UK - One of the UK's largest pension schemes the British Railway Pension Fund (RailPen) has asked around 200 Japanese companies to improve corporate governance practices.
Frank Curtiss, head of corporate governance at RailPen Investments, told IPE today the £20bn (€26.8bn) fund is corresponding with the 193 Japanese companies in which it invests, since it started voting in the region two years ago.
In cooperation with Japanese corporate governance practitioner Toshiaki Oguchi, the fund began approaching companies last November with its views on various governance issues and to present the Japanese version of its corporate governance policy.
One of RailPen's key demands is for the introduction of more independent company boards: "We will vote against the board with less than 15% ‘outsiders', non-executives, or a minimum of two," said Curtiss.
Even though the UK threshold for this requirement is 50%, Curtiss thinks UK corporate governance practices cannot be exported lock, stock and barrel to other jurisdictions.
"It is a process of evolution and we hope that Japan will improve the proportion of independent directors on their board," said Curtiss, adding RailPen will progressively raise the bar.
Moreover, RailPen is "instinctively suspicious" of anti-takeover defences, or so-called poison pills, unless they have been designed to prevent shareholder interests from being harmed.
According to Curtiss, around half of the companies RailPen wrote to have already responded or even offered meetings.
RailPen has around £700m invested in Japanese equities, making it the fund's second-largest overseas equities market.
The fund says it has plans to start using its voting rights in Hong Kong and eventually also in China.
"This year we have also started voting in Australia," said Curtiss, adding the fund already votes in Singapore.
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