(Bloomberg) -- Toyota Industries Corp. shares surged by their daily limit as investors scrambled to interpret what Toyota Motor Corp. Chairman Akio Toyoda’s proposal to buy out the company would mean for corporate governance at Japan’s largest business group.

Toyota Industries, the company founded by Toyoda’s great grandfather, rose 23% on Monday after the company formed a special committee and hired advisers to review the proposal, Bloomberg News reported last week, citing people familiar with the matter.

The stock had remained untraded for most of the day as bids to buy outnumbered offers to sell. Toyota Motor shares rose as much as 5.2%.

The proposal values Toyota Industries, which makes looms for textile manufacturing as well as parts for Toyota’s cars, at ¥6 trillion ($42 billion), one of the people said, who asked not to be identified because the information isn’t public. The deal would represent a roughly 40% premium over its market capitalization at the close Friday.

The deal, which would represent one of the biggest buyouts in the world, comes against the backdrop of increasing pressure from investors in Japan for stronger corporate governance and better returns. Toyoda’s bid to strengthen his grip over Toyota Industries raises questions over what it would mean for the governance of world’s biggest carmaker.

While Toyota Industries has been selling its cross-shareholdings and distancing itself from its subsidiaries recently, this latest move seems to be a “step in the opposite direction,” according to IwaiCosmo Securities Co. analyst Norikazu Shimizu, who warned it could trigger opposition among shareholders.

“If Akio Toyoda has in fact made such a proposal, the founding family would strengthen its grip on the group business through its stake in Toyota Industries, but it could also be a setback to ongoing efforts to improve corporate governance,” SMBC Nikko Securities Inc. auto analyst Kazunori Maki wrote in a report. “We’ve fielded such concerns from a number of investors.”

A buyout could also make an improved return on equity less likely at both Toyota Industries and Toyota Motor, Maki said.

Still, investors piled into Toyota Industries shares Monday in anticipation of a premium from the potential buyout.

The deal would give Toyota’s founding family “more freedom of management,” which could be a plus for Toyota Motor shareholders in the long run, said Tatsuo Yoshida, an analyst at Bloomberg Intelligence. Toyota Industries’ core industrial vehicle business “has been and will continue to be a promising area of profitability,” he added.

News of the potential buyout is “another strong evidence that Toyota Group is improving its corporate governance,” wrote Macquarie analyst James Hong in a report. “This should be positive for all Toyota Group entities.”

Toyota Motor’s shares are getting an extra boost from anticipation ahead of the carmaker’s earnings announcement next week, Eiji Kinouchi, chief technical analyst at Daiwa Securities, wrote in a report. The company is expected to post a strong increase in profit before the impact of tariffs kicks in, he wrote.

“Even if US-Japan tariff negotiations are unsuccessful, the government is planning measures to promote domestic auto demand,” Kinouchi wrote, meaning Toyota’s future earnings outlook is not too murky.

Toyoda holds less than 1% ownership in Toyota Industries, though the company has a 9.1% stake in Toyota, the carmaker.

Toyota Motor said in a statement Friday it was considering various possibilities, including a partial investment in Toyota Industries, but nothing has been decided.

Toyoda himself has seen his approval rate among shareholders drop rapidly in the last three years, from 96% to 85% to 72%.

Opposition initially came in part from Toyota’s hesitation to embrace the global industry’s shift toward battery-powered electric cars, but more recently it was rooted in the company’s handling of a series of safety certification scandals, at Toyota Industries, Daihatsu Motor Co. and later the carmaker itself.

The buyout would bolster Akio’s holding and influence over the broader Toyota group, which includes suppliers and stakes in other businesses, including rival carmakers.

(Updated with share move in first and second paragraphs.)