LegalGungHo Online Entertainment
Supplementary Explanatory Materials Regarding the Opinion of the Company’s Board of Directors on Shareholder Proposals at the Annual General Meeting of Shareholders
1 Feb 20269 pages~8 min full read
GungHo Online Entertainment’s Board of Directors has formally opposed all shareholder proposals from Strategic Capital and LIM Japan Event Master Fund for the March 2026 Annual General Meeting.
See it on page 1The Board rejected a proposed 311-yen-per-share dividend and 21.3-billion-yen buyback, arguing that the outflow of 57% of cash reserves would threaten the company's financial stability.
See it on page 3In response to shareholder pressure, GungHo adopted a new capital policy targeting a 4% Dividend on Equity (DOE) and a minimum 50% consolidated payout ratio.
See it on page 4For the fiscal year ending December 2025, the company committed to a 90-yen ordinary dividend, a 5.0-billion-yen share buyback, and the cancellation of 16 million treasury shares, representing 23.1% of issued stock.
See it on page 4The Board rejected mandates to appoint an outside director as chair and to disclose sales by game title, citing the need for operational leadership and the risk of competitive disadvantage.
See it on page 5GungHo is voluntarily increasing its independent outside director ratio to 50% and doubling female board representation to 20% to address governance concerns without formal shareholder mandates.
See it on page 7GungHo Online Entertainment issued this formal response to shareholder proposals submitted by Strategic Capital and LIM Japan Event Master Fund for the Annual General Meeting of Shareholders scheduled for March 2026. The primary purpose of the communication is to detail the Board of Directors' opposition to all shareholder-led initiatives, arguing that the proposals do not contribute to the enhancement of corporate value.
The opposition centers on two major themes: shareholder returns and corporate governance. Regarding returns, the board rejected a proposal for a 311-yen-per-share dividend and a 21.3-billion-yen share buyback, asserting that such a massive outflow—representing 57% of the company's cash and deposits—would jeopardize financial stability. Instead, the board introduced a new policy featuring a 4% Dividend on Equity (DOE) metric and a consolidated payout ratio of at least 50%. For the fiscal year ending December 2025, the company announced a 90-yen ordinary dividend and a 5.0-billion-yen share buyback, alongside the cancellation of 16 million treasury shares (23.1% of issued shares).
On governance, the board rejected mandates to appoint an outside director as chair, maintaining that the Representative Director and President is best suited for the role due to deep operational knowledge. However, the company is voluntarily increasing its ratio of independent outside directors from 40% to 50% and doubling female board representation to 20%. Other rejected proposals included individual disclosure of director remuneration, the establishment of a third-party investigation committee, and the mandatory disclosure of sales by game title, which the board argued would cause a competitive disadvantage. The company maintains that its existing internal controls and revised remuneration systems already ensure sufficient transparency and alignment with shareholder interests.
