Opposition increases against Toyota’s new “AA” shares image

Another three overseas funds announced recently they would move to vote against Toyota Motor Corp’s idea of introducing a new class of shares, banding together with an influential California pension fund as critics believe the new sale would mostly favor Japanese investors.

Toyota, the largest Japanese company and the biggest automaker in the world has decided to introduce a new class of shares – dubbed Model AA, after the first passenger car of the company – to gather funds from long-term investors. As opposed to the traditional common shares, they would not be listed and only available in Japan, putting foreign interested parties outside of the sale unless they use intermediaries. The Canada Pension Plan Investment Board, Florida State Board of Administration, and Ontario Teachers’ Pension Plan have recently said they would also give a negative vote to the strategy during Toyota’s annual general meeting on Tuesday, according to the U.S. Council of Institutional Investors, which represents pension funds and endowments.

The carmaker wants to offer up to 50 million Model AA shares for as much as 500 billion yen ($4.05 billion), saying the funds would be exclusively used for long-term development of models and technologies. The shares themselves need to be held for five years and only then can be converted into common stock or ask Toyota to buy them back at the price they were issued. The California State Teachers’ Retirement System, the second-largest U.S. public pension fund said last week it would oppose the sale as the issue would live out foreign investors.

VIa Reuters