Kura Sushi Stock Soars as Perks Return—Relatives’ Large Trades in Question

 

On the other hand, with this stock transfer, Shin Tanaka’s individual ranking as a shareholder dropped from 2nd to 4th place. However, since the shares remain within his control, what advantages does this move offer?

“It is likely a tax-saving strategy. For individuals holding more than 3% of a company’s shares, up to 55% of their dividend income is subject to comprehensive taxation. By transferring the shares to an asset management company, where taxes are significantly lower, he could reduce his tax burden. Moreover, since Kura Sushi’s stock price plummeted after the shareholder benefit abolition announcement, Trust Inc. was able to acquire the shares at a considerable discount. Now that the shareholder benefit program has been reinstated and the stock price has recovered significantly, further gains could be realized if the price continues to rise,” explained a business magazine writer.

However, this development has sparked discussions on social media:

“If they knew about the shareholder benefit reinstatement in advance, wouldn’t that be insider trading?”

“Is this stock price manipulation?”

“I had to cut my losses on Kura Sushi stock—this is unfair.”

On the other hand, some have offered more measured perspectives:

“There was no guarantee that reinstating the shareholder benefits would fully restore the stock price, so it can’t be considered insider trading.”

“It’s up to the Securities and Exchange Surveillance Commission to determine whether there was wrongdoing.”

From the perspective of preventing insider trading, after the financial results are announced

Some investors and others have raised suspicions on social networking sites that the company may have intentionally manipulated the share price to get a lower price by abolishing and then reinstating shareholder special benefit programs. We asked Kenta Morimi, an attorney at Morimi Law Office, about the legality of these moves.

“First, regarding whether this falls under insider trading regulations, Trust Co. is a major shareholder of Kura Sushi and may be considered a company insider. That being said, even if it is classified as a company insider, changes or abolishment of shareholder perks generally do not fall under the material facts specified in insider trading regulations. However, if the majority of shareholders hold the stock with the expectation of shareholder perks, it could significantly impact investors decision-making and potentially fall under the so-called basket clause.”

When we interviewed Mr. Tanaka at Kura Sushi, he told us that his stock trading has become a topic of conversation on the Internet.

We are aware of it.

The IR representative then answered our questions.

— Why did Mr. Makoto Tanaka conduct such stock trading?

I think there are many examples of companies that have asset management companies, including other companies, but I understand that the reason he moved his shares to an asset management company was because of tax differences.

–Is it true that you traded stocks because the share price fell after the announcement of the abolition of shareholder special benefits on December 11?

“I understand that the reason why you moved your shares at this time was not because the stock price fell. From the perspective of not engaging in insider trading, I mean that I traded stocks at the timing after the December 11 announcement of financial results. Basically, I think this is a common pattern. Since the most difficult information for insiders to handle is financial results, I understand that the company decided on the appropriate timing after the announcement of financial results from the viewpoint of insider trading prevention. We also announced the abolition of the shareholder special benefit plan and the dividend increase at the same time as the financial results.”

–Is it possible that Makoto Tanaka knew about the reintroduction of the shareholder special benefit plan when he traded stocks in December?

“That is impossible. From the standpoint of changing our shareholder return policy, we aimed to provide returns through dividends rather than shareholder perks, which is why we decided to increase dividends. After that, we received various opinions and requests from shareholders, and ultimately, we decided to reinstate only this particular shareholder benefit because it held a special significance.

In this regard, we may not have been able to fully communicate our intentions to shareholders, and it is possible that the elimination of shareholder perks was perceived negatively. Some may feel that the timing of reinstating the perks was too soon, but if we were going to bring them back, we thought it would be best to announce it in time for the April-end record date when the perks are granted. We hope you understand that this decision was made from the perspective of doing what is best for our shareholders.”

The shareholder special benefit program was reinstated in a short period of time in response to shareholders who wanted to eat sushi rather than receive dividends (money), and although there were various comments on social networking sites, the fact that Kura Sushi’s sushi is so loved by shareholders is proof that the company’s shareholder special benefit program has been successful. The shareholder special benefit program was briefly reinstated in response to shareholder demand for sushi rather than kanekanee.