[Translation]: This represents an excerpted translation, for reference and convenience only, of the original notice issued inJapanese. In the event of any discrepancies between the Japanese and English versions, the former shall prevail.

HOKUETSU METAL Co., Ltd.
(Securities Code: 5446)
June 6, 2022

Notice of Convocation of the 106th Annual General Meeting of Shareholders
Dear Shareholders:
Notice is hereby given that the 106th Annual General Meeting of Shareholders of theCompany will be held as set forth below.
Please review the accompanying "Reference Document Concerning the General Meeting of
Shareholders" and cast your votes so as to reach the Company prior to the end of business hours(5:00 p.m. JST) on June 20, 2022 (Monday).

Yours very truly,

Akira Tanahashi
President and Representative Director
HOKUETSU METAL Co., Ltd.
3-1, Zaou 3-chome, Nagaoka-city,
Niigata, Japan[Translation]-1-

Particulars
1.

Date and time of the meeting:
Tuesday, June 21, 2022, at 10:00 a.m. (JST)Reception will start at 9:00 a.m. (JST)2.

Place of the meeting:Hotel New Otani Nagaoka, 2F (Hakucho’s room)
8-35, Daimachi 2-chome, Nagaoka-city, Niigata

3.

Agenda of the meeting:
Matters to be reported:
1. Report on the Business Report and Consolidated Financial Statements for the 106th
fiscal year (from April 1, 2021 to March 31, 2022) and the results of the audits of theConsolidated Financial Statements by the Accounting Auditor and Board of Company
Auditors Meeting.
2. Report on the Non-Consolidated Financial Statements for the 106th fiscal year (from
April 1, 2021 to March 31, 2022).
Matters for resolution:<Proposals from the Company>
Proposal No. 1: Partial Amendment of the Articles of Incorporation
Proposal No. 2: Election of Five (5) Directors
Proposal No. 3: Election of One (1) Substitute Company Auditor<Proposals from a Shareholder>
Proposal No.4: Election of Three (3) Directors
Proposal No.5: Election of One (1) Substitute Company Auditor

The Board of Directors is opposed to both of the Proposals from the Shareholder.

◎In the event of any amendment to the Reference Document Concerning the General Meeting of Shareholders,Business Report, Consolidated Financial Statements, or Non-Consolidated Financial Statements, the Company will post
the amended items on the Company's website (https://www.hokume.co.jp/).
◎If you do not express the approval or disapproval on the voting, the Company will consider it indicative of approval
for all proposals from the Company and indicative of disapproval for all proposals from the Shareholder.
◎In the event that one and the same shareholder exercises voting rights both via return mail and via the Internet, theCompany will consider the exercise of voting rights via the Internet to be valid. Moreover, in the event one and thesame shareholder exercises voting rights several times via the same method, the Company will consider the last exercise
of voting rights to be valid.

[Translation]-2-

Reference Document Concerning the General Meeting of Shareholders
Proposals and Matters for Reference<Proposals by the Company (Proposal No. 1 to No. 3)>
Proposal No. 1:

Partial Amendment of the Articles of Incorporation

1. Reasons for Proposal(1) Article 2 (Purposes) in the proposed amendment will add additional purposes to the current
purposes of the Company to align with the diversified businesses of the Company and its
subsidiaries.
(2) The revised regulations specified in the Proviso to Article 1 of the Supplementary Provisions to
the Act on Partial Amendment of the Companies Act (No. 70 of 2019) will become effective on
September 1, 2022. Accordingly, in order to prepare for the introduction of systems for electronic
provision of materials for general meetings of shareholders, the Company’s Articles ofIncorporation will be amended as follows.
①Proposed Article 14, Paragraph 1 in the Articles of Incorporation stipulates that the Company
takes measures for electronic provision of information contained in reference documents, etc.,
for the general meeting of shareholders.
②Proposed Article 14, Paragraph 2 in the Articles of Incorporation establishes a provision tolimit the scope of matters to be described in paper copies delivered to shareholders who requestdelivery of such copies.
③The stipulation on internet disclosure and deemed provision of reference documents, etc., forgeneral meetings of shareholders (the current Article 14 of the Articles of Incorporation) is tobe deleted, as it will no longer be necessary.
④In tandem with the above additions and deletions, supplementary provisions will be establishedwith respect to effective dates and other matters.
2．Details of Amendment
Details of the proposed amendments are as follows.
(The underlined portions indicate amendments.)
Current Articles of Incorporation
Proposed Amendments
Article 1 (Article Omitted)
Article 1 (No Amendment)(Purposes)
Article 2. The purpose of the Company shall beto engage in the following businesses:
1. Manufacture, processing and sale of pig iron,copper materials, and primary products of ironand steel such as cast steel.
2. Manufacture, processing and sale ofsecondary products of iron and steel.
3. Manufacture, processing and sale of nonferrous metals and alloy iron.
4. Manufacture, processing and sale of iron andsteel structures.
5. Manufacture, processing and sale ofmachinery and equipment.
(New Addition)[Translation]-3-(Purposes)
Article 2. The purpose of the Company shall beto engage in the following businesses:
1. Manufacture, processing and sale of pig iron,copper materials, and primary products of ironand steel such as cast steel.
2. Manufacture, processing and sale ofsecondary products of iron and steel.
3. Manufacture, processing and sale of nonferrous metals and alloy iron.
4. Manufacture, processing and sale of iron andsteel structures.
5. Manufacture, processing and sale ofmachinery and equipment.
6. Processing and sale of ceramic products, andCurrent Articles of Incorporation

6. Collection, transportation and disposal ofdomestic waste and industrial waste, and sale ofrecycled products thereof.
7. Motor truck transportation business,forwarding business and warehousing business.
8. Any and all businesses incidental or related
to the preceding items.
②For the purpose of executing the businessabove, the Company may jointly run a business,invest in other companies, or incorporate
another company.

Proposed Amendments
other civil engineering and building materials.
7. Contracting and construction of civilengineering works.
8. Collection, transportation and disposal ofdomestic waste and industrial waste, and sale ofrecycled products thereof.
9. Motor truck transportation business,forwarding business and warehousing business.
10. Any and all businesses incidental or related
to the preceding items.
②For the purpose of executing the businessabove, the Company may jointly run a business,invest in other companies, or incorporate
another company.

Article 3 to Article 13 (Articles Omitted)

Article 3 to Article 13 (No Amendment)(New Addition)(Internet Disclosure of Reference Documents,
Etc., for General Meetings of Shareholders)
Article 14. In convening a General Meeting of
Shareholders, the Company shall be deemed tohave provided to shareholders information
concerning matters required to be described orpresented in reference documents for General
Meetings of Shareholders, business reports,financial statements and consolidated financial
statements, by disclosing such information overthe Internet in a manner set forth in theministerial ordinances of the Ministry ofJustice.

(Deletion)(New Addition)(Provision of Documents in Electronic Format,
Etc.)
Article 14. In convening a General Meeting of
Shareholders, the Company shall provide thecontents of the reference documents, etc., for
the General Meeting of Shareholders in anelectronic format.
② Among the contents provided in anelectronic format, the Company may exclude
all or a part of the matters prescribed by theministerial ordinances of the Ministry of Justicefrom the documents that will be delivered toshareholders who requested the delivery ofsuch documents by the record date for voting
rights.

