Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.

Securities code: 4362
June 2, 2022
To our shareholders:
Hiroshi Yano
Representative Director, President
NIPPON FINE CHEMICAL CO., LTD.
4-9, Bingomachi 2-chome, Chuo-ku, Osaka

Notice of the 154th Annual General Meeting of Shareholders
We are pleased to announce that the 154th Annual General Meeting of Shareholders of NIPPON FINE CHEMICAL
CO., LTD. (the “Company”) will be held as set forth below.
Regarding this meeting, the Company earnestly asks shareholders to exercise voting rights beforehand as much as
possible to avoid the infection risk of the novel coronavirus (COVID-19) among shareholders.
Please refer to the following Reference Documents for the General Meeting of Shareholders and send the enclosed
voting form or exercise voting rights on the internet, etc., by no later than Wednesday, June 22, 2022, at 5:40 p.m.
(JST) in accordance with the following guidance.

1. Date and Time: Thursday, June 23, 2022, at 10:00 a.m. (JST)
2. Venue:

Nihon Mengyo Club (Cotton Industry House) New Building 7th Floor
5-8, Bingomachi 2-chome, Chuo-ku, Osaka

3. Purposes:
Matters to be reported:
1. The Business Report, the Consolidated Financial Statements and the Audit Results Report of the Financial
Auditor and the Audit & Supervisory Board on the Consolidated Financial Statements for the 154th fiscal
year (from April 1, 2021 to March 31, 2022)
2. Report on the Non-Consolidated Financial Statements for the 154th fiscal year (from April 1, 2021 to March
31, 2022)
Matters to be resolved:< Company Proposals >Proposal No. 1:

Appropriation of Surplus

Proposal No. 2:

Amendment to the Articles of Incorporation

Proposal No. 3:

Election of Six Directors

Proposal No. 4:

Revision of Amount of Remuneration for Directors and Introduction of Restricted ShareBased Remuneration Plan in Accordance With Revisions to the Officer Remuneration Plan

Proposal No. 5:

Revision of Amount of Remuneration for Audit & Supervisory Board Members< Shareholder Proposals >Proposal No. 6:

Approval of Amount of Remuneration for Restricted Share-Based Remuneration Plan

Proposal No. 7:

Purchase of Treasury Shares

-1-



When attending this meeting in person, please submit the enclosed voting form at the reception.

Of the documents to be provided with this notice, “Notes to the Consolidated Financial Statements” and “Notes to the NonConsolidated Financial Statements” are posted on the Company’s website (https://www.nipponseika.co.jp/) (Japanese only) inaccordance with the provisions of laws and regulations as well as Article 15 of the Company’s Articles of Incorporation and are notdescribed on the documents attached to this notice. The Consolidated Financial Statements and the Non-Consolidated Financial
Statements described in the documents attached to this notice are part of the documents audited by the Audit & Supervisory Board
Members and the Financial Auditor to prepare the Audit Report.



If any event requiring amendment made to the Reference Documents for the General Meeting of Shareholders, the Business Report,
the Consolidated Financial Statements as well as Non-Consolidated Financial Statements occurs until the day before the meeting,the notification will be provided in writing via postal mail or on the Company’s website (https://www.nipponseika.co.jp/) (Japaneseonly).

The Company has decided not to provide gifts for shareholders attending the meeting. Your understanding will be highly appreciated.

-2-

Reference Documents for the General Meeting of Shareholders
Proposals and References< Company Proposals (Proposals No. 1 through 5) >Proposal No. 1:

Appropriation of Surplus

Returning profits to shareholders is one of the Company’s important priorities. In this regard, the Company seeks toincrease the consolidated basic earnings per share. The Company targets a basic policy to achieve a benchmark DOE(dividend on equity) of 3.0%, and aim to improve and stabilize the level of dividends to pay dividends of surplus.
Based on the dividend policy, the year-end dividend shall be paid in cash and the dividend of ¥29 per share (aggregate
amount of ¥684,849,703) shall be paid to shareholders at the end of the fiscal year under review. Accordingly,
including the interim dividend of ¥25 per share, the annual dividends per share will be ¥54.
The effective date (starting date of payments) of the year-end dividend will be Friday, June 24, 2022.

-3-

Proposal No. 2:

Amendment to the Articles of Incorporation

1. Reasons for the Amendment(1)

Since the revised provisions provided for in the proviso to Article 1 of the Supplementary Provisions of the
Act Partially Amending the Companies Act (Act No. 70 of 2019) are to be enforced on September 1, 2022,
the Company proposes to make the following changes in accordance with the introduction of the system forproviding informational materials for the general meeting of shareholders in electronic format.
(i) As the Company will be required to establish provisions in the Articles of Incorporation stating that it willtake measures to provide information constituting the content of the reference documents for the general
meeting of shareholders, etc., in electronic format, the Company proposes to newly establish Article 16(Measures, etc. for Providing Information in Electronic Format), Paragraph 1 as stated under Proposed
Changes.
(ii) The Company proposes to newly establish Article 16 (Measures, etc. for Providing Information in Electronic
Format), Paragraph 2 as stated under Proposed Changes to enable it to limit the scope of items to be provided
in paper-based documents that will be delivered to shareholders who request the delivery of paper-based
documents to the scope set forth in the Ministry of Justice Order, from among information constituting thecontent of the reference documents for the general meeting of shareholders, etc., for which the Company
will take measures for providing in electronic format.
(iii) Since the provisions of Article 15 of the current Articles of Incorporation (Internet Disclosure and Deemed
Provision of Reference Documents for the General Meeting of Shareholders, Etc.) will no longer be required
when the system for providing informational materials for the general meeting of shareholders in electronic
format is introduced, they will be deleted.
(iv) Supplementary provisions will be established in relation to the effectiveness of the aforementioned
provisions to be newly established and deleted. Furthermore, these supplementary provisions will be deleted
after a certain date has elapsed.

(2)

The Company has introduced a Corporate Officer system in order to separate functions related to management
decision-making and supervision from those related to the execution of business operations. Now, however,in order to ensure the number of Directors is appropriate based on future growth, the Company proposes tochange the number from not more than 11, as stipulated in Article 18 (Number of Directors) of the current
Articles of Incorporation, to not more than 9, as stated in Article 19 (Number of Directors) under Proposed
Changes.

(3)

In accordance with the discontinuation of the Advisor system in line with the Company’s corporate
governance system, the Company proposes to change Article 20 (Representative Directors and Directors with
Special Titles) of the current Articles of Incorporation, which contains a provision for Advisors, to Article 21(Representative Directors and Directors with Special Titles) as stated under Proposed Changes.

(4)

To enable the flexible operation of the Board of Directors, the Company proposes to change Article 23(Convener and Chairmanship of Meeting of the Board of Directors) of the current Articles of Incorporation
to Article 24 (Convener and Chairmanship of Meeting of the Board of Directors) as stated under Proposed
Changes.

