This document has been translated from a part of the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. The Company assumes no responsibility for this translation or for direct,
indirect or any other forms of damages arising from the translation.

Securities code: 4043
June 4, 2018
To Those Shareholders with Voting Rights
Hiroshi Yokota
Representative Director
Tokuyama Corporation
1-1 Mikage-cho, Shunan-shi, Yamaguchi

Notice of Convocation of the 154th Ordinary General Meeting of Shareholders
You are cordially invited to attend the 154th Ordinary General Meeting of Shareholders of theCompany.
If you are unable to attend the meeting, you can exercise your voting rights in writing or via
the Internet. Please review the Reference Documents for the General Meeting of Shareholders
and exercise your voting rights by 6:00 p.m. on Thursday, June 21, 2018.
Exercise of Voting Rights in Writing (by Mail)
Please indicate your approval or disapproval of the proposals on the enclosed Voting Rights
Exercise Form and return it so that it arrives by the voting deadline indicated above.
Exercise of Voting Rights via the Internet
Access the Company’s designated voting rights exercise website (https://evote.tr.mufg.jp/), input
the login ID and temporary password indicated on the enclosed Voting Rights Exercise Form,follow the instructions on the screen, and input your approval or disapproval of the proposals by
the voting deadline indicated above.
1. Date and time:

Friday, June 22, 2018, at 10:00 a.m. (Reception opens at 8:30 a.m.)* Please come early to the venue as the reception will be congested as it
becomes close to the commencement of the meeting.

2. Place:

Tokuyama Corporation Culture Gymnasium
1-1-25, Eguchi, Shunan-shi, Yamaguchi

3. Meeting agenda
Matters to be reported:
1. Report on the Business Report, the Consolidated Financial Statements for the 154th Fiscal
Term (from April 1, 2017 to March 31, 2018) and the Results of Audits of the Consolidated
Financial Statements by the Accounting Auditor and the Audit and Supervisory Committee
2. Report on the Non-Consolidated Financial Statements for the 154th Fiscal Term (from April
1, 2017 to March 31, 2018)
Matters to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Six (6) Directors (excluding Directors who are Audit andSupervisory Committee Members)
Proposal No. 3: Amount and Content of Performance-based Stock Remuneration Programfor Directors, etc.
-1-

Proposal No. 4:

Approval of Policy Regarding Large-Scale Purchases of the Company’s
Shares, etc. (Anti-Takeover Measures)

4. Decision for convocation
Please refer to the information on the exercise of voting rights via the Internet.
* When attending the meeting, please submit the enclosed Voting Rights Exercise Form at thereception.
* Documents attached to the “Notice of Convocation of the 154th Ordinary General Meeting of
Shareholders” are included in the enclosed “Report on the 154th Fiscal Term: To Our
Shareholders.”* Of the documents to be provided with this notice, the “Notes to the Consolidated Financial
Statements” and the “Notes to the Non-Consolidated Financial Statements” are not provided in the
appendix to the reported matters because they have been posted on the Company’s website(http://www.tokuyama.co.jp/), pursuant to the provisions of applicable laws and regulations andArticle 16 of the Articles of Incorporation.
The Audit and Supervisory Committee and the Accounting Auditor conducted audits on theConsolidated Financial Statements and Non-Consolidated Financial Statements when preparing
the audit report and the financial audit report respectively. These statements also include, in
addition to what is stated in the attached documents, matters requiring disclosure in “Notes to theConsolidated Financial Statements” and “Notes to Non-Consolidated Financial Statements.”* If any revision is made with regard to the matters stated in the Business Report, Non-Consolidated
Financial Statements, Consolidated Financial Statements and the Reference Documents for the
General Meeting of Shareholders, the modified information will be shown on the website of theCompany (http://www.tokuyama.co.jp/).

-2-

Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal No. 1: Appropriation of Surplus
The Company makes payment of cash dividends to shareholders, in principle on a continuous andstable basis, while taking into consideration changes in business performance and the
medium-term business plan.
As to dividends of the fiscal term under review, taking into account business performance for the
fiscal term under review and that profit plans for business performance for the fiscal year ending
March 31, 2019 onward are in line with the Medium-Term Management Plan, the Company
proposes dividends of 10 yen per share.
Additionally, as the Company celebrated the 100th anniversary of its founding on February 16,
2018, the Company proposes a commemorative dividend of 10 yen per share.
Although the Company was unable to provide dividends since the fiscal year ended March 31,
2015, placing great strain on shareholders, the Company proposes year-end dividends as follows,
and appreciates your understanding.

1. Type of dividend property:
Dividends will be paid in cash.

2. Matters concerning the allocation of dividend property to shareholders and total amountthereof:20 yen per share of common stock of the Company (of which, a commemorative dividend of
10 yen)The total amount: 1,391,119,940 yen
Furthermore, on October 1, 2017, the Company implemented a share consolidation at a ratio offive common shares to one common share. As the Company has already paid an interim
dividend of 2 yen per share prior to the share consolidation with a record date of September 30,
2017, the annual dividend for the fiscal term under review, after conversion to thepost-consolidation figure, will amount to the equivalent of 30 yen per share, which includes aninterim dividend of 10 yen and a year-end dividend of 20 yen.

3. Effective date of distribution of surplus
June 25, 2018-3-

Proposal No. 2: Election of Six (6) Directors (excluding Directors who are Audit andSupervisory Committee Members)
The terms of office of all seven (7) Directors will expire at the close of this General Meeting of
Shareholders.
Accordingly, we request the election of six (6) Directors (excluding Directors who are Audit andSupervisory Committee Members).
Furthermore, we confirmed that there were no matters of note expressed by the Audit andSupervisory Committee at the General Meeting of Shareholders with regard to this Proposal.
The candidates for Director (excluding Directors who are Audit and Supervisory Committee
Members) are as follows:

No.

1

2

Name
Candidate forreelection
Candidate forreelection

Masao Kusunoki

Current position and assignment at theCompany

meetings of theBoard of Directors

Representative Director,

20/20

Chairperson(100%)

Representative Director, Supervision ofHiroshi Yokota

Attendance atall business divisions and Audit Office,President and Executive Officer

20/20(100%)

Director, In charge of Research &Development, Kashima Factory and3Candidate forreelection

Takeshi Nakahara

Corporate Social Responsibility Div.

20/20

Managing Executive Officer, General(100%)

Manager, Corporate Social
Responsibility Div.
4

Candidate forreelection

Director, In charge of Tokuyama Factory
Hideki Adachi

Managing Executive Officer, General
Manager, Tokuyama Factory

20/20(100%)

Director, In charge of Finance and5

Candidate forreelection

Akihiro Hamada

Procurement & Logistics

20/20

Managing Executive Officer, General(100%)

Manager, Corporate Administration Div.
Director, In charge of Corporate
6

Candidate forreelection

Planning Div., General & Personnel
Hideo Sugimura

Affairs and Secretarial Dept.
Managing Executive Officer, General
Manager, Corporate Planning Div.

-4-

16/16
(100%)

No.

Name(Date of birth)

Reelected
Masao Kusunoki

Career Summary, Position, Assignment andPrincipal Concurrent Positions
April 1970

Joined the Company

December 1995

General Manager, Chemicals Sales Dept. 1

June 1997

General Manager, Chemicals Sales Dept.

June 2000

Deputy Executive Officer, Deputy General Manager,
Cement Business Div.

June 2001

Director, Deputy General Manager, Cement Business
Div.

April 2002

Director, General Manager, Cement Business Div.

April 2003

Managing Director, General Manager, Cement Business
Div.

April 2011

Managing Director, Supervision of Cement BusinessDiv., Supervision of ESS Project Dept.

(January 3, 1948)

1

Number of Company Shares
Owned:
20,400 shares
Tenure as Director:
13 years in total
Attendance at meetings of theBoard of Directors during the
fiscal year ended March 31,
2018:
20/20 (100%)

Executive Officer
June 2011

Corporate Advisor
President, EXCEL SHANON CORPORATION

April 2015

Executive Officer

June 2015

Representative Director, Chairperson (To present)

Reasons for nomination as candidate for Director
Mr. Masao Kusunoki supervises the management as Representative Director. At the Company, after serving as
General Manager of Chemicals Sales Department and Cement Business Division, he retired as Director in
2011, and with great achievements in rehabilitating the management of a subsidiary. With our highexpectations for his management talent, he returned as Director in 2015. We again propose his election as
Director.

-5-

No.

Name
(Date of birth)
Reelected
Hiroshi Yokota(October 12, 1961)

2

Number of Company Shares
Owned:
11,300 shares

Career Summary, Position, Assignment andPrincipal Concurrent Positions
April 1985

Joined the Company

April 2008

General Manager, Fine Chemicals Sales Dept.

January 2010

General Manager, Silica & Derivatives Sales Dept.

April 2014

Executive Officer, General Manager, Specialty Products
Business Div.

