Medipal Holdings will ask shareholders on December 15 to rewrite the clause in its articles of incorporation that stops them from deciding dividends. The board is not proposing to give up its own authority. Under the change, shareholders could decide dividends in addition to the board.
The company, a Tokyo Prime-listed wholesaler (code 7459), announced the proposal after a board meeting on November 5. Earlier Tokyo Brief coverage
What Article 39 would say
Article 39 now says that decisions on surplus disposal, dividends and the other matters listed in Article 459(1) of the Companies Act are made by board resolution, unless the law provides otherwise. Its second paragraph says those matters are not decided by shareholder resolution.
The amendment changes "are made by" board resolution to "may be made by" board resolution, and deletes the second paragraph. The carve-out for matters the law assigns elsewhere stays. Capital-allocation decisions outside the clause's listed subjects do not move. If approved at the meeting, the change takes effect the same day. Until then it is a proposal.
One text, two proposers
Item 1 on the agenda is both a company proposal and a shareholder proposal with identical content. The shareholder is The Northern Trust Company AVFC Re: Silchester International Investors International Value Equity Trust. In its proposal letter, it says Northern Trust is the fund's custodian and holds the fund's interests in a nominee account. It says Silchester International Investors has been authorised to make the request.
Medipal's stated reason is that it had put dividends with the board to keep capital policy flexible. It now says dialogue with shareholders on returns and growth spending has become more important, and it wants shareholders to be able to voice a view at a meeting. The proposer says the clause was used to refuse its proposal at the last annual meeting. The board rejects that: it says the matter was not a valid subject for a shareholder proposal under the Companies Act and Article 39, and it followed the law and its articles rather than refusing.
The board resolved the agenda unanimously, including its outside directors. The meeting is at 10am on December 15 at Tokyo Bay Ariake Washington Hotel. Medipal accepted a November 2 letter from the proposer, which arrived after the deadline, as an amendment to the earlier request rather than a new proposal.
What rides on the vote
Three other items are on the agenda, all shareholder proposals that the board opposes. They are the removal of the director who stepped down as president in October, a special dividend of ¥122 a share (about ¥24.9bn in total), and a buyback of up to 33.8mn shares costing up to ¥85bn within a year. The special dividend and buyback are conditional on item 1 passing. Medipal says that if the amendment passes, both would become legally binding resolutions, and that if both are approved, about ¥109.9bn would leave the company in a short period.
The board's case is investment against payout. It says paying out nearly all profit would crowd out growth spending, and that ¥85bn is about 15.4% of shareholders' equity at the end of September 2026. It argues that financial strength matters for its role in supplying drugs. It also says it has revised its cost-of-capital estimate to 6% to 7%, expects return on equity above 8% for the year to March 2027, and has begun studying a higher target than its current total payout ratio of at least 40%.