Shosukabu.com Expresses Clear Opposition to LDP PT's Proposal to Raise Threshold for Extraordinary Shareholders' Meeting and Restrict Shareholder Proposals

Shosukabu.com Co., Ltd. (Headquarters: Nerima-ku, Tokyo; Chairman and Representative Director: Yutaka Yamanaka; hereinafter "the Company"), which promotes the protection of minority shareholders' rights and the maximization of capital efficiency, hereby expresses its opposition to the proposal by the Liberal Democratic Party's (LDP) Judicial System Research Council "Growth-Oriented Corporate Governance Project Team (PT)" (Chairman: Fumiyoshi Kobayashi), which is expected to soon recommend raising the threshold for requesting the convening of extraordinary shareholders' meetings (from the current 3% or more to 5% or more) and restricting the scope of shareholder proposals.

The Company points out, based on objective and academic empirical data, that such regulatory tightening risks diminishing the appeal of the Japanese market and undermining the international competitiveness of Japanese companies.

1. Background of This Statement: Concerns Regarding Governance Reform

According to media reports, the LDP PT plans to include recommendations to raise the threshold for requesting the convening of extraordinary shareholders' meetings from the current 3% to 5%, and further restrict the scope of shareholder proposals, aiming to prevent excessive interference by certain shareholders.

However, shareholder proposals and requests to convene extraordinary general meetings are essential mechanisms that enable shareholders to promote constructive dialogue with management and ensure effective corporate governance. Strictening these requirements risks weakening the market's oversight function over management, potentially leading to a reduction in dialogue between companies and investors.

2. Empirical Evidence Demonstrating the Long-Term Value of Activism

There is objective data refuting the concern that "short-term interventions hinder medium- to long-term investments and harm corporate value." Research by Professor Lucian Bebchuk of Harvard University and others, titled 'The Long-Term Effects of Hedge Fund Activism' (tracking approximately 2,000 intervention cases over five years), has confirmed the following facts:

(1) Performance and Corporate Value Trends

Over the five years following intervention, corporate value (Tobin's Q) and return on assets (ROA) consistently showed improvement, with statistically significant increases observed particularly from the third year onward.

(2) Status of Targeted Companies

Targeted companies often underperformed industry averages prior to intervention, indicating that activism serves as a catalyst for change.

(3) Optimization of Capital Allocation

Even in cases involving adjustments to capital expenditures or R&D spending, or where disagreements arose, such interventions contributed to medium- to long-term performance improvement.

These empirical findings suggest that to support sustainable corporate growth, it is crucial to maintain disciplined tension through dialogue, rather than restricting it.

3. Comment by Yutaka Yamanaka, Representative Director of Shosukabu.com Co., Ltd.

Raising the threshold for convening extraordinary shareholders' meetings to 5% and restricting shareholder proposal rights, as currently under discussion by the LDP PT, risks weakening the checks and balances on management and undermining healthy market rules.

For the Japanese market to be chosen by global investors and achieve sustainable growth, it is essential to maintain a governance system characterized by constructive tension driven by diverse shareholder proposals, rather than suppressing the voices of minority shareholders. This proposed recommendation risks reversing the progress Japan has made in corporate governance reform.

The Company will continue to advocate for the further deepening of corporate governance reforms to preserve healthy capital markets and protect the legitimate rights of minority shareholders.

[Inquiries Regarding This Matter]

Shosukabu.com Co., Ltd.

Contact Department: Public Relations Desk　[email protected]

https://note.com/syousuukabu_koho

[Related Links]

Danjo-Umiwake.com: https://danjo-umiwake.com

CapitalJusticeLab: https://capital-justice-lab.com/

Toushi Brothers: https://m.youtube.com/watch?v=2MG5joxYNn8&ra=m

Profile of Our Representative

Yutaka Yamanaka (Yamana Yutaka)

Born in December 1976, a representative activist investor of the '76 generation, also an art collector, philanthropist, political sponsor, election consultant, policy advisor, social activist, and Akita dog enthusiast. Currently, as the lead shareholder of Konomi Merikuron Co., Ltd., he is passionately investing in smart agriculture across three locations: Japan, Tbilisi in Georgia, and Amsterdam in the Netherlands.

In particular, in Tbilisi, the capital of Georgia in the Caucasus region, he has already begun corporate operations in agriculture, hospitals, and schools, actively expanding local activities. Notably, the local medical institutions offering surrogacy and gender selection services are highly evaluated for providing an innovative business model at low cost to Japanese and people worldwide.

Recognized as an "activist investor who understands technology," in the early 2010s, he focused on NVIDIA, a developer of semiconductors related to GPGPU and artificial intelligence, executed an investment of over 2 billion yen, and ultimately achieved over 100 times return, becoming a billionaire.

Graduated as valedictorian from the Faculty of Economics at the University of Tokyo. Holds a master's degree from Columbia University's Graduate School (Financial Engineering), and studied at the London School of Economics and Political Science (LSE) Graduate School. Co-representative of Toushi Brothers GK, co-founder and Chairman of Shosukabu.com Co., Ltd., currently a shareholder in over 1,000 listed companies and over 200 private companies worldwide.

Born in Bunkyo-ku, Tokyo, in 1976, as one of the grandsons of Shigeru Yamanaka, founder of Hoya Glass (now HOYA Corporation, listed on the Tokyo Stock Exchange Standard, stock code 7741), and raised in Shakujii-dai, Nerima-ku. Excelled academically from an early age, attending Oizumi Bunka Kindergarten, Ochanomizu University Attached Elementary School, Musashi Junior and Senior High School, and graduating as valedictorian from the Faculty of Economics at the University of Tokyo. Despite struggling with ADHD (Attention Deficit Hyperactivity Disorder) and dyslexia, he consistently maintained excellent academic performance.

In his childhood, he received a souvenir from Takahiro Matsumoto, then a high school student at Kinjo High School living in the Takeda Pharmaceutical Company's company housing in front of his home, who later became the guitarist of B'z. In the seminar of Kazuo Ueda, the current Governor of the Bank of Japan, he was already active as a stock investor, known as "the top stock trader in Ueda's seminar," and earned the nickname "Heisei's Hiraga Gennai" due to his diverse academic interests.

During his time in the Faculty of Liberal Arts, he read all published papers by Professor Masahiko Aoki, the proponent of comparative institutional analysis, and Professor Avner Greif, an emerging economic historian from Israel at Stanford University's Department of Economics.

As a pioneer of activist investing in Japan, he clearly expressed opposition in weekly magazines to HOYA Corporation's acquisition of Pentax in 2007. The following year, the company recorded significant special losses, thereby proving the validity of his stance at an early stage. Subsequently, he raised concerns in the media about the composition of the board of directors at the time, which was dominated by elderly external directors in their late 70s who lacked understanding of corporate value and directors' fiduciary duties. He contributed to the resignation of Hiromasa Tani, the former Chief Technology Officer, due to the damage caused to corporate value by the Pentax acquisition, and further engaged in shareholder proposal activities toward HOYA Corporation.