TSE Code 8511
May 31, 2018

To Shareholders
President
Eizo Kobayashi
JAPAN SECURITIES FINANCE CO., LTD.
1-2-10, Nihonbashi-Kayabacho, Chuo-ku, Tokyo, JapanNOTICE OF THE 108th ORDINARY GENERAL MEETING OF SHAREHOLDERS～extract
Dear Shareholders,
You are hereby advised of the convocation of the 108th Ordinary General Meeting of Shareholders of theCompany, details of which are indicated below. We hope very much that you will be able to attend thisMeeting.
In order to exercise your rights, please review the attached reference materials, and indicate yourapproval or disapproval of the proposals on the enclosed document, then return it or vote on the Internet site(https://www.e-sokai.jp) by 5:20 p.m. Japan Standard Time on 21 June, 2018.
We are pleased to announce you that we participate in the ICJ voting platform, improving the voting
environment for all our shareholders.

The ICJ is offering access to the world's most widely used andsophisticated electronic voting platform, Broadridge's Proxy Edge voting platform.

－1－

Details

1 Date and Time:

10:00 a.m. on Friday, 22rd June, 2018

2 Venue:JAPAN SECURITIES FINANCE CO., LTD., Conference Room
1-2-10 Nihonbashi-Kayabacho, Chuo-ku, Tokyo, Japan

3 Agenda for the Meeting
Items to be reported:

Report 1:

The 108th fiscal year (from Apr. 1, 2017 to Mar. 31, 2018)
Business Report, Consolidated Financial Statements andReport of audits of the consolidated financial statements by
the Independent Auditor and the Board of Auditors.

Report 2:

The 108th fiscal year (from Apr. 1, 2017 to Mar. 31, 2018)
Financial Statements.

Items to be resolved:

4 Notes on the Execution

Agenda1:

Appropriation of Retained Earnings

Agenda2:

Partial amendments to the Articles of Incorporation

Agenda3:

Election of nine Directors

Agenda4:

Election of one Audit & Supervisory Board Member

Agenda5:

Election of one Substitute Audit & Supervisory Board Member

Please refer to “ Notes on the Execution of Votes” on page 24

of Votes
Note: This English version is not a legally accurate translation of the original Japanese text.

－2－

REFERENCE DOCUMENTS PERTAINING TO EXERCISE OF VOTING RIGHTS
Agenda and Reference Information

Agenda 1:

Appropriation of Retained Earnings

The Company proposes the appropriation of retained earnings in the following manner.
Year-end dividend
The Company considers the long-term, stable return of profits to shareholders to be among its mostimportant management tasks and therefore has a basic guideline of paying dividends according to results after
provisioning the capital and interval reserves that it requires as a financial institution. Concretely, Our dividend
policy is to return profits to shareholders, with the “Consolidated Payout Ratio” of not less than around 60%, asa standard that reflects our business performance, but also taking account of the “Dividend on Equity Ratio”.
Following the above basic policy, Company’s year-end dividends will be calculated at 17 yen per share.
Accordingly, annual dividends which include the interim dividends of 9 yen per share will be calculated at 26
yen per share (a 8 yen increase from previous fiscal year).
(1) Type of dividend asset
Cash(2) Allocation of dividend assets and total amount of allocation
17 yen per share of common stock
Total amount of payout: 1,620,563,199 yen(3) Effective date of dividend payment
June 25, 2018

－3－

Agenda 2:

Partial amendments to the Articles of Incorporation

1. Purpose of amendment of the Articles of Incorporation：(1) In order to increase the convenience of all of its shareholders, the Company will introduce a system toallow its shareholders to additionally purchase shares less than one unit and therefore will propose theestablishment of new Articles concerning the system (Proposed amendment to Article 9 (4) and Article
10).
(2) For the purpose of facilitating the recruitment of appropriate persons as Directors (excluding

Executive Directors, etc.) and Audit & Supervisory Board Members and allowing them to fully
perform their expected roles, Article 30 (Limitation of Liability of Directors) and Article 38 (Limitationof Liability of Audit & Supervisory Board Members) of the Articles of Incorporation are newly
established as articles enabling Limitation of Liability Agreements to be concluded between the
Company, and its Directors (excluding Executive Directors, etc.) and Audit & Supervisory Board
Members.
The addition of Article 30 (Limitation of Liability of Directors) has been approved by all members of

the Audit & Supervisory Board.
(3) Because of the addition of the above newly-established articles, the articles thereafter will be

renumbered accordingly.
2. Details of amendments of Articles of Incorporation
The amendment details are as follows：(The proposed amended language is underlined)
Current

Proposed Amendment

Article 9. (Rights with respect to Fractional Shares)

Article 9. (Rights with respect to Fractional Shares)(1) to (3) (Text of Articles omitted)(1) to (3) (Same as present)(Newly established)(4) right to make a request as provided for inaccordance with Article 10(Newly established)

Article 10. (Request for Purchase by Shareholders of
Shares Constituting Less than One Unit)
Shareholders who hold Shares Constituting Less than
One Unit of the Company may, as provided for by the
Stock Transaction Rules, request the Company to sellto them a number of shares which, in combination
with the number of Shares Constituting Less than One
Unit already held by them, will constitute the numberof shares constituting a full One Unit.

