Toyota Motor shareholders approve Controversial New Share Sale

A controversial share sale been defended by Toyota Motor, and critics have called the move a measure to tame shareholder activism. According to the world's biggest carmaker, 75% of shareholders had casted their votes in favor of the plan on Tuesday.

As per the plan, 500 million shares will be sold and they must be held for five years. Also, the shares will not be publicly traded.

Toyota said long-term planning is the major requirement of its business now. The plan designed by the company is meant for lifting its ratio of retail investors committed to the company. "The approval rate is quite high. There are very few types of equity instruments in Japan, so if this move leads to further diversification, that would be welcome", said Yo Ota, a corporate lawyer at Tokyo-based law firm Nishimura & Asahi.

However, analysts have to say that chances were high for discouragement in others because of the controversy over the scheme. They said that any company planning a similar move will also require to have a strong balance sheet.

A two-thirds majority was required for Japan's biggest vehicle maker to get approval and the votes were largely casted in favor of the plan because foreign investors account for about 30% of its shares.

Toyota will buy back the same number of shares to prevent the dilution of its common stock.

Toyota said that expensive research work, particularly on next-generation technology such as fuel cell cars, will be significantly supported by funding available from the new share issue.