(5)

In order to enable the Company to attract useful and diverse human resources as Directors and Audit &Supervisory Board Members, and create an environment that enables these persons to sufficiently fulfill theroles expected of them, the Company proposes to change Article 27 (Exemption of Directors From Liability),
Paragraph 2 of the current Articles of Incorporation to Article 28 (Exemption of Directors From Liability),
Paragraph 2 as stated under Proposed Changes, and change Article 35 (Exemption of Audit & Supervisory
Board Members From Liability), Paragraph 2 of the current Articles of Incorporation to Article 36 (Exemptionof Audit & Supervisory Board Members From Liability), Paragraph 2 as stated under Proposed Changes,
which will enable the Company to enter into liability limitation contracts with Directors who are not Executive
Directors, etc., and Audit & Supervisory Board Members who are not Outside Audit & Supervisory Board
Members. Furthermore, the Company has obtained the consent of each Audit & Supervisory Board Member-4-

in relation to the changes to Article 28 (Exemption of Directors From Liability), Paragraph 2 as stated under
Proposed Changes.
(6)

Article 38 (Purchase of Treasury Shares) of the current Articles of Incorporation will be moved to Article 8(Purchase of Treasury Shares) as stated under Proposed Changes, and the numbering of articles will be
adjusted accordingly.

(7)

Other changes will be made to terminology, numbering, etc.

2. Details of the Amendment
The details of the amendment are as follows.
(Underlined portions represent changes)
Proposed Changes

Current Articles of Incorporation(Purpose)
Article 2.
The purpose of the Company shall be to engage in the following
business activities:(1) Manufacture, sale and wholesale of refined camphor,remanufactured camphor, camphor oil, pharmaceuticals,
chemical products, industrial chemicals and fragrances(2) Manufacture, sale and wholesale of resins, essential oils,
paints, oil and fat products and food-related products(3) Manufacture, sale and wholesale of quasi-drugs(4) Manufacture, sale and wholesale of cosmetics(5) Manufacture, sale and wholesale of chemical fertilizers andagricultural chemicals(6) Import and export of products related to those listed
previously(7) Camphor tree and other afforestation(8) Utilization, management, sale and rental of real estate(9) Holding and utilization of securities(10) Business and investment related to and incidental to thoselisted previously(Purpose)
Article 2.
(Change in Japanese only; English unchanged)(Organs)
Article 4.
The Company shall have, in addition to the general meeting ofshareholders and Directors, the following organs:(1) Board of Directors(2) Audit & Supervisory Board Members(3) Audit & Supervisory Board(4) Financial Auditor(Organs)
Article 4.
(Change in Japanese only; English unchanged)[Moved from current Article 38](Purchase of Treasury Shares)
Article 8.
By resolution of the Board of Directors, treasury shares may bepurchased through market transactions, etc.

(Rights Regarding Shares Less Than One Unit)
Article 8.
A shareholder of the Company may not exercise any rights otherthan the rights listed below with regard to shares less than one
unit held by the shareholder:(1) Rights set forth in items of Article 189, paragraph (2) of theCompanies Act;

(Rights Regarding Shares Less Than One Unit)
Article 9.
(Change in Japanese only; English unchanged)-5-Current Articles of Incorporation

Proposed Changes(2) Right to make a demand pursuant to the provisions of Article
166, paragraph (1) of the Companies Act;
(3) Right to receive an allotment of offered shares and offeredshare acquisition rights in proportion to the number of shares
held by the shareholder; and(4) Right to make a demand as provided for in the following
Article.
(Additional Purchase of Shares Less Than One Unit)
Article 9.
A shareholder of the Company who holds shares less than one
unit may, as provided for in the Share Handling Regulations,request the Company to sell to the shareholder a number of shares
which will, when combined with the number of shares alreadyheld by the shareholder, constitute one share unit.

(Additional Purchase of Shares Less Than One Unit)
Article 10.
A shareholder of the Company who holds shares less than one
unit may, as provided for in the “Share Handling Regulations,”
request the Company to sell to the shareholder a number ofshares which will, when combined with the number of sharesalready held by the shareholder, constitute one share unit.

(Share Handling Regulations)
Article 10.
Handling of the Company’s shares and the fees therefor, andprocedures for shareholders to exercise voting rights shall begoverned by the Share Handling Regulations established by the
Board of Directors, in addition to applicable laws and regulations
and these Articles of Incorporation.

(Share Handling Regulations)
Article 11.
Handling of the Company’s shares and the fees therefor, andprocedures for shareholders to exercise voting rights shall begoverned by the “Share Handling Regulations” established by
the Board of Directors, in addition to applicable laws andregulations and these Articles of Incorporation.

(Shareholder Register Administrator)(Shareholder Register Administrator)
Article 11.
Article 12.
(i) The Company shall have a shareholder register administrator. 1. The Company shall have a shareholder register
administrator.
(ii) The shareholder register administrator and the place of
2. The shareholder register administrator and the place ofbusiness thereof shall be designated by resolution of thebusiness thereof shall be designated by resolution of theBoard of Directors and public notice thereof shall be given.
Board of Directors and public notice thereof shall be given.
(iii) The preparation and keeping of the shareholder register and3. The preparation and keeping of the shareholder register andthe share acquisition right register of the Company and otherthe share acquisition right register of the Company andadministrations relating thereto shall be outsourced to theother administrations relating thereto shall be outsourced toshareholder register administrator, and shall not be handled
the shareholder register administrator, and shall not beby the Company itself.
handled by the Company itself.
Article 12. and Article 13. (omitted)

Article 13. and Article 14. (unchanged)(Convener and Chairmanship of General Meeting of
Shareholders)
Article 14.
(i) The Director and President shall convene general meetings ofshareholders and chair the meetings.
(ii) In cases where the Director and President is prevented fromso acting, another Director who is designated in accordancewith an order of priority determined in advance by the Boardof Directors shall convene a general meeting of shareholders
and chair the meeting.

(Convener and Chairmanship of General Meeting of
Shareholders)
Article 15.
1. The Director and President shall convene general meetingsof shareholders and chair the meetings.
2. In cases where the Director and President is prevented fromso acting, another Director who is designated in accordancewith an order of priority determined in advance by the
Board of Directors shall convene a general meeting ofshareholders and chair the meeting.

(Internet Disclosure and Deemed Provision of Reference
Documents for the General Meeting of Shareholders, Etc.)
Article 15.
When the Company convenes a general meeting of shareholders,
if it discloses information that is to be stated or presented in thereference documents for the general meeting of shareholders,business report, financial statements and consolidated financial
statements through the internet in accordance with the provisions
prescribed by the Ministry of Justice Order, it may be deemed that
the Company has provided the information to shareholders.

[Deleted]-6-

Current Articles of Incorporation[Newly established]

Proposed Changes(Measures, etc. for Providing Information in Electronic Format)
Article 16.
1. When the Company convenes a general meeting ofshareholders, it shall take measures for providing
information that constitutes the content of reference
documents for the general meeting of shareholders, etc. inelectronic format.
2. Among items for which the measures for providing
information in electronic format will be taken, theCompany may exclude all or some of those items
designated by the Ministry of Justice Order from statementsin the paper-based documents to be delivered toshareholders who requested the delivery of paper-based
documents by the record date of voting rights.

