These documents have been translated from Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals, the originals
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translations.
Denka Co., Ltd.
(Securities Code: 4061)
NOTICE OF CONVOCATION OF
THE 160TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Date and Time:Thursday, June 20, 2019 at 10:00 a.m.

Place:

Nihonbashi Mitsui Hall, COREDO Muromachi 1 (reception desk on the 4th floor)
2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo

Proposals to be resolved:
Proposal No. 1:
Proposal No. 2:
Proposal No. 3:
Proposal No. 4:
Proposal No. 5:
Proposal No. 6:
Proposal No. 7:
Proposal No. 8:

Appropriation of Surplus
Partial Amendment to the Articles of Incorporation
Election of Seven (7) Directors (Excluding Directors who are Audit & Supervisory
Committee Members)
Election of Five (5) Directors who are Audit & Supervisory Committee Members
Election of One (1) Substitute Director who is an Audit & Supervisory Committee
MemberEstablishment of Amount of Remuneration for Directors (Excluding Directors who are
Audit & Supervisory Committee Members)
Establishment of Amount of Remuneration for Directors who are Audit & Supervisory
Committee Members
Determination of Amount and Details of Stock Compensation, etc. for Directors(Excluding Directors who are Audit & Supervisory Committee Members and Outside
Directors)

Please exercise your voting rights in writing or via the Internet by
5:00 p.m. on Wednesday, June 19, 2019.

1

Message from the Management
To Our Shareholders
As specific measures to realize the benefits of the “Denka Value-Up” plan in its second year, we will makesteady progress in our two Group reorganization plans, and take further steps to strengthen governanceby shifting to a system based on an Audit & Supervisory Committee.
Enclosed please find the Notice of Convocation of the 160th Ordinary General Meeting of Shareholders.
We would like to take this opportunity to express our gratitude to you for your continued support of Denka
and make some observations concerning the Company’s results and current initiatives.
During the fiscal year ended March 31, 2019 (fiscal 2018), the Japanese economy rebounded moderately,with a pickup in personal spending and an increase in capital investment. However, in the second half, there weresome signs of weakness in exports and production, reflecting the emergence of trade friction between the UnitedStates and Canada and increased uncertainties about the future due to the UK leaving the EU and other factors.
In the chemical sector, corporate earnings generally held up, despite the rising raw material prices.
Against this economic backdrop, the Denka Group launched the new five-year “Denka Value-Up”
management plan in fiscal 2018, to embody “The Denka Value” corporate philosophy. There are three growthvisions in the “Denka Value-Up” plan: becoming a “Specialty-Fusion Company,” securing “Sustained Growth”
and achieving “Sound Growth,” based on which we are pursuing the two growth strategies of refocusing thebusiness portfolio and introduction of innovative processes.
As a result, consolidated sales and earnings reached all-time highs. During the year under review, the initial
year of our new management plan, sales rose on the back of market price revisions to absorb rising raw materials
costs, and an increase in units sold, principally in the electronics and advanced product ranges. Turning toearnings, the Company posted a second straight year of record highs in operating and ordinary income and profit
attributable to owners of the parent, driven by increased sales volumes and improved terms of trade. These
positives outweighed the increased cost burden from regular maintenance of styrene monomer facilities upfront
investments for future growth businesses including healthcare. Posting a second straight year of record-highearnings has enabled a sense that the “Denka Value-Up” growth vision really is permeating the whole Denka
Group.
We have designated the current fiscal year, the second year of the “Denka Value-Up” plan, as the year inwhich plan policies truly begin to bear fruit. Now it is necessary to accelerate the pace of plan implementation, toachieve even higher goals. One specific policy will be the two-stage reorganization of four Denka Group
companies scheduled to take place on April 1, 2020. One is the merger of DENKA SEIKEN Co., Ltd. and Denka
to strengthen the healthcare business. The other is the integration of our consolidated subsidiaries Akros Trading
Co., Ltd. and YK Inoas Co., Ltd., with the aim of optimizing the Group's trading house operations. For moredetails on these changes, please refer to page 42 of this Notice of Convocation.
The Group has designated strengthening corporate governance as a priority. It has taken measures to ensure
the transparency and soundness of its business operations through a range of policies, including the introductionof the executive officer system, with the aim of clearly separating supervisory and decision-making frombusiness execution roles. Other measures include shortening the term of office of Directors, taking on three
Outside Directors and setting up an optional Management Advisory Committee centered on outside officers.
To further strengthen corporate governance, we have decided to shift from the “Company with Audit &Supervisory Board” structure to a governance model based on an Audit & Supervisory Committee, assuming
approval at the 160th Ordinary General Meeting of Shareholders. This move is intended to (1) deepen theseparation of executive and supervisory roles, (2) increase the number of Outside Directors, and (3) broaden thediversity of the Board of Directors. This will facilitate more rapid decision-making and bolster the supervisory
function of Directors at the Board of Directors meetings, by vesting voting rights in Directors who are Audit &Supervisory Committee members.
Looking ahead, we recognize that grounding our business in the ESG perspective is the key to retaining thetrust of all stakeholders and continuing to grow in years ahead. By aiming to become a specialty company
capable of contributing to the development of society, we are positioning ourselves to realize “The Denka Value”
corporate philosophy, and help achieve the goals set out in the United Nations SDGs. We hope we can count on
the continued understanding and support of our shareholders in this endeavor.
May 2019
Manabu Yamamoto
Representative Director, President2

(Securities Code: 4061)
May 29, 2019
To Our Shareholders:Manabu Yamamoto
President
Denka Co., Ltd.
1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, TokyoNOTICE OF CONVOCATION OF
THE 160TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 160th Ordinary General Meeting of Shareholders of Denka Co., Ltd.
(the “Company”) to be held as described below.
If you are unable to attend the meeting in person, you may exercise your voting rights in writing bysubmitting the Voting Rights Exercise Form by mail or via the Internet etc. as described in the “Guide for
Exercise of Voting Rights” (Page 5). Please review the attached Reference Documents for the General
Meeting of Shareholders and exercise your voting rights by 5:00 p.m. on Wednesday, June 19, 2019.
1. Date and Time:Thursday, June 20, 2019at 10:00 a.m.

2. Place:

Nihonbashi Mitsui Hall, COREDO Muromachi 1(reception desk on the 4th floor)
2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
160th Term (from April 1, 2018to March 31, 2019) and results of audits by
the Accounting Auditor and the Audit & Supervisory Board of theConsolidated Financial Statements
2. Non-consolidated Financial Statements for the Company’s 160th Term (from
April 1, 2018to March 31, 2019)
Proposals to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Partial Amendment to the Articles of Incorporation
Proposal No. 3: Election of Seven (7) Directors (Excluding Directors who are Audit &Supervisory Committee Members)
Proposal No. 4: Election of Five (5) Directors who are Audit & Supervisory Committee
Members
Proposal No. 5: Election of One (1) Substitute Director who is an Audit& Supervisory
Committee Member
Establishmentof Amount of Remuneration for Directors (Excluding Directors
Proposal No. 6:
who are Audit & Supervisory Committee Members)
Proposal No. 7: Establishment of Amount of Remuneration for Directors who are Audit &Supervisory Committee Members
Proposal No. 8: Determination of Amount and Details of Stock Compensation, etc. for Directors(Excluding Directors who are Audit & Supervisory Committee Members andOutside Directors)3◎ The following are posted on the Company’s website at https://www.denka.co.jp/ in accordance withlaw and Article 16 of the Company’s Articles of Incorporation and thus are not included in the
documents attached to this notice of convocation.
•Company’s Systems and Policies (Systems to Ensure the Appropriateness of Operations, Operational
Status of Systems to Ensure the Appropriateness of Operations, and Basic Policies regarding theControl of the Company) in the Business Report•Consolidated Statement of Changes in Net Assets and Notes to Consolidated Financial Statements•Non-consolidated Statement of Changes in Net Assets and Notes to Non-consolidated Financial
Statements
The Business Report, consolidated financial statements and the non-consolidated financial statements
audited by the Audit & Supervisory Board Members and the Accounting Auditor include the above
documents posted on the Company’s website.
◎ If any revisions are made to the Business Report, Consolidated Financial Statements, Non-consolidated
Financial Statements, or Reference Documents for the General Meeting of Shareholders, they will be
posted on the Company’s website at https://www.denka.co.jp/.

4<Guide for Exercise of Voting Rights>
The following three methods are available for exercising voting rights pertaining to the Company’s General
Meeting of Shareholders.

(1) Exercise of Voting Rights by Attending the Meeting
Please bring the enclosed Voting Rights Exercise Form with you to the meeting and submit it to thereceptionist at the meeting venue.
* In the case of exercising voting rights by attending the meeting as a proxy, please submit a document
evidencing the authority of proxy to the receptionist at the meeting venue together with the Voting Rights
Exercise Form. Please note that such proxy must be one shareholder of the Company with voting rights
in accordance with Article 18 of the Company’s Articles of Incorporation.
(2) Exercise of Voting Rights in Writing by Mail (Voting Rights Exercise Form)
Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form and send
the completed form to us so that it is received by 5:00 p.m. on Wednesday, June 19, 2019.
(3) Exercise of Voting Rights via the Internet etc.
Please access the website for exercising voting rights designated by the Company (https://www.web54.net),
use the “Voting Rights Exercise Code” and the “Password” indicated on the enclosed Voting Rights Exercise
Form, and follow the on-screen guidance. Please vote for or against the proposals by 5:00 p.m. on Wednesday,June 19, 2019.
(Inquiry about Exercise of Voting Rights via the Internet etc.)
Sumitomo Mitsui Trust Bank Stock Transfer Web Support Dial
Tel: 0120-652-031(office hours: 9:00 a.m. - 9:00 p.m.)*Handling of duplicated exercise of voting rights
If you exercise your voting rights both by Method (2) Exercise of Voting Rights in Writing by Mail (Voting
Rights Exercise Form) and by Method (3) Exercise of Voting Rights via the Internet etc., the exercise of
voting rights by Method (3) Exercise of Voting Rights via the Internet etc. shall prevail regardless of the timeof arrival of the votes.
In addition, if you exercise your voting rights multiple times via the Internet, etc., the vote made last shallprevail.

5

Reference Documents for the General Meeting of Shareholders

Proposal No. 1: Appropriation of Surplus
It is proposed that the surplus be appropriated as follows:
Matters concerning year-end dividends
In the management plan “Denka Value-Up,” formulated in November 2017, the Company sets out its
basic concepts of safety as No. 1 priority, environmental awareness, fostering and tapping human capital andcontributing to the community, all of which are indispensable for continued growth of the Company. We aim
to realize sustainable and sound growth as a “Specialty-Fusion Company,” through new strategies to achieve
dramatic growth globally.
The Company has formulated an investment plan as we look to achieve these goals, but in regard toshareholder returns, we will remain committed to the “Policy on Shareholder Returns,” with a 50% target
total payout ratio, reflecting our determination to return the profits yielded by the initiatives of the previous
management plan “Denka100” formulated in November 2014, even during the “Denka Value-Up”
management plan.
<Shareholder returns in the management plan “Denka Value-Up”>
Remain committed to a “50% standard for the target total payout ratio*”
Regarding shareholder returns, the dividend is prioritized, with flexible purchase of treasury shares,
depending on stock price movements and other factors.
* Total payout ratio = (Dividends paid + treasury stock purchased) / consolidated net income<Investment plan in the management plan “Denka Value-Up”>
Total for five years:¥200.0 billion
Of which strategic investment:¥75.0 billion (¥15.0 billion/year)
M&A, etc.:¥60.0 billion
Process reform:¥15.0 billion
Regular investment:¥125.0 billion (¥25.0 billion/year)
With respect to the year-end dividend for the 160th term, in view of the above, the Company proposes thefollowing.
(1) Type of dividend property
Cash(2) Allocation of dividend property and total amount thereof¥60 per share of common stock of the Company
Total amount of dividends: ¥5,219,073,480(3) Effective date of dividends from surplus
June 21, 20196

Proposal No. 2:

Partial Amendment to the Articles of Incorporation

1. Reason for amendment(1) Historically, under the recognition that the reinforcement of corporate governance is an importantmanagement issue, the Company has strived to establish a fair and highly transparent corporate
foundation by strengthening the supervisory functions of the Board of Directors and auditing functionsof the Audit & Supervisory Board Members through initiatives such as adopting an Executive Officer
System in which business execution functions are separated from the supervisory and decision-making
functions of management, as well as appointing three (3) Outside Directors and two (2) Outside Audit &Supervisory Board Members.
At this time, the Company shall transition to a Company with Audit & Supervisory Committee, thus
realizing an additional layer of strength in the supervisory functions of the Board of Directors byallowing Directors who are Audit & Supervisory Committee Members to have voting rights in the Boardof Directors and further strengthening the structure of the Company.
In line with the above, the Company shall delete provisions related to the Audit & Supervisory Board
Members and the Audit & Supervisory Board and establish new provisions related to the Audit &Supervisory Committee and Audit & Supervisory Committee Members, while also making required
amendments to passages related to strengthening governance.
(2) At the same time, new provisions shall be established to the effect that all or part of important decisions
on the execution of business operations may be delegated to Directors, by resolution of the Board of
Directors.
(3) In line with the above, changes shall be made to other related provisions, including amendments anddeletions of words and phrases, the new establishment of articles, and changes to numbering.
Furthermore, the amendments to the Articles of Incorporation in this proposal shall take effect at theconclusion of this General Meeting of Shareholders.
(Reference)
Purpose of shifting to a governance model based on an Audit & Supervisory Committee
By vesting Board of Directors voting rights in Directors who are Audit & Supervisory Committee members,
we are further strengthening auditing and supervisory roles.
 Further separating supervisory roles and business execution
By further deepening the separation of management supervisory and executive roles, we are working to ensuretransparent, fair, fast-reacting and resolute management.
 Increasing the number of Outside Directors
We will increase the number of Outside Directors from 3 (37.5% of the total) to 5 (41.7%).
 Strengthening diversity
By striking an appropriate balance among Director appointments in terms of breadth of expertise, experienceand ability, we aim to foster gender equality, a more international perspective and other forms of diversity.
2. Details of amendment
The details of the amendment are as follows:(Underlined portions are amended.)Present Articles of Incorporation

Proposed Amendments

CHAPTER I GENERAL PROVISIONSCHAPTER I GENERAL PROVISIONS

Article 1 – Article 3(Omitted)

Article 1 – Article 3(Unchanged)

Article 4 (Organization)
The Company shall have following bodies in
addition to the General Meeting of Shareholders
and Directors.

Article 4 (Organization)
The Company shall have following bodies in
addition to the General Meeting of Shareholders
and Directors.
7

1 Board of Directors
2 Audit & Supervisory Board Members
3 Audit & Supervisory Board
4 Accounting Auditor

1 Board of Directors
2 Audit & Supervisory Committee(Removed)
3 Accounting Auditor

Article 5 – Article 18(Omitted)

Article 5 – Article 18(Unchanged)

CHAPTER IV DIRECTORS AND BOARD OF
DIRECTORSCHAPTER IV DIRECTORS AND BOARD OF
DIRECTORS

Article 19 (Number of Directors)
The Company shall have not more than ten (10)Directors.

Article 19 (Number of Directors)
The Company shall have not more than nine (9)Directors (excluding Directors who are Audit &Supervisory Committee Members).
The Company shall have not more than six (6)Directors who are Audit & Supervisory Committee
Members.

Article 20 (Election)
Directors shall be elected at the General Meetingof Shareholders.
Resolutions for the election of Directors shall be
adopted by a majority vote of the attending
shareholders who hold one-third (1/3) or more of
the voting rights of shareholders entitled toexercise voting rights.
Resolutions for the election of Directors shall not
be by cumulative voting.

Article 20 (Election)
Directors shall be elected at the General Meetingof Shareholders, with a distinction made between
Directors who are Audit & Supervisory Committee
Members and other Directors.
Resolutions for the election of Directors shall be
adopted by a majority vote of the attending
shareholders who hold one-third (1/3) or more of
the voting rights of shareholders entitled toexercise voting rights.
Resolutions for the election of Directors shall not
be by cumulative voting.

Article 21 (Term of Office)The term of office of a Director shall expire at theend of the Ordinary General Meeting of
Shareholders for the last settlement period ending
within one (1) year after their appointment tooffice.

Article 21 (Term of Office)The term of office of a Director (excluding
Directors who are Audit and Supervisory
Committee Members) shall expire at the end of theOrdinary General Meeting of Shareholders for thelast settlement period ending within one (1) year
after their appointment to office.
The term of office of a Director who is an Audit &Supervisory Committee Member shall expire at
the end of the Ordinary General Meeting of
Shareholders for the last settlement period ending
within two (2) years after their appointment tooffice.
The term of office of a Director who is an Audit &Supervisory Committee Member appointed to fill
the vacancy of a Director who is an Audit &Supervisory Committee Member who resigned
before the end of his/her term shall be until theterm of the resigned Director who is an Audit &Supervisory Committee Member expires.

Article 22 – Article 23(Omitted)

Article 22 – Article 23(Unchanged)

Article 24 (Convener and Chairman)
Except as otherwise provided by laws andArticle 24 (Convener and Chairman)
Except as otherwise provided by laws and8regulations, the Chairman of the Board of
Directors shall convene the meetings of the Boardof Directors and act as the Chairman thereof.
When the Chairman of the Board of Directors is
unable to act or the position of Chairman of theBoard of Directors is vacant, the President andDirector shall perform this role in his/her place,and if the President and Director is unable to act,
another Director shall perform this role in his/herplace, in accordance with an order of priority
previously determined by the Board of Directors.

regulations, the Chairman of the Board of
Directors shall convene the meetings of the Boardof Directors and act as the Chairman thereof.
When the Chairman of the Board of Directors is
unable to act or the position of Chairman of theBoard of Directors is vacant, another Director
shall perform this role in his/her place, in
accordance with an order of priority previously
determined by the Board of Directors.

