One of Japan's largest providers of shareholder services has admitted to a major operational blunder, after it failed to count 3.4 million postal votes for nearly 1000 companies ahead of their annual general meetings.
Sumitomo Mitsui Trust Bank (SuMi TRUST Bank) admitted to the major miscount after its client Toshiba Corporation called for an investigation into a voting bungle at its shareholder meeting in July.
The bank had outsourced its tallying operations to its equity-method affiliate Japan Stockholders Data Service Company (JaSt), which it noted, conducts tallying of a large volume of voting rights exercise forms during the months of March, May and June each year.
JaST also is responsible for tallying operations from Tokyo Securities Transfer Agent and Japan Securities Agents, both consolidated subsidiaries of SuMI TRUST Bank.
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The company uses a tallying system dubbed forward processing, in which a postal office will issue a "certificate of delivery" on the date that votes are delivered, with JaSt tallying votes with respect to the date indicated on the certificate.
Forward processing was implemented in July as well, SuMi TRUST Bank said, after a substantial number of companies postponed their general meetings to July in the wake of the COVID-19 pandemic.
"SuMi TRUST Bank and JaSt have, in consultation with external law firms, conducted a review into the appropriateness of the forward processing implemented by JaSt, and come to the final conclusion that the voting rights exercise forms received in written from by forward processing on the deadline for the written and electronic exercise of voting rights should have been counted as part of the tallied results, notwithstanding the date on the certificate of delivery," it said.
Votes received in written form on July 30, the deadline, were subject to forward processing and were thus excluded from tallying, it said, when they should have been included.
This miscount impacts 975 companies that entrust its tallying operations to JaST, SuMi TRUST Bank said, which calculated the ratio of the total number of voting rights that were miscounted for all the companies at 0.31%.
After conducting a recount of exercised voting rights, SuMi TRUST Bank said that it believed there to be no cases in which the final result of votes - whether approval or rejection - had been impacted.
It said it would "promptly inform" all of the companies individually on the subject of the recounts, and what measures should be taken.
Following the blunder, JaST will no longer use forward processing, and will instead conduct tallying operations on the basis of the date of receipt from the post office.
This will enable more "accurate, prompt and efficient" tallying of voting rights, it said.
The bank apologised to its clients and their shareholders for the blunder.
"We wish to once again express our sincere apologies to all companies that have entrusted the provision of stock transfer agency services business to SuMi TRUST Bank and its consolidated subsidiaries, Tokyo Securities Transfer Agent and Japan Securities Transfer Agents, as well as to all shareholders of these companies and capital market participants in any way impacted or affected by the matters described herein," it said.