Note：This document has been translated from the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

February 28, 2024
To whom it may concern:
TOWA PHARMACEUTICAL CO., LTD.

Notice of Disposal of Treasury Shares as Restricted Stock
Compensation

Towa Pharmaceutical Co., Ltd. (hereinafter, the “Company”) announces that at a meeting of its
Board of Directors on February 28, 2024, a resolution was passed to dispose of its treasury shares(hereinafter, the “Disposal”) as detailed below.

1. Outline of the Disposal(1)
Payment date
Type and number of(2)shares to be disposedof(3)Amount to be paid
Total amount to be(4)paidAllottee, number ofallottees and number(5)of shares to bedisposed ofMarch 22, 2024
929 shares of the Company’s common stock
JPY 2,840 per share
JPY 2,638,360
929 shares to one (1) director of the Company (excluding outside directors,
directors who are Audit and Supervisory Committee Members, anddirectors who are subject to medium- to long-term performance-based stock
price-linked compensation)

2. Objective and Reason for the Disposal
At a meeting of its Board of Directors held on May 22, 2019, the Company resolved to introduce arestricted stock compensation plan (hereinafter, the “Plan”) as a new compensation plan for the Company’s
directors, excluding outside directors, directors who are Audit and Supervisory Committee Members, anddirectors who are subject to medium- to long-term performance-based stock price-linked compensation(hereinafter, the “Eligible Directors”), to clarify the link between the compensation of the Eligible Directors
and the Company’s performance and shareholder value, to increase awareness of contributing to theenhancement of corporate value, to strengthen the shareholder-oriented management mentality further, andto provide an incentive for the medium- to long-term increase of corporate value. In addition, at the 63rd
Ordinary General Meeting of Shareholders held on June 25, 2019, the Company obtained approval to pay
monetary compensation claims of up to 100 million yen per year to the Eligible Directors as monetarycompensation to be used as a capital contribution for the acquisition of restricted shares under the Plan(hereinafter, “Restricted Stock Compensation”) and to set the transfer restriction period of the restricted
shares between 3 and 30 years, to be determined by the Company’s Board of Directors.
An outline and other matters of the Plan are as follows.

[Outline and other matters of the Plan]The Eligible Directors will pay all of the monetary compensation claims paid by the Company inaccordance with the Plan as assets contributed in kind and will receive the issuance or dispositionof shares of the Company’s common stock. The total number of common stock to be issued ordisposed of by the Company for the Eligible Directors under the Plan will be no more than 19,500
shares per year. The amount to be paid per share will be determined by the Board of Directors basedon the closing price of the Company’s common stock on the Tokyo Stock Exchange on the business
day preceding the date of the each Board of Directors resolution (or the closing price of thepreceding trading day if there was no trading on such date), to the extent that such amount is notparticularly favorable to the Eligible Directors who will subscribe for such common stock.
Upon the issuance or disposal of shares of the Company’s common stock under the Plan, the Company
and the Eligible Directors will enter into a restricted stock allotment agreement containing the following
provisions: (1) the Eligible Directors may not transfer, pledge, or otherwise dispose of the shares of theCompany’s common stock allotted to them under the restricted stock allotment agreement for a specified
period of time and (2) upon the occurrence of certain events, the Company will acquire such shares ofcommon stock free of charge.
This time, the Company has decided to grant monetary compensation claims totaling 2,638,360 yen(hereinafter, the “Monetary Compensation Claims”) and 929 shares of common stock, which are deemed
to be the appropriate amount and number of shares corresponding to compensation for the execution ofduties over three fiscal years, which is the period of the Company’s current medium-term management
plan, and to set the transfer restriction period at 30 years in order to realize shared value with shareholders
in the medium and long term, which is the objective of introducing the Plan, taking into account theobjective of the Plan, the Company’s business conditions, the scope of responsibilities of each Eligible
Director, and other various circumstances, as well as to retain competent personnel as executives andfurther motivate each Eligible Director.

Upon the Disposal, the one Eligible Director, who is the scheduled allottee, will pay all Monetary
Compensation Claims to the Company pursuant to the Plan as assets contributed in kind and will
receive the issuance or disposition of shares of the Company’s common stock (hereinafter, the“Allotted Shares”). In the Disposal, the outline of the restricted stock allotment agreement to beentered between the Company and the Eligible Director (hereinafter, the “Allotment Agreement”)
shall be as described in 3 below.
3. Outline of the Allotment Agreement(1) Transfer restriction period: From March 22, 2024 to March 21, 2054
(2) Conditions for lifting transfer restrictions
The transfer restrictions on all Allotted Shares will be lifted at the expiration of the transfer
restriction period, provided that the Eligible Director continues to hold the position of director of
the Company during the transfer restriction period.
(3) Treatment in the event that the Eligible Director retires (including retirement due to death) due toexpiration of the term of office, death, mandatory retirement age, or other justifiable reasons
during the transfer restriction period
Notwithstanding the provisions of the preceding paragraph, the timing or conditions for thelifting of the transfer restrictions in the event of the retirement (including retirement due to death)of the Eligible Director from the position of director of the Company due to expiration of the termof office, death, mandatory retirement age, or other justifiable reasons (not including those arisingfrom the personal circumstances of the Eligible Director; the same shall apply hereinafter) during
the transfer restriction period shall be as follows.
1) Retirement due to death of the Eligible Director(a) Timing of the lifting of restrictions
As of the time immediately following the death of the Eligible Director

