Note: 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, the original
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 6324
May 31, 2024
(Electronic provision measure starts on: May 22, 2024)
Dear Shareholders:
Akira Nagai
President and Representative Director
Harmonic Drive Systems Inc.

6-25-3 Minami-Oi, Shinagawa-ku, Tokyo, JapanCONVOCATION NOTICE OF
THE ORDINARY GENERAL MEETING OF SHAREHOLDERS FOR FISCAL 2023
We would like to express our appreciation for your continued support and patronage.
We hereby notify you of the Ordinary General Meeting of Shareholders (this “Meeting”) for fiscal 2023 ofHarmonic Drive Systems Inc. (the “Company”). The meeting will be held for the purposes as described
below.
In convening this Meeting, the Company has adopted electronic provision measures, and matters subject
to electronic provision measures have been posted on the following website as “CONVOCATIONNOTICE OF THE ORDINARY GENERAL MEETING OF SHAREHOLDERS FOR FISCAL 2023”
The Company website (https://www.hds.co.jp/english/ir/event/stockholder/)In addition to the above, the information is also posted on the following website.
Tokyo Stock Exchange (TSE) website(https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show)
To view the information on the TSE website above, please access the URL, enter our company name in“Issue name (company name)” or our securities code (6324) in “Code,” select “Basic Information” andgo to “Documents for public inspection/PR information.”
In addition to attending the Meeting in person, you can exercise your voting rights in writing or via theInternet. Please review the Reference Documents for the General Meeting of Shareholders, which areavailable in the matters subject to electronic provision measures, and exercise your voting rights by no later
than 5:30 p.m. (the close of the Company’s business hours) on Thursday, June 20, 2024, Japan Time.
[Exercising Voting Rights by Mail]
Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form, andreturn it so that it arrives by the above deadline for exercise.
[Exercising Voting Rights via the Internet]
Please check the “Guide to Exercising Voting Rights via the Internet” on page 4, and exercise your voting
rights by the above deadline for exercise.

-1-1. Date and Time:

Friday, June 21, 2024 at 10:00 a.m. Japan time
(Reception opens at 9:00 a.m.)

2. Venue:

Prince Room, B1F, Grand Prince Hotel Takanawa located at
3-13-1 Takanawa, Minato-ku, Tokyo, Japan(Please refer to the attached “Guide to the Location of the General Meetingof Shareholders” in Japanese)

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for Fiscal 2023
(April 1, 2023 - March 31, 2024) and results of audits of theConsolidated Financial Statements by the Accounting Auditor and theBoard of Corporate Auditors
2. Non-consolidated Financial Statements for Fiscal 2023 (April 1, 2023 March 31, 2024)
Proposals to be resolved:
Proposal 1:
Appropriation of Surplus
Proposal 2:
Election of ten (10) Directors
Proposal 3:
Election of four (4) Corporate Auditors
4. Matters Determined in Regard to the Convocation:
Treatment of exercise of voting rights(1) If voting rights are exercised by a shareholder multiple times both in writing and via theInternet, the vote exercised via the Internet shall be considered as valid.
(2) If voting rights are exercised by a shareholder multiple times via the Internet, the final
vote exercised shall be considered as valid.
(3) When there is no indication of approval or disapproval for a proposal on the voting form,
it shall be treated as an indication of approval.
End1) When attending the Meeting, please submit the enclosed Voting Rights Exercise Form at the reception desk.
2) If exercising voting rights by proxy, please submit a proxy statement or other written document proving theauthority to represent at the reception desk, together with the Voting Rights Exercise Form of the proxy. (Inregard to the qualifications for a proxy, proxies shall be limited to one (1) other shareholder with voting rights
at this Meeting, in accordance with the provisions of the Articles of Incorporation).
3) In the event of revisions to matters subject to electronic provision measures, they shall be posted on therespective websites where they are posted.
4) The following matters are not included in the paper copy of documents sent to shareholders who requested
it, according to the provisions of laws and regulations and Article 15 of the Articles of Incorporation of theCompany. Therefore, the paper copy is a part of the documents audited by the Corporate Auditors and the
Accounting Auditor in preparing their Audit Reports.
• Consolidated Statements of Changes in Net Assets and Notes to Consolidated Financial Statements in theConsolidated Financial Statements• Non-consolidated Statements of Changes in Net Assets and Notes to Non-consolidated Financial
Statements in the Non-consolidated Financial Statements• Audit Reports
5) Please be advised that matters subject to electronic provision measures posted on each website are the fulltext of the documents for the General Meeting of Shareholders (in Japanese), and therefore the page numbers
do not correspond to those of this Notice of Convocation.

-2-

Guide to Exercising Voting Rights

Shareholders’ voting rights are an important right of shareholders. Please review the “Reference
Documents for the General Meeting of Shareholders” and exercise your voting rights.
Voting rights may be exercised with the three methods below.
1. Attending the General Meeting of Shareholders
Please submit the enclosed Voting Rights Exercise Form at the reception desk. In addition, please bringthis Notice.
Date and time of the General Meeting of Shareholders
10:00 a.m. on Friday, June 21, 2024 (Japan time)(Reception opens at 9:00 a.m.)
Venue: Prince Room, B1F, Grand Prince Hotel Takanawa located at
3-13-1 Takanawa, Minato-ku, Tokyo, Japan(Please refer to the attached “Guide to the Location of the General Meeting of Shareholders”
in Japanese.)

2. By Mail
Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form, andreturn it so that it arrives by the deadline for exercise. If no indication of approval or disapproval is madeon the voting form for a proposal, it shall be treated as an indication of approval.
Deadline for exercise
5:30 p.m. on Thursday, June 20, 2024 (Japan time)
3. Via the Internet
Please see the next page for details.
Please access the designated Voting Rights Exercise Website (https://soukai.mizuho-tb.co.jp/), andindicate your vote for or against the proposals by the deadline for exercise.
Deadline for exercise
5:30 p.m. on Thursday, June 20, 2024 (Japan time)
Note:
If voting rights are exercised by a shareholder multiple times both in writing and via the Internet, the vote
exercised via the Internet shall be considered as valid. If voting rights are exercised by a shareholder
multiple times via the Internet, the final vote exercised shall be considered as valid.

-3-

Guide to Exercising Voting Rights via the Internet■ Via “Smart Exercise”
You can log in to the Voting Rights Exercise Website without entering Voting Rights Exercise Code andPassword.
(1) Please read the QR code printed on the lower right of the enclosed Voting Rights Exercise Form.
Note: “QR code” is a registered trademark of DENSO WAVE INCORPORATED.

(2) Please indicate your vote for or against the proposals following the instructions on the screen to input
your vote.
You may only exercise your voting rights once via “Smart Exercise.”
To change your vote after exercising your voting rights, please access the website for PCs
and log in to the system by entering the Voting Rights Exercise Code and Password
printed on the enclosed Voting Rights Exercise Form, and exercise your vote again.
*Scanning the QR code again redirects you to the website for PCs.

■

Via ID and Password

Voting Rights Exercise Website
https://soukai.mizuho-tb.co.jp(1) Please access the “Voting Rights Exercise Website”
You may also read the QR code printed on the above and access the “Voting Rights Exercise Website”
Click “Next”(2) Log in to the system
Enter the “Voting Rights Exercise Code” and click “Next”(3) Change password
Enter the “Password” and click “Register”
Please indicate your vote for or against the proposals following the instructions on the screen to input
your vote.
Voting Rights Exercise Code and Password are printed on the enclosed Voting Rights Exercise Form.
■ The Electronic Voting Platform for Foreign and Institutional Investors
Other than the method described above, institutional investors may use the Electronic Voting Platform
for Foreign and Institutional Investors operated by ICJ, Inc., subject to prior application for the use of
the platform.

