TOKYO: Toshiba Corp shareholders ousted the chairman of the board on Friday, delivering a powerful rebuke to the company after management was found to have colluded with the Japanese government to put pressure on foreign investors. The unexpected removal of chairman Osamu Nagayama, a veteran of corporate Japan, and another director marked a clear victory for corporate governance, and sent a strong signal about overseas investors' ability to push through change even at one of Japan Inc's most storied conglomerates.

The board said it would undertake a full review of assets and devise a plan to create growth via dividends and buying back shares. It would also engage with potential investors, it said, comments that could spark tension with the government, which regards Toshiba as a strategic asset. CEO Satoshi Tsunakawa was appointed as interim chairman, the company said, adding it recognised the seriousness of the rejection of the two directors. "This result is a sign of a paradigm shift in Japan and will only embolden activist investors whether foreign or domestic," said Justin Tang, head of Asian research at United First Partners in Singapore. Tsunakawa retook the helm in April after Toshiba's previous CEO left, but has said he does not plan to stay for too long. Ousters of board members at Japanese companies, particularly household names such as Toshiba, are extremely rare.

But supporters of Nagayama say his failure to win re-election will only set back Toshiba further, depriving the industrial conglomerate, which has lurched from crisis to crisis since an accounting scandal in 2015, of an experienced leadership.