This document has been translated from the Japanese original version for the reference and convenience of non-Japaneseshareholders without any warranty for its accuracy or otherwise. In the event of any discrepancy between this translation
version and the Japanese original version, the Japanese original shall prevail.

Securities identification code: 6376
March 8, 2019

To our shareholders:Toshihiko Kai

President & Representative Director

NIKKISO CO., LTD.
4-20-3 Ebisu, Shibuya-ku, TokyoNOTICE OF THE 78TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 78th Ordinary General Meeting of Shareholders of NIKKISO CO.,LTD. (the “Company”), which will be held as described below.
If you are unable to attend the meeting in person, you may exercise your voting rights by postal mail or
via the Internet (see Page 3). Please indicate your approval or disapproval of the proposals on theenclosed voting form after reviewing the attached Reference Documents for the General Meeting of
Shareholders, and return it by postal mail or via the Internet to reach us no later than 5:30 p.m.,
Wednesday, March 27, 2019 (Japan Standard Time).

Meeting Details
1.

Date and time:Thursday, March 28, 2019, at 10:00 a.m. (Japan Standard Time)(The reception desk will open from 9:00 a.m.)2.

Venue:

Nikkiso Higashimurayama Plant, R&D Center
Multi-Purpose Bldg. 7F, Conference Room
2-16-2 Noguchi-cho, Higashimurayama-shi, Tokyo

3.

Purposes:
Items to be reported:
1. Business Report and Consolidated Financial Statements for the 78th Term (from January 1,
2018 to December 31, 2018), as well as the results of audits of the Consolidated Financial
Statements by the Accounting Auditor and the Audit & Supervisory Board
2. Non-Consolidated Financial Statements for the 78th Term (from January 1, 2018 to
December 31, 2018)
Items to be resolved:
Proposal 1:
Reduction of Capital Reserves
Proposal 2:
Election of eight (8) Directors
Proposal 3:
Election of two (2) Audit & Supervisory Board Members

14.

Other decisions concerning convocation of this General Meeting of Shareholders(1)

Voting by postal mailPlease follow the “Instructions on How to Exercise Voting
Rights” (Page 3), indicate your approval or disapproval ofeach proposal on the enclosed voting form, and return it by
mail to reach us by the below deadline.
Wednesday, March 27, 2019, at 5:30 p.m. (Japan Standard Time)
Please follow the “When exercising your voting rights via the Internet”(Page 4, Japanese only), and exercise your voting rights by the below
deadline from the voting website designated by the Company(https://www.web54.net).
Wednesday, March 27, 2019, at 5:30 p.m. (Japan Standard Time)(2)

Voting via the Internet(3)

Voting by multiple methods
such as by postal mail andvia the Internet

If you have exercised your voting rights through multiple methods suchas by postal mail and via the Internet, etc., the vote that has reached theCompany last shall be deemed effective.
However, if voting rights are exercised by postal mail and via theInternet on the same date, the exercise of voting rights via the Internet
shall be deemed effective.

(4)

Voting multiple times via
the Internet

If you exercise your voting rights multiple times via the Internet, thelast exercise shall be deemed effective.

 If you will attend the meeting, please submit the enclosed voting form at the reception desk of the General
Meeting of Shareholders.
 Of the documents to be submitted upon this notification, the following matters are posted on the Company’s
website (https://www.nikkiso.co.jp) pursuant to laws and regulations as well as Article 19 of the Company’s
Articles of Incorporation, and thus these documents are not included in the attached documents.
1) System to Ensure Business Appropriateness in the Business Report (Basic Policy on Internal Control)2) Notes to the Consolidated Financial Statements
3) Notes to the Non-Consolidated Financial Statements
These items are included in the Business Report, Consolidated Financial Statements and Non-Consolidated
Financial Statements audited when the Audit & Supervisory Board Members prepare the Audit Report. In
addition, items 2) and 3) in the above are included in the Consolidated Financial Statements and NonConsolidated Financial Statements audited when the Accounting Auditor prepares the Accounting Audit Report.
 In the event of circumstances requiring amendments to the Business Report, Consolidated Financial Statements,
Non-Consolidated Financial Statements, and Reference Documents for the General Meeting of Shareholders, thematters that have been amended will be posted on the Company’s website (https://www.nikkiso.co.jp).

