (client) interests" shall refer to increases in shareholder value or the prevention of damage to such value.
Article 3 - Basic Policy
- When considering how to exercise voting rights for individual stocks, each resolution item shall be carefully examined in accordance with these Guidelines. If a resolution is regarded as being against the interests of the beneficiary or client, Nikko AM shall express its intention to oppose the resolution.
- Voting rights shall not be exercised in order to promote the interests of a third party other than the beneficiary or client.
- The exercise of voting rights shall be in accordance with the country’s state of affairs. The advice of external experts may be utilized, as necessary.
- The advice of an independent third party may be used if there is the possibility of a conflict of interests.
Article 4 - Person with Decision-making Authority
- The Stewardship and Proxy Voting Committee shall establish basic provisions for decision-making regarding the exercise of voting rights.
- Fund management departments shall be responsible for instructions to exercise voting rights for individual stocks.
Article 5 - Types of Instructions
- Instructions to exercise voting rights for each resolution item shall be either instructions to approve or instructions to oppose the item. Blanket discretion must not be awarded. However, in line with the custom or voting system in the relevant country, in certain cases an instruction to abstain shall be issued as a substitute for an opposition vote or in order to indicate a lack of agreement.
Article 6 - Requests from Clients
- When a client makes a request to disclose the voting outcome and decision-making basis for an individual stock, disclosure shall be made, only in respect of those stocks managed within the client's assets.
- When a client provides guidance regarding the exercise of voting rights, these Guidelines shall be presented to the client for discussion.
- If a client retains partial authority to issue instructions regarding the exercise of voting rights and issues instructions that in Nikko AM’s view are clearly irrational, Nikko AM shall endeavor to express its opinion to the client.
Article 7 - Handling Sub-advised Funds
- Even when the exercise of investment discretion is entrusted to an outside party, in principle Nikko AM shall issue instructions regarding the exercise of voting rights.
- Notwithstanding the provisions of the preceding paragraph, if the outside investment manager prefers to cast proxy votes, a different approach may be taken through discussion with the outside manager.
Article 8 - Split Exercise
- In principle, split voting instructions shall not be issued. This restriction does not apply to the cases in Paragraph 3 of Article 6, and Paragraph 2 of Article 7.
Article 9 - Screening
- Screening criteria shall be established for decision-making when exercising voting rights for individual stocks and the resolution items for each stock shall be carefully examined.
- Screening criteria shall be determined by the Stewardship and Proxy Voting Committee. The following specific items shall be included in the criteria.
- Level of ROE and ROA and past fluctuation
- Degree of shareholder return
- Occurrence of any misconduct
- Any adverse opinion from accounting auditors
- Any non-public takeover offers
Article 10 - Revision and Abolition
- Revision and abolition of these Guidelines shall be determined by resolution of the Stewardship and Proxy Voting Committee.
Article 11 - Shareholder Return
- Resolutions on shareholder return, such as dividends, shall be opposed where significant doubts arise when considering the following items.
- Total return ratio, such as shareholder dividends, is continually low compared with the average level for listed companies
- Total return ratio, such as shareholder dividends, is markedly high compared with the average level for listed companies or the investee company records a net loss and its financial soundness is impacted negatively.
- Level of current liquidity and shareholder equity ratio when compared with future business plans
- Consistency of executive compensation with amount of shareholder return, such as dividends
- Any concerns over financial statements or audit procedures
- Resolutions that allow the board of directors to dispose of surplus shall be approved if it is determined that the board of directors is highly independent from management execution.
Article 12 - Appointment of Directors and Independent Directors
- A firm’s board of directors is expected to make decisions intended to improve medium- and long-term shareholder value and to supervise the firm’s execution of business, and should fulfil those functions effectively. A board of directors should therefore be structured in a way that fully takes into consideration factors such as the abilities, characteristics and diversity of its members as well as its ratio of independent outside directors. It should also be of a size that enables it to make swift decisions on business matters. Specifically, decisions to vote for or against such resolutions shall be made based on the below criteria.
