Hopes that today might usher-in a new era of successful shareholder activism in Japan were dashed by mid-afternoon after western investor funds suffered a number of high-profile defeats.

The setback for western shareholders included the outright rejection of five proposals made by The Children's Investment Fund (TCI), the UK investor, to the board and shareholders of J-Power – a utility deemed by the Japanese government to be of national strategic importance.

The long-awaited showdown between TCI and the management of J-Power, which has come under pressure to raise dividends, was followed by a sharp 5 per cent slump in the ulility's share price.

The fall in the share price adds to the woes of TCI, which is understood to have taken heavy paper losses on its 9.9 per cent holding in J-Power.

Southeastern Asset Management, the Memphis-based fund manager, also suffered defeat after it failed to oust Makoto Hyodo as the chief executive at NipponKoa, the insurance group.

Activist shareholders face huge barriers to change in corporate Japan with many companies, including the management of one of Tokyo’s two major airports, voting to keep poison-pill takeover defences in place.

The wholesale rejection of activist-led proposals at the annual shareholder meetings occured within 24 hours of an official government bid to soften Japan’s notoriety as a graveyard of investors’ interests.

However, fund managers pointed out that even the timing of Thursday’s shareholder meetings exposes what one called a “breathtaking lack of shareholder friendliness”:

A total 460 companies held their annual meetings today, and 1,300 business will hold them tomorrow, making it virtually impossible for shareholders to attend and vote in the meetings and grill managements of more than two of the companies in their portfolios.

In a move widely seen as betraying Japan’s panic over its decline in its appeal to foreign funds, the Ministry of Economy Trade and Industry (METI) said on Wednesday that it would press for tax reforms to draw more investment from overseas.

METI, which has long earned a reputation as an aggressive champion of protectionist attitudes within corporate Japan, admitted that foreign funds were “indispensible” to the future development of Japanese industry.

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