Current State of Shareholder Activism in Japan

Shareholder activism has become conspicuous in Japan in recent years. In 2025, 120 companies received shareholder proposals, 50 of which were from institutional shareholders, including activists. In terms of numbers, this is second only to the United States. The largest portion of the proposals have been for share buy-backs and higher returns for shareholders. Japanese companies, which had been more or less free of external control, have come under growing pressure from the market to use capital efficiently to grow the company and increase shareholder value.

The decline of cross-shareholding in the last couple of decades has made companies vulnerable to pressure by activist funds. A major change in corporate governance was triggered by the adoption of the Stewardship Code and the Corporate Governance Code in 2014 and 2015 respectively. The intent was to galvanize the economy by empowering institutional shareholders, who had been complacent in Japan. However, activist funds turned out to be major players in the market for corporate control. In some cases, they took quite short-term views and sought quick returns. Some companies chose to exit the market by means of management buyouts. Compared to other jurisdictions, Japan makes it easy for shareholders to submit proposals, but currently there is a push to introduce certain restrictions on these rights.