Toshiba may add more outside directors after accounting irregularities

TOKYO: Toshiba Corp may appoint more outside board members to improve oversight of its accounts which it is now investigating after finding irregularities, its CEO said on Thursday. Toshiba has not been able to close its books for the year that ended in March as a third-part committee it hired probes its book-keeping practices. It has said it likely overstated profits by around 54 billion yen ($436 million) in recent years.

The company has also skipped its year-end dividend to shareholders, who angrily challenged Chief Executive Hisao Tanaka during an annual general meeting, which lasted for a record 3-1/4 hours.

"This is the biggest crisis in our 140 years of business," Tanaka said, as several shareholders called on him and the board to resign. "To ensure this does not happen again, we are considering the appointment of more outside directors and improving governance."

Currently, a quarter of Toshiba's current 16 board members are independent. The company is due to hold an extraordinary shareholders' meeting in September, when it may propose new board members.

Tanaka's proposal comes after Japan earlier this month adopted a new corporate governance code, which requires listed companies to hire multiple outside directors and encourages companies to prioritise shareholder returns.

These guidelines have also encouraged disgruntled shareholders to speak out.

Shares of Toshiba, whose businesses range from laptop computers to nuclear power plants, have fallen about 15 percent since the company disclosed the internal investigation in April.

"I've never seen Toshiba in such a state," said one shareholder, who declined to be named. "Everyone must quit."

The third-party investigation is expected to announce details on the irregularities by mid-July. Tanaka said it remained unclear when Toshiba could resume dividend payouts.

People familiar with the company's plans have said it was considering an extraordinary dividend to compensate for the missed year-end payment.

So far, Toshiba has said its accounting irregularities included not booking appropriate losses and expenses, as well as underestimating material costs.

Tanaka said Toshiba discovered the problems after the financial regulator asked to inspect its accounting practices in February. He declined to comment when asked if the regulators had been tipped off by a whistleblower.