Oasis Secures Proxy Advisor Support for Upcoming Ain AGM as Ain Fails to Address Governance & Transparency Concerns
29 July 2024 - 12:00AM
Business Wire
(Stock Code: 9627 JT)
* Ain fails to respond to Oasis’s open
letter questionnaire
* Leading proxy advisory firms ISS and Glass
Lewis support Oasis director candidates for Ain AGM
* Oasis reiterates its recommendations to
Ain shareholders to vote AGAINST Mr. Kimura, and to vote FOR
Oasis’s proposals to improve Ain’s governance in the interest of
all stakeholders
More information available at
www.AINCorpGov.com
Oasis Management Company Ltd. (“Oasis”) is the manager to funds
that beneficially own approximately 15.1% of pharmacy franchise Ain
Holdings Inc. (9627 JT) (“Ain” or the “Company”). Oasis has adopted
the Japan FSA’s “Principles for Responsible Institutional
Investors” (a/k/a the Japan Stewardship Code) and, in line with
those principles, Oasis monitors and engages with its investee
companies.
As Ain’s largest shareholder, Oasis is deeply concerned about
the Company’s poor corporate governance practices. To this end,
Oasis has engaged with the Company in the interest of enhancing
Ain’s corporate value and improving its corporate governance for
the benefit of all shareholders and stakeholders. Oasis believes
that the Company’s recent scandal at KKR Sapporo Medical Center, as
a result of which two directors from Ain and one of its
subsidiaries were arrested and found guilty by a court of first
instance, is yet another example of the poor corporate governance
at Ain.
Oasis has also found that many of the Company’s current and past
“outside” directors and corporate auditors are not truly
independent, as many of their positions appear to have been awarded
based on personal or business connections with the Company or the
Company’s CEO, Mr. Otani. Oasis has submitted shareholder proposals
to dismiss these non-independent outside directors, while
nominating four candidates who are truly independent, with relevant
experience and expertise to improve the Company’s corporate
governance and enhance its corporate value.
Ain’s Transparency
Failures
Despite Oasis’s repeated good faith efforts to engage in
dialogue and Oasis’s submission of shareholder proposals aimed at
improving the Company for all shareholders and all stakeholders,
Ain has failed to appropriately engage with Oasis and has shown a
continued lack of transparency in its responses regarding the KKR
Sapporo Medical Center scandal and other issues.
Following this continued lack of transparency from the Company,
Oasis sent an open letter questionnaire, a copy of which is
available here, to Ain’s “Investigation Team”, Management,
and Board of Corporate Auditors. Despite our request to Ain to
provide their responses publicly via their website by July 16,
2024, for the benefit of all shareholders exercising their
shareholder votes at the upcoming AGM, Ain’s Investigation Team,
Management, and Board of Corporate Auditors have all failed to make
any response whatsoever, further demonstrating their practice of
disregarding transparency and accountability when it is needed
most.
Leading Proxy Advisory Firms ISS and
Glass Lewis Support Oasis’s Director Candidates
Independent leading proxy voting advisory firm ISS has supported
the nomination of Oasis’s proposed director candidates for the Ain
2024 AGM. It has also recommended that shareholders vote for the
dismissal of incumbent directors Mr. Junro Ito and Mr. Shigeru
Yamazoe, and to vote against the nomination of the Company’s
director nominee, Mr. Shigeki Kimura. The rationale that ISS
highlights for their recommendations include:
- “The company has a flawed governance structure, with a board
controlled by insiders and the chairman/President serving as the
chairman of the nomination and remuneration committee.
- “[T]he board is not fully addressing its governance
issues.”
- “As the board is not structured to provide proper oversight in
case the issues are widespread and its proposals for reform appear
to lack ambition, board change is warranted.”
- “[A] vote FOR [the proposals to remove Shigeru Yamazoe and
Junro] is warranted given their contribution to weak board
oversight and connections with strategic investors with businesses
with the company”
- “Shigeki Kimura’s connection with Seven & i Holdings
warrant a vote AGAINST his nomination […]; it appears unlikely that
a former director of the company employed by a strategic partner is
the right choice to ensure proper oversight.”