[Please contact below if you have any inquiry on how to exercise your voting rights via the Internet
using a PC, smartphone or mobile phone.]
Stock Transfer Agency Department at Mizuho Trust & Banking
Toll free in Japan: 0120-768-524(9:00 a.m. – 9:00 p.m. except for year-end and New Year holidays, Japan time)-4-Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal 1: Appropriation of Surplus
In regard to the appropriation of surplus, taking into consideration the return of profits to shareholders,strengthening the business operation, and future business development, the Company proposes to pay a yearend dividend from surplus for the fiscal year under review as follows.
Items Related to the Year-end Dividend(1) Type of dividend property
Cash(2) Items related to the allocation of dividend property and its total amount
10 yen per share of common stock at a total of 949,763,430 yen
Furthermore, as the Company paid an interim dividend of 10 yen per share on December 4, 2023, theannual dividend will be 20 yen per share.
(3) Date the appropriation of surplus comes into effectJune 24, 2024

-5-

Proposal 2: Election of ten (10) Directors
The terms of office of all ten (10) Directors will expire at the conclusion of this Meeting, and therefore theCompany proposes the election of ten (10) Directors.
The candidates for Directors are as follows:
No.

1

Name

Reappointment

Akira Nagai

Gender Age

Current positions andresponsibilities
at the Company

Attributes

Attendanceat Board of
Directors
meetings

Years
inofficeMale

President andRepresentative Director,
Chief Executive Officer

―

18/18

11 years―

18/18

8 years―

18/18

4 years―

18/18

3 years

―

―

―

18/18

21 years

18/18

11 years

18/18

4 years

18/18

2 years

12/13

1 year76

Representative Director
Senior Executive Officer
General Manager ofCorporate Planning and
ICT Promotion OfficeDirector
Executive Officer
General Manager ofFinance Accounting,
Finance and Tax Division
Director
Executive Officer
General Manager ofDevelopment andEngineering Division
Executive Officer
In charge of Marketing andSales and General Manager
of Domestic Sales Division2

Reappointment

Akira Maruyama

Male

62

3

Reappointment

Kazutoshi Kamijoh

Male

56

4

Reappointment

Yoshihiro Tanioka

Male

65

5

New appointment

Naomi Shirasawa

Male

63

6

Reappointment

Haruhiko Yoshida

Male

80

Outside Director

7

Reappointment

Masanobu Nakamura Male

77

Outside Director

8

Reappointment

Yoshio Fukuda

Male

71

Outside Director

9

Reappointment

Kazuhiko Hayashi

Male

70

Outside Director

10

Reappointment

Kaeko Kitamoto

Female59

Outside Director

OutsideIndependent
OutsideIndependent
OutsideIndependent
OutsideIndependent
OutsideIndependent

Notes: 1. Ms. Kaeko Kitamoto was newly elected at the Ordinary General Meeting of Shareholders for fiscal 2022 held on
June 21, 2023 and subsequently took office on July 1, 2023, and the status of her attendance at meetings of theBoard of Directors held on or after the date she took office is presented.
2. The age is as of the date of this Meeting.

Reappointment

Candidate for reappointment as Director

New appointment Candidate for new appointment as Director
OutsideCandidate for Outside Director

Independent

Independent Director registered at the Tokyo Stock Exchange

-6-

1

Akira Nagai

Reappointment(March 26, 1948)

Number of shares of the Company held: 54,713

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1972
Apr. 2002
Apr. 2002
Jun. 2002
Jun. 2003
Dec. 2005
Jun. 2007
Apr. 2009
Jan. 2011
Jun. 2013
May 2015
Jun. 2016
Dec. 2016
Mar. 2017
Jun. 2017
Jun. 2019
Jan. 2020
Jun. 2020

Joined Mitsui & Co., Ltd.
Joined the Company
General Manager of Overseas Division, the Company
Chairperson and Director, HD Systems, Inc.
Executive Officer (Marketing and Sales), General Manager of Overseas Division, General
Manager of Corporate Planning and IT Office, the Company
President and CEO, HD Systems, Inc. (incumbent)
Managing Executive Officer (Corporate Planning and IT), the Company
Managing Executive Officer (Corporate Planning and Finance), the Company
Corporate Auditor, Harmonic Drive Systems (Shanghai) Co., Ltd.
President and Representative Director, Executive President, the Company
Director, Harmonic AD, Inc. (incumbent)
President and Representative Director, Chief Executive Officer, In charge of Marketing andSales, the Company
Manager, GK HD Management (incumbent)
Chairperson of the Supervisory Board, Harmonic Drive AG
President and Representative Director, Chief Executive Officer, In charge of Marketing andSales and Quality, the Company
President and Representative Director, Chief Executive Officer, In charge of Quality, theCompany
Deputy Chairperson of the Supervisory Board, Harmonic Drive SE (incumbent)
President and Representative Director, Chief Executive Officer, the Company (incumbent)(Significant concurrent positions)
President and CEO, HD Systems, Inc.
Director, Harmonic AD, Inc.
Manager, GK HD Management
Deputy Chairperson of the Supervisory Board, Harmonic Drive SE(Reason for nomination as candidate)

Mr. Akira Nagai has served as President and Representative Director since June 2013, and has demonstrated his
capabilities in strengthening the management foundation, enhancing corporate value, and other areas. In addition, he
has utilized his abundant experience overseas to build good relationships with customers and partners around theworld, and has appropriately directed and supervised Group companies developing business in the U.S., Germany,
China, and South Korea. Based on the above, the Company has judged that he is an essential person to sustainably
enhance Group corporate value, and therefore proposes his continued election as Director.

-7-

2

Akira Maruyama(January 8, 1962)

Reappointment
Number of shares of the Company held: 8,166

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1985
Apr. 2007
Apr. 2009
Sep. 2009
Sep. 2012
Jun. 2014
May 2015
Jun. 2016
Jun. 2018
Jun. 2019
Jun. 2019
Jun. 2021
Jun. 2022

May 2023

Joined the Company
General Manager of Marketing and Sales Division, the Company
General Manager of Marketing and Sales Division and General Manager of Sales
Planning Department, the Company
General Manager of Engineering Department, Precision Equipment Division, theCompany
General Manager of Engineering Division, the Company
Executive Officer (Engineering), the Company
Director, HD Logistics, Inc.
Director and Executive Officer (Development Engineering), the Company
Director and Executive Officer (Corporate Planning and IT), the Company
Corporate Auditor, Winbel Co., Ltd. (currently Harmonic Winbel Inc.)
Director and Executive Officer, General Manager of Corporate Planning Division, theCompany
Director and Executive Officer, General Manager of Corporate Planning Division andGeneral Manager of ICT Promotion Office, the Company
Representative Director and Senior Managing Executive Officer, General Manager ofCorporate Planning Division and ICT Promotion Office, the Company (incumbent)
Director, Harmonic Winbel Inc. (incumbent)(Significant concurrent positions)
Director, Harmonic Winbel Inc.

(Reason for nomination as candidate)

Mr. Akira Maruyama has participated in the development of speed reducers over many years, and possesses broadand deep insight in HarmonicDrive® in particular. In addition, he has utilized his insight and demonstrated his
abilities as manager not only of the development division but also the sales, engineering and technology divisions,and is currently making a significant contribution to the development of the Group as manager of the corporate
planning and ICT Promotion divisions and fulfilling his responsibilities as Representative Director. Based on theabove, the Company has judged that he is an essential person to sustainably enhance Group corporate value, whichcenters on technology and technical skill, and therefore proposes his continued election as Director.

