Our Basic Policy of Proxy Voting
- We exercise shareholders’ voting rights by proxy to maximize investment return.
- We expect the managements to put a strong emphasize on shareholders interests.
- We expect the managements to make appropriate and timely disclosure on business activities as their accountability to shareholders.
Proxy Vote Execution Process
- We receive services with respect to proxy voting provided by an external proxy research service company. Our operations department receives the convocations of shareholders meeting from the Trustee via the external proxy research service company and forwards them to the head of relevant investment department.
- The head of the relevant investment department gives instructions to the relevant portfolio manager covering that specific company to review the agenda of the shareholders meeting.
- The portfolio manager reviews the agenda items against our Proxy Voting Guidelines (as described below) and prepares a voting recommendation.
- The portfolio manager submits the proxy voting recommendation to the department head for approval.
- The department head makes necessary changes (if any) or approves it.
- Our operations staff submits the proxy voting instructions to the external proxy research service company.
- The external proxy research service company forwards the instructions to the Trustee in a timely manner.
Composition of the Board of Directors (absence of the outside directors)
The board of directors should consist of members who have abilities to make appropriate management decisions as representatives of the shareholders, and preferably include an appropriate number of outside directors, who are independent from the company.
Size of the Board of Directors
The board of directors should maintain an appropriate size to manage the company in the most effective ways to make business decisions.
Functions Required to the Board of Directors (separation of the Chairman and the CEO)
The board of directors is expected to be representative of the shareholders and sufficient background information should be provided to evaluate qualification of new candidate upon nomination. To keep the independence of the board of directors from the management as the representatives of the shareholders, the chairman of the board should be separate from that of the CEO of the company. It should preferably be the chairman who calls an assembly of the board, who is not the CEO of the company.
Distribution of Profit (payout ratio, directors’ remuneration)
The payout ratio and directors remuneration including stock options should be balanced with the total profit which shareholders gain. It is preferable that the directors’ remuneration shall be disclosed separately.
Trend of the Stock Price (profitability rate has or has not dropped sharply over the year)
If the profit for the past one year falls sharply and there is no explanation for the external business environment and performance by the company it may be necessary to consider of voting `No` for the relevant agenda.
Changes in the Financial Strategy and Company’s Operations
The decisions made by the board of directors about the alteration in the corporate financial strategies e.g. equity finance, the changes in the size of business or corporate operations should be respected, however, the decisions should be examined to ascertain they are not against the shareholders interest and company's business development in the future.
Verification of the Company Disclosure
Sufficient corporate disclosure shall be verified to execute the voting rights. In case of insufficient disclosure it will be necessary to request the company to provide the relevant information.
Takeover Defense Measures
Defense measures against potential takeover may not be assessed positively as they might eliminate acquisition opportunities to increase shareholders’ value and prevent management's effort to improve efficiency of the company, or in the worst case it may provide an excessive protection to management to continue its status-quo. However, if the defense measures shall be explained with reasonable grounds to increase the long-term shareholders’ value and avoid the management arbitrary conduct, it may be reviewed positively.