Article 25 (Notice of Convocation)
Article 25 (Notice of Convocation)
Notice of convocation of a meeting of the Board of
Notice of convocation of a meeting of the Board of
Directors shall be sent to each Director and Audit
Directors shall be sent to each Director not more
& Supervisory Board Member three (3) days priorthan three (3) days prior to the meeting; provided,to the meeting; provided, however, that in the
however, that in the event of urgency, such period
event of urgency, such period may be shortened.
may be shortened.
(Newly established)

Article 26 (Delegation of Decisions on the Executionof Important Business Operations)
In accordance with Article 399-13, Paragraph 6 of
the Companies Act, the Company may delegate allor part of decisions on the execution of importantbusiness operations (excluding matters provided
for in each item of Paragraph 5 of the same) to
Directors, by resolution of the Board of Directors.

Article 26 (Omission of Board of Directors
resolution)(Omitted)

Article 27 (Omission of Board of Directors
resolution)(Unchanged)

Article 27 (Emolument and other financial benefits
for the Directors)
The emolument, bonus and other financial benefits
received from the Company in consideration of
execution of the duty (hereinafter referred to as“emoluments and other financial benefits”) of
Directors shall be determined by resolution at a
General Meeting of Shareholders.

Article 28 (Emolument and other financial benefits
for the Directors)
The emolument, bonus and other financial benefits
received from the Company in consideration of
execution of the duty (hereinafter referred to as“emoluments and other financial benefits”) of
directors shall be determined by resolution at a
General Meeting of Shareholders, with adistinction made between Directors who are Audit& Supervisory Committee Members and other
Directors.

Article 28 (Agreements with Outside Directors tolimit responsibility)(Omitted)

Article 29 (Agreements with Outside Directors tolimit responsibility)(Unchanged)

CHAPTER V AUDIT & SUPERVISORY BOARD
MEMBERS ANDAUDIT& SUPERVISORY
BOARD(Removed)

Article 29–Article 37(Omitted)(Removed)(Newly established)

CHAPTER V AUDIT & SUPERVISORYCOMMITTEE

9

(Newly established)

Article 30(Standing Audit & Supervisory Committee
Members)
The Audit & Supervisory Committee may appoint
one or more Standing Audit & Supervisory
Committee Members by resolution.

(Newly established)

Article 31 (Convenor)
The Audit & Supervisory Committee meetings areconvened by a member specified at its previous
meeting. However, this does not prevent othermembers of the Audit & Supervisory Committee
from convening meetings.

(Newly established)

Article 32 (Notice of Convocation)
Notice of convocation of a meeting of the Audit &Supervisory Committee shall be sent to each Audit& Supervisory Committee Member not more than
three (3) days prior to the meeting; provided,
however, that in the event of urgency, such period
may be shortened.

CHAPTER VI ACCOUNTING

CHAPTER VI ACCOUNTING

Article 38 (Business year)(Omitted)

Article 33 (Business year)(Unchanged)

Article 39 (Date of record for dividend of surplus)(Omitted)

Article 34 (Date of record for dividend of surplus)(Unchanged)

Article 40 (Interim dividend)(Omitted)

Article 35 (Interim dividend)(Unchanged)

Article 41 (Period of exclusion)(Omitted)

Article 36 (Period of exclusion)(Unchanged)(Newly established)

Supplementary Provisions
Contracts to limit liability for damages as provided
for in Article 423, Paragraph 1 of the Companies
Act in relation to the actions of Outside Audit &Supervisory Board Members (including former
Outside Audit & Supervisory Board Members)
prior to the conclusion of the 160th Ordinary
General Meeting of Shareholders shall comply
with the provisions of Article 37 of the Articles ofIncorporation before amendment by resolution at
the 160th Ordinary General Meeting of
Shareholders.

10Proposal No. 3:

Election of Seven (7) Directors (Excluding Directors who are Audit & Supervisory
Committee Members)

If Proposal No. 2 “Partial Amendment to the Articles of Incorporation” is approved as originallyproposed, the Company will transition to a Company with Audit & Supervisory Committee, and the terms ofoffice of all eight (8) incumbent Directors will expire when the amendments to the Articles of Incorporation
take effect.
Accordingly, the election of seven (7) Directors (excluding Directors who are Audit & Supervisory
Committee Members; hereinafter, the same applies in this proposal) is proposed.
The effectiveness of this proposal shall be subject to the amendments to the Articles of Incorporation in
Proposal No. 2 “Partial Amendment to the Articles of Incorporation” taking effect.
The candidates for Directors are as follows.

No.

Name

Positions and responsibilities at the Company

1

Reappointed Shinsuke Yoshitaka Chairman, Board of Directors

2

Reappointed Manabu Yamamoto

3

Reappointed

4

New
appointment

5

New
appointment

Representative Director, President and Chief Executive
Officer

Director and Senior Managing Executive Officer
Chief Scientific Officer (CSO)
Norihiro Shimizu Chief R&D Officer
In charge of New Business Planning & Development
Dept., R&D Promoting Dept., Intellectual Property Dept.
Managing Executive Officer
Chief Technical Officer (CTO)
Masaharu Suzuki In charge of Purchasing Dept., Logistics Dept., ElectricPower Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
Managing Executive Officer
In charge of Corporate Planning Dept., Investor Relations
Dept., CSR & Corporate Communications Dept., Automotive
Toshio ImaiMaterials & Solutions Dept., Denka Corporation, Denka
Chemicals GmbH
General Manager, Denka Value-Up Promotion Dept.

OutsideReappointed
Akio Yamamoto Director
6
Independent
Director
OutsideReappointed
7
Tatsutsugu Fujihara Director
Independent
Director
Reappointed: Candidate for reappointment as Director
New appointment: Candidate for new appointment as Director
Outside: Candidate for Outside Director
Independent Director: Independent Director as notified to the Tokyo Stock Exchange

11

Attendance atBoard ofDirectors
meetings
13/13(100%)
13/13(100%)
13/13(100%)

—/—

—/—

13/13
(100%)
13/13(100%)

Name(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1974
January 2001
(Reappointed)

June 2006
Shinsuke Yoshitaka(February 1, 1951)
June 2007
Age: 68
June 2008[June 2008]
April 2010[11 years* at the conclusion of April 2011
this Ordinary General
June 2011
Meeting of
Shareholders]April 20171

April 2019

Joined the Company
General Manager of Corporate Planning Dept. of theCompany
Director of the Company, General Manager of Corporate
Planning Dept. and Investor Relations & Corporate
Communications Dept.
Senior Executive Officer of the Company
Director and Senior Executive Officer of the Company
Representative Director and Managing Executive Officerof the Company
Representative Director, President and Chief Executive
Officer of the Company
Outside Director of Koatsu Gas Kogyo Co., Ltd. (present)
Representative Director, Chairman, Board of Directors of
the Company
Chairman, Board of Directors of the Company (present)

Number ofshares of theCompany held

27,000[Reasons for selection as the candidate for Director]
Subsequent to responsibility for management strategy, medical business, accounting andfinance, and investor relations and corporate communication, Mr. Shinsuke Yoshitaka
promoted the “Denka100” management plan as Representative Director, President. In
addition to a wealth of experience and results as a manager, he serves as the Chairman ofAttendance at Board the Board of Directors, as the Chairman based on his deep knowledge and understanding of
the Group. The Company has judged that he can appropriately fulfill the role of supervisingof Directors
the business execution of Directors and Executive Officers, and requests his election as
meetings
Director.
13/13(100%)[Message to shareholders]
Under the corporate philosophy “The Denka Value, “I will make every effort to boost thecorporate value of the Company with good faith and determination, while also constantly
endeavoring for sound and transparent management from the perspective of our
stakeholders, as Chairman of the Board of Directors.
Note: No material conflict of interest exists between the Company and the above candidate.

12

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1981
June 2004(Reappointed)

April 2009

Manabu Yamamoto(March 31, 1956) April 2011
April 2013
Age: 63
June 2013[June 2013][6 years* at the conclusion of April 2015
this Ordinary General
April 2016
Meeting of
Shareholders]June 2016
April 2017
2

Joined the Company
General Manager of Functional Ceramics Div. ofElectronics Materials Business Group of the Company
Executive Officer of the Company, General Manager ofElectronics Materials Div. of Electronics Materials
Business Group of the Company
Senior Executive Officer of the Company
Managing Executive Officer of the Company, Head ofElectronics & Innovative Products
Director and Managing Executive Officer of theCompany
General Manager of Corporate Planning Dept. of theCompany
Director and Senior Managing Executive Officer of theCompany
Outside Audit & Supervisory Board Member of Koatsu
Gas Kogyo Co., Ltd. (present) (until June 2019 (planned))
Representative Director, President and Chief Executive
Officer of the Company (present)

Number ofshares of theCompany held

7,600

[Reasons for selection as the candidate for Director]
Through work experience at overseas subsidiaries and many years of responsibility for theelectronics materials business division, Mr. Manabu Yamamoto possesses international
viewpoints and adequate operational experience. After he integrated new business strategies
and accounting and finance strategies across the entire Denka Group as the executive
responsible for management strategy, accounting and finance, and investor relations andcorporate communication divisions, Mr. Yamamoto currently serves as President andAttendance at Board
Representative Director. Based on his rich experience and impressive track record inof Directors
Company administration, it is hence judged by the Company that he can appropriately fulfil
meetings
the role of determining important business execution and supervising the business
13/13(100%)execution of Directors and Executive Officers, and requests his election as Director.
[Message to shareholders]
In order to meet the expectations and trust of all stakeholders, I will steadily promote themanagement plan, “Denka Value-Up, “which is now in its second year, and pursue
sustainable growth even in rapidly changing markets, through further specialization of ourbusiness structure and productivity innovations, while aiming to be a sound company that
fulfills our social responsibility.
Note: No material conflict of interest exists between the Company and the above candidate.

13

Name
(Date of birth)
No. [Director since][Director’s term ofoffice](Reappointed)
Norihiro Shimizu(October 2, 1955)
Age: 63

Career summary and significant concurrent positions, etc.

April 1980
October 2008
April 2009
April 2011

[June 2017]
April 2013
[2 years* at the conclusion of June 2017
this Ordinary General
Meeting ofApril 2018
Shareholders]3

Joined the Company
General Manager of Electronic Materials ResearchInstitute of the Company
Executive Officer of the Company
Senior Executive Officer, General Manager of Central
Research Institute of the Company
Managing Executive Officer, General Manager ofResearch and Development Dept. of the Company
Director and Managing Executive Officer of theCompany
Director and Senior Managing Executive Officer of theCompany (present)

Number ofshares of theCompany held

5,000

[Reasons for selection as the candidate for Director]
Mr. Norihiro Shimizu has ample practical experience, including oversight of research anddevelopment activities for many years in the fields of polymers and electronic materials.
Currently, as Chief Scientific Officer and Chief R&D Officer, he is responsible for all
research and development operations, and for business strategy including development ofAttendance at Board next-generation products and of new businesses. In light of his deep expertise andexperience in research and development operations, we judge him to be well-suited forof Directors
decision-making regarding significant business matters, and for supervision of businessmeetings
execution by directors and executive officers, and so seek his election as a Director.
13/13(100%)[Message to shareholders]Through continuous innovation leveraging the comprehensive capabilities of the Group, I
am committed to ensuring sustainable growth and improving corporate value byimplementing business strategy at individual businesses in a way that strikes a balance
between profitability and sustainability.
Note: No material conflict of interest exists between the Company and the above candidate.

14

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1981
June 2005(New appointment)

June 2007
April 2011

Masaharu Suzuki(December 11, 1955) April 2015
Age: 63
April 2017[—][—]

May 2017
January 2018

4

Joined the Company
Deputy General Manager, Shibukawa Plant of theCompany
Deputy General Manager, Omuta Plant of the Company
Executive Officer of the Company, Director Chairman of
Denka Chemicals Holdings Asia Pacific Pte., Ltd.
Managing Executive Officer of the Company (present)
General Manager, Corporate Planning Dept. of theCompany
General Manager, Business Process Reform Promotion
Dept. of the Company
General Manager, Denka Value-Up Promotion Dept. of
the Company

Number ofshares of theCompany held

4,000

[Reasons for selection as the candidate for Director]
Mr. Masaharu Suzuki possesses adequate operational experience, including work
experience in research and development and plant manufacturing, responsibility for the
management of an overseas subsidiary, business strategy, and management divisions suchas investor relations and corporate communication. Currently, Mr. Suzuki directs the
Attendance at Board overall technical divisions as Chief Technical Officer, while also taking responsibility for
the Digital Innovation Dept., a new department created to strategically build and operateof Directors
general information systems for the Group. It is hence judged by the Company that he canmeetings
appropriately fulfil the role of determining important business execution and supervising—/— (— %)the business execution of Directors and Executive Officers, and requests his election as
Director.
[Message to shareholders]
I will endeavor to boost the corporate value of the Company by promoting ESG-oriented
management from a global perspective.
Note: No material conflict of interest exists between the Company and the above candidate.

15

Name
(Date of birth)
No. [Director since][Director’s term ofoffice](New appointment)
Toshio Imai(January25 1959)
Age: 60[—][—]

5Career summary and significant concurrent positions, etc.

April 1982
October 2006
June 2011
April 2013
April 2015
April 2017
April 2019

Joined the Company
General Manager, Styrene Div. of the Company
General Manager, Corporate Planning Dept. of theCompany
Executive Officer of the Company, Assistant to General
Manager, Elastomers & Performance Plastics
General Manager, Elastomers & Performance Plastics of
the Company
Managing Executive Officer of the Company (present)
General Manager, Denka Value-Up Promotion Dept. of
the Company (present)

Number ofshares of theCompany held

5,700

[Reasons for selection as the candidate for Director]
Mr. Toshio Imai possesses adequate operational experience, including work experience atoverseas subsidiaries, and taking responsibility for the styrene and elastomer businesses
over many years. Currently, Mr. Imai is in charge of business strategy for the Denka Group
as a whole, including overseas businesses, as the executive responsible for management
Attendance at Board strategy and investor relations and corporate communication divisions, and he is promoting
the management plan, “Denka Value-Up.” It is hence judged by the Company that he canof Directors
appropriately fulfil the role of determining important business execution and supervising
meetings
the business execution of Directors and Executive Officers, and requests his election as—/— (— %)Director.
[Message to shareholders]
I will focus on achieving the targets in the management plan, “Denka Value-Up,” based on
the corporate philosophy, “The Denka Value,” thus achieving “sustained growth” and“sound growth,” as I endeavor to boost the corporate value of the Company.
Note: No material conflict of interest exists between the Company and the above candidate.

16

Name
(Date of birth)
No. [Director since][Director’s term ofoffice](Candidate for
Outside Director)(Reappointed)(Independent
Director)

Career summary and significant concurrent positions, etc.

April 1974
April 1999
April 2004
April 2007

Akio Yamamoto April 2009
(December 2, 1951)
Age: 67
June 2014[June 2015]
June 2015[4 years* at the conclusionof this Ordinary
General Meeting of
Shareholders]

6

Joined Mitsui & Co., Ltd.
President of Mitsui & Co., Benelux S.A./N.V.
Vice President of Synthetic Resin & Inorganic Chemical
Products Business Unit of Mitsui & Co., Ltd.
Executive Officer of Mitsui & Co., Ltd. (until March
2010), President of Mitsui & Co. (Thailand) Ltd.
Representative Director and President of Mitsui Bussan
Plastic Trade Co., Ltd. (present Mitsui & Co. Plastics Ltd.)(until June 2014)
Counselor of Mitsui & Co. Plastics Ltd. (until June 2015)
Outside Director of the Company (present)

Number ofshares of theCompany held-

[Reasons for selection as the candidate for Outside Director]
Mr. Akio Yamamoto has rich experience and great insight as a manager in Japan andoverseas through his involvement in corporate management for many years. His career
included serving as an Executive Officer of Mitsui & Co., Ltd. and the Representative
Director and President of Mitsui & Co. Plastics Ltd. He also has rich international
experience, including serving as a vice president at global enterprises. The Company
proposes that Mr. Yamamoto be elected as an Outside Director in the expectation that hewill utilize his knowledge in providing suggestions about the Company’s overseas businessexpansion strategy and management in general. Although he used to work at a company
that has transactions with the Company, the Company considers that there is no risk thatconflict of interest with other general shareholders will arise because 1) he is not a current
Attendance atBoard of Directors or a recent operating officer of the said company; 2) although the Company’s sales to thesaid company account for 6.7% of the Company’s total sales, substantial transactions
meetings
between the Company and the said company are payments of commission by the Company
13/13(100%)to the said company for services offered by its trading company function and the amount ofcommission paid is modest (under 2% of the said company’s sales); and 3) he satisfies theCompany’s “Standards of Independence for Outside Executives” and thus, the Company
considers that the said company has no special impact on the Company’s decision-making
by the Board of Directors etc.
[Message to shareholders]
Amid major changes in the global market environment, I intend to contribute to the soundoperation of the Company and increasing corporate value, while prioritizing an awarenessof circumstances at business sites, and remaining committed to a medium- to long-term
perspective and a strong stance of fairness.
Notes:1. No material conflict of interest exists between the Company and the above candidate.
2. Until June 2014, Mr. Yamamoto worked as president and representative director for a specified related
party of the Company.
3. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently concludes liability
limitation contracts with the candidate that limit his liability for damages of Article 423, Paragraph 1 ofsaid Act to a predefined amount of ¥5 million or more or the amount stipulated by laws and regulations,whichever is higher. If the election of Mr. Yamamoto is approved, the Company plans to continue thesame contracts.

