TOKYO (Reuters) – The Japanese government contacted several foreign shareholders of Toshiba Corp ahead of the conglomerate’s annual meeting, three people familiar with the matter said, in what at least one investor saw as an attempt to influence the vote .

The revelations raise new questions about interference in Toshiba’s governance, following calls for an investigation into uncounted votes at the controversial July 31 shareholders meeting.

Representatives from the powerful Ministry of Economy, Trade and Industry (METI) called at least three funds ahead of the meeting to find out if they had collaborated with other investors, two people said.

The ministry paid particular attention to the funds’ collaboration with Toshiba’s largest shareholder, Effissimo Capital Management, a communication that could violate rules preventing shareholders from “acting in concert,” the two people said.

One of the funds interpreted METI’s questioning as a signal to support Toshiba’s management and not investors’ proposals at the meeting, one of the sources said. Foreign shareholders had proposed electing new directors to the board of directors, which management opposed.

The sources declined to be identified because the information is not public.

METI declined to comment when contacted by Reuters, calling the allegations “rumors.”

A representative from Effissimo said the fund could not comment. A spokeswoman for Toshiba said the company would not comment on the speculation.

Reuters reported this month that around 1,300 postal ballot forms were not counted at the meeting.

Last month, a major investor called for an investigation, saying his vote had not been recognized.

Reuters previously reported that the activist fund Effissimo was kept in limbo by the government over its vote until the day before the rally.

Together, the revelations deepened concerns about the treatment of minority shareholders and what appears to be a setback from the campaign for better governance in recent years.

‘ACT IN CONCERT’

Singapore-based Effissimo, which owned around 15% of Toshiba but has since reduced that figure to around 10%, had appointed three candidates to Toshiba’s board of directors. Effissimo said Toshiba’s governance has not improved since an accounting scandal in 2015.

Under Japanese regulations, shareholders deemed to be “acting in concert” may be required to submit ownership declarations or, in some cases, may be charged with insider trading.

METI used a similar approach with several foreign shareholders last year, when US hedge fund King Street Capital Management sought to replace a majority of Toshiba’s board of directors, according to one of the sources and another.

King Street declined to comment.

Investors have often complained about what they call regulatory ambiguity. Some investors and experts also claim that regulations prevent shareholders from working together to improve corporate governance.

In 2017, when Japanese regulators revised the code, one of the public comments submitted to regulators complained that the government had failed to give investors assurance that they could collectively engage with companies without violate regulations.

Nicholas Benes, director of the Board Director Training Institute of Japan and expert on governance, said Japanese regulators should come up with “safe harbor” criteria, similar to Britain’s, which prohibit the use of information privileged but allow investors to make joint recommendations. to businesses.

Toshiba has come under pressure from activist funds since it sold 600 billion yen ($ 5.6 billion) of shares to dozens of foreign hedge funds during a crisis over the bankruptcy of its US nuclear unit in 2017.

At the meeting, Toshiba CEO Nobuaki Kurumatani saw his support drop dramatically to just 58%, down from 99% a year earlier – a rare reprimand from a CEO of Japan Inc.