Toyota Motor Corporation is preparing a large-scale unwind of its strategic cross-shareholdings, in a move that would see affiliated banks and insurance companies sell approximately ¥3 trillion ($19 billion) worth of Toyota shares. The report, citing two sources familiar with the matter who declined to be named because the information is not yet public, describes the plan as a potential turning point in Japan's ongoing corporate governance reform agenda.

According to Reuters, the total value of the sale could exceed the ¥3 trillion figure depending on the willingness of institutional shareholders to participate. The news agency reports that Toyota is targeting completion of the transaction as early as this year, though the timing and scale remain subject to change — and, per one source, the plan could be abandoned altogether. Toyota declined to comment on the Reuters report.

In terms of how the shares would be absorbed, Reuters reports that Toyota intends to acquire the shares primarily through buybacks, with a secondary sale to other investors also under consideration as an alternative mechanism. The publication notes that the identity of the participating shareholders would include major Japanese financial institutions. Among Toyota's shareholders are banks such as Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group, as well as insurer MS&AD Insurance Group.

Reuters frames the development within the broader context of Japan's shifting corporate governance environment. The practice of cross-shareholding — where companies hold shares in each other to cement business relationships — has long been criticised by governance experts and overseas investors as a mechanism that insulates management from accountability to shareholders. While the practice has been widespread in Japan for decades, it has been less common in Western markets. Reuters notes that regulators and the Tokyo Stock Exchange have intensified pressure on listed companies to dismantle these arrangements, arguing they weaken shareholder accountability and entrench management.

In the context of Toyota specifically, Reuters notes that while Toyota has an existing policy to reduce its cross-shareholdings, it has also come under fire over governance practices and has faced calls from investors to improve capital efficiency. One source cited by Reuters indicates that Toyota views the unwind as a signal of its commitment to governance reform, with the automaker wanting to demonstrate its seriousness about change.

The Reuters report also connects this development to a separate transaction involving the automaker. Toyota is currently in the midst of a tender offer for forklift maker Toyota Industries. That process has drawn scrutiny from U.S. activist investor Elliott Investment Management, which has argued the offer undervalues Toyota Industries and has raised concerns about the transparency of the transaction. Elliott has offered to pay around market price to buy Toyota Industries shares from holders who had previously agreed to tender into the offer, according to two people familiar with the matter. 

If realised, Reuters describes the planned cross-shareholding unwind as representing a significant step by one of Japan's most prominent corporations — and a signal of the scale and direction of the country's corporate governance reform.