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

May 22, 2018
Company Name: Tokuyama Corporation
Representative Name: Hiroshi Yokota,
Representative Director, President and Executive Officer(Code No. 4043, First Section TSE)
Contact: Taro Kobayashi, General Manager
Corporate Communications & Investor Relations Dept.
TEL: +81-3-5207-2552

Renewal of Policy Regarding Large-Scale Purchases ofTokuyama Corporation’s Company Shares (Anti-Takeover Measures)

Tokuyama Corporation (hereinafter “the Company,” “Tokuyama” or “we”) hereby announces that the Boardof Directors of the Company, at its meeting held on May 22, 2018, determined to renew a policy (hereinafter“the Policy”) regarding the Large-Scale Purchase of Tokuyama’s shares, as explained in the following, andmake a proposal on the agenda to seek shareholders’ approval of the renewal of the Policy at the 154th
Ordinary General Shareholders’ Meeting (hereinafter “this Ordinary General Shareholders’ Meeting”) to beheld on June 22, 2018. The renewal of the Policy is based on the “Basic Policy Regarding Persons WhoControl the Company’s Decisions on Financial Matters and Business Policies” (hereinafter the “Basic Policy”)
as defined in the main section of Article 118, item 3 of the Enforcement Regulation of the Companies Act.
It is one of our measures to prevent the Company’s decisions on financial matters and business policies frombeing controlled by persons deemed inappropriate according to the Basic Policy (Article 118, item 3(b)2 of
the Enforcement Regulation of the Companies Act).

At the meeting of the Board of Directors held on April 30, 2015, Tokuyama determined to adopt the Policy
Regarding Large-Scale Purchases of Tokuyama Corporation’s Shares (Anti-Takeover Measures) (hereinafter
the “Former Policy”), which was announced in a press release as of the aforementioned day. Later, at the
151st Ordinary General Shareholders’ Meeting held on June 24, 2015, the Former Policy was approved by amajority of the vote of shareholders, thereby continuing the Former Policy. The Former Policy will beeffective until the closing of this Ordinary General Shareholders’ Meeting.
After considering the status of the Former Policy, including the appropriateness of its continuation, from theperspective of protecting the common interests of Tokuyama’s shareholders and Tokuyama’s corporate value,
the Company shall renew the Former Policy, with certain amendments that are made from the standpoint to1

continue to improve an environment in which the Company’s management can commit themselves toachieving the goals set forth in the medium-term management plan. The Policy will take effect on condition
that the above proposal on the agenda is approved by shareholders at this Ordinary General Shareholders’Meeting. In case it is not approved thereat, the Policy shall not be renewed.
Tokuyama does not plan to continue renewing the Policy for an indefinite period. The Company will consider
abolishing the Policy when it has determined that it has completed steps to gain a firm foothold by carryingout the series of measures identified in its medium-term management plan, currently in progress.
In cases where amendments of the Companies Act, the Financial Instruments and Exchange Act and theassociated regulations, Cabinet Orders, Cabinet Office Ordinances and/or Ordinances of the Ministry(hereinafter, in general, “laws and regulations”) come into effect including the change of the names of laws
and regulations and the establishment of new laws and regulations inheriting the previous content, eachprovision of the laws and regulations referred to in this document shall be read as corresponding provision to
the previous content, unless otherwise stipulated by the Board of Directors.
In order to respect shareholders’ views when activating countermeasures, the following amendments will bemade to the Policy.
 The activation of countermeasures (4. (1)) by Tokuyama’s Board of Directors to protect the common
interests of Tokuyama’s shareholders and Tokuyama’s corporate value shall be limited only to cases
when approval at a General Shareholders’ Meeting has been obtained (see page 9-10); and Other amendments to words and phrasing, etc. have been made.
The status of the major shareholders of the Company as of March 31, 2018 is provided in the Appendix. Asof May 22, 2018, we have not received any Large-Scale Purchase proposal.

1. Purpose of the Large-Scale Purchase Rules(1) Basic Policy and Its Background
Tokuyama has put in place a renewed Group vision in a bid to further clarify its role and significance. As a
key component of this vision, the Tokuyama Group is determined to help realize a prosperous society bycreating value that enhances people’s lives centered on the field of chemistry. Drawing on the chemical
technologies that it has nurtured over many years, the Group will contribute to the well-being, growth, anddevelopment of society by continuously creating and proposing new value.
Since our founding in 1918, Tokuyama and our group companies have developed a wide range ofbusinesses organized into five segments: Chemicals Segment, including soda ash, caustic soda, andpolyvinyl chloride; Cement Segment, including cement and building materials; Specialty Products Segment,
including polycrystalline silicon, fumed silica, aluminum nitride, and high-purity chemicals for electronics
manufacturing; Life & Amenity Segment, including microporous film, dental materials, and ion exchange
membranes; and Others Segment. These businesses are based on a foundation of uniform devotion to the
production of goods and earning the longstanding trust of our stakeholders, in particular, our customers.
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In each of these businesses, we attempt to anticipate future changes to the business operating
environment, make advance introductions of management resources and continuously improve corporate
value. This effort involves endeavoring to create business; develop technology; build equipment; bolster
trust and cooperation with our stakeholders, in particular, our customers; and collect management
resources. We believe that, from this medium- to long-term perspective, the cumulative result of these
efforts and the advance introduction of management resources are the very source of Tokuyama’s
corporate value.
Consequently, in order to raise management efficiency and increase profitability while being engaged inmanagement from such a medium- to long-term perspective, we believe that persons who have highly
professional expertise and/or marketing/technical know-how being in charge of important duties withregard to the Company’s decisions on financial matters and business policies in compliance with laws,
regulations and the Articles of Incorporation will contribute to the common interests of Tokuyama’sshareholders and Tokuyama’s corporate value.
The above explains Tokuyama’s Basic Policy Regarding Persons Who Control the Company’s Decisions
on Financial Matters and Business Policies.

