PREVIEW-Japanese shareholders to turn up the heat at AGMs

* What: Over 2,700 firms hold annual shareholder meetings

* Shareholders are expected to be more vocal

* When: Most companies will meet shareholders this month

By Junko Fujita

TOKYO, June 19 (Reuters) - Japan's traditionally compliant shareholders are expected to be more vocal during the upcoming annual meeting season, emboldened by the success of U.S. hedge fund Steel Partners in ousting the management of Japanese wig maker Aderans Holdings Co (8170.T) last month.

Long frustrated by measures designed to thwart hostile takeovers, activist foreign investors are starting to make inroads as they push management to increase efficiency and improve shareholder returns.

More than 2,700 companies hold shareholders' meetings later this month, according to Kengo Nishiyama, an analyst at Nomura Securities Co.

Steel Partners' success at Aderans was a significant turnaround from last year, when it was called an "abusive buyer" by a Japanese court and forced to give up its attempt to take over condiment maker Bull-Dog Sauce Co (2804.T).

"Foreign investors gave up on Japan after the Bull-Dog Sauce case and started selling Japanese shares," said Taiji Okusu, managing director at Credit Suisse Securities (Japan) Ltd and secretary general for Japan Corporate Governance Forum.

"But the Aderans case has changed their views. Stocks are rising now on expectations that this year's shareholder meetings will be different."

A number of Japanese companies are coming under pressure from vocal foreign shareholders.

Electricity wholesaler Electric Power Development Co (9513.T), better known as J-Power, is fighting British hedge fund TCI, which launched a proxy fight to gain support for the ousting of its president and higher dividends.

U.S. fund Southeastern Asset Management said it would vote against the re-election of the chief executive of insurer NipponKoa Insurance Co (8754.T) because of falling earnings.

Another U.S. fund, Perry Capital, which holds a 6 percent stake in chipmaker NEC Electronics Corp (6723.T), is asking NEC Corp (6701.T) to cut its holdings in the chip unit.

POISON PILLS

Steel Partners was joined by other Aderans shareholders in May in refusing to re-elect the president and most board members, the first time the management of a Japanese firm has been ejected under pressure from an activist fund.

As of Wednesday's close, shares in Aderans have gained more than 14 percent since the day before the May 29 meeting, while the Nikkei average .N225 gained 5.4 percent.

The Bull-Dog case was seen as typical of the old corporate Japan, where managers tend to run their companies with less regard for the interests of shareholders.

A group of foreign institutional investors gathered in Tokyo last month said most publicly traded Japanese firms were still not meeting investor needs regarding corporate governance.

The group, which included California Public Employees' Retirement System (Calpers), the biggest U.S. pension fund, criticised defence measures used by some Japanese companies.

Nomura Securities says about 590 companies have poison pill defences, which typically give them the option to issue stock warrants to dilute the stake of hostile buyers.

Shin-Etsu Chemical Co (4063.T), the world's largest maker of silicon wafers, is one such company protected by poison pills.

"There might be some peculiar people who might want to buy our company," CEO Chihiro Kanagawa told reporters at a media event this month, when he was asked why the company needs such measures.

"We need to prepare for them because they would become a real distraction for our business."

Changes in the composition of shareholders is the reason for rapid growth in the number of companies adopting anti-takeover defences, Shinichi Ichikawa, chief strategist at Credit Suisse in Tokyo, said in a report.

SIGNS OF CHANGE

But, in a sign of change, some firms such as cosmetics maker Shiseido Co (4911.T) and Internet provider eAccess Ltd (9427.T) have scrapped such protection, choosing to focus on boosting their stock prices to protect themselves.

"Japan's corporate governance has been improving in the past five years and we believe it will be better," Bill Wilder, chief investment officer at Nikko Asset Management Co, told Reuters in an interview last month.

"Investors should pay more attention to the fact that more Japanese companies are boosting returns to investors through an increase in dividend payments and share buybacks." (Additional reporting by Mayumi Negishi, Nathan Layne, Emi Emoto and Yuka Obayashi; Editing by Lincoln Feast)