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METI official: Shareholders “fickle and irresponsibile”

Earlier today, the ruling Liberal Democratic Party postponed plans to introduce a bill that would prevent foreign investors from owning more than one third of shares with voting rights in the nation’s airports. The Narita International Airport Corporation is one of many airports planning to go public in the coming years, and many amongst the LDP sought to protect what they felt was “fundamental national infrastructure.” (By the way, if you’re dying to get in on that Narita IPO, I have some really, really sweet wooden nickels you just have to check out).

Although the bill is not totally dead yet, the Nikkei quotes Financial Services Minister Yoshimi Watanabe, who is opposed to the idea, as saying that the proposed law it would be a “closed and isolated” measure against foreign investment.

I have to admit, that seems to be some progressive thinking. It would be hard to fault Japan for being protectionist over the sale of airports and seaports to overseas investors, and the nation would hardly be alone in taking such measures.

Later on Tuesday, however, a far more fascinating story was published in the Nikkei. According to the paper, Ministry of Economy, Trade and Industry Vice Minister Takao Kitabata, while speaking at a lecture on January 24, actually said the following out loud:

To be blunt, shareholders in general do not have the ability to run a company, and they are fickle and irresponsible.They only take on a limited responsibility, but they greedily demand high dividend payments. Steel Partners goes so far as to issue threats to corporate managers and other shareholders.

Kitabata thinks that firms should be able to pick and choose their shareholders, though he admits there may be some downside to this strategy. Kitabata talked about making it easier for firms to issue shares that carry no voting rights, or multiple voting rights. He suggested lower capital gains taxes for those who have held shares for over five years, and said that outside directors are “useless.”

As the Nikkei’s writer put it:

The best way to attract desirable shareholders is to run your company well. If Japanese firms come to think of nothing but introducing takeover defense steps, they will make laughingstocks of themselves to the rest of the world.

Sounds like good advice. Especially given this little tidbit from Wednesday morning’s upcoming Nikkei:

Sawai Pharmaceutical Co. on Tuesday said it has confirmed that the stake held by Fidelity Investments Japan Ltd. had reached 10.34%, or 1.62 million shares, as of Jan. 23. The drugmaker said it was unable to determine the rankings of its large shareholders.

If that doesn’t demonstrate the degree to which shareholders are “fickle and irresponsible,” I don’t know what does (Sarcasm alert).

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