Toyota Seen Harming Minority Shareholders in Daihatsu Buyout

Toyota Motor Corp.’s $3.1 billion bid to buy out Daihatsu Motor Co. has run into shareholder and proxy-adviser criticism for being on the cheap, highlighting corporate governance challenges years into Japan Inc.’s push to become more investor friendly. A vote by Daihatsu shareholders Wednesday puts the spotlight back on Toyota one year after criticism by ISS and some investors against its creation of a class of shares that couldn’t be traded for five years. As Prime Minister Shinzo Abe’s administration calls on Japanese companies to add independent board members and boost shareholder returns, Toyota is attempting to take over a 51 percent-owned affiliate that lacks a truly independent director, according to Arga and proxy advisers ISS and Glass Lewis & Co. “It’s bad for Toyota’s image,” A. Rama Krishna, founder and chief investment officer of Arga, said in an interview. “You’ve got the administration trying to make a big case for corporate governance. Here’s the largest corporation in Japan flouting every corporate governance rule you can think of.”