(2) Medium- to Long-Term Management Strategies
Under the Medium-Term Management Plan formulated in May 2016, we have identified the following two
medium- to long-term management strategies, which we intend to carry out over the next decade throughto the fiscal year ending March 31, 2026.
 Transition to a robust business structure that is resilient against changes in its operating
environment and is capable of sustainable growth
The Tokuyama Group has set the goal of becoming a global leader in advanced materials throughunique technologies across growth businesses including the Specialty Products as well as Life &Amenity segment together with the development of new products. In such traditional businesses as
the Cement and Chemicals segments, the Group will work to become a leader in Japan throughstrengthening competitiveness.
 Transition to a Group-wide low-cost structure by undertaking a comprehensive review of existing
work practices
The Tokuyama Group will reduce costs by adopting a cross-departmental approach that differsfrom conventional methods and undertaking strategic capital expenditures as a part of efforts to cut
back principal costs including raw material, fuel, repairs and maintenance, and logistics costs

The Tokuyama Group is focused on rebuilding its financial platform as a first step toward its revitalization.
In addition to completing the transfer of Tokuyama Malaysia Sdn. Bhd., the Group has undertaken
measures such as purchasing and retiring Class A shares. Recognizing the significant deterioration in our3operations due to impairment losses recorded in relation to Tokuyama Malaysia’s business since 2014, we
remain committed to strengthening our financial platform, improving our corporate governance structureand systems, and clarifying business strategies as a part of efforts to make the most of lessons learned.
Moving forward, we will work diligently to create the necessary driving force to propel new profit growth.
In order to overcome each of these issues, we will steadfastly carry out the priority measures set out in ourcurrent medium-term management plan and reform both management and the Group’s operations in abid to secure renewed growth.
 Change its organizational climate
In order to change the Group’s organizational culture and structure as soon as possible, Tokuyama haslaunched a new personnel system for managers, who are a necessary component of our organization,in which the level of achievement of targets is more greatly reflected in treatment. In addition, we haverevised our personnel system for senior employees, who possess abundant experience, such thattreatment will be based on results. Looking ahead, we plan to expand this system to all employees.
In order to incorporate fresh perspectives in the Group’s business promotion activities, we will also
actively recruit outside personnel with specialized skills and a wealth of experience as a part of ourhuman resources development system.
 Rebuild its business strategies
In order to realize the aspirations of becoming a leader in its traditional businesses in Japan and a
global leader in advanced materials identified under its Medium-Term Management Plan, Tokuyama
will strengthen the competitiveness of each business utilizing ICT and accelerate the pace of overseas
business development.
In addition, steps will be taken to introduce a new business evaluation system that focuses on capitalefficiency and to optimize the business portfolio.
As far as research and development is concerned, we will rebuild our R&D structure so that it is morein tune with customers’ needs and cultivate new business domains by implementing open innovation
with other companies.
 Strengthen Group management
In order to fully capitalize on synergies within the Tokuyama Group, every effort was made toaccelerate the pace of overhauling sales strategies with strong support for human resources andmanagement based on flexible capital policies. As a result, reform of the Group as a whole will also
gather pace.
In addition to applying the new business evaluation system to consolidated subsidiaries and clarifying
the degree of contribution to enhancing corporate value, we will work to reinforce internal control atGroup companies

4 Improve its financial structure
Steps were taken to execute an unsecured bond trust-type debt assumption agreement, undertake therepayment in advance of loan agreements with financial covenants, and reduce interest-bearing debt inorder to quickly stabilize the Company’s financial position. Moving forward, Tokuyama will continue toreduce interest-bearing debt while working to enhance its shareholders’ equity by building up profits
for the period.

(3) Corporate GovernanceA corporate governance system is an extremely important structure for every company in realizing
improvement in its corporate value. We therefore believe that routine oversight and periodic reviews
should be made so that the corporate governance of Tokuyama is operated appropriately at all times.
Tokuyama is a company with an Audit and Supervisory Committee.
The Company introduced an executive officer system to separate the supervision and execution functionsin April 2011, assigning External Directors in June of the said year. The number of External Directors
was subsequently increased in stages.
In June 2017, the Company transitioned from a company with a Board of Auditors to a company with an
Audit and Supervisory Committee.
The Audit and Supervisory Committee selects three External Directors from five Committee members
and endeavors to ensure management transparency and fairness. By doing so, it strives to maintainmanagement soundness.
As a company with an Audit and Supervisory Committee, the Company seeks to enhance corporate
governance at all times by making the best of its rapid decision-making functions and effective
supervising/auditing functions.
The decision of whether to accept a Large-Scale Purchase is ultimately left to the discretion of
Tokuyama’s shareholders. Consequently, in cases where a Large-Scale Purchase is being attempted, we
believe that the Large-Scale Purchaser’s provision of an adequate amount of information is necessary. In
addition, we believe that the provision of the appraisal and opinions of Tokuyama’s Board of Directors,
as well as information and the like based on the business features pertaining to any Large-Scale Purchase,are critical for the shareholders to make a decision of whether to accept said Large-Scale Purchase, andcontribute to the common interests of Tokuyama’s shareholders.
Based on the foregoing philosophy, we hereby designate the rules as set forth in 3. below regarding
Large-Scale Purchases so that the necessary and adequate information can be furnished to theshareholders at the time of a Large-Scale Purchase.
Tokuyama shall require Large-Scale Purchasers to comply with the Large-Scale Purchase Rules, and incases where a Large-Scale Purchaser fails to comply with the same, we may take certain countermeasures5

from the perspective of protecting the common interests of Tokuyama’s shareholders and Tokuyama’s
corporate value.

