Toshiba Corp. on Sunday dropped the names of two board directors responsible for auditing from its list of candidates pending shareholder approval later in June after revelations of the industrial conglomerate's inappropriate handling of foreign activist investors.
The rare change to the lineup announced in May comes after a group of independent lawyers concluded earlier this month Toshiba had colluded with the Japanese government to fend off activist foreign investors in the company's general shareholders' meeting last summer.
The exclusion of the two -- Junji Ota, chairman of Toshiba's audit committee, and its member Takashi Yamauchi -- brings the total number of nominees to 11 from 13.
In announcing the decision unanimously made at a board of directors meeting on Sunday, Toshiba said it has taken the independent panel's report "seriously."
"We will take action to identify the root cause without delay, in an objective and transparent manner, including the participation of third parties," Toshiba said in a statement.
The audit committee in February found no issue with the general shareholders' meeting in July 2020, in stark contrast with the outcome of the independent investigation that said it was not managed fairly.
Two senior executives mentioned in the independent panel's report -- Corporate Senior Executive Vice President Masayasu Toyohara and Corporate Senior Vice President Masaharu Kamo --will retire on June 25, when the shareholders' meeting is scheduled to be held.
Conducted by independent lawyers at the request of foreign investors, the independent investigation revealed Toshiba and the Ministry of Economy, Trade and Industry sought to block proposals by activist investors by applying pressure.
Such investors include major Toshiba shareholder Singapore-based fund Effissimo Capital Management Pte. Ltd. and 3D Investment Partners Pte. Ltd., also based in Singapore.
Toshiba has seen a bigger presence of overseas investors in recent years as it accepted foreign funds to cope with its financial struggles.
Since the report was released four outside directors have issued a statement saying that they will not support all candidates.
3D Investment Partners, Toshiba's second-largest shareholder, has sent a letter to Toshiba's board chairman Osamu Nagayama and three other executives demanding that they resign, according to Reuters news agency.
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