ISS Supports All Five Board Nominees Nominated by Oasis to Counterbalance the Family Control at Tsuruha

- ISS has supported Oasis’s proposals to install a refreshed, independent oversight function to counterbalance the control of Tsuruha’s founding families that has led to the Group performance lagging peers.

- Tsuruha’s Board proved incapable of independent oversight through recent decisions, including the false disclosures regarding its relationship with North Pacific Bank, and contradicting itself for the sake of opposing Oasis’s proposals.

- Oasis calls for Tsuruha shareholders to vote FOR Oasis’s shareholder proposals to enhance the Company’s corporate governance, including the election of Oasis’s five highly qualified, independent, and diverse Outside Director candidates supported by ISS, and AGAINST the re-election of the Company’s incumbent Outside Directors.

More information available at www.TsuruhaCorpGov.com

Oasis Management Company Ltd. (“Oasis”) is the manager to funds that beneficially own over 12.8% of drugstore operator Tsuruha Holdings Inc. (3391 JT) (“Tsuruha” or the “Company”).

In June 2023, Oasis, a long-term shareholder of Tsuruha, announced its “Tsuruha Corp Gov” campaign, pointing out the corporate governance failures at Tsuruha, and asking fellow shareholders to support the corporate governance reforms proposed by Oasis at Tsuruha’s upcoming Annual General Meeting (“AGM”) to be held on August 10, 2023, including the nomination of five highly qualified, independent, and diverse Outside Director candidates who have now recently received ISS’s full support (collectively referred to as our “Proposals”).

We believe the control of Tsuruha by the three founding families (Tsuruha, Ogawa, and Murakami) has deteriorated the composition of the wider Board, leading to nepotism in the President role, and effective removal of the independent oversight mechanism. The interests of the three families are clearly not always aligned with all shareholders, and as a result decisions taken for their benefit are impacting negatively all stakeholders. Such poor decisions include keeping each family-run constituent business separate from one another, which has limited the Company’s organic potential. Tsuruha has not only underperformed its competitors on a variety of key financial performance indicators, but their poor relative performance has also impacted their employees who have faced stunted wage growth in an increasingly competitive labour market.

It is clear that effective independent oversight is required on Tsuruha’s Board to oversee its strategic direction, oversee management, and ensure appropriate governance practices are in place to maximize corporate and shareholder value. To this end, Oasis welcomes the full endorsement of its five independent Outside Director candidates by leading independent proxy advisor Institutional Shareholder Services, Inc. (“ISS”). Furthermore, ISS has additionally to vote against all of the Company’s incumbent outside directors, as well as the new outside directors candidates proposed by the Company.

ISS bases their recommendations on:

• Tsuruha’s Poor TSR Performance: “The company has underperformed peers in terms of TSR and operating metrics for the past several years.”
• Tsuruha’s Chronic Poor Fundamental Performance: “In terms of fundamental performance, the company's results have steadily deteriorated since approximately FY18.”
• Tsuruha’s Weak Governance: “The board structure points to very weak governance, with a board controlled by insiders, a father/chairman supervising a son/CEO, and outside directors that have no business executive or sector experience, but rather a compliance profile.”
• Tsuruha’s Insufficient Will to Change: “The company's proposed addition of two new outside directors at this AGM does not fully address these issues, and appears to be a reactive move, made after the dissident published its proposals.”
• Tsuruha’s Board Requires Significant Change: “Importantly, there are structural governance issues that might not allow the board to properly supervise and hold management accountable. As such, the dissident has demonstrated a need for substantial change at the board level.”

Oasis believes that the incumbent Board, controlled by members of the three founding families, has further demonstrated its dysfunction and inability to perform adequate independent oversight in its response to Oasis’s Proposals on July 7, 2023. As detailed in our previous press release, Tsuruha has: (1) made false disclosures; (2) misled shareholders on its performance track-record; and (3) provided contradictory statements on its governance practices. This dysfunction of the Board and Nomination and Compensation Committee can be seen most notably in their recommending against Oasis’s proposed director candidate, Mr. Gohara, who is Japan’s leading lawyer in compliance and crisis management with significant knowledge on corporate governance, while recommending the re-election of the Company’s current incumbent lawyer outside director, Mr. Okazaki, whose expertise does not seem to be in this area. Additionally, despite Oasis pointing out Tsuruha’s false disclosures, especially in their relationship to North Pacific Bank, the Company has failed to address any of the errors, showing a lack of accountability.

Without significant improvements in how Tsuruha is governed, we believe the Company’s overall performance and the interests of all stakeholders will always come secondary to the interests of the founding families. We see clearly that the Company’s Board and its Nomination and Compensation Committee is dysfunctional. We believe now is the time for the shareholders to restore the Company’s monitoring function. Oasis urges all shareholders to support Oasis’s Proposals to improve Tsuruha’s Board composition and governance practices to pave the way for Tsuruha’s success as a leading player in the drugstore industry.

We call on all Tsuruha’s shareholders to vote FOR the series of the corporate governance reforms proposed by Oasis (Proposals #3 through #11), including the nomination of five highly qualified, independent, and diverse Outside Director candidates to improve the Company’s corporate governance structure and enhance its corporate value, and to vote AGAINST the Company’s proposed incumbent Outside Directors (Ms. Harumi Sato and Mr. Takuya Okazaki of Proposal #2).

To learn more about Oasis’s proposals, please visit www.TsuruhaCorpGov.com. We welcome all stakeholders to contact Oasis at info@tsuruhacorpgov.com to help improve Tsuruha’s Corporate Governance.

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 Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with our investee companies.

The information contained in this press release (referred to as the "Document") is an information resource for shareholders in Tsuruha offered by Oasis, the investment manager to funds that are shareholders of Tsuruha (the "Oasis Funds"). The Document is not intended to solicit or seek shareholders' agreements to jointly exercise any voting rights with Oasis. 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 share ownership with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Oasis does not intend to be subjected to such notification requirement. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.

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