Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes noresponsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

(Stock Exchange Code 5357)
June 1, 2022
To Shareholders with Voting Rights:
Mitsuo Taguchi
President
YOTAI REFRACTORIES CO., LTD.
8-1, Nishikinaka-machi, Kaizuka-shi, Osaka

NOTICE OF THE 124TH ANNUAL GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We would like to express our appreciation for your continued support and patronage.
We are pleased to inform you that the 124th Annual General Meeting of Shareholders of YOTAI REFRACTORIES CO.,LTD. (the “Company”) will be held for the purposes as described below.
With a view to preventing the spread of novel coronavirus (COVID-19) infections, when deciding whether to attend theGeneral Meeting of Shareholders, please check the outbreak status and your own health condition as of the day of the
Meeting. In addition, we may take measures to prevent infection in consideration of our shareholders’ safety. In this casewe kindly ask for your cooperation.
Instead of attending the meeting, you can exercise your voting rights in writing or via electromagnetic methods(the Internet, etc.); please examine the Reference Documents for the General Meeting of Shareholders below, andexercise your voting rights by 5:40 p.m. on Wednesday, June 22, 2022, Japan time.
1. Date and Time:
2. Place:

Thursday, June 23, 2022 at 10:00 a.m. Japan time
Conference room at the Company’s Head Office 2nd Floor located at
8-1, Nishikinaka-machi, Kaizuka-shi, Osaka

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
124th Fiscal Year (April 1, 2021 - March 31, 2022) and results of audits by
the Accounting Auditor and the Board of Corporate Auditors of theConsolidated Financial Statements
2. Non-consolidated Financial Statements for the Company’s 124th Fiscal Year
(April 1, 2021 - March 31, 2022)
Proposals to be resolved:<Company proposals (Proposals 1 through 3)>
Proposal 1:
Partial Amendments to the Articles of Incorporation
Proposal 2:
Appropriation of Surplus
Proposal 3:
Election of 6 Directors<Shareholder proposals (Proposals 4 through 8)>
Proposal 4:
Appropriation of Surplus
Proposal 5:
Partial Amendments to the Articles of Incorporation Pertaining toCross-shareholding
Proposal 6:
Partial Amendments to the Articles of Incorporation Pertaining to Cancellationof Company Shares
Proposal 7:
Cancellation of Company Shares
Proposal 8:
Dismissal of Corporate Auditors〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰
◎◎

When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the reception desk.
If the Reference Documents for the General Meeting of Shareholders, the Business Report, Non-consolidated
Financial Statements and Consolidated Financial Statements are revised, the revised versions will be postedon the Company’s website (https://www.yotai.co.jp/).

-1-

Reference Documents for the General Meeting of Shareholders
Proposals and References<Company proposals (Proposals 1 through 3>
Proposal 1:
Partial Amendments to the Articles of Incorporation
1. Reasons for amendments(1) Measures for electronic provision, etc.
The amended provisions stipulated in the proviso of Article 1 of the supplementary provisions of the “Act Partially
Amending the Companies Act” (Act No. 70 of 2019) will be enforced on September 1, 2022. Accordingly, it is proposed
to establish provisions to the effect that information contained in the reference documents for the general meeting ofshareholders, etc. shall be provided electronically, provisions limiting the scope of matters to be included in the paper
copy to be sent to shareholders who have requested it, and supplementary provisions related to the effective date, etc.
(2) Omission of resolution of the Board of Directors
It is proposed to newly establish provisions in the Articles of Incorporation regarding the omission of resolution of
the Board of Directors such that proposals for resolution can be deemed to have been adopted at the Board of Directors
meeting without holding the Board of Directors meeting for the purpose of more flexible decision-making.
(3) Dividends of surplus
It is proposed to amend the Articles of Incorporation such that the Board of Directors shall continue to makedecisions regarding dividends of surplus, etc., and the General Meeting of Shareholders can make decisions on mattersproposed by shareholders.
Until now, the Company has paid dividends of surplus, etc. by resolution of the Board of Directors as stated in Article
40, Paragraph 1 of the current Articles of Incorporation, which states, “Dividends of surplus, etc. may be paid byresolution of the Board of Directors in accordance with the provisions of Article 459, Paragraph 1 of the Companies
Act,” and as stated in Paragraph 3 of the same Article, “The Company shall not set forth any of the items in Paragraph 1
of Article 459 of the Companies Act by resolution of the general meeting of shareholders.”
Until now, the Company has made decisions about dividends of the Company’s surplus, etc. at the Board of Directors
meetings as a matter for decision by management, based on the view that capital policies should be decided inconsideration of factors such as changes in the management environment surrounding the Company and businesscharacteristics, from the standpoint of maintain social harmony and sustainably improving corporate value.
This proposal is for the deletion of provisions of the Articles of Incorporation in accordance with the provisions ofArticle 460, Paragraph 1 of the Companies Act, for the purpose of improving shareholder value, as a result of discussions
by the Board of Directors based on factors such as the Company’s transition to the Prime Market as of April 4, 2022
amid recent calls for initiatives to improve corporate governance for sustainable corporate growth and medium- tolong-term improvement in corporate value.
(4) Other
Article numbers shall be realigned in conjunction with the above-mentioned amendments.