-8-

3

Kazutoshi Kamijoh(June 9, 1968)

Reappointment
Number of shares of the Company held: 12,123

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1992
Jul. 2003
Jul. 2007
May 2012
May 2013
Jun. 2014
Jun. 2016
Mar. 2017
Jun. 2019
Jun. 2020
Jul. 2021

Jun. 2022

Jun. 2023

Joined the Company
Corporate Planning Manager of Corporate Planning and IT Office, and Administrative
Manager, the Company
General Manager of Corporate Planning Department, Corporate Planning and IT Office,and General Manager of Administration Department, the Company
Corporate Auditor, Ome Iron Casting Co., Ltd.
Corporate Auditor, Harmonic Drive Systems (Shanghai) Co., Ltd.
Executive Officer, In charge of Corporate Planning and Finance, the Company
Executive Officer, In charge of Corporate Planning, Finance and Accounting, theCompany
Manager, GK HD Management (incumbent)
Executive Officer, General Manager of Finance Accounting, Finance and Tax Division,
the Company
Director and Executive Officer, General Manager of Finance Accounting, Finance andTax Division, the Company
Member of the Supervisory Board, Harmonic Drive SE (incumbent)
Director and Executive Officer (Finance Accounting, Finance, Tax, Human Resources andAdministration), General Manager of Finance Accounting, Finance and Tax Division, theCompany
Director and Executive Officer, General Manager of Finance Accounting, Finance andTax Division, the Company (incumbent)(Significant concurrent positions)Manager, GK HD Management
Member of the Supervisory Board, Harmonic Drive SE(Reason for nomination as candidate)

Mr. Kazutoshi Kamijoh has been engaged in corporate planning, finance, investor relations, information disclosure
and other responsibilities over many years, and possesses abundant experience, deep insight, and a high level ofexpertise in finance and accounting, which he has cultivated through formulating corporate plans and capital
policies, building relationships with investors, implementing corporate actions, and others as the manager in chargeof these domains. Currently, as the manager in charge of accounting, finance, and tax affairs of the Company, he isdemonstrating leadership in order to further strengthen the financial base of the Group while also being actively
involved in IR activities, contributing to the enhancement of the Group’s corporate value. Based on the above, theCompany has judged that he is an essential person to sustainably enhance Group corporate value, and therefore
proposes his continued election as Director.

-9-

4

Yoshihiro Tanioka(September 21, 1958)

Reappointment
Number of shares of the Company held: 6,279

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1982
May 2003
Mar. 2006
May 2007
Jul. 2007
Oct. 2009
Jun. 2010
Sep. 2011
Sep. 2012
Apr. 2015
May 2015
May 2015
May 2017
May 2018
Jun. 2018
Jun. 2019
Jun. 2021

Joined the Company
Manager of No.1 Development Department, Mechatronics Division, the Company
General Manager of Engineering Department, Mechatronics Division, the Company
Director, Winbel Co., Ltd. (currently Harmonic Winbel Inc.)
General Manager of Mechatronics Division, the Company
General Manager of Development Division, the Company
Executive Officer and General Manager of Development Division, the Company
Executive Officer (Engineering), the Company
Executive Officer and General Manager of Overseas Business Division, the Company
Executive Officer and General Manager of Sales Strategy Division, the Company
Representative Director and President, Harmonic AD, Inc.
Director of SAMICK ADM Co., Ltd. (incumbent)
Executive Officer in charge of Harmonic Planetary Development, the Company
Director, Harmonic AD, Inc. (incumbent)
Executive Officer (Development and Engineering), the Company
Executive Officer, General Manager of Development and Engineering Division, theCompany
Director and Executive Officer, General Manager of Development and Engineering
Division, the Company (incumbent)(Significant concurrent positions)
Director, SAMICK ADM Co., Ltd.
Director, Harmonic AD, Inc.

(Reason for nomination as candidate)

For many years since he joined the Company, Mr. Yoshihiro Tanioka has been involved with development andengineering, and has demonstrated particularly outstanding abilities in the business management of mechatronics
products, which are used for total motion control, the domain of the Group. Furthermore, having served in suchroles as manager of the sales strategy and overseas business divisions and Representative Director and President ofHarmonic AD, Inc., he possesses expertise not only in development, but also in a wide range of other fields such as
international marketing and corporate management. At present, as general manager of the development andengineering division, he is demonstrating strong leadership by, for example, resolving customers’ technical issues
and developing new products, and is thus contributing to the enhancement of the Group’s value. Based on theabove, the Company has judged that he is an essential person to enhance Group corporate value, and therefore
proposes his continued election as Director.

- 10 -

5

Naomi Shirasawa(November 2, 1960)

New appointment
Number of shares of the Company held: 7,099

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1983
Apr. 1996
Sep. 1998
Jul. 2001
Mar. 2003
May 2007Jun. 2010
May 2011
Jun. 2013
Jul. 2016
Jun. 2018
Jun. 2019
Jun. 2021
Jun. 2023

Joined the Company
Manager of Engineering Department, Precision Equipment Division, the Company
General Manager in charge of Precision Equipment, Marketing Department, Marketingand Sales Division, the Company
General Manager of AccuDrive Division, the Company
Managing Director, Harmonic AD, Inc.
Representative Director and President, Harmonic AD, Inc.
Executive Officer and General Manager of AD Business Promotion Office, the Company
Senior Managing Director, Harmonic AD, Inc.
General Manager of Sales, Harmonic Drive Systems (Shanghai) Co., Ltd.
Director, Harmonic Drive Systems (Shanghai) Co., Ltd. (incumbent)
General Manager of Overseas Sales Division, the Company
Director and General Manager of Domestic Sales Division, the Company
Executive Officer and General Manager of Domestic Sales Division, the Company
Executive Officer, In charge of Marketing and Sales, General Manager of Domestic
Sales Division, the Company (incumbent)(Significant concurrent positions)
Director, Harmonic Drive Systems (Shanghai) Co., Ltd.

(Reason for nomination as candidate)Since he joined the Company, Mr. Naomi Shirasawa has been involved with production engineering, development,
marketing, and sales, and possesses extensive expertise in the Group’s businesses, including overseas. In promoting
the precision planetary speed reducer business, he participated in Harmonic AD, Inc. since its inception, and as
Representative Director and President, he has demonstrated excellent management skills and established the current
business foundation. Furthermore, he contributed to expanding sales in the Chinese market as the Director ofHarmonic Drive Systems (Shanghai) Co., Ltd. As Executive Officer in charge of marketing and sales since 2021, heis demonstrating strong leadership by promoting forward-looking sales strategies from the customer’s perspective
within a changing business environment, and is thus contributing to the enhancement of the Group’s value. Basedon this broad experience and track record both in Japan and overseas, the Company expects that he will demonstrate
the ability to execute and make decisions for the medium- to long-term growth and enhancement of the Group’s
value, and therefore proposes his new election as Director.

- 11 -

6

Haruhiko Yoshida (September 2, 1943)

Reappointment

OutsideIndependent

Number of shares of the Company held: 22,011

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1966
Feb. 1996
Apr. 1998
Jun. 1998
Jun. 2001
Apr. 2002
Jul. 2002
Jun. 2003
Jun. 2003
Jun. 2006
Jun. 2007

Joined Mitsui & Co., Ltd.
Senior Executive Vice President, Mitsui & Co. (U.S.A.), Inc.
General Manager of Communications, Transportation & Industrial Project Unit,
Mitsui & Co., Ltd.
Director and General Manager of Communications, Transportation & Industrial
Project Unit, Mitsui & Co., Ltd.
Representative Director, Executive Managing Director, and General Manager ofCommunications, Transportation & Industrial Project Unit, Mitsui & Co., Ltd.
Executive Managing Officer and General Manager of Communications,
Transportation & Industrial Project Unit, Mitsui & Co., Ltd.
Executive Managing Officer and Assistant to President of Machinery and Information
Group, Mitsui & Co., Ltd.
Outside Director, Nagano Keiki Co., Ltd.
Outside Director, the Company (incumbent)
Corporate Auditor, Hakudo Co., Ltd.
Outside Director, Hakudo Co., Ltd.

