Strategic Capital, Inc. (hereinafter referred to as the “SC”) has expressed our acceptance of “The Code of Responsible Institutional Investors” (The Japan Stewardship Code).
SC, as an institutional investor, shall invest in listed companies in Japan in fulfilling the stewardship responsibilities as follows;
- Institutional investors should have a clear policy on how to fulfil their stewardship responsibilities and publicly disclose it.
- SC fully adheres to its responsibility to maximize the return on investment in the medium to long term for our investors.
- To achieve this goal, SC shall actively engage in dialogue with the investee companies and make reasonable and constructive proposals that will contribute to improving shareholder value. SC will strive to assert pressure on company management until the proposals are implemented.
- SC believes such active engagement will not only increase shareholder value and help maximize investment returns for our investors, it will also contribute to the revitalization of the investee companies and contribute to the overall economic growth and expansion of the Japanese economy.
- SC regards the improvement of “Governance” of investee companies as the key factor that will improve shareholder value, however we will also actively propose improvements to “Environment” and “Social” factors where we believe it will contribute to shareholders value. Given our emphasis on ESG, we have uploaded our ESG policies to this website, signed the UN-PRI and agree with the TCFD recommendations.
- 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 the investment management company and funds, and investments of SC affiliated persons in the shares of investee companies. In addition, SC has established rules to avoid conflicts of interest between funds in accordance with laws and regulations.
- For the above reasons, SC has no third-party committee for decision-making or oversight of exercising voting rights.
- Institutional investors should monitor investee companies so they can appropriately fulfill their stewardship responsibilities with an orientation towards the sustainable growth of the companies.
- SC continues its unwavering efforts to foster the sustainable growth of the corporate value of investee companies.
- We shall endeavor to accurately understand the financial condition of the investee companies through the prompt and thorough analysis of all their timely public disclosures as well as through external sources where appropriate.
- We shall endeavor to accurately grasp the state of ESG of the investee companies through ongoing dialogues and by encouraging appropriate disclosure such as the Environmental disclosures in support of TCFD.
- We shall endeavor to understand management strategy by meeting with top management (Representative director etc.), independent outside Directors, and IR heads etc. In particular, we consider the direct interactions with top management as a key aspect of our engagement.
- 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. In addition, SC has dialogues with Independent Directors and possibly with Company Auditors if needed.
- The agendas of above dialogues include not only business aspects and issues with corporate governance but also issues involving “Sustainability” as long it can contribute to improving shareholders value.
- 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.
- 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 publicly disclosed to the market.
- Although SC does not plan to appoint advisors for exercising proxy voting rights, we may use their services solely for the purpose of research.
SC may also provide pertinent information to such an advisory firm if requested.
- Institutional investors in principle should report periodically on how they fulfill 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.
- To contribute positively to the sustainable growth of investee companies, institutional investors should develop skills, and resources needed to appropriately engage with the companies to make proper judgments in fulfilling their stewardship activities based on in-depth knowledge of the investee companies and their business environment and consideration of sustainability consistent with their investment management strategies.
- 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 to consider issues on “Sustainability” that will improve shareholder value.
- 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.
- As one of the parts of improving circumstances beyond our stewardship activities, we submit our opinions as public comments on corporate governance related issues to concerned parties.
the shareholders meeting, SC may share our thoughts and explain the actions we feel it is necessary to take.
- We evaluate the implementation status of each principle of this code and publish the results on our homepage at least annually.
June 2014, Enactment
July 2017, Revision
October 2017, Revision
December 2018, Revision
January 2020, Revision
May 2020, Revision
July 2020, Revision
October 2021, Revision