-2-2. Details of amendments
Current Articles of Incorporation<Newly established>(Amended parts are underlined.)
Proposed Amendments(Measures for Electronic Provision, Etc.)
Article 15 The Company shall, when convening ageneral meeting of shareholders, provide
information contained in the reference documents
for the general meeting of shareholders, etc.
electronically.
Among the matters to be provided electronically, theCompany may choose not to include all or part of thematters stipulated in the Ordinance of the Ministry ofJustice in the paper copy to be sent to shareholders who
have requested it by the record date for voting rights.

Articles 15 through 26 (Text omitted)<Newly established>

Articles 16 through 27 (No change)
Article 28 The Company shall deem that matters to beresolved by the Board of Directors are adopted by aresolution of the Board of Directors if all Directors
consent to such matters in writing or electronically,
unless any Corporate Auditor expresses his/her
objection to such matters.

Articles 27 through 39 (Text omitted)

Articles 29 through 41 (No change)(Dividends of Surplus, etc.)(Dividends of Surplus, etc.)

Article 40 The Company may determine the matterslisted in the items of Paragraph 1 of Article 459 of
the Companies Act by resolution of the Board of
Directors.
The Company will pay a dividend of surplus(hereinafter “Dividend”) in cash to its shareholders or
the registered pledgees on shares appearing or
recorded on the register of shareholders at the close ofbusiness on March 31 and September 30 of each year.
The Company shall not determine any of the matterslisted in the items of Paragraph 1 of Article 459 of theCompanies Act by resolution of the general meetingof shareholders.

Article 42 The Company may set forth the items
listed in Paragraph 1 of Article 459 of theCompanies Act by resolution of the Board of
Directors.
The Company will pay a dividend of surplus(hereinafter “Dividend”) in cash to its shareholders or
the registered pledgees on shares appearing or recordedon the register of shareholders at the close of businesson March 31 and September 30 of each year.
<Deleted>

Article 41 (Text omitted)

Article 43 (No change)<Newly established>(Supplementary Provision)
The proposed new Article 15 of the Articles ofIncorporation shall come into effect on the date ofenforcement of the amended provisions stipulated in
the proviso to Article 1 of the supplementaryprovisions of the Act Partially Amending thecompanies Act (Act No 70 of 2019) (the “EffectiveDate”). This Supplementary Provision shall bedeleted after the lapse of six months from the
Effective Date or the lapse of three months from thedate of the general meeting of shareholders set forthin the preceding paragraph, whichever is later.

-3-

Proposal 2:

Appropriation of Surplus

This proposal has been placed on the agenda subject to the approval of Proposal No. 1.
The Company, in its First Medium-term Management Plan, aims to maintain profitability and sound financial health,while sustainably improving corporate value and enhancing strategic investments and shareholder returns. The
Company’s shareholder return policy is to be implemented appropriately through stable dividends and flexible
repurchasing of Company shares, targeting a consolidated dividend payout ratio of 30%.
For the 124th fiscal year, in light of factors including the Company’s financial position and business performance,
the Company proposes a year-end dividend of ¥27 per share.
If this Proposal is approved, the total amount of dividends for the fiscal year, aggregated with the interim dividendof ¥16 per share paid in December 2021, will be ¥43 (an increase of ¥26 year-on-year).
(1) Type of dividend property
Cash(2) Matters related to the allocation of dividend property and the total amount thereof¥27 per share of the Company’s common stock
Total amount: ¥556,477,884(3) Effective date of the dividends of surplus
Friday, June 24, 2022

-4-

Proposal 3:

Election of 6 Directors

The terms of office of all (6) Directors will expire at the conclusion of this year’s Annual General Meeting of
Shareholders. Accordingly, the election of 6 Directors is proposed.
The candidates are as follows:
No.

Positions and responsibilities
at the Company

Name

Attendance at Board of
Directors meetings

1

Mitsuo Taguchi[Reappointment]

President

15 out of 15 Meetings(100%)

2

Shinichiro Takebayashi[Reappointment]

Director, General Manager of General
Affairs Department of Head Office

15 out of 15 Meetings(100%)

3

Tadashi Taniguchi[Reappointment]

Director, Manager of Hinase Plant

15 out of 15 Meetings(100%)

4

Yorisada Matsumoto[New candidate]

Corporate Officer
General Manager of Tokyo Branch－

5

Hiroshi Itano

6

Shinobu Akiyoshi[Reappointment][External][Independent][New candidate][External][Independent]

External Director

15 out of 15 Meetings(100%)

External Director

11 out of 11 Meetings(100%)[Reappointment]: Director who is a candidate for reappointment[New candidate]: Director who is a new candidate[External]: Candidate for Director outside the Company[Independent]: Independent Director candidate as prescribed by the Tokyo Stock Exchange, Inc.

