Companies Continue to Unwind Cross-Shareholdings- The Fiscal 1999 Cross-Shareholding Survey

Hideaki Inoue

Introduction

Our survey found that companies are continuing to unwind their cross-shareholdings at a fast pace， andconfirms that the scope of unwinding has spread beyond tenuous cross-shareholdings， the product ofzaitech in the bubble period. However， no specific alternatives have emerged to replace cross-holdingsas a management stabilizing mechanism. In any case， it appears that Japan’s cross-ownership structureis being dismantled with the objectives of bringing Japan’s corporate system into conformity withglobal standards， and reducing price risks of shareholdings. Meanwhile， the increase in shareholdingsof foreign investors， institutional investors such as investment trusts and pension funds， and individualinvestors has raised concerns about the ability to secure a quorem at annual general meetings. To pre-ventconfusion at the practical level， companies that are scrapping their cross-holdings now need toexplore how to build new ways to achieve management stability.