2

Instructions on How to Exercise Voting Rights
Voting rights can be exercised with the following three (3) methods.
When attending the General Meeting of Shareholders
Please submit the enclosed voting form at the reception desk of the General Meeting of
Shareholders. (You are not required to sign and affix a seal on this form.)
Date and time:
Venue:

Thursday, March 28, 2019, at 10:00 a.m. (Japan Standard Time)(The reception desk will open from 9:00 a.m.)
Nikkiso Higashimurayama Plant, R&D Center
Multi-Purpose Bldg. 7F, Conference Room

When exercising your voting rights by postal mailPlease indicate your approval or disapproval of the proposals on the enclosed voting form, and thenreturn the form to us by postal mail without affixing a stamp.
Deadline forexercising yourvoting rights:

Must be received by 5:30 p.m. on Wednesday, March 27, 2019 (Japan
Standard Time)

When exercising your voting rights via the Internet
Follow the instructions given under “When exercising your voting rights via the Internet” on the next
page (Japanese only). If you are unsure about exercising your voting rights via the Internet, pleasecontact Stock Transfer Agency Web Support, Sumitomo Mitsui Trust Bank, Limited, listed on thenext page.
Deadline forexercising yourvoting rights:

Must be exercised by 5:30 p.m. on Wednesday, March 27, 2019 (Japan
Standard Time)3

Reference Documents for the General Meeting of Shareholders
Proposals and Reference Information
Proposal 1:

Reduction of Capital Reserves

To secure adoptability and flexibility in future capital policies, the Company proposes to reduce
capital reserves in accordance with Article 448, paragraph 1 of the Companies Act.
The reduction in the amount of capital reserves proposed under this Proposal 1 will be transferred
within the account title of “Net Assets” section in the balance sheet of the Company, and therefore
will not change the Company’s net assets. Therefore, the proposed reduction will not affect the
number of shares held by each shareholder.
1. Reduction of Capital Reserves
Capital reserves shall be reduced from 10,700,690,213 yen to 174,234,798 yen, with the reduced
amount of 10,526,455,415 yen, all of which is transferred to other capital surplus.
2. Effective Date of Reduction of Capital Reserves
May 8, 2019
(Reference)

Capital reserves
Other capital surplus

Current(As of December 31,
2018)

Proposed amendment(As of May 8, 2019)

Increase/decrease

10,700 million yen

174 million yen(10,526) million yen

3 million yen

10,529 million yen+10,526 million yen

4Proposal 2:

Election of eight (8) Directors

The term of office of all of the current eight (8) Directors will expire at the conclusion of thisOrdinary General Meeting of Shareholders. Therefore, the Company proposes that eight (8)Directors be elected.
The Directors of the Company have fiduciary duties and accountabilities for the shareholders, andthey also have a responsibility to sustainably grow the Company’s Group (“the Group”) andmaximize the medium- and long-term corporate value through the implementation of efficient andeffective corporate governance.
The candidates for Director are shown below. These candidates are nominated in accordance with
the Company’s Policies and Procedure for Nominating Candidates for Director and Audit &Supervisory Board Member (Page 19).
Position and responsibilities in
the Company

Significant concurrent
positions outside theCompany

No.

Name

1

Toshihiko Kai

President & Representative
Director[Reelection]

2

Hiroshi Nakamura

Director, Executive Vice
President[Reelection]

3

Hisakazu
Nakahigashi

Director, Executive Officer,
General Manager of Research& Engineering Institute[Reelection]

4

YoshihikoKinoshita

Director, Executive Officer,
General Manager of Medical
Business Unit, and General
Manager of Medical Division[Reelection]

5

Shoichi Nagato

Executive Officer, General
Manager of Aerospace
Business Unit, and General
Manager of Aerospace
Division[New election]

6

Masaru Yamamura Executive Officer, General
Manager of Industrial Business
Unit, and General Manager ofIndustrial Division

7

Eisuke Nagatomo

Outside Director

President & CEO, EN[Reelection]
Associates Co., Ltd.
[Independent]
Outside Director, Miroku[Outside]
Jyoho Service Co., Ltd.
Outside Audit & Supervisory
Board Member, Nidec
Corporation
Public Interest Director,
Japan Financial Services
Association

8

Haruko Hirose(Name in family
register: Haruko
Makinouchi)

Outside Director

President, Japan Morocco[Reelection]
Association[Independent]
Outside Director, S&B Foods [Outside]
Inc.

5[New election]

No.

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)

Name (Date of birth)

February 1996

General Manager of Dai-Ichi Kangyo
Bank Nederland N.V.