-5-

No.

Name
(Date of birth)

Past experience, positions
and significant concurrent positions

Joined the Company
Technical General Manager of Engineering Division
Engineering General Manager and Technical General Manager
of Engineering Division
March 2008
Engineering General Manager of Engineering Division
Director, General Manager of Engineering Division
June 2009
June 2015
Managing Director, General Manager of Engineering Divisionand in Charge of Technical Research Laboratory
April 2017Managing Director, Manager of Hinase Plant and in Charge ofEngineering Division
Mitsuo Taguchi
June 2019
President (to present)(October 21, 1960)[Reasons for nomination as a candidate for Director]
Mr. Mitsuo Taguchi has been engaged in the management of the Company as[Reappointment]
Director since 2009. He served as Director and General Manager of Engineering
Division and as Managing Director and Manager of Hinase Plant. Starting from[Attendance at the Board 2019, he has been responsible for the Company’s management as the President.
of Directors meetings]
He has a wealth of experience and extensive insight in the Company’s business,
15 out of 15 meetings
and therefore we propose his reelection as Director.
(100%)(Note)
There are no special interests between Mr. Mitsuo Taguchi and the Company.
April 1984
March 2006
October 2006

1

-6-

Number ofshares of theCompany held

74,948No.

Name(Date of birth)

Past experience, positions
and significant concurrent positions
April 1986
March 2015
June 2017

2

Joined the Company
General Manager of General Affairs Department of Head OfficeDirector, General Manager of General Affairs Department of
Head Office (to present)[Reasons for nomination as a candidate for Director]
Mr. Shinichiro Takebayashi has mainly been involved in the administrative
department for many years, and has been engaged in the management of theCompany as Director since 2017. He has a wealth of experience andextensive insight in the Company’s business, and therefore we propose hisreelection as Director.
Shinichiro Takebayashi (Note)(January 16, 1964)
There are no special interests between Mr. Shinichiro Takebayashi and theCompany.
[Reappointment][Attendance at the Boardof Directors meetings]
15 out of 15 meetings(100%)

3

Tadashi Taniguchi(September 13, 1972)

April 1995
Joined the Company
April 2017
General Manager of Production Department of Hinase Plant
June 2019
Director, Manager of Hinase Plant (to present)[Reasons for nomination as a candidate for Director]
Mr. Tadashi Taniguchi has mainly been involved in the production
department for many years, and has been engaged in the management of theCompany as Director since 2019. He has a wealth of experience andextensive insight in the Company’s business, and therefore we propose hisreelection as Director.
(Note)
There are no special interests between Mr. Tadashi Taniguchi and the Company.

Number ofshares of theCompany held

17,387

7,787[Reappointment][Attendance at the Boardof Directors meetings]
15 out of 15 meetings(100%)

4
Yorisada Matsumoto(December 29, 1972)

April 1996
Joined the Company
March 2019
General Manager of Sales Department of Tokyo Branch
September 2019 General Manager of Tokyo Branch
July 2020
Corporate Officer and General Manager of Tokyo Branch (topresent)[Reasons for nomination as a candidate for Director]
Mr. Yorisada Matsumoto has mainly been involved in the sales department for
many years. He has a wealth of experience and extensive insight in the
Company’s business, and therefore we propose his election as a new Director.
(Note)
There are no special interests between Mr. Yorisada Matsumoto and the Company.

[New candidate][Attendance at the Boardof Directors meetings]
－

-7-

3,373

No.

Name
(Date of birth)

