Japan Activist Murakami Loses Kuroda Electric Proxy Fight

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Fund manager Yoshiaki Murakami.

Fund manager Yoshiaki Murakami.

Photographer: Haruyoshi Yamaguchi/Bloomberg

Yoshiaki Murakami failed to win approval for his plan to get seats on Kuroda Electric Co.’s board.

The activist investor’s proposal to appoint himself and three others as outside directors at the electronics trader was defeated with about 60 percent of shareholders voting against it, Mamoru Mochimaru, a spokesman for the company, said after an extraordinary general meeting Friday in Osaka. The proxy fight was Murakami’s first since being convicted of insider trading. Kuroda Electric shares plunged 8.3 percent, their steepest decline since March 2011.

Murakami and C&I Holdings Co., an investment company headed by his daughter, have been calling on Kuroda Electric to pay out all its profit to shareholders for three years and consider large mergers or acquisitions. Their defeat in the vote is a sign Japanese investors are still reluctant to embrace the ideas of shareholder activists after years of rejecting them.

Murakami’s return “is a good thing that will stimulate the stock market,” Hidetaka Kawawita, a professor of finance and accounting at Kyoto University, said before the vote. “If the proposal is rejected, it means shareholders have decided it’s not good for the business.”

Kazuya Murahashi, an executive officer at Kuroda Electric, said on Aug. 11 that Murakami’s conviction for a “serious securities crime” makes him unsuitable to represent the company with its Japanese customers.

Advisers Divided

The proposals needed the approval of a majority of shareholders who voted in order to pass. Murakami, C&I Holdings Co. and related firms owned about 16 percent of Kuroda Electric’s shares, according to a July filing to the Tokyo bourse. Proxy advisers were divided, with Institutional Shareholder Services Inc. supporting the plan and Glass Lewis & Co. calling on its clients to vote against it.

Aya Murakami said after the defeat that C&I Holdings will continue to work to improve Kuroda Electric shareholder value, in a statement posted on C&I’s website

Yoshiaki Murakami is a former trade ministry bureaucrat who quit to start his own investment fund in 1999. An outspoken early champion of shareholder rights in Japan, he closed that fund amid the insider trading scandal and now lives in Singapore. He is now investing solely for himself and his associates, according to his daughter, Aya.

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