[Translation for Reference and Convenience Purposes Only]
Please note that the following is an unofficial English translation of Japanese original text of the Notice ofConvocation of the 83rd Ordinary General Meeting of Shareholders of Kurita Water Industries Ltd. The Company
provides this translation for reference and convenience purposes only and without any warranty as to its accuracy orotherwise. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail.

Notice of Convocation of
the 83rd Ordinary General Meeting of Shareholders

Kurita Water Industries Ltd.

[Translation for Reference and Convenience Purposes Only]

TABLE OF CONTENTS
Notice of Convocation

Notice of Convocation of the 83rd Ordinary General Meeting of
Shareholders ·······································································3Reference Documents for the
General Meeting of Shareholders

Proposal No. 1: Appropriation of Surplus ·····································5
Proposal No. 2: Partial Amendments to the Articles of Incorporation ····6
Proposal No. 3: Election of Eleven (11) Directors ···························7
Proposal No. 4: Election of One (1) Member of the Audit & Supervisory
Board·············································································· 19
Proposal No. 5: Election of One (1) Substitute Member of the Audit &Supervisory Board ······························································ 20<Reference> Corporate Governance ········································· 23(Attached documents to the notice of convocation of the 83rd ordinary general meeting of shareholders)Business Report
1. Group Overview of Operations ············································ 26
2. Stock of the Company······················································· 35
3. Directors and members of the Audit & Supervisory Board of theCompany ········································································· 36
4. Accounting Auditor ·························································· 40
5. System to ensure that the execution of the duties of directors conforms
with laws, regulations, and the Articles of Incorporation and othersystems to ensure appropriate operations ··································· 41
Consolidated Financial Statements

Consolidated Balance Sheet ··················································· 48
Consolidated Statement of Income ··········································· 49
Consolidated Statement of Changes in Shareholders’ Equity ············ 50

Non-Consolidated Financial
Statements

Non-Consolidated Balance Sheet············································· 51
Non-Consolidated Statement of Income····································· 52
Non-Consolidated Statement of Changes in Shareholders’ Equity ······ 53

Audit Report

Accounting Auditor’s Audit Report on the Consolidated Financial
Statements········································································ 55
Accounting Auditor’s Audit Report on the Non-Consolidated Financial
Statements········································································ 57
The Audit & Supervisory Board’s Audit Report ··························· 59–1–

[Translation for Reference and Convenience Purposes Only]

Dear Shareholders,
On July 13, this year, Kurita Water Industries Ltd. will celebrate 70 years since its foundation. We
extend our heartfelt gratitude to firstly our shareholders and to all stakeholders who have assisted us
over these many years.
The shareholders of Kurita Water Industries Ltd. are hereby notified of and invited to the 83rd
Ordinary General Meeting of Shareholders to be held on Thursday, June 27, 2019.
This notice details the agenda proposals of the General Meeting of Shareholders and provides an
overview of business operations in the fiscal year ended March 31, 2019. We request that you read it.
June 2019
Sincerely yours,
Michiya Kadota
President and Representative Director

Corporate Philosophy
Study the properties of water, master them,and we will create an environment in which nature and man are in harmony
Kurita Group will contribute to facilitate the coexistence and shared prosperity of the naturalenvironment and human society by creating shared value with society through water.
Kurita Group will generate new functions and value for water, through further exploration andexploitation of the fundamental properties of water.
Each individual of Kurita Group will adopt its customers’ point of view and solve their water andenvironmental issues, by making full use of its unique technologies, products and services.

–2–

[Translation for Reference and Convenience Purposes Only]
Securities Code: 6370
June 7, 2019

Dear Shareholders
Michiya Kadota
President and Representative Director

Kurita Water Industries Ltd.
10-1, Nakano 4-chome, Nakano-ku, TokyoNOTICE OF CONVOCATION OF
THE 83rd ORDINARY GENERAL MEETING OF SHAREHOLDERS
We hereby provide notice that the 83rd Ordinary General Meeting of Shareholders of Kurita Water Industries
Ltd. (the “Company”) shall be held as described below and request your attendance thereat.
If you are unable to attend on the day of the meeting, you may exercise your voting rights in writing or via
the Internet, etc. Please review the attached Reference Documents for the General Meeting of
Shareholders described hereinafter, and exercise your voting rights in accordance with the Guide to
Exercising Your Voting Rights (available only in Japanese), no later than 5:15 p.m. on Wednesday, June
26, 2019.
1.

Time and Date:

2.

Place:

3.

4.

10:00 a.m., Thursday, June 27, 2019 (Reception starts at 9:00 a.m.)

10F Conference Room
Kurita Water Industries Ltd.
Nakano Central Park East,
10-1, Nakano 4-chome, Nakano-ku, Tokyo
Objectives of the Meeting:
1. Reports on Business Report and Consolidated Financial Statements, as well as
Reports:
Results of the Audits of the Consolidated Financial Statements by the
Accounting Auditor and the Audit & Supervisory Board for the 83rd Fiscal Year
(From April 1, 2018, to March 31, 2019)
2. Reports on Non-Consolidated Financial Statements for the 83rd Fiscal Year
(From April 1, 2018, to March 31, 2019)
Agenda:Appropriation of Surplus
Proposal No. 1:
Partial Amendments to the Articles of Incorporation
Proposal No. 2:
Election of Eleven (11) Directors
Proposal No. 3:
Election of One (1) Member of the Audit & Supervisory Board
Proposal No. 4:
Election of One (1) Substitute Member of the Audit & Supervisory Board
Proposal No. 5:

Other Matters Regarding the Convocation of the General Meeting of Shareholders:If your voting rights are exercised in duplicate in writing and via the Internet, etc.:
The exercise of your voting rights that reaches the Company last shall be deemed valid.
Provided, however, that in the event your Voting Rights Exercise Form and your exercise via the Internet,
etc. reach the Company on the same date, the exercise of your voting rights via the Internet, etc. shall bedeemed valid.

–3–

[Translation for Reference and Convenience Purposes Only] If you attend the meeting, we request that you submit the enclosed Voting Rights Exercise Form to thereception desk at the meeting. Any persons other than the shareholders who are entitled to exercise theirvoting rights are not allowed to enter the place of this meeting.
 Consolidated Statement of Changes in Shareholders’ Equity, notes to consolidated financial statements, Nonconsolidated Statement of Changes in Shareholders’ Equity and notes to non-consolidated financial
statements are not stated in accompanying materials of this notice of convocation as they are posted on the
Company’s website on the Internet based on laws and regulations and provisions of Article 14 of the Articles
of Incorporation of the Company. The Consolidated Statement of Changes in Shareholders’ Equity, the notes
to consolidated financial statements, the Non-consolidated Statement of Changes in Shareholders’ Equity andthe notes to non-consolidated financial statements that are posted on the Company’s website are materials
that have been audited by the members of Audit & Supervisory Board and the Accounting Auditor, and theaudit report thereof is as attached to this notice of convocation.
 If there are any corrections to the Reference Documents for the General Meeting of Shareholders, theBusiness Report, the Consolidated Financial Statements and/or the Non-Consolidated Financial Statements,
such corrections will be posted on the Company’s website.
 The Company participates in the Electronic Voting Platform operated by ICJ, Inc.
The Company’s website
https://ir.kurita.co.jp/en/shareholders_information/shareholder_meeting/index.html
While the notes to consolidated financial statements and notes to non-consolidated financial statements have notbeen translated into English, a portion of the notes to consolidated financial statements is included in the English
translation of the consolidated financial statements viewable via the following link:
https://ir.kurita.co.jp/en/downloads/pdf/immediate_190513_en.pdf[Notice] After the conclusion of the meeting, the shareholder briefing will be held in the same place. We would
very much like you to stay on and attend this briefing.

–4–

[Translation for Reference and Convenience Purposes Only]

Reference Documents for the General Meeting of Shareholders

Proposal No. 1: Appropriation of Surplus
1. Year-end dividends
The Company’s basic policy is to pay stable dividends on an ongoing basis. The Company will endeavor to return profits
to shareholders by maintaining a dividend increase, setting a consolidated dividend payout ratio of 30% to 50% as a guideand making the decision based on consolidated dividend payout ratios for the most recent five years in order to respondflexibly to changes in the financial results each year.
The Company proposes that the year-end dividend for the current fiscal year be ¥27 per share, an increase of ¥1 per sharefrom a year earlier.
The Company’s annual dividend for the fiscal year under review would be ¥54 per share, including ¥27 per share
distributed as an interim dividend, an increase of ¥1 per share from a year earlier, and the consolidated dividend payout
ratio would be 35.0%.

(1)Type of Property for Dividends

Cash

(2)

Allotment of Property for
Dividends and Total Amount Thereof

Dividend per share of common
stock of the Company¥27

Total amount of dividends¥3,040,388,676(3)Effective Date of
the Distribution of Surplus

June 28, 2019

2. Other appropriation of surplus
We propose the following internal reserves to be used for investments aimed at boosting corporate value, etc.
in order to strengthen the management foundation in preparation for the development of operations in the
future.
(1)

Item of surplus to be increased
and amount of increase

General reserve¥17,500,000,000(2)Item of surplus to be decreased
and amount of decrease

Retained earnings brought forward¥17,500,000,000–5–[Translation for Reference and Convenience Purposes Only]

Proposal No. 2: Partial Amendments to the Articles of Incorporation
1. Reasons for proposal(1) In line with the enforcement of the Act for Partial Revision of the Act for Securing the Proper Operationof Worker Dispatching Undertakings and Protecting Dispatched Workers and Other Acts (Act No. 73 of2015), and in response to the resulting abolishment of the categories of “general worker dispatchingundertakings” and “specified worker dispatching undertakings,” the Company proposes to make necessary
amendments to Article 2 (Purpose) of the present Articles of Incorporation.
(2) The Company appoints Senior Corporate Advisors and Advisors based on the provisions of the Articles ofIncorporation. Both the role of Senior Corporate Advisor and the role of Advisor provides assistance infields in which they are appointed to by leveraging their abundant insight and experience, and there is notmaterial difference between the two roles. Accordingly, we propose to make amendments to Article 22(Senior Corporate Advisor and Advisor) of the present Articles of Incorporation to remove theclassifications of Senior Corporate Advisor and Advisor and unify them into the single position of Advisor.
2. Amendments
The details of the revision are as follows.
(Changes are underlined.)
Proposed articles
Chapter 1 General Provisions

Present
Chapter 1 General Provisions(Purpose)(Purpose)
Article 2
Article 2
The purpose of the Company shall be to engage in the The purpose of the Company shall be to engage in thefollowing business activities.
following business activities.
1. to 17. (Omitted)
1. to 17. (Not changed)
18.
General and specified worker dispatching
18.
Worker dispatching undertakings
undertakings
19. to 20. (Not changed)
19. to 20. (Omitted)
Chapter 4 Directors and Board of Directors

Chapter 4 Directors and Board of Directors(Advisor)(Senior Corporate Advisor and Advisor)
Article 22
Article 22
The Company may appoint Senior Corporate Advisors The Company may appoint Advisors by resolution ofand Advisors by resolution of the Board of Directors. the Board of Directors.

–6–

[Translation for Reference and Convenience Purposes Only]

Proposal No. 3: Election of Eleven (11) Directors
The term of office of all twelve (12) current Directors will expire at the conclusion of this General Meeting of Shareholders.
In that regard, the Company proposes the election of eleven (11) Directors (including three (3) External Directors). The
Company plans to increase the number of External Directors by one (1) for the purposes of ensuring the independence andobjectivity of the Board of Directors and ensuring its diversity. The Company nominates these candidates in accordance withthe “Policies and procedures for nominating candidates for Directors and members of the Audit & Supervisory Board” onpage 21.

No.

Name

1

Kouichi Iioka

Chairman and Director

2Michiya Kadota

President andRepresentative Director

3
4

5
6

Positions and Assignments in the Company

Reappointment100%(15/15)10 years

Reappointment100%(15/15)

5 years

Reappointment100%(15/15)10 years

Reappointment100%(15/15)

5 years

Reappointment100%(15/15)

5 years

Managing Director

Executive General
Manager ofEngineering
Division

Reappointment100%(15/15)

3 years

Reappointment100%(13/13)

1 yearReappointment100%(13/13)

1 year

93.3%(14/15)

4 years

93.3%(14/15)2 years――

In charge of the
global business―

Executive General
Executive Senior
Manager ofKiyoshi Itou
Managing Director and Corporate Planning
Representative Director and Control
Division
Executive General
Manager of Solution
Toshitaka Kodama Managing Director Business Divisionand in charge of the
facilities business
Executive General
Manager of Japan
Sales BusinessYoshio Yamada
Managing Director
Division and in
charge of thechemicals business

Hirohiko Ejiri

7

Toshimi Kobayashi

Director

Senior General
Manager of
Administration
Group, Japan Sales
Business Division8

Yasuo Suzuki

Director

Executive General
Manager of Global
Business Division

Reappointment

9

Tsuguto Moriwaki

External Director―

External
Independent
Reappointment

10

Ryoko Sugiyama

Number of years as
Record of attendances
Director
at the Board of(at the conclusion of
Directors meetings
this General Meetingof Shareholders)External Director―

External
IndependentNew

11

Keiko Tanaka――

External
Independent–7–

[Translation for Reference and Convenience Purposes Only]

Note: During the fiscal year under review, the Board of Directors held 15 Board of Directors meetings.
The record of attendances at the Board of Directors meetings for Mr. Toshimi Kobayashi and Mr. Yasuo
Suzuki counts only those meetings held after their appointment on June 28, 2018.
New
External

New candidates for Director

Reappointment

Candidates for reappointment as Director

Candidates for External Director

Independent

Independent Officer as set forth underregulations of the Tokyo Stock Exchange, Inc.

–8–

[Translation for Reference and Convenience Purposes Only]
Candidate No.

1

Date of birth
March 5, 1953
66 years old

Kouichi Iioka

Reappointment

Brief personal history, positions and assignments in the Company
Apr. 1975 Joined Kurita Water Industries Ltd.
Jan. 1998 General Manager of Oil Project, Water Treatment Division
Apr. 2003 General Manager of Sales Dept. I, No. 1 Chemicals Group, Chemicals and Maintenance
Services DivisionJun. 2005 Executive Officer of the Company
Jun. 2005 General Manager of No. 1 Chemicals Group, Chemicals and Maintenance Services
Division
Jun. 2007 Director of the Company
Jun. 2009 Senior General Manager of Facilities for General Industry Group, 1st Facilities DivisionJun. 2011 Retired from the position of Director of the Company
Jun. 2011 President and Representative Director of Kuritec Service Co., Ltd.
Jun. 2013 Managing Director of the Company
Number of the sharesof the Company held
28,700 shares

Jun. 2013 Executive General Manager of Chemicals Division
Apr. 2016 Executive Senior Managing Director and Representative Director of the Company
Apr. 2017 Executive General Manager of Global Business Division and in charge of the chemicals
business

Number of years as
Apr. 2018 Chairman and Director of the Company and in charge of the global business (Current
Directorposition)
10 years(at the conclusion of thisSignificant positions concurrently held
General Meeting of
Shareholders)
None
Record of attendancesat the Board of
Directors meetings
100% (15/15)

Reasons for deciding to make him a candidate for Director
Mr. Kouichi Iioka became responsible for the Water Treatment Chemicals business in June 2013, after
holding important posts such as those at the sales departments of the Water Treatment Chemicals
business and representative of group companies in Japan and overseas. He served as Director since June
2007. He became Managing Director in June 2013, Executive Senior Managing Director andRepresentative Director in April 2016, and has been serving as Chairman and Director since April 2018.
He has led the overseas expansion of the Kurita Group, contributing to a dramatic expansion of theWater Treatment Chemicals business through M&A conducted in Europe and North America, and he ispresently in charge of the global business since April 2018. The Company believes that he is anindividual capable of strengthening the function of the Company’s Board of Directors from a global
perspective and has therefore nominated him as a candidate for Director.

–9–[Translation for Reference and Convenience Purposes Only]
Candidate No.