March 2015

President and Executive Officer

June 2015

Representative Director, Supervision of all businessdivisions, Corporate Planning Div., Audit Office,Secretarial Dept. and General & Personnel Affairs,
President and Executive Officer

June 2017

Representative Director, Supervision of all businessdivisions and Audit Office, President and Executive
Officer (To present)

Tenure as Director:
3 years
Attendance at meetings of theBoard of Directors during the
fiscal year ended March 31,
2018:
20/20 (100%)

Reasons for nomination as candidate for Director
Mr. Hiroshi Yokota supervises the management as Representative Director. At the Company, he has not only
extensive sales experience in wide-ranging areas, including chemicals, fine chemicals, and silica & derivatives,
but also has experience in personnel and labor issues, as well as information systems and as General Manager
of Specialty Products Business Division. Showing strong leadership with a sound business perspective, hesucceeded in putting an end to a big issue of concern: rebuilding the deteriorated financial base. To sustain the
Company’s further growth in the future as we look toward its leap forward after reconstruction, we again
propose his election as Director.

-6-

No.

Name
(Date of birth)

Reelected
Takeshi Nakahara

Career Summary, Position, Assignment andPrincipal Concurrent Positions
April 1980

Joined the Company

April 2004

Senior Chief, temporary transferred to FIGARO
Engineering Inc., Managing Director, General Manager,
Manufacturing Dept., General Manager, Corporate
Planning Div.

June 2006

Senior Chief, temporary transferred to FIGARO
Engineering Inc., President

April 2010

General Manager, Corporate Planning Dept. of theCompany

April 2011

Executive Officer, General Manager, Corporate Planning
Dept., General Manager, ESS Project Dept.

April 2013

Executive Officer, General Manager, Corporate Planning
Div.

(December 4, 1955)

3

April 2014
Number of Company Shares
Owned:
4,600 shares

Managing Executive Officer, General Manager,
Corporate Planning Div.

June 2014

Director, Supervision of Corporate Planning Div.,Managing Executive Officer, General Manager,
Corporate Planning Div.

Tenure as Director:
4 years

April 2015

Director, Supervision of MOT Div., and Kashima
Factory

Attendance at meetings of theBoard of Directors during the
fiscal year ended March 31,
2018:
20/20 (100%)

Managing Executive Officer, General Manager, MOT
Div.
June 2015

Director, In charge of MOT Div., and Kashima FactoryManaging Executive Officer, General Manager, MOT
Div.

August 2015

Director, In charge of Research & Development andKashima FactoryManaging Executive Officer, General Manager,
Research & Development Div.

April 2017

Director, In charge of Research & Development,
Kashima Factory and Corporate Social Responsibility
Div.
Managing Executive Officer, General Manager,
Corporate Social Responsibility Div. (To present)

Reasons for nomination as candidate for Director
Mr. Takeshi Nakahara supervises the management as Director, mainly in the research & development field. At
the Company, he has experience in management, research & development, management of a subsidiary, andthe Corporate Planning Division. Deemed a person who can re-establish business development for the futureeven in the current difficult conditions, we again propose his election as Director.

-7-

No.

Name
(Date of birth)

Career Summary, Position, Assignment andPrincipal Concurrent Positions
April 1981

Joined the Company

April 2007

General Manager, Cement Manufacturing Dept.

April 2011

Deputy General Manager, Tokuyama Factory, General
Manager, Cement Manufacturing Dept.

April 2012

Executive Officer, Deputy General Manager, Cement
Business Div.

(May 24, 1955)

April 2013

Executive Officer, General Manager, Tokuyama Factory

Number of Company Shares
Owned:
3,800 shares

April 2015

Managing Executive Officer, General Manager,
Tokuyama Factory

June 2015

Director, In charge of Tokuyama Factory and
Manufacturing Technology

Reelected
Hideki Adachi

4

Tenure as Director:
3 years
Attendance at meetings of theBoard of Directors during the
fiscal year ended March 31,
2018:
20/20 (100%)

Managing Executive Officer, General Manager,
Tokuyama Factory
April 2016

Director, In charge of Tokuyama Factory and
Manufacturing Technology
Managing Executive Officer, General Manager,
Tokuyama Factory, General Manager, Manufacturing
Technology Div.

April 2017

Director, In charge of Tokuyama FactoryManaging Executive Officer, General Manager,
Tokuyama Factory (To present)

Reasons for nomination as candidate for Director
Mr. Hideki Adachi supervises the management as Director, mainly in the manufacturing and technology fields.
At the Company, after engaging in the development of cement building materials, he has had long experiencein the Cement Manufacturing Department, and is currently serving as General Manager of the Tokuyama
Factory, our main production base. We request his reelection as a Director, since he is a right person to work on
safety and disaster management of the Tokuyama Factory as well as to increase competitiveness of the entire
plant from a broad standpoint.

-8-

No.

Name
(Date of birth)
April 1980

Joined the Company

April 2005

General Manager, Finance Dept.

October 2007

Senior Chief, Management Support Center

April 2010

General Manager, Management Support Center

Reelected

October 2011

Deputy General Manager, Corporate Administration Div.

Akihiro Hamada

April 2012

Executive Officer, Deputy General Manager, Corporate
Administration Div.

April 2014

Executive Officer, General Manager, Corporate
Administration Div.

April 2015

Managing Executive Officer, General Manager,
Corporate Administration Div.

June 2015

Director, In charge of Corporate Administration andCorporate Social Responsibility Div.

(October 31, 1955)

5

Career Summary, Position, Assignment andPrincipal Concurrent Positions

Number of Company Shares
Owned:
3,900 shares
Tenure as Director:
3 years
Attendance at meetings of theBoard of Directors during the
fiscal year ended March 31,
2018:
20/20 (100%)

Managing Executive Officer, General Manager,
Corporate Administration Div.
April 2016

Director, In charge of Finance, Procurement & Logistics
and Corporate Social Responsibility Div.
Managing Executive Officer, General Manager,
Corporate Administration Div.

April 2017

Director, In charge of Finance and Procurement &Logistics
Managing Executive Officer, General Manager,
Corporate Administration Div. (To present)

Reasons for nomination as candidate for Director
Mr. Akihiro Hamada supervises the management as Director, mainly in the finance and accounting fields. At
the Company, after being engaged in the cement business and personnel affairs, he specialized in finance, andis currently General Manager of the Corporate Administration Division. Deemed an appropriate person who
will respond to the Company’s task of reestablishing and reinforcing its financial base, we again propose hiselection as Director.

-9-

Name
(Date of birth)No.

Reelected

Career Summary, Position, Assignment andPrincipal Concurrent Positions
April 1984

Joined the Company

April 2004

Temporary transferred to TOKUYAMA ASIA PACIFIC
PTE. LTD, President

April 2007

Senior Chief, ERP Promotion Div. of the Company

May 2009

Senior Chief, ISAAC Promotion Div.

August 2011

Senior Chief, temporary transferred to EXCELSHANON CORPORATION, General Manager of
Administration Dept., Administration Div.

April 2012

Senior Chief, temporary transferred to EXCELSHANON CORPORATION, Director, General Manager
of Administration Div.

April 2014

Senior Chief, temporary transferred to EXCELSHANON CORPORATION, Managing Director,
General Manager of Administration Div.

December 2014

General Manager, Management Support Center of theCompany, Director, EXCEL SHANONCORPORATION

April 2015

Executive Officer, General Manager, Corporate Planning
Div.

April 2017Managing Executive Officer, General Manager,
Corporate Planning Div.

June 2017

Director, In charge of Corporate Planning Div., General& Personnel Affairs and Secretarial Dept.

Hideo Sugimura(October 22, 1959)

6

Number of Company Shares
Owned:
1,003 shares
Tenure as Director:
1 yearAttendance at meetings of theBoard of Directors during the
fiscal year ended March 31,
2018:
16/16 (100%)

Managing Executive Officer, General Manager,
Corporate Planning Div. (To present)
Reasons for nomination as candidate for Director
Mr. Hideo Sugimura served as president of an overseas subsidiary and has a wealth of experience in efforts toconvert an information system and reconstruct a domestic subsidiary. Since April 2015, he has madecoordinating efforts across divisions and proposals to the management as General Manager of the Corporate
Planning Division. To sustain the Company’s further growth in the future as we look toward its leap forward
after reconstruction, we again propose his election as Director.

Notes:
1. There are no special interests between the candidates and the Company.
2. In addition to the meetings of the Board of Directors included in the attendance at meetings ofthe Board of Directors during the fiscal year ended March 31, 2018, there were two written
resolutions that are recognized as resolutions by the Board of Directors pursuant to Article 370of the Companies Act and Article 29 of the Articles of Incorporation.
3. As Mr. Hideo Sugimura was elected as Director at the 153rd Ordinary General Meeting of
Shareholders held on June 23, 2017, the attendance at meetings of the Board of Directors shows
attendance at the meetings held on and after June 23, 2017.