17

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1976
May 2000(Candidate for
Outside Director)(Reappointed)(Independent
Director)

April 2002
March 2003

Tatsutsugu Fujihara June 2003
(November 23, 1952)
April 2005
Age: 66[June 2016][3 years* at the conclusionof this Ordinary
General Meeting of
Shareholders]June 2007
June 2013
June 2014
April 2016
June 2016
June 2016

7

Joined The Dai-Ichi Kangyo Bank, Ltd.
General Manager, Osaka Sales Department of The Dai-Ichi
Kangyo Bank, Ltd.
General Manager, Osaka Sales Department III of Mizuho
Corporate Bank, Limited
Executive Officer of Mizuho Corporate Bank, Limited(until April 2003), General Manager, Corporate
Department II (until April 2003)
Managing Executive Officer of Orient Corporation (until
March 2005)
Managing Executive Officer of Mizuho Corporate Bank,
Limited (until March 2007)
Director and President of Mizuho Marketing Experts Co.,
Ltd. (until March 2013)
Representative Director and President of KSO Corporation
Representative Director and Chairman of KSO Corporation
Director of KSO Corporation
Chairman and Executive Officer of KSO Corporation (until
June 2018)
Outside Director of the Company (present)

Number ofshares of theCompany held-

[Reasons for selection as the candidate for Outside Director]
Having worked in corporate management at financial institutions for many years, Mr.
Tatsutsugu Fujihara has rich experience and great insight as a manager and possesses
advanced insights regarding corporate finance, and to utilize these insights and receive
recommendations toward the Company’s overall management, his election as Outside
Director is requested. Additionally, although he used to work at a financial institution thathas transactions with the Company, the Company considers that there is no risk that conflictof interest with other general shareholders will arise because 1) he is not a current or a
recent operating officer of the said financial institution; 2) a significant number of years
have passed since he retired from the said financial institution (twelve years have passed
Attendance atBoard of Directors since his retirement as of the day of this Ordinary General Meeting of Shareholders); 3) thecomposition of borrowings relative to net assets of the Company is low at approximately
meetings
30%, and the Company’s dependency on the said financial institution is low as it accounts
13/13(100%)for less than 10% of overall borrowings; and 4) he satisfies the Company’s “Standards ofIndependence for Denka Outside Officers” and thus, the Company considers that the said
financial institution has no special impact on the Company’s decision-making by the Boardof Directors, etc.
[Message to shareholders]
I will always approach matters from a fair perspective, and intend to contribute to thegrowth of the Company in the true sense, not simply business performance in terms ofnumbers.
Notes:1. No material conflict of interest exists between the Company and the above candidate.
2. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently concludes liability
limitation contracts with the candidate that limit his liability for damages of Article 423, Paragraph 1 ofsaid Act to a predefined amount of ¥5 million or more or the amount stipulated by laws and regulations,whichever is higher. If the election of Mr. Fujihara is approved, the Company plans to continue the same
contracts.

18

Proposal No. 4:

Election of Five (5) Directors who are Audit & Supervisory Committee Members

If Proposal No. 2 “Partial Amendment to the Articles of Incorporation” is approved as originallyproposed, the Company will transition to a Company with Audit & Supervisory Committee.
Accordingly, the election of five (5) Directors who are Audit & Supervisory Committee Members is
proposed.
The consent of the Audit & Supervisory Board has been obtained for the submission of this proposal.
The effectiveness of this proposal shall be subject to the amendments to the Articles of Incorporation in
Proposal No. 2 “Partial Amendment to the Articles of Incorporation” taking effect.
The candidates for Directors who are Audit & Supervisory Committee Members are as follows.

No.

Name

Positions and responsibilities at the Company

Attendance
Attendanceat Audit &at Board ofSupervisory
Directors
Boardmeetings
meetings

1

Director, Executive Vice President
NewSupervisor of Life Innovation Division
Mitsukuni Ayabe
appointment
President and Representative Director of DENKA
SEIKEN Co., Ltd.

—/—
(—)

13/13
(100%)

2

New
appointment

—/—
(—)

—/—
(—)

Junichi Kimura Advisor

OutsideNew—/—
3 appointment
Yasuo Sato
Director(—)
Independent
Director
OutsideNew
15/15
4 appointment Toshio Kinoshita Audit & Supervisory Board Member(100%)
Independent
Director
OutsideNew—/—
appointment
Hiroko Yamamoto
5(—)
Independent
Director(planned)
New appointment: Candidate for new appointment as Director (Audit & Supervisory Committee Member)
Outside: Candidate for Outside Director (Audit & Supervisory Committee Member)
Independent Director: Independent Directors as notified to the Tokyo Stock Exchange

19

13/13
(100%)

13/13(100%)

—/—
(—)

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1977
June 2004
June 2007(New appointment)
Mitsukuni Ayabe April 2010
(September 23, 1952)
Age: 66
June 2011[June 2011]
April 2013
[8 years* at the conclusion of April 2015
this Ordinary General
Meeting ofApril 2016
Shareholders]April 2017
1

Joined the Company
General Manager of Research and Development Dept. of
the Company
Executive Officer of the Company, Managing Director of
Denka Singapore Pte., Ltd., Managing Director of Denka
Advantech Pte., Ltd.
Senior Executive Officer of the Company, Director andChairman of Denka Chemicals Holdings Asia Pacific Pte.,
Ltd.
Director and Managing Executive Officer of the Company
Director and Senior Managing Executive Officer of theCompany
Representative Director and Senior Managing Executive
Officer of the Company
Representative Director, Executive Vice President andChief Operating Officer of the Company
Director, Executive Vice President of the Company(present)
President and Representative Director of DENKA
SEIKEN Co., Ltd. (present)

Number ofshares of theCompany held

12,300[Reasons for selection as the candidate for Director who is an Audit & Supervisory
Committee Member]
Subsequent to management of research and development and overseas subsidiaries andAttendance at Audit responsibility for medical business, accounting and finance, and investor relations and& Supervisory Board corporate communication, Mr. Mitsukuni Ayabe directed the overall technical divisions as
meetings
the general executive for planning and development, while also assisting the President as—/— (—)
Executive Vice President and Chief Operating Officer. Currently, Mr. Ayabe is in charge of
the Life Innovation Division and supports strategies in the growing healthcare field. The
Attendance at Board Company has judged that his rich and great insight and knowledge are required inof Directors
supervision and audits of the Company’s management, and requests his election as Director
meetings
who is an Audit & Supervisory Committee Member.
13/13(100%)[Message to shareholders]
I am committed to improving corporate value and creating a company more trusted bysociety, through audits of the legality and validity of the execution of business duties, etc.
Note: No material conflict of interest exists between the Company and the above candidate.

20

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1981
June 2006(New appointment) June 2007
Junichi Kimura(August 12, 1958)
Age: 60[—][—]

2June 2011
April 2013
April 2015
April 2017
April 2019

Joined the Company
General Manager, Purchasing Dept. of the Company
General Manager, Corporate Planning Dept. of theCompany
Director of Toyo Styrene Co., Ltd.
Executive Officer of the Company, General Manager,
Corporate Planning Dept.
General Manager, Life Science & Environment Productsof the Company
Managing Executive Officer of the Company
Advisor of the Company (present)

Number ofshares of theCompany held

4,900

[Reasons for selection as the candidate for Director who is an Audit & Supervisory
Committee Member]
Attendance at Audit Mr. Junichi Kimura possesses adequate operational experience, including work experience& Supervisory Board in purchasing and corporate planning, before managing an affiliated company operating ameetings
styrene business and taking responsibility for the resin processing business and China—/— (— )business. The Company has judged that his rich and great insight and knowledge are
required in supervision and audits of the Company’s management, and requests his election
Attendance at Board as Director who is an Audit & Supervisory Committee Member.
of Directors
meetings[Message to shareholders]—/— (— )As an Audit & Supervisory Committee Member, I intend to contribute to the Company
becoming a highly sustainable company by approaching audits and other duties in a fair andtransparent manner, in order to satisfy all stakeholders.
Note: No material conflict of interest exists between the Company and the above candidate.

21

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1965
(Candidate for
Outside Director who March 1987
is an Audit &Supervisory
April 1992
Committee Member)(New appointment) March 1999
(Independent
Director)
January 2003
Yasuo Sato
(September 30, 1942) March 2005
Age: 76
June 2005[June 2015]
May 2006[4 years* at the conclusion ofthis Ordinary General June 2006
Meeting of
3
February 2008
Shareholders]June 2015
July 2016

Joined TEIKOKU SANSO Co., Ltd. (present Air Liquide
Japan Ltd.)
Director and Vice President of Electronics Div. of Air
Liquide Japan Ltd.
Vice President of Worldwide Electronics Div. of L’Air
Liquide S.A. (until March 1996)
Representative Director and President of Air Liquide
Japan Ltd. (until January 2003)
Director and Chairman of Japan Air Gases Co., Ltd. (until
March 2005)
Director and Advisor (part-time) of Air Liquide Japan Ltd.
(until September 2007)
Outside Director of Denal Silane Co., Ltd. (until February
2008)
President & CEO of I.B. Associates Co., Ltd. (present
Wisemech Corporation) (until June 2016)
Outside Auditor of Santen Pharmaceutical Co., Ltd. (until
June 2014)
Auditor of Denal Silane Co., Ltd. (until June 2014)
Outside Director of the Company (present)
Director Chairman of Wisemech Corporation (present)

Number ofshares of theCompany held-

[Reasons for selection as the candidate for Outside Director who is an Audit & Supervisory
Committee Member]
Attendance at Audit Mr. Yasuo Sato has rich experience and great insight as a manager through his involvement& Supervisory Board in corporate management for many years. His career included serving as the President of
Air Liquide Japan Ltd. He also has rich international experience, including serving as a vicemeetings
president at global enterprises, and also has experience as Outside Auditor at a listed—/— (— )company. The company proposes that Mr. Sato be elected as an Outside Director who is an
Attendance at Board Audit & Supervisory Committee Member, in the expectation that he will utilize hisknowledge in supervision and audits of the Company’s management.
of Directors
meetings
13/13(100%)[Message to shareholders]
In a spirit of rationality and fairness, I am determined to contribute to the medium- tolong-term growth of the Company and boosting corporate value, while aiming for the steady
implementation and further development of corporate governance.
Notes: 1. No material conflict of interest exists between the Company and the above candidate.
2. Up to February 2008, Mr. Sato was an Outside Director of a subsidiary of the Company. Up to June
2014, he worked as corporate auditor of a subsidiary of the Company.
3. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently concludes liability
limitation contracts with the candidate that limit his liability for damages of Article 423, Paragraph 1 ofsaid Act to a predefined amount of ¥5 million or more or the amount stipulated by laws and regulations,whichever is higher. If the election of Mr. Sato is approved, the Company plans to continue the same
contracts.

22

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

July 1983
July 1989
June 1994
July 1998(Candidate for
Outside Director who July 2005
is an Audit&
Supervisory
Committee Member) July 2007
(New appointment)(Independent
July 2013
Director)
June 2014
Toshio Kinoshita
July 2014(April 12, 1949)
Age: 70
August 2014[—]
4
March 2015[—]
June 2015
June 2015
July 2015
January 2018

Registered as Certified Public Accountant
Partner, U.S. Coopers & Lybrand L.L.P (current
PricewaterhouseCoopers) (until June 1998)
Representative employee of Chuo Audit Corporation(until July 2005)
Senior Managing Partner for North America, New York
Head Office, U.S. PricewaterhouseCoopers L.L.P. (until
June 2005)
Management Board Member for International Business ofTokyo Office of ChuoAoyama PricewaterhouseCoopers(until June 2007)
Chief Executive of The Japanese Institute of Certified
Public Accountants (JICPA) (until July 2013)
Council Member of JICPA (until July 2016)
Outside Audit & Supervisory Board Member of Panasonic
Corporation (present)
Representative Director of Global Professional Partners(present)
Outside Corporate Auditor of Weathernews Inc. (until
August 2018)
Outside Director of Asatsu-DK Inc. (until December
2018)
Outside Audit & Supervisory Board Member of theCompany (present)
Outside Director of TACHI-S CO., LTD. (present)
Outside Director of Mizuho Bank, Ltd. (present)
Outside Director of ThreePro Group Inc. (present)(to date)

Number ofshares of theCompany held-

[Reasons for selection as the candidate for Outside Director who is an Audit & Supervisory
Attendance at Audit Committee Member]& Supervisory Board Mr. Toshio Kinoshita has experience and rich accounting knowledge gained as a certified
public accountant who practiced in Japan and the U.S. for many years and is well versed inmeetings
international accounting. The Company proposes that Mr. Kinoshita be elected as an
15/15(100%)
Outside Director who is an Audit & Supervisory Committee Member in the expectation that
Attendance at Board he will utilize his knowledge in supervision and audits of the Company’s management.
of Directors
meetings[Message to shareholders]
13/13(100%)
I shall exert every effort to strengthen corporate governance and build a management
environment that can accurately implement corporate governance, in order to boost
corporate value and shareholder value.
Notes: 1. No material conflict of interest exists between the Company and the above candidate.
2. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently concludes liability limitation
contracts with the candidate that limit his liability for damages of Article 423, Paragraph 1 of said Act to apredefined amount of ¥5 million or more or the amount stipulated by laws and regulations, whichever ishigher. If the election of Mr. Kinoshita is approved, the Company plans to conclude similar contracts.
3. The candidate is currently an Outside Audit & Supervisory Board Member of the Company, and his term ofoffice shall be four (4) years at the conclusion of this Ordinary General Meeting of Shareholders.

23

Name
(Date of birth)
No. [Director since]
Career summary and significant concurrent positions, etc.
[Director’s term ofoffice](Candidate forApril 2000
Registered as a lawyer (Dai-Ichi Tokyo Bar Association)
Outside Director who
Joined Takusyou Law Office (until July 2016)is an Audit&
July 2016
Joined Sasanami Law Office
Supervisory(to date)
Committee Member)(New appointment)(Independent
Director (planned))

Number ofshares of theCompany held-

Hiroko Yamamoto(February 16, 1956)
Age: 63[—][—][Reasons for selection as the candidate for Outside Director who is an Audit & Supervisory
Committee Member]
Ms. Hiroko Yamamoto has a long experience as a lawyer and abundant legal knowledge.
The Company proposes that Ms. Yamamoto be elected as an Outside Director who is an
Attendance at Audit Audit & Supervisory Committee Member, in the expectation that she will utilize her& Supervisory Board knowledge in supervision and audits of the Company’s management, as well as provide
meetings
advice from a viewpoint based in diversity. Although she has never been directly engaged in—/— (— )corporate management, the Company deems that Ms. Yamamoto will duly execute her
duties as an Outside Director who is an Audit & Supervisory Committee Member because
Attendance at Board
she is well versed in corporate legal affairs and has extensive insight into corporateof Directors
governance.
meetings—/— (— )[Message to shareholders]Drawing on my experience and knowledge as a lawyer, I intend to perform myresponsibilities as a Director who is an Audit & Supervisory Committee Member, while
focusing on the fullest compliance and the effectiveness of corporate governance in a spiritof diversity.
Notes: 1. No material conflict of interest exists between the Company and the above candidate.
2. If the election of Ms. Yamamoto is approved, the Company plans to concludes liability limitation contracts
with her, based on Article 427, Paragraph 1 of the Companies Act that limit her liability for damages of
Article 423, Paragraph 1 of said Act to a predefined amount of ¥5 million or more or the amount stipulated bylaws and regulations, whichever is higher.
524Proposal No. 5:

Election of One (1) Substitute Director who is an Audit & Supervisory Committee
MemberIf Proposal No. 2 “Partial Amendment to the Articles of Incorporation” is approved as originallyproposed, the Company will transition to a Company with Audit & Supervisory Committee.
Accordingly, in order to ensure that the number of incumbent Directors who are Audit & Supervisory
Committee Members does not fall short of that required by laws and regulations or the Articles ofIncorporation of the Company, the election of one (1) substitute Director who is an Audit & Supervisory
Committee Member is proposed.
The consent of the Audit & Supervisory Board has been obtained for the submission of this proposal.
The effectiveness of this proposal shall be subject to the amendments to the Articles of Incorporation in
Proposal No. 2 “Partial Amendment to the Articles of Incorporation” taking effect.
The candidate for substitute Director who is an Audit & Supervisory Committee Member is as follows:
Name(Date of birth)

Career summary, positions, responsibilities and significant concurrent
positions
April 1975
April 1983
April 1985
April 1996
April 2000
December 2002

Candidate for
Substitute Outside
Director who is an
Audit&
Supervisory
Committee
MemberJanuary 2015
March 2015
March 2016
April 2016
April 2017

Gotaro Ichiki(December 4, 1949) July 2017
Age:69June 2018

Admitted to the bar in Japan (Yokohama Bar Association)
Joined Sagami Godo Law Office
Joined Hamada & Matsumoto Law Firm (transferred toDaini Tokyo Bar Association)
Partner in Hamada & Matsumoto Law Firm
Vice President of Daini Tokyo Bar Association (until
March 1997)
Deputy Secretary of Japan Federation of Bar Associations(until March 2002)
Partner in Mori Hamada & Matsumoto Law Firm formed
as a result of merger (until December 2014)
Joined Kowa Law OfficeOutside Director of Nippon Denko Co., Ltd. (present)
Outside Director of COCA-COLA WEST COMPANY,
LIMITED (until March 2017)
Supervisory Officer of DBJ Private REIT Investment
Corporation (present)
Outside Auditor of COCA-COLA WEST COMPANY,
LIMITED (until December 2017)
Administrative Director of General Incorporated
Foundation Judiciary Association (present)
Outside Director of Lotte Holdings Co., Ltd.(present)(to date)

Number ofshares of theCompany held-

[Reasons for selection as the candidate for substitute Director who is an Audit& Supervisory
Committee Member]
Mr. Gotaro Ichiki has a long experience as a lawyer and abundant legal knowledge. The
Company proposes that Mr. Ichiki be elected as a substitute Outside Director who is an
Audit& Supervisory Committee Member in the expectation that he will utilize his knowledge
in supervision and audits of the Company’s management. Although he has never been directly
engaged in corporate management, the Company deems that Mr. Ichiki will duly execute his
duties as an Outside Director who is an Audit & Supervisory Committee Member because heis well versed in corporate legal affairs and has extensive insight into corporate governance.
Notes: 1. No material conflict of interest exists between the Company and the above candidate.
2. Based on Article 427, Paragraph 1 of the Companies Act, the Company plans to conclude liability
limitation contracts with Outside Director who is an Audit & Supervisory Committee Memberthat limit their liability for damages of Article 423, Paragraph 1 of said Act to a predefined
amount of ¥5 million or more or the amount stipulated by laws and regulations, whichever ishigher. If Mr. Ichiki assumes the position of Outside Director who is an Audit & Supervisory
Committee Member, the Company plans to conclude an identical contract with him.

