SIAS Calls for Isetan to Address Minority Shareholders Concerns

Date: January 8, 2007

SIAS feels that the current attitude of the company to the minority shareholdersメ bonafide request does not appear to be in the interest of good corporate governance. The company should make a serious effort to address the serious genuine concerns of the minority shareholders and to make appropriate concessions or compromise.

The following issues were raised by the minority shareholders at the meeting with SIAS. SIAS calls for Isetan to address these concerns adequately and fairly and not just act solely in the interest of the majority shareholders.

Tax Credits

The minority shareholders feel that the company should utilize its tax credits of $60m before they expire at the end of this year. SIAS reiterates its position that companies should take special effort to ensure that tax credits do not expire at the expense of minorities. The fact that the majority shareholder may be required to pay additional tax in Japan on the dividends to be declared is not a good enough or acceptable reason for Isetan not wanting to distribute tax credit to the minority shareholders. SIAS calls on Isetan to act in the interest of minority shareholders, some of whom have been shareholders since IPO. There are on record other good examples of companies with Japanese majority shareholdings distributing the tax credit notwithstanding the higher tax that has to be paid in Japan.

We would urge the companyメs directors to meet with SIAS management committee to discuss this issue with a view to finding a solution.

Independent Directors

The minority shareholders feel that current Independent Directors are not sufficiently independent and effective and seek to replace them. SIAS note recent press reports indicate that two of the current Independent directors are brothers and have been on the board for 25 years and have other historical family ties with the company. In the circumstance, there is serious doubt as to the extend of their independence.

SIAS has perused the resumes of the directors proposed by the minority and note that they are individuals with financial experience. Mr Soh Suwe has lectured extensively in business and accounting, Mr Eng Guan Siah has had over 30 years of managerial and directorial roles in companies and Mr Tan Lye Huat has expertise in corporate governance and is currently an Independent director of several listed companies in Singapore and overseas.

Should the major shareholder reject the Independent directors put forth by the minority shareholders, SIAS wants Isetan to explain the basis for their rejection.

SIAS calls on all minority shareholders of Isetan to attend and vote on the resolutions tabled at the EGM.

David Gerald
Securities Investors Association (Singapore)