2

Date of birth
February 16, 1959
60 years old

Michiya Kadota

Reappointment

Brief personal history, positions and assignments in the Company
Apr. 1983 Joined Kurita Water Industries Ltd.
Apr. 2006 General Manager of Business Process Reengineering Dept., Corporate Planning Division
Apr. 2008 General Manager of Internal Auditing Dept.
Apr. 2012 General Manager of Finance and Accounting Dept., Administrative DivisionJun. 2013 Executive Officer of the Company
Jun. 2014 Director of the Company
Jun. 2014 Executive General Manager of Administrative Division
Number of the sharesof the Company held
15,200 shares
Number of years as
Director
5 years(at the conclusion of this
General Meeting of
Shareholders)Record of attendancesat the Board of
Directors meetings
100% (15/15)

Apr. 2016 President and Representative Director of the Company (Current position)
Significant positions concurrently held
None
Reasons for deciding to make him a candidate for Director
Mr. Michiya Kadota has a career mainly in the area of general affairs such as finance and accounting
and was responsible for the Administrative Division from June 2014. He also carried through the
integration of the Water Treatment Chemicals business acquired in Europe in a short period of time as
manager responsible for the integration. He served as Director since June 2014, and has been serving as
President and Representative Director since April 2016. He has been exercising strong leadershipunrestrained by preconceived ideas in implementing reforms of the Kurita Group as a whole throughinitiatives such as the transformation of the business model, emphasizing CSR and reviewing thebusiness portfolio.

– 10 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

3

Date of birth
March 8, 1956
63 years old

Kiyoshi Itou

Reappointment

Brief personal history, positions and assignments in the Company
Apr. 1979 Joined Kurita Water Industries Ltd.
Apr. 2000 General Manager of Legal Dept., Administrative DivisionJun. 2003 General Manager of Personnel and Labor Relations Dept., Administrative DivisionJun. 2007 Executive Officer of the Company
Jun. 2009 Director of the Company
Jun. 2009 Executive General Manager of Administrative DivisionJun. 2013 Managing Director of the Company
Jun. 2013 Executive General Manager of Corporate Planning Division
Apr. 2016 Executive General Manager of Administrative Division

Number of the sharesof the Company held
32,800 shares

Apr. 2018 Executive Senior Managing Director and Representative Director of the Company(Current position)
Apr. 2018 Executive General Manager of Corporate Planning Division
Apr. 2019 Executive General Manager of Corporate Planning and Control Division (Current
position)

Number of years as
Director
Significant positions concurrently held
10 years(at the conclusion of this None
General Meeting of
Shareholders)
Reasons for deciding to make him a candidate for Director
Record of attendancesat the Board of
Directors meetings
100% (15/15)

Mr. Kiyoshi Itou has worked to improve the company quality and enhance the corporate value of theKurita Group as Executive General Manager of Corporate Planning Division of the Company, which hefirst assumed in June 2013, after holding important posts in general affairs, such as human affairs andlegal affairs. He served as Executive General Manager of Administrative Division since April 2016 andhe has been serving as Executive General Manager of Corporate Planning Division again since April
2018. He served as Director since June 2009. He became Managing Director in June 2013 and has been
serving as Executive Senior Managing Director and Representative Director since April 2018. The
Company believes that he is an individual capable of using his highly specialized knowledge andexperience to strengthen the corporate governance of the Kurita Group and has therefore nominated him
as a candidate for Director.

– 11 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

4Toshitaka Kodama

Date of birth
February 3, 1955
64 years old

Reappointment

Brief personal history, positions and assignments in the Company
Apr. 1977 Joined Kurita Water Industries Ltd.
Apr. 2000 General Manager of Environmental Sales Dept. I, Environmental Water Treatment Division
Jan. 2009 President of Kuritec (Shanghai) Co., Ltd.
Dec. 2009 General Manager of Ultrapure Water Supply Dept., Ultrapure Water Supply Group, 2nd
Facilities Division
Apr. 2011 Executive Officer of the Company
Apr. 2011 Senior General Manager of Water Treatment Facilities Group, Facilities Division
Apr. 2012 Assistant to Executive General Manager of Facilities Division (overseeing China)
Jun. 2013 Senior General Manager of Global Business Group, Facilities DivisionJun. 2014 Director of the Company
Jun. 2014 Senior General Manager of Sales Group I and Ultrapure Water Supply Group, Facilities
Division
Number of the sharesof the Company held
13,900 shares

Apr. 2015 Senior General Manager of Facilities Group, Facilities Division
Apr. 2016 Managing Director of the Company (Current position)
Apr. 2016 Executive General Manager of Facilities Division
Apr. 2017 Executive General Manager of Sales Division II and in charge of the facilities business

Number of years as
Director
Apr. 2019 Executive General Manager of Solution Business Division and in charge of the
5 years
facilities business (Current position)(at the conclusion of this
General Meeting of
Shareholders)Significant positions concurrently heldRecord of attendancesat the Board of
Directors meetings
100% (15/15)

None
Reasons for deciding to make him a candidate for Director
Mr. Toshitaka Kodama served as manager responsible for the Water Treatment Facilities business sinceApril 2016, after holding important posts such as those at the domestic and overseas sales departmentsof the Water Treatment Facilities business and representative of overseas group companies, leading thetransformation of the business model. He served as Director since June 2014 and has been serving as
Managing Director since April 2016. The Company believes that he is an individual capable ofstrengthening the function of the Company’s Board of Directors, leveraging his considerable insights
and experience in total solutions centered on the Water Treatment Facilities business and has therefore
nominated him as a candidate for Director.

– 12 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

5

Date of birthJune 18, 1958
61 years old

Yoshio Yamada

Reappointment

Brief personal history, positions and assignments in the Company
Apr. 1982 Joined Kurita Water Industries Ltd.
Apr. 2004 General Manager of Paper and Pulp Project, No.1 Chemicals Group, Chemicals andMaintenance Services Division
Apr. 2010 General Manager of Nagoya Sales, Group III, Chemicals DivisionJun. 2011
Jun. 2011

Executive Officer of the Company
General Manager of Planning and Coordination Dept., Chemicals DivisionJun. 2013 Senior General Manager of Sales Group II, Chemicals DivisionJun. 2014 Director of the Company
Apr. 2016 Senior General Manager of Sales Group I, Chemicals Division
Apr. 2017 Executive General Manager of Sales Division I
Number of the sharesof the Company held
16,000 shares

Apr. 2018 Managing Director of the Company (Current position)
Apr. 2018 Executive General Manager of Sales Division I and in charge of the chemicals business
Apr. 2019 Executive General Manager of Japan Sales Business Division and in charge of thechemicals business (Current position)

Number of years as
Director
Significant positions concurrently held
5 years(at the conclusion of this None
General Meeting of
Shareholders)
Reasons for deciding to make him a candidate for Director
Record of attendancesat the Board of
Directors meetings
100% (15/15)

Mr. Yoshio Yamada held important posts at the sales departments after gaining experience in sales andtechnology development in the Water Treatment Chemicals business. Since April 2017, he has managed
the Water Treatment Chemicals business, leading the initiative to strengthen service business integrating
the water treatment chemicals and maintenance of the water treatment facilities. Since April 2019, he
has overseen the development of total solutions for the entire domestic market, including the Water
Treatment Facilities business. He served as Director since June 2014 and has been serving as Managing
Director since April 2018. The Company believes that he is an individual capable of strengthening thefunction of the Company’s Board of Directors, leveraging his broad insights and experience related tototal solutions of the water treatment in general and has therefore nominated him as a candidate for
Director.

– 13 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

6

Date of birth
October 6, 1962
56 years old

Hirohiko Ejiri

Reappointment

Brief personal history, positions and assignments in the Company
Apr. 1985 Joined Kurita Water Industries Ltd.
Apr. 2005 President of Kurita Europe GmbH
Apr. 2011 General Manager of Sales Dept. for Heavy Industries, Group II, Chemicals Division
Apr. 2014 Executive Officer of the Company
Jun. 2014 Senior General Manager of Sales Group I, Chemicals Division
Apr. 2016 Executive General Manager of Corporate Planning DivisionJun. 2016 Director of the Company

Number of the sharesof the Company held
8,800 shares
Number of years as
Director
3 years(at the conclusion of this
General Meeting of
Shareholders)Record of attendancesat the Board of
Directors meetings
100% (15/15)

Apr. 2018 Executive General Manager of Engineering Division (Current position)
Apr. 2019 Managing Director of the Company (Current position)
Significant positions concurrently held
None
Reasons for deciding to make him a candidate for Director
Mr. Hirohiko Ejiri led the initiative for expansion of the Kurita Group’s business fields andtransformation of revenue structure as Executive General Manager of Corporate Planning Division from
April 2016, after holding important posts such as those at the sales departments of the Water Treatment
Chemicals business and representative of an overseas group company. Since April 2018, he has been
serving as Executive General Manager of Engineering Division, leading enhancement of production
efficiency, improvement of product quality, and transformation of the production structure. He served as
Director since June 2016 and has been serving as Managing Director since April 2019. The Company
believes that he is an individual capable of strengthening the function of the Company’s Board of
Directors with the aim of expanding the Kurita Group’s business and improving the company quality,
leveraging his various viewpoints and extensive experience, and has therefore nominated him as a
candidate for Director.

– 14 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

7

Toshimi Kobayashi

Date of birth
July 12, 1958
60 years old

Reappointment

Brief personal history, positions and assignments in the Company
Apr. 1982 Joined Kurita Seibi KK (Note)
Apr. 2005 General Manager of Tokyo Sales Dept. II, Maintenance Group, Chemicals and Maintenance
Services Division of the Company
Apr. 2011 Executive Officer of the Company
Apr. 2011 Senior General Manager of Maintenance Group, Facilities Division
Apr. 2017 Senior General Manager of Sales Group I, Sales Division I
Apr. 2018 Senior General Manager of East Japan Sales Group, Sales Division I

Number of the sharesof the Company held
5,500 shares

Jun. 2018 Director of the Company (Current position)
Apr. 2019 Senior General Manager of Administration Group, Japan Sales Business Division(Current position)(Note) Kurita Seibi KK was merged to Kurita Water Industries Ltd. in 1997.

Number of years as
Significant positions concurrently held
DirectorNone
1 year(at the conclusion of this
General Meeting of
Reasons for deciding to make him a candidate for Director
Shareholders)Record of attendancesat the Board of
Directors meetings
100% (13/13)

Candidate No.

8

Mr. Toshimi Kobayashi held important posts in the sales departments of the Water Treatment Facilities
business and its maintenance business. Since April 2017, he has promoted the development of businesssolutions as the person responsible for the sales department, which integrates the water treatment
chemicals and the maintenance of water treatment facilities. He has been serving as Director since June
2018. The Company believes that he is an individual capable of utilizing his broad insights andexperience related to total solutions of the water treatment in general to strengthen the function of theCompany’s Board of Directors and has therefore nominated him as a candidate for Director.
Date of birthAugust 16, 1959
59 years old

Yasuo Suzuki

Reappointment

Brief personal history, positions and assignments in the Company
Dec. 1997 Joined Kurita Water Industries Ltd.
Apr. 2005 General Manager of Steel and Oil Process Dept., No. 1 Chemicals Group, Chemicals andMaintenance Services Division of the Company
Apr. 2011 President of Kurita Europe GmbH
Apr. 2014 Executive Officer of the Company
Apr. 2017 Senior General Manager of Operation Group, Global Business Division
Apr. 2018 Executive General Manager of Global Business Division (Current position)
Jun. 2018 Director of the Company (Current position)
Number of the sharesof the Company held
3,900 shares
Number of years as
Director
1 year(at the conclusion of this
General Meeting of
Shareholders)Record of attendancesat the Board of
Directors meetings
100% (13/13)

Significant positions concurrently held
None
Reasons for deciding to make him a candidate for Director
Mr. Yasuo Suzuki has held technology and development roles in the Water Treatment Chemicals
business and served as the representative of an overseas group company. In the acquisition of the Water
Treatment Chemicals business in Europe, he managed the integrated company, putting the acquired
business on track. Since April 2017, he has been the person responsible for the sales department of theoverseas businesses, and he has been promoting the Kurita Group’s overseas development. He has been
serving as Director since June 2018. The Company believes that he is an individual capable of utilizing
his experience from a global viewpoint to strengthen the function of the Company’s Board of Directors
and has therefore nominated him as a candidate for Director.
(Note) The registered name of the candidate for Director, Yasuo Suzuki, is Yasuo Hatta.
– 15 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

9Date of birth
September 10, 1943
75 years old

Tsuguto Moriwaki

Reappointment
External
Independent

Brief personal history, positions and assignments in the Company
Apr. 1967 Joined Kobe Steel, Ltd.
Jun. 1996 Director, Kobe Steel, Ltd.
Jun. 1999 Managing Director, Kobe Steel, Ltd.
Oct. 1999 President and Representative Director, Kobelco Construction Machinery Co., Ltd.
Jun. 2002 Executive Vice President and Representative Director, Kobe Steel, Ltd.
Jun. 2004 President and Representative Director, Shinsho Corporation
Jun. 2010 Adviser, Shinsho Corporation
Jun. 2012 Retired from Shinsho Corporation
Jun. 2015 Director of Kurita Water Industries Ltd. (Current position)
Significant positions concurrently held
None
Number of the sharesof the Company held
4,100 shares

Reasons for deciding to make him a candidate for External Director
Mr. Tsuguto Moriwaki is an individual who possesses a great deal of knowledge about manufacturing
and corporate reform. The Company believes that he is an individual capable of utilizing thisNumber of years as
knowledge as well as his experience of having served in important positions such as representative
Director
director in other companies to deliver opinions from an outside perspective and increase the rationality
4 years
and transparency of the Company’s management and has therefore nominated him as a candidate for(at the conclusion of thisExternal Director.
General Meeting of
Shareholders)Record of attendancesat the Board of
Directors meetings
93.3% (14/15)

Notes concerning the candidate for External Director
 The Kobelco Group is one of customers of the Kurita Group. However, because the transaction value
with the Kobelco Group is less than 0.1% of consolidated net sales of the Company, it does not fallunder a major customer.
 The Company has entered into an agreement with Mr. Moriwaki that limits liability for damages
stipulated in Paragraph 1, Article 423 of the Companies Act in accordance with the provisions of the
Articles of Incorporation thereof based on the provisions of Paragraph 1, Article 427 of the Act. The
amount stipulated in Paragraph 1, Article 425 of the Act has been set as the maximum liability fordamages based on this agreement. The Company intends to continue this agreement in case this
proposal is approved and adopted at this meeting and Mr. Moriwaki is reappointed as an External
Director of the Company.
 The Company has notified the Tokyo Stock Exchange, Inc. of the appointment of Mr. Moriwaki as anindependent officer as set forth under regulations thereof.

– 16 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

10

Date of birth
July 27, 1955
63 years old

Ryoko Sugiyama

Reappointment
External
Independent

Brief personal history, positions and assignments in the Company
May 1996 Established Sugiyama & Kurihara Environmental Consultants, Inc., Representative
Director
Aug. 2007 Director of Sugiyama & Kurihara Environmental Consultants, Inc. (Current position)
Apr. 2010 Professor at the Faculty of Social and Environmental Studies, Fuji Tokoha University(current Tokoha University)
Jun. 2010 External Director and Audit and Supervisory Committee Member, LECIP Holdings
Corporation (Current position)
Jun. 2015 External Director, UACJ Corporation (Current position)
Jan. 2016

Director, Gifu Sugiyama Memorial Foundation, a general incorporated foundation (nowGifu Sugiyama Memorial Foundation, a public interest incorporated foundation) (Current
position)

Jun. 2017 Director of Kurita Water Industries Ltd. (Current position)
Dec. 2018 Head and Representative Director, Gifu Shimbun Co., Ltd. (Current position)

Number of the sharesof the Company held
1,200 shares
Number of years as
Director
2 years(at the conclusion of this
General Meeting of
Shareholders)Record of attendancesat the Board of
Directors meetings
93.3% (14/15)

Significant positions concurrently held
Head and Representative Director, Gifu Shimbun Co., Ltd.
External Director and Audit and Supervisory Committee Member, LECIP Holdings Corporation
External Director, UACJ Corporation
Director, Gifu Sugiyama Memorial Foundation, a public interest incorporated foundation
Reasons for deciding to make her a candidate for External Director
Ms. Ryoko Sugiyama is an expert in the environment and wastes and has held important positions suchas an external director of listed companies. The Company believes that she is capable of expressing
opinions from an outside perspective different from the Company’s and increasing the rationality andtransparency of the Company’s management and therefore nominated her as a candidate for External
Director.
Notes concerning the candidate for External Director
 The UACJ Group is one of customers of the Kurita Group. However, because the transaction value
with the UACJ Group is less than 0.1% of consolidated net sales of the Company, it does notconstitute a major customer. LECIP Holdings Group is not a business partner of the Kurita Group.
 The Company has entered into an agreement with Ms. Sugiyama that limits liability for damages
stipulated in Paragraph 1, Article 423 of the Companies Act in accordance with the provisions of the
Articles of Incorporation thereof based on the provisions of Paragraph 1, Article 427 of the Act. The
amount stipulated in Paragraph 1, Article 425 of the Act has been set as the maximum liability fordamages based on this agreement. The Company intends to continue this agreement in case this
proposal is approved and adopted at this meeting and Ms. Sugiyama is reappointed as an External
Director of the Company.
 The Company has notified the Tokyo Stock Exchange, Inc. of the appointment of Ms. Sugiyama as anindependent officer as set forth under regulations thereof.

