(Stock Code: 9627 JT)

* Ain fails to respond to Oasis’s open letter questionnaire

* Leading proxy advisory firms ISS and Glass Lewis support Oasis director candidates for Ain AGM

* Oasis reiterates its recommendations to Ain shareholders to vote AGAINST Mr. Kimura, and to vote FOR Oasis’s proposals to improve Ain’s governance in the interest of all stakeholders

More information available at www.AINCorpGov.com

Oasis Management Company Ltd. (“Oasis”) is the manager to funds that beneficially own approximately 15.1% of pharmacy franchise Ain Holdings Inc. (9627 JT) (“Ain” or the “Company”). Oasis has adopted the Japan FSA’s “Principles for Responsible Institutional Investors” (a/k/a the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with its investee companies.

As Ain’s largest shareholder, Oasis is deeply concerned about the Company’s poor corporate governance practices. To this end, Oasis has engaged with the Company in the interest of enhancing Ain’s corporate value and improving its corporate governance for the benefit of all shareholders and stakeholders. Oasis believes that the Company’s recent scandal at KKR Sapporo Medical Center, as a result of which two directors from Ain and one of its subsidiaries were arrested and found guilty by a court of first instance, is yet another example of the poor corporate governance at Ain.

Oasis has also found that many of the Company’s current and past “outside” directors and corporate auditors are not truly independent, as many of their positions appear to have been awarded based on personal or business connections with the Company or the Company’s CEO, Mr. Otani. Oasis has submitted shareholder proposals to dismiss these non-independent outside directors, while nominating four candidates who are truly independent, with relevant experience and expertise to improve the Company’s corporate governance and enhance its corporate value.

Ain’s Transparency Failures

Despite Oasis’s repeated good faith efforts to engage in dialogue and Oasis’s submission of shareholder proposals aimed at improving the Company for all shareholders and all stakeholders, Ain has failed to appropriately engage with Oasis and has shown a continued lack of transparency in its responses regarding the KKR Sapporo Medical Center scandal and other issues.

Following this continued lack of transparency from the Company, Oasis sent an open letter questionnaire, a copy of which is available here, to Ain’s “Investigation Team”, Management, and Board of Corporate Auditors. Despite our request to Ain to provide their responses publicly via their website by July 16, 2024, for the benefit of all shareholders exercising their shareholder votes at the upcoming AGM, Ain’s Investigation Team, Management, and Board of Corporate Auditors have all failed to make any response whatsoever, further demonstrating their practice of disregarding transparency and accountability when it is needed most.

Leading Proxy Advisory Firms ISS and Glass Lewis Support Oasis’s Director Candidates

Independent leading proxy voting advisory firm ISS has supported the nomination of Oasis’s proposed director candidates for the Ain 2024 AGM. It has also recommended that shareholders vote for the dismissal of incumbent directors Mr. Junro Ito and Mr. Shigeru Yamazoe, and to vote against the nomination of the Company’s director nominee, Mr. Shigeki Kimura. The rationale that ISS highlights for their recommendations include:

• “The company has a flawed governance structure, with a board controlled by insiders and the chairman/President serving as the chairman of the nomination and remuneration committee.
• “[T]he board is not fully addressing its governance issues.”
• “As the board is not structured to provide proper oversight in case the issues are widespread and its proposals for reform appear to lack ambition, board change is warranted.”
• “[A] vote FOR [the proposals to remove Shigeru Yamazoe and Junro] is warranted given their contribution to weak board oversight and connections with strategic investors with businesses with the company”
• “Shigeki Kimura’s connection with Seven & i Holdings warrant a vote AGAINST his nomination […]; it appears unlikely that a former director of the company employed by a strategic partner is the right choice to ensure proper oversight.”
• “Dissident nominee Kenji Shinmori is the only independent nominee with retail experience, and Shogo Maeda the only one with asset management experience; Hajime Yoshitake and Alexander Dmitrenko would contribute auditing and compliance experience. Therefore, their appointments warrant support.”

Similarly, another leading independent proxy voting advisory firm, Glass Lewis, has supported the nomination of Oasis’s proposed director candidates for the Ain 2024 AGM. Key reasons that they highlight for their recommendations include:

• “[E]xpansive oversight and internal control failures rising disconcertingly high within Ain’s corporate architecture in connection with the Company’s auction scandal.”
• “[L]egacy predilection for routinely seating representatives of entities maintaining financial and/or operational relationships with Ain.”
• “Oasis has nominated a minority slate of independent candidates with expertise expressly centered on key failings which have clearly had an adverse impact on investor confidence and shareholder value.”
• “[W]e believe there exists suitable cause for investors to support Oasis’ slate at this time.”
• “[A] key element of the board’s defense (i.e. skill-based overlap among independent outside directors) is not a persuasive bulwark here, particularly given the significant oversight failings previously described.”
• “[W]e consider there exists ample cause for overlap in key areas, including compliance, internal control, legal/regulatory and finance.”

Shareholder proposals

For the upcoming AGM on July 30, Oasis reiterates its recommendation to its fellow shareholders to vote AGAINST the Company’s proposed “outside” director candidate, Mr. Shigeki Kimura, and to vote FOR the Oasis shareholder proposals in the interest of enhancing Ain’s corporate value. Oasis strongly urges shareholders at the Company’s upcoming AGM to:

• Vote AGAINST: Appointment of Mr. Shigeki Kimura as new director
• Vote FOR: Dismissal of incumbent board directors Mr. Shigeru Yamazoe and Mr. Junro Ito
• Vote FOR: Election of four new outside board director candidates: Mr. Yoshitake, Mr. Maeda, Mr. Dmitrenko, and Mr. Shinmori
• Vote FOR: Introduction of a new compensation plan for outside directors

To learn more about Oasis’s proposals, please visit www.AinCorpGov.com. We welcome all stakeholders to contact Oasis at AinCorpGov@oasiscm.com to help improve Ain’s Corporate Governance.

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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 Japanese FSA’s “Principles for Responsible Institutional Investors” (a/k/a 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 or reference purposes only. The Document is not intended to solicit or seek shareholders to, jointly with Oasis, acquire, 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. Shareholders that have an agreement to jointly exercise their voting rights 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 the agreement as a joint holder requiring such disclosure, Oasis does not intend to take any action triggering reporting obligations as a Joint Holder. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.

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