MITI Criticism of Japan Poison Pills Starts

"What is food to one, to others is bitter poison."

Lucretius, (96 BC - 55 BC)
Philosopher

Hooray for Japanese officialdom! According to a recent MITI panel conclusion emanting from Japan, corporate managers should review the use of anti-takeover provisions and consider whether they harm shareholders' interests.

A MITI panel released a report as part of national efforts to shore up its reputation on corporate governance and receptiveness to international investors.

The report follows increased criticism in recent months from some non-Japanese investors (like The Children's Fund) over anti-takeover practices such as poison pills and cross-shareholding arrangements. These are anathema to shareholder value and corporate governance.

This follows on the heals of a recent MITI decision that ordered The Children's Investment Master Fund to abandon a plan to double its stake in Japanese electricity-grid company Electric Power Development Co., known as J-Power, to nearly 20%. MITI said then that J-Power was of strategic interest to Japan. Strange that the same complaint was used by the Russian Government when BP was denied access to a stake in oil reserves in that country!

The ministry panel's report Wednesday warned takeover defenses shouldn't be adopted simply to protect corporate managers' own interests. Managers should consider putting takeover proposals to shareholders to allow investors to assess the merits of approaches themselves. Let's hope that shareholders now have the gumption to actually do something that is in theiur interests and not in the interests of "management stooges". Maybe Japan activism does have a role after all. Mahalo.