March 2000

Joined the Company

April 2001

Executive Officer of the Company

April 2002

President, Medical Equipment Unit
(currently Medical Division) of theCompany

June 2003

Director of the Company (present
position)

December 2004

President & Representative Director of
the Company (present position)

Toshihiko Kai(August 19, 1946)[Reelection]

Number of theCompany’s
shares owned

58,146[Position and areas of responsibility at the Company]
1

President & Representative Director[Significant concurrent positions outside the Company]–[Reasons for selection as a candidate for Director]
Over the past three years (2016 to 2018), he has led the Group vigorously toward the realization of the
Nikkiso 2020 five-year medium-term business plan (ranging from fiscal year ended December 31, 2016 to
fiscal year ending December 31, 2020). He has also decisively worked on growth investment andstrengthening the business and organization foundation in its primary business fields, and this term (2018)has seen the results of this work reflected partially in business performance. In the upcoming term (2019),
he will aim to achieve concrete results greater than or equal to those of the current term while taking thenext step toward what comes after this business plan. His powerful leadership and experienced management
capability have enabled him to realize the sustainable growth of the Group and to improve the medium- andlong-term corporate value. As such, it has been determined that he is suitable as a Director of the Company
and named as a candidate to continue as a Director.

6

No.

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)

Name (Date of birth)January 2006

Executive Officer, General Manager of
Nihonbashi Branch, The Bank of TokyoMitsubishi UFJ, Ltd. (currently MUFG
Bank, Ltd.)March 2007

Joined the Company

October 2009

Director of the Company
Managing Director, Nikkiso EuropeGmbH (a Company’s consolidated
subsidiary in Germany)

April 2013

Director, Senior Executive Officer, incharge of Information Systems andQuality Control, and General Manager ofPrecision Equipment Business Divisionof the Company

November 2013

Director, Senior Executive Officer, incharge of Administration (Export
Control, Internal Control, Internal Audit,
Compliance, and Information Systems),
and General Manager of Corporate
Planning Department of the Company

Hiroshi Nakamura(January 10, 1953)[Reelection]
June 2015

Audit & Supervisory Board Member of
the Company

March 2017

Director, Executive Vice President(present position), in charge of
Administration and Corporate Planning(Compliance, Export Control, Internal
Audit, Internal Control, Information
Systems, and Public Relations/Investor
Relations) and UV-LED Business of theCompany2

Number of theCompany’s
shares owned

50,618[Position and areas of responsibility at the Company]
Director, Executive Vice President[Significant concurrent positions outside the Company]–[Reasons for selection as a candidate for Director]
So as to grow the Group sustainably and to improve the medium- and long-term corporate value, he has
vigorously worked on items such as reforming the corporate system to adapt to a changing management
environment, strengthening and reorganizing the Corporate Business Unit functions that support
management, supporting the promotion of business and strengthening the personnel management of theGroup. He possesses a wealth of experience and knowledge of building a Group governance system atoverseas sites and M&A and other similar strategic investments as well as in general corporate-related
management such as financial affairs and personnel management. As such, it has been determined that he issuitable as a Director of the Company, and as a candidate to continue as a Director.

7

No.

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)

Name (Date of birth)

April 1978

Joined the Company

April 2011

General Manager of Manufacturing
Department, Kanazawa Plant, Medical
Division of the Company

October 2011

Technical Senior Manager, Medical
Shizuoka Factory, Shizuoka Plant(currently Research & Engineering
Institute) of the Company

April 2014

General Manager, Medical Products
Factory, Kanazawa Plant of the Company

April 2015

Executive Officer (present position),
General Manager of Kanazawa Plant,
and General Manager of Medical
Products Factory of the Company

March 2017

Director (present position), in charge of
Production, and General Manager ofKanazawa Plant of the Company

January 2018

In charge of Production and Engineering,
General Manager of Research &Engineering Institute, and General
Manager of Biomedical Engineering
Center of the Company

January 2019

General Manager of Research &Engineering Institute of the Company(present position)

Hisakazu Nakahigashi(January 11, 1955)[Reelection]
3

Number of theCompany’s
shares owned

31,585[Position and areas of responsibility at the Company]
Director, Executive Officer, and General Manager ofResearch & Engineering Institute[Significant concurrent positions outside the Company]–[Reasons for selection as a candidate for Director]
He has worked on and obtained results in strengthening the foundations of the Group’s technology anddevelopment. Of special note, he vigorously worked on the medium- and long-term training of theresearchers, developers and engineers who support “technology expert Nikkiso,” which is one of thepriorities of the Group. He possesses a wealth of experience and knowledge in the process of research,development, technology, procurement, production and quality control and has the ability to work toward
resolving the important management challenges of the Group. As such, it has been determined that he issuitable as a Director of the Company, and as a candidate to continue as a Director.

