Special shareholder incentives created for questionable reasons
Kyokuto established a special shareholder incentive in 2019. There are many companies that have introduced a special shareholder incentive program. If the intent, through the free distribution of its own products or services, is to increase brand loyalty of company and to contribute to business results, this may not be an issue.
However, it is an issue if the company distributes cash vouchers such as a Quo Card as a special incentive for shareholders. This is because distribution of such cards (1) causes the decline of management discipline due to an increase in the number of obedient and undemanding shareholders, and (2) can be seen as a violation of the principle of shareholder equality because such vouchers are essentially a cash dividend. (Click here）
In particular, Kyokuto explained that the reason for establishing the special shareholder incentive was because Kyokuto was on the verge of not being able to meet the former listing criteria of TSE 1st section that required more than “2,000 shareholders”.
In the first place, what causes the decrease in shareholders is that the Company’s stock lacks attractiveness as an investment target. Trying to maintain the formal listing standard by handing out Quo Cards is not a proper business judgement and cannot be overlooked as the largest shareholder.
Also, according to TSE’s “Outline of the New Market Segments” , the listing requirement for the “Prime market”, which is the successor to TSE 1st section, is 800 shareholders instead of 2,000. Therefore, the original rationale for establishing the special shareholder incentive is no longer relevant.
Number of Kyokuto’s shareholders
（Date Source：QUICK ASTRA MANAGER）