On January 26, the Tokyo Stock Exchange (TSE) held the 9th session of its “Study Group on the Protection of Minority Shareholders in Controlled Listed Companies.” At this meeting, the TSE decided to require listed companies with a major shareholder holding more than 40% of voting rights* to disclose the approval ratio of minority shareholders—excluding the votes of the major shareholder and its affiliates—when proposing the election of directors. Furthermore, if more than 50% of minority shareholders vote against the proposal, the company will be required to disclose an analysis of the reasons for opposition within six months and to formulate a policy for engagement with shareholders. These new rules are scheduled to apply to companies with fiscal years ending in December 2026 or later.

While the study group also discussed concerns about increased burdens on listed companies, it ultimately concluded that “significant opposition from minority shareholders should not be ignored simply because a proposal was approved.” A notable case last year involved AGP Corporation, an equity-method affiliate of Japan Airlines (JAL). At its general meeting, JAL, as the major shareholder, proposed a delisting plan via a reverse stock split. In response, AGP's management submitted a counterproposal based on the “Majority of Minority” (MoM) principle. This case was framed as a conflict between the major shareholder and company management, and thus differs from the TSE’s current reform, which assumes that the major shareholder holds effective control over management. Nevertheless, the renewed focus on the rights of minority shareholders is highly significant.

On the same day, another important reform related to stock listings was announced. The Japanese Institute of Certified Public Accountants (JICPA) stated that “accounting fraud at newly listed companies has raised serious concerns about the reliability of financial statements.” In response, it plans to strengthen monitoring of quality control systems at audit firms that audit listed companies. It also announced its intention to raise the minimum number of certified public accountants required at audit firms—currently set at five—to address concerns about the audit quality of small firms. The case of alt Inc., a Japan-based AI startup whose sales were found to be up to 90% fictitious, likely prompted the urgency of the new measures. It is not difficult to imagine that the urgency of these measures was prompted by the case of alt Inc., an AI startup whose sales were found to be up to 90% fictitious.

Dialogue with minority shareholders and restoring trust in financial statements are essential to maintaining a healthy stock market. In June of last year, 111 companies received shareholder proposals at their general meetings, but only seven were approved. Accounting irregularities are not limited to newly listed companies. According to the JICPA, the number of companies involved in accounting fraud has been increasing year by year, reaching 56 in the fiscal year ended March 2025. Behind this trend lies intense pressure from investors demanding short-term improvements in corporate value through better capital efficiency, higher shareholder returns, and stronger governance. The number of companies choosing to delist continues to rise, reaching a record high of 124 last year.

Against this backdrop, I sincerely hope that all listed companies, as well as startups aspiring to go public, will take this opportunity to reflect once again on the strategic significance and responsibilities that come with being a public company.

* In calculating the ownership ratio, affiliated companies as stipulated in Article 8, Paragraph 8 of the Financial Statements Regulation are included, as specified in materials published by the Tokyo Stock Exchange.

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Takashi Mizukoshi, the President
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