- Resolutions on the appointment of directors shall be opposed where doubts arise when considering the following items.
- It is determined that there are personal character issues or other problems that may make the candidate unsuitable as a director
- It is determined that the composition of the board of directors will prevent a director from performing at an appropriate capacity
- It is determined that an individual has taken action that is inappropriate for a director
- It is determined that the director has a poor attendance record at board meetings without reasonable cause
- If there is material fault on the part of management, proposals for the reappointment of a current director who is recognized as being associated with such deficiencies shall be opposed. In particular, the following cases shall be monitored carefully.
- When an important decision has been made and implemented without shareholder approval
- When company resources have not been effectively utilized
- Resolutions to reappoint as director an individual who was a director during any periods of time when the company engaged in anti-social activities or other activity that damaged shareholder value, shall in principle, be opposed.
- Resolutions to appoint outside directors, shall in principle, be approved, after considering their level of independence. Independence shall, in principle, be defined as the candidate having no relationship with the company other than their appointment as an independent director.
- Proposals to appoint directors through cumulative voting shall, in principle, be approved.
Article 13 - Appointment of Statutory Auditors and Outside Statutory Auditors
- The provisions of the preceding article shall also apply to proposals for the appointment of statutory auditors (including proposals for filling statutory auditor vacancies). However, if it is determined that a statutory auditor lacks appropriateness for the position, for example. if they have difficulty monitoring and oversee directors from an independent standpoint, the proposal shall, in principle, be opposed.
- Appointments of independent auditing officers, shall in principle, be approved. However, the appointment shall be opposed it is determined that they clearly lack independence.
Article 14 - Appointment of Accounting Auditors
- Resolutions to appoint accounting auditors, shall in principle, be approved. However, the resolution shall be opposed if doubts arise over the appropriateness of audit implementation or the independence of the auditors.
- If an accounting auditor is not to be reappointed because of a conflict with the company regarding its auditing policies, the entire resolution shall be carefully examined.
Article 15 - Executive Compensation
- All of the following conditions should be met for resolutions on executive compensation.
- Compensation is properly linked to business performance, and the basis for its calculation has been made clear
- Compensation is determined by a committee of which the majority of members are independent directors, or executive compensation has been individually disclosed
- If there is material fault on the part of management, proposals on executive compensation shall be opposed.
Article 16 - Say on Pay
- Taking into consideration the conditions set forth below, resolutions on executive compensation shall be approved if it is determined there are no problems.
- Correlation between company performance and CEO compensation
- Existence of any problematic compensation systems or practices
- Dialog and action between the board of directors and shareholders with regard to compensation
Article 17 - Responsibilities of Officers and Accounting Auditors
- Resolutions to increase the responsibilities of directors or accounting auditors, shall in principle, be approved. However, resolutions that will impose an enormous amount of liability for damages from a minor mishap by a director or accounting auditor shall be opposed.
- Resolutions to limit or waive the liability of a director or accounting auditor shall, in principle, be opposed. If, however, a rational explanation is presented that shows the proposal is based on the Companies Act or other laws, and it is in the overall best interests of the company, the resolution shall be approved.
Article 18 - Stock Option Plan
- A decision regarding a proposed resolution to grant stock options to directors shall be made taking into consideration the items set forth below in addition to the provisions of Article 15.
- Whether the number granted is reasonable
- If the strike price comes with a clause on downward revision, whether the basis is reasonable
- If stock options are exercised, the degree of dilution of other shareholders' equity
- A decision regarding a proposed resolution to grant employee stock options shall be made taking into consideration the scope of the grantees and the items set forth in the preceding paragraph.
- A decision regarding a proposed resolution to grant stock options to third parties other than directors and employees shall be made after consideration of the items set forth in Paragraph 1 and below.