– 17 –

[Translation for Reference and Convenience Purposes Only]
Candidate No.

11

Date of birth
May 24, 1960
59 years old

Keiko Tanaka

New
External
Independent

Brief personal history, positions and assignments in the Company
Apr. 1984 Joined NISSAN MOTOR CO., LTD.
Apr. 2011 Seconded to JATCO Ltd
Apr. 2013 Treated as equivalent to Vice President, JATCO Ltd
Sep. 2014 Retired from NISSAN MOTOR CO., LTD. and JATCO Ltd
Oct. 2014 Ambassador Extraordinary and Plenipotentiary of Japan to Uruguay
Apr. 2018 Vice President, Nissan Financial Services Co., Ltd. (Current position)
Significant positions concurrently held
Vice President, Nissan Financial Services Co., Ltd.

Number of the sharesof the Company held
0 shares
Number of years as
Director―

Reasons for deciding to make her a candidate for External Director
Ms. Keiko Tanaka has been active in business fields that differ from those of the Kurita Group andpossesses a great deal of knowledge on public relations and marketing, as well as having held theposition of Ambassador Extraordinary and Plenipotentiary of Japan to Uruguay. The Company believes
that she is capable of utilizing her expansive knowledge and international experience, and expressing
opinions from an outside perspective while increasing the rationality and transparency of theCompany’s management and therefore nominated her as a candidate for External Director.

Notes concerning the candidate for External Director
Record of attendances  The NISSAN MOTOR Group is one of customers of the Kurita Group. However, because thetransaction value with the NISSAN MOTOR Group is less than 0.1% of consolidated net sales of theat the Board ofCompany, it does not constitute a major customer.
Directors meetings
 The Company plans to enter into an agreement with Ms. Tanaka that limits liability for damages―
stipulated in Paragraph 1, Article 423 of the Companies Act in accordance with the provisions of the
Articles of Incorporation thereof based on the provisions of Paragraph 1, Article 427 of the Act, on
the premise that this proposal is approved and adopted. The amount stipulated in Paragraph 1, Article
425 of the Act has been set as the maximum liability for damages based on this agreement.
 The Company plans to notify the Tokyo Stock Exchange, Inc. of the appointment of Ms. Tanaka as anindependent officer as set forth under regulations thereof.
Notes: 1. No special interest exists between the Company and any of the above candidates for Director.
2. Ages of the candidates indicated are as of the date of the General Meeting of Shareholders.

– 18 –

[Translation for Reference and Convenience Purposes Only]

Proposal No. 4: Election of One (1) Member of the Audit & Supervisory Board
As Shiro Hayashi, the incumbent member of the Audit & Supervisory Board, will retire at the conclusion of the 83rd General
Meeting of Shareholders, the Company proposes to elect one (1) member of the Audit & Supervisory Board.
The Company has already obtained the consent of the Audit & Supervisory Board for this proposal.
The candidate for the member of the Audit & Supervisory Board is as follows:
Date of birthJune 19, 1959
60 years old

Yukihiko Mutou

New

Brief personal history and positions in the Company
Oct. 1991 Joined Kurita Water Industries Ltd.
Jun. 2005 General Manager of Finance and Accounting Dept., Administrative Division
Apr. 2012 General Manager of Personnel and Labor Relations Dept., Administrative Division
Apr. 2014 General Manager of General Affairs Dept., Administrative Division
Apr. 2016 Executive Officer of the Company
Apr. 2018 Executive General Manager of Group Administrative DivisionJun. 2018 Director of the Company (Current position)
Apr. 2019 Deputy Executive General Manager of Corporate Planning and Control Division(Current position)
Significant positions concurrently held
None
Reasons for deciding to make him a candidate for Member of the Audit & Supervisory Board
Mr. Yukihiko Mutou has held important positions in the Administrative Division, and has been serving
as Director of the Company since June 2018. He possesses a wealth of knowledge and experience on
finance, accounting, and management, and the Company believes he is capable of utilizing his
expertise, experience, and insight to execute effective auditing, and therefore nominated him as a
candidate for Member of the Audit & Supervisory Board.
Number of the shares of the Company held
4,700 shares
Notes: 1. No special interest exists between the Company and the above candidate for Members of the Audit & Supervisory
Board.
2. Age of the candidate indicated is as of the date of the General Meeting of Shareholders.

– 19 –

[Translation for Reference and Convenience Purposes Only]

Proposal No. 5: Election of One (1) Substitute Member of the Audit & Supervisory Board
To prepare for the case where the number of Member of the Audit & Supervisory Board lacks in the number set forth by therelevant laws and regulations, the Company proposes that Mr. Toshiaki Tada be elected as a Substitute Member of the Audit& Supervisory Board.
The Audit & Supervisory Board has given its prior consent to this Proposal.
The candidate for Substitute Member of the Audit & Supervisory Board is as follows:

Date of birth
July 28, 1968
50 years old

Toshiaki Tada

External
Independent

Brief personal history
Apr. 1996 Registered as an attorney
Dec. 1996 Joined HIBIYA SOGO LAW OFFICES
Jul. 2002 Registered as an attorney, admitted in New York State, the U.S.A.
Jan. 2005 Partner, HIBIYA SOGO LAW OFFICES (Current position)
Jun. 2012 Corporate Auditor, ITOCHU Techno-Solutions Corporation (Current position)
Significant positions concurrently held
Partner, HIBIYA SOGO LAW OFFICES
Corporate Auditor, ITOCHU Techno-Solutions Corporation
Reasons for deciding to make him a candidate for Substitute External Member of the Audit & Supervisory Board
Mr. Toshiaki Tada has expertise as an attorney and a wealth of knowledge about corporate legal affairs in Japan and overseas.
The Company decided to make him a candidate for Substitute External Member of the Audit & Supervisory Board so that such
expertise and knowledge may be reflected in the Company’s audits.
Notes concerning the candidate for Substitute External Member of the Audit & Supervisory Board The Kurita Group is one of customers of ITOCHU Techno-Solutions Corporation Group. However, because the transaction
value with the Kurita Group is less than 0.1% of consolidated net sales of ITOCHU Techno-Solutions Corporation Group, theCompany does not constitute a major customer of ITOCHU Techno-Solutions Corporation Group.
 Mr. Tada was not involved in corporate management in ways other than acting as an external director or an external member ofthe Audit & Supervisory Board in the past. However, the Company believes that he is capable of executing his duties
appropriately in audits because he has expertise as an attorney and sufficient knowledge in corporate legal affairs.
 The Company plans to notify the Tokyo Stock Exchange, Inc. of the appointment of Mr. Tada as an independent officer as set
forth under regulations thereof, if he assumes the office of External Member of the Audit & Supervisory Board.
Number of the shares of the Company held
0 shares
Notes: 1. No special interest exists between the Company and the above candidate for Substitute Member of the Audit &Supervisory Board.
2. Age of the candidate indicated is as of the date of the General Meeting of Shareholders.

– 20 –

[Translation for Reference and Convenience Purposes Only]<Reference> Policies and procedures for nominating candidates for Directors and membersof the Audit & Supervisory Board
1) Policy for nominating candidates for Directors and members of the Audit & Supervisory Board
It is our policy that there should be three or more Directors in total, two or more of whom should be External Directors
to ensure the independence and objectivity of the Board of Directors. We also aim to ensure that, to fulfill the highly
effective supervisory function over the operational execution, the Board of Directors should be organized in a way thatcomplements the necessary knowledge, experience and diversity for overall decision-making and consists of personnel
with a high degree of expertise in various business fields, management planning, finance and accounting, legal affairs,
and technologies, etc., and be composed of members with considerations made for gender, international experience andother matters. It is also our policy that there should be three or more members of the Audit & Supervisory Board, one ormore of whom should be a member who specializes in finance, accounting and legal affairs.
2) Procedures for nominating candidates for Directors and members of the Audit & Supervisory Board
When making a proposal of candidates for the Directors, the President and Director, Directors with positions ofresponsibility, and Representative Directors as well as members of the Audit & Supervisory Board, the Chairperson of
the Board of Directors will consult the Nomination and Remuneration Advisory Council in advance. Based on the report
given by the Nomination and Remuneration Advisory Council, the Board of Directors will submit a proposal forrecommending the candidates for the Directors and the members of the Audit & Supervisory Board by stating the reason
for recommendation. After deliberating the proposal, the Board of Directors will nominate the candidates and make adecision on the President and Director, Directors with positions of responsibility, and Representative Directors. Whensubmitting a proposal for recommending the candidates for the members of the Audit & Supervisory Board to the Boardof Directors, it shall be carried out after obtaining the consent of the Audit & Supervisory Board in advance.
Distribution of knowledge and experience in the Board of Directors
FinanceandSales
accounting,Management
Name
legal
planning
affairs,
Japan
Overseas
personnel
affairs
Kouichi Iioka●●

Development,
production,technologies●

Knowledge and experience expected toExternal Directors
Corporate
management

Environment

International

―

―

―

Michiya
Kadota

●

●

―

―

―

Kiyoshi Itou

●

●

―

―

―

●

―

―

―

●

―

―

―

●

―

―

―

●

―

―

―

●

―

―

―

Toshitaka
Kodama●YoshioYamada●Hirohiko Ejiri●

ToshimiKobayashi●

Yasuo Suzuki

●

●

―

―

―

―

―

●

―

―

―

―

―

●

―

―

―

―

―

●

TsugutoMoriwaki(External)
Ryoko
Sugiyama(External)
Keiko Tanaka(External)

●

●

●

– 21 –●●

[Translation for Reference and Convenience Purposes Only]<Reference> Our criteria for judging independence
The criteria for judging the independence of the Independent External Directors in selecting candidates shall be that thecandidates for Independent External Directors and their close relatives (*1) must not fall under any of the following
items.
a. A person who currently executes the operations of the Company or its subsidiary, or has executed such operations in thepast 10 years
b. A person whose major business partner is currently the Company (*2) or was the Company at some time during the past
year, or an individual who executes the operations of this partyc. A current major business partner of the Company (*3) or a major business partner at some time during the past year, or aperson who executes the operations of the major business partner
d. A consultant, an accountant, or a legal professional who currently receives or has received at some point during the past
year a lot of money or property (*4) other than remuneration for officers from the Company
e. A current major shareholder of the Company (*5) or a person who executes the operations of a major shareholder
f. A person who executes the operations of an organization in which an external officer also currently assumes office (theperson only)
g. A person who executes the operations of an organization to which the Company currently makes a donation (the person
only)
*1
*2
*3
*4
*5

The term “close relatives” means relatives within the second degree of kinship.
The term “person whose major business partner is the Company” means a person whose sales in transactions with theCompany make up 2% or more of that person’s consolidated net sales.
The term “major business partner of the Company” means a business partner with whom the Company’s sales intransactions make up 2% or more of the consolidated net sales of the Company, or a business partner from which
borrowings make up 1% or more of the consolidated total assets of the Company.
The term “a lot of money or property” means money and other property that are equivalent to 10 million yen or more
per year, other than remuneration for officers.
The term “major shareholder of the Company” means a shareholder who has voting rights that account for 10% ormore of the voting rights of the Company.

– 22 –

[Translation for Reference and Convenience Purposes Only]<Reference> Corporate Governance1. Corporate Governance Policies(1) Basic concept
Kurita Water Industries Ltd. and its consolidated subsidiaries (hereinafter the “Kurita Group,” and Kurita Water
Industries Ltd. on a non-consolidated basis shall be hereinafter referred to as the “Company”) aim to contribute broadly
to society through corporate activities in the fields of water and environment in accordance with the Kurita corporate
philosophy, “Study the properties of water, master them, and we will create an environment in which nature and man are
in harmony.” The Kurita Group will make efforts to promote sustainable growth and enhance its corporate value in themedium and long term, deferring to the rights and position of various stakeholders such as customers, business partners,
employees, shareholders, and local communities while striving to meet their expectations. To this end, the Kurita Groupwill establish corporate governance, with the aim of realizing transparent, fair, prompt, and decisive decision-making
measures and highly effective management supervision.

(2) Basic policies
1) Ensuring the rights and equality of shareholders
The Kurita Group will work to develop an environment in which the shareholders are able to appropriately exercise
their rights, such as voting rights at a General Meeting of Shareholders, and provide the information needed to exerciseof their rights in a timely and accurate manner in order to secure the substantive equality of the rights of shareholders,
including minority and foreign shareholders.
2) Appropriate level of cooperation with stakeholders other than shareholders
The Kurita Group will work to ensure an appropriate level of cooperation with stakeholders such as customers, business
partners, employees, and local communities under the leadership of the Board of Directors. To achieve this aim, theKurita Group will properly respond to issues related to sustainability, and make actions based on compliance with laws,
regulations, and social ethics a prerequisite for all corporate activities.
3) Ensuring appropriate information disclosure and transparency of information
The Kurita Group will develop an environment in which the Audit & Supervisory Board, the members of the Audit &Supervisory Board, and the Accounting Auditor are able to conduct audits properly. It will also disclose informationin accordance with the laws and regulations related to information disclosure, such as the Companies Act and the
Financial Instruments and Exchange Act, and regulations for the timely disclosure of corporate information establishedby the Tokyo Stock Exchange. The Kurita Group will actively and fairly disclose information that is deemed to beeffective for facilitating understanding of the Kurita Group among shareholders and investors. This information willcomprise financial information including financial conditions and results of operations, management strategies
including risks, corporate governance and matters related to social and environmental issues, and policies for capitalefficiency.
4) Duties of the Board of Directors and the Audit & Supervisory Board, etc.
The Board of Directors will fulfill its fiduciary responsibility and accountability to shareholders. It will strengthen theorientation of corporate strategies, decision-making on important matters related to operational execution, thesupervision of overall management, the internal controls and risk management measures that support appropriate risktaking, etc. in order to enhance the corporate value and earnings power, as well as improve capital efficiency, etc.
The members of the Audit & Supervisory Board and the Audit & Supervisory Board will fulfill their fiduciary
responsibility to shareholders, and conduct audits in an appropriate manner and express their opinions from an
independent and objective standpoint.
5) Dialogue with shareholders and investors
Continuing to emphasize management that values shareholders, the Kurita Group will make efforts to engage inconstructive dialogues with shareholders and investors, as well as provide them with information in a timely andappropriate manner.
Further details have been made available to the public via the following URL on the Company’s website on the Internet.
(https://ir.kurita.co.jp/en/corporate_governance/governance_policies/index.html)– 23 –

[Translation for Reference and Convenience Purposes Only]

2. Corporate governance organizational structure and conceptual diagram of the Company
The Company adopts the structure of a company with audit & supervisory board. In addition, the Board of Directors, inaccordance with the Kurita corporate philosophy, provides a strategic direction that contributes to the Kurita Group’s
sustainable growth, makes decisions on important matters related to operational execution and performs supervisory
functions over operational execution. The Nomination and Remuneration Advisory Council, mainly consisting of External
Directors and an external member of the Audit & Supervisory Board, is in place to enhance the transparency of the decisionmaking process related to the remuneration of Directors and the nomination of candidates for Directors/members of the Audit& Supervisory Board. In addition, the Successor Planning Committee was established in the fiscal year ended March 31,
2019 in order to select and develop candidates for successors to the President and Directors, etc.
The Executive Committee performs operational execution based on the authorities delegated by the Board of Directors inorder to provide support for the Board of Directors to perform more sophisticated decision-making. Furthermore, the E&S(Environmental & Social) Committee, Investment Committee and various other committees are in place as enterprise-wideorganizations which facilitate solutions for management issues faced by the Company.
The members of the Audit & Supervisory Board, while performing the audits undertaken by the Audit & Supervisory Boardin accordance with the audit policy and audit plan determined thereby, also attend important meetings including meetings ofthe Board of Directors, Executive Committee and E&S Committee to audit execution of duties by Directors.
(As of March 31, 2019)

General Meetings of Shareholders
Election & Dismissal

Election & Dismissal

Consultation

Nomination &Remuneration
Advisory Council
Successor
Planning
Committee[Business
Operations]