(b) Number of shares to be released from restrictions
The number obtained by multiplying the number specified in (i) below by the number
specified in (ii) below and the number specified in (iii) below (Any fraction less than one
share shall be rounded down.)(i) The number of shares held by the Eligible Director at the time of his/her death(ii) The number obtained by dividing the number of months from the month including thedate of the 67th Ordinary General Meeting of Shareholders to the month including thedate of retirement of the Eligible Director (hereinafter, the “Tenure of Office”) by 12 (Ifsuch number exceeds 1, 1 shall be used.)(iii) The coefficient stipulated in the Allotment Agreement based on the percentage obtainedby dividing the cumulative consolidated operating profit from the beginning of themedium-term management plan published by the Company to the most recently
published quarterly results by the target cumulative consolidated operating profit in theCompany’s medium-term management plan divided proportionally over the period up
to the most recently published quarterly results as of the date of the death of the Eligible
Director2) Retirement for justifiable reasons other than those listed in the preceding item(a) Timing of the lifting of restrictions
As of the time immediately following the retirement of the Eligible Director(b) Number of shares to be released from restrictions
The number obtained by multiplying the number specified in (i) below by the number
specified in (ii) below and the number specified in (iii) below (Any fraction less than one
share shall be rounded down.)(i) The number of shares held by the Eligible Director as of the time immediately following
his/her retirement(ii) The number obtained by dividing the Tenure of Office by 12 (If such number exceeds 1,1 shall be used.)(iii) The coefficient stipulated in the Allotment Agreement based on the percentage obtainedby dividing the cumulative consolidated operating profit from the beginning of themedium-term management plan published by the Company to the most recently
published quarterly results by the target cumulative consolidated operating profit in theCompany’s medium-term management plan divided proportionally over the period up
to the most recently published quarterly results as of the date of the retirement of theEligible Director(4) Acquisition by the Company free of charge
The Company will naturally acquire for no charge the Allotted Shares whose transfer
restrictions are not lifted at the time of expiration of the transfer restriction period or at the time oflifting of the transfer restrictions as set forth in (3) above.
(5) Management of shares
The Allotted Shares will be managed in a dedicated account opened by the Eligible Director atNomura Securities Co., Ltd. during the transfer restriction period so that the Allotted Shares may
not be transferred, pledged, or otherwise disposed of during the transfer restriction period. To
ensure the effectiveness of transfer restrictions, etc. with respect to the Allotted Shares, theCompany has entered into an agreement with Nomura Securities Co., Ltd. regarding themanagement of the account for the Allotted Shares held by each Eligible Director. The Eligible
Directors shall agree to the details of the management of such accounts.
(6) Treatment upon reorganization, etc.

If, during the transfer restriction period, a merger agreement under which the Company isto become the non-surviving company, a share exchange agreement or share transfer planunder which the Company is to become a wholly owned subsidiary, or other mattersconcerning a reorganization, etc., are approved at the Company’s general meeting ofshareholders (or the Company’s Board of Directors meeting if approval at the Company’s
General Meeting of Shareholders is not required for such reorganization, etc.), the transfer
restrictions shall be lifted with respect to the number of shares of the Allotted Shares held asof such time multiplied by the number of months from the month including the date of the 67th
Ordinary General Meeting of Shareholders to the month including the date of the approval ofthe reorganization, etc. divided by 12 (if such number exceeds 1, 1 shall be used) (however, if
the calculation results in a fraction of a share, such fraction shall be rounded down) on thebusiness day preceding the effective date of the reorganization, etc. by resolution of the Boardof Directors. Furthermore, on the business day preceding the effective date of thereorganization, etc., the Company will naturally acquire for no charge all Allotted Shares
whose transfer restrictions are not lifted.
4. Basis for calculation of the amount to be paid and the specific details thereof
The Disposal to the scheduled allottee will be made with the monetary compensation claims paid
as Restricted Stock Compensation for the Company’s 68th fiscal year under the Plan as capitalcontribution. The amount to be paid has been set at 2,840 yen, the closing price of the Company’scommon stock on the Prime Market of the Tokyo Stock Exchange on February 27, 2024 (the business
day preceding the date of the resolution of the Board of Directors), in order to eliminate arbitrarinessfrom the amount. This is the market price immediately prior to the date of the resolution of the Boardof Directors, and we believe it is reasonable and does not constitute a particularly favorable price.
End of Notice