Hibiki Path Advisors Launch a Public Campaign as the Largest Shareholder of JAPAN PURE CHEMICAL CO., LTD.

Business Wire

3 days ago

TOKYO--(BUSINESS WIRE)--Hibiki Path Advisors ('we', 'us', 'our') has decided to launch a public campaign, including shareholder proposals, directed at one of our portfolio companies, JAPAN PURE CHEMICAL CO., LTD. (Securities Code: 4973) (hereinafter referred to as 'the Company', 'JPC'), in the lead-up to its 54 th Annual General Meeting of Shareholders scheduled for 20 th June 2025. As the largest shareholder of the Company, our aim with this campaign is to protect and enhance the common interests of all shareholders.
Opposition to the reappointment of Director and Honorary Advisor Masao Watanabe to the Board
W ith regard to the other director nominees, we plan to oppose the election of eight individuals (including substitute candidates), excluding Mr. Tomoyuki Kojima and Ms. Momoe Kuromatsu (*1)
Plan to oppose the transition to a company with an Audit and Supervisory Committee (*1)
S hareholder proposal (Item 10): Enhancement of stock-based compensation for directors
(excluding outside directors)
S hareholder proposal (Item 11): Partial amendment to the Articles of Incorporation regarding the decision-making body for matters such as surplus dividends
S hareholder proposal (Items 12 and 13): Strengthening of shareholder returns to improve ROE (including share buybacks and increased dividends)
*1 For the rationale behind why items 1. and 2. remain under consideration rather than being finalized, please refer to the attached statement of purpose.
For further details regarding the public campaign, please refer to the statement of purpose via the link below:
" Regarding the Public Campaign as the largest Shareholder of JAPAN PURE CHEMICAL CO., LTD."
We have consistently engaged with the Company over several years earnestly, with our sole intention to guide the Company to take more proactive measures to maximize corporate value. Despite our longstanding, friendly, and earnest proposals since 2018 and the fact that we are currently the largest shareholder holding approximately 18% of the shares (excluding treasury shares) as of the end of March 2025, the Company has completely disregarded our fair requests and abandoned efforts to bridge the differences in opinion. As a result, we have reached the decision to launch a campaign including the submission of shareholder proposals with the aim of protecting the collective interests of all shareholders.
As a premise of this campaign, it is a fact that Board of Directors have the fiduciary duty to act in the best interest of the Company and the shareholders. Despite that, JPC board has been avoiding earnest engagement from the requests of general shareholders, including us as the largest shareholder and this continued management practices neglect their fiduciary duties as well as true advancement of corporate value. In our view, the primary cause of this governance failure lies in two factors. First is the continued dominance of Director/Senior Advisor Masao Watanabe (hereinafter referred to as 'Watanabe'), who has retained effective control of JPC for approximately 25 years since the Company's MBO, despite completely failing to generate corporate value during his term. Second is the uniquely structured board of directors (including independent directors), where repeated appointments from limited corporate groups have created conditions that hinder effective oversight.
Despite such governance failure, we find it utterly disappointing for the JPC Board of Directors' intention to propose again for the reappointment of Watanabe in this year's General Meeting of Shareholders but additionally establish an Audit and Supervisory Committee structure that appears to significantly delegate authority to internal executive directors which appear to potentially further strengthen Watanabe's de facto control. The company has tried to persist with a board composition that appears to be a continuation of the existing structure, which demonstrates not only a complete lack of reflection on the prolonged destruction of corporate value but also a troubling unwillingness to listen to the legitimate voices of shareholders. Under the banner of a so-called "second founder," the Company has effectively deified Watanabe, thereby forfeiting a critical opportunity for fundamental transformation.
We observe that there is serious lacking in fiduciary duty of the Company's Board of Directors as the Company's prolonged underperformance while continuing to implement piecemeal measures and deferring fundamental decisions. Not only did the Company Board of Directors fail to uphold common interests of shareholders, they also undermined the Company's competitive advantage and value creation. Such inaction ultimately harms all stakeholders, including customer relationships and the livelihoods of employees committed to the Company.
We respectfully ask our fellow shareholders to support our proposal to enhance and maximize the common interests of all shareholders. Furthermore, we urge you, as fellow shareholders, to carefully consider whether the company's proposals – including the amendment of the Articles of Incorporation to transition to a company with an Audit and Supervisory Committee, and the election of directors, truly contribute to the fundamental enhancement of the company's corporate value, and so we urge you to exercise your shareholder rights with sound and thoughtful judgment.
Note: This post does not constitute a solicitation for an offer to acquire or recommend the purchase or sale of specific securities, or advice on investment, legal, tax, accounting, or any other matters. In the event of any discrepancy or conflict between the English and Japanese versions, unless otherwise noted, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.
Sincerely yours,