Advisory

ReportReportBoard ofDirectors

Discussion& Report

Audit &
Supervisory Board

Audit

Resolution
Election &Supervision

Members of the
Audit &
Supervisory Board
Audit
Audit Report

Internal Auditing
Department

Executive
Committee
E & S (Environmental &Social) Committee,
Investment Committee& Various Committees

Cooperation

Cooperation

President

Discussion& Report

Cooperation

Internal Audit

Instruction

Accounting Audit & Internal Control Audit

Operating
Divisions– 24 –

Election &Dismissal

Accounting
Auditor[Translation for Reference and Convenience Purposes Only]

3. Effectiveness of the Board of Directors
All Directors and members of the Audit & Supervisory Board analyzed and evaluated the effectiveness of the Board of
Directors, and resolved the evaluation results at a meeting of the Board of Directors. This evaluation was conducted via awritten survey, with each of the respondents identified. The Board of Directors, following the discussion on the aggregate
results, evaluated the effectiveness of the Board of Directors, clarified problems and adopted a resolution on the issue andinitiatives in the future. The evaluation items consisted of six areas, i.e., (i) roles and responsibilities of the Board of Directors,(ii) collaboration with External Directors and external members of Audit & Supervisory Board, (iii) composition of the Boardof Directors, (iv) operation of the Board of Directors, (v) contributions of individual Directors and members of the Audit &Supervisory Board, and (vi) dialogue with shareholders, covering the period of one year from January to December 2018.
According to the evaluation results, the average self-evaluation of all Directors and members of the Audit & Supervisory
Board was generally good in all six areas, indicating that the effectiveness of the Board of Directors is ensured. The area of“collaboration with members of the Audit & Supervisory Board and External Directors” was highly evaluated with lessvariance of evaluation among Inside Directors, External Directors and members of the Audit & Supervisory Board. On theother hand, while evaluation scores generally showed increasing trends, certain items related to the establishment of structuresthat support risk-taking of the Kurita Group and the organization of the Kurita Group’s risk management systems were
evaluated relatively lower than other items. The issue and measures to be addressed in fiscal 2019 were resolved to improve
such evaluation.
(Issue)Further improvement of governance standards for the Kurita Group as a whole, including group companies in Japan andoverseas, is necessary.
(Measures)
In order to strengthen governance at group companies in Japan and overseas, we will further improve the systems andstructures provided by the Company, and the Board of Directors will accurately evaluate operational status and aim to
improve effectiveness. In particular, we will strengthen our system for accomplishing PMI* for acquired group companies,
including expanding the potential of our human resources.
*PMI: Post Merger Integration (Process of integration after M&A)

4. Results of corporate governance initiatives(1) Review of Corporate Governance Policies
In response to the revision of the Corporate Governance Code set forth by the Tokyo Stock Exchange, Inc., the Company
has revised its Corporate Governance Policies. The revisions mainly include statements on the disclosure of management
strategies related to ESG, policy on the aim to reduce strategic shareholdings in other listed companies, and the process
related to selecting and developing a candidate for successor to the President and Director.
(2) Establishment of successor training structure
Based on the evaluation results of the effectiveness of the Board of Directors in the fiscal year ended March 31, 2018,
we established a structure to develop and evaluate each candidate for successor in order to further improve objectivity
in the selection of the President, Directors, and executive officers of the Company, and ensure transparency in theselection process.
Specifically, we have newly established the Successor Planning Committee, mainly consisting of External Directors andExternal Members of the Audit & Supervisory Board, as an organization to evaluate and select each candidate forsuccessor. The Successor Planning Committee selected each candidate for successor and formulated measures fordeveloping a candidate for successor to the President based on objective information such as the results of assessmentsof each candidate for successor by outside organizations, and reported their findings to the Board of Directors.
(3) Reduction of strategic shareholdings in other listed companies
Based on the policy that “The propriety of holding each individual strategic shareholding is reviewed on a regular ortimely basis at the Board of Directors by closely examining the expected return against the cost of capital and actual
business transactions with the company whose shares the Company holds. Based on the results of the examination, theCompany aims to reduce the holding of shares owned for policy purposes.” stated in the Corporate Governance Policies,
the Company proceeded with the sale of strategic shareholdings in the fiscal year ended March 31, 2019.

– 25 –

[Translation for Reference and Convenience Purposes Only](Attached documents to the notice of convocation of the 83rd ordinary general meeting of shareholders)Business Report(From April 1, 2018 to March 31, 2019)
1. Group Overview of Operations(1) Operations and results
During the fiscal year ended March 31, 2019, the global economy grew moderately overall, reflecting the firm
performance of the U.S. economy and continued economic expansion in emerging countries in Asia excluding China,
although the Chinese and European economies decelerated in the second half of the fiscal year due to growing
uncertainties over the economic future given trade friction between the United States and China and the Brexit issue.
The Japanese economy continued to record moderate growth, despite the absence of strength as typified by sluggish
growth in consumer spending.
The market environment surrounding the Kurita Group remained firm in Japan, although the production activitiesof the manufacturing industry dipped temporarily due to a string of natural disasters in summer. Capital expenditures
increased on the back of a high level of corporate earnings. Overseas, active capital expenditures continued mainlyin the electronics industry in East Asia.
In this environment, the Kurita Group started its five-year medium-term management plan, Maximize Value
Proposition 2022 (MVP-22). Under the basic policy “Maximize close relationships with customers by redefining
preconceived ideas and dramatically raising the quality and speed of our work,” the Group focused on providing
value to customers with total solutions by making excellent use of its technologies, products, and services for water
treatment chemicals, water treatment facilities, and maintenance services. In particular, we have positioned
technologies, products, and services that excel in water saving, CO2 reduction and waste reduction for customers
and promote the creation of shared value with society as CSV (Creating Shared Value) businesses, and developed
reclaimed water supply services that contribute to providing solutions to water resource issues faced by customers,
using wastewater reclamation systems, water treatment chemicals that contribute to energy saving operations forboilers by preventing the formation of scales (poorly soluble substances) in boilers, and dry methane fermentation
technology that contributes to the realization of waste reduction and sustainable energy use through application atwaste incineration plants. The Kurita Group also continued to develop competitive products and services that utilize
IT and sensing technology and aimed to strengthen total solutions through market development. Overseas, the Group
worked to strengthen its business platform to develop total solutions in the United States by acquiring U.S. Water
Services, Inc., which manufactures and sells water treatment chemicals and water treatment facilities, and entering
into an agreement on the acquisition of 25% of the total number of shares of Pentagon Technologies Group, Inc.,
which develops the tool cleaning business for semiconductor production equipment. Furthermore, the Groupacquired a majority share in Fracta, Inc., a software service company based in the U.S. that develops software to
predict the deterioration of underground water mains, and turned it into a subsidiary to create and expand a new
digital business that applies IoT/AI in the field of water and the environment.
As a result, total consolidated orders for the Kurita Group in the fiscal year ended March 31, 2019 amounted to258,439 million yen (up 2.8% year on year), and net sales amounted to 259,409 million yen (up 9.5% year on year).
Operating income amounted to 24,326 million yen (up 8.2% year on year). Ordinary income amounted to 23,919
million yen (up 8.2% year on year). Profit attributable to owners of parent amounted to 17,323 million yen (down
3.2% year on year), due to a temporary increase in tax expenses. The Kurita Group has expanded the scope of
application of the percentage-of-completion method mainly in the Water Treatment Facilities business from thefiscal year under review. As a consequence, net sales increased 7,355 million yen, and operating income and ordinary
income rose 1,421 million yen, respectively. In addition, the Kurita Group recorded an 8,676 million yen gain on
sales of strategic shareholdings in other listed companies in extraordinary income, while 5,063 million yen, the sumof a 2,867 million yen loss associated with the transfer of the aluminum compound business of Kurita Europe GmbHand a 1,097 million yen impairment loss on goodwill of Kurita Water Industries (Jiangyin) Co., Ltd., was recorded
in extraordinary losses. The recording of the impairment loss on goodwill of Kurita Water Industries (Jiangyin) Co.,
Ltd. was based on the Group’s decision to transfer the production function of water treatment chemicals of thiscompany to a plant of the new Kurita Water Industries (Taixing) Co., Ltd. (due to begin operating in the second halfof fiscal year ending March 31, 2021) to address production constraint resulting from tightened regulations by the
Chinese authorities on companies that produce hazardous chemicals in densely populated districts in China.

– 26 –

[Translation for Reference and Convenience Purposes Only](2) Status of segment of the Kurita Group
Water Treatment Chemicals business
The MVP-22 plan has set forth aims with respect to the Water Treatment Chemicals business that entail transforming
the business model and strengthening business foundations overseas in order to enhance profitability.
In Japan, we have promoted proposals for total solutions that address the challenges of our customers through avariety of perspectives on water treatment under our one-stop customer contact point system in order to optimize
water treatment at all of our customers’ plants. We also implemented relocation and unification of our sales locations
in order to optimize domestic business operations. Overseas, the Company acquired U.S. Water Services, Inc., andin doing so established a business foundation to cover the entire U.S. At the same time, we proceeded to sell off theless-profitable aluminum compound business of our subsidiary in Germany, Kurita Europe GmbH. In addition, theKurita Group constructed a new plant in Malaysia to manufacture water treatment chemicals to respond to increasing
demand for water treatment chemicals in Southeast Asia.
As for products and services, we have focused our efforts on CSV business proposals such as water treatment
chemicals that combine Cetamine® and DReeM Polymer® to contribute to energy saving operations for boilers.
Furthermore, in addition to applying the IT and sensing technology S.sensing®, we promoted contract-type service
business to reduce steam usage by improving the efficiency of heat conduction in the drying process of paper
manufacturing.
With respect to orders and sales in Japan, the Kurita Group sought to gain new customers by proposing solutions
using new products and services for their issues, although there was an effect attributable to the absence of the spot
projects of equipment and services that were posted in the previous fiscal year. This effort resulted in an increase incooling water treatment chemicals and process treatment chemicals for iron and steel. As a result, overall orders andsales increased in Japan. Overseas, both orders and sales rose, reflecting an increase in the consolidation period for
operating results of Hansu Co., Ltd. in South Korea, which became a consolidated subsidiary in the fourth quarterof the previous fiscal year, by eleven months, in addition to an increase in demand for water treatment, particularly
in Asia. The Water Treatment Chemicals business saw an increase in earnings mainly due to higher overseas sales.
As a result, total Group orders for the Water Treatment Chemicals business amounted to 102,939 million yen (up13.9% year on year), while sales amounted to 102,088 million yen (up 13.0% year on year). Operating income
amounted to 8,327 million yen (up 16.0% year on year).
Water Treatment Facilities business
The MVP-22 plan has set forth aims with respect to the Water Treatment Facilities business that entail applying
knowledge and technology cultivated in the ultrapure water supply business to comprehensive contract proposals
related to maintenance and operational management revolving around large-scale EPC (all-inclusive contract
proposals involving Engineering, Procurement, and Construction related to plant construction, etc.) and increasing
profitability.
In Japan, in addition to gaining a deep understanding of our customers’ production process and utility facilities andpromoting proposals of total solutions in order to realize initiatives such as energy saving, waste reduction,
production technology advancement, and wastewater recycling, we have been applying IT and IoT to improve
efficiency in engineering and operational management. In addition, we have actively invested in facilities for theultrapure water supply business which will lead to earnings in the future. Overseas, we made the decision to acquire
a 25% share of Pentagon Technologies Group, Inc. and strengthened our business foundation for providing highvalue-added solutions for tool cleaning services in the semiconductor market.
As for products and services, we promoted proposals of reclaimed water supply services that use wastewater
reclamation system such as the CSV business, CORR® System (The Customized Optimal Ready-made Recycle
System), and the vertically-arranged dry methane fermentation technology KURITA DRANCO PROCESS® that
produces biogas from industrial and general waste, which can be used to create electricity and heat.
With respect to orders and sales in Japan, in the electronics industry, both orders and sales increased for water
treatment facilities due to orders for large-scale projects and progress in construction work. In maintenance services,
both orders and sales also increased following a rise in orders associated with expansion and remodeling projects
against a backdrop of an increase in capacity utilization at customers’ plants. For general industries, orders for water
treatment facilities increased due to orders for large-scale projects for resource recycling plants using gases
generated by using dry methane fermentation technology, but sales declined. Both orders and sales increased inmaintenance services, reflecting an increase in expansion projects for the purpose of renewing facilities andincreasing production capacity at customers’ plants. Orders for water treatment facilities for electric power and soil
– 27 –

[Translation for Reference and Convenience Purposes Only]

remediation facilities increased due to orders for large-scale projects, and sales also increased thanks to progress inthe construction work of large-scale projects for which orders were received in the previous fiscal year. Overseas,
while orders for water treatment facilities declined in reaction to orders for large-scale projects in the previous fiscal
year, sales increased due to progress in construction work for large-scale projects for the electronics industry in
China and South Korea. Total sales in the ultrapure water supply business in Japan and overseas increased thanks
to the expansion projects. The Water Treatment Facilities business overall achieved an increase in earnings due tothe offsetting of the impact of the occurrence of unprofitable projects by cost reduction efforts, in addition to higher
sales. As a result, total Group orders for the Water Treatment Facilities business amounted to 155,500 million yen(down 3.5% year on year). Partly thanks to the expansion of the scope of application of the percentage-of-completion
method, sales amounted to 157,321 million yen (up 7.4% year on year). Operating income amounted to 15,932
million yen (up 4.0% year on year).
(3) Status of capital expenditure
The Kurita Group carried out capital expenditure amounting to a total of 36,920 million yen (up 14,850 million yen
year on year).
The amount consists of capital expenditure in the Water Treatment Chemicals business largely used for expanding
and upgrading existing facilities of 3,096 million yen (up 287 million yen year on year), and in the Water Treatment
Facilities business largely used for newly constructing and expanding facilities for the ultrapure water supply
business of 33,823 million yen (up 14,562 million yen year on year).
(4) Status of financing
Not applicable to the Kurita Group.

– 28 –

[Translation for Reference and Convenience Purposes Only](5) Changes in assets and profit and loss
[The Kurita Group]
80th
Fiscal Year
2015

81st
Fiscal Year
2016

82nd
Fiscal Year
2017

83rd
Fiscal Year2018

Orders(Million yen)

221,273

218,730

251,447

258,439

Net sales(Million yen)

214,372

214,187

236,815

259,409

Operating income(Million yen)

19,833

19,452

22,47524,326

20,43920,074

22,10423,919Profit attributable toowners of parent(Million yen)

12,577

14,506

17,897

17,323

Net income per share(Yen)

108.24125.23

159.37154.29Total assets(Million yen)

298,107299,249

323,046

349,885

Net assets(Million yen)

228,964

228,758

240,853

239,473

Net assets per share(Yen)

1,961.30

1,991.91

2,126.96

2,116.19

45

49

52

60

5

5

4

4

Classification

Profit andOrdinary income
Loss(Million yen)

AssetsConsolidated
Number of subsidiaries
Companies Equity method
affiliates(Notes)1.
2.
3.

Net income per share is calculated by deducting the number of treasury stock from the average total
number of issued shares during the fiscal year.
Net assets per share is calculated by deducting the number of treasury stock from the total number
of issued shares at the end of the fiscal year.
Treasury stock includes about 327,000 shares of treasury stock for performance-linked stockcompensation to Directors, held by Japan Trustee Services Bank, Ltd. (Trust Account).

