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October 2026 edition · Methodology GNT-BDS v1.1.1 · Last updated 2026-10-23日本語 / English
Japan IR IndexIndependent research · English disclosure & shareholder communication

Questions shareholders ask at the AGM 01

Excess capital and capital efficiency

"Aren't you holding too much equity and cash?" Long-term investors and activists, in Japan and abroad, keep asking it. This page takes the question as it appears in real shareholder proposals and sets out what an answer must contain to count as an answer. Whether an answer was good is judged only on what the published documents and outcomes show (withdrawals, vote results, what happened the next year), not on impressions.

Published 19 October 2026; sources re-checked 24 October 2026. Vote figures come from extraordinary reports and company disclosures.

The questions as asked

Our margins are in line with peers, yet with a 77% equity ratio our ROE lags. Isn't shareholders' equity far more expensive than debt?

Summary of the reasons for SANYO DENKI's (6516) 2026 shareholder proposals (Strategic Capital). The proposal compares its net margin of 7.9%, equity ratio of 77% and ROE of 7.5% with Nidec, Yaskawa Electric and Delta Electronics.

The cost-of-capital disclosure says nothing concrete about improving capital efficiency. The board should review capital policy every year and disclose the resulting shareholder-return policy.

Summary of the same company's proposal 3 (an articles amendment on reviewing capital policy).

A certified broadcasting holding company should not own a real estate business: spin off urban development and tourism. Unwind the ¥300bn of cross-shareholdings at once and use the proceeds to reform the broadcasting and media business.

Summary of the reasons in NIPPON ACTIVE VALUE FUND's 2025 shareholder proposal at Fuji Media Holdings (4676), as reproduced in the company's board opinion (16 May 2025). The press reported the campaign as Dalton Investments'.

What an answer needs to contain

These questions do not say "your equity is too high". They ask why it is at that level, and what you will do about it by when. With the elements below in place, the question has been answered in numbers. The codes are the Japan IR Index questions that check whether each element is available in English.

  1. The cost of equity and how it is estimated (for example 7–9% by CAPM), compared with ROE.F7S1
  2. A target capital structure: an equity-ratio or net-cash range, or a policy on using debt, and why that level is needed.
  3. A multi-year cash allocation: operating cash flow, growth investment, shareholder returns and cash on hand, in amounts.S1
  4. The shareholder-return policy: payout ratio, DOE and buybacks, and what changed from the previous plan.F7
  5. The previous plan's targets against actuals: whether the capital-efficiency targets were met, and if not, why.S7
  6. Cross-shareholdings and non-core assets: balances, reduction targets and deadlines.G7
  7. In English, on the same day: the board opinion, the mid-term plan and the cost-of-capital disclosure, published in English the same day as in Japanese.R3S1

Case: SANYO DENKI (6516), 2026

Proponent
Strategic Capital (about 17%)
Proposals
Five (a director, one-year terms, capital policy, two on a stock split)
Outcome
All withdrawn before the AGM
  1. Publishes its "actions to implement management conscious of the cost of capital and share price"
  2. Moves to a dividend policy targeting a 50% payout ratio; updates its return policy, including buybacks
  3. Shareholder proposal letter (receipt disclosed on 21 April)
  4. The board opposes all proposals. It mentions 13 meetings with the proponent, and that it is considering one-year director terms for next year's AGM
  5. Publishes its 10th mid-term plan (FY2026–2030) in English and Japanese on the same day
  6. The proponent withdraws all proposals. No reason is given; the company says it takes this to mean the plan was "well understood"
  7. AGM. Only the company's dividend proposal is voted on

What the answer covered

  • States a cost of equity of "roughly 7–9%", alongside an average ROE of 9.5% over the previous plan and a target of "ROE of 10% or more" (plan p.25).
  • Gives a five-year cash allocation in amounts: operating cash flow of ¥66bn+, split into returns of ¥30bn+ and growth investment of ¥33bn+, and states that it will use debt (p.27).
  • Raises the payout target from a 24.7% average under the previous plan to 50% (p.28).
  • English: the plan was published in both languages the same day, at the same length (S1 = 5); every timely disclosure, including the board opinion, had a same-day English version (R3 = 5).

What it left unanswered

  • No target for the 77% equity ratio at the centre of the proposal. The board opinion only calls it a "reasonable level".
  • No English disclosure on cross-shareholdings was found (G7 = not found). The English voting results say only that the proposal passed (G6 = 2).
  • The proponent gave no reason for withdrawing. The only verifiable fact is the order: the plan on 20 May, the withdrawal on 21 May.

Contrast: Fuji Media Holdings (4676)

Proponent
NIPPON ACTIVE VALUE FUND (reported as Dalton-affiliated)
Proposal
12 director candidates (2025)
Outcome
All 12 rejected (10.43–27.00% support)

The company's notice names NIPPON ACTIVE VALUE FUND as the proponent; the press reported the campaign as Dalton Investments'. At the AGM on 25 June 2025 the company's candidates were elected with 81.37–88.59% and all 12 shareholder candidates were rejected. The best-supported, Yoshitaka Kitao, received 27.00%.

84th AGM, 25 June 2025Support
Company: 7 directors (excluding audit committee)81.37–86.63%
Company: 4 audit committee members86.12–88.59%
Shareholder: 12 directors10.43–27.00%

Before the meeting, the company's "Reform Action Plan" (16 May 2025) had put numbers on how it would use its capital:

At the next AGM, on 25 June 2026, the year-end dividend was ¥100 a share (¥25 a year earlier), and support for the president rose from 82.35% to 95.28%.

The lesson: winning the vote is not the same as answering the question. Vote results also reflect things other than the answer, such as views on a scandal and proxy-adviser recommendations. And as of September 2026 the company's English site had no corporate governance report, AGM notice, voting results or cross-shareholding disclosure (G1, G5, G6, G7 = not found). It answered foreign shareholders' questions only in Japanese.

How we judge a "good answer"

Applause and the mood in the room are not recorded and cannot be checked. This series uses only three things:

  1. Coverage: which of the seven elements above can be found in published documents.
  2. Verifiable outcomes: withdrawals, vote results (extraordinary reports), and re-filings or changes in support the following year.
  3. Reach in English: whether the same answer can be read in English on the same day.

Outcomes are not proof of answer quality; they show correlation. Each case notes other factors that may have affected the result.

Sources