Oasis Continues to Question DIC’s Claims About Related-Party Transactions and Mr. Kawamura’s Influence

Business Wire

Wed, Mar 26, 2025, 12:03 AM 14 min read

HONG KONG, March 26, 2025--(BUSINESS WIRE)--Oasis Management Company Ltd. ("Oasis") is the manager to funds that beneficially own approximately 11.5% of Japan ink and chemical products manufacturer DIC Corporation (4631 JT) ("DIC" or the "Company"). Oasis has adopted the Japan FSA’s "Principles of Responsible Institutional Investors" (a/k/a the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with its investee companies.

As a large shareholder of DIC, Oasis has been increasingly concerned about the corporate governance deficiencies that have plagued DIC during Mr. Kawamura’s reign and the conflicts of interest that his position has created. In its recent press releases, rather than appropriately addressing Oasis’s genuine concerns, DIC has provided no reasonable explanations or responses, but has instead reacted with dishonest criticism.

Questionable explanations about the Saitama Land Case

As a shareholder of DIC, Oasis has been concerned about the Saitama Land Case, a transaction in which an entity controlled by the Kawamura Family acquired land in Saitama from DIC and then sold it to a subsidiary of Mitsubishi Estate less than two months later.

Oasis has been requesting explanations from DIC regarding the Saitama Land Case and other related-party transactions but, given DIC’s refusal to provide transparency around these concerns, Oasis was forced to initiate court procedures seeking to inspect DIC’s board meeting minutes and books and records. Inspection and making copies of DIC’s board meeting minutes and books and records are basic, fundamental shareholder rights clearly guaranteed by the Japan Companies Act. However, DIC has argued that Oasis should not be allowed to inspect and make copies of the requested materials. In part, DIC has argued that these related-party transactions had been conducted "appropriately" and, thus, there is no need to disclose the relevant board meeting minutes or books and records to Oasis. In connection with Oasis’s efforts to see basic transparency, DIC has submitted to the court documents that number more than 100 pages (including overlaps of documents submitted to the court for both inspection and copying of the minutes of the board of directors meetings and books and records, and documents related to the Museum).

In their press release dated March 14, 2025, DIC claims that "the Company asked multiple intermediaries, including trust banks, to submit bids and sold the property to the bidder offering the best terms, thus following a fair and reasonable sales process."

However, despite the fact that DIC submitted more than 100 pages of documents and attended eight court hearings in total to argue why Oasis should be denied of its shareholder rights, part of which included arguments for the "appropriateness" of these transactions, DIC has never mentioned this bidding process involving trust banks during the court procedures. Moreover, Oasis shared its concerns about the Saitama Land transaction with DIC in a letter dated March 15, 2024. However, DIC never mentioned the existence of such "bidding process" even though DIC had numerous dialogues with Oasis over the one-year period after March 15, 2024. DIC has also never provided any evidence supporting their claim over the existence of said bidding process. This claim by DIC is being made suddenly and for the first time in the March 14, 2025 press release.

If, as DIC now asserts, the bidding process was facilitated by trust banks and other intermediaries, it would be natural for DIC to invite Mitsubishi UFJ Trust and Banking Corporation, a group company of MUFG Bank, DIC’s main bank, to participate in the bidding process, especially if there were several trust banks selected for the bidding process as per DIC’s press release. If that had been the case, Mitsubishi Estate, which has the same main bank, MUFG Bank, would have bought the land directly from DIC without going through Nissei Real Estate. Given the fact that Nissei Real Estate resold the Saitama Land acquired from DIC to Mitsubishi Estate group for the construction of a large-scale condominium (117 houses in total) in less than two months, DIC should have been able to sell the Saitama Land directly to a subsidiary of Mitsubishi Estate at the higher price than the price sold to Nissei Real Estate.

As a shareholder proposal, Oasis submitted an agenda item for the amendment of the Articles of Incorporation of DIC which aims to strengthen governance regarding related-parties transaction. The truth about the Saitama Land transaction, including the following information, is important for each shareholder to make an informed decision:

Whether Mitsubishi UFJ Trust and Banking Corporation was involved in the bidding process as an intermediary;
Whether Mitsubishi Estate had participated in the bidding process, as well as the number of bid participants, and the standards and/or thresholds for inviting participants into the bidding process; and
If Mitsubishi Estate did not participate in the bidding process, the reason why DIC did not invite Mitsubishi Estate group for participation in the bidding process despite DIC’s relationship with them as a joint venture partner.

However, DIC has only made selective disclosures and has failed to provide appropriate disclosures that would address the legitimate questions from shareholders, as mentioned above.

