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Based on the Results of 52nd Annual General Meeting of Japan Pure Chemical Corporation, Hibiki Path Advisors Will Continue to Actively Engage With the Management in Order to Improve Value for All Shareholders

TOKYO--(BUSINESS WIRE)--Hibiki Path Advisors (“Hibiki” and “We”) is a Singapore-based value and engagement investment firm. Considering the results of the 52nd Annual General Meeting of Shareholders (the “AGM”) of Japan Pure Chemical Corporation (TSE: 4973) held on June 20, 2023, we announce that we will continue to actively engage with the management of JPC to enhance its corporate value.

Hibiki has submitted three shareholder proposals at the meeting: item no.5 (Amendment to the Articles of Incorporation regarding cross-held shares), item no.6 (Amendment to the Articles of Incorporation to introduce a 5% DOE dividend policy), and item no.7 (Amendment to the Articles of Incorporation to disclose cost of shareholder’s equity).

Institutional Shareholder Services Inc (“ISS”) the world’s largest voting advisory firm recommended in favor of our shareholder proposals no.5 and no.7 based on its global standards. In addition, we were truthfully encouraged by the favorable comments received on Hibiki’s shareholder proposals from other general shareholders.

Unfortunately, the shareholder proposals at the AGM were declined with support ratio of 22.5% for item no.5, 23.8% for item no.6 and 25.6% for item no.7 as a proportion of total general shareholders who have voted. Based on Toyo Keizai’s Company handbook 2023 Summer version 30 largest shareholder disclosure, we estimate that 16,000 votes were JPC’s related parties and cross-holding shareholders. This implies that our proposals were voted in favor by approximately 33% to 38% of “non-related” general shareholders. We would like to take this opportunity to express our gratitude towards many of the shareholders who supported our proposal. We would also like to ask management to consider this result seriously in order to enhance corporate value with the implementation of better financial and balance sheet management policy.

On a separate note, ISS recommended against reappointment of Representative Director Kojima, which caused his approval rate to drop significantly from 87.3% last year to 81.1% which means that approximately 81.1% of general shareholders voted against the proposal, assuming that the aforementioned 16,000 units voted in favor.

It was the first AGM since JPC’s new mid-term management plan has been announced in July 2022, and we cordially but strongly request Representative Kojima to listen to the voices of many frustrated shareholders, analyze the background and reexamine the direction on financial management. We request once again that the management team quickly steer the company towards “efficient management with an awareness of shareholders and stock price” without putting off financial issues and put focus on management dynamism and improving the cost of capital. Based on “segregation of ownership and execution,” concept, it is clear that a significant part of the “owners” are asking the management team to deal with the current situation imminently by disclosing a clear timeline to achieve JPC’s long-term goal.

We understand that this was JPC’s first shareholder proposal in history, and it was a great moment as minority shareholders were given the opportunity to express their views regarding management policy at an open meeting of shareholders aimed at enhancing corporate value, which should be a common goal between owners and the management. We, as a minority shareholder, would like to take this opportunity to express our sincere appreciation to other shareholders for their support. We will continue to take necessary actions to support JPC’s sustainable growth and medium-to-long-term improvement of corporate value and continue to engage in sincere and constructive dialogue with the management.

(link)Hibiki’s engagement video on this shareholder proposal (19/5/2023)

Japan Pure Chemical – Hibiki’s explanation of our shareholder proposal

While every effort has been made to ensure the accuracy of the data and information contained in this material, the accuracy cannot be guaranteed. This material does not constitute a solicitation to subscribe for, or a recommendation to buy or sell, any particular security, nor does it constitute investment, legal, tax, accounting, or other advice.


Hibiki Path Advisors

Representative Director and Chief Investment Officer

Yuya Shimizu

[email protected]

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