- 10 -

Proposal No. 3: Amount and Content of Performance-based Stock Remuneration Programfor Directors, etc.
1. Reason for Proposal and Reason that the Remuneration, etc., is AppropriateThis Proposal requests the introduction of a performance-based stock remuneration program(hereinafter “the Program”) for Directors of the Company (excluding Directors who are Audit
and Supervisory Committee Members, Non-executive Directors, External Directors, andpersons not resident in Japan) and Executive Officers (excluding persons not resident in Japan;
hereinafter collectively referred to with Directors as “Directors, etc.”) that will conduct
delivery, etc., of the Company’s shares in accordance with the level of achievement ofbusiness performance targets in the Company’s Medium-Term Management Plan, and otherfactors. The Program will provide stock remuneration to Directors, etc., in a framework
separate from the annual limit (up to 560,000,000 yen per year) for Directors (excluding
Directors who are Audit and Supervisory Committee Members) that was approved at the 153rd
Ordinary General Meeting of Shareholders held on June 23, 2017.
As the Company aims to achieve the above Medium-Term Management Plan, the Company
proposes to introduce the Program in order to clarify the linkage between the remuneration of
Directors, etc., and the Company’s corporate value, enhance motivation to achieve thebusiness performance targets in the Medium-Term Management Plan, and further ensureinterests are shared with shareholders by promoting the holding of the Company’s shares byDirectors, etc. As a result, the Company believes that its introduction is appropriate.
Furthermore, the introduction of the Program has been deliberated upon in the Human
Resources Committee, which consists of a majority of External Directors as committee
members. Additionally, there were no matters of note expressed by the Audit and Supervisory
Committee at the General Meeting of Shareholders with regard to this Proposal.
The number of Directors of the Company subject to the Program will be six if Proposal 2:
Election of Six (6) Directors (excluding Directors who are Audit and Supervisory Committee
Members) is approved as originally proposed. Additionally, as stated above, Executive
Officers are also subject to the Program (the number of Executive Officers not concurrently
serving as Directors subject to the Program as of the close of this General Meeting of
Shareholders is scheduled to be seven). Although remuneration based on the Program includes
remuneration for Executive Officers, in view of the possibility that said Executive Officers
may newly become appointed as Directors during the applicable period (as defined in 2. (2)below), this Proposal proposes amounts and contents for overall remuneration under the
Program as remuneration, etc., for Directors, etc.
As a result, remuneration for Directors, etc., of the Company shall be composed of two types:“basic remuneration,” composed of fixed remuneration and performance-based remuneration
corresponding to business performance for the previous fiscal year, and “performance-based- 11 -

stock remuneration.”
2. Amount and Content of Remuneration Under the Program(1) Overview of the Program
Utilizing the remuneration amount for Directors, etc., contributed by the Company asfunds, the Program is a stock remuneration program in which a trust will acquire theCompany’s shares, and the Company’s shares and cash equivalent to the conversion
amount of the Company’s shares (hereinafter “the Company’s shares, etc.”) will bedelivered or paid (hereinafter “delivered, etc.”) to Directors, etc. through said trust. Details
are as shown in item (2) below and thereafter.
1) Persons eligible for the• Directors of the Company (excluding Directors who aredelivery, etc., of the

Audit and Supervisory Committee Members,Company’s shares, etc., underNon-executive Directors, External Directors, and persons

this Proposal

not resident in Japan)• Executive Officers of the Company (excluding persons notresident in Japan)

2) Effect that the Company’s shares subject to this Proposal will have on the total number ofissued shares
Maximum amount of cash to be• The amount will be 120 million yen multiplied by thecontributed by the Company for

number of years in the applicable period, and theacquisition of the Company’s

maximum for the three fiscal years comprising the initialshares subject to delivery, etc., toapplicable period will be 360 million yen (the initial

Directors, etc. (As shown in item

applicable period will be the three fiscal years from the(2) below.)

fiscal year ending March 31, 2019 until the fiscal year
ending March 31, 2021).

Acquisition method for the• The number of shares will be the number equivalent toCompany’s shares (as shown in (2)40,000 points multiplied by the number of years in the

below) and the maximum number

applicable period, and the maximum number ofof the Company’s shares, etc., to bedeliverable shares to be delivered, etc., to Directors, etc.,

delivered, etc., to Directors, etc.

for the three fiscal years comprising the initial applicable(As shown in (3) below.)

period will be 120,000 shares• The ratio of the 40,000 shares of maximum number ofdeliverable shares per fiscal year above to the total number
of issued shares of the Company is approximately 0.06%(as of March 31, 2018; after elimination of treasury shares)• As the trust will acquire the Company’s shares on thestock market, dilution will not occur- 12 -

3) Content of business result• Variable within the range of 0-200% based on the level ofachievement conditions (Asachievement of consolidated operating profit and othershown in (3) below.)business performance targets under the Medium-Term
Management Plan in the final fiscal year of the applicable
period4) Timing of delivery, etc., of the• After conclusion of the applicable period, in principle

Company’s shares, etc., toDirectors, etc. (As shown in(4) below.)(2) Maximum Amount of Cash to be Contributed by the Company
The period applicable to the Program will be fiscal years subject to Medium-Term
Management Plans defined by the Company (hereinafter “Applicable Periods”).
Additionally, the initial Applicable Period will be the three fiscal years from the fiscal year
ending March 31, 2019 until the fiscal year ending March 31, 2021.
During the Applicable Periods, the Company will entrust money of 120 million yen
multiplied by the number of years in an Applicable Period or less (360 million yen for thethree fiscal years of the initial Applicable Period) to establish a trust (hereinafter the“Trust”) for the period of the corresponding Applicable Period with Directors, etc., who
satisfy the beneficiary conditions as beneficiaries. In accordance with the directions of thetrust administrator, the Trust will acquire the Company’s shares from the stock market inlump, using the money entrusted as funds. During the Applicable Period, the Company
will allot points to Directors, etc. (as shown in (3) below), to conduct the delivery, etc., of
the Company’s shares, etc., from the Trust corresponding to the number of points allotted
at a certain predefined timing.
When the trust period expires, the Company may continue the Trust by changing thetrust agreement and making additional entrustments as a substitute for establishment of the
new Trust. In this case, a number of years corresponding to the Medium-Term
Management Plan at that time shall be the new Applicable Period and the trust period of
the Trust will be extended by the same period as the new Applicable Period. For eachextended trust period, the Company plans to make an additional entrustment of 120
million yen multiplied by the number of years in the new Applicable Period or less.
However, when making these additional contributions, if there are the Company’s shares(excluding the Company’s shares corresponding to points granted to Directors, etc., whose
delivery, etc., is incomplete) and money remaining in the trust assets on the final day of
the trust period prior to extension (hereinafter “Remaining Shares, etc.”), the total amountof the monetary amount of the Remaining Shares, etc., and any trust money additionally- 13 -

contributed shall be 120 million yen multiplied by the number of years in the new
Applicable Period or less.

(3) Calculation Method and Maximum Number of the Company’s Shares, etc., to be
Delivered, etc., to Directors, etc.
At a certain time every year during the trust period, points calculated based on thefollowing calculation formula (hereinafter “Base Points”) shall be granted to Directors,
etc., in accordance with their rank, and at a certain time immediately following the final
day of the final fiscal year in the Plan Period (scheduled for June 2021 for the initial Plan
Period), the number of the Company’s shares to be delivered or paid shall be determinedbased on the number of points (hereinafter “Number of Share Conversion Points”)
calculated by multiplying the Base Points accumulated during the trust period (hereinafter“Accumulated Number of Points”) by the performance-linked coefficient.
The performance-linked coefficient shall be determined with the range of 0 to 200%,
based on the level of achievement of business performance targets using consolidated
operating profit and other achievements in the final fiscal year of the Plan Period (thefiscal year ending March 31, 2021)<<Calculation formula for Base Points>>
Base amount of share-based remuneration determined by rank ÷ Average closing price of
the Company’s shares on the Tokyo Stock Exchange during the month before the firstmonth of the Plan Period (for the first Plan Period, the month preceding the month of thedate when the trust agreement is executed) (any fractions less than one shall be discarded)

One (1) point shall equal one (1) share in the Company, and fractions less than one point
shall be discarded. However, if a share split, share consolidation, etc., of the Company’s
shares is conducted during the trust period, the number of the Company’s shares per point
and the total maximum number of the Company’s shares to be delivered from the Trust (asdefined in the below item (7)) shall be adjusted in accordance with the split ratio,consolidation ratio, etc., of the Company’s shares.
The maximum number of points to be allotted to Directors, etc., during the trust periodof the Trust will be 40,000 points multiplied by the number of years in the Applicable
Period, and the maximum number of the Company’s Shares, etc., that Directors, etc., may
receive delivery, etc., for during the trust period of the Trust will be a number of sharescorresponding to said maximum number of points (hereinafter the “Maximum Number ofDeliverable Shares”). As a result, the Maximum Number of Deliverable Sharescorresponding to the initial Applicable Period that covers three fiscal years will be 120,000
shares (if 1 point corresponds to 1 share of the Company’s shares). The Maximum Number- 14 -

of Deliverable Shares is established based on money contributed by the Company in item
(2) above in consideration of the share price, etc., as of May 2018. Furthermore, if theTrust is continued as described in the above item (2), the Maximum Number ofDeliverable Shares during the extended trust period shall be a number of shares equivalent
to 40,000 shares multiplied by the number of years in the new Applicable Period.

