TOKYO & HONG KONG--(BUSINESS WIRE)--Oasis Management Company Ltd. (“Oasis”) is the manager to funds that own over 9.7% of Fujitec Co. Ltd. (“Fujitec” or the “Company).
Fujitec’s Board of Directors (the “Board”) decided – despite egregious breaches of good corporate governance – to preserve the now former-President Takakazu Uchiyama’s influence by deliberately contravening the most basic shareholder rights. Shareholders were not allowed to voice their opinion at the 2022 Annual General Meeting (the “AGM”) and hold Mr. Uchiyama accountable because the Company withdrew his candidacy for reappointment as Director – purportedly because of the ongoing investigation into his conduct – and yet turned around and appointed him to be the Chairman of the Company. We are extremely disappointed by this subterfuge, just as we have been disappointed by Mr. Uchiyama’s attempts at self-preservation and last-minute announcements leading up to this year’s AGM.
Oasis has consistently advocated the importance of having strong governance structures in place to ensure that all stakeholders benefit from the value that companies can create. We value the Governance Code and take seriously the recommendations of the Stewardship Code. Management has the responsibility to create value, the Board of Directors has the responsibility to monitor and hold them accountable for their performance, and shareholders have the responsibility to appoint directors as their fiduciary agents. The Board, under Mr. Uchiyama’s influence, has failed to act in the best interest of all stakeholders, including shareholders. This lack of independence and effectiveness on the Board should be extremely troubling for all stakeholders.
The Context – Exposure to Cover-Up to Avoidance
Oasis brought to light several highly inappropriate related-party transactions that have taken place between Fujitec and Mr. Uchiyama. Each of these related-party transactions appear to have benefited Mr. Uchiyama and exposed a systematic effort by the son of the Company’s founder – notably only a 6.1% shareholder – to exploit his inherited position of power to enrich himself at the expense of Fujitec stakeholders.
An initial non-independent investigation launched by the Board, despite Oasis’s clear calls for an independent investigation, served only to confirm that these value destructive related-party transactions had occurred, but were then argued to not be a cause for concern for shareholders as they were “legal”.
On June 17, 2022, less than a week before Fujitec’s 2022 AGM, Fujitec announced that it would establish a Third-Party Committee to “rid the suspicions of the Company’s shareholders”. The announcement to carry out a new investigation with a foregone conclusion was clearly a last-minute effort to secure the re-appointment of Mr. Uchiyama but failed to alleviate shareholders’ concerns with the conflicted oversight mechanism at Fujitec.
On the day of the 2022 AGM, Fujitec's Board resolved to withdraw Mr. Uchiyama’s nomination as a Director on the basis that he should not be appointed as a Director until the Third-Party Committee’s report is published. If this was truly the reason, the Board had the opportunity to make such announcement when announcing the creation of the Third-Party Committee a week before the AGM. It is clear this was only done when the Board knew Mr. Uchiyama would not be re-elected by shareholders. The Board’s decision, from our perspective, only served to buy Fujitec more time and escape shareholder accountability.
The Board’s decision to withdraw President Uchiyama’s election on the day of the AGM has essentially robbed shareholders’ most basic right as principals – the right to vote and hold agents accountable. This decision to avoid shareholder opinion is a clear violation of shareholders’ rights, which shareholders should not accept.
For this Board then, after an AGM where Uchiyama was not re-elected as a Director, to appoint him as a Chairman of the Company in a Board meeting convened immediately after the AGM is inappropriate and a complete abrogation of proper governance. The Board put Mr. Uchiyama’s interests above those of all stakeholders, contravening any definition of good governance.
Fujitec’s original biased investigation confirmed the underlying facts but could not absolve Mr. Uchiyama -- it is difficult to envisage that a second investigation would clarify the situation any further. Over the last few months, Fujitec has failed its stakeholders and remains entirely at the control of Mr. Uchiyama and, as Chairman, Mr. Uchiyama will continue to have a tight grip over the Company. Fujitec’s corporate governance cannot improve while Mr. Uchiyama has any role at Fujitec. From our perspective, Mr. Uchiyama does not have a shareholder mandate and should not be in any position of power or influence.
We believe it is no longer pertinent to investigate the related-party transactions as the desperation shown to hide Mr. Uchiyama from accountability speaks for itself. The related-party transactions highlighted by Oasis have taken place; shareholders had cast their vote based on the appropriateness of such related-party transactions, regardless of whether they were “legal” or not, and the Board’s conflicted and inadequate response to such misuse of corporate assets.
Oasis’s Commitment to Protect Fujitec
Fujitec’s unapologetic disregard for good corporate governance should be a grave signal to all shareholders and stakeholders to the integrity of Fujitec’s Board.
We, and other responsible investors, will not accept evasive tactics in addressing the issues holding back Fujitec and sidestepping accountability.
Throughout the course of this campaign, different stakeholders, including employees, have voiced their concern with Fujitec’s governance and the leadership of Mr. Uchiyama. Investors pursuing different investment strategies from different geographies, active or passive, have all responded to our call to improve Fujitec’s governance and how it is being led.
Independent governance research firms, like ISS and Glass Lewis, have issued strong recommendations that shareholders oppose Fujitec’s leadership due to the governance abuses and the weak oversight mechanism currently in place.
Every voice, every vote, matters and should count. Oasis is not alone in demanding this, we have just chosen to vocalize our demands and concerns. All shareholders should leverage their tools to make a difference to hold power accountable and to improve our investee companies.
Oasis will continue its efforts to “Protect Fujitec” and will amplify our efforts to reach more stakeholders to bring about change. We reserve all our rights legally provided to us and what is encouraged by Japan’s Stewardship Code.
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 Japan 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 contained in this press release (referred to as the "Document") is an information resource for shareholders in Fujitec offered by Oasis, the investment manager to funds that are shareholders of Fujitec (the "Oasis Funds").
The Document is not intended to solicit or seek shareholders' agreements to jointly exercise voting rights with Oasis. 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 share ownership with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Oasis does not intend to be subjected to such notification requirement. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.