Article 15 to Article 39 (Articles Omitted)

Article 15 to Article 39 (No Amendment)(New Addition)[Translation](Supplementary Provisions)-4-Current Articles of Incorporation[Translation]

Proposed Amendments
1.The deletion of Article 14 of the current
Articles of Incorporation (Internet Disclosureof Reference Documents, Etc., for General
Meetings
ofShareholders)andtheestablishment of Article 14 (Provision ofDocuments in Electronic Format, Etc.) shall beeffective from September 1st, 2022.
2. Notwithstanding the provisions of thepreceding paragraph, Article 14 of the current
Articles of Incorporation shall remain effective
regarding any General Meeting of Shareholders
held on a date prior to the end of February 2023.
3. These Supplementary Provisions shall bedeleted on March 1st, 2023 or the date whenthree months have passed from the date of theGeneral Meeting of Shareholders in thepreceding paragraph, whichever is later.

-5-

Proposal No. 2:

Election of Five (5) Directors

The terms of office of all five (5) Directors will expire at the conclusion of this General
Meeting of Shareholders. Accordingly, we propose to elect five (5) Directors.
The candidates for Directors are as follows:
Candidate
NumberName

Current Position

1.

Reappointment

Akira Tanahashi

Representative Director

2.

Reappointment

Yasutaka Takenaka

Senior Managing Executive Director

3.

Outside Director

Yoshihiko Ogura

Outside Director

4.

Outside Director

Kouzou Yoneda

Outside and Independent Director

Hisashi Nakano

Outside and Independent Director

Reappointment

Reappointment

Independent Director

Reappointment

5.

Outside Director
Independent Director

Reappointment

Candidate for Reappointment as Director

Outside Director

Candidate for Outside Director

Independent Director

Independent Director as Stipulated by the Stock Exchange[Translation]-6-

Candidates for Directors
Name(Date of birth)

Candidate
Number1.

Reappointment

Akira Tanahashi(Nov. 18, 1956)

Brief history(Positions and responsibilities and important positions of other organizations
concurrently held)

April 1980
April 2006
April 2007
June 2011
June 2011
April 2013

June 2013

April 2015
April 2016
April 2017

Joined Topy Industries, Limited (“Topy Industries”)
Head of Toyohashi Factory, Steel Business Divisionof Topy Industries
Executive Officer, Vice Manager of Steel Business
Division, Head of Toyohashi Factory of Topy
Industries
Director of the Company
Director of in charge of Steel and Iron Business, andManager of Steel Business Division of Topy
Industries
Director in charge of Steel and Iron Business,
Manager of Steel Business Division, and Project
Leader of New Steel Factory Construction of Topy
Industries
Executive Officer in charge of Steel and Iron
Business, Manager of Steel Business Division, andProject Leader of New Steel Factory Construction ofTopy Industries
Managing Executive Officer in charge of Steel and
Iron Business, and Manager of Steel Business
Division
Senior Managing Director in charge of GroupManagement assisting President of the Company
Representative Director of the Company (current)

Number of sharesof the Company
held by Candidate
6,000 shares
Length of terms
11 years

Attendance at
Meetings of theBoard of Directors
17/17(Important positions of other organizations currently
held)
None
(Reasons for nomination as a Director Candidate)
Mr. Akira Tanahashi has demonstrated strong leadership as a director (Representative Director) who also has served
as a business executive (President), and has promoted management structural reforms of Hokuetsu Metal Group(“the Group”). In addition, Mr. Tanahashi, in order to realize the long-term vision "Metal Vision 2030 <Kizuna>"
announced in October 2019 and the medium-term five-year management plan "Kizuna 2024", executed theabsorption-type merger of two wholly-owned subsidiaries in October 2019, made Kotecs Co., Ltd. a wholly owned
subsidiary in April 2020, established Innovas Co., Ltd. in July 2021, and made large-scale capital investments suchas rationalization work for the Nagaoka Rolling Plant.
The Nomination and Compensation Committee has determined that it can be expected to contribute to thesustainable improvement of corporate value of the Company, and has decided upon him as a candidate for director
continuously.
(Message for the Shareholders)
The medium-term management plan "Kizuna 2024", which was formulated to realize the "Metal Vision 2030
<Kizuna>" that depicts our company's vision toward 2030, has entered its third year in execution. The current
business environment is harsher and more drastic than initially expected, and it is necessary to implement measuresmore speedily.
We will complete the medium-term management plan, which will lead to the improvement of our corporate value bycontinuously advancing aggressive "capital investment", "investment in people" aimed at strengthening of humanresources, "strengthening of technological capabilities" by promoting new product development and technologicaldevelopment, and "strengthening of on-site capabilities" which is the basis of manufacturing. We would like to ask
our shareholders for continued guidance and encouragement.

[Translation]

-7-

Name
(Date of birth)

Candidate
Number2.

Reappointment

Yasutaka Takenaka(March 23, 1960)

Brief history(Positions and responsibilities and important positions of other organizations
concurrently held)

Oct. 1990
July 2003
July 2008
Oct. 2011
April 2012
April 2013
April 2014
April 2016
June 2016
April 2018
Jan. 2019

April 2020
April 2021

Joined Topy Industries
Senior Manager, Machinery Business Division ofTopy Industries
General Manager, Qingdao Topy Machinery Ltd.
General Manager, Qingdao Topy Machinery Ltd. andGeneral Manager, Topy Undercarriage (China) Co.,Ltd.
Deputy Manager, Corporate Planning Division ofTopy Industries
Manager, Global Strategy Development Division ofTopy Industries
Head of Corporate Planning Office of the Company
Executive Officer, Manager of Corporate Planning
Division of the Company
Director and Executive Officer in charge of Corporate
Planning and Finance, and Manager of Corporate
Planning Division of the Company
Managing Director in charge of Corporate Planning,
General Affairs, HR, Finance and System, Senior
Manager of Overall Business of the Company
Managing Director in charge of Corporate Planning,
General Affairs, HR, Finance and System, Senior
Manager of Overall Business, Chairman ofRestructuring and Developing Group Business of theCompany
Managing Director in charge of Corporate Planning,
General Affairs, HR, Finance and System, Senior
Manager of Overall Business of the Company
Senior Managing Director in charge of Corporate
Planning, General Affairs, HR, Finance and System,
Senior Manager of Overall Business of the Company(current)

Number of sharesof the Company
held by Candidate
1,800 shares
Length of terms
6 years

Attendance at
Meetings of theBoard of Directors
17/17(Important positions of other organizations currently
held)
None
(Reasons for nomination as a Director Candidate)
Mr. Yasutaka Takenaka has combined the board of directors and business execution in both directions and promoted
the organic integration of management and execution as a director who also has served as a business executive In
addition, Mr. Takenaka, in order to realize the long-term vision "Metal Vision 2030 <Kizuna>" announced in
October 2019 and the medium-term five-year management plan "Kizuna 2024", has taken the lead of the businessexecution department and promotion to realize specific management structural reforms, alliance planning andpromotion, and training of next-generation executive candidates.
The Nomination and Compensation Committee has determined that it can be expected to contribute to thesustainable improvement of corporate value of the Company, and has decided upon him as a candidate for director
continuously.
(Message for the Shareholders)
The business environment is becoming more and more uncertain and complicated. In order to find opportunities inthese major changes and aim for sustainable growth, we will continue to promote management structural reforms
continuously this year based on the long-term vision "Metal Vision 2030 <Kizuna>" formulated in October 2019. In
particular, as a director who executes business, I will connect the board of directors with the business execution
department, and management strategy with business execution, and promote legal, appropriate, accurate, promptand flexible business operations. In addition, I will implement concrete efforts to further strengthen the "four bonds(Kizuna)" that we will place importance on in the future. Within the company, in order to foster next-generation
executive candidates and build a strong management foundation that can open up a new era autonomously and selfsufficiently, I will promote drastic organizational and institutional reforms without being bound by preconceived
notions.