(4) Timing and Method of Delivery, etc., of Shares to Directors
The timing of the Company’s Shares, etc., to Directors, etc., who fulfill the beneficiary
requirements shall be after conclusion of the applicable period, in principle.
Directors, etc., who fulfill the beneficiary conditions will receive delivery from the Trustof a number of the Company’s shares corresponding to 70% of the Number of Share
Delivery Points (shares less than one unit will be rounded down), and shall receive
payment of cash equivalent to the conversion amount of the number of the Company’s
shares corresponding to the remaining Number of Share Delivery Points, after conversion
in the Trust. In principle, Directors, etc. shall continuously hold the Company’s shares thathave been delivered until they retire from office of Director or Executive Officer of theCompany.
In the event that a Director, etc., dies during the trust period, his or her heir shall receive
payment of cash equivalent to the conversion amount of the number of the Company’s
shares corresponding to the Accumulated Number of Points calculated at that point, afterconversion in the Trust. In addition, if a Director, etc., is transferred overseas during thetrust period, he or she shall receive payment, by the date of his or her transfer overseas, ofcash equivalent to the conversion amount of the number of the Company’s sharescorresponding to the Accumulated Number of Points calculated at that point, afterconversion in the Trust.

(5) Voting Rights of the Company’s Shares in the Trust
In order to ensure neutrality toward management, voting rights for the Company’s sharesin the Trust will not be exercised during the trust period.

(6) Treatment of Dividends of the Company’s Shares in the Trust
Dividends from the Company’s shares in the Trust shall be received by the Trust andused for the trust fees and trust expenses of the Trust. After use for trust compensation andtrust expenses there exist residual dividends at the time the Trust ends, they will revert to
the Company within the range of the reserve fund for trust expenses after deducting shareacquisition funds from the trust money, and any amount that exceeds the reserve fund fortrust expenses will be donated to an organization with no special interests with theCompany.
- 15 -

(7) Other Contents of the Program
Other contents of the Program shall be determined by the Board of Directors uponestablishment of the Trust, modifying the trust agreement, and making additional
contributions to the Trust.

(Reference)
For details concerning the Program, please see “Introduction of Performance-linked Share-based
Remuneration Plan for Directors, etc., of Tokuyama Corporation” posted on the Company’s website(http://www.tokuyama.co.jp/).

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Proposal No. 4: Approval of Policy Regarding Large-Scale Purchases of the Company’s
Shares, etc. (Anti-Takeover Measures)
The Company’s Board of Directors decided to seek renewal of the Policy Regarding theLarge-Scale Purchases of the Company’s Shares, etc. (hereinafter “the Policy”) set forth below ata Board of Directors meeting held on May 22, 2018. In view of the importance of the Policy, theCompany seeks approval for this proposed renewal by votes in favor from the majority ofshareholders, in order that shareholders’ views on the Policy may be widely reflected.
In the case that this proposal is not approved, the Policy will be abolished with immediate effect.

At the meeting of the Board of Directors held on April 30, 2015, the Company determined toadopt the Policy Regarding Large-Scale Purchases of the Company’s Shares, etc. (Anti-Takeover
Measures) (hereinafter the “Former Policy”), which was announced in a press release as of theaforementioned day. Later, at the 151st Ordinary General Meeting of Shareholders held on June24, 2015, the Former Policy was approved by a majority of the vote of shareholders, thereby
continuing the Former Policy. The Former Policy will be effective until the closing of this General
Meeting of Shareholders.
After considering the status of the Former Policy, including the appropriateness of its
continuation, from the perspective of protecting the common interests of the Company’s
shareholders and the Company’s corporate value, the Company shall renew the Former Policy,
with certain amendments that are made from the standpoint to continue to improve anenvironment in which the Company’s management can commit themselves to achieving the goals
set forth in the medium-term management plan. The Policy will take effect on condition that this
Proposal is approved by shareholders. In case it is not approved thereat, the Policy shall not be
renewed.
The Company does not plan to continue renewing the Policy for an indefinite period. The
Company will consider abolishing the Policy when it has determined that it has completed steps togain a firm foothold by carrying out the series of measures identified in its medium-term
management plan, currently in progress.
In cases where amendments of the Companies Act, the Financial Instruments and Exchange Act
and the associated regulations, Cabinet Orders, Cabinet Office Ordinances and/or Ordinances ofthe Ministry (hereinafter, in general, “laws and regulations”) come into effect including thechange of the names of laws and regulations and the establishment of new laws and regulations
inheriting the previous content, each provision of the laws and regulations referred to in thisdocument shall be read as corresponding provision to the previous content, unless otherwise
stipulated by the Board of Directors.
In order to respect shareholders’ views when activating countermeasures, the following
amendments will be made to the Policy.
•

The activation of countermeasures (4. (1)) by the Company’s Board of Directors to protect- 17 -

the common interests of the Company’s shareholders and the Company’s corporate value
has been limited only to cases when approval at a General Meeting of Shareholders has
been obtained; and•Other amendments to words and phrasing, etc. have been made.

The status of the major shareholders of the Company as of March 31, 2018 is provided in the
Appendix. As of May 22, 2018, we have not currently received any Large-Scale Purchaseproposal.

1. Purpose of the Large-Scale Purchase Rules(1) Basic Policy and Its Background
The Company has put in place a renewed Group vision in a bid to further clarify its role andsignificance. As a key component of this vision, the Tokuyama Group is determined to help realizea prosperous society by creating value that enhances people’s lives centered on the field ofchemistry. Drawing on the chemical technologies that it has nurtured over many years, the Groupwill contribute to the well-being, growth, and development of society by continuously creating
and proposing new value.
Since our founding in 1918, the Company and our group companies have developed a wide
range of businesses organized into five segments: Chemicals Segment, including soda ash, caustic
soda, and polyvinyl chloride; Cement Segment, including cement and building materials;
Specialty Products Segment, including polycrystalline silicon, fumed silica, aluminum nitride, andhigh-purity chemicals for electronics manufacturing; Life & Amenity Segment, including
microporous film, dental materials, and ion exchange membranes; and Others Segment. Thesebusinesses are based on a foundation of uniform devotion to the production of goods and earning
the longstanding trust of our stakeholders, in particular, our customers.
In each of these businesses, we attempt to anticipate future changes to the business operating
environment, make advance introductions of management resources and continuously improve
corporate value. This effort involves endeavoring to create business; develop technology; build
equipment; bolster trust and cooperation with our stakeholders, in particular, our customers; andcollect management resources. We believe that, from this medium- to long-term perspective, thecumulative result of these efforts and the advance introduction of management resources are thevery source of the Company’s corporate value.
Consequently, in order to raise management efficiency and increase profitability while being
engaged in management from such a medium- to long-term perspective, we believe that persons
who have highly professional expertise and/or marketing/technical know-how being in charge ofimportant duties with regard to the Company’s decisions on financial matters and business
policies in compliance with laws, regulations and the Articles of Incorporation will contribute to
the common interests of the Company’s shareholders and the Company’s corporate value.
The above explains the Company’s Basic Policy Regarding Persons Who Control the- 18 -

Company’s Decisions on Financial Matters and Business Policies.