Articles 10 to 28. (Text of Articles omitted)

Articles 11 to 29.

－4－

(Newly established)

Article 30. (Limitation of Liability of Directors)
The company may, in accordance with the provisionsof Paragraph 1 of Article 427 of the Corporations Law,
conclude agreements with Directors (excluding
Executive Directors, etc.) limiting their liability ofdamages, as described in Paragraph 1 of Article 423of the Corporation Low; provided that the limitation of
liability for damages in the agreements shall be basedon the amount prescribed by relevant laws andregulations.

Articles 29 to 35. (Text of Articles omitted)(Newly established)

Articles 31 to 37.
Article 38 (Limitation of Liability of Audit &Supervisory Board Members)
The company may, in accordance with the provisionsof Paragraph 1 of Article 427 of the Corporations Law,
conclude agreements with Audit & Supervisory

Board Members limiting their liability of damages, as
described in Paragraph 1 of Article 423 of the
Corporation Low; provided that the limitation of liability
for damages in the agreements shall be based on theamount prescribed by relevant laws and regulations.
Articles 36 to 38. (Text of Articles omitted)

Articles 39 to 41. (No amendment of the text)－5－Agenda 3: Election of nine Directors
As the term of office of nine directors will expire at the conclusion of this Ordinary General Meeting of
Shareholders, the Company proposes the election of nine directors.
The candidates are as listed below.
[Reference] List of director candidates
Name

1

Minoru Masubuchi

Representative Director
Chairperson

Reappointment

2

Eizo Kobayashi

Representative Director
President

Reappointment

3

Shunichiro Higuchi

Current Position

Attributes of the Candidate

No.

Representative Director
Vice President

Responsibility for Audit Dept. andCompliance Dept.

Reappointment

Managing Director
4

Kenji Fukushima

Responsibility for Margin Loan Dept.,
Institutional Sales Dept., Retail
Business Dept. andInformation Systems Planning Dept.,
Osaka Branch (related to Sales)

Reappointment

Managing Director

Responsibility for Risk Management
Dept., Human Resources Dept.,
Corporate Planning Dept. and Affiliates,
Osaka Branch (related to management
and administration)

5

Kazuhiro Maeda

6

Yutaka Okada

Advisor

7

Takashi Imai

Director

8

Tetsuo Mae

Director

9

Eiko Shinotuska

Director

Reappointment

New appointment
Reappointment

Outside Director

Independent
Reappointment

Outside Director

Independent
Reappointment
Independent－6－

Outside Director

No.

Name
(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)May. 1993

May. 1994

Minoru Masubuchi(Nov. 3, 1943)
Reappointment

1Jul. 1998
Jul. 2002
Jun. 2004
Jun. 2005
Jun. 2006

Jun. 2008
Jun. 2012

Adviser to Governor of Market
Operations Dept., Bank of Japan(BOJ)
Director-General of Financial andPayment System Dept., BOJ
Executive Director of BOJ
Standing Adviser of IBM Japan, Ltd.
President of JSF
Director of JSF Trust and Banking
Co., Ltd.
Director of Japan Information
Processing Service Co., Ltd.
(to the present)
Director of Nihon Building Co., Ltd.
(to the present)
Chairperson of JSF (to the present)

Number ofCompany
Shares owned

71,000(Significant concurrent positions)
Director of Nihon Building Co., Ltd.
Director of Japan Information Processing Service
Co., Ltd.
Director of Tokyo Rope Manufacturing Co., Ltd.
【Reasons for Nomination as the Candidate】
Minoru Masubuchi filled key posts such as Executive Director of BOJ, through which he gained
abundant insights and experiences in financial and securities sector. In addition, he has been
involved in the management of the company as the President since 2004, as the Chairperson since2012. Then the Company selected him as a candidate, believing that he will contribute to its
management as a Director.

No.

