Toshiba Corp. will seek shareholder approval of a new board chair before the year's end, CEO Satoshi Tsunakawa said Thursday, as the Japanese industrial conglomerate scrambles to restore trust after its alleged collusion with the government.

Disgruntled Toshiba shareholders voted out former board chairman Osamu Nagayama and another outside director responsible for oversight in June after an independent investigation concluded that Toshiba had sought government help to prevent foreign activist shareholders from influencing the board.

Toshiba Corp. President Satoshi Tsunakawa speaks at an online press conferencce on Aug. 12, 2021. (Photo courtesy of Toshiba)(Kyodo)  

Speaking at a press conference, Tsunakawa acknowledged that the general shareholders' meeting last year was not conducted fairly, a conclusion by the investigation that looked into behind-the-scenes collaboration with the government in the run-up to the annual gathering.

"The problem was that there was an attempt to effectively block shareholder proposals and the exercising of voting rights by shareholders. We are seriously reflecting on this and taking preventive measures," Tsunakawa said.

"We want to have candidates, including one to serve as chair of the board, selected as soon as possible and seek approval at an extraordinary shareholders' meeting before the end of the year," he said.

Tsunakawa temporarily serves as board chairman and CEO, with picking a successor to him also pending. He was the chairman of the company when the former CEO abruptly quit in April.

Toshiba has been rocked by an unexpected turn of events in recent months and come under intense scrutiny by its shareholders, with about half of the Japanese conglomerate owned by foreign investors.

Former CEO Nobuaki Kurumatani stepped down in April after a buyout plan by British private equity firm CVC Capital Partners apparently led to internal friction at Toshiba. Speculation swirled at the time that Kurumatani, who once served as head of CVC's Japanese unit, was trying to fend off mounting pressure from foreign activist shareholders by turning Toshiba into a private company and protect himself.

In June, the investigation led by lawyers released a report saying that senior Toshiba executives colluded with the industry ministry to prevent foreign activist shareholders who wanted to send outside directors from having greater influence over the board.

Tsunakawa defended the relationship between Toshiba and the Ministry of Economy, Trade and Industry due to his company's businesses related to national security and social infrastructure.

"The point we have to reflect on is that we went too far," Tsunakawa said, adding that there were no violations of the law.

Toshiba has set up a panel led by a former Supreme Court judge, to identify the root cause of the incident and propose preventive steps. A final report is expected in October.

The collusion allegation came after Toshiba spent years trying to enhance its governance following a 2015 accounting scandal.

Under Tsunakawa, who returned to the post of CEO after Kurumatani stepped down, Toshiba is seeking to improve relations with shareholders through dialogue.

Tsunakawa said Toshiba going private should not be ruled out if doing so would maximize its corporate value, though he said that there were no specific proposals after CVC's.

Toshiba returned to the black for the first time in three years in the April-June quarter of fiscal 2021, reporting a net profit of 18.0 billion yen ($163 million) buoyed by strong sales of semiconductors and hard disk drives, according to a quarterly earnings report released the same day. It plans to release a medium-term business strategy in October.