8

No.

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)

Name (Date of birth)

Yoshihiko Kinoshita(September 13, 1966)[Reelection]

April 1989

Joined the Company

April 2009

General Manager of Market
Development Department, Medical
Division of the Company

October 2011

Deputy General Manager, Medical
Division of the Company

January 2016

General Manager of Medical Division of
the Company (present position)

October 2016

Director, Vice Chairman, Weigao
Nikkiso (Weihai) Dialysis Equipment
Co., Ltd. (the Company’s equity method
affiliated company in China) (present
position)January 2017

Executive Officer of the Company(present position)

March 2017

Director (present position) and in chargeof Medical Business Unit of theCompany

October 2017

CEO, Managing Director, Nikkiso
Europe GmbH (the Company’s
consolidated subsidiary in Germany)

January 2019

General Manager of Medical Business
Unit of the Company (present position)

4

Number of theCompany’s
shares owned

16,065[Position and areas of responsibility at the Company]
Director, Executive Officer, General Manager of Medical
Business Unit, and General Manager of Medical Division[Significant concurrent positions outside the Company]–[Reasons for selection as a candidate for Director]
He has worked actively on and obtained concrete results in solidifying the Japanese dialysis business,building new business fields and implementing various policies toward expanding international markets. He
possesses experience and knowledge that enables him to act flexibly and boldly in order to bring about
continuous growth in the Medical Business. As such, it has been determined that he is suitable as a Directorof the Company, and as a candidate to continue as a Director.

9

No.

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)

Name (Date of birth)

Shoichi Nagato

October 1987

Joined the Company

April 2006

General Manager of the Planning andSales Department, Composite Materials
Unit (currently Aerospace Division) of
the Company

April 2009

Executive Officer (present position),
General Manager of Aerospace Divisionof the Company

March 2016

President & Representative Director,
Nikkiso Giken Co., Ltd. (the Company’s
consolidated subsidiary)

October 2016

General Manager of Precision Equipment
Business Division of the Company

December 2017

General Manager of Aerospace Divisionof the Company (present position)

January 2019

General Manager of Aerospace Business
Unit of the Company (present position)
Chairman, Nikkiso Vietnam, Inc. (theCompany’s consolidated subsidiary in
Vietnam) (present position)(August 9, 1956)[New election]

5

Number of theCompany’s
shares owned

10,506[Position and areas of responsibility at the Company]
Executive Officer, General Manager of Aerospace Business
Unit, and General Manager of Aerospace Division[Significant concurrent positions outside the Company]–[Reasons for selection as a candidate for Director]
He has been engaged in the Aerospace Business of the Company for many years. He contributed to an
expansion of the Company’s global share and sales of parts for retrofiring devices, one of major products of
the Company, and an increase in the number of the components for aircraft wings handled by the Company.
Furthermore, he has vigorously worked on and obtained results in areas such as expanding and maintaining
production sites both inside and outside of Japan and improving customer trust in the quality and safety ofour products. He has the experience and knowledge that are required for continued improvement of theCompany’s corporate value as an aircraft part manufacturer in the civilian aircraft market, where demands
are expected to expand continuously. As such, it has been determined that he is suitable as a Director of theCompany, and as a new candidate to be a Director.

10

No.

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)

Name (Date of birth)

Masaru Yamamura(May 27, 1965)[New election]

November 1990

Joined the Company

October 2009

General Manager of Business Promotion
Department, Medical Division of theCompany

July 2012

General Manager of Osaka Branch of theCompany

April 2017

General Manager of Industrial Divisionof the Company (present position)

January 2018

Executive Officer of the Company(present position)

January 2019

General Manager of Industrial Business
Unit of the Company (present position)

