In February 2025, the Tokyo Stock Exchange (TSE) issued a statement titled “Investor Perspectives on Parent-Subsidiary Listings,”
signaling a clear shift toward discouraging—and ultimately abolishing—these governance structures. The move aligns with growing
shareholder unrest, particularly in cases where buyouts are perceived as undervalued.

Toyota’s tender offer to Toyota Industries is a prime example. Offered at an 11% discount to its pre-announcement closing price of ¥18,400,
it was widely criticized and triggered a steep drop in Toyota Industries’ stock. Investor backlash reflects a broader frustration with distorted governance norms.

Why Parent-Subsidiary Listings Are Problematic

While the term “conflict of interest” is often cited, it’s rarely illustrated clearly. The issue becomes much more tangible when viewed through the eyes of activist investors:

*Misaligned Decision-Making: Subsidiaries may act to benefit their parents rather than their own shareholders.

*Governance Gaps: Minority shareholders can lose influence over key decisions.

*Investor Disempowerment: Listed subsidiaries often lack independence in strategy and capital allocation.

In the report available to my clients, I present a case study along with a curated list of potential delisting candidates. Over the past 5 years, more
than 80% of such delistings have led to stock price appreciation. Curious to learn more? Feel free to DM me — I’d love for you to try out my service at no cost.

I’d also love your input—feel free to share any thoughts or feedback you may have!