[Translation]

-8-

Name
(Date of birth)

Candidate
Number3.

Reappointment
Outside Director

Yoshihiko Ogura

Brief history(Positions and responsibilities and important positions of other organizations
concurrently held)

April 1992
Mar. 2021
Oct. 2007
May 2011(May 15, 1969)
April 2015
April 2017
April 2018
April 2021
June 2021

Joined Itochu Corporation (“Itochu”)
Itochu Hong Kong Ltd. (expatriate in Hong Kong)
Leader of Project Development Team, Coal
Department, Itochu
Deputy Manager of Chinese Metal and Energy Groupof Itochu, and Itochu (China) Holding Co., Ltd.
(expatriate in Beijing)
Deputy Manager, Coal Department of Itochu
Head of Brisbane Office, Itochu Australia Ltd.
(expatriate in Brisbane), and temporary assignment to
IMEA (manager)
Manager of Metal Business Planning and CP/CITIC
Strategy Office, Itochu
Deputy Manager of Metal Business Division, andManager of Non-Metal and Recycling Division of
Itochu (current)
Outside Director of the Company (current)

Number of sharesof the Company
held by Candidate
0 shares
Length of terms
1 yearAttendance at
Meetings of theBoard of Directors
13/14(Important positions of other organizations currently
held)
Deputy Manager of Metal Business Division, andManager of Non-Metal and Recycling Division of
ItochuDirector of Itochu Metals Corporation(Reasons for nomination as a Candidate for Outside Director and summary of the expected roles)
As stated in the biography, Mr. Yoshihiko Ogura has a wealth of experience and a wide range of insights cultivatedthrough his work in Japan and overseas at companies that are expanding globally. In the Board of Directors, Mr.
Ogura has also actively played a role in providing management advice and supervising business execution.
The Nomination and Compensation Committee has determined that it can be expected to contribute to thesustainable improvement of corporate value of the Company, and has decided upon him as a candidate for outside
director continuously.
The Company does not have any business with ITOCHU Corporation. In addition, the candidate also serves as adirector of ITOCHU Metals Co., Ltd., which is a specific business operator of the Company, and the Company has abusiness relationship with the company (ITOCHU Metals Co., Ltd.), such as main raw materials.
(Message for the Shareholders)
We are entering an era in which "sustainable development goals," that is, "SDGs," are required worldwide, and"management from the perspective of ESG" is extremely important for companies as well.
Our company plays a part in the "recycling society that enables sustainable growth" by manufacturing and selling
products such as building materials using iron scrap as the main raw material, and it is expected to be more
important.
Although it depends on raw material prices and economic trends, we aim to achieve medium- to long-term andsustainable growth together with the local community while responding to such social needs.
From the position of overseeing management as an outside director, I will be involved in the reform of the businessmodel that supports the growth, the improvement of corporate governance, etc., and will sincerely strive to improvethe corporate value of the Company. I would like to humbly thank you.
(Summary of the liability limitation contract)
The Company has executed a contract with Mr. Yoshihiko Ogura in accordance with Article 427, Paragraph 1 of theCompanies Act and the Articles of Incorporation of the Company, to limit his liability to the minimum liability
under Article 425, Paragraph 1 of the Companies Act, in relation to the liability under Article 423, Paragraph 1 of
the Companies Act. If his election is approved, the Company will continue the contract.

[Translation]

-9-

Name
(Date of birth)

Candidate
Number4.

Reappointment
Outside Director
Independent Director

Kouzou Yoneda（June 18, 1948）

Brief history(Positions and responsibilities and important positions of other organizations
concurrently held)

Mar. 1972
April 2001
June 2002
April 2003
June 2005
April 2012
Dec. 2014
June 2015
June 2015
Dec. 2015
Nov. 2016
June 2018

Joined Sumitomo Bank, Limited (currently, Sumitomo
Mitsui Banking Corporation)
Executive Officer, Manager of Sales Division II, Head
Office, Sumitomo Mitsui Banking Corporation
CEO and Chairman, Japan Equity Capital Co., Ltd.
Advisor, Daiwa Securities SMBC Principal
Investments Co. Ltd.
Representative Director, Hirata Corporation
Representative Director, Kinrei Corporation (currently
KR Holdings Corporation)
Outside Director, Amifa Co., Ltd. (current)
Outside Director, Takagi Co., Ltd.
Outside Director, ANEST IWATA Corporation
Representative Manager, Three Fields Godo Kaisha(current)
Outside Director, FORLIFE Co., Ltd. (current)
Outside Director of the Company (current)

Number of sharesof the Company
held by Candidate
0 shares
Length of terms
4 years
Attendance at
Meetings of theBoard of Directors
17/17(Important positions of other organizations currently
held)Outside Director, Amifa Co., Ltd.
Outside Director, ANEST IWATA Corporation
Representative Manager, Three Fields Godo Kaisha
Outside Director, FORLIFE Co., Ltd.
(Reasons for nomination as a Candidate for Outside Director and summary of the expected roles)
As stated in his biography, Mr. Kouzou Yoneda has been involved in management of many companies for many
years and still plays an active part as an outside director of multiple companies, and has a wealth of experience anda wide range of insights. In addition to actively providing management advice at the Board of Directors, he has also
played a significant role in making proposals for improving governance from the perspective of shareholders andsupervising business execution. Mr. Yoneda has also served as chair of the Nomination and Compensation
Committee.
The Nomination and Compensation Committee has determined that it can be expected to contribute to thesustainable improvement of corporate value of the Company, and has decided upon him as a candidate for outside
director continuously.
The Company does not have any business with Amifa Co., Ltd., Anest Iwata Corporation, Three Fields Godo
Kaisha, or FORLIFE Co., Ltd.
(Message for the Shareholders)
The business environment is changing rapidly, such as escalating energy and resource prices due to economic
sanctions against Russia that invaded Ukraine and a sharp depreciation of the yen due to rising overseas interest
rates due to US monetary tightening, in addition to the COVID-19 pandemic, which has already lasted for morethan two years.
On the other hand, with the demand for carbon neutrality and resource conservation, the resource-recycling electric
furnaces that complement blast furnaces are expected to be more important.
The Company has formulated the long-term vision "Metal Vision 2030 <Kizuna>" and are working on our own
transformation with the aim of building a corporate structure that can withstand such changes in the businessenvironment and enable sustainable growth. To that end, it is indispensable to have a foundation of corporate culturethat embraces diverse ideas and allows employees to act proactively with one's heart, and a stable management
system that supports it.
As chair of the Nomination and Compensation Committee, I will strive to develop future executive candidates andimprove corporate value.
(Summary of the liability limitation contract)
The Company has executed a contract with Mr. Kouzou Yoneda in accordance with Article 427, Paragraph 1 of theCompanies Act and the Articles of Incorporation of the Company, to limit his liability to the minimum liability
under Article 425, Paragraph 1 of the Companies Act, in relation to the liability under Article 423, Paragraph 1 of
the Companies Act. If his election is approved, the Company will continue the contract.