25

3. The candidate satisfies the conditions for independent officers as defined by Tokyo Stock
Exchange, Inc., and if he assumes the position of Outside Director who is an Audit & Supervisory
Committee Member, the Company plans to designate him as an independent officer.

26

(Reference)
The Company’s views regarding Directors
In order to promote the new management plan, “Denka Value-Up” aimed at realizing “The Denka Value,”
the Company’s corporate philosophy, the Company aims to strengthen the management structure with
Directors and Executive Officers, while enriching the governance structure and supervisory functions.
In electing Directors, internal Directors are chosen from persons who possess a wealth of experience andachievements in various divisions within the Company, while also possessing insights and adequate
specialized knowledge as Director, and Outside Directors are chosen from persons who possess
specialization required for continuous growth and improvement in corporate value of the Company and wide
insights based on a wealth of business experience. The Company believes that it is important for the Boardof Directors as a whole to elect a good balance of personnel with a variety of knowledge, experience, andabilities, and ensure that the composition of the Board of Directors is diverse in terms of gender,international background, and other factors.
Additionally, the Company believes that Independent Directors should comprise at least one-third of
Directors, and implements this policy.
Standards of Independence for Denka Outside Officers
The Company selects candidates for Outside Directors based mainly on practical considerations, such aswhether we can expect the candidate to contribute to an increase in the corporate value of the Company as anindependent officer. Specifically, the Company has defined the following standards, in accordance with therequirements for independence stipulated in the Companies Act, in addition to the standards forindependence defined by the Tokyo Stock Exchange and other factors.
Standards of Independence for Outside Officers
The standard of independence for an Outside Director of the Company shall be persons that do not fallunder any of the categories defined in items (1) through (5) below.
(1) An executor of business (*4) at a main customer (*1), main supplier (*2), or main lender (*3)
that is a main trading partner of the Company;(2) A consultant, accountant, lawyer, or other such person that has received money or other property
exceeding ¥10 million in value per year from the Company, excluding officer compensation, inthe most recent fiscal year;(3) A person belonging to a group for whom the amount paid by the Company makes up 2% or moreof the group’s revenues or total income in the most recent fiscal year, in cases where the entity
receiving property under item (2) above is a group;(4) A person that has fallen under any of the above categories (1) through (3) within the past year;(5) A spouse or relation within the second degree of a person falling under any of the categories
below (excluding an insignificant person):i.
A person that falls under any of the above categories (1) through (4);ii.
A person that is or was an executor of business at the Company or a subsidiary of theCompany now or within the past year.
(*1) Main customer: A customer from whom the amount paid has made up 2% or more of theCompany’s revenues in the most recent fiscal year(*2) Main supplier: A supplier to whom the amount paid from the Company has made up 2% ormore of the supplier’s revenues in the most recent fiscal year(*3) Main lender: A lender that was essential for the Company’s funding, and that the Company
relied on to the extent the lender was irreplaceable, as of the end of the most recent fiscal
year(*4) Executor of business: An executive director, executive, executive officer, or other
employee, etc.

27

Proposal No. 6:

Establishment of Amount of Remuneration for Directors (Excluding Directors who
are Audit & Supervisory Committee Members)

If Proposal No. 2 “Partial Amendment to the Articles of Incorporation” is approved as originallyproposed, the Company will transition to a Company with Audit & Supervisory Committee.
It was approved at the 158th Ordinary General Meeting of Shareholders held on June 22, 2017 that the
maximum amount of remuneration for Directors of the Company shall be ¥500.0 million a year (including
the maximum amount of ¥50.0 million for Outside Directors), but with the transition to a Company with
Audit & Supervisory Committee, the Company proposes to abolish this remuneration and establish a new
maximum amount of remuneration for Directors (excluding Directors who are Audit & Supervisory
Committee Members) of ¥490.0 million a year (including the maximum amount of ¥40.0 million for Outside
Directors), taking into consideration the amount of remuneration thus far and Directors’ duties.
As previously, the above amount of remuneration to Directors (excluding Directors who are Audit &Supervisory Committee Members) does not include portions of their salaries as employees.
Outside Directors are outside the scope of the payment of performance-linked remuneration.
The Company currently has eight (8) Directors (including three (3) Outside Directors), and if Proposal
No. 2 and Proposal No. 3 are approved as originally proposed, the number of Directors subject to this
proposal (excluding Directors who are Audit & Supervisory Committee Members) will be seven (7)(including two (2) Outside Directors).
The effectiveness of this proposal shall be subject to the amendments to the Articles of Incorporation in
Proposal No. 2 “Partial Amendment to the Articles of Incorporation” taking effect.

Proposal No. 7:

Establishment of Amount of Remuneration for Directors who are Audit &Supervisory Committee Members

If Proposal No. 2 “Partial Amendment to the Articles of Incorporation” is approved as originallyproposed, the Company will transition to a Company with Audit & Supervisory Committee.
Accordingly, the Company proposes that the maximum amount of remuneration for Directors who are
Audit & Supervisory Committee Members be ¥166.0 million a year, taking their duties into consideration.
If Proposal No. 2 and Proposal No. 4 are approved as originally proposed, the number of Directors who
are Audit & Supervisory Committee Members subject to this proposal will be five (5).
The effectiveness of this proposal shall be subject to the amendments to the Articles of Incorporation in
Proposal No. 2 “Partial Amendment to the Articles of Incorporation” taking effect.

28

Proposal No. 8:

Determination of Amount and Details of Stock Compensation, etc. for Directors(Excluding Directors who are Audit & Supervisory Committee Members andOutside Directors)

1. Reasons for the proposal and reasons why the remuneration is appropriate
The introduction of a “stock remuneration plan” (hereinafter the “Plan”) for Directors (excluding Outside
Directors) was approved at the 158th Ordinary General Meeting of Shareholders held on June 22, 2017. To
establish a clear peg between the Company’s stock value and Director remuneration, Directors will benefit
from rises in the stock price, but they will also bear risk when it falls. With the aim of improving
medium-to-long-term business performance and raising awareness of contribution to increased corporate
value by ensuring that benefits and risks from share price changes are shared by all stockholders, theCompany considers the Plan appropriate and seeks approval for its aim of creating a new form of payment
by stock remuneration. However, if Proposal No. 2 “Partial Amendment to the Articles of Incorporation” isapproved as originally proposed, the Company will transition to a Company with Audit & Supervisory
Committee, and therefore approval is once again sought for an amount of remuneration based on the Plan for
Directors (excluding Directors who are Audit & Supervisory Committee Members; hereinafter the same
applies).
Furthermore, as with the amount of remuneration under the existing Plan, this amount of remuneration
shall be established as a separate framework from the remuneration limits for which approval is sought in
Proposal No. 6 “Establishment of Remuneration for Directors (Excluding Directors who are Audit &Supervisory Committee Members.”
This proposal is a procedural matter accompanying the Company’s transition to a Company with Audit &Supervisory Committee, and the Company considers the actual content of the remuneration appropriate, as itis the same content as that which has already been approved.
At present, the number of Directors who are subject to the Plan is five (5), and it shall remain five (5)even if Proposal No. 3 “Election of Seven (7) Directors (Excluding Directors who are Audit & Supervisory
Committee Members)” is approved as originally proposed.
The effectiveness of this proposal shall be subject to the amendments to the Articles of Incorporation in
Proposal No. 2 “Partial Amendment to the Articles of Incorporation” taking effect.
2. Amount and details of remuneration, etc. under the Plan
(1) Overview of the Plan
In the Plan, cash shall be entrusted to a trust (hereinafter the “Trust”) to be established by the Company.
The Company’s common stock (hereinafter the “Company Stock”) shall be acquired by the Trust. Points
shall be granted to Directors in line with the Stock Allotment Regulations laid down by the Company, and,through the Trust, the Company Stock shall be allocated in proportion to the number of points granted.
In principle, Directors receive the Company Stock at the time when the Director resigns.
(2) Trust period
The Trust period shall be the three years from August 2017 to August 2020. However, the Trust period
may be extended as provided in (3) below.
(3) Upper limit of cash the Company will contribute
As remuneration for Directors in office during the three years from the conclusion of the Ordinary
General Meeting of Shareholders in June 2017 until the conclusion of the Ordinary General Meeting of
Shareholders in June 2020 (hereinafter the “Applicable Period”), the Trust will contribute a maximum of¥120 million in cash (corresponding to ¥40 million per year) during the Trust period (three years) as funds toacquire the Company Stock to grant to Directors under the Plan, and will establish the Trust with Directors
who satisfy certain requirements as beneficiaries (the Trust has already been established).
By a resolution of the Board of Directors, the Trust period may be extended at its expiration, and the Plan
may be continued (this includes de facto extension of the Trust contract by the transfer of assets of the Trustto another trust with the same purpose as the Trust created by the Company, and likewise hereafter). In sucha case of extension, the Company shall make additional cash contributions to the Trust of up to ¥40 million
multiplied by the number of years of extension, during the period of the Trust extension, as funds for
additional acquisition of the Company Stock needed for payment to Directors under the Plan.

29

(4) Method of acquisition of Company Stock by the Trust
The acquisition of the initial round of Company Stock by the Trust has already been carried out, throughthe stock market using cash entrusted by the Company as funds.
(5) Method of calculation and upper limit for number of shares of Company Stock to be delivered to
Directors
1) Method of granting points for Directors and upper limits
Based on the Stock Allotment Regulations laid down by the Board of Directors, points shall be granted
based on position or role of the individual Director on the day of point granting, as laid down in theprovisions of share transfer during the period of the Trust.
However, the total number of points to be granted by the Company to Directors shall not exceed
110,000 per year.
2) Grants of Company Stock corresponding to number of points granted
In line with the procedures described in (6) below, Directors shall receive Company Stock in a total
corresponding to the number of points granted to them as described in 1) above.
The total of shares of Company Stock to be granted to individual Directors shall be 0.2 times thenumber of points granted to the Director. (However, with regard to Company Stock, in the cases where it
is deemed reasonable to adjust the number of shares of Company Stock to be transferred due to stock
split or stock consolidation, etc., a reasonable adjustment shall be made in proportion to the ratio of thestock split or consolidation).
Note: The total of shares of Company Stock to be granted to individual Directors was approved as 1.0 at the 158th
Ordinary General Meeting of Shareholders held on June 22, 2017, but this has been adjusted downward to 0.2,
because of the fact that the Company conducted a consolidation of stock with a date of October 1, 2017.

(6) Grant of Company Stock to Directors
The grant of Company Stock to individual Directors described in (5) above shall be undertaken by theTrust through the prescribed beneficiary determination procedures at the time of retirement of the Director.
However, when conditions of the provisions for grant of stock are met, cash payment may be made insteadof Company Stock compensation, after converting a certain proportion of the Company Stock within the
Trust. In the event of a settlement of the Company Stock in the Trust by responding to a tender offer, etc.,
when Company Stock in the Trust is converted to cash, cash payments may be made instead of granting
Company Stock.

30

(Reference)
Denka’s Corporate Governance Initiatives
Basic Approach to Corporate GovernanceIn order to fulfill the expectations and trust of its many stakeholders, including shareholders, customers,
local society, and employees, based on “The DenkaValue” (corporate philosophy), which forms the basis forthe activities of the Denka Group, the Company strives to strengthen its business foundation by improving its
earnings power and expanding the scope of operations, while also working to improve corporate value bymaking every effort to continue being a company that can win the trust and sympathy of society.
The Company considers corporate governance as the foundation for the above, and so we have striven tostrengthen governance, in order to fulfill the responsibilities we owe to all our stakeholders, and ensure thetransparency and soundness of our management.
The Denka Value (Corporate Philosophy)“The Denka Value” (corporate philosophy) consists of the “Denka Mission,” which represents ouruppermost mission statement, and the “Denka Principles,” a set of precepts guiding actions taken by every
Group employee.
“The Denka Value” lies at the pinnacle of all corporate activities, including management plans, andthrough implementing “The Denka Value,” the Company will work to respond to the expectations and trustof society.
“The Denka Value” (Corporate Philosophy)
The Denka Mission
Taking on the challenge of expanding the possibilities of chemistry to create new value and contribute tosound social development.
Note: Based on the corporate slogan “Possibility of Chemistry.”
The Denka PrinciplesWe: Boldly confront challenges with determination and sincerity.
 Think and take action today with the future in mind.
 Deliver new values, and inspire customers through innovative monozukuri.* Respect the environment and create a cheerful workplace that prioritizes safety.
 Contribute to a better society, whilst taking pride in being a trusted corporate citizen.
*Japanese-style craftsmanship31

Current Corporate Governance System
Board of Directors and optional committee■Board of Directors(met 13 times in fiscal 2018)
To realize the Company’s corporate philosophy, “The Denka Value,” the Board of Directors monitors andsupervises major operational decision-making and execution of business duties by executive officers, basedon strategic and management planning. The Board of Directors as a whole appoints candidates to be
Directors in line with the standards for the appointment of both internal and Outside Directors, based on the
belief that it is important to appoint a good balance of people with a variety of expertise, experiences, andskills. For further details of our approach in appointing members of the Board of Directors, please see page
27.
Additionally, the Management Advisory Committee has been established as an advisory organ of theBoard of Directors, to strengthen the roles of the Board of Directors and foster higher standards ofobjectivity and transparency. It also organizes the D&A Round Table, aimed at enriching deliberations on
major matters of particular management concern.
In addition, in principle, the Company has discontinued the use of executive titles, (such as Senior
Managing Director, Managing Director) for Directors, such that all Directors may focus on monitoring andsupervising the execution of business duties from an equal standpoint. Also, the Company has set the lengthof directors’ terms to one year, in order to facilitate flexible checks on directors at the General Meeting of
Shareholders.
■Management Advisory Committee(Met 3 times in fiscal 2018)
For major management matters such as nomination, remuneration and other elements of governance, theBoard of Directors has set up the Management Advisory Committee, comprising all Outside Directors, all
Outside Audit & Supervisory Board Members, the Chairman and the President, to foster transparency andobjectivity in management decision-making, informed by a wide range of opinion and advice from Outside
Directors.
In the previous fiscal year, this Committee received reports and advice from the Board of Directors
regarding remuneration and redeployments at the Director and Executive Officer level.
■D&A Round Table(Met 12 times in fiscal 2018)
In order to facilitate in-depth discussions regarding management matters that are of particular importance,
the D&A Round Table is organized every month as a forum bringing together all Outside Directors andOutside Audit & Supervisory Board Members and all internal Directors and Audit & Supervisory Board
Members, for free, open-minded, constructive discussions, exchange of opinions and information, andstrengthening of cooperation.
■Evaluation of the Effectiveness of the Board of Directors
At Denka, the effectiveness of the Board of Directors is analyzed and evaluated annually by all Directors
and all Audit & Supervisory Board Members. As a result of measures taken in the previous fiscal year, we
reaffirmed that discussion was reinvigorated at the Board of Directors, by ensuring an appropriate Board sizeand composition (in terms of getting the right balance of expertise, experience, ability and diversity) and an
appropriate meeting frequency and duration, as well as through various initiatives including priorexplanation of agenda items, to deepen the understanding of Outside Officers of the Company, enablingthem to make proactive contributions at the Board of Directors meetings.
Furthermore, at the previous appraisal, by ensuring that there is sufficient time for deliberations including
information provision and prior explanation, to enable appropriate management and supervision by the
Board of Directors with regard to the overall business strategy of the Denka Group, we have ensured
constructive and adequate discussions based on diverse opinions and advice received from outside officers,
through channels such as the optional Management Advisory Committee, which fosters transparent andobjective business decision-making and has as its members all Outside Directors, all Outside Auditors, theChairman and the President. This is based on the perceived need to further improve the functioning of theBoard of Directors meeting and realize the “Denka Value-Up” plan.
At the same time, in order to foster deeper discussion of business strategy for the whole Denka Group andbusiness strategy for individual units, there is a view that it is important to adjust the allocation of time at
meetings of the Board of Directors, and to ensure details of medium-to-long- and short-term businessstrategy are shared by Company and outside officers.
32

Looking ahead, in light of these constructive opinions, we will take steps to further improve theeffectiveness of the Board of Directors, aiming to improve medium-to-long-term corporate value.
Audit & Supervisory Board (Met 15 times in fiscal 2018)
In accordance with their fiduciary responsibilities to shareholders, Corporate Auditors and the Audit &Supervisory Board work with the support of the full-time staff of the Auditor’s Office, whose independence
from management is ensured, to conduct audits of the execution of directors’ duties, internal governance,business duties, and accounting, by exercising statutory rights that include requesting reports on thebusinesses of the Company, investigations pertaining to business duties and accounting, and the appointment,
dismissal, and remuneration of an external auditing firm.
In addition, in view of the roles and responsibilities of the Audit & Supervisory Board, the Company
appoints candidates to be Audit & Supervisory Board Members based on the decision that there should be atleast one person with expertise in finance and accounting.
Outside Officers
Regarding Outside Officers, the Company selects candidates based mainly on practical considerations,such as whether we can expect the candidate to contribute to an increase in the corporate value of theCompany as an independent officer, and has also defined its own standards of independence (Please see page27.), in accordance with the requirements for independence stipulated in the Companies Act, in addition to
the standards for independence defined by the Tokyo Stock Exchange and other factors.
In addition, by enhancing their understanding of the Company, the Company strives to create anenvironment that allows those appointed as Outside Officers to perform their roles for the sake of thesustainable growth of the Company and the increase of its corporate value.
Specifically, in addition to tours of offices, plants, and other facilities, the Company has been
implementing the following initiatives:■Business and research policy briefings (Met twice in fiscal 2018)
Briefings are held in order to have Outside Officers understand the Company’s medium- to long-term andshort-term business and research policies.
■Outside Officer Liaison Committee (Met 4 times in fiscal 2018)
The Company holds “Outside Officer Liaison Committee” meetings to facilitate the exchange of
information and mutual awareness among Outside Officers concerning matters related to Denka’s corporate
governance and business.

