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TOKYO — Toshiba Corp kicked off its annual general meeting on Friday, with shareholders set to decide on whether to keep Osamu Nagayama as board chairman. The vote – expected to be very close – is seen by many as a referendum on corporate governance in Japan.

Nagayama has been under immense pressure to resign after an independent investigation this month accused the industrial conglomerate of colluding with Japan’s trade ministry to block foreign shareholders from gaining influence on the board at last year’s AGM.

Nagayama’s critics say he should take responsibility for the board’s resistance to a shareholder’s call for an independent probe.

3D Investment Partners, Toshiba’s No. 2 shareholder with a 7.2% stake, has called for his immediate resignation, while shareholder advisory firms Institutional Shareholder Services Inc and Glass Lewis have recommended shareholders not reappoint him.

If he is voted out, it would mark another watershed moment for Japan’s corporate governance after foreign activist investors prevailed at a March extraordinary general meeting in their efforts to secure the probe into the allegations.

But Nagayama’s supporters argue he only joined Toshiba’s board after the alleged pressuring of foreign shareholders took place and that Toshiba, which has lurched from crisis to crisis since 2015, needs his experience.

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Nagayama, a former Chugai Pharmaceutical CEO and Sony Group Corp board director, is expected to win the backing of many domestic investors.

They now make up a greater proportion of Toshiba’s shareholder base after the conglomerate’s reinstatement in the Tokyo Stock Exchange’s Topix index this year brought in more index-linked funds. Since then, the proportion of foreign investors in Toshiba has fallen to around half from 63% a year ago, according to the company.

Toshiba, which is one of Japan’s few manufacturers of nuclear reactors and makes defense equipment, is of huge strategic importance to the government.

Trade Minister Hiroshi Kajiyama has been unapologetic about his ministry’s dealings with Toshiba, saying the policies it implemented were natural ones for the ministry to take.

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On Friday morning, when asked about the AGM, Kajiyama said that “in general the hope is that corporate governance can be improved through discussions with shareholders and at the same time we work to secure the stable development of businesses and technology that are important from a national security standpoint.”

Shares in Toshiba were down 1.4% in morning trade on Friday compared to a 0.4% rise for the Topix index. The stock, however is roughly flat compared to June 9, the day before the explosive investigators’ report was released, and is up some 68% this year.

Toshiba will nominate 11 directors at the AGM, including Nagayama. Two members of the board’s audit committee, which has been blamed for failing to properly address the allegations leveled at management, are not standing for re-election.

Voting records disclosed so far show that Norges Bank Investment Management, the world’s largest sovereign wealth fund, and the State Board of Administration of Florida have voted against Nagayama.

But the California Public Employees’ Retirement System (CalPERS) has voted for Nagayama. BlackRock Inc, which has a large stake of more than 5%, also voted for him, a person familiar with the matter has said.

(Reporting by Makiko Yamazaki; Additional reporting by Yuki Nitta; Writing by Tim Kelly; Editing by Edwina Gibbs)