What would you do with that parent-child relationship? July 27, 17:28

"It's better to do that." "This is better." Parents tend to talk to their children. "Please let me do what I want." Your child will probably think so. Looking back at me, the sense of distance between parents and children is subtle. Subtle parent-child relationship. In fact, the company has it too. It is a state of “parent-child listing” in which the parent company and the subsidiary each list their shares. Especially in Japan, investors in Europe and the United States have seen it as a problem. Recently, the movement to eliminate the parent-child relationship has become noticeable, but I searched for what to think about. (Economic Department reporter Toshiki Arai, Keiichiro Furuichi)

Outstanding Japanese parenthood

"Parent-child listing".

This is a word that is unfamiliar to me, but it is one of the characteristics of Japanese corporate groups. According to the Tokyo Stock Exchange, the number of subsidiaries listed with their parents is 294 as of July 27. It accounts for 8% of all listed companies.

What about the world? Although it is not possible to make uniform comparisons because the definitions are different, comparing the subsidiaries listed after the parent company holds 50% or more of the shares, as of December 2018, 28 companies in the United States, 18 companies in France, And 0 companies in the UK... Looking at this number, it seems that Japan is a country with many parent-child listings.

A representative parent-child listing is SoftBank Group (parent)-SoftBank (child). Japan Post (parent)-Japan Post Bank, Japan Post Insurance (child). Many companies, such as RIZAP, which develops training gyms, have many subsidiaries listed.

What are the advantages of listing a subsidiary? The first is to make it easier to raise funds. The stock listing of a subsidiary that develops business in a specific field such as mobile phones makes it easier for investors to imagine what they will use the money they collect.

If business performance improves, it is likely that it will directly lead to a rise in stock prices.

Also, if you become a listed company, you may find it advantageous for hiring employees. It seems that the brand image of the subsidiary is also positive.

Is it all right for the child to care about his/her complexion?

However, the parent-child listing has been unpopular with overseas investors and has been the subject of criticism for many years. Where is the problem A big point is the fear of "conflicts of interest".

There are concerns that the subsidiary may be “exploited” as the parent company speaks out to its subsidiaries, forcing them to make unfavorable deals and paying large dividends.

To be sure, it cannot be denied that there is a risk that the management may not be in the interests of ordinary shareholders, depending on the appearance of the parent company.

Parent-child relationship is resolved at this time

Against this background of criticism, the movement to delist the parent and child is accelerating.

Toshiba acquired the shares of the three listed subsidiaries from other investors and made them an unlisted wholly owned subsidiary. It explains how to accelerate management and avoid the possibility of conflicts of interest.

On the other hand, in order to promote the selection and concentration of businesses, Hitachi, on the other hand, sold off its own shares to eliminate the parent-child relationship with its subsidiary Hitachi Chemical.

Rule changes to ensure child independence

This move is supported by the change in rules on the Tokyo Stock Exchange. In June of last year, the Ministry of Economy, Trade and Industry compiled guidelines for corporate group governance, including parent-child listing issues, and the Tokyo Stock Exchange decided to tighten the rules in order to keep pace with that and to increase the independence of subsidiaries. is.

In a nutshell, the content is stricter qualifications for outside directors and corporate auditors. The executive officer of the parent company prevented a listed subsidiary from becoming an independent outside director or outside corporate auditor within 10 years after he retired after this general shareholders meeting. This is a rule change that makes it easier for a subsidiary to make its own judgment without receiving any instructions from the parent company.

Domestic investors are also responding. Sumitomo Mitsui Trust Asset Management, which keeps pension funds and invests in it, therefore, as a general rule, for listed subsidiaries with a majority of independent outside directors, the Clarified the opposite policy. It is a step further than before.

Delisting parents and children by tightening regulations

Parent-child listing unique to Japan. What should I do? Yoshimitsu Kobayashi, Chairman of Mitsubishi Chemical Holdings, is in the position that the parent-child listing should be resolved.

Mr. Yoshimitsu Kobayashi, Chairman of Mitsubishi Chemical Holdings
"The issue of parent-child listing seems to be that the parent company can not put in a deep hand in executive personnel and compliance, and even the subsidiary causes misunderstanding that the parent company controls everything. The last major theme is that while the government has been working on the governance reform of listed companies for several years led by the government, and that "Japanese companies have changed" from overseas. A publicly-listed subsidiary, with the guidelines set by the government and the Tokyo Stock Exchange, the subsidiary has at least one-third, and eventually a majority of the independent outside directors, and then the parent company acquires a 100% stake in the subsidiary. Companies should be asked to choose whether to become a subsidiary or sell.''

Mitsubishi Chemical Holdings, which is chaired by Mr. Kobayashi, announced in November last year that it intends to make its subsidiary, Mitsubishi Tanabe Pharma, a wholly owned subsidiary, and this was completed in March.

Further regulation carefully

On the other hand, some people are cautious about excessive regulations by countries. Minoru Sawaguchi of Mori/Hamada Matsumoto Law Office, who is familiar with corporate governance, says that listing a parent and child also has the function of strengthening the company.

Mori/Hamada Matsumoto Law Office Minoru Sawaguchi
"Understanding the direction of reform. There is no problem in listing parents and children, but I do not think it is a top priority issue. Japanese companies "select and concentrate business" The listing of a subsidiary is one of the means by which the parent company can proceed with the business restructuring, and the shares of the listed subsidiary have been well-established as an investment target for many years, and investors are aware of the challenges. It should be left to the market choice, not to enforce strong restrictions such as the uniform ban on parent-child listings.”

Where is the proper sense of distance between parents and children?

Looking back, I think that the relationship between parents and children changed a little after leaving home after getting employment and becoming independent, and many people have become smoother than before. You may have the experience that you have settled successfully by setting rules in your home that respect the will of the child.

The parent-child relationship of Japanese companies that Western investors feel strange from the outside. How to get rid of that concern is a difficult task. The sense of distance between parents and children is a problem for companies.

Economic Department reporter
Toshiki Arai

Joined in 2005
After working at Kitami station and Sapporo station
, coverage of a wide range of fields such as digital economy, statistical problems, disaster prevention

Economy reporter
FuruichiAkira Ichiro

2014. He joined
through the Niigata stations
currently responsible for the financial industry