(Method for Making Resolutions)
Article 16.
(i) Unless otherwise provided for by laws and regulations orthese Articles of Incorporation, resolutions of a general
meeting of shareholders shall be made by a majority of thevotes of the shareholders who are present at the meeting andentitled to exercise their votes at such meetings.
(ii) Resolutions prescribed in Article 309, paragraph (2) of theCompanies Act shall be made by at least two-thirds of thevotes of the shareholders present at the meeting where theshareholders holding at least one-third of the voting rights ofthe shareholders entitled to exercise their votes at suchmeetings are present.

(Method for Making Resolutions)
Article 17.
1. Unless otherwise provided for by laws and regulations orthese Articles of Incorporation, resolutions of a general
meeting of shareholders shall be made by a majority of thevotes of the shareholders who are present at the meetingand entitled to exercise their votes at such meetings.
2. Resolutions prescribed in Article 309, paragraph (2) of theCompanies Act shall be made by at least two-thirds of thevotes of the shareholders present at the meeting where theshareholders holding at least one-third of the voting rightsof the shareholders entitled to exercise their votes at suchmeetings are present.

(Proxy Voting)
Article 17.
(i) Shareholders may exercise voting rights by having one othershareholder of the Company with voting rights act as a proxyon his/her behalf.
(ii) A shareholder or a proxy must submit to the Company adocument evidencing the proxy’s authority to represent at
each general meeting of shareholders.

(Proxy Voting)
Article 18.
1. Shareholders may exercise voting rights by having one
other shareholder of the Company with voting rights act as
a proxy on his/her behalf.
2. A shareholder or a proxy must submit to the Company adocument evidencing the proxy’s authority to represent at
each general meeting of shareholders.

Chapter 4

Directors and Board of Directors

Chapter 4

Directors and Board of Directors(Number of Directors)
Article 18.
The Company shall have not more than 11 Directors.

(Number of Directors)
Article 19.
The Company shall have not more than 9 Directors.

(Method of Selecting Directors)
Article 19.
(i) Directors shall be elected at a general meeting ofshareholders.
(ii) Resolutions on the election of a Director shall be made by amajority of the votes of the shareholders present at themeeting where the shareholders holding at least one-third of
the voting rights of the shareholders entitled to exercise theirvotes at such meeting are present.
(iii) Resolutions for the election of Directors shall not be
conducted by cumulative voting.

(Method of Selecting Directors)
Article 20.
1. Directors shall be elected at a general meeting ofshareholders.
2. Resolutions on the election of a Director shall be made by amajority of the votes of the shareholders present at themeeting where the shareholders holding at least one-thirdof the voting rights of the shareholders entitled to exercise
their votes at such meeting are present.
3. Resolutions for the election of Directors shall not be
conducted by cumulative voting.

(Representative Directors and Directors With Special Titles)
Article 20.
(i) The Board of Directors shall appoint representative
Director(s) by its resolution.

(Representative Directors and Directors With Special Titles)
Article 21.
1. The Board of Directors shall appoint representative
Director(s) by its resolution.

-7-

Current Articles of Incorporation

Proposed Changes(ii) The Board of Directors may appoint, by its resolution, one
Director and Chairman, one Director and President, one or asmall number of Senior Executive Directors, and one or asmall number of Executive Directors. In addition, one or asmall number of Advisors may also be appointed byresolution of the Board of Directors.

2. The Board of Directors may appoint, by its resolution, one
Director and Chairman, one Director and President, one ora small number of Senior Executive Directors, and one or asmall number of Executive Directors.

Article 21. and Article 22. (omitted)

Article 22. and Article 23. (unchanged)(Convener and Chairmanship of Meeting of the Board of
Directors)
Article 23.
(i) Unless otherwise provided for by laws and regulations, theDirector and President shall convene meetings of the Boardof Directors and chair the meetings.

(Convener and Chairmanship of Meeting of the Board of
Directors)
Article 24.
1. Unless otherwise provided for by laws and regulations, theDirector and President shall convene meetings of the Boardof Directors. In cases where the Director and President isprevented from so acting, another Director who isdesignated in accordance with an order of priority
determined in advance by the Board of Directors shallconvene a meeting of the Board of Directors.
2. A Director appointed in advance by the Board of
Directors shall act as the chairman of the Board of
Directors meeting.
However, in cases where the appointed Director isprevented from so acting, another Director who isdesignated in accordance with an order of priority
determined in advance by the Board of Directors shallchair the meeting.

(ii) In cases where the Director and President is prevented fromso acting, another Director who is designated in accordancewith an order of priority determined in advance by the Boardof Directors shall convene a meeting of the Board of
Directors and chair the meeting.

(Notice of Meeting of the Board of Directors)
Article 24.
(i) A notice of convocation of the Board of Directors meeting
will be dispatched to each Director and each Audit &Supervisory Board Member at least three days before the dateof the meeting. However, in case of emergency, this can befurther shortened.
(ii) With the consent of all Directors and Audit & Supervisory
Board Members, a meeting of the Board of Directors may beheld without following the convening procedures.

(Notice of Meeting of the Board of Directors)
Article 25.
1. A notice of convocation of the Board of Directors meeting
will be dispatched to each Director and each Audit &Supervisory Board Member at least three days before thedate of the meeting. However, in case of emergency, thiscan be further shortened.
2. With the consent of all Directors and Audit & Supervisory
Board Members, a meeting of the Board of Directors may
be held without following the convening procedures.

(Regulations of the Board of Directors)
Article 25.
Items concerning the Board of Directors shall be governed by theRegulations of the Board of Directors established by the Board of
Directors, in addition to applicable laws and regulations and these
Articles of Incorporation.

(Regulations of the Board of Directors)
Article 26.
Items concerning the Board of Directors shall be governed by
the “Regulations of the Board of Directors” established by the
Board of Directors, in addition to applicable laws andregulations and these Articles of Incorporation.

Article 26. (omitted)

Article 27. (unchanged)(Exemption of Directors From Liability)
Article 27.
(i) Pursuant to the provisions of Article 426, paragraph (1) of theCompanies Act, the Company may, by resolution of theBoard of Directors, exempt a Director (including a person
who was formerly a Director) from his/her liability fordamages arising from neglecting his/her duties to the extent
permitted by laws and regulations.
(ii) Pursuant to the provisions of Article 427, paragraph (1) of theCompanies Act, the Company may conclude a contract withan Outside Director that limits liability for damages arisingfrom neglecting his/her duties to the extent permitted by laws
and regulations.

(Exemption of Directors From Liability)
Article 28.
1. Pursuant to the provisions of Article 426, paragraph (1) of
the Companies Act, the Company may, by resolution of theBoard of Directors, exempt a Director (including a person
who was formerly a Director) from his/her liability fordamages arising from neglecting his/her duties to the extent
permitted by laws and regulations.
2. Pursuant to the provisions of Article 427, paragraph (1) of
the Companies Act, the Company may conclude a contract
with a Director (except for an Executive Director, etc.) that
limits liability for damages arising from neglecting his/herduties to the extent permitted by laws and regulations.