Past experience, positions
and significant concurrent positions
April 1980

5

Joined Nomura Computer Systems Co., Ltd. (present Nomura
Research Institute, Ltd.)
April 2005
Senior Managing Director and Deputy Division Manager ofServices & Industrial Systems Division of Nomura ResearchInstitute, Ltd.
April 2009
Senior Corporate Managing Director, Division Manager ofServices & Industrial Systems Division, General Manager of
Kansai Regional Headquarters and General Manager of Chubu
Regional Headquarters of Nomura Research Institute, Ltd.
April 2014
Senior Executive Managing Director in charge of Supervising ofHiroshi Itano
Corporate Administration, Risk Management and Compliance(February 19, 1957)
of Nomura Research Institute, Ltd.
June 2014
Member of the Board and Senior Executive Managing Director
in charge of Supervising of Corporate Administration, Risk
[Reappointment]
Management and Compliance of Nomura Research Institute,[External]
Ltd.
[Independent]
April 2015
Representative Director, Member of the Board and Senior
Executive Managing Director in charge of Supervising of[Attendance at the Board
Corporate Administration, Risk Management, Compliance andof Directors meetings]
Health and Productivity Management of Nomura Research
15 out of 15 meetings
Institute, Ltd.
(100%)
April 2016
Representative Director, Member of the Board and Senior
Executive Managing Director in charge of Supervising ofCorporate Administration of Nomura Research Institute, Ltd.
April 2017
Member of the Board of Nomura Research Institute, Ltd.
June 2017
External Director, Data Applications Co., Ltd. (to present)
June 2018
Retired from Nomura Research Institute, Ltd.
September 2018 Director, FIXER Inc.
August 2019
Retired from FIXER Inc.
June 2020
External Director, the Company (to present)
External Director, YAMASHIN-FILTER CORP. (to present)[Reasons for nomination as a candidate for External Director and asummary of expected roles]
Mr. Hiroshi Itano has a wealth of experience and insight in corporate
management and sufficient knowledge in overall management, information
technology, etc. We believe that his extensive experience and broad knowledge
will contribute to the management of the Company, and therefore we propose hisreelection as External Director. At the Board of Directors meetings during the
fiscal year ended March 31, 2022, he has fulfilled duties including providing
advice on management policies, determining important matters, and supervising
the business execution.
Years served as External Director: 2 years (at the conclusion of this General
Meeting of Shareholders)(Notes)1. There are no special interests between Mr. Hiroshi Itano and the Company.
2. Mr. Hiroshi Itano is a candidate for External Director. He is also a candidate
for Independent Director prescribed by Tokyo Stock Exchange, Inc.
3. The Company has entered into an agreement with Mr. Hiroshi Itano to limit
his liability under Article 423 Paragraph 1 of the Companies Act, pursuant to
Article 427 Paragraph 1 of the Companies Act. The maximum amount ofliability for damages under this agreement shall be the amount provided for inlaws and regulations. If the reelection of Mr. Hiroshi Itano is approved, theCompany intends to continue such agreement.

-8-

Number ofshares of theCompany held

3,900

No.

6

Name
(Date of birth)

Past experience, positions
and significant concurrent positions

December 2008 Registered as attorney-at-law, Osaka Bar Association
January 2009
Joined Doujima Sougou Law Office
January 2018
Partner, Doujima Sougou Law Office (to present)
April 2018
Regular Delegate, Osaka Bar Association
March 2019
Retired from Regular Delegate, Osaka Bar Association
November 2020 Consultant, Nonprofit Organization Hikosen
Member of Living Environment Dispute Conciliation
Committee, Ashiya City
February 2021 Registered as an Employment Environment Improvement
Expert (Class 1)
Shinobu Akiyoshi
June 2021
External Director, the Company (to present)(March 29, 1977)[Reasons for nomination as a candidate for External Director and asummary of expected roles]
Ms. Shinobu Akiyoshi has a wealth of experience and insight as an expert in law.
[Reappointment]
She also has knowledge in creating a society where not only women, but also
[External]
persons with disabilities and the aged can play active roles. We believe that her[Independent]
extensive experience and broad knowledge will contribute to the management of[Attendance at the Board the Company, and therefore we propose her reelection as External Director. At
the Board of Directors meetings during the fiscal year ended March 31, 2022, sheof Directors meetings]
has provided valuable advice on corporate legal affairs based on her expertise as
11 out of 11 meetings
an attorney-at-law, and encouraged the promotion of women’s participation in the(100%)
Company.
Years served as External Director: 1 year (at the conclusion of this General
Meeting of Shareholders)Number ofshares of theCompany held

200

(Notes)1. There are no special interests between Ms. Shinobu Akiyoshi and theCompany.
2. Ms. Shinobu Akiyoshi is a candidate for External Director. She is also a
candidate for Independent Director prescribed by Tokyo Stock Exchange, Inc.
3. The Company has entered into an agreement with Ms. Shinobu Akiyoshi tolimit her liability under Article 423 Paragraph 1 of the Companies Act,
pursuant to Article 427 Paragraph 1 of the Companies Act. The maximum
amount of liability for damages under this agreement shall be the amountprovided for in laws and regulations. If the reelection of Ms. Shinobu
Akiyoshi is approved, the Company intends to continue such agreement.
(Note)The Company has entered into a directors and officers liability insurance contract stipulated in Article 430-3, Paragraph 1 of theCompanies Act with an insurance company, and covers legal damages and litigation expenses incurred by the insured through said
insurance contact. The candidates are included as insured parties under said insurance contract, and if they are reappointed or electedbased on this proposal, they will continue to be insured under said insurance contract. In addition, the Company plans to renew said
insurance contract during their terms of office in relation to this proposal.