(Reason for nomination as candidate for Outside Director and expected role)

Mr. Haruhiko Yoshida has served in prominent positions at Mitsui & Co., Ltd., and possesses abundant experienceand superior insight in regard to corporate management, in addition to extensive international experience. Thus far,he has utilized this ability and experience to appropriately advise and supervise the management of the Company ingeneral, and can be expected to continue to do so. The Company therefore proposes his continued election as
Outside Director.
In addition, as Mr. Haruhiko Yoshida possesses strong independence and there is no risk of a conflict of interest
with general shareholders, the Company has judged that its corporate governance structure will also be
strengthened.
Mr. Haruhiko Yoshida was appointed Outside Director of the Company in June 2003, and his term of office will be
21 years as of the conclusion of this Meeting.

- 12 -

7

Masanobu Nakamura

Reappointment(August 23, 1946)

OutsideIndependent

Number of shares of the Company held: 13,205

Past experience, positions, responsibilities and significant concurrent positions
May 1970
Jun. 1999
Apr. 2001
Jan. 2002
May 2002
May 2004
Jun. 2005
Oct. 2005
Nov. 2005
Jun. 2007
May 2011
Sep. 2011
Jun. 2013
Jul. 2013

Joined The Sanwa Bank, Ltd. (present MUFG Bank, Ltd.)
Executive Officer and Nihonbashi Branch Manager, The Sanwa Bank, Ltd. (present
MUFG Bank, Ltd.)
Executive Officer and New York Branch Manager, The Sanwa Bank, Ltd. (present
MUFG Bank, Ltd.)Managing Executive Officer and New York Branch Manager, UFJ Bank Limited(present MUFG Bank, Ltd.)
Executive Operating Officer, Corporate Banking Company Director, UFJ Bank Limited(present MUFG Bank, Ltd.)
Representative Director, Executive Operating Officer (Strategic Support Group),Company Director, UFJ Bank Ltd. (present MUFG Bank, Ltd.)Special Advisor, Sanshin Co., Ltd.
President and Representative Director, BNP Paribas (Japan)
Director, Tokyo Branch, BNP Paribas Securities (Japan) Limited
Board of Directors Advisory Committee, the Company
Chairperson, BNP Paribas Securities (Japan) Limited
Special Advisor, BNP Paribas Securities (Japan) Limited
Outside Director, the Company (incumbent)
Chairperson, Social Collaboration Council, The Mathematical Society of Japan(Reason for nomination as candidate for Outside Director and expected role)

Mr. Masanobu Nakamura has served in prominent positions in major banks and securities companies, and possesses
abundant experience and superior insight in regard to corporate management, in addition to extensive international
experience. Thus far, he has utilized this ability and experience to appropriately advise and supervise themanagement of the Company in general, and can be expected to continue to do so. The Company therefore proposes
his continued election as Outside Director.
In addition, as Mr. Masanobu Nakamura possesses strong independence and there is no risk of a conflict of interest
with general shareholders, the Company has judged that its corporate governance structure will also be
strengthened.
Mr. Masanobu Nakamura was appointed Outside Director of the Company in June 2013, and his term of office willbe 11 years as of the conclusion of this Meeting.

- 13 -

8

Yoshio Fukuda(March 1, 1953)

Reappointment

OutsideIndependent

Number of shares of the Company held: 1,265

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1976
Jul. 2006
May 2007Jun. 2010
Jun. 2012

Jun. 2013
Apr. 2015
Jun. 2015
Jun. 2016
Jun. 2017
Jun. 2017
Jun. 2020
Jun. 2020
Mar. 2021

Joined Teijin Limited
Corporate Officer, Teijin Group
Member of the Board and General Manager of Raw Materials & Polymers Division,
Teijin Fibers Ltd.
President, P.T. Teijin Indonesia Fiber Corporation Tbk
Corporate Officer and Member of the Board, General Manager of Corporate Planning
Division, Teijin Limited
Executive Officer and Member of the Board, General Manager of Electronics Materials
and Performance Polymer Products Business Group, and General Manager of Resin and
Plastic Processing Business Unit, Teijin Limited
President, Teijin Chemicals Ltd.
Chairperson, Global Policy Board, Teijin DuPont Films Global Joint Venture
Senior Executive Officer and Member of the Board, General Manager of Electronics
Materials and Performance Polymer Products Business Group, Teijin Limited
Chairperson, Global Policy Board, Teijin DuPont Films Global Joint Venture
Advisor, Member of the Board, Teijin Limited
Advisor, Teijin Limited
Outside Director, Toyo Construction Co., Ltd.
Outside Corporate Auditor, the Company
Auditor, Japan Indonesia Association, Inc. (incumbent)
Outside Director, the Company (incumbent)
Director, Harmonic AD, Inc.
Auditor, Japan-Sri Lanka Association (incumbent)(Significant concurrent positions)Auditor, Japan Indonesia Association, Inc.
Auditor, Japan-Sri Lanka Association(Reason for nomination as candidate for Outside Director and expected role)

Mr. Yoshio Fukuda has served in prominent positions at Teijin Limited and Teijin Group and possesses abundant
experience and superior insight in regard to corporate management, in addition to extensive international
experience. In addition, he has a high level of knowledge of strategic planning, establishment of joint ventures,
M&As, etc. Based on the above, the Company has judged that he has been appropriately advising and supervising
the overall management of the Group, which is expanding its business internationally, from an independent
standpoint, and can be expected to continue to do so. The Company therefore proposes his continued election as
Outside Director.
In addition, as Mr. Yoshio Fukuda possesses strong independence and there is no risk of a conflict of interest withgeneral shareholders, the Company has judged that its corporate governance structure will also be strengthened.
Mr. Yoshio Fukuda was appointed Outside Director of the Company in June 2020, and his term of office will be 4
years as of the conclusion of this Meeting.

- 14 -

9

Kazuhiko Hayashi(April 25, 1954)

Reappointment

OutsideIndependent

Number of shares of the Company held: 234

Past experience, positions, responsibilities and significant concurrent positions
Apr. 1978
Jan. 2001

Jan. 2004
Jan. 2005
Apr. 2007
Jan. 2010
Jan. 2012
Jun. 2015
Jul. 2019

Jun. 2022

Joined Toyota Motor Co., Ltd. (present Toyota Motor Corporation)
Project General Manager of Leading-edge Vehicle Development Planning Office, Toyota
Motor Corporation
General Manager of Electronics Engineering Div. II, Toyota Motor Corporation
General Manager of Electronics Engineering Div. I, Toyota Motor Corporation
General Manager of BR Control Software Development Office, Toyota Motor
Corporation
Managing Executive Officer, Sumitomo Wiring Systems, Ltd.
Executive Officer of Sumitomo Electric Industries, Ltd., Managing Executive Officer of
Sumitomo Wiring Systems, Ltd., and Director of AutoNetworks Technologies, Ltd.
Senior Managing Executive Officer of Sumitomo Wiring Systems, Ltd., Executive
Officer of Sumitomo Electric Industries, Ltd., and Director of AutoNetworks
Technologies, Ltd.
Visiting Professor, Nagasaki Institute of Applied Science
Outside Director, the Company (incumbent)(Reason for nomination as candidate for Outside Director and expected role)

Mr. Kazuhiko Hayashi has engaged in the development and engineering of power train and electric drive control
system, etc. at the Toyota Group, and demonstrated leadership as manager. He has served in prominent positions at
the Sumitomo Electric Industries Group, and possesses abundant experience and superior insight in regard tocorporate management. In addition, he has top-class expertise on the development and engineering of such products,
and served as a visiting professor at a graduate school which was established to invent new technology based on
advanced technology and creating new business, where he lectured on energy and control-related fields in theautomotive industry. Based on this experience and capability, the Company judges that he has been advising andsupervising the management of the Company in general, and can be expected to continue to do so. The Company
therefore proposes his continued election as Outside Director.
In addition, as Mr. Kazuhiko Hayashi possesses strong independence and there is no risk of a conflict of interest
with general shareholders, the Company has judged that its corporate governance structure will also be
strengthened.
Mr. Kazuhiko Hayashi was appointed Outside Director of the Company in June 2022, and his term of office will be
2 years as of the conclusion of this Meeting.