Questionable claims about Mr. Kawamura’s involvement over the future of the Museum

Through its dialogue with Oasis, DIC explained its policy that, although Mr. Kawamura should be excluded from formal board resolutions, he should be involved in discussions about the future of the Museum, such as board discussions and private discussion with Corporate Value Improvement Committee members. Mr. Ikeda clearly confirmed that Mr. Kawamura was taking part in such conversations to Oasis during a meeting held on October 21, 2024, and also mentioned the example quoted below as a reason why Mr. Kawamura needs to be involved in the discussion process.

"For example, when considering a divesture of the art pieces, DIC consider who holds the network to make that happen. In this case, if we exclude the network the founding family has, we may risk missing the opportunity to sell the artwork at the highest price."

Regarding a collaboration with the International House of Japan ("IHJ" and the "Collaboration"), DIC now claims that "it is without foundation that Mr. Kawamura advised or influenced the selection of IHJ as a collaboration partner during deliberations and resolutions regarding the Collaboration at the Board of Directors". However, given DIC’s policy and practice regarding Mr. Kawamura’s involvement, as described above, there are concerns about the exercise of Mr. Kawamura’s de facto influence over DIC’s decision-making process. In its open questionnaire, Oasis submitted a question to DIC asking, "[w]as Mr. Kawamura involved in the discussions at the board meetings[…]?" However, DIC only made remarks selectively on Oasis’s concerns that Mr. Kawamura "advised or influenced" "the selection of IHJ as a collaboration partner during deliberations and resolutions regarding the Collaboration," and did not answer Oasis’s question (i.e., whether Mr. Kawamura was "involved in the discussions at the board meetings"). Oasis believes that DIC is intentionally avoiding providing a clear answer to Oasis because DIC cannot deny the involvement of Mr. Kawamura to some extent in the discussion about the future of the Museum (such as, in the form of participation in board meetings).

Unjustified Criticism of Oasis by DIC

DIC has announced through its press release that the Company has selected "experts" from whom to seek advice and support regarding the management of the artworks after relocation. Oasis has pointed out that these chosen experts have close ties to Mr. Kawamura. The only fact that Oasis has pointed out about these experts is their close relationship with Mr. Kawamura.

It is important to note that DIC is the party acting "beyond the scope of appropriate engagement", not Oasis, as DIC alleges. In the court procedures where Oasis is seeking to exercise its shareholder rights to access the Company’s board meeting minutes and books and records, DIC has not only made significant efforts to deny Oasis this right, but it has also been making clearly dishonest claims or responses in those court proceedings, as shown below. In particular, the first of the actions listed below has concerning effects on the exercise of the most fundamental shareholder right -- the right to vote -- by providing inaccurate information that shareholders rely on to make their voting decision. Moreover, DIC has repeatedly made claims clearly contrary to the truth in court proceedings, forcing Oasis to correct them each time and thereby delaying the legal process, which can only be evaluated as an act aimed at delaying and frustrating the exercise of the shareholder’s right to inspect and copy the board meeting minutes and books and records, a right clearly guaranteed under the Japan Companies Act. These acts can indeed be said to acting "beyond the scope of appropriate engagement," and Oasis strongly condemns such actions.

Oasis is seeking to inspect and copy DIC’s Board of Directors meeting minutes, including those "related to discussions and decisions" concerning various related-party transactions. Although it is clear that any instances in which the DIC’s board received any "reports" should be included in the scope of Oasis’s requested disclosure, Oasis has clearly stated this intention (i.e., Oasis’s request for disclosure covering instances of the board receiving "reports") in writing. Nevertheless, DIC, in their opinion opposing Oasis’s shareholder proposals, publicly announced their interpretation of Oasis’s request that the minutes requested by Oasis were only "‘portion relating to discussions and decisions’ regarding the transactions with the two companies mentioned above, i.e., disclosure of the approval details for those transactions," as the reason why DIC claimed that there were no board meeting minutes regarding related-party transactions with Nissin Trading and Dainichi Can, which amounts to over 120 billion yen over a 10-year period. Considering that Oasis had already clarified in writing during a court procedure that the minutes for which Oasis was seeking disclosure includes board meeting minutes where only "reports" were made, DIC is clearly making statements that are contrary to the truth, and using that as the basis for opposing Oasis’s shareholder proposal. These are problematic actions that hinders the exercise of shareholders’ voting rights based on accurate information.
Additionally, DIC has made other claims that clearly appear to be contrary to the truth. For example, when DIC temporarily moved its headquarters from the Nihonbashi building owned by Nissei Real Estate, a Kawamura family entity, to Waterras Tower, DIC did not receive a refund of the security deposit from Nissei Real Estate. The explanation DIC is providing in the court procedures is that, in summary, "the floors to which the DIC headquarters temporarily moved in the Waterras Tower was also owned by Nissei Real Estate, and therefore, DIC did not demand the return of the security deposit for the Nihonbashi headquarters building from Nissei Real Estate, but instead had the amount used as the security deposit for the floors in Waterras Tower that DIC temporarily moved to, which were owned by Nissei Real Estate." However, through land registry information of the relevant floors of the Waterras Tower obtained by Oasis, Oasis has confirmed that the relevant floors have never been owned by Nissei Real Estate.
Furthermore, DIC has claimed that support for the Kawamura Ikueikai was terminated at the end of March 2024. However, Oasis has confirmed that, as of June 2024, DIC’s General Affairs and Human Resources Department was the recipient address for documents for Kawamura Ikueikai.

