Exercise of Voting Rights and the Stewardship
Code of the Trustee of a Trust
Kaizo Sato
（Sumitomo Mitsui Trust Bank, Ltd）

Among the issues being considered for trust banks in connection
with the Japan’s Stewardship Code, I report on the issues regarding
the“exercise of voting rights of the trustee of a trust,”and“MaterialProposals”that have a significant practical impact upon the executionof a“purposeful dialogue.”
Regarding the first issue, the“exercise of voting rights of thetrustee of a trust,”since trustees and beneficiaries differ and thepurpose of a trust varies by individual trust, in principal, it would bedesirable to determine the content of the exercise of the voting rights
according to the particular trust, or by the category of the trust,after individually considering the status of the investee companies
and the substance of the dialogue with the relevant companies, etc.
upon fulfilling the stewardship responsibilities. However, particularly
for trust banks, as there are administrative issues and limitations inscheduling with regard to exercising voting rights, while the category
and the number of trusts in existence, and the investee companies, isaround several thousand companies, the types of methods that may beconsidered to exercise the voting rights upon fulfilling the stewardship
responsibilities while fulfilling the responsibilities of the trustee
imposed under the trust agreements, will be examined having regard
for the relationship with the“duty to administer trust affairs in linewith the purpose of the trust,”the“due care of a prudent manager,”and the“duty of loyalty”under the Trust Act.
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信託法研究第41号（2016）

In conclusion, the idea that it would not conflict with theobligations under the Trust Act or the stewardship responsibilities,
to make it a principle to exercise voting rights pursuant to the single
guidelines for the exercise of voting rights, on the premise that it
may be possible to employ a method of divided exercise, in certain
cases such as the case where a decision to exercise that differs fromthe guidelines for the exercise of voting rights is required due to thedifferences in the purposes and the terms of the trust, and the cases
where, upon the client’s request, a decision for the exercise that differsfrom the guidelines, was indicated.
Regarding the second issue,“Material Proposal,”if“purposefuldialogue” (Referred to as engagement) falls under the Material
Proposal under the large-volume holdings reporting system under theFinancial Instruments and Exchange Act, the“special provisions of
the large-volume holdings reporting system”may not be used, and an
extremely heavy administrative burden will be incurred, particularly
by trust banks.

However, trust banks taking less responses inengagement activities in order to avoid administrative burdens is notdesirable from the perspective of stewardship responsibilities, nor theobligations of the trustee of a trust.
Therefore, upon calculating the trust banks’ Ownership Ratioof Share Certificates, etc. under the large-volume holdings reporting
system, counting each of bank accounts, trust accounts including retrust subsidiaries, etc., and subsidiaries that are Settlor Companies ofInvestment Trusts, independently, will contribute to Principle 4 of theStewardship Code“enhancing the companies’medium- to long-termvalue and capital efficiency, and promoting their sustainable growth.”
Moreover, also with regard to bank accounts, it may be possible toenhance corporate value and capital efficiency of client companies
more actively than previously, and to engage in activities to promote― 144 ―

their sustainable growth. Hence, it may be expected to be helpful for
revitalizing the Japanese economy.

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