Japanese companies are facing a record number of shareholder proposals from activist investors ahead of their annual shareholder meetings later this month.

As of Friday, institutional investors had submitted a total of 139 proposals to 51 Japanese companies, up from 137 the previous year, according to Mitsubishi UFJ Trust and Banking. Of them, proposals related to executive appointments numbered 19, up from 14.

¡°There is a tendency to propose the appointment of outside directors to companies that may go private,¡± said Hiroo Shimoda, a senior official at Mitsubishi UFJ Trust.

Some institutional investors demanded the removal of top executives. Hong Kong investment fund Oasis Management sought the removal of Kyocera Chairman Goro Yamaguchi over the company¡¯s poor earnings.

British investment fund Asset Value Investors proposed that Rohto Pharmaceutical dismiss Chairman Kunio Yamada, who is from the company¡¯s founding family.

Nomura Asset Management, which manages over ?111 trillion in assets, has voted for 10% to 15% of shareholder proposals since 2020.

Yosuke Uchida, head of Nomura Asset Management¡¯s Responsible Investment Department, said shareholders have begun making proposals that are easy to support, such as those calling for structural reform in the medium to long term.

Last year, Nomura Asset Management voted for part of a shareholder proposal to Fuji Media Holdings regarding the appointment of board members. Uchida explained that his company could vote for proposals seeking the hiring of outside directors at scandal-hit companies or financially struggling firms.

An SMBC Nikko Securities official who has long been involved in dialogue between companies and investors said the share of shareholders voting for companies¡¯ proposals tends to fall when the companies suffer scandals or have governance-related issues.

The official said activist shareholders are likely to continue gaining more influence by exercising their right to make proposals to companies.