-8-Current Articles of Incorporation

Proposed Changes

Chapter 5 Audit & Supervisory Board Members and Audit &Supervisory Board

Chapter 5 Audit & Supervisory Board Members and Audit &Supervisory Board

Article 28. (omitted)

Article 29. (unchanged)(Method of Selecting Audit & Supervisory Board Members)
Article 29.
(i) Audit & Supervisory Board Members shall be elected at a
general meeting of shareholders.
(ii) Resolutions on the election of an Audit & Supervisory Board
Member shall be made by a majority of the votes of theshareholders present at the meeting where the shareholders
holding at least one-third of the voting rights of theshareholders entitled to exercise their votes at such meetings
are present.

(Method of Selecting Audit & Supervisory Board Members)
Article 30.
1. Audit & Supervisory Board Members shall be elected at a
general meeting of shareholders.
2. Resolutions on the election of an Audit & Supervisory
Board Member shall be made by a majority of the votes ofthe shareholders present at the meeting where theshareholders holding at least one-third of the voting rightsof the shareholders entitled to exercise their votes at suchmeetings are present.

(Audit & Supervisory Board Member Term of Office)
Article 30.
(i) The term of office of an Audit & Supervisory Board Member
shall expire at the conclusion of the annual general meetingof shareholders for the last business year out of the businessyears terminating within four years after the election of the
Audit & Supervisory Board Member.
(ii) The term of office of an Audit & Supervisory Board Member
who is elected as the substitute for an Audit & Supervisory
Board Member who retired from office before the expirationof the term of office shall continue until the time the term ofoffice of the Audit & Supervisory Board Member who retired
from office is to expire.

(Audit & Supervisory Board Member Term of Office)
Article 31.
1. The term of office of an Audit & Supervisory Board
Member shall expire at the conclusion of the annual general
meeting of shareholders for the last business year out of thebusiness years terminating within four years after theelection of the Audit & Supervisory Board Member.
2. The term of office of an Audit & Supervisory Board
Member who is elected as the substitute for an Audit &Supervisory Board Member who retired from office before
the expiration of the term of office shall continue until thetime the term of office of the Audit & Supervisory Board
Member who retired from office is to expire.

Article 31. and Article 32. (omitted)

Article 32. and Article 33. (unchanged)(Notice of Meeting of the Audit & Supervisory Board)
Article 33.
(i) A notice of convocation of the Audit & Supervisory Board
meeting will be dispatched to each Audit & Supervisory
Board Member at least three days before the date of themeeting. However, in case of emergency, this can be further
shortened.
(ii) With the consent of all Audit & Supervisory Board Members,a meeting of the Audit & Supervisory Board may be held
without following the convening procedures.

(Notice of Meeting of the Audit & Supervisory Board)
Article 34.
1. A notice of convocation of the Audit & Supervisory Board
meeting will be dispatched to each Audit & Supervisory
Board Member at least three days before the date of themeeting. However, in case of emergency, this can be further
shortened.
2. With the consent of all Audit & Supervisory Board
Members, a meeting of the Audit & Supervisory Board may
be held without following the convening procedures.

(Regulations of the Audit & Supervisory Board)
Article 34.
Items concerning the Audit & Supervisory Board shall begoverned by the Regulations of the Audit & Supervisory Board
established by the Audit & Supervisory Board, in addition toapplicable laws and regulations and these Articles ofIncorporation.

(Regulations of the Audit & Supervisory Board)
Article 35.
Items concerning the Audit & Supervisory Board shall begoverned by the “Regulations of the Audit & Supervisory
Board” established by the Audit & Supervisory Board, in
addition to applicable laws and regulations and these Articles ofIncorporation.

(Exemption of Audit & Supervisory Board Members From
Liability)
Article 35.
(i) Pursuant to the provisions of Article 426, paragraph (1) of theCompanies Act, the Company may, by resolution of theBoard of Directors, exempt an Audit & Supervisory Board
Member (including a person who was formerly an Audit &Supervisory Board Member) from his/her liability fordamages arising from neglecting his/her duties to the extent
permitted by laws and regulations.

(Exemption of Audit & Supervisory Board Members From
Liability)
Article 36.
1. Pursuant to the provisions of Article 426, paragraph (1) of
the Companies Act, the Company may, by resolution of theBoard of Directors, exempt an Audit & Supervisory Board
Member (including a person who was formerly an Audit &Supervisory Board Member) from his/her liability fordamages arising from neglecting his/her duties to the extent
permitted by laws and regulations.

-9-Current Articles of Incorporation

Proposed Changes(ii) Pursuant to the provisions of Article 427, paragraph (1) of the 2. Pursuant to the provisions of Article 427, paragraph (1) of
Companies Act, the Company may conclude a contract with
the Companies Act, the Company may conclude a contract
an Outside Audit & Supervisory Board Member that limits
with an Audit & Supervisory Board Member that limits
liability for damages arising from neglecting his/her duties toliability for damages arising from neglecting his/her duties
the extent permitted by laws and regulations.
to the extent permitted by laws and regulations.
Article 36. (omitted)

Article 37. (unchanged)(Dividends of Surplus)
Article 37.
(i) By resolution of the General Meeting of Shareholders, yearend dividend may be paid to shareholders or registered sharepledgees recorded in the shareholder list on the last day ofeach business year.
(ii) In addition to the preceding paragraph, by resolution of theBoard of Directors, an interim dividend may be paid to theshareholders or registered share pledgees recorded in theshareholder list on September 30 every year.

(Dividends of Surplus)
Article 38.
1. By resolution of the General Meeting of Shareholders,
year-end dividend may be paid to shareholders or registeredshare pledgees recorded in the shareholder list on the last
day of each business year.
2. In addition to the preceding paragraph, by resolution of theBoard of Directors, an interim dividend may be paid to theshareholders or registered share pledgees recorded in theshareholder list on September 30 every year.

(Purchase of Treasury Shares)
Article 38.
By resolution of the Board of Directors, treasury shares may bepurchased through market transactions, etc.

[Moved to Article 8 in the Proposed Changes](Prescription for Payment of Dividends)(Prescription for Payment of Dividends)
Article 39.
Article 39.
(i) In cases where the dividend property is monetary and the
1. In cases where the dividend property is monetary and thedividends have not been received after the lapse of three full
dividends have not been received after the lapse of three
years from the date of commencement of payment thereof,
full years from the date of commencement of payment
the Company shall be exempt from the obligation to pay suchthereof, the Company shall be exempt from the obligation
dividends. No interest is paid on accrued dividends.
to pay such dividends.
2. No interest is paid on accrued dividends.
[Newly established]

Supplementary Provisions(Transitional Measures for Providing Informational Materials
for the General Meeting of Shareholders in Electronic
Format)Article 1.
1. The deletion of Article 15 (Internet Disclosure and Deemed
Provision of Reference Documents for the General Meetingof Shareholders, Etc.) in the pre-amended Articles ofIncorporation and the establishment of Article 16(Measures, etc. for Providing Information in Electronic
Format) in the amended Articles of Incorporation shall takeeffect on September 1, 2022.
2. Notwithstanding the provision(s) of the preceding
paragraph, Article 15 (Internet Disclosure and Deemed
Provision of Reference Documents for the General Meetingof Shareholders, Etc.) in the pre-amended Articles ofIncorporation shall remain effective regarding any general
meeting of shareholders held on a date within six months
after September 1, 2022.
3. These Supplementary Provisions shall be deleted on thedate when six months have elapsed after September 1, 2022or three months have elapsed from the date of the general
meeting of shareholders in the preceding paragraph,
whichever is later.

