Toshiba shareholders have rejected plans that were put forward by management to split the company into two, following a shareholders meeting on Thursday.
Under the plan, Toshiba intended to keep Toshiba and Infrastructure Service Co as one entity, and spin out Device Co on its own.
The company said the decision to separate into two independent businesses came after the board’s “thorough review” of its reorganisation plan and processes.
“After further engaging with key stakeholders and completing the additional analysis, we determined that separating Toshiba into two standalone companies and divesting certain non-core assets is in the best long-term interests of our company and its shareholders, customers, business partners and employees,” Toshiba interim chair, president and CEO Satoshi Tsunakawa said in February.
Prior to that, Toshiba had intended to split into three standalone businesses.
The restructure plans were previously touted by the Japanese conglomerate as one that would help deliver sustainable profit growth as well as enhance shareholder value and trust, after several months of turmoil within the company, including the ousting of the company’s chairman Osamu Nagayama by shareholders in June.
Another director that was part of Toshiba’s audit committee, Nobuyuki Kobayashi, was also ousted during the vote by shareholders at the company’s annual general meeting (AGM) last year.
It was the first AGM since an independent investigation [PDF], passed by shareholders, revealed the company colluded with Japanese officials to prevent certain shareholders from exercising their voting rights at last year’s AGM.
Nagayama previously penned an open letter stating his “deep regret” about Toshiba’s conduct and pledged to be an agent of positive change.
The investigation, conducted by three lawyers, found Toshiba “devised a plan” with Ministry of Economy, Trade and Industry officials to prevent Effissimo Capital Management, which holds 9.9% of Toshiba shares, from exercising certain shareholder proposals at Toshiba’s annual general meetings.
During Thursday’s meeting, shareholders also rejected a separate proposal by shareholder, Singapore-based 3D Investment Partners, to consider alternative options.
“Toshiba accepts the opinion of shareholders expressed at the EGM and will make best efforts to build trust with shareholders and reconsider its strategic options to enhance corporate value continuously,” Toshiba stated.