- 15 -

10

Kaeko Kitamoto

Reappointment(April 15, 1965)

Outside Independent

Number of shares of the Company held: -Past experience, positions, responsibilities and significant concurrent positions
Apr. 1988
Oct. 1993
Jul. 2009
Sep. 2018
Jul. 2019

Jul. 2023
Jul. 2023

Joined Sapporo Breweries Limited
Joined Ota Showa Audit Corporation (currently Ernst & Young ShinNihon LLC)
Partner, Ernst & Young ShinNihon LLC
Member of Electricity and Gas Market Surveillance Commission, Ministry of
Economy, Trade and Industry (incumbent)
Executive Board Member, Ernst & Young ShinNihon LLC
Outside Director, the Company (incumbent)
Audit & Supervisory Board Member (external), DAIKIN INDUSTRIES, LTD. (incumbent)(Significant concurrent positions)Certified public accountant
Audit & Supervisory Board Member (external), DAIKIN INDUSTRIES, LTD.

(Reason for nomination as candidate for Outside Director and expected role)

Ms. Kaeko Kitamoto has abundant experience and superior insight into financial accounting, having been involvedin accounting audits of various listed companies as a certified public accountant at a major audit corporation andserving as a Partner and Executive Board Member. In addition, since 2018, she has served as a member of theElectricity and Gas Market Surveillance Commission, Ministry of Economy, Trade and Industry, and has
knowledge of introducing renewable energy sources to reduce CO2 emissions. Based on this experience andcapability, the Company judges that she has been appropriately advising and supervising the management of theCompany in general and its sustainability initiatives, including climate change and diversity, equity, and inclusion,and can be expected to continue to do so. The Company therefore proposes her continued election as Outside
Director.
In addition, as Ms. Kaeko Kitamoto possesses strong independence and there is no risk of a conflict of interest withgeneral shareholders, the Company has judged that its corporate governance structure will also be strengthened.
Ms. Kaeko Kitamoto was appointed Outside Director of the Company in July 2023, and her term of office will be 1
year as of the conclusion of this Meeting.

- 16 -

Notes:

1. Candidates’ histories at the Company are carried over from the former Harmonic Drive Systems Inc.
2. There are no special interests between any of the candidates and the Company.
3. Mr. Haruhiko Yoshida, Mr. Masanobu Nakamura, Mr. Yoshio Fukuda, Mr. Kazuhiko Hayashi and Ms. Kaeko
Kitamoto are candidates for Outside Directors.
4. Mr. Haruhiko Yoshida, Mr. Masanobu Nakamura, Mr. Yoshio Fukuda, Mr. Kazuhiko Hayashi and Ms. Kaeko
Kitamoto are candidates for Independent Directors with no risk of conflict of interest with general shareholders, forwhich appointment is required by the Tokyo Stock Exchange.
5. The number of shares of the Company held includes the portion held by the Officers’ Shareholding Association.
6. Liability limitation agreement with Outside Directors
In order to create an environment where the Company can invite capable personnel to serve as Directors, and toenable them to sufficiently perform the duties expected of them, the Company stipulates in its Articles ofIncorporation that it may enter into an agreement with Directors (excluding persons who are Executive Directors,etc.) to limit their liability to the Company to a certain range. Among candidates for Director, Mr. Haruhiko Yoshida,
Mr. Masanobu Nakamura, Mr. Yoshio Fukuda, Mr. Kazuhiko Hayashi, and Ms. Kaeko Kitamoto are currently
Outside Directors, and the Company has thus entered into liability limitation agreements with each of thesecandidates.
An overview of the content of the liability limitation agreements that the Company has entered into with incumbent
Outside Directors is as follows.
・If a Director (excluding persons who are Executive Directors, etc.) causes damages to the Company owing to
the neglect of his or her duties, his or her liability shall be limited to the minimum amount for liability set forth in
Article 425, Paragraph 1 of the Companies Act, provided that he or she has performed his or her duties in goodfaith and without gross negligence.
7. Directors and officers, etc. liability insurance contracts
The Company has concluded a directors and officers, etc. liability insurance agreement provided for in Article 4303 of the Companies Act with an insurance company, and the said insurance agreement shall compensate fordamages including compensation for damages and legal expenses to be borne by the insureds. Note that the Company
bears the full cost of the insurance premiums. If each of the candidates for Director is elected and assumes office,
the Company plans to make all of them insured persons under the aforementioned directors and officers, etc.
insurance agreement.

- 17 -

(Reference)
Skills matrix of Directors after the conclusion of this Meeting
The overall composition of the Board of Directors and the main skills (insight, experience, capability,
expertise, etc.) of each Director are as outlined below if this proposal is approved as originally proposed:
Expected insight, experience, capability and expertise, etc.
Name

Position(As proposed)

Attributes

Corporate
management/
Management
strategyOverseasbusiness

Sales/
Marketing●●Information
Financial
andManufacturing Technology/
strategy/
Communication/Production
R&D
Capital policy /Technology
Accounting(ICT)

Akira Nagai

Chairpersonof board of
directors―●

Akira Maruyama

President andRepresentative
Director―●●

Kazutoshi Kamijoh

Representative
Director―●●

Yoshihiro Tanioka

Director

―

●

●

●

●

●

Naomi Shirasawa

Director

―

●

●

●

●

●

Haruhiko Yoshida

OutsideDirector

Independent

●

●

●

●

●

●

●

●

●

●

●

OutsideMasanobu Nakamura Director

OutsideOutsideIndependent
Outside

Yoshio Fukuda

OutsideDirector

Kazuhiko Hayashi

OutsideDirector

Independent

Kaeko Kitamoto

OutsideDirector

Independent

Independent
OutsideOutside●●●- 18 -

●
●

●

●

●

●

●
●

●

Sustainability●

Reasons for selecting skill areas of the Skills Matrix
Skill areas
Corporate management/
Management strategy

Reasons for selection
A director needs management experience and track record at various companies including a
manufacturing company as well as abundant knowledge to deliver technological innovation
for a better society under the Group’s mission of “contributing to technological innovation insociety through motion control technology,” in addition to achieving a sustainable society andenhancing corporate value.

Overseas businessA director needs abundant knowledge and experience in overseas business management andlocal culture, etc. to promote the growth strategy of the Group which operates businessoverseas.

Sales/ Marketing

A director needs proven knowledge and abundant experience in sales and marketing to identify
essential needs of customers, create attractive and satisfactory products, and provide customeroriented services.

Manufacturing/ Production

A director needs proven knowledge and abundant experience in manufacturing and production
which is essential to maintain and develop a production system to achieve added-value
manufacturing in total motion control, the domain of the Company, and high customer
satisfaction.

Technology/ R&D

A director needs experience in R&D for speed reducers and mechatronics products, in addition
to expertise and experience in the industry, to ensure high product quality as a leading company
of precision speed reducers, and develop high added-value products for customers.

Financial strategy/ Capital
policy/ Accounting

A director needs proven knowledge and abundant experience in finance and accounting tobuild a solid financial base, promote growth investment and financial strategy to sustainably
enhance corporate value and return profits to shareholders.

Information andCommunication Technology(ICT)

A director needs proven knowledge and experience in information and communication
technology to develop information infrastructure including cyber security measures and topromote ICT across the Company utilizing advanced information technologies.

Sustainability

A director needs proven knowledge and experience in sustainability promotion including the
introduction of renewable energy sources to reduce greenhouse gas emissions and humancapital such as the promotion of diversity, equity, and inclusion to promote the reduction of
global environmental impacts, the development of a rewarding work environment, etc. basedon the Basic Policy of Sustainability and material issues (materiality), which were established
to realize a sustainable society and enhance corporate value.