33

Initiatives to Corporate Governance Thus Far
Purpose2007 To speed up decision-making
Ensure that Directors monitor and supervise theexecution of business on an equal footing
Clear separation of monitoring and supervisory
functions from the execution of business
Flexibly place checks on directors
2008

・Step up checks on management from anexternal perspective
・Create system enabling appropriate
advice-giving even outside of meetings of theBoard of Directors, by arranging ample exchangeof opinions
Speed up decision-making by deepening
discussions of important management matters

2015

2016

2017

2019

Improve the governance framework and raise
standards of transparency and soundness ofmanagement
Create venues for free, vigorous and constructive
deliberations, exchange of opinion andinformation and alliance-strengthening forInternal and Outside Directors and Audit &Supervisory Board Members
Work to ensure optimum standards of corporate
governance to ensure sustainable growth andimprove medium to long-term corporate value
Deepen understanding of the Company’sbusiness, and stimulate debate at meetings of theBoard of Directors
Enable exchange of information and formation ofconsensus among outside officers
Promote understanding of the Company’s
medium- to long-term and short-term businessand research objectives
Ensure adequate the Board of Directors’ auditing
and monitoring of execution of business duties
by executive officers
Step up the effectiveness of the Board of
Directors

Foster greater transparency and objectivity inbusiness decision-making, with the Board of
Directors accepting diverse opinions and advice
from the Outside Officers with regard to major
business topics including appointments,
remuneration and other governance matters

Further strengthen corporate governance andimprove corporate value by further strengthening
the supervisory role of the Board of Directors, byenabling more rapid decision-making and vesting
directors who are members of the Audit &Supervisory Committee with voting rights at theBoard of Directors meeting

34

Measures・Cut the number of directors by half・Introduction of a corporate officer system
Abolition of executive titles (such as Senior
Managing Director, Managing Director)
Reassigning the authority of business execution
and executive titles from directors to corporate
officers
Shortening the length of directors’ appointments
to one year
・By appointing two Outside Directors, thenumber of appointments of Outside Officers rises
to four, including two Outside Audit &Supervisory Board Members (per statutory
requirements)
・Holding regular exchanges of opinion between
outside officers and top management
Establishment of a Management Committee
comprising directors, Audit & Supervisory Board
Members (Outside), and some corporate officers
Increasing the number of Outside Directors (fromtwo to three) and reducing the number ofmembers of the Board of Directors (by two)
Decision to step up round-table meetings of
Outside Directors and Corporate Auditors
formerly held twice per year, and hold a monthly
round-table conference of Directors and Audit &Supervisory Board Members”
Compilation of the Denka Corporate Governance
Guidelines
More advance explanations to Outside Officers
regarding specific agenda items that required
adequate explanation
Decision to hold “Outside Officer Liaison
Committee” four times per year
Decision to hold business and research objective
briefings for Outside Officers twice a year
Clarification of the details of agenda and reportmaterials at the Board of Directors meetings
Decisions to arrange for all Directors and all
Audit & Supervisory Board Members to annually
analyze and evaluate the effectiveness of theBoard of Directors, and disclose the results in the
Corporate Governance Report
Establishment of the Management Advisory
Committee comprising all Outside Directors, all
Outside Audit and Supervisory Board Members,
the Chairman and the President
Rename the “round-table conference of Directors
and Audit & Supervisory Board Members” the“D&A Round Table”
Shift from the “Company with Audit &Supervisory Board” model to that of a “Company
with Audit & Supervisory Committee”(planning)

[Attached Documents]

Business Report(From April 1, 2018to March 31, 2019)

1. Overview of the Group(1)

Business Progress and Results
During the fiscal year ended March 31, 2019 (fiscal 2018), the Japanese economy rebounded
moderately, with a pickup in personal spending and an increase in capital investment, but weakness
became evident in certain export and production activities in the second half. Concerns grew overprospects for the global economy due in part to the emergent trade friction between the United States
and China and the UK’s decision to leave the EU, despite overall ongoing moderate recovery
momentum, especially in the United States.
Corporate earnings were solid overall in the chemical industry, despite an increase in raw material
prices and other negatives.
Against this economic backdrop, the Group in fiscal 2018 launched the new five-year “Denka
Value-Up” management plan, to realize “The Denka Value” corporate philosophy. Resources were thenchanneled into expanding businesses and consolidated earnings, by pursuing the two growth strategies
of refocusing the business portfolio and introduction of innovative processes, based on the three growthvisions in the “Denka Value-Up” plan: becoming a “Specialty-Fusion Company,” securing “Sustained
Growth” and achieving “Sound Growth.” As a result, sales increased ¥17,498 million or 4.4% year on
year to ¥413,128 million reaching all-time highs. During the year under review, the initial year of our
new management plan, sales rose on the back of market price revisions to absorb rising raw materials
costs, and an increase in units sold, principally in the electronics and innovative product ranges. Turning
to earnings, the Company posted a second straight year of record highs in operating and ordinary
income and profit attributable to owners of the parent, driven by increased volumes sold and improved
terms of trade. These positives outweighed the increased cost burden from regular maintenance ofstyrene monomer facilities and upfront investments for future growth businesses including healthcare.
Operating income rose ¥34,228 million (up ¥576 million year on year, a 1.7% increase), ordinary
income rose ¥32,811 million (up ¥1,311 million year on year, a 4.2% increase),and profit attributable toowners of the parent rose ¥25,046 million (up ¥2,010 million year on year, an 8.7% increase), These
positives outweighed the increased cost burden from regular maintenance of styrene monomer facilities
and costs from upfront investments for the future including healthcare and other sectors.
On April 1, 2018, production of highly pure DENKA BLACK carbon black was shifted from the
Elastomers & Performance Plastics Division to the Electronics & Innovative Products Division. The
classification of year on year changes assumes implementation of this change.
Results of operations by division are described below.
Elastomers & Performance Plastics Division (Sales: ¥179,237 million)
Principal products: Chloroprene rubber, styrene monomer, polystyrene resin, ABS resin,
CLEAREN, heat-resistant resin, transparent resin, POVAL, etc.
Sales of chloroprene rubber fell in volume terms amid reduced production due to cold weather at
Denka Performance Elastomer LLC, our United States subsidiary. But sales revenues increased on theback of the revised sales prices. ABS resin performed robustly, with sales and earnings increasing forpolystyrene resin and MS resin at Denka Singapore Pte., Ltd., our Singapore subsidiary.
As a result, division sales increased ¥9,127 million or 5.4% year on year to ¥179,237 million.
Infrastructure &Social Solutions Division (Sales: ¥54,846 million)
Principal products: Cement, special cement additives, fertilizers, calcium carbide, fire resistantmaterials, environmental materials, etc.
35

Sales were robust for special cement additives and corrugated drainpipes for agriculture and civilengineering, as well as fire-resistant and steel materials, but cement sales prices failed to correct as
expected and shipments of fertilizers were weal. Shipments also fell for certain products due to theimpact of typhoons and other natural disasters.
As a result, division sales increased ¥1,700 million or 3.2% year on year to ¥54,846 million.
Electronics & Innovative Products Division (Sales: ¥67,113 million)
Principal products: Fused silica, electronic circuit substrates, fine ceramics, electronic packaging
materials and acetylene black, etc.
Sales volumes and revenues increased for electronic circuit substrates and ALSINK, highly reliable
heat-dissipating plate and spherical alumina for thermal dissipation materials. Volume and revenue
growth was also seen in high-purity conductive carbon black for lithium ion secondary batteries andhigh-voltage power cable. However, sales were down year on year for functional films including
THERMO FILM ALS for transportation and packing of electronic components and semiconductors and
ALONBRIGHT SiAlON phosphors for LED.
As a result, division sales increased ¥4,499 million or 7.2% year on year to ¥67,113 million.
Life Science & Environmental Products Division (Sales: ¥39,034 million)
Principal products: Food packaging materials, housing materials, life science and industrial
materials, etc.
Sales revenues for plastic rain gutters and industrial tapes increased, and sales were robust for film
for food packaging material and processed products from DENKA Polymer Co., Ltd. Sales for“TOYOKALON” synthetic fiber for wigs were flat year on year, but DX Filmanti-weather fluorine
alloy film were down year on year. Shipments of influenza vaccines were down year on year.
As a result, division sales decreased ¥1,946 million or 4.7% year on year to ¥39,034 million.
Life Innovation Division (Sales: ¥34,104 million)
Principal products: Joint function improvers, vaccines, and diagnostic reagents, etc.
Domestic and export sales volumes and sales increased for DENKA SEIKEN Co., Ltd.’s reagents,and shipments of influenza vaccines were up year on year.
As a result, division sales increased ¥1,766 million or 5.5% year on year to ¥34,104 million.
Others Division (Sales: ¥38,791 million)
Principal business: Plant engineering etc.
Transaction volumes of Akros Trading Co., Ltd. and other trading companies were up from theprevious year. The value of projects completed by Denka Consultant & Engineering Co., Ltd. increased.
As a result, division sales increased ¥2,351 million or 6.5% year on year to ¥38,791 million.

36

(2)

Capital Investment
In the period under review, the Group has launched a new five-year management plan “Denka
Value-Up.” In the “Denka Value-Up” plan, investments totaling 200 billion over five years will be madein two growth strategies, our refocusing of the business portfolio and introduction of innovative
processes, to meet numerical targets. In fiscal year ended March 31, 2019, the Group carried out capital
investments totaling ¥32,745 million.
Capital investment in the Elastomers & Performance Plastics Division amounted to ¥8,636 million.
Principal items were capital investment for the Company’s Omi Plant and Chiba Plant.
In the Infrastructure & Social Solutions Division, capital investment amounted to ¥9,208 million,
which mostly concerned the Company’s Omi Plant and Omuta Plant.
In the Electronics & Innovative Products Division, capital investment amounted to ¥6,842 million,
which mostly concerned the Company’s Omuta Plant. The investments were mostly works to expand
spherical alumina production capacity at the Company's Omuta Plant, and in works to expand purity
carbon black capacity at Denka Singapore Pte. Ltd.
Capital investment in the Life Science & Environmental Products Division amounted to ¥2,146
million mainly for the Company and DENKA Polymer Co., Ltd.
In the Life Innovation Division, capital investments of ¥5,893 million were made at DENKA
SEIKEN Co., Ltd. and other units.
Main capital investment projects completed during fiscal 2018 included installation of productionlines for Evolmer, a new high-performance elastomer, at our Omi Plant, and works to increase
production capacity for electronics and highly advanced product lines at the Omuta and Shibukawa
Plants. Likewise, as part of the operational process reforms carried out in introducing innovative
processes growth strategy under the “Denka Value-Up” plan, the Company completed refurbishment
works at headquarters offices and a new corporate administrative office, Omi Innovation Hub, at theflagship Omi Plant. Capital investment projects currently under construction include a newhydroelectric power facility at the Omi Plant and investment in new production facilities for influenza
vaccines at DENKA SEIKEN Co., Ltd.

(3)

Financing
In fund procurement, the Company issued ¥15 billion in corporate bonds in April 2018, to meetcosts of redemption of previously issued corporate bonds.

(4)

Issues to be Addressed
The Company launched the “Denka Value-Up” five-year management plan in the previous fiscal
year, aimed at realizing the “The Denka Value” concept.
In fiscal 2018, the first year of the plan, we made steady progress in the three “Denka Value-Up”
growth visions, aiming to become a Specialty-Fusion Company supported by sustained and soundgrowth, as well as the two growth strategies of refocusing the business portfolio and introduction of
innovative processes.
In specific measures, core Group company DENKA SEIKEN Co., Ltd. decided to double
production capacity for influenza vaccines from current levels in the priority domain of healthcare. In
October 2018, it also launched the QuickNavi Reader™, a densitometry (optical density measurement)
analyzer device for the QuickNavi™-Flu2 rapid diagnostic kit for the influenza virus. Looking ahead,the Denka Group will continue to contribute to a higher quality of life for people around the world, by
developing advanced technologies in the fields of illness prevention, diagnosis and treatment.
Likewise, in the environment and energy field, we have decided to increase production capacity for
ceramic substrates and spherical alumina in investments totaling ¥8.0 billion in the Omuta Plant and at
our Singapore unit, to meet rapidly growing demand around the world for thermal-dissipation materials
as electric vehicles become more widespread. This will give us strong leading status in the market forthermal-dissipation materials especially for eco-friendly vehicles as the trend toward electricallypowered cars gathers pace around the world.
At the same time, we expect turbulence in the global situation amid intensifying trade friction
between the United States and China, and a rise in protectionism as typified by Britain's decision toleave the European Union, exacerbated by the increased frequency of natural disasters. What was until
recently considered conventional wisdom has suddenly been replaced by unconventional thinking. To
ensure sustainable growth, it is necessary to rigorously promote the new “Denka Value-Up” plan, basedon a clear understanding of global megatrends.
For this reason, we have decided to undertake the following two reforms.
37

One of these initiatives is the integration on April 1, 2020 of the healthcare business through themerger of DENKA SEIKEN Co., Ltd. with Denka. DENKA SEIKEN has taken a central role within the
Denka Group healthcare business for many years. By fully integrating it as a core business of the Denka
Group, we aim to further develop the business by strengthening governance, speeding up
decision-making and consolidating the organizational framework. The second reorganization is theintegration of the Group’s two trading companies, Akros Trading Co., Ltd and YK Inoas Co., Ltd. We
expect this integration to help us develop into a more prominent trading company house within thechemical industry, by making effective use of the management resources of both companies and by
globally maximizing marketing synergies.
The second reform, concerning human resource management, aims to ensure Denka attracts the
specialized personnel that are essential for achievement of goals in the “Denka Value-Up” plan.
Through overhauls of the job grouping and personnel appraisal systems, as well as the expansion ofhuman resources training programs and promotion of diversity, the Denka Group will position itself tofully leverage the capabilities of diversified human resources and create an environment in which
employees can grow with the Company.
To continue to justify the trust of all stakeholders and to continue to grow in years ahead, we willdevelop our businesses aiming to become a specialty company, grounded in a recognition of ESG as thebasis of our operations; in other words, with an emphasis on safety as No. 1 priority, environmental
awareness, fostering and tapping human capital, contributing to the community and corporate
governance. These initiatives will, we believe, enable us to realize “The Denka Value” corporate
philosophy and meet the United Nations-designated social development goals.

38

(Reference)
Denka’s SDG Initiatives
Adopted by the United Nations in September 2015, the Sustainable Development Goals form an action plancomprising 17 goals and 169 targets in areas including climate change, energy, health and employment, with
2030 as target date for achievement.
Mindful of its responsibilities as a corporate citizen, the Company will contribute to achievement of the SDG
targets, a concern of all mankind, and will consider what should be done in future years to usher in asustainable society.
This feature focuses on recent topics in the Company's SDG-related initiatives.
Market launch of Quick Navi-ReaderTM device for influenza diagnosis
In October 2018, DENKA SEIKEN, a core company of the Denka Group, and its major marketing partner
Otsuka Pharmaceutical Co., Ltd. launched the Quick Navi-ReaderTM densitometry (optical density
measurement) analyzer, for use with the Quick Navi-Flu2 in vitro diagnostic kit.
Quick Navi-Flu2 is a market-leading quick diagnostic kit in Japan, able to detect rapidly and highly accurately
the presence of the influenza virus in the body. It is possible to determine within five minutes whether the“lines” are present or not.
In influenza diagnosis, healthcare professionals determine visually whether or not the “lines” are present, butthere will sometimes be differences in judgment depending on the individual in question. The Quick
Navi-ReaderTM can capture and analyze “line” images generated by Quick Navi-Flu2 using an optical sensor.
Comparison with preset threshold values enables analysis by densitometry (optical density measurement),
yielding a positive or negative judgment. The results of the test enable objective evaluation without any
variation due to human differences.
The Quick Navi-ReaderTM supports on-the-spot diagnosis through two modes. With “Suguyomitori mode”(with evaluations made in five seconds), results are displayed with insertion of the test device after theevaluation time has elapsed. With the “Jidouyomitori mode”, the test device is inserted immediately after
adding sample droplets, and evaluations are made automatically at one-minute intervals with results displayedwhen the positive threshold value is exceeded.
DENKA SEIKEN already markets influenza, norovirus and other test reagents in its Quick-NaviTM Series. We
will further expand our line-up of infectious disease diagnostic products, supporting doctors on the front line.
Strategic investment in expanding the thermal-dissipation materials business for automakers
Leading the global market through major increases in production capacity
As a leading manufacturer of “silicon nitride ceramic substrates” and “spherical alumina,” the Company isworking to bolster production capacity through Group wide capital investment totaling around ¥8.0 billion, to
respond to rapidly growing global demand for thermal-dissipation materials, amid a move towards
electric-powered engines in the automotive industry.
Over some 30 years in the field of “silicon nitride ceramic substrates,” Denka has used products produced in
an integrated system that includes the manufacture of raw materials (silicon nitride powder) to garner highly
favorable customer reviews, by supplying aluminum nitride substrates and metal substrates, and also offeringsolutions that meet diverse needs.
These products boast superior thermal conductivity and heat-cycle reliability. In recent years, they havebecome sought after for use as insulation and thermal-dissipation components for motor-driving power
modules installed in eco-friendly vehicles. With this capital investment, Denka intends to introduce
cutting-edge front-end process automation, and thus increase its production capacity threefold (compared withthe 2018 level).

