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By Junko Fujita
TOKYO, May 11 (Reuters) - Japan's financial services firm Orix Corp said on Wednesday it would end a popular shareholder incentive programme that rewarded retail investors, giving in to calls to ensure equality in treating shareholders.
Orix is among many other Japanese listed companies that offer benefits to individual shareholders. In a unique practice to Japan, they typically give their services and products to retail investors for free or at a discount as a way of securing stable shareholders.
However, that practice has raised questions notably from equity strategists about whether companies treat their shareholders equally, prompting other major firms to end the incentives.
The Tokyo Stock Exchange also urges companies to treat their shareholders equally in its corporate governance code that was revised ahead of a reorganisation in April of the bourse's main trading boards.
"After careful considerations in order to give returns to shareholders equally, we have decided to abolish the programme," Orix said in a statement.
"We will shift our focus to rewarding investors with other returns such as dividend payouts."
Depending on the number of shares they hold, Orix's retail investors are able to use facilities Orix operates, such as aquariums and hotels, at a discount. The gifts include specialities from various regions in Japan.
Retail investors accounted for 15.5% of Orix's total shareholders in March 2022, a jump from 7.9% in 2018, Orix's website showed.
"The incentive programme for individual investors could go against the concept of equity of all the shareholders," said Masayuki Kubota, chief strategist at Rakuten Securities.
Orix's programme was ranked third among other similar incentives by a Rakuten Securities survey, Kybota added.
Japan Tobacco Inc, the nation's cigarette monopoly, said in February it would abolish a similar programme, which it started in 2004.
(Reporting by Junko Fujita; editing by Emelia Sithole-Matarise)