(2) Medium- to Long-Term Management Strategies
Under the Medium-Term Management Plan formulated in May 2016, we have identified thefollowing two medium- to long-term management strategies, which we intend to carry out overthe next decade through to the fiscal year ending March 31, 2026.
• Transition to a robust business structure that is resilient against changes in its operating
environment and is capable of sustainable growth
The Tokuyama Group has set the goal of becoming a global leader in advanced materials
through unique technologies across growth businesses including the Specialty Products aswell as Life & Amenity segment together with the development of new products. In suchtraditional businesses as the Cement and Chemicals segments, the Group will work to
become a leader in Japan through strengthening competitiveness.
• Transition to a Group-wide low-cost structure by undertaking a comprehensive review ofexisting work practices
The Tokuyama Group will reduce costs by adopting a cross-departmental approach thatdiffers from conventional methods and undertaking strategic capital expenditures as a partof efforts to cut back principal costs including raw material, fuel, repairs and maintenance,and logistics costs
The Tokuyama Group is focused on rebuilding its financial platform as a first step toward its
revitalization. In addition to completing the transfer of Tokuyama Malaysia Sdn. Bhd., the Grouphas undertaken measures such as purchasing and retiring Class A shares. Recognizing thesignificant deterioration in our operations due to impairment losses recorded in relation to
Tokuyama Malaysia’s business since 2014, we remain committed to strengthening our financial
platform, improving our corporate governance structure and systems, and clarifying businessstrategies as a part of efforts to make the most of lessons learned. Moving forward, we will work
diligently to create the necessary driving force to propel new profit growth.
In order to overcome each of these issues, we will steadfastly carry out the priority measures set
out in our current medium-term management plan and reform both management and the Group’s
operations in a bid to secure renewed growth.
• Change its organizational climate
In order to change the Group’s organizational culture and structure as soon as possible,
the Company has launched a new personnel system for managers, who are a necessarycomponent of our organization, in which the level of achievement of targets is more
greatly reflected in treatment. In addition, we have revised our personnel system forsenior employees, who possess abundant experience, such that treatment will be based on
results. Looking ahead, we plan to expand this system to all employees.
In order to incorporate fresh perspectives in the Group’s business promotion activities, we- 19 -

will also actively recruit outside personnel with specialized skills and a wealth ofexperience as a part of our human resources development system.
• Rebuild the Group’s business strategies
In order to realize the aspirations of becoming a leader in its traditional businesses inJapan and a global leader in advanced materials identified under its Medium-Term
Management Plan, the Company will strengthen the competitiveness of each business
utilizing ICT and accelerate the pace of overseas business development.
In addition, steps will be taken to introduce a new business evaluation system that focuseson capital efficiency and to optimize the business portfolio.
As far as research and development is concerned, we will rebuild our R&D structure sothat it is more in tune with customers’ needs and cultivate new business domains byimplementing open innovation with other companies.
• Strengthen Group management
In order to fully capitalize on synergies within the Tokuyama Group, every effort wasmade to accelerate the pace of overhauling sales strategies with strong support for humanresources and management based on flexible capital policies. As a result, reform of theGroup as a whole will also gather pace.
In addition to applying the new business evaluation system to consolidated subsidiaries
and clarifying the degree of contribution to enhancing corporate value, we will work to
reinforce internal control at Group companies• Improve its financial structure
Steps were taken to execute an unsecured bond trust-type debt assumption agreement,
undertake the repayment in advance of loan agreements with financial covenants, andreduce interest-bearing debt in order to quickly stabilize the Company’s financial position.
Moving forward, the Company will continue to reduce interest-bearing debt whileworking to enhance its shareholders’ equity by building up profits for the period.

(3) Corporate GovernanceA corporate governance system is an extremely important structure for every company inrealizing improvement in its corporate value. We therefore believe that routine oversight andperiodic reviews should be made so that the corporate governance of the Company is operated
appropriately at all times.
The Company is a company with an Audit and Supervisory Committee.
The Company introduced an executive officer system to separate the supervision and executionfunctions in April 2011, assigning External Directors in June of the said year. The number ofExternal Directors was subsequently increased in stages.
In June 2017, the Company transitioned from a company with a Board of Auditors to a company
with an Audit and Supervisory Committee.
- 20 -

The Audit and Supervisory Committee selects three External Directors from five Committee
members and endeavors to ensure management transparency and fairness. By doing so, it strives
to maintain management soundness.
As a company with an Audit and Supervisory Committee, the Company seeks to enhance
corporate governance at all times by making the best of its rapid decision-making functions andeffective supervising/auditing functions.

The decision of whether to accept a Large-Scale Purchase is ultimately left to the discretion of
the Company’s shareholders. Consequently, in cases where a Large-Scale Purchase is being
attempted, we believe that the Large-Scale Purchaser’s provision of an adequate amount of
information is necessary. In addition, we believe that the provision of the appraisal and opinionsof the Company’s Board of Directors, as well as information and the like based on the businessfeatures pertaining to any Large-Scale Purchase, are critical for the shareholders to make adecision of whether to accept said Large-Scale Purchase, and contribute to the common interestsof the Company’s shareholders.
Based on the foregoing philosophy, we hereby designate the rules as set forth in 3. below
regarding Large-Scale Purchases so that the necessary and adequate information can be furnishedto the shareholders at the time of a Large-Scale Purchase.
The Company shall require Large-Scale Purchasers to comply with the Large-Scale Purchase
Rules, and in cases where a Large-Scale Purchaser fails to comply with the same, we may takecertain countermeasures from the perspective of protecting the common interests of theCompany’s shareholders and the Company’s corporate value.

2. Purchases of the Company’s Shares to which the Policy Is Applied
The Policy will apply to an action that falls under (i) or (ii) below or similar actions (regardlessof the specific purchase method thereof, whether it is through market transactions or a tender offer,excluding cases where the prior consent of the Company’s Board of Directors has been obtained
regarding either case (hereinafter such a purchase shall be referred to as a “Large-Scale
Purchase”). The party carrying out such Large-Scale Purchase (hereinafter the “Large-Scale
Purchaser”) must comply with the Large-Scale Purchase Rules that are set forth in the Policy.

(i)With respect to the shares1 issued by the Company, a purchase and other actions where
the holding ratio of the shares2 of a holder3 will be 20% or more.

(ii)

With respect to the shares4 issued by the Company, a tender offer5 where the total of theowning ratio of the shares6 owned by a party carrying out the tender offer and the owning
ratio of the shares owned by a party having a special relationship7 with the said party willbe 20% or more.

- 21 -

3. Details of the Large-Scale Purchase Rules
The Large-Scale Purchase Rules require that Large-Scale Purchasers furnish the necessary andadequate information to the Company’s Board of Directors in advance, whereupon Large-Scale
Purchases shall be commenced after the elapse of a certain period for the Company’s Board of
Directors to appraise the same (hereinafter the “Large-Scale Purchase Rules”).
A summary of the Large-Scale Purchase Rules is as follows.

(1) Provision of the Large-Scale Purchase Information
Prior to any Large-Scale Purchase, Large-Scale Purchasers shall provide to the Company’s
Board of Directors the required and adequate information (hereinafter the “Large-Scale Purchase
Information”) for decision making by the Company’s shareholders and the appraisal andconsideration of the Company’s Board of Directors.
In cases where a Large-Scale Purchaser attempts to carry out a Large-Scale Purchase, a“Statement of Intent” regarding the execution of the Large-Scale Purchase must first be provided
to the Company’s Representative Director in accordance with the Large-Scale Purchase Rules.
The Statement of Intent shall have set forth therein the Large-Scale Purchaser’s name, address,
corporate establishment governing law, representative name and contact information within Japan;
a summary of the proposed Large-Scale Purchase; and covenants that adhere to the Large-Scale
Purchase Rules. The Company shall deliver to the Large-Scale Purchaser a list of the Large-Scale
Purchase Information to be initially submitted by the same within 10 business days after receipt of
the Statement of Intent. Upon judging that sufficient Large-Scale Purchase Information has been
provided, the Company’s Board of Directors will publicly announce the fact that it has received
sufficient information at a time and in a manner that it deems appropriate. The principal items
regarding the Large-Scale Purchase Information shall be as follows. In cases where it is concluded
necessary for the shareholders to make a decision, the Company’s Board of Directors may
publicly announce all or part of the facts of the Large-Scale Purchase proposal and theLarge-Scale Purchase Information submitted to the Company’s Board of Directors at a time that it
deems appropriate.
When determining whether or not the Large-Scale Purchaser has complied with the procedure set
forth in the Large-Scale Purchase Rules, the Company’s Board of Directors shall sufficiently
consider to a reasonable extent various facts on the side of the Large-Scale Purchaser, including
the fact that the Large-Scale Purchaser may not necessarily have detailed information with respect
to the Company, and shall not determine that the Large-Scale Purchaser has not complied with theprocedure set forth in the Large-Scale Purchase Rules solely for the reason that part of theLarge-Scale Purchase Information that has been requested by the Company’s Board of Directors
has not been provided by the Large-Scale Purchaser.

- 22 -

(i)A Summary of the Large-Scale Purchaser or its group (including specific name, capitaland financial information).

(ii)

The purpose, method and details of the Large-Scale Purchase (including the type andvalue of purchase consideration, the timing of the purchase and the appropriateness of thepurchase method).

(iii) The existence of any notification of intent to a third party and, if such notification of
intent exists, the details thereof, at the time of the Large-Scale Purchase(iv) The basis for calculating the purchase consideration and materials that evidence funding
for the purchase (including the specific name and procurement method of the providerof purchase funds (including substantive providers).
(v)

The existing collateral for the shares of the Company that are already owned or theplanned establishment of collateral for the shares of the Company to be purchased in the
future (including the method and details of the planned establishment of collateral).