2. Purchases of Tokuyama’s Shares to which the Policy Is Applied
The Policy will apply to an action that falls under (i) or (ii) below or similar actions (regardless of the specificpurchase method thereof, whether it is through market transactions or a tender offer, excluding cases where
the prior consent of Tokuyama’s Board of Directors has been obtained regarding either case (hereinafter sucha purchase shall be referred to as a “Large-Scale Purchase”). The party carrying out such Large-Scale Purchase(hereinafter the “Large-Scale Purchaser”) must comply with the Large-Scale Purchase Rules that are set forthin the Policy.
(i) With respect to the shares1 issued by the Company, a purchase and other actions where the holding
ratio of the shares2 of a holder3 will be 20% or more.
(ii) With respect to the shares4 issued by the Company, a tender offer5 where the total of the owning ratioof the shares6 owned by a party carrying out the tender offer and the owning ratio of the shares
owned by a party having a special relationship7 with the said party will be 20% or more.
3. Details of the Large-Scale Purchase Rules
The Large-Scale Purchase Rules require that Large-Scale Purchasers furnish the necessary and adequate
information to Tokuyama’s Board of Directors in advance, whereupon Large-Scale Purchases shall becommenced after the elapse of a certain period for Tokuyama’s Board of Directors to appraise the same
(hereinafter the “Large-Scale Purchase Rules”).
A summary of the Large-Scale Purchase Rules is as follows.
(1) Provision of the Large-Scale Purchase Information
Prior to any Large-Scale Purchase, Large-Scale Purchasers shall provide to Tokuyama’s Board of Directors
the required and adequate information (hereinafter the “Large-Scale Purchase Information”) for decision
making by Tokuyama’s shareholders and the appraisal and consideration of Tokuyama’s Board of
Directors.
In cases where a Large-Scale Purchaser attempts to carry out a Large-Scale Purchase, a “Statement ofIntent” regarding the execution of the Large-Scale Purchase must first be provided to Tokuyama’s
Representative Director in accordance with the Large-Scale Purchase Rules. The Statement of Intent shallhave set forth therein the Large-Scale Purchaser’s name, address, corporate establishment governing law,
representative name and contact information within Japan; a summary of the proposed Large-Scale
Purchase; and covenants that adhere to the Large-Scale Purchase Rules. Tokuyama shall deliver to theLarge-Scale Purchaser a list of the Large-Scale Purchase Information to be initially submitted by the same
within 10 business days after receipt of the Statement of Intent. Upon judging that sufficient Large-Scale
Purchase Information has been provided, Tokuyama’s Board of Directors will publicly announce the fact
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that it has received sufficient information at a time and in a manner that it deems appropriate. The
principal items regarding the Large-Scale Purchase Information shall be as follows. In cases where it isconcluded necessary for the shareholders to make a decision, Tokuyama’s Board of Directors may
publicly announce all or part of the facts of the Large-Scale Purchase proposal and the Large-Scale
Purchase Information submitted to Tokuyama’s Board of Directors at a time that it deems appropriate.
When determining whether or not the Large-Scale Purchaser has complied with the procedure set forth inthe Large-Scale Purchase Rules, Tokuyama’s Board of Directors shall sufficiently consider to a reasonable
extent various facts on the side of the Large-Scale Purchaser, including the fact that the Large-Scale
Purchaser may not necessarily have detailed information with respect to the Company, and shall not
determine that the Large-Scale Purchaser has not complied with the procedure set forth in the Large-Scale
Purchase Rules solely for the reason that part of the Large-Scale Purchase Information that has beenrequested by Tokuyama’s Board of Directors has not been provided by the Large-Scale Purchaser.
(i)

A Summary of the Large-Scale Purchaser or its group (including specific name, capital and financial
information).

(ii)

The purpose, method and details of the Large-Scale Purchase (including the type and value ofpurchase consideration, the timing of the purchase and the appropriateness of the purchasemethod).

(iii)

The existence of any notification of intent to a third party and, if such notification of intent exists,
the details thereof, at the time of the Large-Scale Purchase(iv)

The basis for calculating the purchase consideration and materials that evidence funding for thepurchase (including the specific name and procurement method of the provider of purchase funds(including substantive providers).

(v)

The existing collateral for the shares of Tokuyama that are already owned or the planned
establishment of collateral for the shares of Tokuyama to be purchased in the future (including themethod and details of the planned establishment of collateral).

(vi)

The intended fundamental management policies and business plans of Tokuyama and the
Tokuyama Group after the completion of the Large-Scale Purchase.

(vii)

Any changes planned after the completion of the Large-Scale Purchase or the details thereof when
making such changes regarding the relationship among our stakeholders, including customers,
business partners, employees and local community, and Tokuyama and the Tokuyama Group.

