VZCZCXRO2766
RR RUEHFK RUEHGH RUEHKSO
DE RUEHKO #1550/01 1580718
ZNR UUUUU ZZH
R 060718Z JUN 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 4842
INFO RUEHBJ/AMEMBASSY BEIJING 3763
RUEHFR/AMEMBASSY PARIS 6129
RUEHUL/AMEMBASSY SEOUL 9762
RUEHGP/AMEMBASSY SINGAPORE 7169
RUEHFT/AMCONSUL FRANKFURT 0500
RUEHFK/AMCONSUL FUKUOKA 8217
RUEHHK/AMCONSUL HONG KONG 6536
RUEHOK/AMCONSUL OSAKA KOBE 1907
RUEHKSO/AMCONSUL SAPPORO 8806
RUEHGH/AMCONSUL SHANGHAI 0434
RUEHIN/AIT TAIPEI 7051
RHEHAAA/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/TREASURY DEPT WASHDC
RUEAWJA/JUSTICE DEPT WASHDC
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 3346

UNCLAS SECTION 01 OF 03 TOKYO 001550 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP: HASLACH 
ALSO FOR EEB/IFD: KAMBARA 
NSC FOR TONG 
DEPT PASS USTR FOR CUTLER AND BEEMAN 
USDOC FOR 4410/ITA/MAC/OJ 
JUSTICE FOR ANTITRUST DIVISION - CHEMTOB 
TREASURY DEPT FOR IA/CARNES AND POGGI 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: EINV ECON OECD JA
SUBJECT: JAPAN'S SHAREHOLDERS QUIETLY FORCING IMPORTANT 
CHANGES 
 
REF: A. TOKYO 1495 
 
     ¶B. TOKYO 1353 
     ¶C. TOKYO 1337 
     ¶D. 07 TOKYO 3689 
 
Sensitive But Unclassified.  Please Protect Accordingly. 
 
¶1.  (SBU) Summary: The 2008 annual general shareholder 
meetings of Japanese listed companies taking place this month 
are likely to be less contentious than last year's meetings, 
with only about half of the number of shareholder proposals 
up for debate.  Fewer proxy fights do not mean activist funds 
are abandoning Japan.  Rather, investors are altering their 
strategies in the wake of last year's defeats and, at the 
same time, still grappling with the fallout of a July 2007 
court decision that cited shareholder support in justifying a 
controversial corporate takeover defense.  Until Japanese 
companies succeed in boosting their share prices and reducing 
excessive cash holdings, there will continue to be incentive 
-- and opportunity -- for shareholder activism in Japan.  End 
Summary. 
 
¶2.  (SBU) Because of certain peculiarities of Japan's Company 
Law and the fact that most Japanese companies use an 
April-March fiscal year, approximately 53 percent of Japanese 
listed companies will hold their annual general shareholder 
meetings (AGMs) during a ten-day period beginning June 18 and 
peaking June 27.  In recent years, these meetings have become 
fora for activist shareholders to seek changes in corporate 
behavior over the objections of management.  Again this year, 
several private equity funds are seeking shareholder support 
for dividend hikes or other corporate governance changes in 
targeted companies.  There was already one dramatic result 
when U.S. hedge fund Steel Partners joined other 
institutional investors to oust the board of Aderans 
Corporation at its May 28 AGM (ref A).  More surprises may be 
possible in the weeks ahead but, overall, the number of 
contentious meetings is likely to be far fewer than last 
year. 
 
Many Boards Seek to Boost Defenses 
---------------------------------- 
 
¶3.  (U) More than 200 corporate boards will seek shareholders 
approval of new or renewed takeover defense plans at this 
year's AGM, according to a Tokyo-based equity analyst who 
follows these issues.  He sees continuation of a trend that 
began with adoption of the 2005 Company Law.  Added to the 86 
companies that have adopted defensive measures by board vote 
since September 2007, the number of companies having takeover 
defenses in place, if shareholders approve all of 
managements' proposals, would rise to over 500, almost 
one-fifth of 2,414 Tokyo Stock Exchange (TSE) listed firms. 
 
¶4.  (SBU) This latest push for shareholder approval for 
takeover defenses is, in part, fallout from the July 2007 
ruling in the Bull-Dog Sauce Co. case, in which Japan's 
Supreme Court refused to block implementation of the 
company's "poison pill" defense plan, citing earlier, 
overwhelming shareholder approval of the plan at the 
company's 2007 AGM (Ref D).   Although shareholder approval 
of takeover defenses is technically unnecessary