Asset Management

Proxy Voting

Basic Policy on the Exercise of Voting Rights

In view of the importance of corporate governance, SuMi TRUST decides its basic policy on the exercise of voting rights to ensure that the exercise of these rights can make the management of investee companies respect the interests of and maximize long-term benefits for shareholders and ultimately benefit customers.


Corporate Governance System and Investment Criteria

We believe that the management policies and decisions of a company should be made not just to reflect the interests of shareholders but should also be based on the reconciliation of interests among various stakeholders including employees, creditors and clients. As such, we believe that a company’s management must actively develop sound corporate governance systems that respect the interests of shareholders, in which efficient utilization of shareholders’ equity and proactive disclosure to stakeholders are realized. The status of a corporate governance system in this broader sense can be a form of investment criterion. Whenever we find companies in our portfolio that do not pay sufficient heed to shareholder interests, we offer them guidance so that they pay proper attention by indicating our intention through the exercise of voting rights.


Our Policies on Misconduct or Anti-social Behavior

We regard misconduct or anti-social behavior by an investee company or its management to be a serious breach of corporate governance, and we endeavor to exercise voting rights in a way that improves the effectiveness of the company’s corporate governance.

Outline of our Philosophy on the Exercising of Voting Rights


Board of Directors and Directors

We believe the Board of Directors as an executive body that governs a company should comprise members with sufficient competence to make prompt and appropriate management decisions, and dedicate itself to adequately performing a management supervision function separately from execution functions. In addition, we believe companies should appoint independent outside directors to restore and enhance the ability to supervise corporate management.

  • We require that outside directors shall have independence and substantial attendance to board of directors meetings
  • If we find any issues after conducting minute examination on appropriateness, we will not make affirmative determinations on measures described below.
    • ・ Reappointment of directors when company’s earnings, capital efficiency or stock price has been sluggish in their tenure.
    • ・ Appointment of directors who are involved in antisocial issues related to the company.
  • We will not make affirmative determinations on measures if a company sets an inappropriate number of directors compared to its firm size, scope of business or significant increase/decrease of directors without reasonable explanation to shareholders.

Board of Corporate Auditors and Corporate Auditors

We believe the Board of Corporate Auditors should be structured and operated so that it adequately functions as a body that monitors and supervises the execution of duties by corporate auditors.

  • We require that outside corporate auditors shall have independence and substantial attendance to board of corporate auditors’ meetings
  • We will not make affirmative determination on measures of appointment of a corporate auditor who is perceived to be inappropriate.
  • We will not make affirmative determination on measures if a company sets a significant increase/decrease of corporate auditors compared to its firm size or scope of business without reasonable explanation to shareholders.

Compensation for Officers

We believe that compensation for officers should be set at a level commensurate with the business performance of the company and in line with the distribution of profits to shareholders.

  • We will not make affirmative determination on officers’ compensation, bonus or retirement benefits in ant of the cases described below.
    • ・ Measures proposed by a company, with poor corporate earnings, capital efficiency or stock performance, to increase compensation, to pay bonus for officers or to pay retirement benefits without clear reason.
    • ・ Measures proposed by a negatively perceived company which intends to increase compensation, to pay bonus for officers or to pay retirement benefits without clear reason.
    • ・ Measures to increase compensation or to pay bonus for officers, of which amounts are inappropriate compared to companies’ earnings and common sense.
    • ・ Measures for retirement benefits for outside directors and auditors. However, this shall not apply to final payments to abolish retirement benefits scheme.
  • We will not make affirmative determination on measures for stock options if in the cases described below.
    • ・ A case giving right to those including external directors, corporate auditors or those irrelevant to improvement of earnings.
    • ・ A case which would cause significant dilution of shareholders’ value.
    • ・ A case where the exercise price would be reduced or set at below market price.

Returning Profits to Shareholders

We believe that dividend payouts to shareholders should represent an appropriate distribution of profits according to the growth stage of the company, while taking in consideration the balance between returning profits to shareholders and retaining internal reserves based on factors including the company’s financial condition and business plan.