(viii)The probability of acquiring the approvals, licenses and/or permits to be acquired from any
governments or third parties in Japan and overseas, in accordance with the Antitrust Law, otherlaws and regulations, and the like.

(2) Appraisal and Consideration by Tokuyama’s Board of Directors
Tokuyama’s Board of Directors believes that, after the Large-Scale Purchaser completes the provision of7

the Large-Scale Purchase Information to Tokuyama’s Board of Directors, a period of 60 days (in cases ofpurchases of all of Tokuyama’s shares through a tender offer of the consideration in cash (denominated inJapanese yen) only) or 90 days (in cases of other Large-Scale Purchases) should be secured as a period for
Tokuyama’s Board of Directors to appraise, consider, negotiate, form opinions about or devise alternate
proposals (hereinafter the “Board of Directors Appraisal Period”) in accordance with the degree ofdifficulty for appraising and considering the Large-Scale Purchase. During the Board of Directors
Appraisal Period, Tokuyama’s Board of Directors shall sufficiently appraise and consider the provided
Large-Scale Purchase Information while accepting the advice of outside experts and the like as deemed
appropriate and necessary, whereupon the opinions and/or alternate proposal of Tokuyama’s Board of
Directors shall be carefully summarized and publicly announced in a timely and appropriate manner.
In addition, to confirm shareholders’ view regarding the activation of countermeasures against a
Large-Scale Purchase, the Board of Directors of the Company shall hold a General Shareholders’ Meeting
as soon as practically possible, and shall submit a proposal regarding the appropriateness of activating
countermeasures.
The Board of Directors of the Company shall also promptly disclose information related to an overview
of the proposal at the General Shareholders’ Meeting regarding the activation of countermeasures, andany other matters judged appropriate by the Board of Directors of the Company.
After the conclusion of the General Shareholders’ Meeting, the Board of Directors of the Company shallresolve to activate or not activate countermeasures based on the resolution of the General Shareholders’Meeting.
Therefore, Large-Scale Purchases shall commence only after a resolution has been made by the Board of
Directors.
4. Policy When a Large-Scale Purchase Is Attempted (Please refer to Exhibit 1, “Outline of the
Policy,” for a summary of the Policy)(1) When a Large-Scale Purchaser Fails to Comply with the Large-Scale Purchase Rules
In cases where a Large-Scale Purchaser fails to comply with the Large-Scale Purchase Rules, Tokuyama’s
Board of Directors may, regardless of the specific purchase method thereof, take measures (hereinafter
the “Countermeasures”), that is “Allotment of Share Options without Contribution” defined in Article
277 and following of the Companies Act, for the purpose of protecting the common interests ofTokuyama’s shareholders and Tokuyama’s corporate value, and oppose the Large-Scale Purchase,provided the views of shareholders have been confirmed.
A detailed outline of the Countermeasures is as set forth in Exhibit 2. However, in cases of actually
implementing the Allotment of Share Options without Contribution, an exercise period and exercise
terms may be established in light of their effect as Countermeasures. In this case, such share options may
not be exercised by the Large-Scale Purchaser. In addition, there may be cases in which changes are made,such as adding a clause (an acquisition clause) in which Tokuyama may acquire the share options in8exchange for its shares or other property regarding the details of said share options.
Furthermore, in relation to the Former Policy, the Company registered the issuance of the share options
for quick issuance (submitted on June 25, 2015, June 24, 2016, and June 23, 2017). In case shareholders
approve the renewal of the Policy at this Ordinary General Shareholders’ Meeting, Tokuyama plans toregister the issuance of the share options again for quick issuance thereof.
(2) When a Large-Scale Purchaser Complies with the Large-Scale Purchase Rules
In cases where a Large-Scale Purchaser complies with the Large-Scale Purchase Rules, Tokuyama’s Boardof Directors will only go so far as to express its opposition or present an alternate proposal regarding such
purchase proposal, even if it is opposed to said Large-Scale Purchase, and shall not, in principle, take any
Countermeasures pertaining to said Large-Scale Purchase.
The shareholders shall determine whether to accept the Large-Scale Purchaser’s purchase proposal upon
considering the details of said purchase proposal and the opinions, alternate proposals and the like ofTokuyama’s Board of Directors pertaining thereto.
However, in cases where it is determined that said Large-Scale Purchase will significantly damage thecommon interests of Tokuyama’s shareholders and Tokuyama’s corporate value, even if the Large-Scale
Purchase Rules have been complied with, Tokuyama’s Board of Directors may implement aCountermeasure (the specific details of the Countermeasure are as set forth in the foregoing 4. (1)) in
order to protect the common interests of Tokuyama’s shareholders and Tokuyama’s corporate value,
provided the views of shareholders have been confirmed. Specifically, in cases where there are reasonablegrounds for concluding that the Large-Scale Purchase corresponds to any of the scenarios described in (i)through (v) below, such a Large-Scale Purchase will, in principle, be determined to be one that will
significantly damage the common interests of Tokuyama’s shareholders and Tokuyama’s corporate value.
Meanwhile, a Countermeasure against the Large-Scale Purchase shall be exclusively activated in cases
where the Large-Scale Purchase is judged to significantly damage the common interests of Tokuyama’sshareholders and Tokuyama’s corporate value, and shall not necessarily be activated only due to the factthat the Large-Scale Purchase is determined to formally fall under any of the categories (i) through (v)below.
(i) When it is determined that the purchase of Tokuyama’s shares is being carried out for the purpose of
causing Tokuyama’s related parties to take over Tokuyama’s shares at an overstated share price,
regardless of whether there is genuine intent to participate in the management of Tokuyama(so-called green mailer).
(ii) When it is determined that the purchase of Tokuyama’s shares is being carried out for the purpose of
temporarily controlling the management of Tokuyama so that the intellectual property rights,