- Relationship between the grantees and the company
- Whether there is a rational explanation for providing stock options if the proposed grant is a substitute for labor or compensation
Article 19 - Takeover Defenses and Resolutions that Contest Company Control
- Resolutions aimed at introducing or maintaining takeover defenses shall, in principle, be opposed. If the board of directors passes a resolution for the introduction or maintenance of takeover defenses, resolutions aimed at the reappointment of directors shall be opposed.
Article 20 - Restructuring
- Resolutions aimed at establishing a holding company shall be approved if the explanation for the establishment of the holding company is rational and clear and will lead to enhanced corporate value.
- Mergers and acquisitions shall, in principle, be approved if the calculation basis for the merger ratio or acquisition price is provided by a neutral third party and such calculation is considered to be reasonable. If, however, the merger or acquisition will clearly damage shareholder value, the resolution shall be opposed.
- Resolutions aimed at transferring a business or obtaining a business by transfer shall, in principle, be approved if the calculation basis is provided by a neutral third party and is considered to be reasonable. If, however, it is clear that the business transfer will damage shareholder value, the resolution shall be opposed.
- Resolutions aimed at exchanging shares or transferring shares shall, in principle, be approved if there is a rational explanation for such reorganization and if the calculation basis for exchange or transfer ratios is provided by a neutral third party. If, however, it is clear that the exchange or transfer of shares will damage shareholder value, the resolution shall be opposed.
Article 21 - New Stock Issuance
- Resolutions on issuing common stock shall be examined and considered. However, the resolution shall be opposed if existing shareholder equity will be significantly diluted or if the receiver of new shares will be given a particularly advantageous issue price.
- Resolutions aimed at issuing classes of shares with different voting rights shall be examined and considered. However, the resolution shall be opposed if it may lead to the strengthening of management control.
- Resolutions to issue preferred stock and deferred stock shall, in principle, be approved. However, the resolution shall be opposed if existing shareholder equity will be significantly diluted or if the common stock acquisition right mechanism is not rational.
Article 22 - Other Company Proposals
- Resolutions aimed at increasing authorized capital shall be approved if the purpose is rational and clear and will lead to enhanced corporate value.
- Resolutions aimed at changing the business year shall, in principle, be approved if they are accompanied by a rational explanation and if they have no effect or only a minor effect on business performance. If, however, the primary purpose is to postpone a regular shareholders meeting, the resolution shall be opposed.
- Resolutions to tighten or ease resolution approval requirements shall be opposed unless such action is accompanied by a satisfactory explanation to demonstrate that it is necessary and will not harm shareholder value.
Article 23 - Shareholder Proposals
- Resolutions proposed by shareholders shall be examined and considered from the standpoint of maximizing shareholder value.
These Guidelines shall take effect on February 25, 2021.
- September 13, 2002 (Effective date: October 1, 2002)
- April 22, 2003
- August 16, 2004
- January 31, 2005
- June 10, 2005
- March 3, 2006
- June 8, 2006
- May 16, 2007
- April 17, 2008
- May 20, 2009
- May 13, 2010
- February 7, 2011
- April 1, 2012
- August 9, 2012
- June 26, 2014
- June 22, 2016
- April 27, 2018
- November 20, 2018
- February 25, 2021
Established: February 15, 2006
Revised: March 7, 2023
Standards for Exercising Voting Rights on Japanese Stocks
The purpose of these Standards for Exercising Voting Rights on Japanese Stocks is to set forth specific standards to enable Nikko Asset Management Co., Ltd. (“Nikko AM”) to exercise voting rights on Japanese stocks in line with its Guidelines on Exercising Voting Rights. These Standards are also intended to ensure that Nikko AM exercises voting rights systematically and consistently, and to contribute to Nikko AM’s faithful fulfillment of its fiduciary duty. The standards indicated below are not necessarily intended to be applied formally and uniformly, but are instead intended to ensure that Nikko AM makes voting decisions that help investee firms to grow sustainably and enhance their medium- and long-term corporate value based on an accurate grasp of the firms’ conditions and initiatives through engagement and other such means.