[Translation]- 10 -

Name(Date of birth)

Candidate
Number5.

Reappointment
Outside Director
Independent Director

Hisashi Nakano

Brief history(Positions and responsibilities and important positions of other organizations
concurrently held)

April 1975
July 1999
July 2000(June 21, 1952)
June 2002
April 2005
June 2016
April 2008
April 2009
April 2010
June 2010
June 2010
June 2014
June 2014
June 2018
June 2019

Joined Yasuda Fire and Marine Insurance Co., Ltd.
(currently, Sompo Japan Insurance Inc., “Sompo
Japan”)
Chubu Business Division Manager, Sompo Japan
Temporary assignment to INA Himawari Life
Insurance Co., Ltd. (currently, Sompo Himawari Life
Insurance, Inc.)
Temporary assignment to Saison Automobile and Fire
Insurance Co., Ltd.
Executive Office and HR Division Manager, Sompo
Japan
Director and Managing Executive Officer, HR
Division Manager, Sompo Japan
Representative Director and Managing Executive
Officer, Kansai I Division Senior Manager, Sompo
Japan
Representative Director and Senior Managing
Executive Officer, Kansai I Division Senior Manager,
Sompo Japan
Representative Director and Vice President, Kansai I
Division Senior Manager, Sompo Japan
Retired from Director of Sompo Japan
Representative Director, ZAIKEI JUTAKU KINYU
Co., Ltd.
Retired form Director, ZAIKEI JUTAKU KINYU
Co., Ltd.
Outside and full-time Company Auditor of theCompany
Retired from Outside Company Auditor of theCompany
Outside Director of the Company (current)

Number of sharesof the Company
held by Candidate
1,000 shares
Length of terms
3 years
Attendance at
Meetings of theBoard of Directors
17/17(Important positions of other organizations currently
held)
None
(Reasons for nomination as a Candidate for Outside Director and summary of the expected roles)
As stated in his biography, Mr. Hisashi Nakano has been involved in management of many companies for many
years and has a wealth of experience and a wide range of insights. In the Board of Directors, Mr. Nakano has also
actively made proposals regarding human resources strategies (succession plans), and has fully played his role inproviding advice to management and supervising business execution.
The Nomination and Compensation Committee has determined that it can be expected to contribute to thesustainable improvement of corporate value of the Company, and has continued to decide upon him as a candidatefor outside director.
(Message for the Shareholders)
In order to improve corporate value and contribute to the creation of a circular economy, we have formulated along-term vision "Metal Vision 2030 <Kizuna>" and aim to achieve the medium-term management plan "Kizuna2024" that is the basis for this realization, and we are entirely working as one.
As an outside director, I will continue to closely monitor and supervise this progress and make positive opinions andsuggestions, but the COVID-19 pandemic and the outbreak of the Ukrainian conflict have a negative impact oncompanies around the world, where it is undeniable that the outlook for the business environment is extremely
difficult to forecast.
Under such circumstances, it is indispensable to broaden the perspective of thinking and efforts that are not an
extension of the conventional ones, and to create a free and vibrant organizational culture, and the development of
human resources who can embody these is becoming more important. We will focus on this human resource
development by making use of the management experience of multiple companies and the knowledge as a senior inlife.
We hope that these efforts will function organically and lead to the achievement of the medium-term management
plan and the realization of the long-term vision.

[Translation]- 11 -

Name(Date of birth)

Candidate
NumberBrief history(Positions and responsibilities and important positions of other organizations
concurrently held)(Summary of the liability limitation contract)
The Company has executed a contract with Mr. Hisashi Nakano in accordance with Article 427, Paragraph 1 of theCompanies Act and the Articles of Incorporation of the Company, to limit his liability to the minimum liability
under Article 425, Paragraph 1 of the Companies Act, in relation to the liability under Article 423, Paragraph 1 of
the Companies Act. If his election is approved, the Company will continue the contract.
Notes:
1. The Company has no special interest with each of the Director candidates.
2. Mr. Katsuhiko Ogura, Mr. Kouzou Yoneda, and Mr. Hisashi Nakano are Outside Director candidates.
3. The Company has entered into indemnity contracts, as stipulated in Article 430-2, Paragraph 1 of the Companies Act, with Mr.
Akira Tanahashi, Mr. Yasutake Takenaka, Mr. Katsuhiko Ogura, Mr. Kouzou Yoneda and Mr. Hisashi Nakano. In accordancewith the said contracts, the Company will provide compensation for the expenses set forth in Article 430-2, Paragraph 1, Item
1 of the Companies Act and the losses set forth in Item 2 of the said Paragraph within the range stipulated by law. In the said
contracts, reporting, loss mitigation and informing obligations by directors are stipulated, and there is a limitation of theindemnity in case of violation of such obligations. If they are re-elected, the Company intends to continue the said contracts.
4. The Company has concluded a directors and officers liability insurance agreement with an insurance company. Such insurance
agreement will cover the liability of the insured including all Directors of the Company in relation to the exercise of the duty,or legal damages in the event of the claim, provided, however that there is a disclaimer for the acts which are recognized as
violations of law. The Company bears all costs of the said insurance. Each Director candidate is an insured in the said insurance
agreement. The agreement will be renewed with the same coverage and conditions at the next renewal date.
5. The Company has designated Mr. Kouzou Yoneda, and Mr. Hisashi Nakano as independent directors and submitted thestatement to that effect to the Tokyo Stock Exchange, Inc. Upon their re-appointment as originally proposed, it is planned thatthey will continue to serve as independent directors.
For reference:

Expertise and Experience of Director candidates

LegalcomplianceNameand riskmanagement
Akira Tanahashi〇〇〇
Yasutake Takenaka〇〇〇〇
Katsuhiko Ogura〇〇〇
Kouzou Yoneda〇〇〇〇
Hisashi Nakano〇〇(Note) The table above does not show all the knowledge, experience and skills of each director candidate.
Corporate
management[Translation]

Globalbusiness

Technologies
andmanufacturing- 12 -

Finance andaccounting

Humanresources〇〇

Proposal No. 3:

Election of One (1) Substitute Company Auditor

We propose to elect one (1) substitute Company Auditor in anticipation of a case in which
the number of Company Auditors might become less than the number provided for in the laws andregulations.
The validity of the resolution under this proposal can be nullified by resolution of theBoard of Directors, with the consent of the Board of Corporate Auditors Meeting, only before heassumes office.
We have already obtained the consent of the Board of Corporate Auditors Meeting for thesubmission of this proposal.
The candidate for substitute Company Auditor is as follows:
Name(Date of birth)

Candidate
NumberBrief history(Positions and responsibilities and important positions of other organizations
concurrently held)

Outside Company Auditor

April 1982
April 1997

Masatoshi Okura

Dec. 2002(Aug. 29, 1958)

April 2003
April 2005

1.

