We seek to generate absolute returns by employing an Activist investment strategy among Japanese listed equities.
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Strategic Capital, Inc.

Five Annex Building 5F, 1-3-10, Ebisu-nishi, Shibuya-ku, Tokyo, JAPAN 150-0021

Stewardship Code
 
Furthermore to our acceptance of the original Stewardship Code in 2014; Strategic Capital, Inc. (hereinafter referred to as the “SC”) hereby revised our acceptance of “The Code of Responsible Institutional Investors” (The Japan Stewardship Code).

As of July 2017, SC as an institutional investor in publically held companies understands and
fulfils the stewardship responsibilities as follows;

Principle1
Institutional investors should have a clear policy on how to fulfil their stewardship
responsibilities and publicly disclose it.
  • SC fully adheres to the responsibility to maximize return on investment in the medium
    to long term for our investor clients.
  • To achieve our goal, SC shall establish dialogue with the investee companies to
    contribute to improvement of shareholders value. SC may continue dialogue
    assertively until the proposal content to improve shareholders value is implemented.
  • SC believes such investment activity is required to improve the shareholder value of
    investee companies, and that the performance of investment returns will increase as a
    result of such active engagement. SC also believes these investment methods should
    contribute to the overall economic growth and expansion of the Japanese economy.
Principle2
Institutional investors should have a clear policy on how they manage conflicts of
interest in fulfilling their stewardship responsibilities and publicly disclose it.
  • Since SC is an independent organization and there are no subsidiaries or affiliated
    companies of the investment firm, as such there are no conflicts of interest between
    SC and investee companies.
  • SC does not allow proprietary trading of any securities in principal under our internal
    policy and guidelines. Thus there are no conflicts of interest in the principal accounts
    and the accounts of managed assets.
  • In principal, internal rules are stipulated to prohibit; transactions between funds,
    transactions between the investment management company and funds, and
    investments of SC affiliated persons in the shares of investee companies.
  • For the above reasons, SC has no Independent Directors or third-party committee for
    decision-making or oversight of exercising voting rights.
Principle3
Institutional investors should monitor investee companies so they can appropriately
fulfil their stewardship responsibilities with an orientation towards the sustainable
growth of the companies.
  • SC continues unwavering efforts to foster the sustainable growth of the corporate
    value of investee companies.
  • SC shall endeavor to understand the condition of companies in which the fund(s)
    invest through the prompt and thorough analysis of all timely public disclosure such as
    financial statements and other releases.
  • Depending on our analysis, SC will gather information on the industry and market that
    the investee companies belong to from external resources.
  • SC shall endeavor to understand the management of investee companies and engage
    in constructive dialogue with the management of such companies (CEO, Independent
    Directors, etc.) and the person(s) in charge of Investor Relations of these corporations.
    SC believes dialogue with the top management of investee companies is the most
    important aspect of engagement.
Principle4
Institutional investors should seek to arrive at a common understanding with investee
companies and work to solve problems through engagement with purpose.
  • As previously mentioned, SC believes dialogue with the top management of investee
    companies is the most important aspect in our investments. SC continues to make the
    best effort to mutually understand and maintain a productive relationship with
    investee companies.
  • SC shall consider exercising some of the privileges of shareholders under the Japanese
    Company Act and regulations in order to satisfy SC’s stewardship responsibilities. The
    following are such cases:

    • The top management of investee companies refuse to meet with SC.
    • The investee company does not accept proposals which benefit the company
      and increase corporate value.
    • The management policy of investee companies might damage their corporate
      value and/or future corporate value.
  • SC can proactively engage in collective engagement if there are other institutional
    investors who can cooperate with us to create corporate value.
  • With respect to the dialogue we establish with the investee companies, SC does not
    attempt to acquire information not yet publicly available. Despite the above
    mentioned purpose, it is possible SC could, unintentionally, obtain non-public
    information. If this is to occur, SC will not participate in any stock trading of the
    company in accordance with the law until such information will become public. If
    necessary, SC will request the company to disclose such information publically.
Principle5
Institutional investors should have a clear policy on voting and disclosure of voting
activity. The policy on voting should not be comprised of only a mechanical checklist,
but should be designed to contribute to the sustainable growth of an investee
company.
  • SC understands proxy voting rights are basic rights of shareholders at the General
    Meeting of Shareholders. SC shall exercise proxy voting rights to contribute to
    maximizing the shareholders’ value of investee companies.
  • In compliance with SC’s proxy voting policy as disclosed on our website, SC will
    examine all the agenda contents individually and exercise voting rights.
  • The results of the exercise of voting rights will be announced on SC’s website including
    the reasons for voting.
  • However, to protect the interests of clients, SC may chose not to disclose voting
    activity where the funds shareholding of an investee company is not already publically
    disclosed to the market.
  • Although SC does not plan to appoint advisors for exercising proxy voting rights, SC
    would provide appropriate information to such an advisory firm if required.
Principle6
Institutional investors in principle should report periodically on how they fulfil their
stewardship responsibilities, including voting responsibilities, to their clients and
beneficiaries.
  • SC discloses dialogue as well and the approach to engagement with major investee
    companies to clients periodically in investment reports.
Principle7
To contribute positively to the sustainable growth of investee companies, institutional
investors should have in-depth knowledge of the investee companies, their business
environment, skills, and resources needed to appropriately engage with the companies
to make proper judgments in fulfilling their stewardship activities.
  • Before conducting meetings with an investee company, SC shall endeavor to acquire
    and analyze all publicly available information on the company and ongoing trends in
    their industry.
  • SC will exchange opinions with other shareholders of the investee company if it is
    necessary to improve the corporate value of the company.
  • When SC executes a right to submit shareholder proposals to the investee company at
    the shareholders meeting, SC may share our thoughts and explain the actions we feel
    it is necessary to take.
  • We regularly evaluate the implementation status of each principle of this code and publish the results on our homepage.
  • June 2014, Enactment
  • July 2017, Revision
  • October 2017, Revision

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