Ureru Net Advertising Group has recast item four of its October 26 annual general meeting as a non-binding advisory resolution. In a TDnet notice dated October 16, the Tokyo Growth-listed company said that approving it would not authorise any third-party allotment, and would not hand its board a blanket mandate to issue shares or share subscription rights.
What changed
The proposal, titled "confirmation of shareholder intent on a large-scale third-party allotment", was first meant to serve as shareholder consent under Article 432 of the Tokyo Stock Exchange's listing regulations. That rule governs large third-party allotments. The company said that after it checked with the exchange, it learned the item was not valid for that purpose.
The company's account of the problem: it pushed the item onto the AGM agenda without properly consulting the exchange in advance, and the item sought blanket approval before the number of shares, issue price, allottees or other terms had been fixed. In its separate notice, the company said it had not examined sufficiently whether such an open-ended confirmation met the rule's requirements. This is Ureru Net's own account of its talks with the exchange; no exchange statement is included in the disclosures.
The notice is the second correction to the convocation notice. The company had already amended the same item on October 5. The earlier wording said that, if shareholders approved, the board could carry out the fundraising within the stated range. The revised text drops that. The company apologised to shareholders for the repeated corrections. The meeting date and venue are unchanged.
What a future issuance would still need
Ureru Net said it would not carry out a large allotment on the strength of the vote alone. Once the terms are settled, if dilution would reach 25% or more, it plans to obtain an opinion on the necessity and appropriateness of the allotment from a party reasonably independent of management, or to seek a shareholder resolution on that specific allotment. It also plans board approval and timely disclosure.
The company says it is still weighing funds for growth investment and a stronger balance sheet through third-party allotments of new shares and share subscription rights. It says the amount and terms are undecided. It does not name a buyer, a share count or a price.
Remediation
The company acknowledged that its internal checks and procedure management needed improvement. It said it is considering clearer procedures for confirming listing rules, tighter control of matters requiring prior exchange consultation, and more review involving internal departments and outside experts. Specific preventive measures will be set after it investigates how the lapse happened, and will be disclosed separately. The company said the matter has no direct effect on its consolidated earnings.
For shareholders, the vote on October 26 will register their view on a future large allotment policy and nothing more. Earlier Tokyo Brief coverage