-9-

(Reference) Directors Skill Matrix [Planned at the conclusion of this General Meeting of Shareholders and the subsequent meeting of
the Board of Directors]
SkillsCorporate Auditors

Directors

Name

External/Int
Independent
ernal

Sex

Position/responsibilities in the
Company

President
Chair, Nomination andCompensation Advisory
Committee
Managing Director, General
Manager of General Affairs
Department of Head Office

Corporate Technology/
mgmt.
R&D

Mitsuo TaguchiInternal

Male

Shinichiro
Takebayashi

Internal

Male

Tadashi TaniguchiInternal

Male

Director, Manager of Hinase
Plant

○

○

Male

Director, President of Tokyo
Branch○○Yorisada
MatsumotoInternal

External Director
Member, Nomination andCompensation Advisory
Committee
External Director
Member, Nomination andCompensation Advisory
Committee○○

Personnel/L Finance/ Legal/Riskabor
Accounting
mgmt.

○

Male

○

Shinobu Akiyoshi

External○

FemaleTakashi Umezawa

Internal

Male

Full-time Corporate Auditor○○

Tadaharu Tani

Internal

Male

Corporate Auditor○○

Shinichi Inoue

External

Male

External Corporate Auditor○○

Yasuo Fujiwara

External

Male

External Corporate Auditor

Kazuhide Urata

External

Male

External Corporate Auditor

ESG

○

○

○

○
○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

- 10 -IT Systems○○

External

Auditing(Operations/
Accounting)○○

Hiroshi Itano

○

Sales

○

○

<Shareholder proposals (Proposals 4 to 8)>
Proposals 4 to 8 have been proposed by a single shareholder. Furthermore, Proposal 4 has been placed on the agenda
as proposals subject to the approval of Proposal 1, and Proposal 7 has been placed on the agenda as proposals subject tothe approval of Proposal 6.
The Board of Directors opposes all the Proposals 4 to 8.
As a general rule, a summary of shareholder proposals and their reasons are presented as they were submitted by the
proposing shareholders.
Proposal 4:

Appropriation of Surplus

A. Summary of the proposal
The appropriation of surplus/retained earnings shall be as described below, subject to the approval of the proposal
for partial amendments to the Articles of Incorporation of the Company for the deletion of Article 40, Paragraph 3 of the
Articles of Incorporation. This proposal is made independent from and in addition to any proposal for appropriation of
surplus by the Company’s Board of Directors at this Annual General Meeting of Shareholders.
(a) Type of dividend property
Cash(b) Dividend per share
The amount obtained by deducting the amount of dividend of surplus per share of common stock in the Company
proposed by the Board of Directors of the Company at this Annual General Meeting of Shareholders and approvedat this Meeting from ¥100 (or ¥100 if the Board of Directors of the Company does not propose appropriation of
surplus at this Annual General Meeting of Shareholders).
(c) Matters related to the allocation of dividend property and the total amount thereof
The amount of dividend per share in (b) above per share of common stock in the Company (The total amount ofdividend is calculated by multiplying the dividend per share by the total number of shares of common stock issued
by the Company as of March 31, 2022 [excluding Company shares].)(d) Effective date of the dividends of surplus
The date of this Annual General Meeting of Shareholders(e) Start date of dividend payment
Three weeks after this Annual General Meeting of Shareholders
B. Reasons for the proposal
The Company repurchased a total of ¥1,499,898,853 of Company shares in the fiscal year ended March 31, 2022, in
accordance with the plan disclosed in the First Medium-term Management Plan (FY2021-2023) announced on May 13,2021. In addition, according to the quarterly report for the nine months ended December 31, 2021, the annual dividend
per share for this period was expected to be ¥37. Based on this the total return payout ratio is calculated at around 85%.
The proposing shareholder considers this shareholder return policy of the Company to be laudable to a certain extent.
However, as of December 31, 2021, the number of Company shares accounted for approximately 19.45% of thetotal number of shares issued by the Company, and further repurchases of Company shares is not recommended as it
would lead to a decrease in stocks in circulation and a decline in the liquidity of the stocks. Therefore, the proposing
shareholder thinks the point that in strengthening shareholder returns, the Company should focus on improving thedividend payout ratio instead of on flexible repurchases of Company shares.
On the other hand, the Company’s equity ratio was 82.0% as of March 31, 2021 and 78% as of December 31, 2021.
This is very high compared with the 30.44% average (aggregate financial results for the fiscal year ended March 31,2021) of all companies (2,121 companies) listed on the Tokyo Stock Exchange, of which the average for manufacturers
was 44.03%. Clearly, the Company does not need more retained earnings and should make active shareholder returns.
Therefore, the proposing shareholder proposes an annual dividend amount of ¥100 per share for the fiscal year
ended March 31, 2022. If this is accomplished, the Company’s dividend payout ratio would be approximately 80%, andits total return payout ratio for the fiscal year ended March 31, 2022 would exceed 100%. Returning surplus funds toshareholders would raise shareholder value and improves share prices, and therefore this proposal is made.
The proposing shareholder thinks that, in terms of the Company’s capital policy, for the fiscal year ending March 31,
2023 and beyond as well, instead of flexible repurchases of Company shares, by adopting a target dividend payout ratioof 80%, the Company’s focus on shareholders could strongly appeal to the overall market over the medium- to long-term.
As a result, this shareholder proposal is viewed as the first step toward improving the Company’s corporate value andshareholder value.