know-how, trade secrets and principal suppliers, customers and the like required with respect toTokuyama’s or the Tokuyama Group companies’ business can be transferred to the Large-Scale
Purchaser or its group companies and the like.
9(iii) When it is determined that the purchase of Tokuyama’s shares is being carried out in accordance withplans to divert the assets of Tokuyama or the Tokuyama Group companies to secure or use as asource of funds to repay the obligations of the Large-Scale Purchaser or its group companies and thelike after controlling the management of Tokuyama.
(iv) When it is determined that the purchase of Tokuyama’s shares is being carried out for the purpose of
temporarily controlling the management of Tokuyama so that Tokuyama’s or the Tokuyama Group
companies’ high-value assets, such as real estate and securities, can be disposed of through sales andthe like or so that an opportunity is afforded to cause the share price to increase rapidly due totemporarily high dividends whereupon Tokuyama’s shares can be sold at an inflated price.
(v) When it is determined that the purchase method of Tokuyama’s shares proposed by the Large-Scale
Purchaser will restrict the shareholders’ opportunity and freedom to make decisions, such as
oppressive two-stage purchases (executing purchases of shares, such as tender offers, whereby nosolicitations for purchasing all the shares are made in the initial purchase, and disadvantageouspurchase terms are set or the purchase terms are not made explicitly clear in the second stage),whereby shareholders may essentially be forced to sell their Tokuyama shares (provided that
incremental tender offers shall not always correspond hereto).
5. Establishment of a Special Committee(1) Special Committee Members
A Special Committee is an organ in the Former Policy that serves as a deterrent against arbitrary decision
making by Tokuyama’s Board of Directors before activating a Countermeasure. The Special Committee
shall remain established upon the renewal of the Policy. The Special Committee shall comprise at least
three members, who shall be selected from among External Directors, attorneys-at-law, Certified Public
Accountants, Certified Public Tax Accountants, academic experts and outside knowledgeable persons
who have sufficient experience as Directors or executives to enable fair and neutral decision making. The
current Special Committee comprises one attorney-at-law and two External Directors. The names andbrief work histories of the members who will assume office after the close of this Ordinary General
Shareholders’ Meeting are set forth in Exhibit 3, “Brief Work Histories of the Attorney-at-Law andExternal Directors as Special Committee Members (planned to assume office).”(2) Functions of the Special Committee
In cases where Tokuyama’s Board of Directors contemplates activating a Countermeasure, the following
procedures must be taken in order to ensure fair decision making.
First, Tokuyama’s Board of Directors shall inquire of the Special Committee as to the suitability ofactivating a Countermeasure, whereupon the Special Committee shall make a recommendation to
Tokuyama’s Board of Directors on the suitability of activating such a Countermeasure while accepting
advice from outside experts and the like based on said inquiries. Resolutions to make a recommendation
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shall be made by unanimous approval of the members of the Special Committee, in principle. Tokuyama’s
Board of Directors shall respect the recommendation of the Special Committee to the utmost when adecision as to whether to activate a Countermeasure has been made.
With regard to the implementation of any countermeasure against an inappropriate Large-Scale Purchase,the Board of Directors of the Company shall convene a General Shareholders’ Meeting to confirm theshareholders’ view. As set forth in 3. (2) above, Large-Scale Purchases shall commence only after thisseries of procedures has been completed.
6. Impact on the Shareholders when Activating a Countermeasure
Although no circumstances are expected to arise from the implementation of the Countermeasure, in which
Tokuyama’s shareholders (excluding the Large-Scale Purchaser in violation of the Large-Scale Purchase Rules)
suffer any especial losses in regards to legal rights or economic considerations, the Company’s stock pricemight be affected, to which shareholders would have to pay attention. If Tokuyama’s Board of Directors
decides to implement a Countermeasure, such matter shall be timely and appropriately disclosed inaccordance with laws and ordinances and securities exchange regulations, etc.
If the Large-Scale Purchaser withdraws the tender offer that it has already initiated after a resolution to
implement an Allotment of Share Options without Contribution as a specific Countermeasure is approved at
a General Shareholders’ Meeting of the Company, or if the Large-Scale Purchaser immediately disposes ofTokuyama’s shares after purchasing them, or if General Shareholders’ Meeting approves a resolution toaccept a Large-Scale Purchase, the purchase itself ceases to be a Large-Scale Purchase. In these cases,
Tokuyama may cancel the implementation of the Allotment of Share Options without Contribution or
acquire the share options gratis that were already allotted gratis. In such cases, Tokuyama’s stock price might
be affected, to which shareholders would have to pay attention. If Tokuyama cancels the Allotment of Share
Options without Contribution or acquires the share options gratis that were already allotted gratis after
determination of shareholders to be allotted gratis the share options, the dilution of stock value per share will
not occur. Any shareholders who conduct the purchase and sale of the Company’s shares assuming thedilution of the per share stock value will suffer a significant loss due to changes in stock prices.
7. Procedures Required of Tokuyama Shareholders Attendant to the Issuance of the Share Options(1) Allotment of the Share Options
In cases where Tokuyama’s Board of Directors approves a resolution to implement an Allotment of Share
Options without Contribution, Tokuyama shall set the allotment date of the share options and give apublic notice of this date. Furthermore, because the share options will be allotted to the shareholders by
way of “Allotment of Share Options without Contribution” as stipulated under Article 277 of theCompanies Act, the shareholders entered or registered in the final shareholders’ register or beneficial
shareholders’ register as of the allotment date will naturally become the holders of share options on the
day when such Allotment of Share Options without Contribution becomes effective.