 Shareholder Returns
Investee firms are expected to maximize shareholder value over the medium and long term by generating economic value through the efficient use of cash, investing that value for growth and retaining it as internal reserves, and distributing it appropriately for such purposes as shareholder returns. Voting decisions on resolutions for the appropriation of surpluses shall be based on examinations as to whether the resolutions constitute shareholder return measures that will help to maximize medium- and long-term shareholder value based on considerations such as the firm’s growth stage, its business environment, its financial standing and its investment plans.
Resolutions for the appropriation of surpluses shall be voted against in principle in the below cases:
- if the firm’s shareholder distribution ratio is less than 30% and its ROE has been less than 8% for the past three consecutive fiscal years;
- if the firm is cash rich, its shareholder distribution ratio is less than 40% and its ROE has been less than 8% for the past three consecutive fiscal years (a firm is cash rich if its net cash to total assets ratio is 30% or more and its equity ratio is 50% or more);
- if the firm has paid out dividends in the past three consecutive fiscal years despite posting net losses in those years; or
- if the level of the firm’s shareholder returns is otherwise deemed insufficient for the medium- and long-term enhancement of shareholder value.
 Appointments of Directors
Decisions shall be based on whether it is appropriate to entrust appointees with the management of the investee firm with the aim of maximizing the firm’s medium- and long-term shareholder value. Decisions shall be made comprehensively in view of the firm’s conditions and initiatives as ascertained through engagement and other such means in view of the below-mentioned criteria.
A firm’s board of directors is expected to make decisions intended to improve medium- and long-term shareholder value and to supervise the firm’s execution of business, and should fulfil those functions effectively. A board of directors should therefore be structured in a way that fully takes into consideration factors such as the abilities, characteristics and diversity of its members as well as its ratio of independent outside directors. It should also be of a size that enables it to make swift decisions on business matters.
Specifically, decisions to vote for or against such resolutions shall be made based on the below criteria. The criteria shall also apply to audit and supervisory committee members at firms that have audit and supervisory committees, and to audit committee members at firms that have nomination committees and other such committees.
- If any of the below apply to the composition of a firm’s board of directors, resolutions for appointments of directors shall be voted against in principle given the status of directors as top managers:
- if the directors to be appointed do not include at least two outside directors who fulfill Nikko AM’s standards for independence and the number of outside directors who fulfill Nikko AM’s standards for independence does not come to at least one-third of the total (or the majority in the case of companies with parent companies);
- if no female directors are included (however, this rule shall be applied initially to companies listed on the Prime Market, after which coverage will be expanded to other markets and the required number of female directors will be increased gradually); or
- if the number of statutory auditors or audit and supervisory committee members is set to decrease significantly without a reasonable explanation from the firm.
- Resolutions for reappointments of directors shall be voted against in principle if any of the below apply:
- if the firm’s shareholder distribution ratio is less than 30% and its ROE has been less than 8% for the past three consecutive fiscal years;
- if the firm is cash rich, its shareholder distribution ratio is less than 40% and its ROE has been less than 8% for the past three consecutive fiscal years (a firm is cash rich if its net cash to total assets ratio is at least 30% and its equity ratio is at least 50%);
- if the firm has paid out dividends in the past three consecutive fiscal years despite posting net losses in those years;
- if the firm’s ROE has been less than 5% for the past three consecutive fiscal years and the firm has been in the bottom 50% of its sector (based on the Tokyo Stock Exchange’s 17 sector classifications) for ROE in the past three consecutive fiscal years (reappointment of directors in position during the relevant period is to be opposed);
- if the directors are judged to have seriously damaged shareholder value through misconduct or antisocial conduct, or are judged likely to do so in the future (the definition of misconduct and antisocial conduct shall include serious violations of laws and regulations, fraudulent accounting, quality falsification, conduct that causes environmental or social problems, and other conduct that damages social trust in the firm, and judgments shall take into account mitigating factors including recurrence prevention measures and other such responses); or
- if the firm’s management initiatives are deemed insufficient for the medium- and long-term enhancement of shareholder value.