- “Dissident nominee Kenji Shinmori is the only independent
nominee with retail experience, and Shogo Maeda the only one with
asset management experience; Hajime Yoshitake and Alexander
Dmitrenko would contribute auditing and compliance experience.
Therefore, their appointments warrant support.”
Similarly, another leading independent proxy voting advisory
firm, Glass Lewis, has supported the nomination of Oasis’s proposed
director candidates for the Ain 2024 AGM. Key reasons that they
highlight for their recommendations include:
- “[E]xpansive oversight and internal control failures rising
disconcertingly high within Ain’s corporate architecture in
connection with the Company’s auction scandal.”
- “[L]egacy predilection for routinely seating representatives of
entities maintaining financial and/or operational relationships
with Ain.”
- “Oasis has nominated a minority slate of independent candidates
with expertise expressly centered on key failings which have
clearly had an adverse impact on investor confidence and
shareholder value.”
- “[W]e believe there exists suitable cause for investors to
support Oasis’ slate at this time.”
- “[A] key element of the board’s defense (i.e. skill-based
overlap among independent outside directors) is not a persuasive
bulwark here, particularly given the significant oversight failings
previously described.”
- “[W]e consider there exists ample cause for overlap in key
areas, including compliance, internal control, legal/regulatory and
finance.”
Shareholder proposals
For the upcoming AGM on July 30, Oasis reiterates its
recommendation to its fellow shareholders to vote AGAINST the
Company’s proposed “outside” director candidate, Mr. Shigeki
Kimura, and to vote FOR the Oasis shareholder proposals in the
interest of enhancing Ain’s corporate value. Oasis strongly urges
shareholders at the Company’s upcoming AGM to:
- Vote AGAINST: Appointment of Mr. Shigeki Kimura as new
director
- Vote FOR: Dismissal of incumbent board directors Mr. Shigeru
Yamazoe and Mr. Junro Ito
- Vote FOR: Election of four new outside board director
candidates: Mr. Yoshitake, Mr. Maeda, Mr. Dmitrenko, and Mr.
Shinmori
- Vote FOR: Introduction of a new compensation plan for outside
directors
To learn more about Oasis’s proposals, please visit
www.AinCorpGov.com. We welcome all stakeholders to contact Oasis at
AinCorpGov@oasiscm.com to help improve Ain’s Corporate
Governance.
***
Oasis Management Company Ltd. manages private investment
funds focused on opportunities in a wide array of asset classes
across countries and sectors. Oasis was founded in 2002 by Seth H.
Fischer, who leads the firm as its Chief Investment Officer.
More information about Oasis is available at
https://oasiscm.com. Oasis has adopted the
Japanese FSA’s “Principles for Responsible Institutional Investors”
(a/k/a Japan Stewardship Code) and, in line with those principles,
Oasis monitors and engages with our investee companies.
The information and opinion contained in this press release
(referred to as the "Document") is provided by Oasis Management
Company (“Oasis”) for informational or reference purposes only. The
Document is not intended to solicit or seek shareholders to,
jointly with Oasis, acquire, transfer, or exercise any voting
rights or other shareholder’s rights with respect to any shares or
other securities of a specific company which are subject to the
disclosure requirements under the large shareholding disclosure
rules under the Financial Instrument and Exchange Act. Shareholders
that have an agreement to jointly exercise their voting rights are
regarded as Joint Holders under the Japanese large shareholding
disclosure rules and they must file notification of their aggregate
shareholding with the relevant Japanese authority for public
disclosure under the Financial Instruments and Exchange Act. Except
for the case where Oasis expressly enters into the agreement as a
joint holder requiring such disclosure, Oasis does not intend to
take any action triggering reporting obligations as a Joint Holder.
The Document exclusively represents the opinions, interpretations,
and estimates of Oasis.
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