  • Measures for dividend
    We will not make affirmative determination on measures if they fall in the cases described below. If payment of dividends do not go through shareholders’ meeting, we will present our intention through measures to appoint directors.
    • ・ A dividend policy which has a risk to damage shareholders’ value in the aspect of long term shareholders’ benefit.
    • ・ Payout ratio lower than appropriate rate compared to capital efficiency, financial condition or internal reserve.
  • Measures for buyback

    We will not make affirmative determination on measures if they fall in the case described below.
  • ・ A case that will damage shareholders’ value without reasonable explanation, including the case with inappropriate size.

Changes to Financial Strategy and Lines of Business

For such issues as changes to the corporate financial structure including the raising of new capital, and readjustments to the scale and lines of business through mergers, transfers and acquisitions of businesses or corporate splits, we believe that management decisions by the Board of Directors should be respected in principle, unless they damage the interests of shareholders or future business development of the company.

  • Standard of measures for finance by stock issue
    • ・ We will cast an affirmative votes on new stock issues based on reasonable logic.
    • ・ We will not make affirmative determination in actions including third-party share issuance if a dilution of voting rights is significant and it will damage shareholders’ value.
  • Standard of measures that need special resolutions such as M&A, business transfer, spin-off and amendment to Articles of Incorporation.
    • ・ Basically, we cast a pro vote for measures for M&A, business transfer and spin-off if a company provides enough explanation by using external neutral institutions.
    • ・ We will not make affirmative determination on measures regarding M&A, business transfer or spin-off when it gives negative effect on corporate earnings or is against shareholders’ interest.
    • ・ Basically, we cast a pro vote for measures for expansion of new businesses that are well considered by a company on synergy with existing business and possibility of using companies’ strength for new businesses.

Measures to Deflect Hostile Takeovers

We believe that investee companies should adopt measures against hostile takeovers that enhance long-term shareholder value, and must not adopt them for the purpose of defending positions of the Board of Directions. Companies adopting such measures must meet the requirements of accountability by disclosing their intended purpose and outlines for their adoption. Such measures should be designed to provide a precise scheme that is neutral and fair to both an acquirer and acquiree, and should be adopted, renewed and amortized subject to the consent of shareholders.

  • We will not make affirmative determination on measures that do not meet all of our requirements as described below.
    • ・ That corporate governance is secured by the selection of outside directors resulting in capital efficiency over the medium term.
    • ・ Actuating measureus to deflect hostile takeovers must be examined, deliberated and decided by an independent committee consisting of independent members. Alternatively, it must be submitted to a shareholders' meeting to confirm shareholders' approval.
    • ・ The countermeasure must be for a limited period, and must be fair and neutral to both the potential acquirer and acquiree.

In addition, we will declare our intention when we vote on measures regarding the appointment of directors in those cases where companies propose a measure to deflect hostile takeovers without going through a shareholders’ meeting.


Other Proposals

Other various measures, including amendments to the Articles of Incorporation, must also contribute to enhancing shareholder value, ultimately for the long-term growth of the interests of beneficiaries, and accountability must be fulfilled as a prerequisite for the implementation of such measures.

  • Standard for measures for corporate organization
    • ・ Basically, we cast a pro vote for measures to strengthen a function of observation to management such as shifting to a company with a committee governance structure.
  • Standard for measures to reduce or exempt from liability of directors and auditors
    • ・ Basically, we cast a pro vote for measures to reduce or exempt from liability of directors and auditors.
    • Standard for measures of appointment of accounting auditors
    • ・ Basically, we cast a pro vote for measures of appointment of accounting auditors. However, if there is a doubt concerning the independence of accounting auditors, we will not make affirmative determination.
    • Standard for amendments to Articles of Incorporation
    • ・ We judge the following measures after examining appropriateness, effects on shareholders’ value and beneficiaries’ interest,
    • a. Stricter conditions for dismissal of a director
    • b. Shortening a tenure of a director
    • c. Significant change of maximum number of directors
    • d. Defining a board of directors as decision making body for appropriation of surplus
    • e. Raising the number of authorized shares
    • f. Staggered terms, flexible record dates and a reduction of the maximum number of directors
    • g. Shortening a period and easing requirements for shareholders' right to propose
Results of Voting(From July 2012 - To June 2013) 
Results of Voting(From July 2013 - To June 2014) 

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