(vi) The intended fundamental management policies and business plans of the Company and
the Tokuyama Group after the completion of the Large-Scale Purchase.
(vii) Any changes planned after the completion of the Large-Scale Purchase or the details
thereof when making such changes regarding the relationship among our stakeholders,
including customers, business partners, employees and local community, and theCompany and the Tokuyama Group.
(viii) The probability of acquiring the approvals, licenses and/or permits to be acquired fromany governments or third parties in Japan and overseas, in accordance with the Antitrust
Law, other laws and regulations, and the like.

(2) Appraisal and Consideration by the Company’s Board of Directors
The Company’s Board of Directors believes that, after the Large-Scale Purchaser completes theprovision of the Large-Scale Purchase Information to the Company’s Board of Directors, a periodof 60 days (in cases of purchases of all of the Company’s shares through a tender offer of theconsideration in cash (denominated in Japanese yen) only) or 90 days (in cases of other
Large-Scale Purchases) should be secured as a period for the Company’s Board of Directors toappraise, consider, negotiate, form opinions about or devise alternate proposals (hereinafter the“Board of Directors Appraisal Period”) in accordance with the degree of difficulty for appraisingand considering the Large-Scale Purchase. During the Board of Directors Appraisal Period, theCompany’s Board of Directors shall sufficiently appraise and consider the provided Large-Scale
Purchase Information while accepting the advice of outside experts and the like as deemed
appropriate and necessary, whereupon the opinions and/or alternate proposal of the Company’s
Board of Directors shall be carefully summarized and publicly announced in a timely andappropriate manner.
In addition, to confirm shareholders’ view regarding the activation of countermeasures against a- 23 -

Large-Scale Purchase, the Board of Directors of the Company shall hold a General Meeting of
Shareholders as soon as practically possible, and shall submit a proposal regarding theappropriateness of activating countermeasures.
The Board of Directors of the Company shall also promptly disclose information related to an
overview of the proposal at the General Meeting of Shareholders regarding the activation ofcountermeasures, and any other matters judged appropriate by the Board of Directors of theCompany.
After the conclusion of the General Meeting of Shareholders, the Board of Directors of theCompany shall resolve to activate or not activate countermeasures based on the resolution of theGeneral Meeting of Shareholders.
Therefore, Large-Scale Purchases shall commence only after a resolution has been made by the
Board of Directors.

4. Policy When a Large-Scale Purchase Is Attempted (Please refer to Exhibit 1, “Outline of
the Policy,” for a summary of the Policy)(1) When a Large-Scale Purchaser Fails to Comply with the Large-Scale Purchase Rules
In cases where a Large-Scale Purchaser fails to comply with the Large-Scale Purchase Rules, theCompany’s Board of Directors may, regardless of the specific purchase method thereof, takemeasures (hereinafter the “Countermeasures”), that is “Allotment of Share Options without
Contribution” defined in Article 277 and following of the Companies Act, for the purpose ofprotecting the common interests of the Company’s shareholders and the Company’s corporate
value, and oppose the Large-Scale Purchase, provided the views of shareholders have been
confirmed.
A detailed outline of the Countermeasures is as set forth in Exhibit 2. However, in cases ofactually implementing the Allotment of Share Options without Contribution, an exercise period
and exercise terms may be established in light of their effect as Countermeasures. In this case,such share options may not be exercised by the Large-Scale Purchaser. In addition, there may becases in which changes are made, such as adding a clause (an acquisition clause) in which theCompany may acquire the share options in exchange for its shares or other property regarding thedetails of said share options.
Furthermore, in relation to the Former Policy, the Company registered the issuance of the shareoptions for quick issuance (submitted on June 25, 2015, June 24, 2016, and June 23, 2017). In
case shareholders approve the renewal of the Policy at this Ordinary General Meeting of
Shareholders, the Company plans to register the issuance of the share options again for quick
issuance thereof.

- 24 -

(2) When a Large-Scale Purchaser Complies with the Large-Scale Purchase Rules
In cases where a Large-Scale Purchaser complies with the Large-Scale Purchase Rules, theCompany’s Board of Directors will only go so far as to express its opposition or present analternate proposal regarding such purchase proposal, even if it is opposed to said Large-Scale
Purchase, and shall not, in principle, take any Countermeasures pertaining to said Large-Scale
Purchase.
The shareholders shall determine whether to accept the Large-Scale Purchaser’s purchaseproposal upon considering the details of said purchase proposal and the opinions, alternate
proposals and the like of the Company’s Board of Directors pertaining thereto.
However, in cases where it is determined that said Large-Scale Purchase will significantly
damage the common interests of the Company’s shareholders and the Company’s corporate value,even if the Large-Scale Purchase Rules have been complied with, the Company’s Board of
Directors may implement a Countermeasure (the specific details of the Countermeasure are as set
forth in the foregoing 4. (1)) in order to protect the common interests of the Company’s
shareholders and the Company’s corporate value, provided the views of shareholders have been
confirmed. Specifically, in cases where there are reasonable grounds for concluding that theLarge-Scale Purchase corresponds to any of the scenarios described in (i) through (v) below, sucha Large-Scale Purchase will, in principle, be determined to be one that will significantly damage
the common interests of the Company’s shareholders and the Company’s corporate value.
Meanwhile, a Countermeasure against the Large-Scale Purchase shall be exclusively activated incases where the Large-Scale Purchase is judged to significantly damage the common interests of
the Company’s shareholders and the Company’s corporate value, and shall not necessarily be
activated only due to the fact that the Large-Scale Purchase is determined to formally fall under
any of the categories (i) through (v) below.

(i)When it is determined that the purchase of the Company’s shares is being carried out forthe purpose of causing the Company’s related parties to take over the Company’s sharesat an overstated share price, regardless of whether there is genuine intent to participate
in the management of the Company (so-called green mailer).

(ii)

When it is determined that the purchase of the Company’s shares is being carried out forthe purpose of temporarily controlling the management of the Company so that the
intellectual property rights, know-how, trade secrets and principal suppliers, customers
and the like required with respect to the Company’s or the Tokuyama Group companies’
business can be transferred to the Large-Scale Purchaser or its group companies and thelike.

(iii) When it is determined that the purchase of the Company’s shares is being carried out inaccordance with plans to divert the assets of the Company or the Tokuyama Group
companies to secure or use as a source of funds to repay the obligations of the- 25 -

Large-Scale Purchaser or its group companies and the like after controlling themanagement of the Company.
(iv) When it is determined that the purchase of the Company’s shares is being carried out forthe purpose of temporarily controlling the management of the Company so that theCompany’s or the Tokuyama Group companies’ high-value assets, such as real estateand securities, can be disposed of through sales and the like or so that an opportunity isafforded to cause the share price to increase rapidly due to temporarily high dividends
whereupon the Company’s shares can be sold at an inflated price.
(v)

When it is determined that the purchase method of the Company’s shares proposed by
the Large-Scale Purchaser will restrict the shareholders’ opportunity and freedom tomake decisions, such as oppressive two-stage purchases (executing purchases of shares,
such as tender offers, whereby no solicitations for purchasing all the shares are made in
the initial purchase, and disadvantageous purchase terms are set or the purchase terms
are not made explicitly clear in the second stage), whereby shareholders may essentially
be forced to sell their shares in the Company (provided that incremental tender offers
shall not always correspond hereto).

5. Establishment of a Special Committee(1) Special Committee Members
A Special Committee is an organ in the Former Policy that serves as a deterrent against arbitrary
decision making by the Company’s Board of Directors before activating a Countermeasure. The
Special Committee shall remain established upon the renewal of the Policy. The Special
Committee shall comprise at least three members, who shall be selected from among External
Directors, attorneys-at-law, Certified Public Accountants, Certified Public Tax Accountants,
academic experts and outside knowledgeable persons who have sufficient experience as Directors
or executives to enable fair and neutral decision making. The current Special Committee
comprises one attorney-at-law and two External Directors. The names and brief work histories ofthe members who will assume office after the close of this General Meeting of Shareholders areset forth in Exhibit 3, “Brief Work Histories of the Attorney-at-Law and External Directors as
Special Committee Members (planned to assume office).”(2) Functions of the Special Committee
In cases where the Company’s Board of Directors contemplates activating a Countermeasure,the following procedures must be taken in order to ensure fair decision making.
First, the Company’s Board of Directors shall inquire of the Special Committee as to thesuitability of activating a Countermeasure, whereupon the Special Committee shall make a
recommendation to the Company’s Board of Directors on the suitability of activating such aCountermeasure while accepting advice from outside experts and the like based on said inquiries.
- 26 -

Resolutions to make a recommendation shall be made by unanimous approval of the members of
the Special Committee, in principle. the Company’s Board of Directors shall respect therecommendation of the Special Committee to the utmost when a decision as to whether to activatea Countermeasure has been made.
With regard to the implementation of any countermeasure against an inappropriate Large-Scale
Purchase, the Board of Directors of the Company shall convene a General Meeting of
Shareholders to confirm the shareholders’ view. As set forth in 3. (2) above, Large-Scale
Purchases shall commence only after this series of procedures has been completed.