– 29 –

[Translation for Reference and Convenience Purposes Only](6) Issues to be addressed
The Company began the MVP-22 plan in the fiscal year ended March 31, 2019 by revising the corporate vision to“‘A creator of unique value to the solution of water and environment’ contributing to the realization of a sustainable
society,” thereby positioning CSR (Corporate Social Responsibility) activities as the core of the management
strategy.
In the MVP-22 plan, we aim to become a Kurita Group that has high profitability and growth potential and isequipped with the ability to solve social challenges by means of creating and implementing new business processes
that exponentially enhance work quality and speed, and accelerating development into CSV business that creates
customer value and shared value with society.
In the fiscal year under review, the first year of the MVP-22 plan, we focused on proposing increased value forcustomers through the provision of total solutions. Overseas, we strengthened our business foundations to expand
development of total solutions as well as our structure for creating a new business model that applies IoT/AI in thefield of water and the environment through corporate acquisition and share acquisition in the U.S. At the same time,
focusing on Japan, we worked to develop a business model that creates customer value while gaining a deep
understanding of our customers’ production process and the challenges they face, and applied it in proposing totalsolutions. However, although business results increased in contract-type service business for the application of water
treatment chemicals to reduce steam usage in paper processing and the pure water supply service KWSS® (Kurita
Water Supply Service), it only accounted for a small percentage of total sales, and wasn’t enough to change therevenue structure entirely.
Furthermore, we promoted corporate governance reform and put in place a structure relating to successor training
for the President and management, clarified our policies regarding reducing the strategic shareholdings in otherlisted companies, and focused on sales of shareholdings.
We have found that the issues to be addressed by the Kurita Group involve moving away from business models
centered on product sales and business processes based on conventional extensions, and heading toward early
conversion to a business centered on total solutions that realize high profitability by accelerating the formulationand establishment of systems with this intent in Japan and overseas.
Based on the above, in the fiscal year ending March 31, 2020, the second year of the MVP-22 plan, we will prioritize
the following three key measures, and build the foundations to transition to a higher revenue structure from theinterim year of the MVP-22 plan.
1) Accelerating the development of total solutions
In order to enhance customer intimacy, we will strengthen operational systems by market and region, strengthen
coordination between all related departments from development to sales, and focus on establishing a businessmodel that creates customer value. In addition, we will endeavor to quantify customer value and strengthen
information systems supporting our proposal activities to quickly develop total solutions.
2) Promoting M&A and prompt PMI (Post Merger Integration)
We will continue to promote M&A for the purpose of acquiring business foundations for the global developmentof total solutions and acquiring products, technologies, and services for strengthening total solutions. In addition,
we will accelerate the integration process after company acquisition and build an optimal and unified groupmanagement system. On the other hand, for low-profit businesses, we will conduct reviews which include
possible scale reduction and withdrawal to concentrate management resources on promising businesses.
3) Strengthening the production structure of the Water Treatment Facilities businessIn order to improve product quality and reduce costs, we will promote standardized engineering diagrams andfacility layouts as well as strengthened collaboration between various systems used in engineering andconstruction processes, and consolidate information on procurement within the Kurita Group as we endeavor torebuild our supply chain and corporate alliances in Japan and overseas.

– 30 –

[Translation for Reference and Convenience Purposes Only](7) Principal businesses (As of March 31, 2019)
Since its founding, the Kurita Group has contributed to developing industry and society and conserving theenvironment through various business activities in the water and environment areas.
Major principal products in each business segment of the Kurita Group are as follows:
Segment

Principal products

Boiler water treatment chemicals, cooling water treatment chemicals, airconditioning-related water treatment chemicals, process treatment chemicals
for oil refining and petrochemicals, process treatment chemicals for paper
and pulp, process treatment chemicals for steel, marine vessel-related water
treatment chemicals, wastewater treatment chemicals, sludge dehydrating
Water Treatment Chemicals
water treatment chemicals, civil engineering and construction related
treatment chemicals, dioxin treatment chemicals, heavy metal stabilizers,
reverse osmosis membrane water treatment chemicals, chemical dosing
systems, ion exchanger resin, maintenance services, water analysis andsoftware services

Water Treatment Facilities

Ultra-pure water production systems, pharmaceutical-use water production
systems, demineralizer, condensate demineralizers, filtration systems,
standard-type products (deionizers, wastewater treatment systems, various
water treatment systems), water and wastewater treatment systems forvarious industries (electronics, steel, oil refining, petrochemicals, electric
power, paper, pulp, pharmaceuticals, food products, etc.), wastewater
reclamation systems, high-performance liquid chromatography systems forindustrial use, marketable substance recovery systems, equipment for
generating biogas, seawater desalting equipment, swimming pool-related
equipment, ion exchanger resin, reverse osmosis membranes, ultrafiltration
membranes, functional water production equipment for the semiconductor
manufacturing process, water purifiers, ultrapure water supply, reclaimed
water supply, maintenance services, tool cleaning services, chemicalcleaning services, operation and maintenance of water treatment facilities,
soil and groundwater remediation, household drinking water and software
services– 31 –

[Translation for Reference and Convenience Purposes Only](8)

Principal offices (As of March 31, 2019)
Head Office10-1, Nakano 4-chome, Nakano-ku, Tokyo

Osaka Office2-22, Kitahama 2-chome, Chuo-ku, Osaka-shi, Osaka

Branch Office
The Company

Production, R&D
facilities

Japan

Subsidiary
Overseas(Note)

Tohoku Office (Aoba-ku, Sendai-shi, Miyagi)
Nagoya Office (Naka-ku, Nagoya-shi, Aichi)
Hiroshima Office (Naka-ku, Hiroshima-shi, Hiroshima)
Kyushu Office (Hakata-ku, Fukuoka-shi, Fukuoka)
Shizuoka Plant (Yoshidacho, Haibara-gun, Shizuoka)
Tsuruga Plant (Tsuruga-shi, Fukui)
Yamaguchi Plant (Yamaguchi-shi, Yamaguchi)
Toyoura Plant (Shimonoseki-shi, Yamaguchi)
Kurita Global Technology Center (Nogi-machi, Shimotsuga-gun,Tochigi)
Engineering Center (Mitaka-shi, Tokyo)
Kurita Chemical Manufacturing Ltd. (Ibaraki and others)
Kuritaz Co., Ltd. (Tokyo, Osaka and others)
Kuritec Service Co., Ltd. (Osaka and others)
Kurita Engineering Co., Ltd. (Osaka and others)
Hansu Technical Service Ltd. (South Korea)
Hansu Co., Ltd. (South Korea)
Kurita Water Industries (Dalian) Co., Ltd. (China)
Kurita Water Industries (Jiangyin) Co., Ltd. (China)
Kurita Water Industries (Suzhou) Ltd. (China)
Kurita (Singapore) Pte. Ltd. (Singapore)
Kurita Europe GmbH (Germany and others)
Kurita do Brasil Ltda. (Brazil)
Kurita America Inc. (United States)
Fremont Industries, LLC (United States)

The Company has 26 sales branch offices in addition to those listed above (including the Taiwan
Branch).

– 32 –

[Translation for Reference and Convenience Purposes Only](9)

Important subsidiaries (As of March 31, 2019)
Capitalization(In millions)Company name

Ownership(%)

Principal business

Kurita Europe GmbHEUR 50100

Manufacture and sale of water
treatment chemicals

Kurita Water Industries (Suzhou)
Ltd.

JPY 530

100

Manufacture and sale of water
treatment facilities

Kurita Water Industries (Jiangyin)Co., Ltd.

USD 16

100

Manufacture and sale of water
treatment chemicals
Manufacture and sale of water
treatment facilities
Operation and maintenance of water
treatment facilities

Hansu Technical Service Ltd.

KRW 26,400

100

Hansu Co., Ltd.,KRW 2,500

99.2

Kuritaz Co., Ltd.

JPY 220

100

Kurita Engineering Co., Ltd.
Kuritec Service Co., Ltd.
Kurita Chemical Manufacturing
Ltd.

JPY 160
JPY 50100
100

JPY 50100

Manufacture and sale of water
treatment chemicals
Operation and maintenance of water
treatment facilities
Chemical cleaning services
Tool cleaning services
Manufacture of water treatment
chemicals(10) Employees (As of March 31, 2019)[The Kurita Group]
Number of employees

Year-on-year change

6,613

+ 602

[The Company]
Number of employees

Year-on-year change

Average age

Average length of service

1,549

+ 33

42.4

16 years and 11 months– 33 –

[Translation for Reference and Convenience Purposes Only](11) Important matters concerning the Kurita Group
1) Turning Fracta, Inc. a U.S. startup, into a subsidiary through an acquisition of shares
The Company acquired a majority of the outstanding shares of Fracta, Inc., a U.S. startup on May 31, 2018.
Fracta is headquartered in California, U.S., and provides a software service of predicting water maindegradations. The software service developed by Fracta can output the probability of failure and appropriate
times to replace water mains quickly with a high level of accuracy, allowing significant reduction in theamount of capital investment and maintenance cost associated with replacement. The Company will achieve
Fracta’s leading-edge technologies and expertise in AI and ML (AI: Artificial Intelligence, ML: Machine
Learning) and apply them to its water treatment technologies and services, thereby creating and expanding a
new digital business that applies IoT/AI, in the field of water and the environment.
2) Transfer of the alumina compounds business of Kurita Europe GmbH, a German subsidiary
Kurita Europe GmbH, a subsidiary of the Company, transferred its aluminum compound business to a
subsidiary of LIVIA Corporate Development SE on September 30, 2018. This business was acquired with awater solutions business and a paper solutions business from BK Giulini GmbH in Germany and its parent
company in 2015. However, it was not a core business of the Kurita Group, and the decision to sell the business
was based on the determination that the sale of this business would improve future profitability.
3) Acquisition of U.S. Water Services, Inc.
On March 26, 2019 CST, the Company, through Kurita America Holdings Inc., a wholly-owned subsidiary of
the Company, completed the acquisition of 100% of the outstanding shares of Global Water Services Holding
Company, Inc., the holding company of U.S. Water Services, Inc., that manufactures and sells water treatment
chemicals and facilities in the U.S.
U.S. Water Services, Inc. has manufacturing and sales offices across the U.S., centering on the Midwest, andprovides customers with solutions that contribute to water saving and energy saving by combining various
water treatment chemicals and providing facilities and engineering.
We aim to further strengthen customer intimacy by introducing the competitive products of the Kurita Groupand highly unique services such as pure water supply and wastewater reclamation to the customer base andsales network of U.S. Water Services, Inc., develop our business model of contract-type services that makefull use of IT and sensing, and accelerate business development in the U.S.
4) Equity investment in precision tool cleaning company Pentagon Technologies Group, Inc. in the U.S.
On April 1, 2019 PST, the Company acquired 25% of the outstanding shares of Pentagon Technologies Group,
Inc., a company operating a precision tool cleaning business in the U.S., thereby making it an equity method
affiliate of the Company.
Pentagon Technologies Group, Inc., headquartered in California, has engaged in the precision tool cleaning
business primarily in the U.S. since it was founded in 1998. Developing cutting-edge cleaning tooltechnologies and a unique cleaning method that contributes to improving the quality of customers’ products
while reducing the burden on the environment, Pentagon Technologies focuses on providing services forleading manufacturers of semiconductors and semiconductor manufacturing equipment that have production
bases in the U.S. Pentagon Technologies has established a solid customer base in the market for semiconductor
precision tool cleaning and is one of the leading service providers in the global market.
Among the companies of the Kurita Group, Kuritec Service Co., Ltd. engages in the precision cleaning toolbusiness in Japan. In future, the technologies and services of Pentagon Technologies and Kuritec Service will
be combined to provide solutions with high added value as a global supplier of the precision cleaning tool
service, which aims for greater intimacy with customers toward continual business expansion and thedevelopment of new overseas markets. In addition, the business area in the U.S. will continue to be expanded
through collaboration with the overseas operating companies of the Kurita Group.

– 34 –

[Translation for Reference and Convenience Purposes Only]

2.

Stock of the Company (As of March 31, 2019)(1)

Total number of issuable shares
531,000,000 shares(2)

Total number of issued shares
116,200,694 shares (including 3,593,706 shares of treasury stock)(3)

Number of shareholders as of March 31, 201923,476 persons(4)

Major shareholders (Top 10 shareholders)Name of shareholder

Number of shares
thousand shares

Ratio of shareholding%

Japan Trustee Services Bank, Ltd. (Trust Account)

7,748

6.88

The Master Trust Bank of Japan, Ltd. (Trust Account)

6,422

5.70

Nippon Life Insurance Company

5,979

5.31

Japan Trustee Services Bank, Ltd. (Trust Account 9)

2,323

2.06

BNYMSANV AS AGENT/CLIENTS LUX UCITS NON
TREATY 1

2,182

1.93

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,155

1.91

Japan Trustee Services Bank, Ltd. (Trust Account 5)

2,121

1.88

MUFG Bank, Ltd.

2,056

1.82

JP Morgan Chase Bank 385151

1,733

1.53

BANK JULIUS BEAR AND CO., LTD

1,724

1.53

(Notes)

1.
2.
3.

(5)

Treasury stock held by the Company is omitted from the above table.
Ratio of shareholding is calculated based on the number of shares after deduction of the number oftreasury stock from the total number of issued shares.
Treasury stock does not include about 327,000 shares of treasury stock for performance-linked stockcompensation to Directors, held by Japan Trustee Services Bank, Ltd. (Trust Account).

Other important matters regarding stock1) Holdings of the Company stock by means of a trust pertaining to the performance-linked stock compensation
plan
As of March 31, 2019, holdings of 327,369 shares of the Company stock have been acquired by the stock
distribution trust established with monetary funds contributed by the Company on the basis of the performancelinked stock compensation plan which was adopted upon resolution made at the 80th Ordinary General Meetingof Shareholders held on June 29, 2016 and held by Japan Trustee Services Bank, Ltd. (Trust Account).

– 35 –

[Translation for Reference and Convenience Purposes Only]

3. Directors and members of the Audit & Supervisory Board of the Company (As of March 31, 2019)(1)

Directors and members of the Audit & Supervisory Board
Name

Responsibility andimportant concurrent positions

Position

Kouichi Iioka

Chairman and Director

Michiya Kadota

President andRepresentative Director

Kiyoshi Itou

Executive Senior Managing
Director and Representative
Director

Executive General Manager of Corporate
Planning Division

Takahito Namura

Managing Director

Executive General Manager of Solution Business
Division

Toshitaka Kodama

Managing Director

Executive General Manager of Sales II Divisionand in charge of the facilities businessYoshio Yamada

Managing Director

Executive General Manager of Sales I Divisionand in charge of the chemicals business

Hirohiko Ejiri

Director

Executive General Manager of Engineering
Division

Toshimi Kobayashi

Director

Senior General Manager of East Japan Sales
Group, Sales Division I

Yasuo Suzuki

Director

Executive General Manager of Global Business
Division

Yukihiko Mutou

Director

Executive General Manager of Group
Administrative Division

Tsuguto Moriwaki

Director(External Director)

Ryoko Sugiyama

Director(External Director)

Shiro Hayashi

Full-time member of the Audit& Supervisory Board

Kenjiro Kobayashi

Full-time member of the Audit& Supervisory Board(External member of the Audit& Supervisory Board)

Shigekazu TorikaiMember of the Audit &Supervisory Board(External member of the Audit& Supervisory Board)(Notes)1.
2.
3.

In charge of the global business

Head and Representative Director of the Board,
Gifu Shimbun Co., Ltd.
External Director and Audit and Supervisory
Committee Member of LECIP Holdings
Corporation
External Director of UACJ Corporation
Director, Gifu Sugiyama Memorial Foundation, apublic interest incorporated foundation

Representative Lawyer, Torikai Law Office
External Director of United Super Markets
Holdings Inc.
Representative Director, Nikkeizei Co., Ltd
Outside Director of RISO KAGAKUCORPORATION

Mr. Ikuo Ishimaru retired from the office of Director at the conclusion of the 82nd Ordinary General
Meeting of Shareholders held on June 28, 2018.
Directors Tsuguto Moriwaki and Ryoko Sugiyama are External Directors of the Company under
Item 15, Article 2 of the Companies Act.
Members of the Audit & Supervisory Board Kenjiro Kobayashi and Shigekazu Torikai are external
members of the Audit & Supervisory Board of the Company under Item 16, Article 2 of theCompanies Act.
– 36 –

[Translation for Reference and Convenience Purposes Only]

4.

5.

Member of the Audit & Supervisory Board Kenjiro Kobayashi has considerable insight with respect
to finance and accounting, having handled operations that include the investment and loan businessof Japan Development Bank (currently, Development Bank of Japan Inc.) for 27 years until his
appointment as a member of the Audit & Supervisory Board of the Company.
On April 1, 2019, the following changes were made in the position and responsibility of Directors.
Name

Kiyoshi Itou

Position
Executive Senior
Managing Director
and Representative
Director

Toshitaka Kodama Managing Director
Yoshio Yamada

Managing Director

Hirohiko Ejiri

Managing Director

Takahito Namura

Director

Toshimi Kobayashi Director
Yukihiko Mutou
6.