Number of theCompany’s
shares owned

10,878[Position and areas of responsibility at the Company]
6

Executive Officer, General Manager of Industrial Business
Unit, and General Manager of Industrial Division[Significant concurrent positions outside the Company]–[Reasons for selection as a candidate for Director]
He had been engaged in the Medical Business of the Company for many years. After he assumed theposition as General Manager of Osaka Branch of the Company, he exercised leadership sufficiently andachieved magnificent results in improved sales capabilities of Industrial Division, where a strict
management environment had continued. In the previous term (2017), taking the opportunity of acquisitionof all shares in an American corporate group called Cryogenic Industries (hereinafter “CI Group”) that
performs operations such as LNG-related business, the Industrial Business of the Company embraced new
growth through the strengthening of business in the LNG field and fully entering business for manufacturing
devices for industrial gas fields including hydrogen. He has experience and skills that enable him to respond
speedily and decisively so as to realize even greater synergistic effect as a corporate group, by strengthening
collaboration, promoting mutual use of business facilities and consolidating sales promotion systems withthe consolidated subsidiaries; LEWA GmbH (Germany) which mainly sells its products to the upstream
markets consisting of such as oil and gas exploration companies, and CI Group which sells its products tothe downstream markets consisting of such as companies in LNG-related businesses. As such, it has been
determined that he is suitable as a Director of the Company, and as a new candidate to be a Director.

11

No.

Name (Date of birth)

Eisuke Nagatomo(July 7, 1948)

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)
April 1971

Joined Tokyo Stock Exchange

December 2005

Senior Executive Officer, Tokyo Stock
Exchange, Inc. (Chief Self-Regulatory
Officer)

October 2007

President & CEO, EN Associates Co.,
Ltd. (present position)

April 2008

Visiting Professor, Graduate School ofCommerce, Waseda University (present
position)

June 2010

Outside Director, Miroku Jyoho Service
Co., Ltd. (present position)

June 2012

Outside Audit & Supervisory Board
Member of the Company

June 2016

Outside Audit & Supervisory Board
Member, Nidec Corporation (present
position)[Reelection][Independent][Outside]

7

March 2018

Outside Director of the Company(present position)

June 2018

Public Interest Director, Japan Financial
Services Association (present position)

Number of theCompany’s
shares owned

7,192[Position and areas of responsibility at the Company]
Outside Director[Significant concurrent positions outside the Company]
President & CEO, EN Associates Co., Ltd.
Outside Director, Miroku Jyoho Service Co., Ltd.
Outside Audit & Supervisory Board Member, Nidec
Corporation
Public Interest Director, Japan Financial Services
Association[Reasons for selection as a candidate for Outside Director]
He has held successive positions in important offices such as Senior Executive Officer and Chief SelfRegulatory Officer, Tokyo Stock Exchange, Inc., a position on the Business Accounting Council of the
Financial Services Agency of Japan and Director of the Financial Accounting Standards Foundation. In
addition to his considerable expertise related to financial affairs and accounting, he has also acquired
thorough knowledge concerning corporate governance, group governance and risk management and has awealth of international experience. In this term (2018), he has actively provided suggestions to andperformed similar services for the Board of Directors and the management team from a wide range ofviewpoints such as group governance at overseas sites, risk management, group capital usage, return on
investment, return of profit to shareholders, IR activities, remuneration for directors and executive officers,
personnel development and labor issues to fulfill his duties as an Outside Director for management. As
such, we nominate him as a candidate to continue as an Outside Director in order to have him continue to
put his wide-ranging experience and opinions to work as an Outside Director of the Company.

12

No.

Name (Date of birth)

Haruko Hirose(Name in family register:
Haruko Makinouchi)(September 23, 1945)

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)
December 1968

Appointed to the National Personnel
Authority of Japan

January 1992

Director, Bureau of Human Resources
Management of Headquarters, United
Nations Educational, Scientific andCultural Organization (UNESCO)

September 2002

Deputy to the Director General andManaging Director of Programme
Coordination and Field Operations
Division, United Nations Industrial
Development Organization (UNIDO)

November 2006

Japanese Ambassador Extraordinary andPlenipotentiary to Kingdom of Morocco

March 2010Retirement from Ministry of Foreign
Affairs of Japan

April 2013

Specially Appointed Professor, Academy
for Global Leadership, Tokyo Institute ofTechnology (present position)

May 2014

President, Japan Morocco Association(present position)

June 2016

Outside Director, S&B Foods Inc.
(present position)

April 2017

Director, Ochanomizu University(present position)

March 2018

Outside Director of the Company(present position)[Reelection][Independent] [Outside]

