The coming figure of Tokyo Electric Power Company (TEPCO) is one of serious concerns in Electric Utility Industry.
As well-known, Nuclear Damage Compensation and Decommissioning Facility Corporation (NDF) is now a majority stockholder of it, therefore, TEPCO is virtually under control of Ministry of Economy, Trade and Industry (METI).
In newly-revised general business plan, published in May 2017, NDF is due to reconsider their engagement in TEPCO by the end of 2019FY. Stakeholders of utility industry generally believe that the judgment of NDF will decide whether TEPCO will be able to restore their self-determination or not.
However, TEPCO will never do their business under their own judgment. Let us look back present circumstances.
NDF which invests 1 billion yen in TEPCO has two classified shares, A and B shares. A share is endowed with the right to vote, B share is not. Accordingly, the percentage of their voting rights is determined by the ratio of A and B shares they have. As of now, they have just the majority of voting rights. (However, potentially, they have far beyond two-thirds of votes with both A and B shares.)
NDF agrees with TEPCO that they will decrease their voting rights under half, when they judge that the Reform of TEPCO’s management has reached to the extent they are content with, or when TEPCO independently finance by publicly-issued bond. In such cases, concretely, NDF will decrease their voting rights by adjusting the ratio of A and B shares (to for example 49%).
When that procedure occurs, Will anything change next?
Think about voting rights. NDF has the right to request acquisition for A share with B (vice versa). Therefore, they can any time change the ratio of A and B shares at their will. Even if they decrease their voting rights in 2019FY, they can easily restore majority by acquiring A share in exchange for B share.
Furthermore, corporate governance matters seriously. TEPCO is a corporation with nomination committee governance. Nomination committee, majority of which are comprised of outside directors, recommend the members of directors to general stockholders’ meeting. And outside directors are virtually appointed by NDF. In short, NDF is in charge of personnel in TEPCO. This environment will not change irrespective of the NDF’s engagement due to be reconsidered by the end of 2019FY.
METI is going to have the initiative of Japan’s energy policy by indirectly control themanagement of TEPCO via NDF. TEPCO, which unfortunately encounter a tragic Fukushima-daiichi disaster, will no longer restore self-determination.