- 19 -

(Reference) Independence Standards for Outside Directors
The Company shall elect independent outside directors who are outside directors without any risk of a conflict of interest
with general shareholders (outside directors under Article 2, Paragraph 15 of the Companies Act) and outside officers
prescribed in Article 2, paragraph (3), item (v) of the Regulation for Enforcement of the Companies Act (Ministry of Justice
Order No. 12 of February 7, 2006) who do not fall under any of the following items and who possess strong independence
without any risk of a conflict of interest with general shareholders.
1) A major business partner of the Group or an executive thereof;2) A major shareholder who directly or indirectly holds 10% or more of the Company’s total voting rights or a person
performing an executive role thereof;3) An executive of the Group companies;
4) An accounting auditor of the Group or an employee thereof;5) A consultant, accounting specialist and/or legal special receiving substantial amount of money or other financial benefits
beyond compensation as directors and officers paid by the Group (or if the entity receiving such financial benefits is a
corporation, association or other organization, then any individual belonging to such organization);
6) A person who has been an executive of the Group companies or has served as a director, corporate auditor or executive
officer of the Group over the past ten (10) years, a relative within the second degree of relationship of such person or aperson living together with such person;
In addition, if an applicable person is still judged to be substantially independent even in a case where he or she fallingunder any of the items 1) – 6) above, the Company will explain and disclose the reason at the time of election.
End- 20 -

Proposal 3: Election of four (4) Corporate Auditors
The terms of office of all four (4) Corporate Auditors will expire at the conclusion of this Meeting, andtherefore the Company proposes the election of four (4) Corporate Auditors.
The Board of Corporate Auditors has given its consent to the submission of this proposal.
The candidates for Corporate Auditors are as follows:
No.

Name

GenderAge

Current positions
at the Company

1

Reappointment

Yoshitsugu Yokogoshi Male70

Full-time Corporate
Auditor2

Reappointment

Hidefumi Iguchi

Male

65

Full-time Corporate
Auditor3

Reappointment

Eisaku Imazato

Male

68

Outside Corporate
Auditor (Part-time)4

New appointment

Nobuyuki Higashi

Male

60

―

Attendance Attendanceat Board of
at Board of
Attributes Directors Corporate
Auditors
meetings
meetings
OutsideIndependent―
OutsideIndependent―

Note: The age is as of the date of this Meeting.

Reappointment

Candidate for reappointment as Corporate Auditor

New appointment Candidate for new appointment as Corporate Auditor
OutsideCandidate for Outside Corporate Auditor

Independent

Independent Corporate Auditor registered at the Tokyo Stock Exchange- 21 -

Yearsin
office

18/18

17/17

4 years

18/18

17/17

2 years

18/18

17/17

4 years

―

―

―

1

Yoshitsugu Yokogoshi

Reappointment(November 16, 1953)

Outside Independent

Number of shares of the Company held: -Past experience, positions, and significant concurrent positions
Apr. 1977
Apr. 1995
May 2005
May 2007Jan. 2009
Jun. 2014
Jun. 2017
Jun. 2020

Joined The Sanwa Bank, Ltd. (present MUFG Bank, Ltd.)
Yoyogi Branch Manager, The Sanwa Bank, Ltd. (present MUFG Bank, Ltd.)
Executive Officer, General Manager of Public Relations Department, UFJ Bank Ltd. (present MUFG
Bank, Ltd.)Managing Executive Officer and Deputy Chief Executive of Retail Banking Business Unit, The Bankof Tokyo-Mitsubishi UFJ, Ltd. (present MUFG Bank, Ltd.)
Executive Vice President, Mitsubishi UFJ Asset Management Co., Ltd.
President, The Midori Kai Co., Ltd.
Full-time Audit & Supervisory Board Member, Cosmo Oil Co., Ltd.
Full-time Outside Corporate Auditor, the Company (incumbent)(Reason for nomination as candidate for Outside Corporate Auditor)

Mr. Yoshitsugu Yokogoshi possesses abundant management experience and broad insight gained at a majorbanking group. In addition, he possesses a wealth of knowledge of duties of corporate auditor and substantial
knowledge of finance and accounting gained through his experience of having served as a full-time corporate
auditor at another company. Since assuming office as full-time Outside Corporate Auditor of the Company, he has
been strengthening its corporate governance structure from an independent standpoint. The Company therefore
proposes his continued nomination as a candidate for full-time Outside Corporate Auditor.
Mr. Yoshitsugu Yokogoshi was appointed full-time Outside Corporate Auditor of the Company in June 2020, andhis term of office will be 4 years as of the conclusion of this Meeting.

- 22 -

2

Hidefumi Iguchi

Reappointment(April 5, 1959)

Number of shares of the Company held: 5,470

Past experience, positions, and significant concurrent positions
Apr. 1983
May 1999
Apr. 2009
Jun. 2011
May 2013
Jul. 2014
Jun. 2020
Apr. 2022
Jun. 2022

Joined the Company
General Manager of Quality Assurance Promotion Office, the Company
General Manager of Operational Process Innovation Department, the Company
General Manager of Internal Control and Audit Office, the Company
Corporate Auditor, Harmonic Precision Inc.
Executive Officer (Corporate Governance), General Manager of Internal Control and Audit Office,
the Company
Executive Officer (Administration and Human Resource), General Manager of Administration and
Human Resource and Manager of Environment, the Company
Executive Officer, General Manager of Administration and Human Resource Division, Manager ofEnvironment, and General Manager of Health Promotion Center, the Company
Full-time Corporate Auditor, the Company (incumbent)(Reason for nomination as candidate)

Mr. Hidefumi Iguchi has engaged in business of the Company over many years, and has served prominent positionsat quality, environment, internal control audit, human resource and administration divisions. Based on the above, hepossesses abundant experience and superior insight, and, since assuming office as full-time Corporate Auditor, he
has been significantly contributing to strengthening our audit function based on his experience and knowledge
accumulated thus far. The Company therefore proposes his continued nomination for full-time Corporate Auditor.
Mr. Hidefumi Iguchi was appointed full-time Corporate Auditor of the Company in June 2022, and his term ofoffice will be 2 years as of the conclusion of this Meeting.

- 23 -

3

Eisaku Imazato

Reappointment(March 2, 1956)

Outside Independent

Number of shares of the Company held:-

Past experience, positions, and significant concurrent positions
Apr. 1979
Mar. 2002
Mar. 2003
Dec. 2004
Feb. 2005
Feb. 2007
Aug. 2008
Feb. 2009
May 2010

Jun. 2012
Jun. 2016
Mar. 2020
Jun. 2020

Joined The Nikko Securities Co., Ltd. (present SMBC Nikko Securities Inc.)
General Manager of Corporate Clients Department II, Nikko Cordial Securities Inc.
Executive Officer, General Manager of Tokyo Corporate Clients Department II, Nikko Cordial
Securities Inc.
Director in charge of sales planning and corporate clients, Nikko Cordial Securities Inc.
Executive Managing Director in charge of planning and wholesale business promotion, Nikko
Cordial Securities Inc.
Senior Managing Director in charge of Wholesale Sales Division I, Nikko Cordial Securities Inc.
Senior Executive Officer, Head of Institutional Client Coverage Division, Nikko Citigroup Limited
Managing Executive Officer, Co-Head of Corporate & Institutional Business Unit, Mitsubishi UFJ
Securities Co., Ltd.
Managing Executive Officer, Head of Corporate & Institutional Business Unit, Head of Corporate
Clients Group, and Co-Manager of Regional Executives, Mitsubishi UFJ Morgan Stanley Securities
Co., Ltd.
Managing Executive Officer in charge of corporate consolidation, Mitsubishi UFJ Securities
Holdings Co., Ltd.
Executive Officer, Mitsubishi UFJ Financial Group, Inc.
Principal Executive Officer, Head of Corporate & Institutional Business Unit, Mitsubishi UFJ
Morgan Stanley Securities Co., Ltd.
Outside Director, Chairperson of the Board of Directors, Marusan Securities Co., Ltd.
Outside Director, Marusan Securities Co., Ltd. (incumbent)
Outside Corporate Auditor, the Company (incumbent)(Significant concurrent positions)

Outside Director, Marusan Securities Co., Ltd.

