TOKYO - A global shareholder advisory firm has urged investors in Japan's scandal-tainted Olympus Corp to refuse to accept the firm's recently restated accounts and to vote against two men nominated to lead the business out of disgrace.

ISS Proxy Advisory Services has made the recommendations ahead of an extraordinary shareholder meeting on April 20, when the maker of cameras and medical equipment will try to draw a line under a US$1.7 (S$2.14) billion fraud that threatened to sink it.

ISS noted that the fraud was still subject to official investigations and warned shareholders they could undermine any law suit they might want to pursue in future against Olympus if they voted at the meeting to accept the restated accounts.

"Supporting this resolution is an endorsement of the company's financial statements, and would not be appropriate at a time when the findings of investigations by public entities are not available," it said in a report dated April 6.

"There is no telling what may happen to Olympus, depending upon the outcome of investigations by public entities now under way," ISS added.

"Given the unusual circumstances surrounding Olympus, it would not be advisable for shareholders to support this proposal, which could interfere with their ability to file suit should the financial statements turn out to be inaccurate based on information yet to be revealed."

ISS also said stockholders should oppose nominee president Hiroyuki Sasa and nominee chairman Yasuyuki Kimoto, saying the former was not ideally qualified and the latter too closely tied to a big Olympus creditor, Sumitomo Mitsui Banking Corp (SMBC).

It said Kimoto and another director, Hideaki Fujizuka, who was affiliated with another big creditor, Bank of Tokyo-Mitsubishi UFJ (BTMU), could both be likely to act in the interests of banks over the interests of ordinary shareholders.

"Given the size of the outstanding loans SMBC and BTMU have with Olympus, neither Kimoto nor Fujizuka can be expected to act in the best interests of ordinary shareholders," ISS said.

On Sasa, it added: "No information about the strategy the new board is to implement has been announced, making it difficult for shareholders to evaluate the leadership and aptitude of Sasa as company president."

Olympus's restated balance sheet has been left weakened by the fraud, in which investment losses were hidden off its books for 13 years. Major foreign shareholders fear the firm's banks will push Olympus into a big, dilutive issue of new shares.

But Sasa says Olympus may be able to recover without having to bring in new investors, even as it looks to beef up its capital by around US$3 billion (S$3.78 billion) over the long term.