April 2007
June 2011
Aug. 2012
April 2018
April 2019
April 2022

Joined Itochu Corporation (“Itochu”)
Deputy Manager, Metal Material Section, Niigata
Branch, Itochu
Deputy Manager, Development and Recycling
Section, Metal Material Division, Itochu
Deputy Manager, Metal Material Division
Director and Manager of West Japan Business
Division, i-Recycle Inc. (currently, Itochu Metals
Corporation)
Niigata Branch Manager, Itochu
Vice General Manager, Dalian New Green Recycle &Resources Corporation (expatriate in Dalian)
Deputy Manager, Metal Recycling Business Division,
Itochu Metals Corporation
Director, Educational Corporation NIIGATA Instituteof Technology
Senior Director, Educational Corporation NIIGATA
Institute of Technology
Chairman, Educational Corporation NIIGATA
Institute of Technology (current)

Number of shares of
the Company held by
Candidate0

shares(Important positions of other organizations currently
held)
Chairman, Educational Corporation NIIGATA
Institute of Technology(Reasons for nomination as a Substitute Company Auditor candidate)
Mr. Masatoshi Okura is proposed for the position of Substitute Outside Company Auditor because he is expected toutilize his extensive experience and broad insight gained from his work at global companies in Japan and overseas
as well as at the Niigata Institute of Technology as part of our auditing system.
The Company has no business transactions with ITOCHU Corporation or the Niigata Institute of Technology. The
candidate was formerly a business executive of ITOCHU Metals Corporation, a specific business operator of theCompany, and the Company has business transactions with ITOCHU Metals Corporation, including those for main
raw materials.
(Summary of the liability limitation contract)
The Company will execute a contract with Mr. Masatoshi Okura, upon his assumption of office, in accordance with
Article 427, Paragraph 1 of the Companies Act and the Articles of Incorporation of the Company, to limit his
liability to the minimum liability under Article 425, Paragraph 1 of the Companies Act, in relation to the liability
under Article 423, Paragraph 1 of the Companies Act.
Notes:
1. The Company has no special interest with the candidate.
2. Mr. Masatoshi Okura is a Substitute Outside Company Auditor candidate.
3. The Company has entered into indemnity contracts, as stipulated in Article 430-2, Paragraph 1 of the Companies Act, with
Company Auditors. In accordance the said contracts, the Company will provide compensation for the expenses set forth in
Article 430-2, Paragraph 1, Item 1 of the Companies Act and the losses set forth in Item 2 of the said Paragraph within the range[Translation]- 13 -

4.

stipulated by law. In the said contracts, reporting, loss mitigation and informing obligations by directors are stipulated, and there
is a limitation of the indemnity in case of violation of such obligations. If the candidate assumes the office of Company Auditor,
the Company intends to enter into the said contract.
The Company has concluded a directors and officers liability insurance agreement with an insurance company. Such insurance
agreement will cover the liability of the insured including all Company Auditors of the Company in relation to the exercise of
the duty, or legal damages in the event of the claim, provided, however that there is a disclaimer for the acts which are recognized
as violations of law. The Company bears all costs of the said insurance. The Substitute Company Auditor candidate will be an
insured in the said insurance agreement upon being the Company Auditor. The agreement will be renewed with the same
coverage and conditions at the next renewal date.

[Translation]- 14 -

<Proposals from a Shareholder (Proposal Nos. 4 and 5)>
Proposal Nos. 4 and 5, made by a shareholder, are quoted below.
The number of voting rights held by the shareholder is 13,221.
Proposal No. 4: Election of Three (3) Directors(1) Outline of the proposal
The following three persons shall be elected as directors of HOKUETSU METAL Co., Ltd. (the“Company”):
Katsuyoshi Daido;
Masaki Takeuchi; andKazuhiko Amakawa.
(2) Reason for the proposal
In order to increase the Company’s corporate value over the medium to long term, it isessential to maintain and strengthen a cooperative business framework that enables us to share
the know-how and resources of the electric furnace operations that the Topy Industries Grouphas cultivated over many years, while maintaining the Company’s independence as a listedcompany. This will enable us to enjoy various managerial advantages, such as enhancing ourtechnological capabilities and on-site capabilities, and responding appropriately to ourimportant issues, such as countermeasures against the aging of production facilities, thereby
improving our presence as an electric furnace manufacturer.
However, the Company’s current management has neglected the above framework and in
2021 caused serious equipment failures at its major plants and employee fatalities. It failed toutilize the know-how of the Topy Industries Group in preventing, and taking follow-up
measures against, those incidents. The Company cannot increase its corporate value over the
medium to long term with such management.
Accordingly, we propose the appointment of new management personnel and independent
outside directors in order to rebuild the cooperative framework described above and realize theenhancement of corporate value over the medium to long term.

[Translation]- 15 -

(3) Names, brief history, etc., of candidates
Candidate
NumberName(Date ofbirth)

Brief history(Positions and responsibilities and important positions of otherorganizations concurrently held)
April 1982

1

2

3

[Translation]

Joined Topy Industries, Limited (“TopyIndustries”)
July 2004
Director in charge of Corporate Planning- March 2013
Business, Corporate Planning Division; Head of
Katsuyoshi
Accounting, Finance Division; Director in charge
Daido
of Financial Accounting(December April 2013
Executive Officer, Finance Manager
3, 1959)
April 2016
Executive Officer, Manager of Steel Business
Division
April 2018
Managing Executive Officer, Manager of Internal
Audit Division
June 2021
Senior Managing Director (current)(Important positions of other organizations currently held)
Senior Management Director of Topy Industries(Reasons for nomination as a Director Candidate)
Mr. Daido is capable of making balanced analyses, has planning ability, power todisseminate information, and a large network of contacts in Topy Industries Group
from his long years of experience as a finance manager and abundant knowledge
from his experience in corporate planning and management at Topy Industries. Mr.
Daido also has experience in business management gained from, among other
responsibilities, coordinating subsidiaries as the Manager of the Steel Business
Division in the Steel and Iron Department. Therefore, Mr. Daido is expected tostrengthen the Company’s cooperative ties with Topy Industries and contribute to
the enhancement of mid- to long-term corporate value of the Company.
April 1988
Joined Topy Industries
April 2013
Production Manager, Toyohashi Factory, SteelBusiness Division
April 2015
Manager of Technology Management Division,
MasakiToyohashi Factory, Steel Business Division
TakeuchiApril 2017
Director, Engineering Manager, Toyohashi(September
Factory, Steel Business Division18, 1965) April 2019
Director, Head of Toyohashi Factory, SteelBusiness Division
April 2021
Director, temporary assignment to HR (current)
June 2021
Director of Topy Marine Transport, Limited(current)(Important positions of other organizations currently held)
Director of Topy Industries, Director of Topy Marine Transport, Limited(Reasons for nomination as a Director Candidate)
Mr. Takeuchi has abundant knowledge and experience in technology from his longyears of experience as the head of Toyohashi Factory, Steel Business Division ofTopy Industries, has demonstrated strong leadership as the head of the factory witha “workplace-oriented” perspective and gained the confidence of front-line
workers. Following the assumption of the office of director of Topy Marine
Transport, Mr. Takeuchi has largely contributed to logistics reforms by bolstering
its relationship with Topy Industries. Mr. Takeuchi is expected to strengthen the
Company’s technological abilities and workers’ capabilities and contribute to theenhancement of mid- to long-term corporate value of the Company throughcooperative ties with Topy Industries.
Kazuhiko April 1980
Joined Nippon Steel Corporation
Amakawa July 1994
Head of Iron and Steel Production Division,(August 1,
Kimitsu Works
1954)
March 1996
Deputy Manager of Production Technology