6. Impact on the Shareholders when Activating a Countermeasure
Although no circumstances are expected to arise from the implementation of theCountermeasure, in which the Company’s shareholders (excluding the Large-Scale Purchaser inviolation of the Large-Scale Purchase Rules) suffer any especial losses in regards to legal rights or
economic considerations, the Company’s stock price might be affected, to which shareholders
would have to pay attention. If the Company’s Board of Directors decides to implement aCountermeasure, such matter shall be timely and appropriately disclosed in accordance with laws
and ordinances and securities exchange regulations, etc.
If the Large-Scale Purchaser withdraws the tender offer that it has already initiated after aresolution to implement an Allotment of Share Options without Contribution as a specificCountermeasure is approved at a General Meeting of Shareholders of the Company, or if theLarge-Scale Purchaser immediately disposes of the Company’s shares after purchasing them, or if
General Meeting of Shareholders approves a resolution to accept a Large-Scale Purchase, thepurchase itself ceases to be a Large-Scale Purchase. In these cases, the Company may cancel theimplementation of the Allotment of Share Options without Contribution or acquire the shareoptions gratis that were already allotted gratis. In such cases, the Company’s stock price might beaffected, to which shareholders would have to pay attention. If the Company cancels the
Allotment of Share Options without Contribution or acquires the share options gratis that werealready allotted gratis after determination of shareholders to be allotted gratis the share options,the dilution of stock value per share will not occur. Any shareholders who conduct the purchaseand sale of the Company’s shares assuming the dilution of the per share stock value will suffer asignificant loss due to changes in stock prices.

7. Procedures Required of the Company’s Shareholders Attendant to the Issuance of the
Share Options(1) Allotment of the Share Options
In cases where the Company’s Board of Directors approves a resolution to implement an
Allotment of Share Options without Contribution, the Company shall set the allotment date of theshare options and give a public notice of this date. Furthermore, because the share options will be- 27 -

allotted to the shareholders by way of “Allotment of Share Options without Contribution” asstipulated under Article 277 of the Companies Act, the shareholders entered or registered in the
final shareholders’ register or beneficial shareholders’ register as of the allotment date will
naturally become the holders of share options on the day when such Allotment of Share Options
without Contribution becomes effective.

(2) Procedures for Exercising the Share Options
The Company shall send the claim forms for exercising the share options (a prescribed written
instrument by the Company that includes a covenant that the shareholder him or herself is not theLarge-Scale Purchaser) and the other documents required for exercising the rights of the shareoptions to the shareholders entered or registered in the final shareholders’ register or beneficial
shareholders’ register as of the allotment date. After the issuance of the share options, theshareholders shall be issued one ordinary share of the Company for each share option throughsubmitting the required documents thereof and paying a payment-handling institution an amountdetermined by the Company’s Board of Directors that is at least one Japanese yen for each shareoption.
However, as set forth in the foregoing 4. (1), in cases where the Company makes a change, suchas the addition of a clause (an acquisition clause) that enables the Company to acquire the shareoptions in exchange for the Company’s shares or other assets, or, in other words, in cases where it
has been determined that the Company can obtain the share options in exchange for theCompany’s shares, if the Company completes the acquisition procedures, the shareholders who
own the share options determined by the Company’s Board of Directors to be the subject of theacquisition will receive shares of the Company as consideration for the acquisition by theCompany of the share options without having to pay any sum of money equivalent to the exercise
price thereof. Note that, in this case, shareholders may be asked to separately submit a prescribed
written instrument of the Company covenanting that they are not the Large-Scale Purchaser.

8. Effective Period, and Abolition and Change of the Policy
The Policy will be effective until the closing of the Ordinary General Meeting of Shareholders
for the last fiscal year that ends within three (3) years after this Ordinary General Meeting of
Shareholders. Even before the end of the effective period, the Company’s Board of Directors shallreview the Policy as necessary from the point of view of protecting the common interests of theCompany’s shareholders and the Company’s corporate value based on revisions to relevant laws
and ordinances, such as the Companies Act, trends in judicial decisions and measures taken by
securities exchanges and other institutions. Note that if it has been determined to change the
Policy, the details thereof shall immediately be disclosed. In addition, any substantial change orabolition of the Policy shall be brought up as an agenda proposal at the General Meeting of
Shareholders.
- 28 -

The Policy was determined by the unanimous approval of the Directors, including three External
Directors who are Audit and Supervisory Committee Members, in a resolution by the Company’s
Board of Directors at a meeting held on May 22, 2018.

9. Reasonableness of the Policy(1) Consistency of the Policy with the Basic Policy without Damaging the Common Interests of
the Company’s Shareholders
As described in the foregoing 3., the Policy will enable the Company’s Board of Directors toappraise, consider, negotiate, form opinions about or devise alternate proposals for theLarge-Scale Purchase by requiring the Large-Scale Purchaser in advance to provide the necessary
information for the Large-Scale Purchase and secure a certain period for the Company’s Board of
Directors to appraise the same. Meanwhile, the shareholders will be, in turn, allowed to make adecision of whether to accept a Large-Scale Purchase, in accordance with the Policy. Furthermore,
under the Policy, countermeasures shall only be activated in cases when approval at a General
Meeting of Shareholders has been obtained. In other words, the Policy is renewed to constrain any
purchase that is contrary to the common interests of the Company’s shareholders and therefore isconsistent with the Basic Policy.

(2) Respect for the Shareholders’ Intentions
The Company makes a proposal on the agenda to seek shareholders’ approval of the renewal of
the Policy at this Ordinary General Meeting of Shareholders and shall not renew the Policy in casethe shareholders’ approval cannot be obtained. Thus, the intentions of the shareholders arereflected.
Even before the end of the effective period, the Company shall review the Policy as necessary
based on revisions to relevant laws and ordinances. However, any substantial change or abolitionof the Policy shall be brought up as an agenda proposal at the General Meeting of Shareholders.
Note that the term of office for the Company’s Directors (excluding Directors who are Audit andSupervisory Committee Members) shall be for one year, whereupon the intentions of theshareholders regarding the continuation of the Policy shall be reflected, even during the effective
period of the Policy, through the exercise of voting rights regarding the agenda proposal for theappointment of Directors at the Ordinary General Meeting of Shareholders held each year.

(3) The Requirements in the Guidelines regarding Anti-Takeover Measures Satisfied
The Policy satisfies all the three basic principles formulated in the “Guidelines Regarding
Takeover Defenses for the Purposes of the Protection and Enhancement of Corporate Value andShareholders’ Common Interests” jointly released by the Ministry of Economy, Trade and Industry
and the Ministry of Justice on May 27, 2005: (i) the principle of the protection and enhancementof corporate value and shareholders’ common interests; (ii) the principle of prior disclosure and- 29 -

shareholders’ intentions; and (iii) the principle of securing necessity and suitability. The substanceof the Policy also reflects recent practices and discussions, such as “Takeover Defense Measuresin Light of Recent Environmental Changes” released on June 30, 2008, by the Corporate Value
Study Group of the Ministry of Economy, Trade and Industry.

(4) Respect for the Judgment of Highly Independent Outsiders
The Company has established a Special Committee as an organ that serves as a deterrent against
arbitrary decision making by the Company’s Board of Directors. The Special Committee
comprises at least three members, who shall be selected from among External Directors,
attorneys-at-law, Certified Public Accountants, Certified Public Tax Accountants, academic
experts and outside knowledgeable persons, all of whom are independent from the management
team of the Company that is engaged in executing duties. The committee shall give advice to theBoard of Directors on the judgment as to whether implementation of a Countermeasure isappropriate. The Board of Directors shall maximally accept the advice of the Special Committee
to adopt resolutions as an organ under the Companies Act.

(5) Reasonable and Objective Requirements for Activating a Countermeasure
The Policy is so formulated that the Countermeasure against a Large-Scale Purchase may not be
activated unless the reasonable and objective requirements for activating a countermeasure, whichhave been disclosed in advance, are met to prevent the Company’s Board of Directors fromarbitrarily activating the Countermeasure.

(6) Advice from Outside Experts
The Company’s Board of Directors and the Special Committee may, for themselves, seek theadvice of outside professionals (including attorneys-at-law, Certified Public Accountants,
consultants, financial advisors and other specialists). The objectivity and reasonableness of thedetermination of the Board of Directors will thus be ensured.