- 11 -

<Opinion of the Board of Directors on Proposal 4>
1. Opinion of the Board of Directors of the Company
The Board of Directors opposes this proposal.
2. Reasons for the opposition
In its First Medium-Term Management Plan announced on May 13, 2021, the Company’s basic strategy andpriority measures are to invest in humans, things, and information, and to build a management foundation that
supports sustainable growth, while working to maintain high profitability and financial well-being. The Company’s
basic thinking is to maintain social harmony, increase financial and non-financial value, and sustainably improve
corporate value through maintaining profitability and promoting ESG management.
The Medium-Term Management Plan aims to sustainably improve corporate value and enhance distributions offunds to strategic investments and shareholder returns while maintaining profitability and financial well-being.
In terms of the shareholder return policy, the plan’s goals are to make appropriate returns via stable dividends
aiming at a consolidated payout ratio of 30% and flexible repurchases of Company shares. In addition, the Company’s
dividend policy, based on continued stable dividends, is to pay dividends commensurate with profits, whilestrengthening the corporate financial structure and expanding retained earnings.
Based on many factors, such as concerns over deterioration of financial results for the Company’s business partners
due to the mature domestic market, sluggish demand for refractories over the long-term, uncertainties in international
market conditions and demand due to the Ukrainian situation, soaring raw material prices currently, increased calls for
decarbonization, ESG, and SDGs, and natural disasters, the management environment and social conditions
surrounding the Company are changing drastically, and in considering the Company’s medium- to long-term funds
distribution, it would be preferable to address shareholder return methods more flexibly.
If the year-end dividend were ¥100 per share as the proposing shareholder seeks, the dividend payout ratio would
be 82.1%, which means that the entire shareholder return would need to be implemented through dividends. In
addition, combined with the Company share repurchases made by the Company during the fiscal year ended March
31, 2022, the total return payout ratio would be 131.2%. Such a proposal is not in line with our aforementioned policy.
The Company, based on the aforementioned policy, announced on May 13, 2022 that we plan to pay a dividend of¥43 per share for the fiscal year ended March 31, 2022, an increase of ¥26 from the previous year. As such, theCompany has met the expectations of its shareholders by raising the annual dividend from ¥9 to ¥43 per share since
the fiscal year ended March 31, 2014, and has made approximately ¥1.5 billion in Company share repurchases in thefiscal year ended March 2022. As a result, the total return payout ratio for the fiscal year ended March 31, 2022, isexpected to be 80.5%.
Furthermore, on May 13, 2022, we announced that we would repurchase up to a total of ¥1.5 billion or 1.5 million
shares by March 31, 2023.
As mentioned above, by achieving the First Medium-Term Management Plan, the Company plans to meet the
expectations of all of our stakeholders, including shareholders, by strengthening capital distribution towards strategic
investments and shareholder returns, paying stable dividends with the aim of a 30% consolidated payout ratio, andimplementing appropriate returns via flexible repurchases of Company shares. Going forward, we shall continue
striving to strike a balance between sustainably improving corporate value and while maintaining high profitability
and financial well-being.
Accordingly, the Board of Directors of the Company opposes Proposal 4.

- 12 -

Proposal 5:

Partial Amendments to the Articles of Incorporation Pertaining to Cross-shareholding

A.

Summary of the proposal
Newly establish the following chapter and article in the Articles of Incorporation of the Company.
Chapter 7 Cross-shareholding(Verification of the purpose of cross-shareholding and disclosure of the results)
Article 42(1) The Company shall assess in detail and report to the Board of Directors once every 3 months whether or
not the purpose of holding shares other than for pure investment purposes (hereinafter“Cross-shareholding”) is appropriate and whether the benefits and risks from holding these cover the costof capital.
(2) The Board of Directors, based on the assessment results in Paragraph 1, shall determine whether or not
the Cross-shareholding is appropriate and write the details and reasons for this in the Board of Directors
meeting minutes.
(3) The Company shall disclose the assessment results of Paragraph 1 and the details of and reasons for thedetermination of the Board of Directors in the preceding paragraph in the Corporate Governance Reportthat the Company submits to the Tokyo Stock Exchange.

B.

