Hibiki Path Advisors (“we”, “us”, “our”) submitted a shareholder proposal to Tomoe Corporation (the “Company”, “Tomoe”) to protect the common interests of the Company’s shareholders, and the voting result (Japanese Only) was disclosed on 30th June. We would like to touch on it as the result contains interesting facts.
First, our shareholder proposals received approximately 4% support for Item 4 (Remuneration in Granting Restricted Stock to Directors, excluding Audit and Supervisory Committee Members and Outside Directors) and 10% for Item 5 (Appropriation of Surplus) from fellow shareholders. We truly appreciate those who supported our proposals.
If we exclude the votes of shareholders closely related to Tomoe, or those with cross-shareholdings¹ (“Tomoe-related shareholders”) (as estimated from the top 11 shareholders listed in the Summer 2025 issue of Toyo Keizai Inc.’s Shikiho, those identified in Tomoe’s securities report as having cross-shareholding relationships and confirmed to still hold shares as of the end of March 2025, and Tomoe’s directors holding shares as disclosed in the securities report), support from such “unrelated” shareholders was approximately 8% for Item 4 and 21% for Item 5.
On May 30, 2025, Tomoe announced “3rd Medium-Term Management Plan: TOMOE BUILD up 5(Japanese Only)” significantly lowering its ROE target from the original 10% to 5% due to the consolidation of a real estate subsidiary during FY3/25. We estimate the Company’s actual ROE —reflecting unrealized gains on real estate— at 3.1% (please refer to our earlier post for details and calculation method). If the Company has no intention of fundamentally improving its ROE and P/B ratio, it should consider going private, including through an MBO.
Ishii Iron Works Co., Ltd. (“Ishii”), which had a cross-shareholding relationship with Tomoe, announced its decision to go private through an MBO(Japanese Only) in August 2024 and completed it in December. Ishii held substantial non-core real estate with unrealized gains exceeding twice its capital and, as a result, received shareholder proposals calling for “dividends equivalent to a 5% DOE to improve ROE”, as well as “an amendment to its Articles of Incorporation to disclose KPIs reflecting unrealized real estate gains”. Consequently, Ishii decided to go private at a valuation reflecting the fair value of its real estate. Tomoe is financially very similar to Ishii, and we will proactively engage with Tomoe to realize the intrinsic value of its real estate and other assets.
Despite the detrimental practice of cross-shareholding, which has artificially suppressed the supporting rate for our shareholder proposals, we are encouraged by the fact that, even at this year’s AGM, we secured a meaningful level of support from individual and institutional investors.
We will continue to actively exercise our rights as a shareholder and remain firmly committed to enhancing Tomoe’s corporate value, without hesitation or resignation.
We truly appreciate our fellow shareholders who supported our proposals and kindly ask for your continued support toward the true transformation of Tomoe.
¹Assuming that shareholders presumed to be related to Tomoe or involved in cross-shareholdings voted against
(Reference)
13/Jun/2025 – ISS Endorses Hibiki’s Shareholder Proposals to Tomoe Corporation
5/June/2025 ー Comments on the Revision of the Medium-Term Management Plan
29/May/2025 ー Shareholder proposal for Tomoe Corporation
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.