Proxy advisory firm ISS recommends against Toshiba's break-up plan

Tokyo: Influential proxy advisory firm Institutional Shareholder Services (ISS) on Thursday advised against Toshiba Corp's break-up plan that is up for a vote on March 24, further clouding prospects for the controversial restructuring.

The Japanese conglomerate is aiming to break into two companies and is due to hold an extraordinary shareholders' meeting to win approval. The plan has been criticised by foreign hedge fund shareholders - many of which favour a sale to a private equity firm.

"Years of corporate governance turmoil...a split shareholder base, and an uninspiring management track record raise significant scepticism as to whether the current plan is superior to a privatisation proposal," ISS said.


Toshiba said in a statement that it would continue to make every effort to explain its proposal to shareholders to gain their support.

ISS also recommended shareholders vote against a major shareholder's proposal that Toshiba explore other options and solicit buyout offers from private equity firms.

The proposal from the shareholder, Singapore-based 3D Investment Partners, "appears overly prescriptive and premature given the three months remaining until the company's annual shareholders meeting," it said.

Toshiba earlier this month appointed a new chief executive after shareholders voiced concerns that management had not appeared able to proceed with the company's restructuring plans in a timely manner.