Results of 48th Annual General Shareholders’ Meeting of With us Corporation

株式会社ウィザスの第48回定時株主総会の決議結果について

Press release

Global ESG Strategy

July 6, 2024

Full press release

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Global ESG Strategy (“GES”), an investment fund managed by Swiss-Asia Financial Services Pte Ltd (“SAFS”), submitted shareholder proposals to the 48th Annual General Shareholders’ Meeting of With us Corporation (“With us” or the “Company”), which took place on June 27, 2024.

Unfortunately, all of the Company’s own proposals were approved and all shareholder proposals were rejected. However, many shareholders agreed with the assertions made by GES. Proposal No.3: Deletion of Article 38 of the  Articles of Incorporation (Decision-making Body for Distributions from Surplus) received support equivalent to 41.93% of the total vote, and ProposalNo.10: Abolition of Anti-takeover Measures also received strong support of 41.85%. Other shareholder proposals received support of 28.92%-33.82% votes. In all cases, the support rate was significantly higher than the GES’s vote alone, and GES would like to express sincere gratitude to all shareholders who supported the proposals.

Confirmed that  management does NOT have basic financial policy

When a shareholder asked questions at the General Meeting about the Company’s policy for deploying its net cash balances, Executive Officer Takashi Kamota (in charge of Business Administration) explained the rationale of having net cash position by saying that the year-end influx of lump-sum tuition fees in the high school and university business results in cash peaking at the end of the fiscal year, typically at just above JPY6bn (it was around JPY7bn at March-end 2024), after which it then declines through the next fiscal year, and that the Company additionally needs to keep on-hand liquidity of around JPY3bn, equivalent to three months’ worth of revenues. However, GES pointed out that Mr. Kamota’s explanation failed to justify the need for net cash of JPY7bn, since With us could ensure on-hand liquidity of JPY3bn, for example, by raising JPY3bn in loans, which would result in JPY3bn of cash being booked on the asset side of the balance sheet and JPY3bn of interest-bearing debt on the liabilities side although this would mean net cash (interest bearing debt less cash & deposits) to be zero.

When GES asked for an explanation of how far With us intends to continue building up net cash, adding that GES does not deny the Company’s claim that it needs to maintain a robust financial position and sufficient internal reserves, it received no response from Mr. Kamota. Instead, President Ikoma stepped in with a non-committal reply, saying that he could not give specific numerical figures, but that he believes the Company will use the funds as and when needed, and it hopes to do so in a way that will increase corporate value. It is very difficult to argue that management is fulfilling its duty of transparency and accountability to shareholders by providing such a vague explanation despite the build-up of net cash to around 45% of market cap. Unfortunately, the situation leaves grave doubts about whether management, and the NEDs who exercise oversight over them, have a fitting level of literacy in corporate finance to manage a publicly traded company.

It became evident at the General Shareholders’ Meeting that With us management had expressed opposition to GES’s shareholder proposal for a higher dividend, without having a basic financial policy governing how far it will build up net cash and what the cash will be used for. With us management is oblivious to the detrimental effect on corporate and shareholder values of having a huge net cash position that completely disregards capital efficiency. In addition, a corporate culture that unthinkingly hoards cash is clearly at odds with the TSE’s call for management to take “more consideration of cost of capital and profitability based on the balance sheet”.

Confirmed that anti-takeover measures will also be applied to the founder & associates

When management expressed opposition to Proposal No.12: Partial amendment to Articles of Incorporation (application of anti-takeover measures to the founder and associates), it explained that the measures will not be applied to any parties already pre-approved by the Board of Directors. At the General Shareholders’ Meeting, GES asked whether, at present, there are any parties including the founder and associates that have already been pre-approved by the Board of Directors, and whether the founder and associates are also subject to the anti-takeover measures. In response, management said there are currently no parties that have been pre-approved by the Board of Directors, and that the measures will also be effective against any moves by the founder and associates to increase their shareholdings.

経営陣が具体的な財務方針を持たないことを確認
本総会において、ネットキャッシュをどこまで積み上げる方針か、どのように活用するかを含め、ウィザス経営陣は具体的な財務方針を持たないにもかかわらず、GESの増配提案に反対を表明していたことが確認されました。ウィザス経営陣は、資本効率を無視した大幅なネットキャッシュ状態にあることが企業価値及び株主価値を毀損しているという自覚がなく、無自覚にキャッシュを溜め込む企業体質は、東証の要請する「バランスシートをベースとする資本コストや資本収益性を意識した経営」 にも明らかに反します。

買収防衛策は創業者関係者にも適用されることが確認された
第12号議案「定款の一部変更の件（買収防衛策の創業者関係者らへの適用について）」に関する会社側の反対意見において、当該買収防衛策は予め当社取締役会が同意したものには適用されないと説明されていました。GESが、本総会にて、現時点において、創業者関係者らを含めて予め取締役会が同意しているものはいるのか、また創業者関係者らも買収防衛策の対象になるのかを質問したところ、現時点で予め取締役会が同意しているものはおらず、創業者関係者らにおいても保有株数を増加させる場合には買収防衛策の適用対象となるとの回答を得ました。

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Disclaimer

This document is for  the purpose of providing information on shareholder proposal by Global ESG  Strategy (“GES”) which is managed by Swiss-Asia Financial Services Pte  Ltd (“SAFS”) to With us Corporation (“With us”) and should not be used  for any other purpose.

The information  contained in this document is based on SAFS’s independent research and  analysis and publicly-available information. We, SAFS, Global ESG Strategy  and other SAFS’s affiliates (“SAFS et al.”), do not guarantee its  accuracy, appropriateness or completeness.

This document  represents the unique views, expectations and opinions of SAFS et al. and is  subject to change. You may not rely on this material for any purpose  whatsoever, nor should it be interpreted as investment, financial, legal, tax  or other advice.

The information and  opinions included herein may include forward-looking statements. You should  be aware that all forward-looking statements, estimates, and projections are  inherently uncertain and subject to significant contingencies and have been  included solely for illustrative purposes. Actual results may differ  materially from the estimates, projections or assumptions contained herein  due to reasons that may or may not be foreseeable. SAFS et al. accept no  liability or responsibility whatsoever for any direct or consequential loss  and/or damages arising out of or in relation to any use of opinions,  forecast, materials and data contained herein or otherwise arising in  connection therewith.
 None of the information or content in this document is, in any way, an offer,  a recommendation, a promotion of services or products; and shall not be  construed as an advertisement, solicitation or representation or as advice or  a recommendation regarding the purchase or sale of any investment product or  any investment in any securities.
 This document does not, and should not be construed as, a request for SAFS et  al. to grant SAFS et al. or any other third party the authority to exercise  voting rights on behalf of the shareholders of With us with respect to the  agenda at the General Meeting of Shareholders. In addition, it does not  propose, encourage, solicit or aim to grant the shareholders of With  us the right to exercise their voting rights on their behalf by designating  SAFS et al. or any other third party as their proxy.