Japanese financial regulators have ordered the countrys two largest providers of shareholder services to submit full accounts of how votes were ignored or miscounted at thousands of companies annual meetings.
Sumitomo mitsui trust and mizuho trust were told this week by the regulator to provide the reports as soon as possible, according to two people with direct knowledge of the matter, as the groups face growing pressure to guarantee that voting at critical agms were conducted fairly.
The demand by the financial services agency raises the stakes in an scandal that erupted after sumitomo mitsui trust, the largest of the shareholder service providers, admitted votes at the agms of nearly 1,000 companies were miscounted as a result of an outdated counting method.
Mizuho trust, using the same method, said past voting for 371 client companies would be investigated.
Investors and shareholder groups fear the issue may have affected the outcomes of critical votes at agms dating back decades.
The banks could ultimately face business improvement orders, depending on the explanations they submit and measures they outline to prevent further problems.
Sumitomo mitsui trust and mizuho trust declined to comment.
In its initial explanation of how the miscounts happened, sumitomo mitsui trust said the problem lay with the special forward processing arrangements deployed for tallying the huge volumes of votes that it handles in march, may and june the traditional peaks of agms in corporate japan.
In order to give itself time needed to count the physical voting cards, sumitomo mitsui trust has an agreement with the postal service in which votes are delivered to it a day early, but issued with a certificate of delivery bearing the date they would have been normally been delivered on.
According to sumitomo mitsui trust, the risk is that some votes are mistakenly assumed to have arrived after the counting deadline, and are therefore ignored.
In a sign of how pervasive the practice appears to have been, a day after admitting errors in the agms of 1,000 companies, sumitomo mitsui trust issued a statement to its own shareholders in which it said that votes at the banks own agm in june this year had been miscounted.
The issue came to light in the wake of irregularities surrounding toshibas agm at which chief executive nobuaki kurumatani risked being forced to step down by an investor rebellion. after mr kurumatani survived the agm, one of toshibas investors, the singapore-based 3d, discovered that votes on about 5m of its shares had not been counted by sumitomo mitsui trust.