Reasons for the proposal
In the 122nd fiscal year, the Company spent ¥53,330,000 to purchase 64,000 shares issued by Chubu Steel
Plate Co., Ltd. and ¥49,001,000 to purchase 62,600 shares of Meisei Industrial Co., Ltd. Meanwhile, Chubu Steel
Plate Co., Ltd. holds 150,800 shares of the Company, and Meisei Industrial Co., Ltd. holds 68,700 shares of theCompany. In other words, the Company cross-holds shares with these companies.
The proposing shareholder filed a petition with the Osaka District Court on August 17, 2021 for permission toview and copy the meeting minutes of the Company’s Board of Directors in order to check what kind of assessment
the Board of Directors performed in relation to this cross-shareholding. This is because the Company’s securities
report discloses with regard to the “details of the Board of Directors’ assessment” of cross-shareholding, “TheBoard of Directors, etc. determines once every 3 months, based on the verification results, whether shareholding isappropriate after fully examining the economic rationale of whether or not the held company is important for the
profit of the Company’s shares in light of shareholding policy.” However, in the hearing at the Osaka District Court,
the Company argued that the determination of the appropriateness of cross-shareholding is done not by the Board of
Directors, but by the full-time Board of Directors, and therefore, there are no Board of Directors meeting minutes
regarding the purchase of shares of Chubu Steel Plate Co., Ltd. and Meisei Industrial Co., Ltd.
The proposing shareholder was surprised that the Company only assessed the appropriateness ofcross-shareholding through a completely separate body rather than the Board of Directors, despite disclosing thatthe appropriateness of cross-shareholding was determined at the Board of Directors meeting, etc. However,regardless of this point, the proposing shareholder believes that spending a total of ¥102,331,000 on
cross-shareholding without assessment of the rationale by the Board of Directors was a major betrayal ofshareholder trust.
The “Corporate Governance Code” (hereinafter, the “CG Code”) appended to the Tokyo Stock Exchange
Securities Listing Regulations states, “When companies hold shares of other listed companies as
cross-shareholdings, they should disclose their policy with respect to doing so, including their policies regarding the
reduction of cross-shareholdings. In addition, the board should annually assess whether or not to hold eachindividual cross-shareholding, specifically examining whether the purpose is appropriate and whether the benefits
and risks from each holding cover the company’s cost of capital. The results of this assessment should be
disclosed.”
Therefore, the proposing shareholder demands that the Company set forth basic rules regarding this point in its
Articles of Incorporation so that rigorous assessments by the Board of Directors regarding cross-shareholding andadequate disclosures are made in compliance with the CG Code.

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<Opinion of the Board of Directors on Proposal 5>
1. Opinion of the Board of Directors of the Company
The Board of Directors opposes Proposal 5.
2. Reasons for the opposition
The Company views the maintenance and development of trusting and cooperative relationships with a wide rangeof business partners cultivated through business activities to date as extremely important from the standpoint ofsustainable growth and medium- to long-term improvement of corporate value. As such, the Company cross-holds
shares that it has determined will help to maintain and strengthen business relationships between the Company and thecross-shareholding, improve the profitability of both companies, and even help to improve the Company’s corporate
value.
From the perspective of strengthening the corporate governance structure, the Company regularly reviews its
cross-shareholding assessment system, etc. As a result, the Corporate Governance Report submitted on January 14,
2022, states that each individual cross-shareholding is qualitatively and quantitatively assessed annually in terms ofwhether it contributes to the improvement of the Company’s corporate value, and based on a comprehensive judgment,
cross-shareholdings determined to be of little significance are sold while taking into consideration the effect on themarket, etc. The procedure for reviewing the significance of cross-shareholdings consists of a primary evaluation at
the full-time Board of Directors meeting, then, based on this primary evaluation, a final determination regardingwhether or not cross-shareholdings are appropriate by the Board of Directors. Matters such as cross-shareholding
policy and assessment methods are disclosed in the Company’s securities report and the Corporate Governance Reportsubmitted to the Tokyo Stock Exchange.
As such, the Company finds the cross-shareholding assessment procedures and disclosure methods by theCompany’s Board of Directors to be appropriate, and therefore, it is not necessary to amend the Articles ofIncorporation as proposed here. In addition, in the Company’s view, the content that this proposal requests to be set
forth in the provisions of the Articles of Incorporation is not suitable to provide in the Articles of Incorporation, which
are a company’s basic rules.
Accordingly, the Board of Directors of the Company opposes Proposal 5.

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Proposal 6:
A.

Partial Amendment to the Articles of Incorporation Pertaining to Cancellation of Company Shares

Summary of the proposal
Newly establish the following as Article 17 in the current Articles of Incorporation, and move down each Article
after Article 17 of the current Articles of Incorporation.
Article 17
The general meeting of shareholders may make resolutions on matters provided in the Companies Act andmatters pertaining to the cancellation of Company shares.