Name
(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)May. 1999
May. 2000

Eizo Kobayashi(Sep 8, 1948)

Jun. 2002
May. 2006
Jul. 2007
May. 2010
Jun. 2010

Reappointment

2

Jun. 2012

Director-General of Personnel andCorporate Affairs Dept., BOJ
Director-General of Bank Examinationand Surveillance Dept., BOJ
Executive Director of BOJ
Senior Advisor of Aflac Japan
Vice Chairman of Aflac Japan
Adviser of JSF
Senior Managing Director of
JSF, Responsibility for Risk
Management Dept.
President of JSF (to the present)

Number ofCompany
Shares owned

40,000(Significant concurrent positions)
Director of Fujimori, Inc.

【Reasons for Nomination as the Candidate】
Eizo Kobayashi filled key posts such as Executive Director of BOJ, through which he gained
abundant insights and experiences in financial and securities sector. In addition, he has been
involved in the execution of our business as the Senior Managing Director since 2010. Furthermore,
he has been involved in the management of the Company as the President since 2012. Then the
Company selected him as a candidate, believing that he will contribute to its management as a
Director.
－7－

No.

Name
(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)

Number ofCompany
Shares owned

Jul. 1997
Jul. 2000

3No.

Director-General of Budget Bureau
Manager of Credit System Division,
Planning and Coordination Bureau,
Financial Services Agency of Japan
Jul. 2007
Chief of Kinki Local Finance Bureau,
Shunichiro Higuchi
Ministry of FinanceJul. 2008
President of Policy Research(Nov 2, 1953)
Institute
6,500
Apr. 2011
Visiting Professor of Department of
Reappointment
Cross-Cultural Studies, Faculty of
Policy Studies, Chuo University
Jun. 2012
Executive Managing Director ofLifenet Insurance Company
Jun. 2016
Vice President of JSF
Responsibility for Audit Dept. andCompliance Dept. (to the present)【Reasons for Nomination as the Candidate】
Shunichiro Higuchi filled key posts such as President of Policy Research Institute, through which hegained abundant insights and experiences in financial and securities sector. In addition, he has been
involved in the execution of Lifenet Insurance Company as the Director since 2012. Furthermore, he
has been involved in the management of the company as the Vice President since 2016. Then the
Company selected him as a candidate, believing that he will contribute to its management as a
Director.

Name(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)Apr. 1982
Feb. 2008

4

Number ofCompany
Shares owned

Joined JSF
General Manager of Margin Loan
Dept.
Jun. 2011
Executive Officer & General Manager ofInformation Systems Planning Dept.
Jun. 2015
Executive Officer & General Manager
Kenji Fukushima
of Planning Dept.
Jun. 2016
Managing Director of JSF(Nov. 28, 1959)
Responsibility for Margin Loan Dept.,
30,100Institutional Sales Dept., Retail
Reappointment
Business Dept. and Information
Systems Planning Dept.
Jun. 2017Managing Director of JSF
Responsibility for Margin Loan Dept.,
Institutional Sales Dept., Retail Business
Dept. and Information Systems Planning
Dept., Osaka Branch (related to Sales)(to the present)【Reasons for Nomination as the Candidate】
Kenji Fukushima has thorough knowledge of our business, has been involved in the execution of ourbusiness as an Executive officer since 2011. Furthermore, he has been involved in the managementof the Company as the Director since 2016. Then the Company selected him as a candidate,believing that he will contribute to its management as a Director.

－8－

No.

Name
(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)Apr. 1982
Jun. 2007
Jun. 2011

Kazuhiro Maeda

Jun. 2016(Jul. 30, 1959)
Reappointment
Jun. 2017

5

Joined JSF
General Manager of General Affairs
Dept
Executive
Officer&
GeneralManager of General Affairs Dept.
Managing Director of JSF
Responsibility for Risk Management
Dept., Human Resources Dept.,
Corporate Planning Dept. and
Affiliates

Number ofCompany
Shares owned

33,290Managing Director of JSF
Responsibility for Risk Management
Dept., Human Resources Dept.,
Corporate Planning Dept. and Affiliates,
Osaka Branch (related to management
and administration) (to the present)【Reasons for Nomination as the Candidate】
Kazuhiro Maeda has thorough knowledge of our business, has been involved in the execution of ourbusiness as an Executive officer since 2011. Furthermore, he has been involved in the managementof the Company as the Director since 2016. Then the Company selected him as a candidate,believing that he will contribute to its management as a Director.

No.

Name
(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)Nov.2010
May.2013

Yutaka Okada(Feb, 20 1965)

Jun.2014
Aug.2015

New appointment

6

May.2018

General Manager of Matsue Branch,
BOJ
Deputy Director-General ofOperations Dept., BOJ
Deputy Director-General of Financial
Markets Dept., BOJ
Director-General of Currency Issue
Dept., BOJ
Advisor of JSF (to the present)

Number ofCompany
Shares owned－【Reasons for Nomination as the Candidate】
Yutaka Okada, filled Deputy Director-General-level posts since 2013 at BOJ, has thoroughunderstanding of international operations and settlement system. He also has abundant insights andexperiences in financial and securities sector. Then the Company selected him as a candidate,believing that he will contribute to its management as a Director.