8

Number of theCompany’s
shares owned

709[Position and areas of responsibility at the Company]
Outside Director[Significant concurrent positions outside the Company]
President, Japan Morocco Association
Outside Director, S&B Foods Inc.
[Reasons for selection as a candidate for Outside Director]
She has provided meritorious service in areas such as personnel, financial affairs and industrial development
for the United Nations. Furthermore, she has also endeavored in activities for developing personnel who are
active on the world stage. In this term (2018), she has provided diverse suggestions to and performed similar
services for the Board of Directors and the management team from viewpoints such as group capitalmanagement, credit management, risk management at overseas sites, development of internationally active
personnel and engineers, corporate value improvement and expansion into new businesses to fulfill her
duties as an Outside Director for management. We expect that she will provide beneficial suggestions
regarding items such as ensuring the effectiveness of the functions of the Company’s Board of Directors andconstructing a Group environment in which we can place diverse employees in the right places including
promoting further active participation by women. As such, we nominate her as a candidate to continue as an
Outside Director in order to have her continue to put her wide-ranging experience and opinions to work as
an Outside Director of the Company. Although she has not been directly involved in corporate managementin the past, it has been determined that she is suitable as an Outside Director of the Company for the reasons
outlined above.
Notes:
1. There is no special interest between each candidate and the Company.
2. Eisuke Nagatomo is a candidate to be our Outside Director.
(1) Tenure as Outside Director
He is currently one of the Company’s Outside Directors, and he will have been in this position for one (1)year at the conclusion of this Ordinary General Meeting of Shareholders.
(2) Independent Officer13

At the current time, the Company has registered him with the Tokyo Stock Exchange, Inc. as an Independent
Officer. When he assumes the position of Outside Director, the Company plans to continue registering him as
an Independent Officer.
(3) Limited liability agreement
The Company has currently executed with him, pursuant to the provisions of Articles of Incorporation for an
Outside Director, a limited liability agreement that provides that the higher amount of either five (5) million
yen or the minimum total liability specified by laws and regulations shall be the maximum amount ofliability for damages. When he assumes the position of Outside Director, the Company plans to maintain thelimited liability agreement.
3. Haruko Hirose is a candidate to be our Outside Director.
(1) Tenure as Outside Director
She is currently one of the Company’s Outside Directors, and she will have been in this position for one (1)year at the conclusion of this Ordinary General Meeting of Shareholders.
(2) Independent Officer
At the current time, the Company has registered her with the Tokyo Stock Exchange, Inc. as an Independent
Officer. When she assumes the position of Outside Director, the Company plans to continue registering her
as an Independent Officer.
(3) Limited liability agreement
The Company has currently executed with her, pursuant to the provisions of Articles of Incorporation for an
Outside Director, a limited liability agreement that provides that the higher amount of either five (5) million
yen or the minimum total liability specified by laws and regulations shall be the maximum amount ofliability for damages. When she assumes the position of Outside Director, the Company plans to maintain thelimited liability agreement.

14

Proposal 3:

Election of two (2) Audit & Supervisory Board Members

Since the terms of office of Audit & Supervisory Board Member Nobuhiko Ban and Outside Audit& Supervisory Board Member Mitsuaki Nakakubo will expire at the conclusion of this Ordinary
General Meeting of Shareholders, the Company proposes that two (2) Audit & Supervisory Board
Members be elected. The Audit & Supervisory Board has given its consent to this proposal. If this
proposal is approved in its original form, the Audit & Supervisory Board will have four (4) Audit &Supervisory Board Members, including two (2) Outside Audit & Supervisory Board Members.
The Audit & Supervisory Board Members and the Audit & Supervisory Board of the Company havefiduciary duties for the shareholders and have the main duty of, from a position independent of the
Directors and the Board of Directors, effectively auditing the Directors and the Board of Directors toensure that they fulfill their duties in a legal and appropriate manner.
The candidates for Audit & Supervisory Board Member are shown below. These candidates arenominated in accordance with the Company’s Policies and Procedure for Nominating Candidates for
Director and Audit & Supervisory Board Member (Page 19).
No.

Name (Date of birth)

Toshiaki Mitsumi(January 8, 1956)[New election]

1

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)
September 2005

Assistant General Manager of Sales andAdministrative Division at Head Office,Mizuho Corporate Bank, Ltd. (currently
Mizuho Bank, Ltd.)

December 2007

Joined the Company

April 2013

General Manager of Medical
Administration Department, Medical
Division of the Company

January 2015

General Manager of Industrial
Administration Department, Industrial
Division of the Company

April 2015

Auditor, Shanghai Nikkiso Non-Seal
Pump Co., Ltd. (the Company’s
consolidated subsidiary in China)

January 2016

General Manager of Sales Division of theCompany

April 2017

General Manager of Administration
Department, Corporate Planning
Division of the Company (present
position)

