Global ESG Strategy (GES) hopes that by submitting these shareholder proposals and publicizing them to With us shareholders, it will help resolve the critical governance failings at With us, promote management that genuinely pursues capital efficiency, and maximize the common interests of all shareholders.

GES started investing in With us Corporation (“With us” or the “Company”, securities code 9696), which is listed on the TSE Standard Market, in 2023, and has continued to engage with management since then. Over that period, GES has obtained confirmation of the company’s high growth potential, but has also identified serious governance issues related to the founding family. It is clear that management is complacently unmindful of the levels of capital efficiency required of a listed company.

More specifically, management policy at With us ignores both the cost of capital and capital efficiency, and its share price valuations have dropped to sector lows. One reason for this is the huge net cash position, which completely ignores capital efficiency and for which the company has no remedial financial policy in place. A corporate culture that allows such unjustifiable cash buildup is clearly contrary to the TSE’s call for management with “more consideration of cost of capital and profitability based on the balance sheet”.

Moreover, the Company awards a privileged position and special remuneration to the founder and the founding Horikawa family, which permits founding family members to serve simultaneously on rival company boards, distributes profits to the founding family through the acquisition of subsidiary equity, and has introduced and maintains takeover prevention measures designed to protect the founding family. As a result, despite being a listed company, With us gives excessive consideration to one group of shareholders – the founding family – and channels profits in their direction. This is detrimental both to the growth that a listed company ought to aim for, and the realization of the common interests of all shareholders.

GES has reached out to With us management to request improvement in these issues. However, management has consistently argued that there is nothing inappropriate about its policies, demonstrating that there is no sign of the Company undertaking improvements on its own initiative. For this reason, GES has submitted the shareholder proposals to the Annual General Meeting of Shareholders scheduled for June 2024, with the aim of achieving radical reform to governance and improving capital efficiency.

The proposal consists of a total of 10 resolutions with the following four goals: 1) Large-scale shareholder returns to improve capital efficiency; 2) Governance reform to free the company from anachronistic management that favors the founding family; 3) The promotion of constructive dialogue with shareholders; and 4) The discontinuation of anti-takeover measures that protect the vested interests of the founder and associates.