－9－

No.

Name
(Date of birth)

Takashi Imai

(Dec. 23, 1929)

Career Summary, Positon and Duty
(Significant concurrent positions)Jun. 1993
Apr. 1998
May. 1998
May. 2002

Reappointment

Jun. 2002
Apr. 2003

Candidate for
Outside Director

Jun. 2003

Candidate for
Independent Director

Jun. 2008[Attendance at the BOD meetings]

7

President of Nippon Steel Corp.
Chairman of Nippon Steel Corp.
Chairman of Nippon Keidanren(Japan Business Federation)
Honorary Chairman of Nippon
Keidanren (to the present)
Director of JSF (to the present)
Director & Senior Adviser / Honorary
Chairman of Nippon Steel Corp.
Senior Adviser (Sodanyaku) /Honorary Chairman of Nippon SteelCorp.
Senior Adviser (Shayuu) / Honorary
Chairman of Nippon Steel Corp.
(to the present)

Number ofCompany
Shares owned

4,000

90.9%
Number of meetings duringof appointment:11
Number of attendance : 10

(Significant concurrent positions)
Director of Nippon Television Holdings, Inc.
Auditor of Nippon Life Insurance Co.
Director of Tokyo Financial Exchange Inc.

[Term of office] 16 years【Reasons for Nomination as the Candidate】
The Company expects that Takashi Imai will provide management supervision and advice to theCompany from a broad perspective based on his abundant knowledge and experience in business
community. The Company selected him as a candidate based on our judgment that he would make acontribution to the management of the Company as an Outside Director given that he meets theCriteria for Independence of Outside Directors set by the Company and is in an objective position,
independent of the executive management of the Company.
【Independence】
He is an independent director in accordance with the rule of the Tokyo Stock Exchange Group, Inc. In
the case this proposal is approved at the General Meeting of Shareholders, he will continue to be an
independent director.

－10－

No.

Name
(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)Jun. 2003

Tetsuo Mae

Jun. 2004(Jul. 25, 1945)
Apr. 2008
Jul. 2010

Reappointment
Candidate forJul. 2011
Jun. 2013

Outside Director
Candidate for
Independent Director

Jul. 2013[Attendance at the BOD meetings]

100%

Jun. 2014

Deputy President of Daiwa Securities
Co., Ltd. & Executive Officer of
Daiwa Securities Group Inc.
Deputy President of Daiwa Securities
Co., Ltd. & Director & Corporate
Executive Officer, Deputy Presidentof Daiwa Securities Group Inc.
Adviser of Daiwa Securities Co., Ltd.
Chairman of Japan Securities
Dealers Association
Chairman of Japan Investor Protection Fund
Chairman of NPO-APROSIS(Association for Promoting Securities
Investment and Study)
Adviser of Daiwa Securities Co., Ltd.
(to the present)
Adviser of Japan Securities Dealers Association(to the present)
Director of JSF (to the present)

Number ofCompany
Shares owned

6,000

Number of meetings duringof appointment:11

8

Number of attendance : 11
[Term of office] 4 years【Reasons for Nomination as the Candidate】
The Company expects that Tetsuo Mae will provide management supervision and advice to theCompany from a broad perspective based on his abundant knowledge and experience in securities
community. The Company selected him as a candidate based on our judgment that he would make acontribution to the management of the Company as an Outside Director given that he meets theCriteria for Independence of Outside Directors set by the Company and is in an objective position,
independent of the executive management of the Company.
【Independence】
He is an independent director in accordance with the rule of the Tokyo Stock Exchange Group, Inc. In
the case this proposal is approved at the General Meeting of Shareholders, he will continue to be an
independent director.
Daiwa Securities Co., Ltd. in which Mr. Tetsuo Mae served as Deputy President until 2008 is one ofour major business partners. The status of transactions between Daiwa Securities Co., Ltd during is
as follows:
1. Transactions with Daiwa Securities Group Inc. of our consolidated total assets in amount are 1%
or below. and 0.5% or below of his total liabilities.
2. Total revenues related to transactions with Daiwa Securities Group Inc. Ltd. of our consolidated
gross sales in amount are approximately 1% and 0.5% or below of his total operating expenses.
3. Total expenses related to transactions with Daiwa Securities Group Inc. of our consolidated grossoperating expenses in amount are 0.5% or below. and 0.1% or below of his gross sales.

－11－

No.