Reasons for the proposal
As of the end of the third quarter of the fiscal year ended March 31, 2022, the Company held 4,977,123 shares ofCompany stock, which is equivalent to approximately 19.45% of the total number of outstanding shares. Consideringthat the average ratio of treasury stock to the total number of outstanding shares of approximately 3,700 companies
listed on the Tokyo Stock Exchange is only 3.8%, it is clear that the Company’s ratio of holdings is extremely high.
However, the Company has no rational reason for holding so many Company shares. If the purpose of holding Company
shares is for M&A, etc., the amount estimated for M&A investment in the First Medium-Term Management Plan
(FY2021-FY2023) announced by the Company on May 13, 2021 is only ¥900 million, which is an amount that theCompany is fully capable of covering with its abundant cash holdings. On the other hand, cancelling Company sharesleads to a reduction of the Company’s cost of capital, which sends a strong message that the Company’s management
team is focusing on improving capital structure and corporate value.
For the above-mentioned reasons, the proposing shareholder proposes amending the Articles of Incorporation as
described in the “Summary of the proposal” so that matters concerning cancellation of Company shares can be resolved
by a general meeting of shareholders.

B.

<Opinion of the Board of Directors on Proposal 6>
1. Opinion of the Board of Directors of the Company
The Board of Directors opposes Proposal 6.
2. Reasons for the opposition
The Company regards the use and cancellation of Company shares as a capital policy that needs to be examined
and implemented flexibly based on medium- to long-term management strategy. Accordingly, it should be resolved by
the Board of Directors as prescribed, in principle, by the Companies Act.
The Company intends to continue considering the use of Company shares based on its medium- to long-term
management strategy, including their use as a stock-based incentive for officers, as well as for financing futurebusiness reorganizations, capital expenditures, etc., M&A, and other flexible capital policies. Actually, the Company
has used Company shares to date, for example, to grant restricted shares to Directors (excluding External Directors) as
approved by the 123rd Annual General Meeting of Shareholders on June 24, 2021, and in a restricted share incentive
plan for an employee stockholding association that the Company’s Board of Directors decided to introduce on
February 9, 2022.
Accordingly, the Board of Directors of the Company opposes Proposal 6.

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Proposal 7:

Cancellation of Company Shares

A.

Summary of the proposal
Cancel 4,977,123 shares held, subject to approval of the proposal, “Proposal 6: Partial Amendments to the Articles
of Incorporation Pertaining to Cancellation of Company Shares”

B.

Reasons for the proposal
The cancellation of Company shares is proposed for the reasons stated in the proposal, “Proposal 6: Partial
Amendments to the Articles of Incorporation Pertaining to Cancellation of Company Shares.”<Opinion of the Board of Directors on Proposal 7>
1. Opinion of the Board of Directors of the Company
The Board of Directors opposes Proposal 7.
2. Reasons for the opposition
Based on the policy described in the opinion of the Board of Directors of the Company on Proposal 6 (Partial
Amendments to the Articles of Incorporation Pertaining to Cancellation of Company Shares), as a result of
deliberations by the Board of Directors of the Company, the cancellation of Company shares was judged to beunnecessary at the present time.
Accordingly, the Board of Directors of the Company opposes Proposal 7.

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Proposal 8:
A.

Dismissal of Corporate Auditors

Summary of the proposal
Dismiss Corporate Auditor Takashi Umezawa
Dismiss Corporate Auditor Tadaharu Tani

Reasons for the proposal
As explained in the above-mentioned Proposal No. 5, the Company’s Directors and Board of Directors haveneglected to make disclosures on cross-shareholding to shareholders in line with corporate governance. One reason forthis is thought to be that the Corporate Auditors and the Board of Corporate Auditors, which are in the position ofauditing the performance of the duties of the Directors, are not adequately functioning. This dysfunction despite the factthat the Company has 5 Corporate Auditors is largely thought to be caused by full-time Corporate Auditor Takashi
Umezawa and Corporate Auditor Tadaharu Tani, who are former employees of the Company. Accordingly, the dismissalof these two is proposed.

B.

<Opinion of the Board of Directors on Proposal 8>
1. Opinion of the Board of Directors of the Company
The Board of Directors opposes Proposal 8.
2. Reasons for the opposition
As described in the opinion of the Board of Directors of the Company on Proposal 5 (Partial Amendments to the
Articles of Incorporation Pertaining to Cross-shareholding), the Company’s Board of Directors makes necessary
disclosures regarding matters such as cross-shareholding policy and assessment method in the Company’s securities
report and in the Corporate Governance Report submitted to the Tokyo Stock Exchange. The proposing shareholder’spoint that the Board of Directors has “neglected to make disclosures on cross-shareholding to shareholders in line withcorporate governance” is incorrect.
Furthermore, the Company’s Corporate Auditors, Mr. Takashi Umezawa and Mr. Tadaharu Tani, since assuming
the position of Corporate Auditor, have used their abundant experience and insight necessary for auditing theperformance of duties of Directors, and through auditing individual business locations and attendance at important
meetings such as the Board of Directors meetings, they have performed objective and reasonable audits as Corporate
Auditors of the Company. In addition, they have done their best toward medium- to long-term improvements in the
Company’s corporate value, including actively and regularly exchanging opinions and information with internal
control divisions and accounting auditors as necessary. They have sufficiently fulfilled their duties.
Accordingly, the Board of Directors of the Company opposes Proposal 8.

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