Director

Responsibility and important concurrent positions
Executive General Manager of Corporate
Planning and Control Division
Executive General Manager of Solution Business
Division and in charge of the facilities business
Executive General Manager of Japan Sales
Business Division and in charge of the chemicals
business
Executive General Manager of Engineering
Division
Deputy Executive General Manager of Solution
Business Division
Senior General Manager of Administration Group,Japan Sales Business Division
Deputy Executive General Manager of Corporate
Planning and Control Division

The Company has registered the following individuals as independent officers with the Tokyo Stock
Exchange, Inc.
Director
Tsuguto Moriwaki
Director
Ryoko Sugiyama
Member of the Audit & Supervisory Board
Kenjiro Kobayashi
Member of the Audit & Supervisory Board
Shigekazu Torikai(2) Outline of agreements for limitation of liability with external officers
The Company has entered into an agreement with External Directors Tsuguto Moriwaki and Ryoko Sugiyama, andan external member of the Audit & Supervisory Board Shigekazu Torikai that limits liability for damages stipulated
in Paragraph 1, Article 423 of the Companies Act in accordance with the provisions of the Articles of Incorporation
thereof based on the provisions of Paragraph 1, Article 427 of the Act. The amount stipulated in Paragraph 1, Article
425 of the Act has been set as the maximum liability for damages based on this agreement.
(3)

Policies and procedures for determining the remuneration of the Directors and the members of the
Audit & Supervisory Board
The remuneration system for the Company’s Directors (excluding the External Directors) consists of fixed
remuneration as the basic remuneration and incentive remuneration that reflects performance. The remuneration
system for External Directors with supervising functions and members of the Audit & Supervisory Board is a fixed
remuneration system. The fixed remuneration is a fixed amount by position for the Directors and by working form
for the members of the Audit & Supervisory Board, and a portion thereof is appropriated for the Directors’ and themembers of the Audit & Supervisory Board’s Shareholding Scheme for the purchase of the Company’s shares sothat the Directors and the members of the Audit & Supervisory Board share the risks of share price fluctuations withthe shareholders. The incentive remuneration consists of short-term incentive remuneration, which increases ordecreases depending on factors such as the level of attainment of the annual business plan or the evaluation of eachindividual’s performance of his or her duties and long-term incentive remuneration, whereby shares are issued toretiring directors according to their performance while in office and their title. The incentive remuneration isintended to motivate Directors (excluding the External Directors) to continuously improve the Kurita Group’sbusiness results for the enhancement of corporate value.
– 37 –

[Translation for Reference and Convenience Purposes Only]

Regarding the remuneration system and the remuneration level of the Directors and the members of the Audit &Supervisory Board and the performance evaluation of the Directors (excluding External Directors), the Chairpersonof the Board of Directors will consult the Nomination & Remuneration Advisory Council in advance. Based on thereport given by the Nomination & Remuneration Advisory Council, the Board of Directors will decide theremuneration of the Directors within the total amount determined by a General Meeting of Shareholders. The
Nomination & Remuneration Advisory Council consists of the four members of two External Directors, one fulltime external Member of the Audit & Supervisory Board, and the President and is chaired by an External Director.
The allocation of remuneration to each member of the Audit & Supervisory Board shall be decided throughdiscussions among members of the Audit & Supervisory Board.
(4)

Remuneration of Directors and members of the Audit & Supervisory Board during the fiscal year underreview
Classification

Number of payees

Amount of remuneration

Director

12(including two External Directors)

570 million yen

Member of the Audit &Supervisory Board

3(including two external membersof Audit & Supervisory Board)

81 million yen

External officers

4

75 million yen(Notes)

1.
2.

3.

4.

5.

Remunerations for the Directors do not include the employee salaries paid to the Directors who
concurrently serve as employees.
At the 72nd Ordinary General Meeting of Shareholders held on June 27, 2008, a resolution was
passed to set the amount of remuneration for Directors (excluding External Directors) at a maximumof an annual 800 million yen (excluding the employee salaries paid to Directors who concurrently
serve as employees).
At the 80th Ordinary General Meeting of Shareholders held on June 29, 2016, a resolution was madeto pay performance-linked stock compensation (long-term incentive remuneration) to Directors(excluding External Directors) from a separate fund from that shown in 2. above.
The Company will record the estimates of money to be paid for short-term incentive remunerationand long-term incentive remuneration as provisions as of March 31, 2019. The amounts ofremuneration paid to Directors stated above include 133 million yen of provision for short-term
incentive remuneration for the fiscal year under review and 98 million yen of provision for longterm incentive remuneration for the fiscal year under review.
In addition to the above-stated remuneration paid to Directors, 142 million yen of short-term
incentive remuneration for the previous fiscal year has been paid to Directors and 8 million yen ofprovision for long-term incentive remuneration has been paid to the Directors who retired as of theconclusion of the 82nd Ordinary General Meeting of Shareholders held on June 28, 2018.

(5) External Directors and external members of the Audit & Supervisory Board
1) The important concurrent positions that External Directors and external members of the Audit & Supervisory
Board hold at other companies are described in the aforementioned “(1) Directors and members of the Audit& Supervisory Board.”– 38 –

[Translation for Reference and Convenience Purposes Only]

2) Principal activities of External Directors and external members of the Audit & Supervisory Board
Name

Position

Principal Activities

External Director

Mr. Moriwaki attended 14 of 15 Board of Directors
meetings (attendance rate: 93.3%) held during the fiscal
year under review.
He questions and expresses his opinions from his
professional standpoint as an external director over thecourse of deliberations on proposals and confirmationsof matters reported, drawing on his career backgroundacting as representative director of listed companies indifferent industries and based on his experience andinsight with respect to manufacturing and corporate
reform.

Ryoko Sugiyama

External Director

Ms. Sugiyama attended 14 of 15 Board of Directors
meetings (attendance rate: 93.3%) held during the fiscal
year under review.
She poses questions and expresses her opinions over thecourse of deliberations on proposals and confirmationsof matters reported from an outsider’s perspective in
general, drawing on her career background acting as anexternal director, etc. at listed companies in otherindustries in addition to her significant knowledge of theenvironment and waste.

Kenjiro Kobayashi

Mr. Kobayashi attended all 15 Board of Directors
meetings and all 11 Audit & Supervisory Board
meetings (each attendance rate: 100%) held during the
fiscal year under review.
External member of the
He conducts daily audits as a full-time member of the
Audit & Supervisory Board Audit & Supervisory Board, and expresses his opinions
in the Board of Directors meetings, Audit &Supervisory Board meetings and other important
meetings, in part based on his expert perspective infinance and accounting.

Shigekazu Torikai

Mr. Torikai attended 13 of 15 Board of Directors
meetings (attendance rate: 86.7%) and 10 of 11 Audit &Supervisory Board meetings (attendance rate: 90.9%)
External member of the
Audit & Supervisory Board held during the fiscal year under review.
He expressed his opinions from his professional
standpoint as an attorney at law.

Tsuguto Moriwaki– 39 –

[Translation for Reference and Convenience Purposes Only]

4. Accounting Auditor(1)

Name of Accounting Auditor
Grant Thornton Taiyo LLC(2)Remuneration to Accounting Auditor for the fiscal year under review
Amount of
remuneration

Classification
Amount of Remuneration paid by the Company for the fiscal year underreview

76 million yen

Sum of the amount of money and other material advantage to be paid by theCompany and its subsidiaries to Accounting Auditor

89 million yen(Notes)(3)

1.

The amount of remuneration listed above in the row “Amount of Remuneration paid by the Company
for the fiscal year under review” has been determined on the basis of the audit agreement enteredinto between the Company and the Accounting Auditor. The above paid amount is the total of
payments since the remuneration from audits pursuant to the Companies Act and Financial
Instruments and Exchange Act are not clearly divided or cannot be practically divided.

2.

The amount listed in the row, “Sum of the amount of money and other material advantage to be paidby the Company and its subsidiaries to Accounting Auditor” includes remuneration for non-audit
services involving preparation of application forms and certificates.

3.

The Audit & Supervisory Board has furnished its consent with respect to remuneration, etc. of the
Accounting Auditor, upon having conducted requisite validation of the audit plan of the Accounting
Auditor, evaluations of results of prior fiscal year audits, status of executing duties, and rationale
used for calculating quotations for remuneration.

4.

Among the Company’s significant subsidiaries, Kurita Europe GmbH, Kurita Water Industries(Suzhou) Ltd., Kurita Water Industries (Jiangyin) Co., Ltd., Hansu Technical Service Ltd. and Hansu
Co., Ltd are audited by Certified Public Accountants or audit corporations (including persons or
entities with equivalent qualifications overseas) other than the Company’s Accounting Auditor.

Policy on decision to dismiss or not reappoint Accounting Auditor

Where the Audit & Supervisory Board deems the Accounting Auditor corresponds to the provisions ofParagraph 1, Article 340 of the Companies Act based on the agreement of the all members of Audit &Supervisory Board, the Accounting Auditor will be dismissed.
Moreover, the Audit & Supervisory Board evaluates the Accounting Auditor in terms of its auditing frameworks,
independence and expertise, and if deemed necessary, determines the content of proposals calling for the dismissal
or non-reappointment of the Accounting Auditor, particularly if the Audit & Supervisory Board finds it difficult for
the Accounting Auditor to execute its duties appropriately. Meanwhile, the Board of Directors submits suchproposals to general meetings of shareholders, pursuant to such decision by the Audit & Supervisory Board.

– 40 –

[Translation for Reference and Convenience Purposes Only]

5. System to ensure that the execution of the duties of Directors conforms with laws, regulations, and the
Articles of Incorporation and other systems to ensure appropriate operations
The Kurita Group’s Basic Policies for Constructing an Internal Control System (April 1, 2018 Partial Revision) are
as follows.
(1)

System to ensure that the execution of the duties of Directors and employees conforms with laws,
regulations, and the Articles of Incorporation

1)

The Company and its consolidated subsidiaries (the “Group Companies”) comply with laws and regulationsin accordance with social ethics and the construction of transparent and fair relationships with shareholders,customers, employees, local communities, and trade partners at all places in which business activities are
conducted, and have specified actions based on compliance with laws, regulations, and social ethics as aprerequisite for corporate activities. We have established Core Values (fairness, transparency, integrity, safety
and compatibility) that officers and employees should emphasize, and the Kurita Group Code of Conduct
with which officers and employees should comply, transcending differences in their language, custom andcultural background, to fully enforce actions based on compliance with laws, regulations and social ethics inour daily business activities. In addition, the Company and the Group Companies will stand up to antisocial
forces that potentially pose a threat to social order and safety with a resolute attitude, and work to fight off
the unjustified claims of antisocial forces in a determined manner.

2)

The Company sets up the E&S (Environmental & Social) Committee, which is chaired by the Director, and
the Group E&S Committee, which is also chaired by the same Director and whose members are therepresentatives of the Group Companies. In these Committees, the members set out policies and importantmeasures for compliance activities, and convey them to all employees through the divisions and thedepartment committees of the Group Companies. The Company will also work continuously to raise thecompliance level by regularly reporting the status of activities and their results to the Board of Directors. If
the Chairman of these Committees determines that there is a serious problem or a doubt related to compliance,
the Chairman will immediately report it to the President and Representative Director, and then formulate andimplement remedial actions and preventive measures. The President and Representative Director or the
Chairman of these Committees will report these events to the Board of Director and the Audit & Supervisory
Board whenever appropriate.

3)

The Company establishes the Internal Auditing Department, which is placed under the direct control of the
President and Representative Director, to conduct internal audits on matters such as those related tocompliance activities.

4)

The Company establishes the Public Interest Whistle-Blower Protection Regulations as a mechanism for theemployees of the Company and the Group Companies to directly provide information about legally doubtful
conducts, etc. In conjunction with these regulations, the Company also establishes the ComplianceCounselling Office. The Company also works to ensure the fairness and transparency of the management of
the Company and the Group Companies by regularly reporting the status of the operation of the contact for
Public Interest Whistle-Blowing to the Board of Directors.

5)

The Company develops and operates the “Internal Control Reporting System” in accordance with the
Financial Instruments and Exchange Act to ensure the accuracy of the financial reporting of the Company
and the Group Companies. Monitoring, recommendations for improvement, and support for improvement
for the operation of the System are implemented, with the Internal Auditing Department as the responsible
department. In addition, the Accounting Department in the Corporate Planning Division shares responsibility
for monitoring, recommendations for improvement, and support for improvement related to the “operations
process control inside the Company” and the “account settlement and financial reporting process control ofconsolidated subsidiaries from a company-wide perspective.”

6)

In response to the “Corporate Governance Code” set forth in the Securities Listing Regulations of Tokyo
Stock Exchange, Inc., the Company establishes policies for corporate governance and strengthens its
corporate governance, with the aim of realizing transparent, fair, prompt, and decisive decision-making andmore effective management supervision of the Company and the Group Companies.
– 41 –

[Translation for Reference and Convenience Purposes Only]

Outline of operational status(a)

Having defined the objective of initiatives on CSR as “creating and maximizing shared value for the Kurita
Group and society” and “identifying, preventing and mitigating possible adverse impacts by the Kurita
Group,” the Company identified seven material issues (primary focused area) related to CSR and formulated
and is operating the “CSR Policy” including what we should be like and the frame of mind that we should
maintain firmly in 2030.

(b)

To enhance the effectiveness of the Kurita Group Code of Conduct formulated on October 1, 2016, theCompany set forth the Kurita Group taxation policy and revised the policies shared by the Group companies
on product quality, procurement, and information disclosure, thereby promoting the establishment of theKurita Group Business Policy in the fiscal year ended March 31, 2019.

(c)

The Company is operating the Regulation for Responding to Anti-social Forces that prescribes mattersrelating to an organizational structure and other approaches to cutting any relations with anti-social forces.

(d)

The E&S Committee holds meetings regularly to check the state of progress of key measures and issues.

(e)

The Company and the Group Companies have been conducting questionnaires on compliance on an annual
basis. They have been drawing on questionnaire results to monitor progress with respect to improvements,
pinpointing issues, and then reflecting those findings in activity policies for the subsequent fiscal year.

(f)

The Company and the Group Companies have been operating whistle-blowing system of internal control.
They have accordingly established the Public Interest Whistle-Blower Protection Regulations and have set
up consultation desk and reporting desk operated by outside organizations.

(g)With respect to internal controls for financial reporting, a team dedicated to such tasks from the Internal
Auditing Department has been engaging in monitoring in accordance with fiscal year plans, and the
Accounting Department in the Corporate Planning Division has also been taking on some responsibility inthat regard. The Company has also been monitoring the effectiveness of respective controls.

(h)

The Company revises our policies on corporate governance regularly (at least once a year) or as necessary.
In the fiscal year ended March 31, 2019, in response to the revision of the Corporate Governance Code, theCompany partially revised its Corporate Governance Policies on December 1, 2018, to include statementson policy to reduce strategic shareholdings in other listed companies, and formulate the process of selecting
and training candidates for successor to the President and Director.

(2)

System to store and manage information about the execution of the duties of Directors

Information about the execution of the duties of Directors is recorded and stored in documents or electromagnetic
media in accordance with the Document Regulations and the Confidential Information Management Regulations
established by the Board of Directors. The Directors and members of the Audit & Supervisory Board may inspectthese documents, etc. when necessary.
Outline of operational status
Original copies of such information are being stored in vaults, and duplicates are being kept in locked document
cabinets under stringent control. In addition, the Company has stipulated that those who have been granted
permission to view documents must follow certain procedures in that regard, under the Company’s regulations.
(3)Regulations and other systems for managing the risk of loss

1)

Risks pertaining to the Company and the Group Companies are monitored and risk management is promoted,with the Executive General Manager of the Corporate Planning Division acting as the officer in charge. The
Executive General Manager of the Corporate Planning Division regularly analyzes and assesses the risks of
the Company and the Group Companies, and makes efforts to prevent the occurrence of risks throughcontinuous monitoring. If a risk that may have a material impact on management arises, the Executive
General Manager of the Corporate Planning Division will appoint a responsible official, draw up a system
to address the risk, and immediately issue a command after gaining the approval of the President andRepresentative Director. The responsible official will immediately implement countermeasures and report
the impact of the risk, the status of correcting the risk, and the measures for preventing the risk to the– 42 –

[Translation for Reference and Convenience Purposes Only]

President and Representative Director and the Executive General Manager of the Corporate Planning
Division.
2)

In regards to serious risks, the Chairman of the E&S Committee will be the responsible official for risks
related to compliance, and the Chairman of the Headquarters Health and Safety Committee will be theresponsible official for risks related to health, safety, and disasters. Risks that are directly related to daily
business activities are addressed by the executive general managers of the divisions, who acts as the
responsible official. Other day-to-day risks related to quality, the environment, information security, andexport regulations, etc. are addressed by their respective departments.

3)

The Executive General Manager of the Corporate Planning Division, the Chairmen of the Committees, andthe executive general managers of the divisions regularly report the status of activities to promote risk
management and compliance to the Board of Directors, and report the occurrence and result of material risks
to the Board of Directors and the Audit & Supervisory Board whenever appropriate.