- Resolutions for appointments of outside directors shall be voted against in principle if any of the following apply (however, an individual decision on application of the independence requirement shall be made if a company is undergoing a management reorganization or other such conditions apply to it):
- if their board of directors meeting attendance ratio is less than 75% (the same shall apply to audit and supervisory committee members if their audit and supervisory committee meeting attendance ratio is less than 75%, and to audit committee members if their audit committee meeting attendance ratio is less than 75%); or
- if any of the below apply to them and they are deemed to lack sufficient independence as a result:
- notification regarding them as an independent officer has not been submitted to a financial instruments exchange or there are no plans to do so;
- they are a major shareholder with a share exceeding 5%, or they currently work or have worked in the past five years at an organization that is a major shareholder;
- they have been in their current position for more than 12 years; or
- their organization conducts mutual dispatching of outside officers with the firm.
- If any of the below apply, resolutions for appointments of directors shall be voted against in principle given the status of directors as top managers:
- If the firm is a relatively high emitter of greenhouse gases and its initiatives regarding the climate change-related actions listed below are deemed insufficient:
- the establishment of medium- and long-term emissions reduction targets in line with the Paris Agreement;
- the formulation and execution of a roadmap for realizing the above targets; and
- information disclosure in line with the Recommendations of the Task Force on Climate-related Financial Disclosures;
- if the firm has serious sustainability issues, its initiatives to address them are deemed insufficient and the situation is not deemed to be improving; or
- if the firm has cross-shareholdings totaling 20% or more of its net assets (however, consideration shall be given to quantitative reduction targets and the status of its initiatives).
- If the firm is a relatively high emitter of greenhouse gases and its initiatives regarding the climate change-related actions listed below are deemed insufficient:
 Appointments of Statutory Auditors
If proposals for appointing statutory auditors are deemed to be unsuitable for reasons such as difficulties in monitoring and supervising directors from an independent standpoint, their appointment shall be voted against in principle.
Resolutions for appointments of outside directors shall be voted against in principle if any of the below apply to them:
- if their board of directors and board of statutory auditors meeting attendance ratio is less than 75%; or
- if they are deemed to lack sufficient independence (criteria on the independence of outside directors shall apply mutatis mutandis to judgments on the independence of statutory auditors).
 Appointments of Accounting Auditors
Resolutions for appointments of accounting auditors shall be voted in favor of in principle. However, resolutions shall be voted against if they involve matters that cast doubt as to whether they will conduct audits fairly, or if there are doubts over their independence.
 Compensation for Officers
Compensation for officers and other such people shall be examined to determine whether it is linked appropriately to the interests of shareholders and thereby functions as an incentive to enhance shareholder value, and whether it is at an appropriate level in terms of the firm’s performance and its distribution of profits to shareholders. When compensation is determined, it is important for the basis for the calculation to be made clear and for the process to be made transparent by such means as using bodies whose important members are outside directors.
Resolutions related to compensation for officers shall be voted against in principle if any of the below items apply to them:
- the payment of bonuses and raising of compensation caps despite the recipients’ management being at serious fault;
- the payment of retirement bonuses (excluding allowances for termination); or
- if any of the follow apply to a resolution related to stock compensation (including stock options):
- granting of them to statutory auditors and Audit and Supervisory Committee Members (decisions on voting for or against granting of them to employees or third parties are to be determined based on examinations);
- if the transfer restriction period or the period when it is possible to exercise them is less than two years; or
- if the compensation (the sum of the potential dilution amount and the past amount) is 5% or more of the firm’s total issued shares.
 Takeover Defenses
Takeover defenses involve the risk of damaging shareholder value because they can be used to entrench management teams and can prevent normal shareholder value from being reflected in a firm’s stock price.