Number ofshares of theCompany heldby Candidate- 16 -

0 share0 share0 shareDivision, Kimitsu Works
Joined Japan Institute of Plant Maintenance
Head of Research and Development
Visiting Professor, Keio University Graduate
School (current)(Important positions of other organizations concurrently held)
None(Reasons for nomination as a Candidate for Outside Director and summary of the
expected roles)
Mr. Amakawa served as the Head of the Iron and Steel Production Division andthen as Deputy Manager of the Production Technology Division at Kimitsu Works,
and engaged in factory operation reform. Mr. Amakawa also gave guidance
regarding TPM (Total Productive Maintenance) at some 40 business locations foriron and steel production, copper refining and forging in and outside Japan as amember of Japan Institute of Plant Maintenance, thereby committing himself to theCompany’s production operation reform until March 2022. Mr. Amakawa is
expected to strengthen the Company’s foundation for “manufacturing things” withhis ample knowledge and training experience regarding TPM, and contribute to theenhancement of mid- to long-term corporate value of the Company.
December 1998
April 2004
April 2019

Notes:
1.
Each of the Director candidates has no special interest with the Company.
2.
Mr. Kazuhiko Amakawa is an Outside Director candidate.

[Translation]- 17 -

Opinion of the Board of Directors regarding Proposal No. 4
The Board of Directors opposes this Proposal.
1. Introduction
Our company will propose at the Shareholders Meeting the reappointment of the current five(5) directors of our company (the “Company Proposal”). We have determined that theappointment of the five (5) director candidates of the Company Proposal is the best way
forward from the perspective of the stability of the corporate value of our company and Topy
Industries, Ltd. (“Topy Industries”), and will lead to improvements in the common interest of
all of the stakeholders of the two companies.
Since our receipt of the Shareholder’s Proposal, we held a series of discussions with Topy
Industries, aiming for a resolution through dialogue with Topy Industries and keeping in mind
with respect to the acceptance of the candidates of the Shareholder’s Proposal. However, Topy
Industries notified us that, unless we abandon the reappointment of three (3) director
candidates (two (2) of which are Independent Outside Directors) of the Company Proposal,
Topy Industries will not agree to a resolution through dialogue.
Considering such negotiation process, it is obvious that Topy Industries is recommending
the appointment of three (3) director candidates who are under the strong influence of Topy
Industries and, at the same time, is opposing the appointment of at least three (3) director
candidates of the Company Proposal and, therefore, the actual purpose of the Shareholder’s
Proposal is to dissolve the current management structure of our company. Under suchcircumstances, as explained below, there is a risk that the reform we have worked on may fall
through, and the motivation of our company’s employees may seriously decline, and that thisin turn may invite a situation in which the common interests of all of the stakeholders of ourcompany, including the proposing shareholder, Topy Industries, will be undermined.
In addition, our company will lose its independence as a listed company.
Therefore, the Board of Directors opposes the Shareholder’s Proposal.
2．The best way forward is to continue the business structure reform with the current
management
Since before, in anticipation of the future movement of the domestic electric furnacebusiness, our company has worked to build a relationship with Topy Industries, especiallyconsidering that developing our business while keeping the independence of our management
intact will contribute to the improvement of the corporate value of our company as well as
Topy Industries. In particular, under a business environment where electric furnaces are
drawing more attention from the perspective of SDGs, our company’s current management has
been making efforts with the aim of business structure reform in order to play a central role inregional recycling of iron resources, and we believe that such efforts of our company aimed at
the increase of our corporate value will directly lead to the corporate value of Topy Industries,
which holds our company as an equity method affiliate.
On the other hand, since our company and Topy Industries are also both listed companies,
from the perspective of establishing appropriate governance in the capital relationship, ourcompany has secured the fairness, transparency and objectivity of the process regarding thenominating and compensation of directors and executive employees, and has established a
Nomination and Compensation Committee (the chairman of which is an Independent Outside
Director) composed of two (2) Independent Outside Directors, one (1) Outside Director, andone (1) Director, as a non-binding advisory board for the board of directors. We have also
strengthened the structure through which the director candidates our company proposes will
[Translation]- 18 -

be determined on the basis of the advice and recommendations of the Nomination andCompensation Committee.
All of the five (5) director candidates our company proposes were determined through suchcareful consideration as part of our company’s governance structure, and have high levels of
ethics and experience, expertise and knowledge necessary for performance of their duties. Suchfive (5) candidates have knowledge and experience in corporate management, global business,
techniques and production, finance and accounting, legal affairs and risk management, andhuman affairs and labor issues, and their composition from a personnel perspective is wellbalanced as a whole.
Of the five (5) director candidates we propose, three (3) are Outside Directors and two (2)are Independent Outside Directors, so the majority of director candidates are Outside Directors
and one third or more consist of Independent Outside Directors. We consider that having agood balance of experience, expertise and knowledge is necessary for corporate management
and, in order to resolve the governance issue resulting from the capital relationship structurein which Topy Industries holds our company as an equity method affiliate, ensuring that thecomposition of the Board of Directors gives due consideration to the protection of the interestsof minority shareholders with a high level of independence will lead to the improvement of thecorporate value of our company and Topy Industries, in other words, it is in the common
interest of all of the stakeholders, including the shareholders of both companies.
With such recognition, our company has developed the long-term vision “Metal Vision 2030
<Kizuna>” and the medium-term business plan “<Kizuna>2024” as our company’s own path
toward the continuous improvement of the corporate value of our company. Under the longterm vision “Metal Vision 2030 <Kizuna>” and medium-term business plan “<Kizuna>2024”,
we believe that, under the rapidly changing discontinuous and uncertain business environment
where the domestic economy is contracting due to the falling birth rate and the aging
population, as well as the increase in natural disasters due to climate change, we cannot deal
with such issues by simply extending the management of the past. Accordingly, under suchlong-term vision and medium-term business plan, by applying our business foundation andbrand power fostered in the region for years, and through cooperation with our business
partners, we will broadly shift and renovate our business portfolio by developing new
businesses, such as the expansion of sales of processed products, new products and the resource
recycling business and aim for the establishment of a new business foundation.
In order to be able to continue to grow and develop as an independent listed company, ourcurrent management has actively engaged in business structure reform based on the long-term
vision “Metal Vision 2030 <Kizuna>” and the medium-term business plan “<Kizuna>2024”.
In particular, aiming for a departure from a management structure over-dependent on the bar
steel business, which is difficult to differentiate, we have been strengthening the processed
product business by enhancing a standardized business process from raw materials toprocessed products. In relation to such strengthening, in order to consolidate the management
and indirect departments which are dispersed in each of the group companies, and to optimize
the costs of the entire group, on October 1, 2019, we absorbed and merged with ourconsolidated subsidiaries, Hokuetsu Kogyo Co., Ltd. and Hokuetsu Tunbuckle Co., Ltd. As aresult of such business structure reform, we succeeded in reducing the head office costs byseven percent (7%) in the fiscal year ending in March 2022 (the selling, general andadministrative expenses, excluding temporary transfer costs) compared to that of the fiscal
year ending in March 2018, which is the first year Mr. Tanahashi became the Representative
Director of our company (excluding the costs of Kotecs Co., Ltd. which became our wholly
owned subsidiary in April, 2020).
In addition, while in the past, we have procured the oxygen necessary for the operation of
the electric furnace from affiliates in our group, and have used both PSA oxygen and liquid[Translation]- 19 -

