Carmaker Toyota has won approval for a new class of stock that critics complain is not in the spirit of Japanese corporate governance reforms intended to strengthen the role of shareholders.

Known as Model AA shares, the stock would be unlisted and not traded on markets for five years. They would also only be offered to retail shareholders and would behave like a convertible bond, according to the Financial Times.

Hiroki Sampei, director of research at Fidelity Worldwide Investment in Japan, is quoted by Bloomberg expressing scepticism about Model AA.

“Creating financial products with no principal risk and favourable yields that must be held for five years goes against encouraging dialogue as shareholders. It will increase owners who are different from the kind of long-term holders that the governance code is seeking to foster,” he told Bloomberg.

Japan put in place much-lauded new governance reforms at the beginning of June, requiring companies to appoint two external directors and explain publicly why they hold shares in other companies.

The measures are designed in the hope of cutting the number of shares held for relationship purposes and bring an outside focus on company performance.

It hopes the new governance measures will persuade companies to release cash for investment and meet return on equity targets. Japanese companies, according to The Economist, are said to be sitting on aggregate reserves of US $1.9tr. The new code is modelled on the “comply or explain” approach of the UK.