(Securities Code: 4967 JT)
*The first shareholder derivative lawsuit hearing takes place today at Osaka District Court
*Oasis seeks to hold directors accountable for the Beni-Koji incident and to help Kobayashi Pharma recover damages caused to it by the directors at the time of the incident
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 largest institutional shareholder, Oasis is working to secure appropriate reparations for the victims of the Beni-Koji Incident, build effective corporate governance by freeing the Company from the control of the founding family, and ensure that improved product safety and recurrence prevention measures are implemented going forward.
Today at the Osaka District Court marks the first court hearing in the shareholder derivative lawsuit submitted by Oasis on behalf of Kobayashi Pharma, which seeks to establish director liability for the Beni-Koji incident. Through this litigation, Oasis aims to correct the corporate governance failures at Kobayashi Pharma and recover damages on behalf of Kobayashi Pharma of at least JPY 13.5 billion caused by the directors.
"This case represents an important step towards setting a new standard for director accountability in Japan, helping to ensure that corporate governance failures of this magnitude -- and the human tragedies they enable -- are never repeated again," said Seth Fischer, founder and Chief Investment Officer of Oasis.
Background of the Beni-Koji Incident
The incident originates from the health hazard that was reported to be caused by products containing Beni-Koji that Kobayashi Pharma manufactured and sold (the "Products"). The damage to consumers reported to be caused by the Beni-koji Incident is extremely serious. Specifically, according to the latest report by MHLW, there were 408 fatalities, 558 inpatients requiring hospitalization, and 2,710 patients in medical institutions.
Although the Company was informed by a physician in mid-January 2024 of a health hazard incident possibly caused by the Products, the Company did not publicize the Beni-Koji Incident until the announcement of a voluntary recall of Beni-koji-related products, including the Products, on March 22, 2024, over two months later. Subsequently, on March 27, the Ministry of Health, Labor and Welfare (the "MHLW") presented its view that the Products produced by Kobayashi Pharma should be treated as a violation of Article 6, Item 2 of the Food Sanitation Law. The Beni-Koji Incident has caused numerous types of severe damage affecting the lives and health of consumers and Oasis believes that this resulted from various breaches of obligations by the then-current Board of Directors of Kobayashi Pharma.
Basis of the Claims
Based on information revealed in the Fact-Finding Committee's report and various media reports, Oasis believes that the following failures, could constitute breaches of the obligations of the Company's Directors at the time of the incident:
Directors named as defendants:
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Director of the Company (at the relevant time), Mr. Satoshi Yamane.
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Representative Director of the Company (at the relevant time), Mr. Akihiro Kobayashi.
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Representative Director of the Company (at the relevant time), Mr. Kazumasa Kobayashi.
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Outside Director of the Company (at the relevant time), Mr. Kunio Ito.
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Outside Director of the Company (at the relevant time), Ms. Kaori Sasaki.
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Outside Director of the Company (at the relevant time), Ms. Chiaki Ariizumi.
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Outside Director of the Company, Mr. Yoshiro Katae.
Obligations Breached:
1. Breach of Duty to Establish and Cause the Company to Implement a Quality-Control Structure
a. Inadequate "company-wide" management system regarding establishing and operating standards of quality control
b. Inadequate pre-shipment inspection system
c. Inadequate personnel control system
d. Inadequate facilities control system
2. Breach of the Executive Directors' Obligation to Prevent the Occurrence and Spread of Danger to the Lives, Bodies, and Health of Consumers
a. Belated action including reporting to the authorities and disclosure of the Beni-Koji Incident based on erroneous interpretation of related guidelines
b. Failure to implement effective crisis management measures, including failure to establish a Crisis Management Headquarters
3. Dysfunctional Supervision by Outside Directors
a. Inadequate supervision to prevent defects in the quality-control structure
b. Failure to establish an institutional system for sharing information with the Outside Directors
To learn more, 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 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/20251013054865/en/
Media Contact
For all inquiries, please contact:
Hong Kong
Taylor Hall
media@oasiscm.com
Japan
Ashton Consulting Limited
email: OasisAC@ashton.jp
phone: +81 03 5425 7220