Number of theCompany’s
shares owned

2,144[Position at the Company]
General Manager of Administration Department, Corporate
Planning Division[Significant concurrent positions outside the Company]–[Reasons for selection as a candidate for Audit & Supervisory Board Member]
At the Company, he has been involved in work such as management and performance related to the Medical
Business (one of our primary businesses), management of subsidiaries and adjustment of duties for thewhole Company. He has considerable experience and knowledge related to financial affairs, accounting andmanagerial accounting; has thorough knowledge about the management of all of our businesses; and isfamiliar with the systems for the execution of business, the internal control and the internal audit of theGroup. He possesses experience and knowledge that enable him to closely cooperate with Outside Officers,
the Accounting Auditor and Internal Auditors and to appropriately audit the operations of the Directors andthe Board of Directors. As such, it has been determined that he is suitable as an Audit & Supervisory Board
Member of the Company, and as a new candidate for this position.

15

No.

Name (Date of birth)

Career summary, position and areas of responsibility(significant concurrent positions outside the Company)
April 1995

Registered as an attorney of Japan(affiliated with the Daini Tokyo Bar
Association) (to present)

April 2001

Partner, Asahi Law Offices (present
position)

June 2008

Substitute Audit & Supervisory Board
Member of the Company

October 2011

Auditor, Bicycle Parking Facilities
Provision Foundation, a public interest
incorporated foundation (present
position)[Reelection]

June 2015[Independent][Outside]

Outside Audit & Supervisory Board
Member of the Company (present
position)

June 2017

Outside Audit & Supervisory Board
Member, Nippon Kodo Holdings Co.,
Ltd. (present position)

Mitsuaki Nakakubo(November 24, 1966)

Number of theCompany’s
shares owned

3,629[Position at the Company]
2

Outside Audit & Supervisory Board Member[Significant concurrent positions outside the Company]
Attorney (Partner, Asahi Law Offices)
Outside Audit & Supervisory Board Member, Nippon Kodo
Holdings Co., Ltd.
[Reasons for selection as a candidate for Outside Audit & Supervisory Board Member]
As an attorney, he has mainly acted in areas such as disputes on officers’ liability, copyright-related matters,
consultation on Product Liability of automobiles, matters related to the Unfair Competition Prevention Act
of Japan, and matters related to real estate. During his time spent as an Outside Audit & Supervisory Board
Member, he has provided beneficial suggestions from a wide range of viewpoints such as labor issues,foreign legislation, the management of personal information, return on investment, expansion into new
businesses, compliance and corporate governance. We expect that he will sufficiently fulfill his role inauditing the decision-making and the execution of duties of Directors from an objective and expert
standpoint independent from the execution of the Company’s operations while providing beneficial
suggestions in order to promote the sustainable growth of the Group and improve the medium- and longterm corporate value. As such, we nominate him as a candidate to continue as an Outside Audit &Supervisory Board Member in order to have him continue to put his experience and opinions to work as an
Outside Audit & Supervisory Board Member of the Company. Although he has not been directly involvedin corporate management in the past, it has been determined that he is suitable as an Outside Audit &Supervisory Board Member of the Company for the reasons outlined above.

Notes:
1. There is no special interest between each candidate and the Company.
2. Limited liability agreement with Toshiaki Mitsumi
When he assumes the position of Audit & Supervisory Board Member, the Company plans to execute with him,
pursuant to the provisions of Articles of Incorporation, a limited liability agreement that provides that the higher
amount of either three (3) million yen or the minimum total liability specified by laws and regulations shall be
the maximum amount of liability for damages.
3. Mitsuaki Nakakubo is a candidate to be our Outside Audit & Supervisory Board Member.
(1) Tenure as Outside Audit & Supervisory Board Member
He is currently one of the Company’s Outside Audit & Supervisory Board Members, and he will have beenin this position for three (3) years and nine (9) months at the conclusion of this Ordinary General Meeting of
Shareholders.
(2) Independent Officer
At the current time, the Company has registered him with the Tokyo Stock Exchange, Inc. as an Independent
Officer. When he assumes the position of Outside Audit & Supervisory Board Member, the Company plans
to continue registering him as an Independent Officer.

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(3) Limited liability agreement
The Company has currently executed with him, pursuant to the provisions of Articles of Incorporation for an
Outside Audit & Supervisory Board Member, a limited liability agreement that provides that the higher
amount of either three (3) million yen or the minimum total liability specified by laws and regulations shallbe the maximum amount of liability for damages. When he assumes the position of Outside Audit &Supervisory Board Member, the Company plans to maintain the limited liability agreement.

