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Farallon Comments on ISS Report Confirming Need for Toshiba to Rebuild Investor Trust

·4 min read

ISS Highlights Need for Company to Provide "Clearer Disclosure" On Capital Policy and Notes "Reasonable Basis" for Shareholder Skepticism

ISS Highlights the "Urgent Need to Address the Deteriorating Trust of its Shareholder Base"

Farallon Urges Fellow Toshiba Shareholders to Vote for Its EGM Proposal

Farallon Capital Management, L.L.C. ("Farallon") today issued the following statement in response to a report by Institutional Shareholder Services Inc. (ISS) regarding Toshiba Corporation’s ("Toshiba" or the "Company") (6502.T) extraordinary general meeting of shareholders ("EGM"), which is scheduled to be held on March 18, 2021.

Farallon stated: "The ISS report confirms that Toshiba modified its capital policy in November 2020 and now needs to rebuild the trust of its shareholders. Without that trust, Toshiba will not achieve its full potential or be fairly valued in the capital markets."

In its report, ISS wrote:1

  • There is an "urgent need to address the deteriorating trust of [Toshiba’s] shareholder base."

  • "Given Toshiba's prolonged poor performance and the various controversies that have plagued the company in recent years, there is a reasonable basis for Farallon's skepticism."

  • "There is little doubt that management must rebuild investor trust. The company has taken steps to clarify its intentions regarding capital allocation – though clearer disclosure is still needed, given that a lot seems to be still lost in translation."

  • The company’s November announcement expanded "the potential M&A pot from hundreds [of billion] to up to approximately JPY 1 trillion."

  • With the November 2020 announcement, Toshiba indicated for the first time that the "IRR of share buybacks [will] not [be] evaluated in conjunction with investment opportunities [including M&A]," but instead only "after" capital is deployed into M&A deals.

Farallon believes that our EGM proposal is an opportunity for shareholders to improve transparency regarding Toshiba’s capital allocation policy and a means to convey to Toshiba the vital importance of honoring its commitments to shareholders.

As pointed out by ISS, "the issue is not so much what the company is doing, but rather what some believe it could potentially do absent external shareholder pressure."

Farallon continues to believe that shareholder oversight is critical in ensuring accountability and we therefore urge our fellow shareholders to vote for our EGM proposal.

More information can be found here:

About Farallon

Farallon Capital Management, L.L.C., is a global investment firm founded in 1986 and registered as an investment advisor with the United States Securities and Exchange Commission since 1990. Farallon seeks investments across asset classes and around the world through a process of bottom-up fundamental research and analysis emphasizing capital preservation. More information on Farallon is available at


This press release is for general information purposes only and is not complete. Under no circumstances is this intended to be, nor should it be construed as an offer, invitation, marketing of services or products, advertisement, inducement or representation of any kind, nor as investment advice or a recommendation to buy or sell any investment products or make any type of investment in securities. This press release should not be construed as legal, tax, investment, financial or other advice. Additionally, this press release should not be construed as an offer to buy any investment in any fund or account managed by Farallon Capital Management L.L.C. or any of its affiliates or representatives (collectively, "Farallon").

This press release should not be construed as soliciting any other Toshiba shareholder to authorize Farallon or any third party to exercise voting rights on such shareholder's behalf with respect to any matter proposed to be presented to shareholders as indicated in the Convocation Notice of the Extraordinary General Meeting of Shareholders. This press release, and the presentation referenced herein, is not intended and should not be considered to solicit, encourage, induce or seek for Toshiba shareholders to authorize Farallon or any other third party as their proxy in exercising their voting rights on their behalf. Farallon is not soliciting or requesting other shareholders of Toshiba to jointly exercise their shareholders' rights with Farallon (including, but not limited to, voting rights). Farallon declares that it does not intend to be treated or deemed a "joint holder" (kyo-do hoyu-sha) under the Japanese Financial Instruments and Exchange Act or a "related person" (kankei-sha) under the Foreign Exchange and Foreign Trade Act with other Toshiba shareholders.

This press release is made available exclusively by Farallon and not by or on behalf of Toshiba or its affiliates or subsidiaries or any other person. Farallon is not an affiliate of Toshiba and neither Farallon nor its principals or representatives are authorized to disseminate any information for or on behalf of Toshiba, and nor does Farallon purport to do so.

1 Permission to quote from the ISS report was neither sought nor obtained.

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