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(2) Procedures for Exercising the Share Options
Tokuyama shall send the claim forms for exercising the share options (a prescribed written instrument by
the Company that includes a covenant that the shareholder him or herself is not the Large-Scale
Purchaser) and the other documents required for exercising the rights of the share options to theshareholders entered or registered in the final shareholders’ register or beneficial shareholders’ register asof the allotment date. After the issuance of the share options, the shareholders shall be issued one
ordinary share of the Company for each share option through submitting the required documents thereof
and paying a payment-handling institution an amount determined by Tokuyama’s Board of Directors thatis at least one Japanese yen for each share option.
However, as set forth in the foregoing 4. (1), in cases where Tokuyama makes a change, such as the
addition of a clause (an acquisition clause) that enables the Company to acquire the share options in
exchange for Tokuyama shares or other assets, or, in other words, in cases where it has been determinedthat Tokuyama can obtain the share options in exchange for the Company’s shares, if Tokuyama
completes the acquisition procedures, the shareholders who own the share options determined by
Tokuyama’s Board of Directors to be the subject of the acquisition will receive shares of the Company asconsideration for the acquisition by Tokuyama of the share options without having to pay any sum ofmoney equivalent to the exercise price thereof. Note that, in this case, shareholders may be asked toseparately submit a prescribed written instrument of the Company covenanting that they are not theLarge-Scale Purchaser.
8. Effective Period, and Abolition and Change of the Policy
The Policy will be effective until the closing of the Ordinary General Shareholders’ Meeting for the last fiscal
year that ends within three (3) years after this Ordinary General Shareholders’ Meeting. Even before the endof the effective period, Tokuyama’s Board of Directors shall review the Policy as necessary from the point ofview of protecting the common interests of Tokuyama’s shareholders and Tokuyama’s corporate value basedon revisions to relevant laws and ordinances, such as the Companies Act, trends in judicial decisions andmeasures taken by securities exchanges and other institutions. Note that if it has been determined to change
the Policy, the details thereof shall immediately be disclosed. In addition, any substantial change or abolitionof the Policy shall be brought up as an agenda proposal at the General Shareholders’ Meeting.
The Policy was determined by the unanimous approval of the Directors, including three External Directors
who are Audit and Supervisory Committee Members, in a resolution by Tokuyama’s Board of Directors at a
meeting held on May 22, 2018.

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9. Reasonableness of the Policy(1) Consistency of the Policy with the Basic Policy without Damaging the Common Interests ofTokuyama’s Shareholders
As described in the foregoing 3., the Policy will enable Tokuyama’s Board of Directors to appraise,
consider, negotiate, form opinions about or devise alternate proposals for the Large-Scale Purchase byrequiring the Large-Scale Purchaser in advance to provide the necessary information for the Large-Scale
Purchase and secure a certain period for Tokuyama’s Board of Directors to appraise the same. Meanwhile,the shareholders will be, in turn, allowed to make a decision of whether to accept a Large-Scale Purchase,in accordance with the Policy. Furthermore, under the Policy, countermeasures shall only be activated incases when approval at a General Shareholders’ Meeting has been obtained. In other words, the Policy isrenewed to constrain any purchase that is contrary to the common interests of Tokuyama’s shareholders
and therefore is consistent with the Basic Policy.
(2) Respect for the Shareholders’ Intentions
The Company makes a proposal on the agenda to seek shareholders’ approval of the renewal of the
Policy at this Ordinary General Shareholders’ Meeting and shall not renew the Policy in case theshareholders’ approval cannot be obtained. Thus, the intentions of the shareholders are reflected.
Even before the end of the effective period, the Company shall review the Policy as necessary based onrevisions to relevant laws and ordinances. However, any substantial change or abolition of the Policy shallbe brought up as an agenda proposal at the General Shareholders’ Meeting.
Note that the term of office for Tokuyama’s Directors (excluding Directors who are Audit andSupervisory Committee Members) shall be for one year, whereupon the intentions of the shareholders
regarding the continuation of the Policy shall be reflected, even during the effective period of the Policy,
through the exercise of voting rights regarding the agenda proposal for the appointment of Directors at
the Ordinary General Shareholders’ Meeting held each year.
(3) The Requirements in the Guidelines regarding Anti-Takeover Measures Satisfied
The Policy satisfies all the three basic principles formulated in the “Guidelines Regarding Takeover
Defenses for the Purposes of the Protection and Enhancement of Corporate Value and Shareholders’Common Interests” jointly released by the Ministry of Economy, Trade and Industry and the Ministry ofJustice on May 27, 2005: (i) the principle of the protection and enhancement of corporate value andshareholders’ common interests; (ii) the principle of prior disclosure and shareholders’ intentions; and (iii)the principle of securing necessity and suitability. The substance of the Policy also reflects recent practices
and discussions, such as “Takeover Defense Measures in Light of Recent Environmental Changes”
released on June 30, 2008, by the Corporate Value Study Group of the Ministry of Economy, Trade andIndustry.

