Excellent story on Bloomberg notes that companies are swerving round even the mild anti-cross-shareholding stipulation in the Stewardship Code — which states they should explain why they keep such arrangements — and continuing to ensure a compliant ownership base by setting up foundations to which they transfer shares they have recently bought back from the market using their excess cash.
Examples include DMG Mori Co, Daiken Medical Co, sportswear maker Goldwin Inc, Kobayashi Pharmaceutical Co, Toyota Motor Corp and KDDI Corp.
Institutional investors would prefer that spare cash be distributed to them. Among the reasons floated for this not happening has been the notion that companies may be nursing losses on their pension funds which they will need to top up before the consequent underfunding is exposed in annual accounts to the 30 March year-end.
Having a pension fund stuffed with its sponsors’ own shares is a practice frowned on by the Ministry of Health, Labour and Welfare, the corporate retirement scheme regulator.
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