Name
(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)Apr. 1993

Eiko Shinotsuka(May. 1, 1942)

Apr. 1998
Apr. 2001

Jan. 2002

Reappointment

Jul. 2005

Candidate forMar. 2008

Outside Director
Candidate forApr. 2009

Independent Director

Apr. 2010[Attendance at the BOD meetings]

100%

9

May. 2013
Jun. 2015

Professor at Faculty of Human Lifeand Environmental Sciences ofOchanomizu University
Member of the Policy Board, BOJ
Visiting Research Fellow of Japan
Center for Economic Research (tothe present)
Professor at Faculty of Letters andEducation of Ochanomizu University
Outside Auditor of Sumitomo Life
Insurance Co.
Emeritus professor of Ochanomizu
University (to the present)
Executive Director of Japan Legal
Support Center
Commissioners of the National
Personnel Authority
Adviser of the National Personnel
Authority (to the present)
Director of JSF (to the present)

Number ofCompany
Shares owned

500

Number of meetings duringof appointment:11
Number of attendance : 11

(Significant concurrent positions)Audit & Supervisory member of Komatsu Ltd.
Director of Lifenet Insurance Company[Term of office] 3 years【Reasons for Nomination as the Candidate】
The Company expects that Eiko Shinotsuka will provide management supervision and advice to theCompany based on her high level of expertise and abundant experience in finance and economics.
The Company selected her as a candidate based on our judgment that she would make acontribution to the management of the Company as an Outside Director given that she meets theCriteria for Independence of Outside Directors / Auditors set by the Company and is in an objective
position, independent of the executive management of the Company.
According to the above-mentioned reasons, we made the decision that she could adequately carryout her assignment as one of the Company’s Outside Directors, even though she has not been
directly involved in corporate management except for acting as an Outside Director.
【Independence】
She is an independent director in accordance with the rule of the Tokyo Stock Exchange Group, Inc.
In the case this proposal is approved at the General Meeting of Shareholders, she will continue to be
an independent director.
Notes: 1. There are no conflicts of interests between the Company and the above candidates for Directors.
2. If Mr. Takashi Imai, Mr. Tetsuo Mae, Ms. Eiko Shinotsuka will be reappointed as Directors, theCompany will enter into an agreement with each of those three persons, pursuant to Paragraph 1,
Article 427 of the Corporations Law, to limit the amount of the liability for damages stipulated in
Paragraph 1, Article 423 of the said law to the amount set forth in the applicable law under thecondition that “Agenda2: Partial amendments to the Articles of Incorporation” will be approved in theoriginal form.

－12－Agenda 4:

Election of one Audit & Supervisory Board Member

Mr. Masayuki Hamada will resign effective at the closing time of this Ordinary General Meeting of
Shareholders, the Company proposes the election of one Audit & Supervisory Member.
The candidate is as listed below.
The consent of the Audit & Supervisory Board has been obtained for this proposal.
Name(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)Apr. 1983

Joined JSF

Jun.2009

General Manager of Planning Dept.

Jun.2013

Executive Officer & General Manager ofPlanning Dept.

Jun.2015

Executive Officer & General Manager ofCompliance Dept.

Yasuhiro Hirama(Mar. 19, 1961)

Number ofCompany Shares
owned

14,963

New appointment【Reasons for Nomination as the Candidate】
Yasuhiro Hirama has thorough knowledge of our business, has been involved in the execution of our businessas a General Manager since 2009, and an Executive officer since 2011. Then the Company selected him as a
candidate, believing that he will monitor and supervise our business appropriately.
Notes: 1. There are no conflicts of interests between the Company and the above candidate for Audit &Supervisory member.
2. If Mr. Mr. Yasuhiro Hirama appointed as an Audit & Supervisory member, the Company will enter into
an agreement with him, pursuant to Paragraph 1, Article 427 of the Corporations Law, to limit theamount of the liability for damages stipulated in Paragraph 1, Article 423 of the said law to theamount set forth in the applicable law under the condition that “Agenda2: Partial amendments to the
Articles of Incorporation” will be approved in the original form.

－13－

Agenda 5:

Election of one Substitute Audit & Supervisory Board Member

At the commencement of this Ordinary General Meeting of Shareholders, the decision of the 107th Ordinary
General Meeting of Shareholders held on June 23th, 2017 to elect Masato Denawa as Substitute Auditor will
expire. Accordingly, the Company proposes the reappointment of Masato Denawa as Substitute Auditor inorder to provide for the possible case scenario in which the number of incumbent auditors provided by laws or
regulations becomes insufficient.
The candidate is as listed below.
The consent of the Audit & Supervisory Board has been obtained for this proposal.
Name(Date of birth)

Career Summary, Positon and Duty
(Significant concurrent positions)Apr. 1990
Jan. 1999
Jun. 2000
Apr. 2002
Jul. 2007
Sep. 2007

