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Asset Value Investors (AVI) Submits Shareholder Proposals to NS Solutions, a Subsidiary of Nippon Steel
[May 23, 2022]

Asset Value Investors (AVI) Submits Shareholder Proposals to NS Solutions, a Subsidiary of Nippon Steel

Asset Value Investors ("AVI") launched a public campaign on the submission of its shareholder proposals to NS Solutions (TYO 2327, "NSSOL"), a subsidiary of Nippon Steel Corporation (TYO 5401, "Nippon Steel").

AVI owns 1.2% of voting rights of NSSOL. Having first invested in March 2020, the team has now concluded that a continued approach of constructive private dialogue has no prospects of success.

A detailed presentation has been published on AVI's dedicated website -

AVI identified the following issues:

  • Due to the parent-subsidiary listing relationship between NSSOL and Nippon Steel, the standards of governance and treatment of minority shareholders expected of a Prime Market listed company have not been achieved.
  • Two former Nippon Steel eecutives with no experience in the IT services industry have been appointed as internal directors of NSSOL in the last two years.
  • NSSOL has deposited 90.2 billion yen of cash with its parent company Nippon Steel at an interest rate of about 0.2%.
  • NSSOL holds 67.8 billion yen in shares of its clients, mainly Recruit HD.
  • There is potential disregard for employee welfare issues.
  • The parent company holds a prohibitively high 63.4% of the shares, preventing NSSOL from conducting share buybacks from general shareholders as a further reduction in the free float could violate the criteria for prime listing.

Joe Bauernfreund, CEO of AVI, comments: "NS Solutions must take steps to achieve the highest standards of corporate governance and capital discipline that a Prime Market publicly traded company should uphold, and to address its undervaluation.

"As the controlling shareholder, Nippon Steel has an obligation to ensure that NS Solutions is managed for the benefit of all stakeholders. Nippon Steel has the power to hold NSSOL's board to account and call on NSSOL to address poor employee welfare and its discounted valuation."

Despite regular private dialogue, the Board of Directors of NSSOL have ignored AVI's recommendations and failed to put forward remedial solutions.

- ENDS -

Notes to editors

AVI is a London-based investment management company that has been investing in Japanese equities for more than 20 years. AVI was established in 1985 and has been investing in the equity markets for more than 35 years. AVI's investment team is committed to contributing to sustainable improvements in corporate value by engaging with the management teams of its portfolio companies, with approximately ¥78bn invested in Japanese equities.

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