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(4) Respect for the Judgment of Highly Independent Outsiders
The Company has established a Special Committee as an organ that serves as a deterrent against arbitrary
decision making by Tokuyama’s Board of Directors. The Special Committee comprises at least threemembers, who shall be selected from among External Directors, attorneys-at-law, Certified Public
Accountants, Certified Public Tax Accountants, academic experts and outside knowledgeable persons, allof whom are independent from the management team of the Company that is engaged in executing
duties. The committee shall give advice to the Board of Directors on the judgment as to whether
implementation of a Countermeasure is appropriate. The Board of Directors shall maximally accept theadvice of the Special Committee to adopt resolutions as an organ under the Companies Act.
(5) Reasonable and Objective Requirements for Activating a Countermeasure
The Policy is so formulated that the Countermeasure against a Large-Scale Purchase may not be activatedunless the reasonable and objective requirements for activating a countermeasure, which have been
disclosed in advance, are met to prevent Tokuyama’s Board of Directors from arbitrarily activating theCountermeasure.
(6) Advice from Outside Experts
Tokuyama’s Board of Directors and the Special Committee may, for themselves, seek the advice ofoutside professionals (including attorneys-at-law, Certified Public Accountants, consultants, financial
advisors and other specialists). The objectivity and reasonableness of the determination of the Board of
Directors will thus be ensured.
(7) Not a “Dead-Hand” Type or “Slow-Hand” Type Anti-Takeover Measure
The Policy is not a so-called “dead hand” type anti-takeover measure (a takeover defense measure inwhich the triggering of the measure cannot be prevented even though a majority of the members of theBoard of Directors are replaced). Neither is the Policy a “slow-hand” anti-takeover measure (a takeover
defense measure in which the triggering of the measure takes more time to prevent due to the inability toreplace all of the Directors at one time) because the Company does not adopt a board system with adifferent tenure of office for Directors (because the term of office for Tokuyama’s Directors (excluding
Directors who are Audit and Supervisory Committee Members) is one year.)
Notes:
1. Defined in Article 27-23, Paragraph 1, of the Financial Instruments and Exchange Act, hereinafter thesame applies, unless otherwise stipulated.
2. Defined in Article 27-23, Paragraph 4, of the Financial Instruments and Exchange Act, hereinafter thesame applies.
3. Defined as holders in Article 27-23, Paragraph 3 and any joint holders defined in Article 27-23, Paragraph14

5, including a person deemed to be a joint holder pursuant to Article 27-23, Paragraph 6, of the Financial
Instruments and Exchange Act, hereinafter the same applies.
4. Defined in Article 27-2, Paragraph 1, of the Financial Instruments and Exchange Act, the same applies in(ii).
5. Defined in Article 27-2, Paragraph 6, of the Financial Instruments and Exchange Act, hereinafter thesame applies.
6. Defined in Article 27-2, Paragraph 8, of the Financial Instruments and Exchange Act, hereinafter thesame applies.
7. Defined in Article 27-2, Paragraph 7, of the Financial Instruments and Exchange Act, hereinafter thesame applies (including persons who the Board of Directors regards as applicable). With regard to
persons listed in Item 1 of the same Paragraph, persons are excluded who are set forth in Article 3,
Paragraph 2, of the Cabinet Office Order on Disclosure Required for Tender Offer for Share Certificates,etc. by Person Other than Issuer.

15

Exhibit 1

Outline of the Policy
Emergence of a Large-Scale Purchaser

Board of Directors of the Company:
Apply the Large-Scale Purchase Rules

Large-Scale Purchaser:
In case the Large-Scale Purchaser does
not comply with the Large-Scale
Purchase Rules

Large-Scale Purchaser:
In case the Large-Scale Purchaser
complies with the Large-Scale Purchase
Rules

Board of Directors of the Company:
Appraisal, consideration, negotiation,
formulation of opinion and planning ofalternative proposals

Advice from the Special Committee

Board of Directors of the Company:
Judgment as to whether implementation of a Countermeasure isappropriate

General Shareholders’ Meeting:Judgment as to whether implementation of aCountermeasure is appropriate
Approved
Board of Directors of the Company:
Implement a Countermeasure (Allotment of
Share Options without Contribution)

Voted down
Board of Directors of the Company:
Do not implement a Countermeasure (Allotmentof Share Options without Contribution)

Board of Directors of the Company:
Express an opinion and make analternate proposal