Masato Denawa(Feb. 5, 1964)

Jun. 2008
Apr. 2009
Apr. 2011

Candidate for
Outside Director
Apr.2013
Candidate for
Independent Director
Sep.2014
Jun.2015

Registered Lawyer (Daiichi Tokyo Bar Association)
Joined Okinobu & Ishihara Law Office(currently, Spring Partners)
Partner attorney at Spring Partners (to the present)
Audit & Supervisory member of KinkanCo., Ltd. (to the present)
Lecturer at Keio Univ. Faculty of Law.
Director of Advise Link Co., Ltd. (to the present)
Audit & Supervisory member of Japan Prime
Realty Investment Corp. (to the present)
Substitute Auditor of JSF (to the present)
Lecturer at Keio Law School
Practicing-Attorney-Professor for Civil
Advocacy at the Legal Training andResearch Institute of the Supreme Court ofJapan
Practicing-Attorney-Senior Professor for
Civil Advocacy at the Legal Training andResearch Institute of the Supreme Court ofJapan
Lecturer at Keio Law School
Audit & Supervisory member of Ichikawa
Co., Ltd. (to the present)

Number ofCompany Shares
owned

―

(Significant concurrent positions)Audit & Supervisory member of Ichikawa Co., Ltd.
【Reasons for Nomination as the Candidate】
The Company asks for his election in expectation of his special knowledge and abundant experience as alawyer.
【Independence】
In the event of the candidate becoming elected, upon assumption of office in case that the number ofincumbent auditors provided by laws or regulations becomes insufficient, the Company will register him with
the Tokyo Stock Exchange as Independent Director.
Notes: 1. There are no conflicts of interests between the Company and the above candidate for Audit &Supervisory member.
2. If Mr. Masato Denawa appointed as a substitute Audit & Supervisory member and in case that heassume the position of Audit & Supervisory member , the Company will enter into an agreement withhim, pursuant to Paragraph 1, Article 427 of the Corporations Law, to limit the amount of the liability
for damages stipulated in Paragraph 1, Article 423 of the said law to the amount set forth in theapplicable law under the condition that “Agenda2: Partial amendments to the Articles of Incorporation”
will be approved in the original form.

－14－

（reference）

Criteria for Independence of Outside Directors
Anyone who meets any of the following criteria, in addition to the independence criteria prescribedby the Tokyo Stock Exchange, Inc. shall not be deemed to be independent by JSF.
１． A person who is currently:(1) Major shareholder
 A person who is a major shareholder of JSF(i.e., a shareholder who holds 10% or more of
voting rights), or, if that person is an Juridical Person, Etc., an executive director, officer, orother person engaged in the execution of business of that Juridical Person, Etc..
(2) Major Business Partners
 A person who has JSF as a major business partner (whose transactions with JSF in the lastbusiness year exceeded 2% of JSF’s consolidated gross sales in amount) , or, if that person
is an Juridical Person, Etc., an executive director, officer, or other person engaged in theexecution of business of that Juridical Person, Etc..
 A person who is a major business partner of JSF(whose transactions with JSF in the lastbusiness year exceeded 2% of his consolidated gross sales in amount) , or, if that person is
an Juridical Person, Etc., an executive director, officer, or other person engaged in theexecution of business of that Juridical Person, Etc..
(3) Specialist
 A consultant, accounting expert or legal expert who has received money or other property
from JSF more than JPY 10 million per one fiscal year, or, if that person is an Juridical
Person, Etc., an executive director, officer, or other person engaged in the execution ofbusiness of that Juridical Person, Etc..
(4) Donations
 Anyone who has received donations from JSF more than JPY 10 million per one fiscal year,
or, if that person is an Juridical Person, Etc., an executive director, officer, or other person
engaged in the execution of business of that Juridical Person, Etc..
(5) Close Relative A close relative of any person (spouse, family within the second degree) who falls under anyof (1) through (4) above
２． A person who has fallen under any item of (1) through (5) at any time within the past three years
End

－15－

CONSOLIDATED BALANCE SHEETSAs of March 31, 2018ASSETS
Current assets:
Cash
Call Loans
Short-term investments
Operating loans
Deferred tax assets
Collateral money for securities borrowed
Other current assets
Allowance for doubtful receivables
Total current assets
Non-current assets:
Tangible non-current assets:
Buildings and structures
Tools, furniture and fixtures
Land

Millions of Yen

777,895
95,00060,817
1,002,931
767
2,168,170
57,790(1,118)4,162,254

2,479
544
3,264
6,288

Intangible non-current assets:
Software
Software in progress
Other intangible non-current assets

3,324
533
26
3,884

Investments and other assets:
Investments in securities
In-house loan
Fixed operating claims
Other investments and other assets
Allowance for doubtful receivables