4)

The status of the implementation of risk management and improvements is monitored, with the Internal
Auditing Department acting as the responsible department.

Outline of operational status(a)

The Company and the Group Companies have adopted risk management systems whereby risk is categorized
either as “Group-wide risk” which must be addressed by the entire Kurita Group such as in the event of anearthquake or other disaster, or as “business risk” which derives directly from daily business affairs. The
Company and the Group Companies have also been conducting review on an annual basis of risk maps. The
risk maps indicate probabilities of risks materializing, profile the impact and magnitude of impact that a risk
event would pose, and assess the significance of such situations. To such ends, the Company and the Group
Companies have been striving to prevent risk from materializing by implementing prevention measures, andotherwise have been preparing themselves to address unforeseen circumstances by establishing action plans
for risk events. In addition, the Group formulated the “Kurita Group BCM Policy (Business Continuity
Management)” on April 1, 2018 to set out the Kurita Group’s principles on response measures for officers,
executive officers, and employees in handling emergencies that pose a risk to the continuity of the Group’sbusinesses such as major earthquakes, storm and flood damage, or pandemics.

(b)

The Company and the Group Companies have established legal violation risk maps, and accordingly engage
in practices that involve identifying major risks of legal violation and regularly monitoring implementationof initiatives in that regard.

(c)

The Board of Directors has been regularly receiving reports regarding the promotion status of risk
management and compliance activities, and the Board of Directors and the Audit & Supervisory Board havebeen receiving reports whenever appropriate with respect to the occurrence and materializing of significant
risk events.

(d)

The status of the implementation of risk management and improvements is monitored, with the Internal
Auditing Department acting as the responsible department.

(4)

System to ensure the efficient execution of duties by the Directors

The Company will improve the efficiency of the execution of duties of the Directors based on the following
management control system and mechanism.
1)

The Board of Directors specifies the operations delegated to the Directors, the executive officers, and the
responsible officials of organizations (managerial personnel with the rank higher than Senior General
Manager, Head of Osaka Office or Head of an Office).

2)

The Board of Directors formulates a long-term vision, a medium-term management plan, and a business plan
for a single fiscal year, and sets out the targets, policies, and focused measures for each organization. The
Board of Directors also implements monthly and quarterly business controls in relation to the consolidated
and non-consolidated targets of the Company and the business departments.

– 43 –

[Translation for Reference and Convenience Purposes Only]3)

The final decision application system is set up, in line with the Executive Committee and the Final Decision
and Examination Regulations, as a decision-making system to complement the resolutions made at the Boardof Directors meetings.

4)

The Executive Committee makes decisions and conducts a review of matters resolved at the Board of
Directors meetings to facilitate the decision-making progress when necessary. The Executive Committee
consists of the President and Representative Director, Directors with a rank of Managing Director or above,
the Executive General Manager of the Corporate Planning Division, and the Directors and executive officers
appointed by the President and Representative Director. The committee meets twice a month in principle,
and on a temporary basis when necessary. In the Executive Committee, the members deliberate mattersrelated to the management of the Company and the Kurita Group, conduct a monthly and quarterly check ofwhether targets have been achieved and the status of implementation of policies and measures, and give the
Directors and the executive officers in charge instructions to correct deviations. The members of the Audit& Supervisory Board may attend the Executive Committee.

5)

The decision to establish, revise, or abolish the Final Decision and Examination Regulations is made by the
Board of Directors. For the Directors and the executive officers to conduct their duties more efficiently,internal regulations conforming to the Final Decision and Examination Regulations are established andimplemented.

Outline of operational status(a)

To enable the Board of Directors to better provide strategic direction that contributes to the Kurita Group’s
sustainable growth, make decisions on important matters related to operational execution, and exercise
supervisory functions over the execution of duties, the Company reviewed and is operating the Final
Decision and Examination Regulations when necessary.

(b)

The Executive Committee has been making judgments and decisions on matters that have been delegated to
it by the Board of Directors, and has been conducting review with respect to agenda items for meetings ofthe Board of Directors. Executive Committee members include the President and Representative Director,
Directors with a rank of Managing Director or above, the Executive General Manager of the Corporate
Planning Division, and the Directors and executive officers appointed by the President and Representative
Director. The committee has been meeting twice a month in principle, and on a temporary basis whennecessary. The full-time members of the Audit & Supervisory Board have been attending meetings of the
Executive Committee.

(5)

System to ensure the accuracy of operations in a corporate group consisting of the Company and its
subsidiaries

The Company and the Group Companies perform operations appropriately by the following systems and theframeworks that are in place.
1)

The Company and the Group Companies set a medium-term management plan and a business plan for asingle fiscal year based on a unified outline for formulating plans.

2)

The overall management of the Group Companies is controlled by the Corporate Planning Division. In
addition, an officer and a department of the Company in charge of each Group Company are appointed toregularly determine the status of the business performance achieved and the status of risk management basedon the medium-term management plan and the business plan for a single fiscal year, and to provide the Group
Companies with guidance.

3)

A Board of Directors is set up in each Group Company, and the Company or the Group Companies dispatcha (non-standing) Director and (non-standing) member of the Audit & Supervisory Board to monitor the
management, business performance, settlement of accounts, and risks. If a decision needs to be made as theGroup, the Executive Committee of the Company deliberates the matter and makes the decision inaccordance with “7. Matters related to subsidiaries and associates in Japan and overseas,” an appendix of the
Final Decision and Examination Regulations of the Company, or the Board of Directors or the Executive
Committee of the Company makes the decision.
– 44 –

[Translation for Reference and Convenience Purposes Only]

4)

In regards to the Group Companies’ efforts related to compliance, the Group E&S Committee stated in
Paragraph 2, Article 1 of the Basic Polices for Constructing an Internal Control System sets out policies andimplements specific measures. In addition, the system for ensuring the accuracy of the financial reporting by
the Group is considered and established as part of the approaches stated in Paragraph 5, Article 1.

5)

The Group Companies report the status of their management, sales activities, manufacturing, and risk
management, etc. to the Company regularly, such as on a monthly or quarterly basis.

Outline of operational status(a)

The Company and the Group Companies have set a medium-term management plan and a business plan fora single fiscal year based on a unified outline for formulating plans. Meanwhile, the President andRepresentative Director of the Company has been holding management plan review sessions with respective
Group Companies, and has been making decisions on general matters with respect to the fiscal year andplans for the subsequent fiscal year. The overall management of Group Companies is controlled by the
Corporate Planning Division.

(b)

The Group E&S Committee, the Group Health and Safety Committee, and other such bodies have been
regularly providing an understanding of circumstances with respect to compliance and risk management ofGroup Companies, and have been providing necessary guidance in that regard.

(c)Members of the Audit & Supervisory Board have been conducting audits and surveys with respect to theCompany and the Group Companies in accordance with audit policies and audit plans, etc. established by
the Audit & Supervisory Board.

(6)

Matters related to an employee if a member of the Audit & Supervisory Board requests the assignmentof the employee to assist him/her, matters related to the independence of the employee from the
Directors, and matters related to ensuring the effectiveness of instructions issued to the employee

1)

The Audit & Supervisory Board of the Company may appoint a full-time assistant. If a full-time assistant is
not appointed, a member of the Audit & Supervisory Board may instruct a certain employee who belongs to
the Internal Auditing Department to assist his/her auditing work as necessary.

2)

The employee who assists the auditing work of the member of the Audit & Supervisory Board in accordancewith the instruction described in the preceding paragraph provides assistance independent of the Directors
and within the necessary scope of assistance. In addition, the opinions of the member of the Audit &Supervisory Board are respected regarding personnel changes and evaluations, etc. of the employee.

3)

The employee who assists the auditing work of the member of the Audit & Supervisory Board may regularly
attend places where opinions are exchanged between the Representative Director and the Accounting Auditor
within the company of the member of the Audit & Supervisory Board.

Outline of operational status
The Audit & Supervisory Board of the Company has no full-time assistant. However, to help members of the Audit& Supervisory Board perform sufficient audit work, the General Manager of Internal Auditing Department supports
the Audit & Supervisory Board in audit work as the secretariat of the Audit & Supervisory Board, and members of
the Audit & Supervisory Board give instructions to specific employees in the Internal Auditing Department to assist
audit work as necessary.
(7)

System for the Directors and employees of the Company and Group Companies to report to the Audit& Supervisory Board, and other systems for reporting to the Audit & Supervisory Board

1)

In order to regularly confirm that the Directors, executive officers and employees of the Company perform
operations appropriately, the members of the Audit & Supervisory Board are required to attend the Board of
Directors meetings. They may also attend the Executive Committee and the E&S Committee, etc.

2)

The members of the Audit & Supervisory Board of the Company may inspect documents, etc. necessary for
their auditing work at any time, irrespective of the provisions of the Document Regulations, the Confidential
Information Management Regulations, and other regulations.
– 45 –

[Translation for Reference and Convenience Purposes Only]

3)

The Directors of the Company report important matters related to the execution of duties to the members of
the Audit & Supervisory Board or the Audit & Supervisory Board whenever appropriate through the Boardof Directors meetings and other important meetings.

4)

The executive officers and employees of the Company and the Directors, the members of the Audit &Supervisory Board, and the employees of the Group Companies report matters stipulated in laws andregulations as well as cases of compliance violations, cases in dispute, the occurrence of material risks, andmatters related to accounting and the settlement of accounts, etc. to the respective departments in charge
within the Company. The departments in charge report the details of reports from the executive officers andemployees of the Company and the Directors, the members of the Audit & Supervisory Board and employeesof Group Companies to the members of the Audit & Supervisory Board or the Audit & Supervisory Board
when necessary. In addition, the departments in charge also make necessary reports at the request of amember of the Audit & Supervisory Board.

5)

The Company prohibits those who made a report to a department in charge, a member of the Audit &Supervisory Board, or the Audit & Supervisory Board in accordance with the provisions of the preceding
paragraph from being treated unfavorably on the grounds of making a report, and makes this fact fully known
to the Directors, executive officers and employees of the Company and the Directors and employees of theGroup Companies.

Outline of operational status(a)

Each member of the Audit & Supervisory Board has been attending the Board of Directors meetings andother important meetings such as those of Executive Committee and E&S Committee, and has been
performing audits of Directors with respect to their execution of duties.

(b)

The Directors of the Company have been reporting important matters related to the execution of duties tothe members of the Audit & Supervisory Board or the Audit & Supervisory Board whenever appropriate,through the Board of Directors meetings and other important meetings.

(c)

The employees of the Company, and the Directors and the employees of the Group Companies report on thematters stipulated in laws and regulations as well as cases of compliance violations, cases in dispute, theoccurrence of material risks, and matters related to accounting and the settlement of accounts, etc. to thedepartments in charge within the Company. The departments in charge report on the details of the reports
from the employees of the Company, and the Directors and employees of Group Companies to the membersof the Audit & Supervisory Board or the Audit & Supervisory Board when necessary. In addition, thedepartments in charge also make the necessary reports at the request of a member of the Audit & Supervisory
Board.

(d)In accordance with the Public Interest Whistle-Blower Protection Regulations, the Company and the Group
Companies have prohibited the unfair treatment of those who have reported information set forth in theprevious paragraph, on the ground of having made such a report.

(8)

Other systems to ensure the effective auditing of the Audit & Supervisory Board

1)

A meeting for the President and Representative Director and the members of the Audit & Supervisory Boardor the Audit & Supervisory Board to exchange opinions is held regularly.

2)

The Audit & Supervisory Board establishes standards for appointing, dismissing, and refusing to reappoint
the Accounting Auditor, and nominates a candidate for the Accounting Auditor. The Company and the Group
Companies secure sufficient amount of time for the Accounting Auditor to conduct a high-quality audit. The
members of the Audit & Supervisory Board, the Internal Auditing Department, and the Accounting Auditor
promote a cooperation by mutually checking each other’s audit plans and sharing their concerns.

3)

The members of the Audit & Supervisory Board or the Audit & Supervisory Board hold discussions andexchange opinions with the Internal Auditing Department and the Accounting Auditor when necessary.

4)

The Audit & Supervisory Board allocates expenses that are deemed necessary for the execution of duties inadvance. However, the Audit & Supervisory Board may charge the Company postmortem for expenses it
spent on urgent or provisional matters.
– 46 –

[Translation for Reference and Convenience Purposes Only]

Outline of operational status(a)Members of the Audit & Supervisory Board have been regularly holding meetings for exchanging opinionswith the President and Representative Director of the Company in order to facilitate mutual understanding
and further develop relationships of trust.

(b)

The Audit & Supervisory Board establishes standards for appointing, dismissing, and refusing to reappoint
the Accounting Auditor, and nominates a candidate for the Accounting Auditor.

(c)Members of the Audit & Supervisory Board have been holding discussions and exchanging opinions with
the Internal Auditing Department whenever appropriate, and have otherwise been taking steps to promote
cooperation by mutually checking each other’s audit plans and regularly exchanging opinions throughforums such as briefing sessions for reporting on settlement of accounts and audit results.

Basic Policies for Constructing an Internal Control System are made available to the public via the following URL
on the Company’s website on the Internet upon revision by resolution of the Board of Directors.
We made slight changes to meet the reorganization as of April 1, 2019.
(https://ir.kurita.co.jp/en/corporate_governance/internal_control_system/index.html)– 47 –

[Translation for Reference and Convenience Purposes Only]

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

AmountAccount item

AssetsCurrent assets
Cash and deposits
Notes receivable – trade
Accounts receivable – trade149,550
35,351
7,576
91,671Marketable securities
Finished products
Work in process
Raw materials and supplies

1,235
5,106
1,235
3,133

Other
Allowance for doubtful accounts

4,900
(659)

Non-current assets

200,335

Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Land

109,669
14,36042,551
14,510Liabilities
Current liabilities
Notes payable – trade
Accounts payable – trade(Million yen)Amount68,072
1,961
24,401

Accounts payable – other and accrued
expenses

23,700

Income taxes payable
Provision for bonuses
Other

5,890
2,520
9,599

Non-current liabilities
Lease obligations

42,3395,250

Deferred tax liabilities related torevaluation

1,119

Net defined benefit liability
Long-term advances received
Other

16,64813,497
5,822

Leased assets

6,391

Total liabilities

110,412Construction in progress
Other

28,0883,767

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock

233,417
13,450
10,665220,234(10,932)

Intangible fixed assets
Goodwill
SoftwareOther

53,95836,301
2,808
14,847

Investments and other assets
Investment securities
Shares of subsidiaries and associates

36,708
21,104
1,099

Deferred tax assets
Other
Allowance for doubtful accounts

7,929
6,724
(149)

Accumulated other comprehensive
income4,187

Unrealized gains (losses) on
available-for-sale securities

8,651

Deferred gains (losses) on hedges
Revaluation reserve for land

314
(200)

Foreign currency translation
adjustments
Remeasurements of defined benefit
plans
Non-controlling interests
Total assets

349,885(4,578)0
1,868

Total net assets

239,473

Total liabilities and net assets

349,885(Note) Figures are rounded down to the nearest millions of yen.

– 48 –

[Translation for Reference and Convenience Purposes Only]

Consolidated Statement of Income(From April 1, 2018 to March 31, 2019)(Million yen)AmountAccount item
Net sales

259,409

Cost of sales

176,663

Gross profit

82,746

Selling, general and administrative expenses

58,420Operating income

24,326

Non-operating income

2,006Interest and dividend income

733

Other

1,272

Non-operating expenses

2,413Interest expense

317

Other

2,095

Ordinary income

23,919Extraordinary income

8,676

Gain on sales of investment securities

8,676

Extraordinary losses

5,063

Loss on sales of non-current assets

579

Impairment loss

1,097

Loss on liquidation of business

519

Loss on transfer of business

2,867

Income before income taxes

27,532

Income taxes
Current

9,715

Deferred491

Net income

17,325

Profit attributable to non-controlling interests

1

Profit attributable to owners of parent

17,323(Note) Figures are rounded down to the nearest millions of yen.