As mentioned above, despite significant concerns over DIC’s related-party transactions, DIC continues to refuse to provide Oasis -- DIC’s largest minority shareholder -- a meeting opportunity with Mr. Kawamura, a member of the founding family who controls the counterparties of the related-party transactions. If DIC seeks "appropriate engagement", Oasis suggests that DIC start with apologizing for making so many dishonest claims in the court proceedings and disclosures and engage with Oasis in a constructive and transparent manner.

In addition, DIC continues to refuse to disclose further details of the agreement between the Company and IHJ regarding the Collaboration, hiding behind "confidentiality" obligations. This has resulted in shareholders being denied of their right to disclosure over the handling of DIC’s artworks, one of DIC’s most valuable assets. The Company should be transparent about all of these issues. This need for transparency should have been a non-negotiable clause in any agreement concerning the Company’s valuable assets. In particular, in DIC’s press release as of March 12, 2025, it appears that, as a part of the Collaboration, it is planned that a special exhibit room, named the "Rothko Room," will be constructed at IHJ. However, DIC has failed to provide appropriate disclosures that address the legitimate questions from shareholders, such as whether or not, based on the agreement with IHJ, the Collaboration will, in substance, deprive DIC of control over the assets that ultimately belong to DIC’s shareholders over a prolonged period (i.e., whether DIC will be able to terminate the Collaboration and dispose of the artworks, at DIC’s discretion, as necessary), and whether or not DIC will bear any burden with respect to the construction costs and/or operation costs of the Museum.

Oasis’s view and opinion that DIC’s series of actions appear to be an attempt to deprive shareholders of their rightful assets and effectively transfer wealth and/or control of the assets to Mr. Kawamura himself and an inner circle of people and organizations under Mr. Kawamura’s influence has not been changed. The Collaboration, potentially, may effectively eliminate the option of utilizing these assets to enhance DIC’s capital efficiency and corporate value over the long term. Additionally, it is a societal demand, and not only an obligation to its shareholders, for the management of listed companies to conduct management with a focus on capital efficiency. Although sufficient disclosures have not been made regarding these actions, Oasis views these actions by DIC’s management clearly go against not only the mandate given by shareholders, but also the societal expectations mentioned above.

In light of these series of actions clearly conflicting with shareholder interests, Oasis urges all shareholders to:

Vote AGAINST the re-election of Chairman Ino and CEO Ikeda, who led the process for this series of decisions; and
Vote FOR the Oasis’s shareholder proposal to amend the articles of incorporation to enhance monitoring of related-party transactions at DIC.

For more information, please visit DICcorpgov.com. We welcome all stakeholders to contact Oasis at info@DICcorpgov.com to help improve DIC’s corporate governance for the benefit of all shareholders and stakeholders.

Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at https://oasiscm.com. Oasis has adopted the Japan FSA’s "Principles for Responsible Institutional Investors" (a/k/a the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with our investee companies.

The information and opinions contained in this press release (referred to as the "Document") are provided by Oasis Management Company ("Oasis") for informational or reference purposes only. The Document is not intended to solicit or seek shareholders to, jointly with Oasis, acquire or transfer, or exercise any voting rights or other shareholder’s rights with respect to any shares or other securities of a specific company which are subject to the disclosure requirements under the large shareholding disclosure rules under the Financial Instrument and Exchange Act. Shareholders that have an agreement to jointly exercise their voting rights are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate shareholding with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Except in the event that Oasis expressly enters into the agreement as a joint holder requiring such disclosure, Oasis does not intend to take any action triggering reporting obligations as a Joint Holder. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250325989241/en/

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