787,231
5
678
1,264
(678)
788,501

Total non-current assets
Total Assets

798,674
4,960,928－16－

As of March 31, 2018
LIABILITIES AND NET ASSETS
Current liabilities:
Call Money
Short-term borrowings
Commercial paper
Accrued income taxes
Allowance for bonuses (Employees)
Allowance for bonuses (Directors & Executive Officers)
Collateral money received for securities lent
Borrowed money from trust account
Other current liabilities
Total current liabilities
Non-current liabilities:
Long-term Borrowings
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Allowance for officers retirement rewards
Stock benefits accrued
Liabilities for retirement and severance benefit
Asset retirement obligations
Derivative financial instruments
Other non-current liabilities
Total non-current liabilities
Total liabilities

Millions of Yen

771,414
15,510459,000
620
630
117
2,505,135
961,61178,412
4,792,452

3,000
10,395
74
41
98
301
51
10,078625
24,665
4,817,117

Net assets:
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gain on other securities
Deferred loss on hedges
Gain on revaluation of land
Accumulated amount for adjustment retirement and severance benefit
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets－17－

10,00011,325
108,588(3,094)
126,819

24,484(7,242)
168(417)
16,991
143,811
4,960,928

CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended March 31, 2018
Operating revenues
Operating expenses
Operating profit
General and administrative expenses
Operating income
Non-operating revenues
Interest received and dividends received
Miscellaneous revenues

Millions of Yen

26,333
13,33013,002
9,121
3,881

642
162
814

Non-operating expenses
Miscellaneous expenses

9
9
4,685

Recurring income
Extraordinary profit
Gain on sales of investment securities
Gain on liquidation of investment securities

5
128
133

Extraordinary loss
Loss on sales of investment securities

2
2

Income before income taxes
Income taxes
Current
Deferred

4,817
938
(346)
592

Income before minority interests
Minority interests

4,225
－

Net income

4,225

－18－

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Millions of Yen
Shareholders’ equity

Common stock
Balance at April 1, 2017

Additional
paid-in capital

10,000Retained earnings

Treasury stock

Total
shareholders’equity(2,207)125,314106,196

11,325

Changes arising during the year:
Cash dividends(1,833)(1,833)Net Income

4,225

4,225

Purchase of treasury stock

(892)

(892)

Retirement of treasury stock

5

5

Net changes other than shareholders’equity
－

－

2,391

(887)

(1,504)10,00011,325

108,588(3,094)

126,819

Total changes during the year
Balance at March 31, 2018

Accumulated other comprehensive income
Gain onNet unrealized
gain or loss on Deferred gains or revaluation of
land
securities
losses onhedgesBalance at April 1, 2017

19,736(5,083)168

Remeasurementsof defined
benefit plans

Total accumulated
other comprehensive
income(423)

14,397

Total net assets
139,712

Changes arising during the year
Cash dividends(1,833)Net Income

4,225

Purchase of treasury stock(892)

Retirement of treasury stock5

Net changes other thanshareholders’ equity
Total changes during the year
Balance at March 31, 2018

4,747

(2,159)

－

5

2,594

2,594

4,747

(2,159)

－

5

2,594

4,098

24,484(7,242)

168

(417)

16,991

143,811－19－

NON-CONSOLIDATED BALANCE SHEETSAs of March 31, 2018ASSETS
Current assets:
Cash
Short-term investments
Loan for margin transactions
Bond financing and General loans
Other loans
Deferred tax assets
Collateral money for securities borrowed
Other current assets
Allowance for doubtful receivables
Total current assets
Non-current assets:
Tangible non-current assets:
Buildings and structures
Tools, furniture and fixtures
Land

Millions of Yen

419,818
38,702519,590
57,142
1,000
671
2,168,170
51,193(965)
3,255,325

1,796
462
503
830

Intangible non-current assets:
Software
Software in progress
Other intangible non-current assets

3,853
3,292
536
24

Investments and other assets:
Investments in securities
Shares in affiliates
Other investments and other assets
Allowance for doubtful receivables

593,320564,672
26,893
2,432(678)

Total non-current assets
Total Assets

593,320
3,854,296－20－

As of March 31, 2018
LIABILITIES AND NET ASSETS
Current liabilities:
Call Money
Short-term borrowings
Commercial paper
Accrued income taxes
Allowance for bonuses (Employees)
Allowance for bonuses (Directors & Executive Officers)
Collateral money received for margin transactions
Collateral money received for securities lent
Other current liabilities
Total current liabilities
Non-current liabilities:
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Allowance for officers retirement rewards
Stock benefits accrued
Other non-current liabilities
Total non-current liabilities
Total liabilities