- 10 -

Proposal No. 3:

Election of Six Directors

The term of office of all six Directors will expire at the conclusion of this meeting. Therefore, the Company proposes
the election of six Directors (including two Outside Directors).
The candidates for Director are as follows.
The Nomination and Remuneration Committee where Independent Outside Directors hold a majority has discussed
the nomination of candidates for Director in order to capitalize on the knowledge and advice of Independent Outside
Directors as well as to ensure the fairness, transparency and objectiveness of the procedures.
Candidate
No.

Name(Date of birth)

Hiroshi Yano
(June 29, 1964)

1

2

Career summary, position and responsibility in the Company,
and significant concurrent positions outside the Company
Apr. 1989
Sept. 2006
June 2010
Apr. 2011
June 2015

Apr. 2017
June 2020

Joined the Company
General Manager of Planning Office
Corporate Officer
General Manager of Corporate Planning OfficeDirector
Senior General Manager of Fine Chemicals
Department
General Manager of Lipid Division
Representative Director, President (current
position)
Senior General Manager of Lipid Division

Number of theCompany’s shares
owned

32,190 shares

Oct. 2021(Reasons for election)
Mr. Hiroshi Yano has worked on strengthening the Company’s governance structure through leading and supervising
the Company’s overall management as Representative Director, President since 2020 after assuming the position of
Corporate Officer in 2010. He also has experience serving as Director, Corporate Officer. The Company has judged thatit can hope that he will be able to contribute to enhancing the Company’s sustained corporate value based on theseabundant experience and in-depth insight about the overall businesses and therefore nominated him as a candidate for
Director for another term.
Apr. 1978
Joined the Company
Apr. 2000
General Manager of Pharmaceutical
Manufacturing Department
Nov. 2002
General Manager of Pharmaceutical Plant
June 2003
Corporate Officer
Deputy Senior General Manager of
Manufacturing & Technology Division andGeneral Manager of Takasago Plant
Susumu Yano
75,147 shares(April 19, 1955)
June 2004
Director
Senior General Manager of Manufacturing &Technology Division
June 2006
Representative Director, President
June 2020
Representative Director, Chairman (current
position)[Significant concurrent positions outside the Company]
Outside Director of NICHIRIN CO., LTD.
(Reasons for election)
Mr. Susumu Yano has contributed to enhancing the corporate value of the Company group (the “Group”) as
Representative Director, President since 2006 after assuming the position of Corporate Officer in 2003. He also has
experience serving as Director, Corporate Officer. He has worked on strengthening the Group’s governance structure
through leading and supervising the Group’s overall management as Representative Director, Chairman since 2020. The
Company has judged that it can hope that he will be able to contribute to enhancing the Company’s sustained corporate
value based on these abundant experience and in-depth insight about the overall businesses from a broader perspectivein the future and therefore nominated him as a candidate for Director for another term.

- 11 -

Candidate
No.

Name
(Date of birth)

Career summary, position and responsibility in the Company,
and significant concurrent positions outside the Company
Apr. 1974
Mar. 2005
June 2008
Oct. 2008

Masanobu Kawabayashi(September 5, 1955)

3

4

5

June 2010
June 2015
June 2017

Joined the Company
General Manager of Takasago Plant
Corporate Officer
Senior General Manager of Manufacturing &Technology Division
Director (current position)
Director, Executive Corporate Officer (current
position)Group Company Production Management(current position)

Number of theCompany’s shares
owned

28,984 shares(Reasons for election)
Mr. Masanobu Kawabayashi has reflected knowledge and experience gained so far for the Company’s overallmanagement as Director as well as supervised the manufacturing technology area after assuming Corporate Officer in
2008, serving as Director, Corporate Officer in 2010, and then assuming the position of Director, Executive Corporate
Officer in 2015. The Company has judged that it can hope that he will be able to contribute to enhancing theCompany’s sustained corporate value based on these abundant experience and in-depth insight about the overallbusinesses and therefore nominated him as a candidate for Director for another term.
Sept. 2000
Joined the Company
Sept. 2005
General Manager of Cosmetic Ingredients
Research Laboratory Office
June 2006
General Manager of Cosmetic Ingredients
Research Laboratory Department (current
position)
June 2008
Corporate Officer
Yukihiro Ohashi
Apr. 2009
Deputy Senior General Manager of Research
62,917 shares(July 26, 1960)
Laboratory Division
Apr. 2011
Senior General Manager of Cosmetic
Ingredients Division (current position)
June 2011
Director (current position)
May 2013
General Manager of Research Laboratory(current position)
June 2021
Director, Senior Corporate Officer (current
position)(Reasons for election)
Mr. Yukihiro Ohashi has reflected knowledge and experience gained so far for the Company’s overall management as
Director as well as supervised the cosmetic ingredients area after assuming Corporate Officer in 2008, serving as
Director, Corporate Officer in 2011, and then assuming the position of Director, Senior Corporate Officer in 2021. The
Company has judged that it can hope that he will be able to contribute to enhancing the Company’s sustained corporate
value based on these abundant experience and in-depth insight about the overall businesses and therefore nominatedhim as a candidate for Director for another term.
Mar. 1968
Joined Daito Chemix Corporation
June 1992
Director
June 2000
Managing Director
Apr. 2002
Representative Director and President
Chihiro Murase
June 2002
Representative Director and President & Chief(June 17, 1945)
0 shares
Executive Officer[Outside]
June 2008
Director of the Company (current position)
June 2009Retired from Representative Director andPresident & Chief Executive Officer of Daito
Chemix Corporation(Reasons for election and outline of expected role)
Mr. Chihiro Murase has abundant knowledge and experience about corporate management. The Company has
considered it as his expected role to present a long-term vision and give proper opinions from a perspective different
from the Company’s previous idea regarding the Company’s management as well as to seek to reinforce the supervisory
function of the Board of Directors with high independence and therefore nominated him as a candidate for Outside
Director for another term.

- 12 -

Candidate
No.