(7) Not a “Dead-Hand” Type or “Slow-Hand” Type Anti-Takeover Measure
The Policy is not a so-called “dead hand” type anti-takeover measure (a takeover defense
measure in which the triggering of the measure cannot be prevented even though a majority of themembers of the Board of Directors are replaced). Neither is the Policy a “slow-hand”
anti-takeover measure (a takeover defense measure in which the triggering of the measure takes
more time to prevent due to the inability to replace all of the Directors at one time) because theCompany does not adopt a board system with a different tenure of office for Directors (because
the term of office for the Company’s Directors (excluding Directors who are Audit andSupervisory Committee Members) is one year.)- 30 -

Notes:1. Defined in Article 27-23, Paragraph 1, of the Financial Instruments and Exchange Act,
hereinafter the same applies, unless otherwise stipulated.
2. Defined in Article 27-23, Paragraph 4, of the Financial Instruments and Exchange Act,
hereinafter the same applies.
3. Defined as holders in Article 27-23, Paragraph 3 and any joint holders defined in Article 27-23,
Paragraph 5, including a person deemed to be a joint holder pursuant to Article 27-23,
Paragraph 6, of the Financial Instruments and Exchange Act, hereinafter the same applies.
4. Defined in Article 27-2, Paragraph 1, of the Financial Instruments and Exchange Act, the same
applies in (ii).
5. Defined in Article 27-2, Paragraph 6, of the Financial Instruments and Exchange Act,
hereinafter the same applies.
6. Defined in Article 27-2, Paragraph 8, of the Financial Instruments and Exchange Act,
hereinafter the same applies.
7. Defined in Article 27-2, Paragraph 7, of the Financial Instruments and Exchange Act,
hereinafter the same applies (including persons who the Board of Directors regards asapplicable). With regard to persons listed in Item 1 of the same Paragraph, persons are
excluded who are set forth in Article 3, Paragraph 2, of the Cabinet Office Order on Disclosure
Required for Tender Offer for Share Certificates, etc. by Person Other than Issuer.

- 31 -

Exhibit 1

Outline of the Policy
Emergence of a Large-Scale Purchaser

Board of Directors of the Company:
Apply the Large-Scale Purchase Rules

Large-Scale Purchaser:
In case the Large-Scale Purchaser
complies with the Large-Scale Purchase
Rules

Large-Scale Purchaser:
In case the Large-Scale Purchaser
does not comply with the Large-Scale
Purchase Rules

Board of Directors of the Company:
Appraisal, consideration, negotiation,
formulation of opinion and planning ofalternative proposals

Advice from the Special Committee

Board of Directors of the Company:
Judgment as to whether implementation of a Countermeasure isappropriate

General Meeting of Shareholders:Judgment as to whether implementation of aCountermeasure is appropriate
Approved

Voted down
Board of Directors of the Company:
Do not implement a Countermeasure (Allotmentof Share Options without Contribution)

Board of Directors of the Company:
Implement a Countermeasure (Allotment of
Share Options without Contribution)

Board of Directors of the Company:
Express an opinion and make analternate proposal- 32 -

Exhibit 2
Outline of the Allotment of Share Options without Contribution
1. Shareholders Subject to Allotment of Share Options without Contribution and Terms andConditions Thereof
The share options shall be allotted at a 1:1 ratio for each share held (excluding, however,ordinary shares of the Company held by the Company) to shareholders entered or registered in
the final shareholders’ register or beneficial shareholders’ register as of the allotment datestipulated by the Company’s Board of Directors.
2. Type and Number of Shares for Purpose of the Share Options
The type of shares for the purpose of the share options shall be ordinary shares of theCompany, and the number of shares corresponding to each share option shall be one share.
However, the requisite changes shall be made in cases where the Company executes a share
split or a reverse share split.
3. Total Number of Issued Share Options
The total number of allotted share options shall be the number stipulated by the Company’s
Board of Directors. The Company’s Board of Directors may execute Allotments of Share
Options without Contribution multiple times.
4. Issuance Price of the Share Options
Gratis.
5. Amount to Be Paid upon Exercise of Each Share Option
The amount to be paid upon the exercise of each share option shall be the amount stipulatedby the Company’s Board of Directors of at least one Japanese yen per share.
6. Transfer Restrictions on the Share Options
The transfer of share options must be approved by the Company’s Board of Directors.
7. Exercise Terms and Conditions
Large-Scale Purchasers cannot exercise the share options.
8. Exercise Period, etc., of the Share Options
The exercise period of the share options, exercise terms and conditions other than those set
forth in the foregoing 7., grounds for extinguishing shares, share extinguishment terms andconditions, and other required matters shall be separately stipulated by the Company’s Board of- 33 -

Directors
9. Share Options with Acquisition Clause
As set forth in 7.(2) of the Policy, the Company may make changes, such as the addition of aclause (an acquisition clause) that enables it to exchange shares or other assets of the Company
for the share options in regards to the details of the share options.
10. Cancelation of the Allotment of Share Options without Contribution or Acquisition of the
Allotted Share Options Gratis
If the Large-Scale Purchaser withdraws the tender offer that it has already initiated after theCompany’s Board of Directors approves a resolution to implement an Allotment of Share
Options without Contribution as a specific Countermeasure, or if the Large-Scale Purchaser
immediately disposes of the Company’s shares after purchasing them, or if General Meeting of
Shareholders approves a resolution to accept a Large-Scale Purchase, the purchase itself ceases
to be a Large-Scale Purchase. In these cases, the Company may cancel the implementation of
the Allotment of Share Options without Contribution or acquire the share options gratis thatwere already allotted gratis.

- 34 -

Exhibit 3
Brief Work Histories of the Attorney-at-Law and External Directors as Special Committee
Members (planned to assume office)Junya Sato (born May 4, 1953)
Apr. 1982

Registered as Lawyer,

Apr. 1982

Law Office of Furness, Sato & Ishizawa(currently Law Office of Oku, Katayama & Sato)

Mr. Junya Sato and the Company have not entered into a consultancy agreement and he has no
special interest in or with the Company.

Shin Kato (born June 27, 1961)
Apr. 1990

Registered as Lawyer,
Hiranuma Law Office

Apr. 1995

Aoyama Central Law Office

Sept. 2001

South Toranomon Law OfficeJun. 2013

Audit & Supervisory Board Member of the Company

Jan. 2014

Representative lawyer, Kato Law Office (To present)

Jun. 2017

External Director who is an Audit and Supervisory Committee Member of theCompany (To present)

Mr. Shin Kato is an External Director as set forth in Item 15 of Article 2 of the Companies Act. The
Company has notified Tokyo Stock Exchange, Inc., that he is an independent officer as provided forin Article 415, Paragraph 6 and Article 436-2 of its Enforcement Rules for Securities Listing
Regulations. He has no special interest in or with the Company.

Yoshikazu Tsuda (born December 27, 1950)
Apr. 1974

Joined Nisshin Steel Co., Ltd.

Jun. 2003

Executive Officer, General Manager, Finance Dept.

Apr. 2006

Managing Executive Officer, Chief Financial Officer

Jun. 2006

Director, Managing Executive Officer, Chief Financial Officer

Oct. 2012

Director, Managing Executive Officer, Chief Financial Officer, Nisshin Steel
Holdings Co., Ltd.
Director, Managing Executive Officer, Chief Financial Officer, Nisshin Steel Co.,Ltd.

Apr. 2014

Director, Assistant to President, Nisshin Steel Co., Ltd.

Jun. 2014

Senior Advisor

Jun. 2015

Advisor

Jun. 2015

Audit & Supervisory Board Member of the Company- 35 -

Jun. 2017

External Director who is an Audit and Supervisory Committee Member of theCompany (To present)

Mr. Yoshikazu Tsuda is an External Director as set forth in Item 15 of Article 2 of the Companies Act.
The Company has notified Tokyo Stock Exchange, Inc., that he is an independent officer as provided
for in Article 415, Paragraph 6 and Article 436-2 of its Enforcement Rules for Securities Listing
Regulations. He has no special interest in or with the Company.

- 36 -

Appendix
Top 10 Major Shareholders(Percentage of shares held to the total number of shares issued (excluding treasury stock))(As of March 31, 2018)
Name of Shareholder

Number ofPercentage ofShares Held

Shares Held(in thousands)(%)

The Master Trust Bank of Japan, Ltd. (trust account)

8,144

11.71

Japan Trustee Services Bank, Ltd. (trust account)

7,399

10.64

Nippon Life Insurance Company

2,174

3.13

The Yamaguchi Bank, Ltd.

1,649

2.37

Meiji Yasuda Life Insurance Company

1,488

2.14

Bank, Ltd.)

1,419

2.04

Sojitz Corporation

1,296

1.86

Sumitomo Metal Mining Co., Ltd.

1,180

1.70

Mitsubishi UFJ Trust and Banking Corporation

1,170

1.68

Japan Trustee Services Bank, Ltd. (trust account 5)

1,161

1.67

The Bank of Tokyo-Mitsubishi UFJ, Ltd. (currently MUFG

(Note) The Percentage of Shares Held is calculated after deducting the shares held by the Company
as treasury stock (378,378 shares).

- 37 -