(Reason for nomination as candidate for Outside Corporate Auditor)

Mr. Eisaku Imazato has served in prominent positions at major securities companies, and possesses abundant
management experience and broad insight. Since assuming office as Outside Corporate Auditor of the Company, he
has been strengthening our corporate governance structure from an independent standpoint. The Company therefore
proposes his continued nomination for Outside Corporate Auditor.
Mr. Eisaku Imazato was appointed Outside Corporate Auditor of the Company in June 2020, and his term of officewill be 4 years as of the conclusion of this Meeting.

- 24 -

4

Nobuyuki Higashi

New appointment(March 31, 1964)

Number of shares of the Company held:-

Past experience, positions, and significant concurrent positions
Apr. 1987
Apr. 1998
Jul. 2000
Apr. 2012
Apr. 2017
Apr. 2017
Jun. 2017
Sep. 2018
Mar. 2020
Jun. 2021

Nomura Research Institute, Ltd.
Nomura Securities Co., Ltd.
Nomura Principal Finance Co., Ltd.
Managing Director of Investment Business Group, Innovation Network Corporation of Japan(currently Japan Investment Corporation)
Outside Director, JOLED Inc. (incumbent)
Outside Corporate Auditor, Harmonic Drive AG (currently Harmonic Drive SE)
External Director, Japan Display Inc. (retired in June 2018)
Executive Managing Director and Managing Director of Investment Business Group, INCJ, Ltd.
External Director, Japan Display Inc.
Senior Executive Managing Director and Managing Director of Investment Business Group, INCJ,
Ltd. (incumbent)(Significant concurrent positions)
Senior Executive Managing Director, INCJ, Ltd.
Outside Director, JOLED Inc.

(Reason for nomination as candidate)

Mr. Nobuyuki Higashi has abundant experience in management research and investment business at major thinktanks, major securities companies, investment companies, etc., and possesses considerable knowledge of financeand accounting. He also possesses a high level of insight into corporate management, having served as an outside
director and an outside corporate auditor of several companies involved in investment business through publicprivate funds.
In March 2017, the Company jointly acquired additional shares of Harmonic Drive AG (currently Harmonic DriveSE), a German equity method affiliate, with Innovation Network Corporation of Japan, and he served as an Outside
Corporate Auditor of Harmonic Drive AG from April 2017 to July 2021, auditing and supervising the company’s
management, and sufficiently fulfilled his duties as an Outside Corporate Auditor. The Company expects that hewill contribute to strengthening our audit function, and proposes his new nomination for Corporate Auditor.

- 25 -

Notes:

1.
2.
3.
4.

Candidates’ histories at the Company are carried over from the former Harmonic Drive Systems Inc.
There are no special interests between any of the candidates and the Company.
Mr. Yoshitsugu Yokogoshi and Mr. Eisaku Imazato are candidates for Outside Corporate Auditor.
Mr. Yoshitsugu Yokogoshi and Mr. Eisaku Imazato are candidates for Independent Corporate Auditors with no riskof conflict of interest with general shareholders, for which appointment is required by the Tokyo Stock Exchange.
5. The number of shares of the Company held includes the portion held by the Officers’ Shareholding Association.
6. Liability limitation agreement with Corporate Auditors
In order to create an environment where the Company can invite capable personnel to serve as Corporate Auditors,
and to enable them to sufficiently perform the duties expected of them, the Company stipulates in its Articles ofIncorporation that it may enter into an agreement with Corporate Auditors to limit their liability to the Company to acertain range. Among candidates for Corporate Auditor, Mr. Yoshitsugu Yokogoshi, Mr. Hidefumi Iguchi and Mr.
Eisaku Imazato are currently Corporate Auditors, and the Company has thus entered into liability limitationagreements with each of these candidates. If they are reelected and assume office, the Company will continue theliability limitation agreements with each of these candidates. If the candidate for Corporate Auditor Mr. Nobuyuki
Higashi, is elected and assumes office, the Company will enter into a liability limitation agreement with him.
An overview of the content of the liability limitation agreements that the Company has entered into with incumbent
Corporate Auditors is as follows.
・If a Corporate Auditor causes damages to the Company owing to the neglect of his or her duties, his or her
liability shall be limited to the minimum amount for liability set forth in Article 425, Paragraph 1 of theCompanies Act, provided that he or she has performed his or her duties in good faith and without grossnegligence.
7. Directors and officers, etc. liability insurance contracts
The Company has concluded a directors and officers, etc. liability insurance agreement provided for in Article 4303 of the Companies Act with an insurance company, and the said insurance agreement shall compensate fordamages including compensation for damages and legal expenses to be borne by the insureds. Note that the Company
bears the full cost of the insurance premiums. If each of the candidates for Corporate Auditor is elected andassumes office, the Company plans to make all of them insured persons under the aforementioned directors andofficers, etc. insurance agreement.

- 26 -

Business Report(April 1, 2023 - March 31, 2024)

1. Matters concerning Present Status of the Corporate Group(1)

Business Progress and Results(i)

Overview of business
Future of the world economy increased uncertainty during this fiscal year under review due to factors
such as further instability of the international situation, strong inflationary pressures and surge inresource and raw material prices, in addition to the slower growth in the Chinese economy. These
factors had a noticeable impact on the Harmonic Drive Systems Group (hereinafter “the Group”),
including a decrease in orders received, a surge in procurement costs for materials, and an increase inpersonnel costs due to increased wage rates.
Overview of amount of orders received
The situations concerning orders received by the Group generally became tough owing to continuous
cutbacks in future orders by customers who were increasingly concerned about demand trends,
reflecting slower capital investment in China’s manufacturing industry, stagnancy of investment in new
facilities for cutting-edge semiconductors, and others.
On the other hand, although it cannot be said that Japan is experiencing a full-on recovery, it can be
confirmed that orders received have bottomed out, and orders received from customers whose
inventories of our products have been optimized have begun to return, albeit gradually. As a result,consolidated orders received decreased by 20.9% year on year to 44,104 million yen.
Overview of net sales
Consolidated net sales for the fiscal year under review amounted to 55,796 million yen, down 22.0%
year on year, having been significantly affected in particular by sluggish orders received in Japan, which
has continued from the previous fiscal year.
Overview of net sales by application
Regarding net sales by application, net sales for industrial robots decreased significantly, due to factors
such as slower capital investment in China, the main market, in addition to cutbacks in capital
investment in EVs. Net sales for semiconductor manufacturing equipment also decreased, especially inthe cutting-edge area, where new indications of investment such as in data center application andgenerative AI application were shown; however, there was no full-scale progress in the fiscal year underreview.
On the other hand, net sales for advanced medical applications such as surgical robots rose reflecting
steady demand growth mainly from customers in the United States of America. Net sales for automotive
applications steadily progressed, due to gradual improvement since the latter half of the previous fiscal
year in production adjustment by customers caused by the semiconductor shortage.
Overview of profit
In terms of profit and loss, depreciation cost increased as a result of investment made to enhance
production capacity in the previous fiscal year. In addition, the lower operating rates of production
plants in Japan during the fiscal year under review also affected the results, and operating profit
decreased to 124 million yen, down 98.8% year-on-year. In addition, loss attributable to owners ofparent of 24,806 million yen (profit attributable to owners of parent of 7,595 million yen in the previous
fiscal year) was recorded. This is mainly because 28,159 million yen of impairment losses of intangible
assets was recorded related to Harmonic Drive SE, a consolidated subsidiary.
Overview of business initiatives
In fiscal year 2023, which is the final year of the medium-term management plan for fiscal years 20212023, we worked on various measures set out in the plan.
On the sales front, we worked to acquire orders with a greater sense of urgency in solving customer issues
on a case-by-case basis. In the exhibition area, continuing from the previous year, we held the“Mechatronics Show” again on August 31 and September 1, featuring three major manufacturers of coremotion control components (THK Co., Ltd., SMC Corporation, and the Company). Through the appealof the combined strength of each company, the show provided an opportunity for attracting many
visitors and having substantive business negotiations. Aiming to expand adoption opportunities for theCompany’s products, we exhibited at exhibitions related to the space industry, etc. in order to expand toother new uses.