Resolutions for the introduction or continuation of takeover defenses shall be voted against in principle. If a firm decides on the introduction or continuation of its takeover defense only through a resolution of its board of directors without seeking the approval of its general meeting of shareholders, resolutions on the reappointment of its directors shall be voted against.
Business restructuring such as mergers, acquisitions, business transfers, business assumptions, share exchanges or share transfers shall be examined to determine whether they are consistent with the firm’s management strategy and whether they are the best option for helping to enhance its stock price in the medium and long term.
Resolutions for business restructuring shall be voted against if either of the below apply to them:
- if a merger or exchange ratio, a price or other such matter is deemed to be inappropriate in terms of the interests of existing shareholders; or
- if it is deemed clear that another aspect of the restructuring will damage shareholder value.
 Capital Policies
Resolutions related to capital policies shall be examined to ascertain whether they will help to enhance shareholder value in the medium and long term, and to determine that they will not damage the interests of existing shareholders.
- Decisions on voting for or against resolutions for the issuance of stock (including class shares and preferred/subordinated shares) shall be based on examinations of matters including the purpose of the stock issuance and its impact on the interests of existing shareholders in light of the relevant firm’s financial position and business performance. Issuances that risk damaging shareholder value by diluting the holdings of existing shareholders significantly, serving the interests of recipients of the new shares, strengthening the control of the firm’s management or for other such reasons shall be voted against.
- Decisions on voting for or against resolutions for issuances of new stock for third parties or dispositions of treasury shares shall be based on examinations of matters including the allottees, the degree of stock dilution, and comparisons of the allotment price with fair market value. Treasury share contributions to foundations shall be voted in favor of if 1) activities at the foundation are deemed to increase medium-to-long term corporate value, 2) voting rights of the contributed equities will not be exercised by the corporation or the foundation and 3) dilution is less than 3%.
- Resolutions for acquisitions of treasury stock that are expected to significantly damage market liquidity shall be voted against.
 Changes to Articles of Incorporation
Resolutions for changes to a firm’s Articles of Incorporation shall be examined to ascertain whether they will help to enhance shareholder value, or to prevent damage to it, in the medium and long term, and to determine that they will not unnecessarily limit the rights of shareholders.
Resolutions for changes to a firm’s Articles of Incorporation shall be voted against in principle if any of the below items apply to them:
- if they specify that appropriations of surpluses are to be conducted based on board of directors resolutions;
- if the purpose of a resolution for raising an authorization limit has not been comprehensively and clearly explained in terms of how it will raise the firm’s corporate value;
- if the purpose of a resolution for changing a firm’s fiscal year is deemed to be to postpone the holding of the firm’s regular general meeting of shareholders;
- if a resolution for strengthening or easing resolution requirements is not fully explained in terms of its necessity and whether it will not damage shareholder value; or
- if a resolution to increase the number of regular members of a firm’s board of directors is set to significantly increase the number without a reasonable explanation.
 Shareholder Resolutions
Decisions on voting for or against shareholder resolutions shall be based on individual examinations into their effect on shareholder value in the medium and long term. Shareholder resolutions with the potential to serve the interests of particular shareholders shall be voted against.
 Revision and Abolition
Revision and abolition of these Standards shall be decided on by resolutions of the Stewardship and Proxy Voting Committee.
 Supplementary Provisions
These Standards shall take effect on April 01, 2023.
- February 15, 2006
- April 13, 2006
- June 8, 2006
- September 29, 2006
- April 25, 2007
- June 6, 2007
- May 1, 2008
- May 2, 2008
- August 11, 2008
- July 5, 2010
- March 31, 2011
- March 31, 2015
- July 25, 2016
- January 24, 2017
- July, 28, 2017
- April 27, 2018
- February 19, 2019
- April 14, 2020
- February 25, 2021
- December 20, 2021
- March 7, 2023