Millions of Yen

726,4143,020
459,000
433
573
117
74,0192,442,438
4,133
3,710,150

7,142
74
41
98
3,743
11,0993,721,250

Net assets:
Shareholders’ equity
Common stock
Capital surplus
Additional paid-in capital
Other capital surplus
Retained earnings
Earned surplus reserve
Other retained earnings
Reserve for dividends
Special reserve
Retained earnings carried forward
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Net unrealized gain on other securities
Deferred Gain or Loss on Hedges
Gain on revaluation of land
Total valuation and translation
adjustments
Total net assets
Total liabilities and net assets－21－

10,00011,325
5,181
6,144
97,495
2,278
95,2172,030
77,03016,175(3,086)
115,734

17,994(852)
168
17,310133,0453,854,296

NON-CONSOLIDATED STATEMENTS OF INCOME

For the year ended March 31, 2018
Operating revenues
Operating expenses
Operating profit
General and administrative expenses
Operating income
Non-operating revenues
Interest received and dividends received
Miscellaneous revenues

Millions of Yen

22,49011,718
10,772
7,866
2,905

704
23
728

Non-operating expenses
Miscellaneous expenses

9
9
3,625

Recurring income
Extraordinary profit
Gain on sales of investment securities
Gain on liquidation of investment securities

5
128
133

Extraordinary loss
Loss on sales of investment securities

2
2

Income before income taxes
Income taxes
Current
Deferred

3,756
648
(331)
317

Net income

3,439

－22－

NON-CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Millions of Yen
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Specialreserves

Retainedearnings
carriedforwardTotal
retainedearnings

Treasury
stock

Total
shareholders’equity77,03014,551

95,889(2,199)115,015

Cash dividends(1,833)(1,833)(1,833)

Net income

3,439

3,439

3,439

Balance at April 1, 2017

Commonstock

Additional
paid-in
capitalOther
capitalsurplusTotal
capitalsurplus10,000

5,181

6,144

11,325

Earned Reserve forreserves
dividends
2,278

2,030

Changes arising during the year:

Purchase of treasury stock

(892)

(892)

Retirement of treasury stock
Net changes other thanshareholders’ equity
Total changes during the year

55

Balance at March 31, 2018

－

－

－

－

－

－

－

1,606

1,606

(887)

719

10,000

5,181

6,144

11,325

2,278

2,030

77,03016,517

97,495(3,086)

115,734

Valuation and translation adjustments

Balance at April 1, 2017

Net unrealized
gain or loss on
securities

Deferred gains
or losses onhedgesGain onrevaluation of
land

13,3452,146

168

Total valuation andtranslation
adjustments
15,660Total net assets
130,676

Changes arising during the year:
Cash dividends(1,833)

Net income

3,439

Purchase of treasury stock(892)

Retirement of treasury stock
Net changes other than

4,649

(2,998)

－

1,650

1,650

Total changes during the year

4,649

(2,998)

－

1,650

2,369

Balance at March 31, 2018

17,994(852)

168

17,310133,045

shareholders’ equity－23－

Notes on the Execution of Votes.
1. With regard to the exercise of voting rights via the Internet.
① Shareholders exercising their voting rights via the Internet can only do so via the website designated by theCompany (https://www.e-sokai.jp). However, please note that the voting service website is not available froma mobile which the Internet can be connected.
② If you are exercising your voting rights via the Internet, please enter your “voting code” and “password”
indicated on the proxy voting form and follow the instructions on the screen to register whether you approveor disapprove of each proposal, and are kindly requested to exercise your voting rights on or before 5:20 p.m.
(Japan standard time) on Thursday, June 21, 2018.
③ To prevent unauthorized access by parties other than shareholders and the alteration of shareholder votes,
shareholders voting via the Internet will be asked to change their “password” on the Voting Rights Exercise
Site.
④ If you exercise your voting rights via the Internet multiple times, the vote cast last shall prevail.
⑤ Connection fees payable to the providers and communication expenses payable to telecommunication
carriers when accessing the website for the exercise of voting rights will be borne by the shareholders.

Inquiries about the Exercise of Voting Rights via the Internet
Transfer Agent： JAPAN SECURITIES AGENTS, LTD.
Agency Department[Direct Line for Web Support (Toll free)] 0120-707-743
Accessible from 9:00 a.m. to 9:00 p.m. on business days,
Saturdays, Sundays, and national holidays.

2. Platform for the Electronic Exercise of Voting Rights
Management and trust banks or other nominee shareholders as well as standing proxies have the choice of analternative method for exercising voting rights for the Company’s General Meeting of Shareholders. This is theElectronic Voting Platform for Institutional Investors that is operated by ICJ Inc. to use this Electronic Voting
Platform must be made in advance.

End－24－