(ii)

(iii)

(iv)

(v)

(vi)

- 27 -

In terms of R&D, we worked on evolving the flagship product, the HarmonicDrive® strain wave
gearing, as well as focused on joint research with external research institutes, continuing to develop andcommercialize elements that are potentially essential to next-generation motion control technology. In
particular, we applied the latest weight reduction technology and construction method development for
new development projects, contributing to customers’ new technological transformation. In the field of
mechatronics, in addition to the development of next-generation drivers (control devices), focused on
developing torque sensors and enhancing value-added products, we strengthened a new technologicalfoundation.
On the production front, Japanese factories continued to operate at a low level due to impacts ofsluggish orders received. The Company saw this as a chance and worked on reforms and improvementsthat could only be done at this time, aiming to further improve productivity and quality, anticipating
growing demand. Utilizing information systems, we introduced the “MES (Manufacturing Execution
System)” at the Ariake Plant, for real-time management, grasping the status of manufacturing processes
and managing forecasts and actual results, and providing instructions and support. In addition, with theaim of further improving and passing on skills of employees, improvements in operations andpromoting multi-skilled workers were conducted based on the key phrase of “eliminated waste” for allprocesses.
We have been progressing with the complete transfer of production capabilities of our mechatronics
product from the Company to Harmonic Winbel Inc. (a consolidated subsidiary), a new manufacturingbase. Alongside this, production capacity is also being increased, with the transfer scheduled to becompleted in October 2024.
We also increased production capacity at our overseas production sites in Germany and the UnitedStates in anticipation of increased demand in the future. Furthermore, we transferred product production
to increase locally produced products for customers in each region, with the aim of maximizing
production efficiency within the Group.
In terms of quality, we significantly expanded the “visualization” of various manufacturing data, andstrengthened our quality control framework.
We also focused on coordination with each Group company and worked to maintain and raise our
Common Global Quality initiative as we promote production transfers.
As part of our sustainability initiatives, the Sustainability Committee was established in April 2023, andwe have adopted a system in which management themselves promote initiatives. Furthermore,materiality was partially reviewed in November of the same year, and we are working to further clarify
the Group’s issues. We are promoting the sustainability activities of the Group, such as establishing an“SDGs Proposal System,” where all employees can actively participate and not just be told what to do.

(2)Capital investment status
The total amount of capital investment made by the Group during the fiscal year under review was
4,955 million yen, and the details are as follows.
(Millions of yen)
Facilities
Capital investment amount722
Buildings and structures
Machinery, equipment and vehicles
2,386
Tools, furniture and fixtures
1,151
171
Leased machinery, equipment and vehicles
Software
424
Land
98
- 28 -

(3)Financing status
To enable flexible management, we have concluded a three-year commitment line agreement with a
syndicate of six banks for a total of 8.5 billion yen.
However, at the end of the fiscal year under review, there was no outstanding borrowing based on thecommitment line agreements.

(4)

Issues to Be Addressed(i)Issues for fiscal year 2024
Amid expectations of further uncertainty in the global economy, such as resource and raw material
prices remaining high due to instability of the international situation, and exchange rate fluctuations, inthe business environment of the Group in fiscal year 2024, product demand is expected to recover due
to expanding investment in automation, such as robots to make up for the decline in the working
population, and expanding demand for cutting-edge semiconductors, which are necessary for expanding
data centers and generative AI. As a result, with inventory adjustments of our products by customers
and agencies, we expect a recovery in orders received during the period. In order to respond to thisbusiness environment, we will continue to maintain our high production capacity and strengthen our
supply chain system to ensure stable procurement of materials, further promote productivity
improvement and operational efficiency through proactive investment in IT, and strive for further
quality, cost, delivery, service; product power enhancement, cost reduction, and lead-time reduction),
which were implemented as measures in the current medium-term management plan (fiscal years 20212023).
In addition, we will promote the improvement of our ability to solve customer issues and theacceleration of our response through the integration of sales and development technology, and focus on
further expanding our competitive advantage.
Medium- to long-term issues
The Group promotes its unwavering mission of contributing to social and technological innovation
through motion control technology.
For mechatronics and precision speed reducers, in which we participate, is contributing greatly to theemerging social and technological innovation, including electrification of vehicles and surgical robots,and such demand is expected to continue to expand. At the same time, with the acceleration of
automation as demand for collaborative robots in addition to a new market for “humanoid robots” isexpected to increase amid the worldwide labor shortage. To properly capture these growth opportunities,
the Group aims to further strengthen its business foundation. We also pursue activities for achieving
sustainable society through our business, based on the new medium-term management plan (fiscal years
2024-2026) which was newly formulated, with the whole Group united. Moreover, we aim to enhance
corporate value over the medium to long term by maintaining a balance between defensive andoffensive approaches in our management strategy to achieve our missions and new long-term vision.

(ii)- 29 -

The summaries of the Management Principles, the Basic Policy of Sustainability, our Group’s mission, long-term
vision, materiality, and medium-term management plan are as follows.
■

Management Principles
1. Respect for the individual
2. A meaningful company
3. Coexistence and co-prosperity
4. Contribution to society■

Basic Policy of Sustainability
Based on our management principles on four pillars: 1) Respect for the individual, 2) a meaningful company,3) coexistence and co-prosperity, and 4) contribution to society, the HDS Group, a group of technological andengineering experts providing total motion control, aims to realize sustainable society and increase its
corporate value by contributing to technological innovation for better society.

■

Our Group’s Mission
To contribute to technological innovation in society through motion control technology■

Our Vision
The best provider of total motion control in harmony with the future■

Materiality
 Maximize the value of human capital Achieve QCDS that goes beyond customer expectations
 Take on the challenge of developing new technologies and new skills that coordinate with changes in theenvironment
 Contribute to creating a sustainable society through corporate activities
 Establishment of a management foundation in harmony with the times■

Medium-term Management Plan for Fiscal Years 2024–2026– Take on the challenge of “value creation and transformation” –Basic policies(a) Sustainable growth of all businesses with an emphasis on profitability
 Develop new drivers for growth Thorough implementation of QCDS+Speed to meet customer expectations(b) Strengthen management resources (people, things, money, information) that can adapt to changes in theenvironment Realize an organization where individual growth and diverse skills are demonstrated andrespected
 Growth investment aware of capital efficiency
 Strengthen the financial foundation and governance(c) Initiatives to enhance corporate value that will continue into the future Promote Net Zero
 Appoint and hire diverse personnel
 Develop products that promote the reduction of customers’ environmental load

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(5)Trends in Assets and Profit/Loss

Category
Orders received
Net sales
Ordinary profit
Profit (loss) attributable toowners of parent
Profit (loss) per share
Total assets
Net assets(Thousands of yen, or for profit (loss) per share, yen)
FY 2023(FY under
FY 2020
FY 2021
FY 2022
review)
41,675,681
94,823,135
55,760,423
44,104,880
37,034,042
57,087,914
71,527,316
55,796,455
1,366,803
9,108,243
10,757,728
570,333
662,495

6,643,893

7,595,928(24,806,996)

6.88
140,028,170
110,059,815

69.02
143,289,918
98,856,302

79.67
154,336,246
103,955,658(261.00)
119,142,291
79,401,665- 31 -