Name
(Date of birth)

Career summary, position and responsibility in the Company,
and significant concurrent positions outside the Company

Number of theCompany’s shares
owned

Apr. 1975
June 2006

6(Notes)Joined Toray Industries, Inc.
Director of Toray Industries (Malaysia) Sdn.
Bhd, and President of Penfibre Sdn. Bhd
June 2013
CEO & COO of Kansai TEK Co., Ltd.
Susumu Ota
Jan. 2015
CEO & COO of Toray Engineering Co., Ltd.
(October 13, 1952)
0 shares
June 2019
Advisor[Outside]
June 2021
Director of the Company (current position)[Significant concurrent positions outside the Company]
Outside Audit & Supervisory Board Member of YMC CO.,LTD.
(Reasons for election and outline of expected role)
Mr. Susumu Ota has abundant knowledge and experience about corporate management. The Company has considered it
as his expected role to present a long-term vision and give proper opinions from a perspective different from theCompany’s previous idea regarding the Company’s management as well as to seek to reinforce the supervisory functionof the Board of Directors with high independence and therefore nominated him as a candidate for Outside Director for
another term.
1. There is no special interest between any of the candidates and the Company.
2. Candidates Mr. Chihiro Murase and Mr. Susumu Ota are candidates for Outside Director.
3. The Company has submitted notification to the Tokyo Stock Exchange that candidates Mr. Chihiro Murase and Mr. Susumu
Ota have been designated as independent officers as provided for by the aforementioned exchange. If these candidates are
reelected, they will continue to be independent officers.
4. At the conclusion of this meeting, candidate Mr. Chihiro Murase’s tenure as Outside Director of the Company will havebeen 14 years, and candidate Mr. Susumu Ota’s tenure as Outside Director of the Company will have been one year.
5. Limited liability agreements with Outside Directors
The Company specifies that the liability of Outside Directors can be exempted within the range provided for by theCompanies Act so that they can properly perform their expected duties as well as stipulates in its current Articles ofIncorporation that the Company can enter into agreements with Outside Directors to limit their liability for damages for theCompany caused by negligence of their duties within a certain range to make it more smoothly to bring in competent humanresources suitable for Outside Directors. The Company has entered into a limited liability agreement with candidates for
Outside Director Mr. Chihiro Murase and Mr. Susumu Ota. If these candidates’ reelections are approved, the Company
plans to continue the said limited liability agreement with them.
The outline of this agreement is as follows:(i) This agreement limits liabilities provided for by Article 423, paragraph (1) of the Companies Act to the total of theamounts stipulated in each item of Article 425, paragraph (1) of the aforementioned Act.
(ii) The aforementioned limitation of liability shall apply only when an Outside Director performs duties that have caused
the liability in good faith and without gross negligence.
6. The Company has entered into a directors and officers liability insurance (D&O insurance) policy with an insurancecompany as stipulated in Article 430-3, paragraph (1) of the Companies Act. Under the said insurance policy, legal
compensation for damages and damages for litigation expenses to be shouldered by the insured shall be supplemented.
The insured on the said insurance policy shall be Directors and Audit & Supervisory Board Members of the Company andits subsidiaries (excluding its overseas subsidiaries). If the election of each candidate for Director is approved under this
proposal, each candidate to be reelected will continue to be the insured. The Company plans to renew the said insurance
policy in November 2022.

- 13 -

(Reference)

Audit & Supervisory Board Members

Candidates for Director

Skill matrix of candidates for Director and Audit & Supervisory Board Members
Name

Corporate
management

ESG andsustainability

Hiroshi Yano○○

Susumu Yano○○

Masanobu
Kawabayashi○○

Yukihiro
Ohashi

Manufacturing,
technology andresearch

Sales andmarketing

Financeandaccounting

Internationalityand diversity

Legal affairs
and riskmanagement

○

○

○

○

○

○
○

○

○

○

○

ChihiroMurase

○

○

○

○

○

○

Susumu Ota

○

○

○

○

○

○

○

○

○

Kiyoshi Horie
Masanori
Mitsuki○

TetsuoMasuda○Kazufumi
Suzuki

○

○
○

○

○

- 14 -○○○

Proposal No. 4:

Revision of Amount of Remuneration for Directors and Introduction of Restricted Share-BasedRemuneration Plan in Accordance With Revisions to the Officer Remuneration Plan

1. Reasons for the Proposal
The Company has held numerous discussions concerning the ideal remuneration system for enhancing corporate
value over the medium- to long-term at meetings of the Nomination and Remuneration Committee, where
Independent Outside Directors hold a majority.
As a result, the Company has decided to introduce a remuneration plan that aims to clarify the responsibility toachieve business results, while also providing an incentive to sustainably enhance the corporate value of theCompany through the further sharing of value with shareholders.
At a meeting held on April 28, 2022, the Board of Directors passed a resolution concerning the revisions to the
remuneration plan, after previously receiving a report from the Nomination and Remuneration Committee. In the
proposal, in accordance with the revisions to the remuneration plans resolved at the aforementioned meeting of
the Board of Directors, the Company requests shareholders’ approval to increase the amount of remuneration for
Directors from the existing “maximum of ¥180 million per year (including a maximum of ¥20 million for Outside
Directors)” to a “maximum of ¥250 million per year” (revisions to amount of remuneration for Directors), and,separately to this amount of remuneration, to create a new amount of remuneration for the granting of restricted
share-based remuneration (introduction of restricted share-based remuneration plan) to Directors of the Company,
excluding Outside Directors (the “Target Directors”).
The maximum amount of remuneration under the proposal, the total number of ordinary shares of the Company
to be issued or disposed of, and other conditions of the granting of restricted shares to Target Directors based on
the proposal have been determined after taking into consideration the aforementioned objective, the status of theCompany’s businesses, the Company’s policy for determining the content of individual remuneration, etc.
(furthermore, if the proposal is approved, the Company intends to change this policy to the content describedunder [Reference] below, to ensure that it is consistent with the approved content) and various other factors, andthe Company thus believes that they are appropriate.
Furthermore, there are currently six Directors (including two Outside Directors), but there will be no change in
the number of Directors even if Proposal No. 3 “Election of Six Directors” is approved as originally proposed.
2. Details of the Proposal(1)

Revisions to the Amount of Remuneration for Directors
At the 140th Annual General Meeting of Shareholders held on June 24, 2008, the amount of remuneration for
Directors of the Company was approved as a maximum of ¥180 million per year (including a maximum of ¥20
million for Outside Directors).
Now, as part of revisions to the officer remuneration plan, the Company hereby requests shareholders’ approvalat this General Meeting of Shareholders to revise the amount of remuneration for Directors of the Company to a
maximum of ¥250 million per year (provided, however, that this does not include the portion of salary andbonuses for duties as an employee paid to Directors whose role is partly that of an employee), as a plan that will
grant further incentives in relation to business performance, taking into consideration various factors, such as anincrease in the duties of Directors in line with changes in economic circumstances and the management
environment.