oxygen, which is relatively expensive in cost, by assembling and absorbing part of such
affiliates, we now self-manufacture PSA oxygen, and, by performing a stable and energyefficient operation, we have reduced our environmental impact as well as our costs.
Furthermore, we have actively carried out M&A and alliances with other companies at theinitiative of the management, such as by making Kotecs Co., Ltd., a sales company of highstrength iron materials, a subsidiary, through the business alliance with Kyowa Concrete
Industry Co., Ltd., a company engaged in a different business, through the expansion of ourbusiness scope through the establishment of Innovas Co., Ltd., a joint venture company with
Kyowa Concrete Industry Co., Ltd., and through the renewal of a high-voltage substation at
low cost under an umbrella agreement with a group company of Tokyo Electric Power
Company Holdings, Inc.
In addition to the above, amid an increase in mandatory carbon neutrality, we are also newly
proceeding with challenging projects such as exhaust heat recovery and efficient use of CO2
through an academic-industrial alliance with a local university and joint research with business
partners.
These business structure reforms are starting to achieve successful results despite an
extremely difficult management environment due to the novel coronavirus pandemic, Russia’s
invasion of Ukraine, and the escalating price of iron scraps, materials and energy. However,there are many projects that are still only half-complete and in order for our company tocontinue to develop, it is necessary to complete this business structure reform with a sense ofurgency. Since strong leadership, the ability to execute, and motivation is required for the
implementation of this business structure reform, we are convinced that allowing the current
management, which has these abilities, to continue to strongly implement the reform will
improve our company’s medium to long-term corporate value and will lead to the best interestof the shareholders, including Topy Industries.
From these perspectives, it is not appropriate to dissolve the current management structure.
3 ． The Shareholder’s Proposal may interfere with the performance of the in-house
employees
Under the current circumstances of rapidly and significantly changing business environment,such as digitalization and SDGs, we consider that the importance of the performance of the inhouse employees are increasing more than before. In order for our company to increase theorganization strength and to continue to grow and develop, it is essential to discover andcultivate many human resources for management from in-house employees and to selectleaders of the next generation who will cultivate the growth of our company. As such, in 2020,
our company has started a program to develop candidates for next generation management
personnel and has established a structure to continue to produce human resources for
management systematically. In addition, from this fiscal year, by jointly conducting
educational program for candidates of leaders who will support next generation leaders andcultivate the next generation, we have also started strengthening to establish a cycle to develop
human resources for management. We will continue to provide more opportunities for
performance and motivation to the in-house employees by continuing to discuss theadvisability of the nomination of in-house employees as managing personnel and executive
officers.
On the other hand, our company emphasizes on exchanges of personnel and establishmentof cooperative relationships with other companies and has been accepting several executive
officers from Topy Industries, the proposing shareholder, since before. Obviously, ourcompany’s attitude to emphasize relationships with stakeholders including Topy Industries has
not changed even now. However, our company considers that the practice of “Ama-kudari”,[Translation]- 20 -

where personnel from Topy Industries serve as executive officers in our company for a shortterm and automatically retire in accordance with Topy Industries’ retirement age for executive
officers, or token acceptance of executive officers which may be deemed as “Koshi-kake”,
where such personnel from Topy Industries reside in our office for a certain period and then
are replaced automatically, may cause issues of management consistency and may cause
negative effects taking away the opportunities for performance from in-house employees andlower their motivation.
In this regard, if it becomes a situation that the current management structure is dissolved
and directors of the Shareholder’s Proposal are appointed, it may create anxiety among our
employees that “Ama-kudari” or “Koshi-kake” mentioned above may become the majority of
our company’s executive officers (For example, Topy Industries admits that Mr. Daido, one of
the candidates of the Shareholder’s Proposal, will serve as the director of our company forseveral years and then automatically retire in accordance with the retirement age of Topy
Industries regardless of our company’s business environment etc.).
This runs counter to the flow of the growth strategy our company proceeds with, the core ofwhich is the human resources development program for the in-house employees, and it will
have a significant adverse impact from the perspective of our company’s medium-to long-term
creation and improvement of corporate value.
Therefore, we consider that it is inappropriate to dissolve the current management structure
and appoint the candidates of the Shareholder’s Proposal as our company’s directors.
4．The Shareholder’s Proposal is solely for the benefit of Topy Industries and may also
impair the independence of our company
Topy Industries is a major shareholder of our company holding 35.11% of our company’s
voting rights together with its subsidiaries. Under the background of such capital relationship,
as mentioned above, we have continued to accept executive officers from Topy Industries.
On the other hand, as an independent listed company, our company has proceeded withimprovement of further governance based on the recent request from the Tokyo Stock
Exchange for the governance reformation in order not to impair the interest of the minority
shareholders other than Topy Industries. More specifically, as mentioned above, we have
improved the objectivity and fairness of the composition of the Nomination and Compensation
Committee and we also consider that even with respect to personnel recommended by Topy
Industries, we should not accept them blindly but the appropriate way is to have a process offair discussion regarding the appointment of executive officers at the Nomination andCompensation Committee and the decision at the Board of Directors.
Our company views that personnel exchange between our company and Topy Industries, themajor shareholder of our company, fulfils two (2) requirements, that is, the cooperative
structure based on the capital relationship mentioned above and our company’s independence
as a listed company.
While we have been conducting a review of the future relationship between Topy Industries
and our company based on the above view, in February 2021, Topy Industries requested us toaccept Topy Industries’ executive officers as our company’s directors. The reasons for therequest by Topy Industries were the following three (3):(i)
Topy Industry would like to have their executive officers study the positions of
directors of our company and after two (2) years, transferred back;(ii)
Topy Industries would like to review the policy regarding our company’s shares
held by Topy Industries; and(iii)
Our company should accept Topy Industries’ demands in light of the shareholding
ratio of Topy Industries in our company.
[Translation]- 21 -