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Exhibit 2

Outline of the Allotment of Share Options without Contribution
1. Shareholders Subject to Allotment of Share Options without Contribution and Terms and Conditions
ThereofThe share options shall be allotted at a 1:1 ratio for each share held (excluding, however, ordinary sharesof the Company held by Tokuyama) to shareholders entered or registered in the final shareholders’register or beneficial shareholders’ register as of the allotment date stipulated by Tokuyama’s Board of
Directors.
2. Type and Number of Shares for Purpose of the Share Options
The type of shares for the purpose of the share options shall be ordinary shares of the Company, and thenumber of shares corresponding to each share option shall be one share. However, the requisite changes
shall be made in cases where Tokuyama executes a share split or a reverse share split.
3. Total Number of Share Options to Be Issued
The total number of allotted share options shall be the number stipulated by Tokuyama’s Board of
Directors. Tokuyama’s Board of Directors may execute Allotments of Share Options without
Contribution multiple times.
4. Issuance Price of the Share Options
Gratis.
5. Amount to Be Paid upon Exercise of Each Share Option
The amount to be paid upon the exercise of each share option shall be the amount stipulated by
Tokuyama’s Board of Directors of at least one Japanese yen per share.
6. Transfer Restrictions on the Share Options
The transfer of share options must be approved by Tokuyama’s Board of Directors.
7. Exercise Terms and Conditions
Large-Scale Purchasers cannot exercise the share options.
8. Exercise Period, etc., of the Share Options
The exercise period of the share options, exercise terms and conditions other than those set forth in theforegoing 7., grounds for extinguishing shares, share extinguishment terms and conditions, and other17required matters shall be separately stipulated by Tokuyama’s Board of Directors
9. Share Options with Acquisition Clause
As set forth in 7.(2) of the Policy, Tokuyama may make changes, such as the addition of a clause (anacquisition clause) that enables it to exchange shares or other assets of the Company for the share options
in regards to the details of the share options.
10. Cancelation of the Allotment of Share Options without Contribution or Acquisition of the Allotted Share
Options Gratis
If the Large-Scale Purchaser withdraws the tender offer that it has already initiated after Tokuyama’s
Board of Directors approves a resolution to implement an Allotment of Share Options without
Contribution as a specific Countermeasure, or if the Large-Scale Purchaser immediately disposes ofTokuyama’s shares after purchasing them, or if General Shareholders’ Meeting approves a resolution toaccept a Large-Scale Purchase, the purchase itself ceases to be a Large-Scale Purchase. In these cases,
Tokuyama may cancel the implementation of the Allotment of Share Options without Contribution or
acquire the share options gratis that were already allotted gratis.

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Exhibit 3

Brief Work Histories of the Attorneys-at-Law and External Directors as Special Committee
Members (planned to assume office)Junya Sato (born May 4, 1953)
Apr. 1982

Registered as Lawyer,

Apr. 1982

Law Office of Furness, Sato & Ishizawa(currently Law Office of Oku, Katayama & Sato)

Mr. Junya Sato and the Company have not entered into a consultancy agreement and he has no special
interest in or with the Company.

Shin Kato (born June 27, 1961)
Apr. 1990

Registered as Lawyer,
Hiranuma Law Office

Apr. 1995

Aoyama Central Law Office

Sept. 2001

South Toranomon Law OfficeJun. 2013

Audit & Supervisory Board Member of the Company

Jan. 2014

Representative lawyer, Kato Law Office (To present)

Jun. 2017

External Director who is an Audit and Supervisory Committee Member of the Company(To present)

Mr. Shin Kato is an External Director as set forth in Article 2, item 15 of the Companies Act. The Company
has notified Tokyo Stock Exchange, Inc., that he is an independent officer as provided for in Article 415,
item 6 and Article 436-2 of its Enforcement Rules for Securities Listing Regulations. He has no special
interest in or with the Company.

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Yoshikazu Tsuda (born December 27, 1950)
Apr. 1974

Joined Nisshin Steel Co., Ltd.

Jun. 2003

Executive Officer, General Manager, Finance Dept.

Apr. 2006

Managing Executive Officer, Chief Financial Officer

Jun. 2006

Director, Managing Executive Officer, Chief Financial Officer

Oct. 2012

Director, Managing Executive Officer, Chief Financial Officer, Nisshin Steel Holdings Co.,Ltd.
Director, Managing Executive Officer, Chief Financial Officer, Nisshin Steel Co., Ltd.

Apr. 2014

Director, Assistant to President, Nisshin Steel Co., Ltd.

Jun. 2014

Senior Advisor

Jun. 2015

Advisor

Jun. 2015

Audit & Supervisory Board Member of the Company

Jun. 2017

External Director who is an Audit and Supervisory Committee Member of the Company(To present)

Mr. Yoshikazu Tsuda is an External Director as set forth in Item 15 of Article 2 of the Companies Act. The
Company has notified Tokyo Stock Exchange, Inc., that he is an independent officer as provided for in
Article 415, Paragraph 6 and Article 436-2 of its Enforcement Rules for Securities Listing Regulations. He has
no special interest in or with the Company.

20Appendix

Top 10 Major Shareholders(Percentage of shares held to the total number of shares issued (excluding treasury stock))(As of March 31, 2018)
Name of Shareholder
The Master Trust Bank of Japan, Ltd. (trust account)

Number ofPercentage ofShares Held
Shares Held(in thousands)
(%)
8,144
11.71

Japan Trustee Services Bank, Ltd. (trust account)

7,399

10.64

Nippon Life Insurance Company

2,174

3.13

The Yamaguchi Bank, Ltd.

1,649

2.37

Meiji Yasuda Life Insurance Company

1,488

2.14

The Bank of Tokyo-Mitsubishi UFJ, Ltd. (currently MUFG Bank,
Ltd.)
Sojitz Corporation

1,419

2.04

1,296

1.86

Sumitomo Metal Mining Co., Ltd.

1,180

1.70

Mitsubishi UFJ Trust and Banking Corporation

1,170

1.68

Japan Trustee Services Bank, Ltd. (trust account 5)

1,161

1.67

(Note) The Percentage of Shares Held is calculated after deducting the shares held by the Company as treasury
stock (378,378 shares).

21