(2) Introduction of Restricted Share-Based Remuneration Plan(i) Objective of Introduction of the Plan, Etc.
The objective of the plan is to ensure that Target Directors further share value with shareholders, while also
providing an incentive to enhance the corporate value of the Company over the medium- to long-term.
Under the plan, the Company will pay monetary claims for the granting of restricted shares as remuneration
to Target Directors. Accordingly, the Company will make it a condition of the introduction of the plan that- 15 -

the approval of shareholders is obtained at this General Meeting of Shareholders for the payment of thesemonetary claims.
Accordingly, the Company requests shareholders’ approval for the establishment of a new amount of
remuneration for restricted shares for Target Directors, separately to the amount of remuneration for
Directors after the revisions for which the Company requests approval in the above “(1) Revisions to theAmount of Remuneration for Directors.”(ii) Overview of the Plan
The total amount of monetary claims to be paid to Target Directors based on the plan will be a maximum of¥50 million per year (provided, however, that this does not include the portion of salary and bonuses forduties as an employee paid to Directors whose role is partly that of an employee), and the total number ofordinary shares to be newly issued or disposed of by the Company will be a maximum of 100,000 shares
per year (provided, however, that in the event a share split (including a gratis allotment of the Company’s
ordinary shares) or consolidation of shares is conducted in relation to the ordinary shares of the Company
with an effective date on or after the date of resolution at this General Meeting of Shareholders, the total
number shall be reasonably adjusted as necessary in accordance with the split or consolidation ratio, etc.,
on or after the relevant effective date).
Target Directors shall pay all monetary claims paid by the Company based on the plan as property
contributed in kind, and shall receive the issuance or disposal of ordinary shares of the Company. The
amount to be paid for each share shall be determined by the Board of Directors, within a scope such that it
is not an amount that is particularly advantageous for the Target Directors who will receive the ordinary
shares, based on the closing price of the Company’s ordinary shares on the Tokyo Stock Exchange on thebusiness day preceding the date of each resolution of the Board of Directors (in the event that there are notransactions on the date, it shall be the closing price on the most recent day with transactions before that
date). Furthermore, the specific timing and distribution of payment to each Target Director shall be
determined by the Board of Directors, after consulting the Nomination and Remuneration Committee.
In addition, when issuing or disposing of ordinary shares of the Company under the plan (the “Shares”) andwhen paying monetary remuneration claims as property contributed in kind, the Company will enter into a
restricted share allotment agreement (the “Allotment Agreement”) that includes the following content with
the Target Directors. Furthermore, to ensure that the Shares cannot be transferred, have security interests
created on them, or be otherwise disposed of during the transfer restriction period, the Company plans forthem to be managed in a dedicated account that the Target Directors will open at Nomura Securities Co.,
Ltd., during the transfer restriction period.

[Overview of Content of the Allotment Agreement](i) Transfer Restriction Period
From the day a Target Director receives allotment in accordance with the Allotment Agreement until
immediately after he/she resigns from a position as an officer or employee of the Company or a subsidiaryof the Company that is determined in advance by the Board of Directors of the Company (the “transfer
restriction period”), he/she may not transfer, create security interests on, or otherwise dispose of the ordinary
shares (the “Allotted Shares”) of the Company that he/she is allotted under the Allotment Agreement (the“transfer restrictions”).

(ii) Treatment Upon Resignation
In the event that a Target Director resigns from a position as an officer or employee of the Company or asubsidiary of the Company that is determined in advance by the Board of Directors of the Company prior
to the expiration of the period determined in advance by the Board of Directors of the Company (the “service
provision period”), the Company shall automatically acquire the Allotted Shares without consideration,- 16 -

except when the resignation is due to the expiration of his/her term of office, death, or other justifiablereason.

(iii) Removal of Transfer Restrictions
The Company shall remove transfer restrictions from all of the Allotted Shares when the transfer restriction
period expires, subject to the condition that a Target Director serves continuously in a position as an officer
or employee of the Company or a subsidiary of the Company that is determined in advance by the Board of
Directors of the Company during the service provision period; provided, however, that the number of the
Allotted Shares from which transfer restrictions are removed and the timing of the removal of transfer
restrictions will be reasonably adjusted as necessary in the following cases: i) cases when the Target Director
resigns from a position as an officer or employee of the Company or a subsidiary of the Company that isdetermined in advance by the Board of Directors of the Company prior to the expiration of the service
provision period for justifiable reasons, and ii) cases when the Target Director resigns from a position
determined in advance by the Board of Directors of the Company for reasons other than justifiable reasonsprior to the expiration of the transfer restriction period, even if it is after the expiration of the service
provision period. In addition, immediately after the removal of transfer restrictions in accordance with theabove provisions, the Company will automatically acquire any of the Allotted Shares that still have not had
transfer restrictions removed, without consideration.

(iv) Treatment in the Event of Organizational Restructuring, Etc.
The provisions of the above item (i) notwithstanding, in the event that, during the transfer restriction period,a merger agreement with the Company as the disappearing company, share exchange agreement or sharetransfer plan in which the Company will become a wholly owned subsidiary, or other organizational
restructuring, etc., is approved at a General Meeting of Shareholders of the Company (provided, however,that this shall be a meeting of the Board of Directors of the Company in cases when the relevantorganizational restructuring, etc., does not require approval at a General Meeting of Shareholders of theCompany), the Company shall, by resolution of the Board of Directors of the Company, remove transfer
restrictions from a number of the Allotted Shares that is reasonably determined based on the period fromthe start date of the transfer restriction period to the approval date of the organizational restructuring, etc.,
ahead of the effective date of the organizational restructuring, etc. In addition, immediately after the removalof transfer restrictions as set forth above, the Company will automatically acquire any of the Allotted Sharesthat have not had transfer restrictions removed, without consideration.

(v) Other Matters
Other matters related to the Allotment Agreement shall be determined by the Board of Directors of theCompany.

- 17 -

[Reference]
1. Overview of Revisions to the Officer Remuneration Plan
(These shall be subject to the condition that Proposal No. 4 of Company Proposals is approved at this
General Meeting of Shareholders.)(1) Composition of Remuneration and the Composition Ratio ThereofRemuneration for Directors (excluding Outside Directors) shall consist of basic remuneration,
performance-linked bonuses and share-based remuneration.
If 100% is achieved for the assessment indicator, etc., the benchmark composition ratio of the
remuneration shall be 55:35:10 for basic remuneration, performance-linked bonuses and share-based
remuneration, respectively.
Furthermore, remuneration for Outside Directors shall consist only of basic remuneration.

(2) Performance-Linked Bonuses
In order to increase motivation to enhance business performance each fiscal year, performance-linked
bonuses shall be cash remuneration that reflects the assessment indicator.
The assessment indicator shall be calculated based on an assessment of comprehensive contribution to
the Company, including the level of achievement against targets and growth rate compared with resultsin the previous fiscal year for consolidated EBITDA and consolidated profit, results for DOE (dividendon equity), the performance of departments supervised, and the level of progress toward ESG targets.

(3) Share-Based Remuneration
The Company will discontinue share price-linked bonuses and introduce share-based remuneration thatuses restricted shares, in order to provide a new incentive to sustainably enhance corporate value andpromote the further sharing of value with shareholders.

2. From the conclusion of this General Meeting of Shareholders, the Company plans to allot restricted sharesthat are similar to the above restricted shares to Corporate Officers who do not serve concurrently as
Directors of the Company.

