Oasis Management Company Ltd. is the manager of funds that own over 9.7% of Fujitec Co. Ltd.
Misleading Public Disclosure by Fujitec– all shareholders should be put on notice
On May 20, 2022, Fujitec published a press release in response to Oasis’s research on the Company’s related-party transactions with Uchiyama family-owned entities and other governance issues.
Based on Oasis meetings with a Fujitec independent director on April 28 and again on May 23, we believe that the Fujitec press release contained multiple material inaccurate statements. Investors should also note the press release was not approved by the Company’s Board of Directors.
Some of the false disclosures contained in the Response are as follows:
False Statement #1:
The Response states: “[W]ith respect to one additional transaction from among the Transactions that was raised newly in Oasis’s assertion, we have conducted an urgent investigation and confirmed that no such facts exist.”
The truth:
A a. The investigation regarding the “additional transaction” has not been completed.
A Fujitec independent director confirmed to Oasis that the investigation regarding the “additional transaction” had only just begun and was not yet completed as of May 20, when Fujitec released the Response, nor as of May 23, when Oasis met with one of the independent directors.
b. The facts exist.
The additional point raised by Oasis was that President Uchiayama’s wife registered the apartment as her personal address the day after Fujitec bought the apartment. This is a matter of public record.
False Statement #2:
The Response states: “We previously received an inquiry from Oasis regarding most of the Transactions, in response to which the Company conducted an investigation, and our attorney provided a response to Oasis’s attorney confirming that all of the transactions raised were lawful and appropriate, and were taken in accordance with applicable laws and procedures.”
The truth:
When our council met with Fujitec’s counsel on April 11 and received their response dated April 18, the investigation was not finished, as confirmed to us by two of the independent directors.
False Statement #3:
The Response states that Fujitec “believe[s] that all of the Transactions are lawful and appropriate, was taken in accordance with applicable laws and procedures, and are not problematic in terms of corporate governance”.
The truth:
Fujitec claimed that the apartment was owned for “top to top sales activity” when it was really the personal residence of Uchiyama’s wife, according to Oasis research. This is problematic in terms of corporate governance, by any definition. Failing to collect a fair market rent for the apartment (est. JPY30m) or to report it is also a significant governance failing, as the company is required to disclose all related-party transactions over JPY10 million.
Fujitec must conduct a truly independent investigation
We call on the Board of Directors to hire a new law firm to conduct a truly independent investigation. A Fujitec independent director informed Oasis that Fujitec hired the law firm Nishimura & Asahi to investigate these issues. However, Nishimura & Asahi has been representing the Company for many years and has been closely tied to the Uchiyama family throughout the entirety of Oasis’ engagement.
Nishimura & Asahi should not be investigating itself. Fujitec’s independent directors should appoint an independent reputable law firm in Japan to conduct the investigation.
Conclusion
We remain extremely concerned by the many governance issues related to the Uchiyama family’s control of the Company including the numerous related party transactions. The false statements in the press release — and the lack of its approval for its publication by the Company’s independent directors — provide yet another example of the Company’s governance failings.
All shareholders should vote against President Takakazu Uchiyama’s reappointment at the upcoming AGM. We also call on Fujitec to establish a Strategic Committee made up of independent directors and experts to determine Fujitec’s future leadership and ownership.
We are committed to a better and more profitable Fujitec. We strongly believe the best path forward for Fujitec is a Fujitec free of abuse of power by the Uchiyama family.
