NEW YORK (BLOOMBERG) - 3D Investment Partners, the second-largest investor in Toshiba, has called for a special meeting of the Japanese company's shareholders as it steps up its opposition to a break-up plan, people familiar with the matter said.

Singapore-based 3D Investment is requesting a vote on Toshiba's proposed split that it must be supported by at least two-thirds of stockholders, the people said, asking not to be identified because the matter is private. A second proposal from 3D Investment, which holds a 7.6 per cent stake in Toshiba, asks for the company to reconsider alternative options, they said.

Toshiba announced in November that it intended to separate into three companies as a way to create value for shareholders after years of scandals and corporate governance issues. 3D Investment published an open letter that month opposing the plan, saying Toshiba's strategic review process was inadequate.

The investor is now calling for an extraordinary general meeting because it is concerned about a lack of transparency in the separation process, including about how Toshiba intends to structure the shareholder vote and what level of support would be required for the process to proceed, the people said.

Investor distrust

The first proposal is unusual in that it would require Toshiba to push ahead with the company split, or any other strategic reorganisation supported by the board and its strategic review committee, if approved. The move aims to ensure that at least two-thirds of investors support the break-up, a threshold that would typically be needed for any major reorganisation or sale of a Japanese company, the people said.

3D Investment plans to vote against its own proposal, the people said. The investment firm believes a supermajority vote would give Toshiba a mandate for its plans if they are approved, or force the company to scrap the split and launch a new review, they said.

The second proposal, which 3D Investment will support, calls for the Toshiba board's strategic review committee to launch a new review to ensure all avenues to unlock value are fully explored, the people said.

Toshiba plans to complete the spin-offs of the infrastructure services business and the technology device unit by the second half of fiscal 2023, the company has said.

3D Investment argued in the November letter that the strategic review process that led to the break-up plan was flawed and failed to address the company's underlying issues. The investment firm accused Toshiba of not adequately exploring a full range of alternatives, including a sale of all or part of the company.

It also argued that it prematurely cut off talks about selling a minority stake to a global private equity firm in favour of the break-up.

Accounting scandal

The company has said it plans to hold a shareholder meeting by March to vote on the separation plan. Toshiba's leadership has offered few details beyond that, including what date the vote will be held on.

3D Investment's push for its own meeting and proposals highlight the simmering tension and level of distrust between the Japanese icon and some of its largest investors.

Toshiba has been mired in controversy since the emergence of an accounting scandal in 2015 that devastated its profits and led to a companywide restructuring.

Toshiba has been mired in controversy since the emergence of an accounting scandal in 2015 that devastated its profits and led to a companywide restructuring.

The subsequent unravelling of a costly foray into the nuclear power business in the United States saw it teeter on the edge of delisting, forcing it to sell its crown-jewel memory unit and offer stock that was snapped up by activist investors. That, in turn, led to a proxy fight at a 2020 shareholder meeting, where company executives and high-level officials were found to have colluded to influence voting.

Since then, Toshiba has vowed to improve its governance and relationship with shareholders.