39

We also boast the top market share in the field of “spherical alumina,” where thanks to products that leverage
our proprietary fusing technologies, we already have an unassailable leading position in the market. Needs oflithium-ion batteries for eco-friendly vehicles and heat-resistant materials for all kinds of control mechanism
are increasing. Looking ahead, we expect demand to further expand as devices of all types grow morefunctionally sophisticated, and we are building additional production facilities at the Singapore subsidiary,
following on from the Omuta Plant, where the Group manufactures these products. In this way, we are
increasing production capacity fivefold compared with fiscal 2018, while also establishing business continuity
plans through dispersal of production bases, establishing a supply framework capable of meeting the demandsof the rapidly growing global market.
In the “Denka Value-Up” plan, the Company has designated environment and energy as a priority business.
We aim to contribute to sustainable global development by focusing on the spread of clean energy andenhancing energy efficiency, as set forth in the SDGs, through monozukuri (Japanese-style craftsmanship) in
the chemicals field.
Planned full-scale entry into the biostimulants market
As part of measures to accelerate the growth of the specialty businesses being promoted under the “Denka
Value-Up” plan, Denka has decided to make a full-scale entry into the biostimulants market.
Biostimulants are defined as “substances and microorganisms that positively affect the sound growth of plants
and help enhance their quality in terms of such properties as resilience against stress and the volume of crop
yields.” *1 While biostimulants “enhance the intrinsic properties of targeted plants,” they are also designed tohelp plants better adapt to and thrive in the various “environments surrounding them.” High expectations havebeen placed in biostimulants as a way of resolving social issues such as the tightening supply of agricultural
products due to population growth, and worsening damage to farm products due to global warming andclimate change. The global biostimulants market was valued at approximately US$2.2 billion in 2018 and is
expected to be worth approximately US$3.3 billion in 2022, with an annual average growth rate estimated at
10.4%. *2
For over 50 years, the Company has been marketing AZUMIN humic acid fertilizer, considered biostimulant.
AZUMIN is a product that not only improves soil quality, but can have a highly beneficial effect in improving
plant growth even in difficult environments, and therefore is expected to contribute to the promotion ofsustainable farming and the creation of farmland that is resilient to climate change and natural disasters, andhas been highly praised by many agricultural producers.
With this full-scale entry into the biostimulants market, we are focusing on making our products morefunctionally sophisticated and developing new products through open innovation, taking advantage of thetechnological assets we have accumulated over many years. At the same time, we will utilize the Denka
Group’s overseas network to expand sales and consider opportunities for alliances with biostimulant makers
outside Japan. Denka will continue to support the expansion of global agricultural production, as we
contribute to achieving the SDGs, a concern of all humanity.
*1 Source: Japan Biostimulant Association website (partially revised)*2 Source: MarketsandMarkets 2017
Measures to reduce ocean plastics
Recently there has been rising international concern, widely addressed in mass media such as newspapers,
magazines and online, about the problem of plastics dumped in ocean waters.
Specific regulations have begun to come into force, including the European Union's passing of a ban on theuse of single-use disposable plastic products (effective 2021), and, in Asian countries, introduction of charges
for plastic bags issued in shops, and restrictions on their use. In addition, the “Ocean Plastics Charter” wasannounced at the 2018 G7 summit in Charlevoix, and momentum is building for an agreement on stepping up
the 3R (reduce, reuse, recycle) approach to disposable plastics under the “Ocean Plastics Charter” atinternational conferences, etc. such as the G20 summit scheduled to be held in June 2019.

40

Denka has long been committed to the recycling of resources, such as waste plastic at its cement plants. In
measures to recycle materials for raw materials and fuel for cement production in fiscal 2017, we received
approximately 850,000 tons of waste plastics, shredder dust from vehicle dismantling, sludge and sewage
slurry, left-over construction soil, factory byproducts, etc. This outstanding environmental technology thatutilizes waste materials, which would formerly have been disposed of in landfills, as resources will play asignificant role in contributing to the prevention of waste creation and promoting recycling, as set forth in theSDGs.
At the same time, as a company that manufactures and sells plastic products, in September 2018 Denka
participated in a conference established by 22 companies including Denka to deal with the ocean plastics issue.
At the conference, participants engaged in activities to raise awareness of the 3R campaign among countries
and regions that create a large amount of waste plastic.
Furthermore, as initiatives focused on product development, we have launched sales of styrene plastic sheetsthat reduce plastic use by approximately 35% compared with traditional A-PET containers, and developed
environment-friendly materials with a content of at least 25% of the biomass plastic based on plant oil, as partof efforts to provide environmentally-friendly food packaging containers.
New environment-friendly product of a Group company DENKA Polymer“CLEALEADTM,” a food container that uses a high-strength BOPS (biaxially oriented polystyrene sheet). The
new container is 35% lighter than one made with traditional A-PET (amorphous polyethylene terephthalate).
Food container that uses “PLAPSTM,” the bioplastic using materials combining polylactic acid, a plastic
material derived from starch and other plant products, and polystyrene.
More information on Denka’s SDG initiatives is provided in our “Denka Report.”
Our “Denka Report” has been issued as an integrated report since the “Denka Report 2018” in September
2018, providing a comprehensive overview of corporate information to stakeholders, including shareholders
and investors, with a focus on the creation of value over the medium- to long-term from the perspective of
ESG-oriented management.
The full text (PDF) of the Denka Report can be found on Denka’s website(https://www.denka.co.jp/sustainability/report), where there is also information on environmental performanceand other CSR and ESG-related data.
Printed copies of the report may also be requested from the above website.

41

(Reference)
News Check
Topics for the period under review
Please see the News Release Topics section of our website for other information and news
Group reorganization to achieve the “Denka Value-Up” plan goals
As part of measures to achieve the goals of the “Denka Value-Up” management plan launched in April 2018,
the Board of Directors of Denka on March 11, 2019 passed a resolution to proceed on April 1, 2020 with areorganization of the Group by the mergers of DENKA SEIKEN Co., Ltd. with Denka, with the aim ofstrengthening the healthcare business and Akros Trading Co., Ltd. with YK Inoas Co., Ltd., optimizing theGroup’s trading house activities.
Strengthening the healthcare business: Merger of Denka and DENKA SEIKENIn the healthcare business, the Denka Group engages in the vaccine and diagnostic reagent business through
DENKA SEIKEN Co., Ltd., while Denka develops norovirus vaccines using proprietary plant-based genemodification technologies held by the macromolecular sodium hyaluronate preparation business and
IconGenetics GmbH, a Germany-based subsidiary, and operates other development businesses including
cancer gene alteration analysis and remedy information services.
In the “Denka Value-Up” plan, healthcare has been designated as a priority area. To further strengthen andexpand this business, we aim to generate the following four benefits by integrating the separate healthcare
operations of the two companies:(1) Accelerate the expansion of our specialty businesses, a “Denka Value-Up” growth strategy
By integrating the comprehensive strengths of the Denka Group, we will accelerate the expansion anddevelopment of our specialty businesses.
(2) Strengthen governance
We will further strengthen governance through integration of our healthcare businesses, to respond
appropriately to risks specific to this business.
(3) Accelerate decision-making
Based on the Denka Group corporate philosophy and business strategy, we will speed up decision-making forlarge-scale investments in the healthcare sector, which is expected to grow in the future.
(4) Synergies in HR and organizational structures
Through the integration, we plan to further step up personnel exchanges and strengthen our organizational
structure.
Optimizing Group trading house activities
Merger of consolidated subsidiaries Akros Trading and YK Inoas
Akros Trading Co., Ltd. and YK Inoas Co., Ltd. are consolidated subsidiary trading companies handling all
kinds of chemical products, mainly those traded among businesses within the Group, for the Denka Group.
On April 1, 2020, an integration of our two trading houses on equal terms will be carried out.
Through this merger, the Company aims to make effective use of the management resources of bothcompanies and streamline their businesses, as well as strengthen the Company's sales capabilities in Japan andoverseas by maximizing marketing synergies for electronic materials and special cement additives and otherproducts. This will further raise standards of service to our premium customers, and contribute to goal
achievement in the “Denka Value-Up” management plan.

42

(5)

Financial Position and Results of Operations
Item

157th term(Millions of yen, unless otherwise stated)
158th term
159th term
160th term(from April 1, 2015 to (from April 1, 2016 to (from April 1, 2017 to (from April 1, 2018 toMarch 31, 2016)
March 31, 2017)
March 31, 2018)
March 31, 2019)

369,853
362,647
395,629
413,128
Net sales
30,63425,84433,652
34,228Operating income
27,022
23,15831,49932,811
Ordinary income
Profit attributable to19,472
18,14523,03525,046owners of parent
Net income per share
214.71205.05261.80286.18(yen)
443,864
454,944473,799483,827
Total assets
216,071
227,487242,780
250,481
Total net assets
Net assets per share
2,366.74
2,526.42
2,727.94
2,839.16(yen)
Total shareholders’
47.7
49.1
50.5
51.0
equity ratio (%)
Return on equity
9.3
8.3
10.0
10.3
(ROE) (%)
Total dividends paid
5,836
6,194
9,206
10,479Dividends per share
65.00
70.00
105.00120.00(yen)
Notes: 1. The Company conducted a consolidation of shares at a ratio of five shares to one sharewith an effective date of October 1, 2017. As a result, net income per share, net assets
per share and dividends per share in the above chart are provided assuming that theshare consolidation had been conducted at the beginning of the 157th term.
2. Net income per share is calculated using the average number of shares issued andoutstanding excluding treasury stock. Net assets per share are calculated using thenumber of shares issued and outstanding at the end of the fiscal year excluding
treasury stock.
3. For total dividends paid and dividends per share for the 160th term, the sum of theinterim dividend paid in December 2018 and the dividend proposed for resolution at
this Ordinary General Meeting of Shareholders is indicated.
4. Details of assets and profit/loss in the 159th term are subject to retroactive applicationof the partial amendment of Accounting Standards for Tax Effect Accounting(Corporate Accounting Standard No. 28, February 16, 2018) from the beginning of the160th term, and are for indicative purposes.

43(6) Significant Subsidiaries (as of March 31, 2019)1) Significant subsidiaries
Company name

CapitalDenka Singapore Pte., Ltd.

SGD 69,410 thousand

Denka Chemicals Holdings
Asia Pacific Pte., Ltd.
Denka Performance
Elastomer LLC

USD 68,700 thousand
USD 62,000 thousand

Hinode Kagaku Kogyo

JPY 300 million

Nishi-nihon Koatsu Gas Co.,Ltd.

JPY 80 million

Denka RENOTEC Co., Ltd.

JPY 50 million

Denka Azumin Co., Ltd.

JPY 300 million

Denka Inorganic Materials
Tianjin Co., Ltd.
Denka Infrastructure
Technologies Shanghai Co.,Ltd.
Denka Infrastructure
Malaysia Sdn Bhd.
Denka Construction Solutions
Malaysia Sdn Bhd.

JPY 250 million
JPY 210 million
MYR 7,151 thousand
MYR 1,500 thousand

PT. Hissan Trading Indonesia

USD 300 thousand

Denka Advantech Pte., Ltd.

SGD 17,000 thousand

Denal Silane Co., Ltd.

JPY 500 million

Denka Advanced Materials(Suzhou) Co., Ltd.

CNY 55,440 thousand

Denka Electronic Materials
Dalian Co., Ltd.

JPY 1,000 million

Denka Advanced Materials
Vietnam Co., Ltd.

USD 12,000 thousand

DENKA Polymer Co., Ltd.

JPY 2,080 million

Nakagawa Techno IndustrialCo., Ltd.

JPY 50 million

DENKA SEIKEN Co., Ltd.

JPY 1,000 million
44

The
Company’s
percentage ofequityparticipation

Principal business

Manufacturing and sales of
100.0
acetylene black and functional(100.0)polystyrene resin products
Regional headquarters for
100.0
Southeast and South Asia
70.0 Manufacturing and sales of(70.0) synthetic rubbers
Manufacturing and sales of
100.0 fertilizers and chemical
products
Manufacturing and sales of
93.3
high-pressure gas
Repair, design, engineering
100.0 and management work forconcrete structures
Manufacturing and sales of
100.0 fertilizers and agricultural
materials
Manufacturing and sales of
100.0
special cement additives
Business headquarters for100.0 special cement additives in
China
100.0 Manufacturing and sales of(100.0) construction chemicals
100.0 Manufacturing and sales of(100.0) construction chemicals
100.0 Sales of special cement(100.0) additives, etc.in Indonesia
Manufacturing and sales of
100.0
fused silica and synthetic fiber(100.0)for wigs and hairpieces
Manufacturing and sales of
51.0
monosilane gas, etc.
Manufacturing, processing,and sales of electronic
100.0
packaging materials and foodpackaging materials, etc.
Processing and sales of
100.0
electronic materials
Manufacturing and sales of
100.0
electronic packaging materials(100.0)and vinyl tapes
Manufacturing and sales of
100.0 various packaging materials
and plastic containers
Manufacturing, processing,
100.0
and sales of metal rain gutters
Manufacturing and sales of
100.0 vaccines and clinicaldiagnostic reagents

Sales of raw materials forindustrial applications, civil
YK Inoas Co., Ltd.
JPY 100 million
100.0 engineering and construction
materials, and interiormaterials
Import, export and marketing
Denka Chemicals G.m.b.H
256,000 euros
100.0 of chemical and electronics
products
Design and engineering of
Denka Consultant &JPY 50 million
100.0 various industrial facilities,
Engineering Co., Ltd.
transportation facilities, etc.
Sales of inorganic industrial
Akros Trading Co., Ltd.
JPY 1,200 million
68.5 products, organic industrial
products, industrial resins, etc.
Akros Trading China Co.,
100.0 Sales of electronic packaging
USD 300 thousandLtd.
(100.0) materials, etc.
Sales of resins andAkros Trading Taiwan Co.,
100.0
TWD 29,000 thousandsemiconductor-related
Ltd.
(100.0)materials, etc.
Note:
The Company’s percentage of equity participation is calculated by dividing thenumber of shares held by the Company by the number of shares issued and outstanding.
The figure within parentheses indicates the percentage of indirect ownership by
subsidiaries.
2) Significant affiliates
Company nameToyo Styrene Co., Ltd.
Denak Co., Ltd.
Kurobegawa Power Plant

The
Company’s
percentage ofequityparticipation

CapitalPrincipal business

Manufacturing processing
50.0 sales of polystyrene resin andstyrene-based special resin.
Manufacturing and sales of
50.0
monochloroacetic acid50.0 Electric power supply

JPY 5,000 million
JPY 600 million
JPY 3,000 million(7) Principal Business Details (as of March 31, 2019)
The Company manufactures and sells the following products.
Business division

Main products

Elastomers & Performance
Plastics Division
Infrastructure & Social
Solutions Division
Electronics & Innovative
Products Division
Life Science &Environmental Products
DivisionLife Innovation Division
Others Division

Chloroprene rubber, styrene monomer, polystyrene resin, ABS resin,
CLEAREN, heat-resistant resin, transparent resin, POVAL, etc.
Cement, special cement additives, fertilizers, calcium carbide, fire
resistant materials, environmental materials, etc.
Fused silica, electronic circuit substrates, fine ceramics, electronic
packaging materials, acetylene black, etc.
Food packaging materials, housing materials, life science and industrial
materials, etc.
Joint function improvers, Vaccines, diagnostic reagents, etc.
Plant engineering etc.

45

(8)

Principal Offices and Factories (as of March 31, 2019)
Company namePrincipal offices
Head Office:1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku,
TokyoBranches: Osaka, Nagoya, Fukuoka, Niigata, Hokuriku (Toyama),
Sapporo, Tohoku (Sendai)
Plants:Omi (Itoigawa, Niigata Prefecture), Omuta, Chiba(Ichihara, Chiba Prefecture), Shibukawa, Ofuna(Kamakura, Kanagawa Prefecture), Isesaki
Denka Co., Ltd.
Research Institutes: Denka Innovation Center (Advanced Technologies
Research Institute, Life Innovation ResearchInstitute, Infrastructure & Solutions Development
Research Institute) (Machida, Tokyo)
Polymer & Processing Technology Institute(Ichihara, Chiba Prefecture)
Denka Singapore Pte., Ltd. Head Office and Plants: Singapore
Denka Chemical Holdings
Head Office: Singapore
Asia Pacific Pte., Ltd.
Denka Performance
Head Office and Plant: Louisiana, United States
Elastomer LLC
Hinode Kagaku Kogyo
Head Office and Plant: Maizuru, Kyoto Prefecture
Nishi-nihon Koatsu Gas
Head Office: Fukuoka, Fukuoka PrefectureCo., Ltd.
Denka RENOTEC Co.,
Head Office: Chuo-ku, TokyoLtd.
Denka Azumin Co., Ltd.
Head Office and Plant: Hanamaki, Iwate Prefecture
Denka Inorganic Materials
Head Office and Plant: Tianjin, China
Tianjin Co., Ltd.
Denka Infrastructure
Technologies Shanghai
Head Office: Shanghai, China
Co., Ltd.
Denka Infrastructure
Head Office and Plant: Selangor, Malaysia
Malaysia Sdn Bhd.
Denka Construction
Solutions Malaysia Sdn
Head Office and Plant: Selangor, Malaysia
Bhd.
PT. Hissan Trading
Head Office: Jakarta, Indonesia
Indonesia
Denka Advantech Pte., Ltd. Head Office and Plant: Singapore
Denal Silane Co., Ltd.
Head Office: Chuo-ku, Tokyo
Denka Advanced Materials
Head Office and Plant: Suzhou, Jiangsu, China(Suzhou) Co., Ltd.
Denka Electronic Materials
Head Office and Plant: Dalian, Liaoning, China
Dalian Co., Ltd.
Denka Advanced Materials
Head Office and Plant: Hung Yen, Vietnam
Vietnam Co., Ltd.
Head Office: Koto-ku, Tokyo
DENKA Polymer Co., Ltd. Plants: Sakura, Katori (Tako-machi, Chiba Prefecture), Goi (Ichihara,
Chiba Prefecture)
Nakagawa Techno
Head Office and Plant: Kasai, Hyogo Prefecture
Industrial Co., Ltd.
Head Office: Chuo-ku, Tokyo
DENKA SEIKEN Co., Ltd.
Plant: Gosen, Niigata Prefecture
YK Inoas Co., Ltd.
Head Office: Bunkyo-ku, Tokyo
Denka Chemicals G.m.b.H Head Office: Düsseldorf, Germany
Denka Consultant &Head Office: Chuo-ku, Tokyo
Engineering Co., Ltd.
Akros Trading Co., Ltd.
Head Office: Minato-ku, Tokyo
46

Akros Trading China Co.,Ltd.
Akros Trading Taiwan Co.,Ltd.

