Proxy Fight at J-Power

The hedge fund TCI now says that it will wage a proxy contest among the shareholders of the Japanese electricity wholesaler J-Power, demanding higher dividends and a limit on cross-shareholdings.

Last month, TCI sought permission from the government of the country to raise its stake in J-Power to 20%. The government denied that request as I noted at the time, so the activist fund still has just below the 10% limit.

J-Power's annual meeting is set for June 26. TCI says that it plans to "expose serious conflict of interest of supplier and cross-shareholders" between now and then.

Cross-shareholding is a major corporate-governance issue that we haven't yet discussed on this blog. It refers to the practice whereby two corporations may hold shares in each other, therebvy entrenching the management of each against possible dissidents. The practice is quite common in Japan.

Should we stigmatize pressure upon Japanese countries of this sort, brought to bear by a London-based fund, as neo-imperialist? I don't see how that assists understanding, although those who wish may use the label at their pleasure. The world is getting to be a smaller place, and Japan of all countries knows the impossibility of autarky.