May 9, 2019 / 9:05 AM / 4 months ago

Lixil shareholders withdraw extraordinary meeting request, but vow to push for change

TOKYO, May 9 (Reuters) - A group of investors in Japanese toilet maker Lixil Group said on Thursday they had withdrawn a request for an extraordinary shareholders meeting, after two top managers bowed to pressure and decided to resign.

But the investors - Marathon Asset Management, Indus Capital Partners, London-based Polar Capital Holdings Plc and Taiyo Pacific Partners LP - also signalled that their push for better corporate governance was not over and called on Lixil to reform.

The investors had in March called for the meeting to seek the ouster of the chief executive and chief operating officer from the board, citing a lack of corporate governance. Shortly after, Lixil CEO Yoichiro Ushioda and COO Hirokazu Yamanashi said they would resign from the board.

The investors said in a statement that they had withdrawn their request for the extraordinary meeting after the company confirmed Ushioda would resign from the board as of May 20 and Yamanashi would do so following June’s annual meeting.

“The institutional shareholders believe that the dismissal of the two directors alone will not entirely improve Lixil’s corporate governance issues,” the investors said.

The shareholders said they expected Lixil to take into account the view of all stakeholders when selecting candidates for the board at the June meeting.

Lixil confirmed in a statement that the request for a meeting had been withdrawn and apologised to investors for any inconvenience. It has previously said it was working to improve its governance.

The battle at Lixil stems from the abrupt resignation of its former CEO Kinya Seto in October, and the prompt appointment of Ushioda, who hails from one of the company’s founding families.

Lixil, which also owns the American Standard and Grohe brands, has emerged as something of a test case for whether minority shareholders can improve corporate governance in Japan. (Reporting by Junko Fujita; Editing by David Dolan and Himani Sarkar)

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