- 18 -

Proposal No. 5:

Revision of Amount of Remuneration for Audit & Supervisory Board Members

The amount of remuneration for Audit & Supervisory Board Members of the Company has been approved as a
maximum of ¥30 million per year, and remained unchanged to the present, by resolution at the 140th Annual General
Meeting of Shareholders held on June 24, 2008. In accordance with the market restructuring, etc., that Tokyo Stock
Exchange, Inc. conducted in April 2022, the Company proposes to revise the amount of remuneration for Audit &Supervisory Board Members to a maximum of ¥50 million per year, in order to secure useful and diverse humanresources as the scope of the responsibilities and expected role of Audit & Supervisory Board Members increases.
Furthermore, at present, there are four Audit & Supervisory Board Members (including two Outside Audit &Supervisory Board Members).

- 19 -

< Shareholder Proposals (Proposals No. 6 and 7) >Each shareholder proposal is provided as written on the shareholder proposal form submitted by the shareholder who
submitted the proposal.

Proposal No. 6:(1)

Approval of Amount of Remuneration for Restricted Share-Based Remuneration Plan

Outline of the Proposal
The maximum amount of remuneration for Directors of the Company was approved as ¥180 million per year(including a maximum of ¥20 million for Outside Directors) at the 140th Annual General Meeting of
Shareholders held on June 24, 2008. Now, in order to provide Directors of the Company (including Directors
who are Outside Directors; hereinafter, the “Target Directors”) an incentive to sustainably enhance thecorporate value of the Company and promote the further sharing of value between the Target Directors andshareholders, monetary remuneration claims shall be newly granted for granting restricted shares up to a
maximum of ¥180 million per year or 85,000 shares to the Target Directors, separately to the aforementioned
amount of remuneration. The transfer restriction period shall be three years from the time of granting. The
specific timing of payment and allocation shall be determined by the Board of Directors, but it shall be
designed to function as a performance-linked incentive plan, and the design shall also be such that, if businessperformance criteria are satisfied, restricted shares equivalent to three times cumulative fixed remuneration
shall be granted in three years’ time.

(2)

Reasons for the Proposal
The Company has not introduced a restricted share-based remuneration plan (the “Plan”), and it cannot be
said that sufficient steps have been taken to share value between Directors and shareholders. Now, it isbelieved that the Company should introduce the Plan for Directors, and make the top 20 members of theCompany’s management eligible for the Plan, including Audit & Supervisory Board Members and Corporate
Officers, not just all Directors of the Company (including Outside Directors). In addition, it is proposed that
restricted shares equivalent to three times cumulative fixed remuneration or salaries be granted to the target
officers and employees under the Plan over the next three years. As described in “Board Members’
Remuneration to Promote Proactive Business Management,” which was published by the Ministry of
Economy, Trade and Industry in April 2014 and has been continuously revised since, it is believed that the
granting of appropriate and effective share-based remuneration to members of the management team would
be desirable for promoting business management from the perspective of shareholders and providing an
incentive for enhancing business performance over the medium- to long-term.

Opinion of the Board of Directors of the Company Regarding Proposal No. 6(1)

Opinion of the Board of Directors of the Company
The Board of Directors of the Company opposes this shareholder proposal.

(2)

Reasons for Opposition
Regarding the revisions to the Company’s officer remuneration plan, after receiving a report from theNomination and Remuneration Committee, where Independent Outside Directors hold a majority, the Boardof Directors has resolved at its meeting held on April 28, 2022, to revise the remuneration plan, including the
introduction of restricted share-based remuneration. The Company submits a proposal regarding these matters
as Proposal No. 4 at this General Meeting of Shareholders. Accordingly, it is believed that the objective
provided as the reason for the shareholder proposal, “promoting business management from the perspectiveof shareholders and providing an incentive for enhancing business performance over the medium- to longterm,” will be sufficiently achieved by the approval of the proposal that the Company submits (the “Company
proposal”).

- 20 -

Furthermore, the specific details of the restricted share-based remuneration plan in the shareholder proposal
and the restricted share-based remuneration plan in the Company proposal are different (for example, in the
Company proposal, the maximum amount of monetary claims to be paid to Directors excluding Outside
Directors of the Company will be ¥50 million and the maximum total number of ordinary shares to be newly
issued or disposed of by the Company will be 100,000 shares per year), but after careful consideration basedon the Company’s actual circumstances, it is believed that the details of the restricted share-based
remuneration in the Company proposal are appropriate.
In addition, the share-based remuneration plan in the shareholder proposal is designed such that an amount of
restricted shares equivalent to three times fixed remuneration or salaries will be granted over a period of three
years. However, under the remuneration plan that the Company plans to introduce, if the level of achievementof the assessment indicator, etc., is 100%, the benchmark ratio shall be “55:35:10 for basic remuneration,
performance-linked bonuses, and share-based remuneration, respectively.” This benchmark ratio is the resultof careful consideration based on the actual circumstances of the Company, in order to achieve a good balanceof short-term and medium- to long-term incentives, and as such, it is believed to be appropriate.

- 21 -

Proposal No. 7:(1)

Purchase of Treasury Shares

Outline of the Proposal
Pursuant to the provisions of Article 156, paragraph (1) of the Companies Act, the Company shall purchase a
total of up to 2,370,000 ordinary shares of the Company for a maximum total purchase amount of¥4,977,000,000 in exchange for the delivery of cash, within one year from the conclusion of this Annual
General Meeting of Shareholders.

(2)

Reasons for the Proposal
In order to enhance shareholder returns and improve capital efficiency, it is believed that the Company shouldpurchase approximately 10% of the total number of issued shares (excluding treasury shares) as treasury
shares, and take measures to cancel them pursuant to the provisions of Article 178 of the Companies Act.

Opinion of the Board of Directors of the Company Regarding Proposal No. 7(1)

Opinion of the Board of Directors of the Company
The Board of Directors of the Company opposes this shareholder proposal.

(2)

Reasons for Opposition
The Company recognizes that the purchase of treasury shares is effective for enhancing capital efficiency andshareholder returns, as well as the execution of flexible capital policies in response to changes in the
management environment. Recently, pursuant to a resolution at a meeting of the Board of Directors held in
February 2022, the Company acquired a total of 131,000 of its own shares for a total purchase amount of¥270,908,000 on the Tokyo Stock Exchange off-auction own share repurchase trading system (ToSTNeT-3)
on February 25, 2022. In addition, at its Board of Directors meeting held on April 28, 2022, the Company has
resolved to change its basic policy regarding the distribution of profits, and in relation to shareholder returns,
it has clarified its intention to steadily enhance and stabilize dividend levels by setting its policy of maintaining
a benchmark DOE (dividend on equity) of 3.0%.
The Company believes that, taking into consideration the liquidity of the Company’s shares, the purchase of¥4,977 million of treasury shares in one year on the market is not realistic, and if a proposal like this is passed,
there is not only a risk that the financial resources for growth investment would be harmed and the mediumto long-term growth and enhancement of corporate value of the Company would stall, there is also a risk that
financial stability would be harmed, which could harm shareholders’ interests as a result. Based on factors
such as the actual business performance of the Company, the Company believes that the purchase of treasury
shares should be performed with appropriate timing, while taking into consideration the status of trading in
the Company’s shares and the share price.

- 22 -