Head Office: Shanghai, China
Head Office: Hsin-Chu, Taiwan(9) Employees (as of March 31, 2019)1) The Group
Number of employees
Business segment
1,007
[96]
Elastomers & Performance Plastics Division
Infrastructure & Social Solutions Division
1,015
[126]
Electronics & Innovative Products Division
1,106
[107]
Life Science & Environmental Products Division
1,043
[177]
Life Innovation Division
882
[277]
Others Division
712
[185]
Corporate (common)
368
[ 58]
Total
6,133 [1,026]
Notes: 1. The number of employees indicated is the number of full-time employees and theannual average number of temporary employees is indicated in brackets.
2. The number of employees indicated for “Corporate (common)” is the number of
employees who belong to administrative divisions that cannot be classified into a
specific business.
2) The Company
Increase (Decrease)from the previous
Average age
Average service years
fiscal year-end
3,250 [515]+239 [-153]
40.6
17.1
Note:
The number of employees indicated is the number of full-time employees and theannual average number of temporary employees is indicated in the brackets.
Number of employees(10) Principal Lenders (as of March 31, 2019)
LenderOutstanding borrowings (Millions of yen)
25,000Syndicated loan
17,634
Mizuho Bank, Ltd.
12,442
M&A loans
5,895
The Norinchukin Bank
5,498
Sumitomo Mitsui Banking Corporation
Notes: 1. The syndicated loan is managed by Mizuho Bank, Ltd., Sumitomo Mitsui Banking
Corporation, and the Development Bank of Japan Inc. and is co-financed.
2. M&A loans refers to an overseas M&A support loan system maintained by the Japan
Bank for International Cooperation in cooperation with private banks.
(11) Other Significant Matters concerning the Group’s Current Situation
Not applicable47

2. Status of Shares (as of March 31, 2019)(1) Total Number of Authorized Shares

290,000,000 shares(2) Shares of Common Stock Issued

88,555,840 shares(including 1,571,282 shares of treasury stock)(3) Number of Shareholders

26,821(4) Major Shareholders
Number of shares
held(hundred shares)
103,461
78,104

Shareholder name

Percentage ofshares held
(%)
11.89
8.98

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Service Bank, Ltd. (Trust Account)
Trust & Custody Services Bank, Ltd.
(Mizuho Corporate Bank, Ltd. Retirement Benefit Trust
32,1583.70
Account re-entrusted by Mizuho Trust and Banking Co.,Ltd.)
National Mutual Insurance Federation of Agricultural
29,007
3.33
Cooperatives
MITSUI LIFE INSURANCE, CO., LIMITED
23,816
2.74
STATE STREET BANK AND TRUST COMPANY
17,0501.96505001
Japan Trustee Service Bank, Ltd. (Trust Account 5)
15,092
1.74
Mitsui Sumitomo Insurance Company, Limited
13,832
1.59
SSBTC CLIENT OMNIBUS ACCOUNT
13,819
1.59
JP MORGAN CHASE BANK 385151
13,766
1.58
Notes: 1. 1,571,282 shares of treasure stock have been excluded from the above list of major
shareholders.
2. Treasury stock is excluded for calculation of the percentage of shares held.
3. MITSUI LIFE INSURANCE, CO., LIMITED changed its trade name to TAIJU LIFE
INSURANCE COMPANY LIMITED on April 1, 2019.
(5) Other Significant Matters concerning Shares
Not applicable.

3. Matters concerning the Company’s Stock Acquisition Rights (as of March 31, 2019)
Not applicable48

4. Company Officers(1)

Directors and Audit & Supervisory Board Members (as of March 31, 2019)
Name

Position

Shinsuke Yoshitaka

Chairman, Boardof Directors

Manabu Yamamoto

President

Mitsukuni Ayabe

Director

Norihiro Shimizu

Director

Kenji Nakano

Director

Yasuo Sato
Akio Yamamoto
Tatsutsugu Fujihara
Shohei Tamaki
Masanori
Sakamoto
Tsunehiro Sasanami

Director(Outside Director)
Director(Outside Director)
Director(Outside Director)
Audit &
Supervisory
Board Member
Audit &
Supervisory
Board Member
Outside Audit &Supervisory
Board Member

Responsibilities and significant concurrent positions
Outside Director of Koatsu Gas Kogyo Co., Ltd.
President and Chief Executive Officer
Outside Audit & Supervisory Board Member of Koatsu
Gas Kogyo Co., Ltd.
Executive Vice President and Chief Operating Officer
Supervisor, Life Innovation
President and Representative Director of DENKA
SEIKEN Co., Ltd.
Managing Executive Officer
Chief Scientific Officer (CSO)
Chief R&D Officer
In charge of New Business Planning &Development
Dept., R&D Promoting Dept., Intellectual Property
Dept.
Managing Executive Officer
Supervisor, Infrastructure & Social Solutions
Chief Compliance Officer
In charge of Secretary Dept., Internal Auditing Dept.,
Administrative Dept., Legal Dept., HR Dept.
Chairman and Director of Wisemech Corporation

Lawyer, Sasanami Law Office

Representative Director of Global Professional Partners
Outside Audit & Supervisory Board Member of
Outside Audit &Panasonic Corporation
Toshio Kinoshita
Supervisory
Outside Director of Mizuho Bank, Ltd.
Board Member
Outside Director of TACHI-S CO., LTD.
Outside Director of ThreePro Group Inc.
Notes: 1. Directors Mr. Yasuo Sato, Mr. Akio Yamamoto, and Mr. Tatsutsugu Fujihara areoutside directors as stipulated in Article 2, Item 15 of the Companies Act.
2. Audit & Supervisory Board Members Mr. Tsunehiro Sasanami and Mr. Toshio
Kinoshita are outside auditors as stipulated in Article 2, Item 16 of the Companies Act.
3. Director Mr. Tatsutsugu Fujihara retired as Chairman and Executive Officer of KSO
Corporation in June 2018.
4. Audit & Supervisory Board Member Mr. Toshio Kinoshita is a certified public
accountant, and has an adequate level of knowledge regarding finance and accounting.
5. Audit & Supervisory Board Member Mr. Toshio Kinoshita retired as Outside
Corporate Auditor of Weathernews Inc. in August 2018, and in December 2018 asoutside Director of ASATSU-DK Inc.

49

6. The Company designated Directors Mr. Yasuo Sato, Mr. Akio Yamamoto, and Mr.
Tatsutsugu Fujihara and Audit & Supervisory Board Members Mr. Tsunehiro Sasanami
and Mr. Toshio Kinoshita as independent directors/auditors as defined by Tokyo Stock
Exchange, Inc. and notified it of the designation.
(Reference)
Executive Officers (as of April 1, 2019)
Position
President and Chief
Executive Officer
Executive Vice
President and Chief
Operating Officer
Senior Managing
Executive Officer
Managing Executive
Officer

Executive Officer

Name

Responsibilities

Manabu Yamamoto
Supervisor, Life Innovation
President and Representative Director of DENKA
SEIKEN Co., Ltd.
Chief Scientific Officer (CSO)
Chief R&D Officer
Norihiro Shimizu In charge of New Business Planning &Development
Dept., R&D Promoting Dept., Intellectual Property
Dept.
Chief Technical Officer (CTO)
In charge of Purchasing Dept., Logistics Dept., Electric
Masaharu Suzuki
Power Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
Tetsuya Shinmura General Manager, Omi Plant
In charge of Corporate Planning Dept., Investor
Relations Dept., CSR & Corporate Communications
Toshio Imai
Dept., Automotive Materials & Solutions Dept., Denka
Corporation, Denka Chemicals GmbH
General Manager, Denka Value-Up Promotion Dept.
Supervisor of Environmental Measures Promotion
Hideki Hirano
In charge of Internal Auditing Dept., Environment and
Safety Dept., Quality Assurance Dept.
Hideki Watanabe General Manager, Chiba Plant
Koki Tabuchi
General Manager, Elastomers & Performance Plastics
General Manager, Infrastructure & Social Solutions
Toyoki Yokoyama President and Representative Director of Denka
RENOTEC Co., Ltd.
Shojiro Watanabe General Manager, Omuta Plant
Assistant to Chief R&D Officer
In charge of Innovation Center
Nobuyuki Yoshino
General Manager, Advanced Technologies ResearchInstituteKazuya Tokumoto Managing Director, DCHA, DSPL, and DAPL
General Manager, Life Innovation
Hideki Takahashi
General Manager, Medical Science Dept.
Kazuo Takahashi President of Denka Performance Elastomer LLC
Rimiru Hayashida General Manager, Accounting & Finance Dept.
General Manager, Life Science & Environment
Jinichi Osuga
Products
Yoshimi Ishizuka General Manager, Shibukawa Plant
In charge of HR Dept., Legal Dept., Secretary Dept.
Kiyoshi Asami
General Manager, Administrative Dept.
Ikuo Ishida
General Manager, Electronics & Innovative Products
Mitsukuni Ayabe

Notes: DCHA: Denka Chemicals Holdings Asia Pacific Pte., Ltd.
DSPL: Denka Singapore Pte., Ltd.
DAPL: Denka Advantech Pte., Ltd.

50

(2) Summary of Liability Limitation Agreements
Based on Article 427, Paragraph 1 of the Companies Act, the Company currently concludes liability
limitation contracts with Directors Mr. Yasuo Sato, and Mr. Akio Yamamoto, and Mr. Tatsutsugu Fujihara
and Audit & Supervisory Board Members Mr. Tsunehiro Sasanami and Mr. Toshio Kinoshita that limit
their liability for damages of Article 423, Paragraph 1 of said Act. The limit of liability under thecontract is set to a predefined amount of ¥5 million or more or the amount stipulated by laws andregulations, whichever is higher.
(3) Remuneration for and Other Payments to Directors and Audit & Supervisory Board Members

Category

Numberofpersons

Amount of
remuneration,
etc.
(Millions ofyen)

Breakdown
Cash remuneration
Performance-linked
Basic remuneration
remuneration
Number
Total
Total
Numberof(Millions(Millionsofpersons
personsof yen)of yen)Stockremuneration
Numberofpersons

Total(Millionsof yen)Directors(of which
8
377
8
307
5
44
5
25
Outside
(3)
(36)
(3)
(36)
(-)
(-)
(-)
(-)
Directors)
Audit &
Supervisory
Board
Members(of which
479
479
Outside
(2)
(24)
(2)
(24)
(-)
(-)
(-)
(-)
Audit &
Supervisory
Board
Members)
Total(of which
12
456
12
386
5
44
5
25
outside
(5)
(60)
(5)
(60)
(-)
(-)
(-)
(-)
officers)
Notes: 1. The maximum amount of cash compensation remuneration for Directors is ¥500
million per year (of which the maximum amount of remuneration for Outside Directors
is ¥50 million, excluding the portions of their salaries as employees) as resolved at the158th Ordinary General Meeting of Shareholders held on June 22, 2017.
2. The maximum amount of remuneration for Audit & Supervisory Board Members is¥13 million per month as resolved at the 147th Ordinary General Meeting of
Shareholders held on June 29, 2006.
3. The total amount of stock remuneration is the amount of expenses recorded for the
fiscal year under review for the stock remuneration plan that allots shares of theCompany (a stock remuneration plan wherein a trust established by the Company
makes acquisitions using funds contributed by the Company, and shares of theCompany and cash equivalent to the disposal conversion amount of the Company’s
shares are allotted to Directors (excluding Outside Directors) through said trust).

51

(4) Outside Officers
1) Significant concurrent positions as business executors at other companies, etc. and therelationship between the Company and such companies, etc.
Director Mr. Yasuo Sato is Chairman and Director of Wisemech Corporation. There are no
significant transactions between the Company and Wisemech Corporation.
Director Mr. Tatsutsugu Fujihara served as Chairman and Executive Officer of KSO
Corporation until June 2018. There are no significant transaction relations between the Company
and KSO Corporation.
Audit & Supervisory Board Member Mr. Tsunehiro Sasanami is a lawyer with Sasanami Law
Office. There are no significant transactions between the Company and Sasanami Law Office.
Audit & Supervisory Board Member Mr. Toshio Kinoshita is Representative Director of
GlobalProfessional Partners. There are no significant transactions between the Company andGlobalProfessional Partners.
2) Significant concurrent positions as outside officers etc. at other companies, etc. and therelationship between the Company and such companies, etc.
Audit & Supervisory Board Member Mr. Toshio Kinoshita is Outside Audit & Supervisory
Board Member of Panasonic Corporation and Outside Director of Mizuho Bank, Ltd., Outside
Director of TACHI-S CO., LTD., and Outside Director of ThreePro Group Inc.
He also served as Outside Corporate Auditor at Weathernews Inc. until August 2018, and until
December 2018 as Outside Director at ASATSU-DK Inc.
There are no significant transactions between the Company and TACHI-S CO., LTD., ThreePro
Group Inc., Weathernews Inc., and ASATSU-DK Inc.
The Company has transactions with Panasonic Corporation and Mizuho Bank, Ltd., but there
are no special interest relationships.
3) Relationship with specified related parties such as major customers
Not applicable4) Principal activities in the fiscal year ended March 31, 2019i. Outside Directors[Board of Directors meetings]
The Board of Directors met 13 times in the fiscal year ended March 31, 2019. Mr. Yasuo Sato, Mr.
Akio Yamamoto and Mr. Tatsutsugu Fujihara attended all 13 meetings of the Board of Directors(attendance rate: 100%). Mr. Yasuo Sato and Mr. Akio Yamamoto, based on their rich experience andwide views as managers and rich international experience serving as persons responsible for businessat global companies, and Mr. Tatsutsugu Fujihara, based on his rich experience and wide views as amanager, and expert knowledge of corporate finance, actively made inquiries and recommendations on
the Denka Group’s corporate management in the medium-to-long term, including business strategies
and fund management systems, etc., as well as overseas subsidiaries. They also received briefings on
the business, and asked questions and stated opinions to Directors etc., as necessary, from external
viewpoints.
ii. Outside Audit & Supervisory Board Members[Board of Directors meetings]
The Board of Directors met 13 times in the fiscal year ended March 31, 2019. Mr. Tsunehiro
Sasanami and Mr. Toshio Kinoshita attended all 13 meetings of the Board of Directors (attendance
rate: 100%). Mr. Sasanami, based on his rich experience and expert knowledge as a lawyer, and Mr.
Kinoshita, based on his experience and rich accounting knowledge as a certified public accountant inJapan and the US, proactively asked questions and made recommendations from an accounting
perspective on business development contractual terms and business planning. They also received
briefings on the business and asked questions and stated opinions to Directors, etc., as necessary, fromexternal viewpoints.
[Audit & Supervisory Board meetings]
The Audit & Supervisory Board met 15 times in the fiscal year ended March 31, 2019. Mr.
Tsunehiro Sasanami and Mr. Toshio Kinoshita attended all 15 meetings of the Audit & Supervisory
Board (attendance rate: 100%). They also attended the Board of Directors meetings and otherimportant meetings. In addition, they reviewed important minutes, authorization documents, etc.,
investigated the Company’s divisions and departments, business sites and subsidiaries, and received
52

briefings on the status of business execution at periodic divisional report meetings. They reported theresults of these activities to the Audit & Supervisory Board and had necessary discussions with other
Audit & Supervisory Board Members.
Board of Directors meetings
Director
Yasuo Sato
Director
Akio Yamamoto
Director
Tatsutsugu Fujihara
Audit & Supervisory Board Member
Tsunehiro Sasanami
Audit & Supervisory Board Member
Toshio Kinoshita

Audit & Supervisory Board
meetings
Attendance Attendance rate

Attendance

Attendance rate

13/13

100%

-

-

13/13

100%

-

-

13/13

100%

-

-

13/13

100%

15/15

100%

13/13

100%

15/15

100%

53

5. Accounting Auditor(1)

Accounting Auditor’s Name
Ernst & Young ShinNihon LLC(2)Accounting Auditor’s Remuneration, etc. for the Fiscal Year Ended March 31, 2019
Amount paid (thousands of yen)
Remuneration, etc. for the Accounting Auditor for the fiscal
78,000year ended March 31, 2019
Monetary or property benefits to be paid by the Company
121,970
and its subsidiaries to the Accounting Auditor
Notes: 1. Under the audit agreement between the Company and its Accounting Auditor,
remuneration for audits based on the Companies Act and that for audits based on the
Financial Instruments and Exchange Act are not strictly distinguished and they cannot
be substantially distinguished. Consequently, the sum of the amounts of these
remunerations is stated as the amount of remuneration, etc. for the Accounting Auditor
for the fiscal year ended March 31, 2019.
2. The Audit and Supervisory Board of the Company, in observance of the “Practical
Guidelines for Cooperation with Accounting Auditors” published by the Japan Audit &Supervisory Board Members Association, has confirmed the time taken to audit each
audit item compared to audit plans for previous fiscal years and comparisons withamounts for other companies as disclosed for the fiscal year ended March 31, 2018,
and agrees to the fees, etc., of the Accounting Auditor under Article 399, Item 1 of theCompanies Act.
3. Financial statements (including corresponding statements) of some of the Company’s
significant subsidiaries are audited (subject to regulations of the Companies Act andthe Financial Instruments and Exchange Act; including corresponding laws andregulations overseas) by Certified Public Accountants or Audit Corporations(including persons with qualifications that correspond to these qualifications overseas)other than the Company’s Accounting Auditor.

(3)

Non-audit Services
The Company pays fees to Ernst & Young ShinNihon LLC mainly for work in the creation of
comfort letters associated with the issuance of corporate bonds.