– 49 –

[Translation for Reference and Convenience Purposes Only]

Consolidated Statement of Changes in Shareholders’ Equity(From April 1, 2018 to March 31, 2019)(Million yen)
Shareholders’ equity
Common stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity13,45010,959209,149(10,943)

222,615

Balance as of the
beginning of the fiscal
year
Change during the period
Dividend from surplus
Profit attributable toowners of parent
Purchase of treasury
stock
Disposal of treasury
stock
Reversal of revaluation
reserve for land
Changes associated withthe change of theclosing date of
consolidated
subsidiaries
Changes of equity
interest in consolidated
subsidiaries
Other
Net change in items
other than shareholders’equity during the period
Total change during theperiodBalance as of the end of
the fiscal year

(5,968)(5,968)17,323

17,323
(2)

(2)

14

14

(180)

(180)

(123)

(123)

(294)

(294)
32

32

–

(294)

11,084

11

10,801

13,450

10,665220,234(10,932)

233,417

Accumulated other comprehensive income

Balance as of the
beginning of the fiscal
year
Change during the period
Dividend from surplus
Profit attributable toowners of parent
Purchase of treasury
stock
Disposal of treasury
stock
Reversal of revaluation
reserve for land
Changes associated withthe change of theclosing date of
consolidated
subsidiaries
Changes of equity
interest in consolidated
subsidiaries
Other
Net change in items
other than shareholders’equity during the period
Total change during theperiodBalance as of the end of
the fiscal year

Unrealized
gains(losses) on
availablefor-salesecurities

Deferred
gains(losses) onhedges

16,558(1)

RemeasureTotal
NonForeign
Revaluation currency
ments of accumulated controlling
reserve fordefinedotherinterests
translation
land
benefitcomprehenadjustments
plans
sive income
(380)

6

3

16,1872,049

Total net
assets240,853(5,968)17,323
(2)
14
(180)

(123)

(294)
32
(7,907)315

180(4,584)(3)(12,000)(181)(12,181)(7,907)315

180(4,584)(3)(12,000)(181)(1,379)

8,651

314

(200)

(4,578)

0

4,187

1,868

239,473(Note) Figures are rounded down to the nearest millions of yen.

– 50 –

[Translation for Reference and Convenience Purposes Only]

Non-Consolidated Financial Statements
Non-Consolidated Balance Sheet (As of March 31, 2019)
Account item
AssetsCurrent assets
Cash and deposits
Notes receivable – trade
Accounts receivable – tradeFinished products
Work in process
Raw materials
Short-term loans receivable
Other
Allowance for doubtful accounts

AmountAccount item

76,901
8,524
4,828
54,915
609
199
368
3,382
4,074
(1)

Non-current assets

223,223

Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Land

85,462
9,175
32,440
11,155

Liabilities
Current liabilities
Accounts payable – trade(Million yen)Amount54,717
16,355

Accounts payable – other and accrued
expenses

16,892

Income taxes payable
Deposits received
Provision for bonuses
Other

3,960
10,727
1,146
5,636

Non-current liabilities
Lease obligations

31,003
3,517

Deferred tax liabilities related torevaluation

1,119

Net defined benefit liability
Long-term advances received
Other

10,79913,4972,069

Leased assets

3,880

Total liabilities

85,720Construction in progress
Other

27,440
1,369

Net assets
Shareholders’ equity

206,051

4,566
2,379
2,186

Common stock
Capital surplus
Legal capital surplus

13,45011,426
11,426133,194
20,95766,318Retained earnings
Legal retained earnings
Other retained earnings

192,106
2,919
189,187

Intangible fixed assets
Software
Other
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital of subsidiaries
and associates
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts

Total assets

26,264

Reserve for advanced depreciationof non-current assets

773

General reserve
Retained earnings brought forward
Treasury stock

163,980
24,433(10,932)

Valuation and translation adjustments

8,352

Unrealized gains (losses) on availablefor-sale securities

8,552

Deferred gains (losses) on hedges
Revaluation reserve for land

0
(200)

8,401
6,705
4,629
(81)

300,125

Total net assets

214,404

Total liabilities and net assets

300,125(Note) Figures are rounded down to the nearest millions of yen.

– 51 –

[Translation for Reference and Convenience Purposes Only]

Non-Consolidated Statement of Income(From April 1, 2018 to March 31, 2019)(Million yen)AmountAccount item
Net sales

131,558

Cost of sales

92,810Gross profit

38,748Selling, general and administrative expenses

26,802

Operating income

11,946

Non-operating income

6,535Interest and dividend income

3,386

Other

3,149

Non-operating expenses

1,650Interest expense

139

Other

1,510

Ordinary income

16,831

Extraordinary income

8,676

Gain on sales of investment securities

8,676

Extraordinary losses

765

Loss on sales of non-current assets

765

Income before income taxes

24,742

Income taxes
Current

6,183

Deferred(66)

Net income

18,626(Note) Figures are rounded down to the nearest millions of yen.

– 52 –

[Translation for Reference and Convenience Purposes Only]

Non-Consolidated Statement of Changes in Shareholders’ Equity(From April 1, 2018 to March 31, 2019)(Million yen)
Shareholders’ equity
CapitalsurplusRetained earnings
Other retained earnings

Commonstock

Balance as of the
beginning of the fiscal
year
Change during the period
Reversal of reserve foradvanced depreciationof non-current assets
Dividend from surplus
Net income
Purchase of treasury
stock
Disposal of treasury
stock
Reversal of revaluation
reserve for land
Net change in items
other than shareholders’equity during the period
Total change during theperiodBalance as of the end of
the fiscal year

13,450Reserve forLegal capital Legal retainedadvancedsurplusearnings
depreciationof non-current
assets11,426

2,919

1,218

Generalreserve

Retainedearnings
brought
forward

Total retained
earnings

163,980

11,510179,628444–(5,968)18,626(5,968)18,626

(180)

(180)

(444)

–

–

–

(444)

–

12,922

12,47813,45011,426

2,919

773

163,980

24,433

192,106– 53 –

[Translation for Reference and Convenience Purposes Only]
Shareholders’ equity

Balance as of the
beginning of the fiscal
year
Change during theperiodReversal of reserve
for advanced
depreciation of noncurrent assets
Dividend from surplus
Net income
Purchase of treasury
stock
Disposal of treasury
stock
Reversal ofrevaluation reserve
for landNet change in items
other thanshareholders’ equity
during the period
Total change during
the period
Balance as of the endof the fiscal year

Valuation and translation adjustments

Treasury stock

Total
shareholders’equityUnrealized
gains (losses)
on availablefor-salesecurities(10,943)

193,562

16,490

Deferred gains(losses) onhedges(8)

Revaluation
reserve for
land

(380)

Total
valuation andtranslation
adjustments

Total net
assets

16,101

209,663––(5,968)18,626(5,968)18,626

(2)

(2)

(2)

14

14

14

(180)

(180)

(7,937)8

180(7,748)(7,748)11

12,489(7,937)8

180(7,748)

4,740(10,932)

206,051

8,552

0

(200)

8,352

214,404(Note) Figures are rounded down to the nearest millions of yen.

– 54 –

[Translation for Reference and Convenience Purposes Only]

Audit Report
Accounting Auditor’s Audit Report on the Consolidated Financial Statements
Report of Independent Auditor
May 21, 2019
The Board of Directors
Kurita Water Industries Ltd.
Grant Thornton Taiyo LLC
Satoshi Kirikawa
Designated and Engagement Partner
Certified Public Accountant
Tatsuya Arai
Designated and Engagement Partner
Certified Public Accountant
Kenta Nishimura
Designated and Engagement Partner
Certified Public Accountant(Seal)(Seal)(Seal)

Pursuant to Paragraph 4, Article 444 of the Companies Act, we have audited the accompanying consolidated
financial statements, which comprise the consolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in shareholders’ equity and the notes to consolidated financial statements ofKurita Water Industries Ltd. (the “Company”) applicable to the fiscal year from April 1, 2018 through March 31,
2019.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating such internal
control as management determines is necessary to enable the preparation and fair presentation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in orderto design audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position and results of operations of the Kurita Group, which consisted of the Company and consolidated
subsidiaries, applicable to the fiscal year ended March 31, 2019 in conformity with accounting principles generally
accepted in Japan.
Emphasis of Matter
1. As stated in the additional information, the Company has expanded the scope of application of the percentageof-completion method from the fiscal year under review.

– 55 –

[Translation for Reference and Convenience Purposes Only]

2. As stated in the notes on significant subsequent events, Kurita America Holdings Inc., a consolidated
subsidiary, acquired the shares of Pentagon Technologies Group, Inc., a tool cleaning company in the UnitedStates, thereby making the company an equity method affiliate.
3. As stated in the notes on significant subsequent events, the Company underwrote a capital increase throughprivate placement with APANA, Inc., a venture company in the United States that develops the IoT watersaving solution business, as well as exercised the share acquisition rights held by the Company, thereby making
the venture company an equity method affiliate.
4. As stated in the notes on significant subsequent events, Kurita America Holdings Inc., a consolidated
subsidiary, entered into an agreement to acquire all shares outstanding of Avista Technologies, Inc., amanufacturing and sales company of water treatment chemicals in the United States. Kurita Europe GmbH, aconsolidated subsidiary, entered into an agreement to acquire all shares outstanding of Avista Technologies(UK) Ltd., a manufacturing and sales company of water treatment chemicals in the United Kingdom.
Our opinion is not qualified in respect of these matters.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

– 56 –

[Translation for Reference and Convenience Purposes Only]

Accounting Auditor’s Audit Report on the Non-Consolidated Financial Statements
Report of Independent Auditor
May 21, 2019
The Board of Directors
Kurita Water Industries Ltd.
Grant Thornton Taiyo LLC
Satoshi Kirikawa
Designated and Engagement Partner
Certified Public Accountant
Tatsuya Arai
Designated and Engagement Partner
Certified Public Accountant
Kenta Nishimura
Designated and Engagement Partner
Certified Public Accountant(Seal)(Seal)(Seal)

Pursuant to Item 1, Paragraph 2, Article 436 of the Companies Act, we have audited the accompanying nonconsolidated financial statements, which comprise the non-consolidated balance sheet, the non-consolidated
statement of income, the non-consolidated statement of changes in shareholders’ equity, the notes to nonconsolidated financial statements and the related supplementary schedules of Kurita Water Industries Ltd. (the“Company”) applicable to the 83rd fiscal year from April 1, 2018 through March 31, 2019.
Management’s Responsibility for the Financial Statements and the Related Supplementary Schedules
Management is responsible for the preparation and fair presentation of these financial statements and the related
supplementary schedules in accordance with accounting principles generally accepted in Japan, and for designingand operating such internal control as management determines is necessary to enable the preparation and fairpresentation of the financial statements and the related supplementary schedules that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements and the related supplementary schedules
based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements and the related supplementary schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the related supplementary schedules. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial statements and the related
supplementary schedules, whether due to fraud or error. The purpose of an audit of the financial statements andthe related supplementary schedules is not to express an opinion on the effectiveness of the entity’s internal control,
but in making these risk assessments the auditor considers internal controls relevant to the entity’s preparation andfair presentation of the financial statements and the related supplementary schedules in order to design audit
procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements and the related supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the financial statements and the related supplementary schedules referred to above present fairly,
in all material respects, the financial position and results of operations of the Company applicable to the fiscal year
ended March 31, 2019 in conformity with accounting principles generally accepted in Japan.
Emphasis of Matter
As stated in the additional information, the Company has expanded the scope of application of the percentage-ofcompletion method from the fiscal year under review.
Our opinion is not qualified in respect of these matters.
– 57 –

[Translation for Reference and Convenience Purposes Only]

Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

– 58 –

[Translation for Reference and Convenience Purposes Only]

The Audit & Supervisory Board’s Audit Report

Audit Report
With respect to the Directors’ performance of their duties during the 83rd fiscal year (from April 1, 2018 to March
31, 2019), the Audit & Supervisory Board has prepared this audit report, as the agreed opinion of all members of
the Audit & Supervisory Board formed as a result of their deliberations, based on the audit reports prepared byeach member of the Audit & Supervisory Board, and hereby reports as follows:1.

Method and Contents of Audit by Members of the Audit & Supervisory Board and the Audit & Supervisory
Board
The Audit & Supervisory Board stipulated auditing policies and the audit plan for the fiscal year under review,
designated the status of the establishment and operation of internal control systems (including internal controls
for financial reporting) and risk management systems as priority audit items, received reports from eachmember of the Audit & Supervisory Board about the implementation status and results of the audit, received
reports from the Directors and Accounting Auditors about the status of performing such duties, and requested
explanations as necessary.

In accordance with the auditing standards for members of the Audit & Supervisory Board determined by
the Audit & Supervisory Board, and in compliance with auditing policies and the audit plan, each memberof the Audit & Supervisory Board made efforts to collect information and establish auditing
circumstances through communication with Directors, the Internal Auditing Department and other
employees, and conducted the audit by the following methods.
(1) Each member of the Audit & Supervisory Board has attended the Board of Directors meetings and otherimportant meetings, received reports from the Directors and employees about the status of performance of
their duties, and requested them to provide explanation when needed. Each member of the Audit &Supervisory Board has reviewed important authorized documents and examined the status of business
operations and financial position of the Company and its principal offices. As for subsidiaries, eachmember of the Audit & Supervisory Board also facilitated communication and information exchange with
Directors and employees, visited subsidiaries when needed, and examined the status of business operations
and financial position of the subsidiaries and their principle officers.
(2) Each member of the Audit & Supervisory Board verified the resolutions adopted by the Board of
Directors regarding the establishment of a system for ensuring that the Directors’ duties, as stated in
the Business Report, are executed in conformity of laws and regulations, and the Articles ofIncorporation of the Company, and the establishment of a system necessary to ensure proper business
operations of a stock company set forth in Paragraphs 1 and 3 of Article 100 of the Ordinance for
Enforcement of the Companies Act. Each member of the Audit & Supervisory Board also received
reports from Directors and employees on the status of the establishment and operation of the system(internal control system) established in accordance with such resolutions adopted by the Board of
Directors, and requested explanations as necessary and expressed his/her opinions. As for internal
controls for financial reporting, we received reports from the Directors and Accounting Auditor about
the status of evaluation and audit of the internal controls, and requested explanations as necessary.
(3) Each member of the Audit & Supervisory Board audited whether the Accounting Auditor maintained its
independence and properly conducted its audit, received a report from the Accounting Auditor on the statusof its performance of duties, and requested explanations as necessary. In addition, each member of the
Audit & Supervisory Board was notified by the Accounting Auditor that it had established a “System toensure that the performance of the duties of the Accounting Auditors was properly conducted” (the mattersset forth in the items of Article 131 of the Ordinance on Accounting of Companies) in accordance with the“Quality Control Standards for Audits” (Business Accounting Council, October 28, 2005), and requested
explanations as necessary.

– 59 –

[Translation for Reference and Convenience Purposes Only]

Based on the above method, the Audit & Supervisory Board has examined the Business Report and the
supplementary schedules, the non-consolidated financial statements (the non-consolidated balance sheet, thenon-consolidated statement of income, the non-consolidated statement of changes in shareholders’ equity andthe notes to the non-consolidated financial statements) and the supplementary schedules, as well as theconsolidated financial statements (the consolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in shareholders’ equity and the notes to the consolidated financial
statements) for the fiscal year under review.
2.

Results of Audit(1) Results of Audit of Business Report, etc.
(a)

We acknowledge that the Business Report and the related supplementary schedules fairly present
the status of the Company in conformity with the applicable laws and regulations and the Articles
of Incorporation of the Company.

(b)

We acknowledge that there is no misconduct or material fact in violation of the applicable laws or
regulations and the Articles of Incorporation of the Company with regard to the performance of
duties by Directors.

(c)

We acknowledge that the Board of Directors’ resolutions with respect to the internal control systems
are appropriate. We also acknowledge that there are no matters warranting special mention, neither
regarding content provided in the Business Report on the internal control systems, nor regarding theperformance of duties by Directors. As for internal controls for financial reporting, we received
reports from Grant Thornton Taiyo LCC stating that the internal controls were functioning
effectively Company-wide as of the date on which this report was prepared, and furthermore that
there were no deficiencies warranting disclosure with respect to the internal controls in businessprocesses.

(2) Results of Audit of Financial Statements and Related Supplementary Schedules
We acknowledge that the methods and results of audit performed by the Accounting Auditor Grant
Thornton Taiyo LLC, are appropriate.
(3) Results of Audit of Consolidated Financial Statements
We acknowledge that the methods and results of audit performed by the Accounting Auditor Grant
Thornton Taiyo LLC, are appropriate.
May 29, 2019
Kurita Water Industries Ltd.

Audit & Supervisory Board

Full-time member of the Audit & Supervisory Board

Shiro Hayashi

Full-time member of the Audit & Supervisory Board
Kenjiro Kobayashi(External member of the Audit & Supervisory Board)
External member of the Audit & Supervisory Board– 60 –

Shigekazu Torikai