By Minami Funakoshi
TOKYO (Reuters) - Three foreign funds on Monday said they would oppose Toyota Motor Corp's <7203.T> proposal to issue a new class of shares, joining an influential California pension fund in objecting to a sale that critics say favors Japanese retail investors.
Toyota aims to sell "Model AA" shares, named after its first passenger car, to attract long-term investors. Unlike common shares, they are unlisted and will be sold only in Japan, meaning foreign investors will have to buy them through intermediaries.
The Canada Pension Plan Investment Board, Florida State Board of Administration, and Ontario Teachers' Pension Plan will vote against the plan at Toyota's annual general meeting on Tuesday, the U.S. Council of Institutional Investors, which represents pension funds and endowments, said in a newsletter.
Toyota said it could not immediately comment.
The automaker has registered to issue up to 50 million Model AA shares for as much as 500 billion yen ($4.05 billion), earmarking the funds raised for long-term product development.
The shares must be held for five years after which holders can convert them into common stock or have Toyota buy them back at their issue price.
The latest opposition comes a week after the California State Teachers' Retirement System, the second-largest U.S. public pension fund, said it would vote against the plan because the sale would essentially be closed to foreign investors.
It also comes as a new corporate governance code takes effect in Japan, encouraging investors to voice concerns and forcing companies to consider the views of those who vote against management-backed proposals.
Toyota needs a two-thirds majority at its annual general meeting to pass the plan.
But the vote would likely be close because around 30 percent of Toyota shares are held by foreign investors, finance industry executives told Reuters, declining to be identified as they were not authorized to speak with media on the matter.
(Additional reporting by Taro Fuse; Editing by Christopher Cushing)