(4)

Policy for Determination of Dismissal or Non-reappointment of the Accounting Auditor
If the Audit & Supervisory Board considers that it has become difficult for the Accounting Auditor
to perform its duties appropriately or otherwise considers it necessary, the Audit & Supervisory Board
will make a resolution for dismissal or non-reappointment of the Accounting Auditor, and the Board of
Directors will submit a proposal to the General Meeting of Shareholders based on this resolution.
If the Accounting Auditor is deemed to fall under any item of Article 340, Paragraph 1 of theCompanies Act, the Audit & Supervisory Board will dismiss the Accounting Auditor upon consent of all
the Audit & Supervisory Board Members.

(5)

Disposition of Suspension of Business of the Accounting Auditor during the Past Two Years
Not applicable(6)

Outline of the Limited Liability Contracts
Not applicable54

Consolidated Financial Statements
Consolidated Balance Sheet(As of March 31, 2019)

Account item
(Assets)
Current assets
Cash and deposits
Notes and accounts
receivable-trade
Merchandise andfinished goods
Work in process
Raw materials andsupplies
Other
Allowance for
doubtful accounts

Noncurrent assets
Property, plant andequipment
Buildings
Structures
Machinery andequipment
VehiclesTools, furniture andfixturesLand
Lease assets
Construction inprogress
Intangible assets
Software
Goodwill
Right of using patent
Investments and otherassets(Reference)
159th term
473,799
184,129

160th term

Account item

483,827
190,730(Liabilities)
Current liabilities
Notes and accounts
payable-trade

14,115

13,902

95,583

95,780

Short-term loans payable

43,76147,455

Commercial papers

3,669

4,389

18,870(Millions of yen)
(Reference)160th term
159th term
231,019
233,346
158,043
154,047
53,62552,924

41,10043,101-

2,000

Current portion of
long-term loans payable

634

5,062

19,911

Current portion of bonds

15,000

5,000

8,595

9,802

Accounts payable-other

14,67718,504

(466)

(511)

Income taxes payable

5,855

3,010

1,081

487

289,670

293,097

Accrued consumption
taxes
Accrued expenses
Provision for bonuses
Other
Noncurrent liabilities

10,746
3,002
12,321
72,975

10,881
3,122
9,953
79,298

209,761

218,677

12,00022,00039,424
22,11140,497
21,89539,535
5,318

34,9694,961

66,94770,359

8,403

8,403

488

796

6,002

7,269

3,249

3,820

63,323248

Bonds payable18

44

63,366307

Long-term loans payable
Deferred tax liabilities
Deferred tax liabilities forland revaluation
Net defined benefit
liability
Provision for stock
benefits
Other(Net assets)

1,696
242,780

1,650
250,481

13,96817,634

Shareholders’ equity

212,479

225,498

13,880
1,148
9,315
3,417

12,415
978
8,312
3,124

36,99849,391
129,278(3,189)36,99849,353
144,638(5,492)

66,02762,004

Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated othercomprehensive income

26,584

21,36255

Investment securities

58,17855,028

552

236

2,122

1,699

Deferred tax assets

2,534

2,736

Other

2,779

2,422

Long-term loans
receivable
Long-term prepaid
expenses

Valuation difference on
available-for-salesecurities
Deferred gains or losses
on hedges
Revaluation reserve forland
Foreign currencytranslation adjustment
Remeasurements ofdefined benefit plans

17,44815,182

(195)

(345)

10,26010,260

1,241

(120)

(2,170)(3,614)

Allowance for
(139)
(118)
Non-controlling interests
3,717
3,620
doubtful accounts
Total
473,799483,827
Total
473,799483,827(Notes) 1. Amounts are rounded down to the nearest million yen.
2. Amounts of the Consolidated Balance Sheet in the 159th term are subject to retroactive applicationof the partial amendment of Accounting Standards for Tax Effect Accounting (Corporate AccountingStandard No. 28, February 16, 2018) from the beginning of the 160th term, and are for indicative
purposes.

56

Consolidated Statement of Income(From April 1, 2018 to March 31, 2019)(Millions of yen)
(Reference)
159th term
395,629

Account item
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income

160th term
413,128

295,583

310,839

100,046

102,289

66,39468,06033,652

34,228Non-operating income
Interest and dividend income

1,681

2,313

Equity in earnings of affiliates

1,105

1,384

Other

702

3,488

495

4,193

Non-operating expenses
Interest expenses

707

Other

4,933

Ordinary income

762
5,641

4,849

31,4995,611
32,811

Extraordinary income
Loss on sales of investment securities

-

-

689

689

Extraordinary loss
Loss on liquidation of business

1,928

Loss on disaster-

Income before income taxes

389
1,928

718

29,571

Income taxes-current

7,280

Income taxes-deferred(933)

ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent(Note) Amounts are rounded down to the nearest million yen.

57

1,108
32,392

6,480
6,347

978

7,459

23,22424,933

188(112)

23,03525,046

Non-consolidated Financial Statements
Non-consolidated Balance Sheet(As of March 31, 2019)

Account item
(Assets)
Current assets(Reference)
159th term
366,464
115,636

Cash and deposits

3,175

Notes receivable-trade

4,493

Accounts
receivable-trade59,233Merchandise andfinished goods

29,461

Raw materials andsupplies

11,189Prepaid expenses

1,152

Short-term loans
receivable

1,803

Other

5,134

Allowance for doubtful
accounts(7)160th term
371,751
120,635(Liabilities)
Current liabilities
Accounts
4,609
payable-trade
Short-term loans
3,971
payableCommercial
59,912
papersCurrent portion
31,822of long-termloans payable
Current portion
12,223of bonds
Accounts
1,319
payable-other
Income taxes
1,855
payableAccrued4,921
consumption
taxes
Accrued(1)
expenses
Deposits
received
Provision forbonuses
Other
Noncurrent
251,116
liabilities

Noncurrent assets

250,827

Property, plant andequipment

163,111

167,866

Buildings

26,874

28,100

Structures

19,404

19,370Machinery andequipment

43,911

46,622

346

672

Tools, furniture andfixtures

2,203

2,670

Land

60,45160,451

VehiclesAccount item

58

Bonds payable
Long-term loans
payableDeferred tax
liabilities
Deferred tax
liabilities forland
revaluation
Provision for
retirement
benefits
Provision forstock benefits
Asset retirement
obligations(Millions of yen)
(Reference)160th term
159th term
194,861
195,453
127,358
124,32133,92531,00527,67527,675

-

2,000

58

5,053

15,0005,000

13,054

16,265

3,940

783

883

106

6,581

6,909

23,84627,452

1,590

1,747

803

321

67,502

71,132

12,00022,00039,49534,442

5,676

5,346

8,403

8,403

972

68

18

44

127

128

Construction inprogress
Intangible assets

9,919

9,978

Other

1,001

830

Software610

529

Right of using patent
Investments and otherassets391

301(Net assets)
Shareholders’equityCapital stock

86,71482,419

Capital surplus

809

700

171,603

176,297

145,526

152,402

36,99836,99849,28449,284

Legal capital
49,28449,284surplus
Stocks of subsidiaries
Other capital
45,09145,09400
and affiliates
surplus
Long-term loans
Retained
2,101
1,879
62,424
71,610receivableearnings
Long-term prepaid
Other retained
1,413
1,178
62,424
71,610expensesearnings
Reserve foradvanced
Other investments
1,757
1,483
depreciation
3,823
3,804
of noncurrent
assetsRetained
Allowance for doubtful
earnings(1)(1)
58,60067,806accounts
brought
forwardTreasury stock(3,180)(5,492)
Valuation andtranslation
26,07623,895adjustments
Valuationdifference on
15,816
13,635available-forsale securities
Revaluation
reserve for
10,26010,260land
Total
366,464
371,751 Total
366,464
371,751(Notes) 1. Amounts are rounded down to the nearest million yen.
2. Amounts of the Non-consolidated Balance Sheet in the 159th term are subject to retroactive
application of the partial amendment of Accounting Standards for Tax Effect Accounting(Corporate Accounting Standard No. 28, February 16, 2018) from the beginning of the 160th term,
and are for indicative purposes.
Investment securities

36,35132,78359

Non-consolidated Statement of Income(From April 1, 2018 to March 31, 2019)(Millions of yen)
(Reference)
159th term
237,833

Account item
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income

160th term
243,735

172,167

178,540

65,66565,194

44,66145,94921,003

19,245Non-operating income
Interest and dividend income

5,255

Other

768

7,834
6,023

1,056

8,890

Non-operating expenses
Interest expenses

483

Other

3,840

Ordinary income

524
4,323

3,706

22,703

4,231
23,904Extraordinary income
Gain on sales of investment securities

-

-

689

689

Extraordinary loss
Loss on liquidation of business

1,928

Loss on disaster-

Income before income taxes

389
1,928

481

20,775

Income taxes-current

5,061

Income taxes-deferred(1,018)

Profit60

23,723
3,850

4,043
16,732(Note) Amounts are rounded down to the nearest million yen.

870

603

4,453
19,269Transcript of Accounting Auditor’s Audit Report on Consolidated Financial Statements
Independent Auditors’ Report(English Translation)
May 8, 2019
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Shigeyuki Honda
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
Certified Public Accountant
Designated and Engagement Partner

Pursuant to Article 444, Section 4of the Companies Act of Japan, we have audited the consolidated
financial statements, which consist of the consolidated balance sheet, the consolidated statement of income,the consolidated statement of changes in net assets, and the notes to consolidated financial statements of
Denka Co., Ltd. (hereinafter referred to as the “Company”) for the fiscal year from April 1, 2018 to March 31,
2019.
Management’s Responsibility for Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan. This responsibility includes designingand operating internal control, which management considers necessary for the preparation and fairpresentation of the consolidated financial statements that are free from material misstatements, whether due tofraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit as
independent auditors. We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected and applied depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. The purpose of the audit is not to express an opinion on the effectiveness of theentity’s internal control. However, in making those risk assessments, we consider internal control relevant to
the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of61

accounting policies used, the method of their application, and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and the results of operations of the Denka Group consisting of Denka Co., Ltd. and its
consolidated subsidiaries, applicable to the fiscal year ended March 31, 2019 in conformity with accounting
principles generally accepted in Japan.
Conflicts of Interest
Our firm and engagement partners have no interest in the Company which should be disclosed incompliance with the Certified Public Accountants Act of Japan.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

62

Transcript of Accounting Auditor’s Audit Report on Non-consolidated Financial Statements

Independent Auditors’ Report(English Translation)
May 8, 2019
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Shigeyuki Honda
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
Certified Public Accountant
Designated and Engagement Partner

Pursuant to Article 436, Section 2, Paragraph 1of the Companies Act of Japan, we have audited thenon-consolidated financial statements, which consist of the balance sheet, the statement of income, thestatement of changes in net assets, the notes to financial statements, and the accompanying supplementaryschedules thereof of Denka Co., Ltd. (hereinafter referred to as the “Company”) for the 160th term from April
1, 2018 to March 31, 2019.
Management’s Responsibility for Non-consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the non-consolidated financial
statements and the accompanying supplementary schedules in accordance with accounting principles
generally accepted in Japan. This responsibility includes designing and operating internal control, which
management considers necessary for the preparation and fair presentation of the non-consolidated financial
statements and the accompanying supplementary schedules that are free from material misstatements, whether
due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the non-consolidated financial statements and theaccompanying supplementary schedules based on our audit as independent auditors. We conducted our audit
in accordance with auditing standards generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the non-consolidated financial statements andthe accompanying supplementary schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
non-consolidated financial statements and the accompanying supplementary schedules. The procedures
selected and applied depend on the auditors’ judgment, including the assessment of the risks of material
misstatement of the non-consolidated financial statements and the accompanying supplementary schedules,
whether due to fraud or error. The purpose of the audit is not to express an opinion on the effectiveness of theentity’s internal control. However, in making those risk assessments, we consider internal control relevant to
the entity’s preparation and fair presentation of the non-consolidated financial statements and the63accompanying supplementary schedules in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accounting policies used, the methodof their application, and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the non-consolidated financial statements and the accompanying
supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Audit Opinion
In our opinion, the financial statements and the accompanying supplementary schedules thereof referred toabove present fairly, in all material respects, the financial position and the results of operations of theCompany applicable to the fiscal year ended March 31, 2019 in conformity with accounting principles
generally accepted in Japan.
Conflicts of Interest
Our firm and engagement partners have no interest in the Company which should be disclosed incompliance with the Certified Public Accountant Act of Japan.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

64

Transcript of the Audit Report by the Audit & Supervisory Board

Audit Report(English Translation)
With respect to the Directors’ performance of their duties during the 160th term from April 1, 2018 toMarch 31, 2019, the Audit & Supervisory Board has prepared this audit report after deliberations based on theaudit reports prepared by each Audit & Supervisory Board Member, and hereby reports as follows:
1. Auditing Method Applied by the Audit & Supervisory Board Members and the Audit & Supervisory
Board and Details Thereof(1) The Audit & Supervisory Board established auditing policies, assignment of duties, and otherrelevant matters, and received a report from each Audit & Supervisory Board Member regarding thestatus of implementation of audits and results thereof. In addition, the Audit & Supervisory Board
received reports from the Directors, other relevant personnel and the Accounting Auditor regarding
the status of performance of their duties, and requested explanations as necessary.
(2) In conformity with the auditing standards for Audit & Supervisory Board Members established by
the Audit & Supervisory Board, and in accordance with the auditing policies, assignment of duties
and other relevant matters, each Audit & Supervisory Board Member communicated with Directors,
the Internal Auditing Department, other employees, and any other relevant personnel, andendeavored to collect information and maintain and improve the audit environment, conducting
audits as follows.
1) Each Audit & Supervisory Board Member also attended meetings of the Board of Directors
and other important meetings, received reports from the Directors, employees and otherrelevant personnel regarding the status of performance of their duties, requested explanations
as necessary, examined important documents related to important decisions and associatedinformation, and inspected the status of operations and assets at the head office and otherprincipal business offices. Concerning subsidiaries, communication was made with Directors
and Audit & Supervisory Board Members, etc., of subsidiaries, and information wascollected, and business reports were received from subsidiaries as necessary.
2) The Audit & Supervisory Board Members also expressed opinions on the resolutions of theBoard of Directors regarding the establishment of the system to ensure that the Directors’
performance of their duties as stated in the Business Report complies with laws andregulations and the Company’s Articles of Incorporation and other systems that are set forthin Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act
of Japan as being necessary for ensuring the appropriateness of operations of a corporategroup comprised of a joint stock company (kabushiki kaisha) and its subsidiaries, and thesystems (internal control systems) established based on such resolutions. Audit &Supervisory Board Members periodically received reports from Directors, employees andother relevant personnel regarding the status of development and operation of such systems
and requested explanations as necessary.
3) With respect to the basic policy set forth in Article 118, Item 3 (i) of the Ordinance for
Enforcement of the Companies Act and the measures set forth in Item 3 (ii) of the said
article, which are described in the Business Report, the Audit & Supervisory Board
Members examined the content based on the status of deliberations at meetings of the Boardof Directors and other meetings.
4) Audit & Supervisory Board Members monitored and verified whether the Accounting
Auditor maintained its independence and implemented appropriate audits, received reports
from the Accounting Auditor regarding the status of the performance of its duties, andrequested explanations as necessary. In addition, the Audit & Supervisory Board Members
received notice from the Accounting Auditor that the “system for ensuring that duties are
performed properly” (matters set forth in each item of Article 131 of the Ordinance for
Corporate Accounting) had been prepared in accordance with the “Quality Control
Standards Relating to Auditing” (issued by the Business Accounting Council on October 28,2005) and other relevant standards, and requested explanations as necessary.
65Based on the above method, the Audit & Supervisory Board Members reviewed the non-consolidated
financial statements (non-consolidated balance sheet, non-consolidated statement of income,non-consolidated statement of changes in net assets, and notes to non-consolidated financial statements) andthe accompanying supplementary schedules, as well as the consolidated financial statements (consolidatedbalance sheet, consolidated statement of income, consolidated statement of changes in net assets, and notes
to consolidated financial statements), and the business report and its accompanying supplementary schedules
for the fiscal year in question.
2. Results of Audit(1) Results of Audit of Business Report, etc., and Other Relevant Documents
1) In our opinion, the Business Report and the accompanying supplementary schedules present fairly
the conditions of the Company in conformity with the applicable laws and regulations and the
Articles of Incorporation of the Company.
2) We have found no instances of misconduct or material violation of the applicable laws andregulations or the Articles of Incorporation with respect to performance of duties by the Directors.
3) In our opinion, the contents of the resolutions of the Board of Directors related to the internal
control systems are fair and reasonable. In addition, we have found no matters requiring special
mention regarding the description in the Business Report and the performance of duties by the
Directors related to such internal control systems.
4) We have found no matters requiring special mention with respect to the basic policies regarding thedetermination of policies on control of the finances and business of the Company described in theBusiness Report. In our opinion, the measures described in the Business Report, set forth in Article
118, Item 3 (ii) of the Ordinance for Enforcement of the Companies Act, are in line with the basic
policy, do not impair the common interests of the Company’s shareholders, and are not for the
purpose of maintaining the position of the Company’s officers.
(2) Results of Audit of Non-consolidated Financial Statements and the Accompanying Supplementary
Schedules
In our opinion, the method and the results of the audit performed by Ernst & Young ShinNihon
LLC are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the method and the results of the audit performed by Ernst & Young ShinNihon
LLC are fair and reasonable.
May 8, 2019
Audit & Supervisory Board, Denka Co., Ltd.
Full-time Audit & Supervisory Board Member
Full-time Audit & Supervisory Board Member
Audit & Supervisory Board Member
Audit & Supervisory Board Member(Note)

Shohei Tamaki
Masanori Sakamoto
Tsunehiro Sasanami
Toshio Kinoshita

Audit & Supervisory Board Members Tsunehiro Sasanami and Toshio Kinoshita are outside
audit & supervisory board members as stipulated in Article 2, Item 16 of the Companies Act.

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