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(Reference) Nikkiso Group Corporate Governance Basic Policy
1. Basic Approach concerning Corporate Governance
As a company with Board of Auditors, the Group believes that the important points to strive forregarding corporate governance are transparency and fairness in decision-making and therealization of our corporate philosophy through speedy and decisive decision-making. In line withthe following basic approach, we will construct the ideal corporate governance that conforms to
the development stage of the Group.
(i)
Respect the rights of our shareholders and ensure equality to them.
(ii) Respect the profits of the stakeholders and cooperate appropriately with them.
(iii) Disclose the information of the Group appropriately to ensure transparency.
(iv) Endeavor to separate the supervision and execution of management.
Ensure effective supervision and auditing of management through cooperation among
Independent Outside Officers, the Accounting Auditor and Internal Auditors. In addition,
establish within the Group an environment in which the operations business unit can focus
on the improvement of business profitability.
(v)
Have constructive conversations with shareholders with an investment policy that meetsthe medium- and long-term profits of shareholders.
2. System for the Execution of Business<Executive Officers and Division System>
We will aim for a corporate structure that is capable of speedy and decisive decision-making
through the employment of the Executive Officer system/Division system.
<Securing Diversity Within the Company>
We will strive to create an environment in which we can place diverse employees in the rightplaces, starting with promoting active participation by women.
3. Corporate Governance System<System for Supervising the Execution of Business>
In accordance with the Articles of Incorporation, the Board of Directors shall be made up of nine(9) or less Directors, two (2) or more of which are independent Outside Directors. Independent
Outside Directors will serve the function of supervising management by comparing management
strategies and business plans laws, regulations and the Articles of Incorporation; verifying andevaluating the management results of the Group and the operations of the management class asnecessary and appropriately reflecting the opinions of the stakeholders to management.
The Board of Directors serves the following roles.
- Indicating major management directions such as management strategies- Establishing corporate structures that support speedy and decisive management decisions- Demonstrating supervisory functions for the whole of management in order to secure fairness
and transparency in management<Business Audit/Accounting Audit System>
Audit & Supervisory Board Members and the Audit & Supervisory Board perform business audits
and accounting audits not only exercise the authority permitted by laws and regulations in an
active and assertive manner, but also perform them in close cooperation with Outside Directors,
the Accounting Auditor and Internal Auditors from the viewpoint of improving the sustainablegrowth and medium- and long-term corporate value of the Group.
<Internal Control System>
The Internal Control Committee, the Risk Management/Compliance Committee (which acts as thepractical organization of the Internal Control Committee) and the Information System Committee
act as the core promotional business unit for the internal control system and fulfill the central

18roles of planning and executing policies aimed at constructing the internal control system of theGroup.
4. Policies and Procedure for Nominating Candidates for Director and Audit & Supervisory
Board Member<Criteria for the Election of Directors>
For a Director, we designate a person who has knowledge, capability and leadership that will
enable him or her to gain an overview of the management environment of our Group, promote
important management issues speedily and decisively, and achieve results, and who can becommitted to establish corporate governance that supports the realization of our corporate
philosophy.
<Criteria for the Election of Audit & Supervisory Board Members>
For an Audit & Supervisory Board Member, we designate a person who can perform businessaudits and accounting audits as well as actively exercise his or her authority and give appropriate
opinions at the Board of Directors. Furthermore, at least one (1) Audit & Supervisory Board
Member shall possess appropriate expertise related to financial affairs and accounting.
<Criteria for the Election, Independence Judgment Criteria and Concurrent Post Restrictions of
Outside Officers>
For an Outside Director, we designate a person who can sufficiently fulfill his or her role insupervising the decision-making and execution of duties of Directors from an objective and expert
standpoint independent from the execution of the Company’s operations while clearly providing
advice based on his or her knowledge in order to promote the sustainable growth of the Group andimprove the medium- and long-term corporate value.
For an Outside Audit & Supervisory Board Member, we designate a person who can sufficiently
fulfill his or her role in auditing the decision-making and execution of duties of Directors from an
objective and expert standpoint independent from the execution of the Company’s operations
while providing instructions and advice related to items such as management strategy risks on thebasis of extensive expertise.
The independence of Outside Officers shall be judged strictly in accordance with theindependence criteria of Tokyo Stock Exchange, Inc.
Independent Outside Officers shall not concurrently hold positions as Director or Audit &Supervisory Board Member at more than three (3) public companies other than the Company as a
general rule.
<Procedure for Nominating Candidates for Director and Audit & Supervisory Board Member>
The Company shall explain the candidates to the Independent Outside Officers and receive theiradvice on the nominations in advance.

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