AVI raises concerns over Fujitec’s current board

AVI raises concerns over Fujitec's independent directors, questioning whether they are acting in the best interests of shareholders

LONDON, 29 June 2022 -- Asset Value Investors ("AVI") calls into question the credibility of Fujitec's current Board of Directors following its failure to hold former President Takakazu Uchiayma to account for decades of related-party transactions and after the debacle at Fujitec's AGM where, despite shareholders not voting for his re-election, Takakazu Uchiayma was allowed to continue leading the Company as Chairman.

AVI has been a shareholder in Fujitec for almost four years, launching a public campaign in May 2020 titled "Taking Fujitec to the Next Level" and publishing a presentation on how to improve corporate value which can be found at www.takingfujitectothenextlevel.com. Since the launch of the campaign, Fujitec has undertaken numerous improvements that AVI supports, including the abolishment of an anti-takeover measure, improved disclosure, enhanced shareholder returns, and efforts to standardise production. These actions have led, at least in part, to Fujitec's +79% share price increase following the launch of AVI's public campaign in May 2020.

However, Fujitec's response to legitimate concerns raised by Oasis Management Company Ltd regarding related-party transactions has fallen short of basic standards of good corporate governance. Despite the Board's efforts to exonerate Mr Uchiyama of any wrongdoing, AVI remains entirely unconvinced that the numerous related-party transactions taken by Mr Uchiyama and his family do not pose a problem for Fujitec's corporate governance. In recognition of Mr Uchiayma's repeated involvement in related-party transactions and abuse of power, AVI voted against his reappointment at Fujitec's 2022 AGM.

Nonetheless, in what AVI believes was an effort to conceal a low approval rating for Mr Uchiyama's reappointment, the motion to reappoint him as President was withdrawn one hour before the AGM. Despite lacking shareholder support, shortly after the AGM, Mr Uchiyama was reappointed as Chairman.

Joe Bauernfreund, CEO of AVI, commented: "Fujitec has defied the voice of shareholders and circumnavigated the AGM voting process to appoint former President Takakazu Uchiyama as Chairman. This flies in the face of the efforts by the TSE, the Government and regulators to enhance corporate governance."  

That a Board composed of a majority of outside directors allowed such an abuse of shareholder rights, raises concerns as to whether the current outside directors are representing shareholders' best interests.

Bauernfreund continued: "Outside directors who were party to the decision to withdraw the motion to reappoint Mr Uchiyama just one hour before the AGM and then to reappoint him as Chairman should feel ashamed. As outside representatives, they are there to safeguard the interests of shareholders. We question whether the actions of the outside directors have been taken in the best interests of shareholders and whether they have the credibility to continue in their current positions."

"As a long-standing shareholder, we have had many fruitful discussions with Fujitec representatives over the past years but we are alarmed by recent developments. Shareholders cannot stand by idly while they are being ignored. We are proactively evaluating our next steps."

ENDS

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About AVI

AVI is a London-based investment management company that has been investing in Japanese equities for over 20 years. AVI's investment team aims to contribute to the sustainable enhancement of corporate value through dialogue with the management of its portfolio companies, and its investments in Japanese equities which amount to approximately JPY 78 billion.