We determined that although Topy Industries is our largest shareholder, the reasons from (i)to (iii) above do not consider the interests of our company (furthermore, the interests of all of
the shareholders of our company), and through discussion among all the directors including
Outside Directors, we declined such proposal.
The request by Topy Industries regarding the appointment of our company’s executive
officers continued thereafter and we received inappropriate interventions such as, our company
should apply the same retirement age of executive officers as Topy Industries although ourcompany is not a subsidiary of Topy Industries, and Mr. Tanahashi, the representative directorof our company, must submit to the Nomination and Compensation Committee the personnel
proposal of executive officers reflecting the intent of Topy Industries.
Under such circumstances, just as we were seeking measures aiming to improve therelationship between Topy Industries and our company, we received the Shareholder’s
Proposal.
After the Shareholder’s Proposal was submitted, reflecting the intent of Topy Industries, thelargest shareholder, we have also considered to operate the Board of Directors for the next term
as a place for substantive discussion aiming for the improvement of the common interests ofall of the stakeholders of both companies associated with continuous improvement of thecorporate value of both companies, and we have continued exchanging opinions and discussion
with Topy Industries also regarding appointment of all eight (8) candidates in total, thecandidates of the Company Proposal and the candidates of the Shareholder’s Proposal.
However, during such discussion, Topy Industries requested us to have three (3) (two (2) ofwhich are Independent Outside Directors) of the four (4) directors comprising the Nomination
and Compensation Committee to retire and didn’t make any concession.
Considering such background, it is obvious that Topy Industries is seeking to substantiallyexclude our company’s current management structure including two (2) Independent Outside
Directors and to control the Board of Directors of our company on the ground that our
Nomination and Compensation Committee didn’t follow the intent of Topy Industries.
We consider that the process of determining the appointment of the executive officers on thebasis of the fair opinion of the Independent Outside Directors is essential as our company’s
governance mechanism in order to protect the interests of minority shareholders and therefore,
we oppose to the Shareholder’s Proposal which seeks to exclude such mechanism.
5．Our company respects the cooperative structure with Topy Industries
Although there is a statement in the Shareholder’s Proposal to the effect that our company
disrespects the cooperative structure with Topy Industries, such statement is incorrect. Between
Topy Industries and our company, the factual cooperative structure based on the abovementioned capital relationship has been established and we do not deny the usability of suchcooperative structure. Actually, among Topy Industries and our company, at the field level,
improvement proposal at factories, constant exchange such as participation in small group
activities and information exchanges, etc., have been conducted. Also, recently, there werediscussions between Mr. Daido of Topy Industries and Mr. Takenaka, the executive director of
our company, regarding cooperative structure in order to achieve business synergies of bothcompanies based on the guidelines such as Corporate Governance Code and Fair Disclosure
Rule, etc. In addition, when equipment failure and an accident resulting in the death of an
employee occurred in 2021 at our company, we immediately notified Topy Industries first anddealt with the resolution of such issues based on the advice of Topy Industries.
Although it is obvious that as an independent listed company, there is business information
which we cannot disclose even to our major shareholder, Topy Industries, under suchcircumstances, we are seeking for the cooperative structure in order to maximize both interests[Translation]- 22 -

based on the current situation of the electric furnace business field, and we will keep andenhance such structure from now on.
The Shareholder’s Proposal intends to have three (3) (including two (2) Independent Outside
Directors) of the four (4) directors comprising the Nomination and Compensation Committee
who do not follow the intent of Topy Industries retire under the name of “Restructuring ofcooperative structure”, and its content is to dissolve the current management structure and to
make those who are under the strong influence of Topy Industries the majority of the Board of
Directors. Thus, in case the Shareholder’s Proposal is passed, under the name of the“cooperative structure”, it may lead to a result in which the interests of our company as well
as all of the shareholders of our company would be undermined.
Therefore, the Board of Directors of our company opposes the Shareholder’s Proposal.

[Translation]- 23 -

Proposal No.5: Election of One (1) Substitute Company Auditor(1) Outline of the proposal
The following shall be elected as our substitute company auditor:
Tsuyoshi Nakamura.
(2) Reason for the proposal
The appointment of Tsuyoshi Nakamura, who was elected as a substitute company auditor atour 102nd annual shareholders’ meeting held on June 21, 2018, is effective until thecommencement of our 106th annual general meeting of shareholders scheduled to be held on
June 2022. Therefore, we propose the election of one substitute company auditor in case there
is a shortfall in the number of company auditors specified by law. This appointment may be
rescinded by a resolution of the board of directors with the consent of the company auditors’
meeting only before assuming office.
(3) Name, brief history, etc. of candidate
Candidate
NumberName(Date ofbirth)

Brief history(Positions and responsibilities and important positions of otherorganizations concurrently held)
April 1983
April 2016

1

Joined Topy Industries
Executive Officer, Manager of Technology
Management Division
July 2016
Executive Officer, Manager of Technology
Tsuyoshi
Division
Nakamura
April 2018
Executive Officer, Manager of Steel Business(April 2,
Division
1960)
April 2020
Managing Executive Officer, Manager of SteelBusiness Division
April 2021
Managing Executive Officer, Manager ofCorporate Planning Division
April 2022
Senior Executive Officer (current)(Important positions of other organizations currently held)
Senior Executive Officer of Topy Industries(Reasons for nomination as a Substitute Company Auditor candidate and summaryof expected roles)
Mr. Nakamura specialized in steel making technology for electric furnaces at the
Steel Business Division of Topy Industries, his expertise is well known to theindustry, and he has attracted a number of investments in steel. Mr. Nakamura also
has ample knowledge of Topy Industries’ overall technology as well as a large
network of contacts. Mr. Nakamura is expected to strengthen the Company’s audit
function through advice for securing the legality and adequacy of the decision
making of the Board of Directors and comments to the Board of Auditors.

Number ofshares of theCompany heldby Candidate

Notes:
1.
Mr. Tsuyoshi Nakamura has no special interest with the Company.
2.
Mr. Tsuyoshi Nakamura is a Substitute Outside Company Auditor candidate.

[Translation]- 24 -

0 shareOpinion of the Board of Directors regarding Proposal No.5
The Board of Directors opposes this Proposal.
The candidate of substitute company auditor which our company proposes as the candidateof Outside Company Auditor has deep knowledge of the electric furnace business fostered by
the past experience and high management capability.
The candidate of substitute auditor in the Shareholder’s Proposal is a senior executive officerof Topy Industries. In addition, two (2) of the three (3) current auditors of our company arefrom Topy Industries. Such proposal intends nothing but to occupy almost all of the members’seats of the Board of Directors together with the director candidates of the Shareholder’s
Proposal.
Therefore, the Board of Directors of our company opposes the Shareholder’s Proposal.

[Translation]- 25 -

The above represents an excerpted translation, for reference andconvenience only, of the original notice issued in Japanese. We did ourutmost to ensure accuracy in our translation and believe it to be of thehighest standard. However, due to differences of accounting, legal, andother systems as well as of language, this English version might containinaccuracies, and therefore, might be inconsistent with the original
intended in Japanese. In the event of any discrepancies between theJapanese and English versions, the former shall prevail as the official
version.

[Translation]- 26 -