Oasis Secures Proxy Advisors' Support for Proposals that Address Serious Governance Concerns at Upcoming Kobayashi Pharma EGM

(Securities Code: 4967 JT)

* Oasis nominated independent investigator to lead investigation into recent Beni-Koji scandal

*Oasis nominated three highly qualified, independent, diverse director candidates

* Proxy advisory firms ISS and Glass Lewis support Oasis’s independent director candidates

* Proxy advisory firm ISS supports appointment of Oasis’s independent investigator candidate

* Oasis reiterates its recommendations to Kobayashi Pharma shareholders to vote FOR Oasis’s proposals to improve Kobayashi Pharma’s governance and to improve its health and safety standards for all stakeholders

More information available at www.KobayashiCorpGov.com

Oasis Management Company Ltd. (“Oasis”) is the manager to funds that beneficially own over 10.1% of Japanese pharmaceuticals and food products manufacturer Kobayashi Pharmaceutical Co., Ltd. (4967 JT) (“Kobayashi Pharma” or the “Company”).

As Kobayashi Pharma’s second largest shareholder and the largest institutional shareholder, Oasis has accelerated its effort to rebuild the Company’s governance to secure appropriate reparations for the victims, and to ensure improved product safety going forward. As part of its efforts, Oasis called for an extraordinary general shareholders’ meeting (“EGM”) scheduled on February 19, 2025 in Osaka, to make proposals to address Kobayashi Pharma’s governance deficits.

Leading Proxy Advisory Firm ISS Supports Oasis’s proposed Independent Investigator as well as Oasis’s Three Independent Director Candidates

Independent leading proxy voting advisory firm ISS has supported the nomination of Oasis’s proposed independent investigator and independent director candidates for EGM. The rationale that ISS highlights for its recommendations are as follows.

Agenda 1: Election of an independent investigator

• “An independent evaluation of the founding family role, if any, in the malfunctioning of the internal control system, … appears critical in order for the company to build its new corporate governance system and come up with counter measures to prevent recurrence. However, this is not the case here, so we conclude that the investigation by the fact-finding committee is not sufficient.”
• “Concerning cost considerations, the company notes that an investigation in the way requested by Oasis would significantly hinder the operations of the company. … The cost should be set to the extent socially reasonable. … Therefore, the company’s concern here appears overblown.”
• “[I]t will not be easy for the company to break away from them [founding family]. Kazumasa Kobayashi in fact still retains the office which he had used when he was the chairman and is currently paid as a senior advisor.”

Agenda 2: Election of three independent directors

• “[T]he company is urged to enhance its internal control system whose malfunction is considered as the main reason for the delayed announcement of the incident. In this perspective, all of the dissident candidates appear to have relevant skills to address that concern.”
• “The appointment is likely to bring a new independent perspective to the board, where the influence of the Kobayashi founding family is still observed.”

Leading Proxy Advisory Firm Glass Lewis Supports Oasis’s Director Candidates

Similarly, Glass Lewis has also confirmed its support for Oasis’s proposed independent director candidates, highlighting Kobayashi Pharma’s problematic corporate governance:

Agenda 1: Election of an independent investigator

• “We share deep concerns that this incident underscores serious deficiencies in the Company’s internal controls and risk management framework.”
• “We are also concerned about the objectivity of the Committee's report as the Committee shared information about the founding of the investigation with internal directors and finalized following discussions with them.”
• “[W]e believe the board should establish a truly independent investigative committee, in line with the Third-Party Committee Guidelines for Corporate Scandals issued by the Japan Federation of Bar Associations or an equivalent standard.”
• “While we acknowledge the Company has conducted multiple investigations since the incident came to light, the fundamental concern remains: we cannot fully trust the current board’s decisions.”

Agenda 2: Election of three independent directors

• “[W]e are deeply concerned that the Beni-koji incident reveals fundamental weaknesses in the Company’s internal controls and risk management framework.”
• “Oasis effectively highlighted critical shortcomings within the Company.”
• “[A]ppointing former representative director and chair K. Kobayashi as a special advisor and re-nominating former representative director and president A. Kobayashi for re-election at the March 2025 AGM—both of whom we believe should be held accountable for the Beni-koji incident—raises serious concerns regarding the board's decision-making process.”
• “Given these serious governance concerns and recognizing that Oasis has nominated a minority slate of independent candidates with expertise in governance, compliance, and medical research and development—key areas where the Company has demonstrably struggled—there is a compelling case for investors to support Oasis' nominees in this proposal.”

Oasis’s Shareholder Proposals

For the upcoming EGM on February 19, Oasis reiterates its recommendation to fellow shareholders to vote FOR the Oasis shareholder proposals in order to identify the root-causes of the Beni-Koji incident and to prevent recurrences, and to enhance Kobayashi Pharma’s governance by breaking free from the founding family. Oasis strongly urges shareholders at the Company’s upcoming EGM to:

Vote FOR Oasis’s Agenda 1:

Election of Mr. Shin Ushijima, president of the Japan Corporate Governance Network and founding partner of law firm Ushijima & Partners, to lead an independent investigation into the Beni-Koji scandal from an unbiased third-party perspective.

Vote FOR Oasis’s Agenda 2:

Election of three new independent director candidates:

1. Mr. Richard Dols Young, a former partner at a venerable US product liability law firm, who has led global product safety compliance for a multinational corporation.
2. Dr. Tomoko Chubachi, an experienced physician and former Chief Medical Officer of a pharmaceutical manufacturer, who has expertise in sanitation, health and safety, and regulatory compliance.
3. Mr. Yoshio Nakamura, a lawyer and former prosecutor who has extensive investigative experience, including serving as a committee member in past scandal investigations.

We call on all shareholders who care about improving Kobayashi Pharma’s compliance and health and safety standards through the restoration of effective corporate governance to Vote FOR Oasis’s proposals.

To learn more about Oasis’s proposals, please visit www.KobayashiCorpGov.com. We welcome all stakeholders to contact Oasis at info@KobayashiCorpGov.com to help improve Kobayashi Pharma’s corporate governance and, thus, ensure consumer safety.

***

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 of 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 opinion contained in this press release (referred to as the "Document") is provided by Oasis Management Company (“Oasis”) for informational purposes only or for 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 (“FIEA”). Shareholders that have an agreement to jointly acquire or transfer, or exercise their voting rights or other shareholder’s rights with respect to any shares or other securities of a specific company 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 for the case where Oasis expressly enters into such agreement, Oasis does not intend to be treated as a Joint Holder and/or a Specially Related Person with other shareholders under the Japanese FIEA or to take any action triggering reporting obligations as a Joint Holder. Oasis does not have any intention to receive any power to represent other shareholders in relation to the exercise of their voting rights. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250217041957/en/