February 9, 2017
Questions relating to SMC Corporation
Dear Resona Holdings Board Members,
Mr. Kazuhiro Higashi, Director, President and Representative Executive Officer,
Mr. Tetsuya Suga, Director and Representative Executive Officer,
Mr. Yuji Koga, Director and Representative Executive Officer,
Mr. Koaru Isono, Director,
Ms. Emi Ozono, Non-executive Director,
Mr. Toshio Arima, Non-executive Director,
Ms. Yoko Sanuki, Non-executive Director,
Mr. Mitsudo Urano, Non-executive Director,
Mr. Tadamitsu Matsui, Non-executive Director,
Mr. Hidehiko Sato, Non-executive Director.
As you may be aware, we at Well Investments Research published a report on December 13, 2016 which noted our concerns with regards to your client SMC Corporation (“SMC”). Through our extensive due diligence, it has come to our attention that Resona Holdings (“Resona”) is involved in potentially serious accounting and corporate governance issues at SMC. We outline these below.
According to our analysis, the potential risk exposure Resona has to SMC is significant. Based on the reported consolidated capital of 1,879.1 billion yen as of Dec. 31, 2016, Resona’s exposure to SMC may be as high as 12.8% of Resona’s book value, or 239.5 billion yen.
We believe that as a leading Japanese company who prides itself on its corporate governance, you have a responsibility to investigate the raised concerns, to find out the truth and to provide answers for your stakeholders. As such, we would very much appreciate if you could probe the issues stated listed below, and disclose your findings publicly through a press release or by other means at least by the 15th of this month.
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