Shareholder Proposal - 9085 Hokkaido Chuo Bus
Shareholder: Kazuo Narumiya
My Goal
My shareholder proposal proposes the establishment of a "Governance Reform Committee" through an amendment to the Articles of Incorporation.
This Governance Reform Committee aims to review the distorted capital structure of Hokkaido Chuo Bus, which is essentially a "mutual control relationship" with its parent company, Chuo Bus Sogyo Co., Ltd., and to improve management transparency and governance.
I hope that this proposal will also encourage broader interest in improving the supervisory systems and governance standards of regional stock exchanges in Japan.
Deeply Flawed Capital Structure
Under Article 308, Paragraph 1 of the Companies Act and Article 67 of the Enforcement Regulations of the Companies Act, where a kabushiki kaisha (in this case, Hokkaido Chuo Bus Co., Ltd.) holds 25% or more of the total voting rights of one of its shareholders (in this case, Chuo Bus Sogyo Co., Ltd.), that shareholder is prohibited from exercising the voting rights it holds in the kabushiki kaisha (in this case, approximately 40% of the voting rights in Hokkaido Chuo Bus shares held by Chuo Bus Sogyo).
This is commonly referred to as the “Restriction on the Exercise of Voting Rights of Cross-Held Shares” or “Mutual Shareholding Voting Rights Restriction.”
Hokkaido Chuo Bus's stake in Chuo Bus Sogyo is conveniently kept slightly below the 25% threshold, so that Chuo Bus Sogyo can continue to exercise its 40% voting power over Hokkaido Chuo Bus.
However, I believe that Hokkaido Chuo Bus and its management team are de facto controlling Chuo Bus Sogyo, by having persons who are "closely related to or in agreement with" Hokkaido Chuo Bus hold shares in Chuo Bus Sogyo, for the purpose of maintaining and maximizing their influence over Chuo Bus Sogyo. This arrangement is akin to “name-lending” or nominee ownership, which effectively allows them to circumvent the aforementioned statutory prohibition on Mutual Shareholding.
In today's rapidly changing business environment, the bus and tourism industries are no exception.
Chuo Bus is currently facing a serious driver shortage, making it difficult to maintain its route network. In its tourism business, despite possessing world-class locations such as the Niseko Annupuri International Ski Resort, it cannot be denied that it may have lagged behind other companies in the same Niseko area in strengthening customer attraction and price-increasing strategies.
Furthermore, even with the recent rise in stock price, the PBR remains around 0.60 (based on the closing price on March 31, 2026), indicating that it is not receiving sufficient valuation from the capital market.
Under these circumstances, the parent-subsidiary loop control structure, which I consider the biggest problem, results in insufficient renewal of management and business strategies. Despite this, accountability is not being taken in the form of executive changes, leaving a state of complete complacency unaddressed.
Stagnant Stock Price Reflecting Governance Failure
出所：Yahoo!ファイナンス
Hokkaido Chuo Bus's stock price, which once reached a level of 14,545 yen, has been on an upward trend recently, but as of the closing price on March 31, 2026, its PBR is trading at around 0.60 times.
It still has not received sufficient valuation from the capital market.
FAQ
Q: Hokkaido Chuo Bus has many stable shareholders. Doesn’t that mean there’s almost no chance your shareholder proposal will pass?
A: I believe there is a real possibility it can pass.
I take the position that Hokkaido Chuo Bus’s effective ownership ratio in Chuo Bus Sogyo has reached 25%. If that is the case, under Article 308, Paragraph 1 of the Companies Act, Chuo Bus Sogyo would lose approximately 40% of its voting rights in Hokkaido Chuo Bus.
On top of that, if I join forces with the rest of the shareholders and we all cast our conscientious votes, I believe we can pass a shareholder proposal to amend the articles of incorporation and correct this closed-loop parent-subsidiary control structure.
---
Q: What is your ultimate goal?
A: My goal is to resolve the distorted capital structure between Hokkaido Chuo Bus and Chuo Bus Sogyo, and to create an environment where healthy tension is brought back into Hokkaido Chuo Bus’s management.
That alone should enable the company to adopt more proactive management strategies and initiatives befitting the Reiwa era.
In the longer term, I also hope to make a modest contribution toward raising the standards of supervision and governance at local stock exchanges across Japan.
---
Q: Why did you choose Hokkaido Chuo Bus as an investment target?
A: It started naturally. As I learned more about Hokkaido Chuo Bus, I realized the stock was extremely undervalued compared to its potential, so I gradually increased my holdings.
At first, I was simply enjoying skiing in Hokkaido, but while doing so I discovered that the company holds vast land and business assets in Niseko, Sapporo, and Otaru. When I looked at the financial statements and stock price, it was clearly a “treasure being wasted.” So I started buying shares little by little.
Later, I attended last year’s general shareholders meeting and tried to engage with management as a shareholder. I sensed a very closed-off attitude. This gradually made me concerned about the company’s governance structure, where general shareholders have little oversight. This led to my current shareholder proposal.
---
Q: How can I support or endorse your shareholder proposal?
A: If you agree with my proposal, please mark “For” (賛) on the shareholder proposal section of the voting form that Hokkaido Chuo Bus will send you later, and submit it by mail or electronically.
Through this proposal, I also aim to raise broader awareness about improving supervision and governance standards at local stock exchanges in Japan. I believe that raising governance standards for regional companies will make initiatives for regional revitalization and turning Japan into an asset management powerhouse more effective.
If you support this cause, I would greatly appreciate it if you could share this website and my official X account (https://x.com/kazuonarumiya).
---
Q: Hokkaido Chuo Bus has disclosed that it holds no voting rights on the 24.37% of Chuo Bus Sogyo shares it owns. Your proposal argues that Hokkaido Chuo Bus effectively owns more than 25% of Chuo Bus Sogyo. Does the presence or absence of voting rights on Chuo Bus Sogyo’s side not matter?
A: As you understand, whether Hokkaido Chuo Bus holds voting rights in Chuo Bus Sogyo is not directly relevant.
It is true that the company has disclosed it holds no voting rights:
“We own 24.37% of the total issued shares of Chuo Bus Sogyo Co., Ltd., but pursuant to Article 308, Paragraph 1 of the Companies Act, we do not hold voting rights.” (Note 2 in the timely disclosure dated May 14, 2025).
My argument is that the restriction under Article 308, Paragraph 1 should apply not only in one direction (Hokkaido Chuo Bus → Chuo Bus Sogyo), but in both directions.
Article 308, Paragraph 1 of the Companies Act states (the parenthetical part at the beginning is key):
“A shareholder (excluding a shareholder who is in a position to substantially control the management of the company through holding one-quarter or more of the total voting rights or other reasons as prescribed by Ministerial Ordinance) shall have one voting right per share held at the general meeting of shareholders...”
Under this, Hokkaido Chuo Bus (the “shareholder” in the article) has no voting rights at Chuo Bus Sogyo’s shareholders meeting.
What I am asserting in my proposal is that the same logic applies in the reverse direction. That is, Chuo Bus Sogyo (the “shareholder” from Hokkaido Chuo Bus’s perspective) should also have its voting rights restricted at Hokkaido Chuo Bus’s shareholders meeting, given that it effectively controls more than 25% through close relationships, interlocking directors, and coordinated practices.
My proposal calls for both sides to lose voting rights under the Article 308 parenthetical clause, and for the establishment of a committee to examine this governance structure in which Chuo Bus Sogyo continues to exercise 40% of the voting rights despite this situation.
---
Q: Do you plan to buy more shares?
A: Regarding future additional purchases, I will comprehensively consider factors such as stock price, trading volume, dialogue with management, insider trading regulations, and so on.
The current stock price of around 7,000 yen is only half of the 14,000 yen it once reached, and the PBR is 0.6x. I believe the company’s potential is still significantly undervalued.
This website is based on the independent analysis and publicly available information of Kazuo Narumiya (hereinafter, "Proposing Shareholder"). The information and materials posted on this website are based on information that the Proposing Shareholder deems reliable, but the Proposing Shareholder does not guarantee their accuracy, validity, or completeness, express or implied, and assumes no responsibility for any decisions made using this information.