Note: Please note that the following is an unofficial English translation of Japanese original text of the Notice ofConvocation of the 98th Ordinary General Meeting of Shareholders of HIRANO TECSEED Co., Ltd. The Company
provides this translation for reference and convenience purposes only and without any warranty as to its accuracy orotherwise. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail.

Securities Code 6245
June 6, 2022

Dear Shareholders
101-1 Kawai, Kawai-cho, Kitakatsuragi-gun, Nara

President Kaoru Okada

Convocation Notice of the 98th Ordinary General Meeting of Shareholders
We would like to express our sincere thanks for your continued support.
I hereby deliver this Convocation Notice of the 98th Ordinary General Meeting of Shareholders.
In order to prevent the spread of the novel coronavirus disease (COVID-19), we request that shareholder refrainfrom attending the General Meeting of Shareholders this year if possible and exercise voting rights via either
postal mail of the internet in advance.
For details on exercising voting rights, please refer to the attached “Reference Documents for the General
Meeting of Shareholders". In accordance with Page 3 “Guide to Exercising Voting Rights”, please exercise yourrights by 5pm JST June 24 (Friday) 2022.

1.
2.

Date and Time

3.

Items

Place

Items to be

Notes
June 27 (Monday) 2022 at 10.00am (JST)Company Headquarters, 101-1 Kawai, Kawai-cho, Kitakatsuragi-gun 636-0051 Nara
（Please refer to notes at the end）
1.

reported

2.

Business Report, Consolidated Financial Statements, and Report by the Independent
Auditor and Audit & Supervisory Committee for the 98th term (from April 1, 2021 toMarch 31, 2022)
Non-consolidated Financial Statements for the 98th term (from April 1, 2021 toMarch 31, 2022)

Items to beresolved<Company proposals (Proposals 1 to 4)>
Proposal 1 Appropriation of Surplus
Proposal 2 Partial Amendments to the Articles of Incorporation
Proposal 3 Election of Eight (8) Directors (excluding Audit & Supervisory Committee Members)
Proposal 4 Election of Three (3) Audit & Supervisory Committee Members<Shareholder proposals (Proposals 5 and 6)>
Proposal 5 Determination of Remuneration Under the Restricted Stock Compensation System
Proposal 6

Acquisition of the Company’s Treasury Shares

A summary of shareholder proposals (Proposals 5 and 6) is provided in the attached Reference Documents for
the General Meeting of Shareholders (Pages 15 to 17)◎If there are revisions to Reference Documents for the General Meeting of Shareholders, Business Report,
Consolidated Financial Statements, and Non-Consolidated Financial Statements, they will be posted on the
Company’s website（https://www.hirano-tec.co.jp/）- 1 -【Measures to prevent the spread of the novel coronavirus disease】
In order to prevent the spread of the novel coronavirus disease, we present the following guidelines.
We ask for shareholders understanding of and cooperation with these measures.
＜Request to Shareholders＞
・In order to prevent the spread of the novel coronavirus disease (COVID-19), we request that shareholders,regardless of their health condition, refrain from attending the General Meeting of Shareholders this year if
possible and exercise voting rights via either postal mail of the internet in advance.
＜Requests to Shareholders Attending the General Meeting of Shareholders＞
・Please use the alcohol disinfecting spray and temperature check facilities placed in the reception area
before entering the General Meeting of Shareholders’ venue.
・Please wear a mask at all times inside the General Meeting of Shareholders’ venue.
・In order to maintain a safe distance between seats, the number of seats inside the venue is limited. As aconsequence, we may not be able to allow entry to everyone and ask for your understanding in this matter.
＜Measures to be taken by the Company＞
・All of the Directors and operating staff attending the General Meeting of Shareholders will wear masks.
・We request that any shareholder who seems to be unwell act in accordance with the instructions ofoperating staff, including requests to leave the venue, in order to prevent the spread of the virus.
・In the interest of time, the meeting will proceed with a summarized explanation to the floor of items to bereported (including the Report by the Independent Auditor) and the items to be resolved.
・The provision of a dedicated shuttle bus from JR Horyuji Station will be cancelled this year.

【Provision of gifts and food and drink at the General Meeting of Shareholders】
To ensure fairness between those shareholders able to attend and those not able to attend the General
Meeting of Shareholders, the provision of gifts at the General Meeting of Shareholders will be cancelled
this year. In addition, to prevent the spread of the virus, the provision of food and drink before the General
Meeting of Shareholders will be cancelled this year. Thank you for your understanding.
We ask for your understanding and cooperation in all these matters.
Any changes to the hosting or schedule of the General Meeting of Shareholders will be posted on the
Company’s website（https://www.hirano-tec.co.jp/）- 2 -Guide to Exercising Voting Rights
The exercising of voting rights at a General Meeting of Shareholders is an important shareholder right.
Please review the accompanying reference documents for the General Meeting of Shareholders andexercise your voting rights.
Voting rights can be exercised through one of the following three methods.

Exercise voting rights online

Exercise voting rights inwriting (by postal mail)Attend the General Meetingof Shareholders in person

Please vote for or against each proposal
according to the instructions on thefollowing page.

Please vote for or against each proposalon the enclosed Voting Rights Exercise
Form and return it without a stamp on theenvelope.

Please submit the enclosed Voting Rights
Exercise Form at the reception desk.

Voting deadline

Voting deadline

Date and time

Voting must be completed by
5:00 p.m. JST on Friday,
June 24, 2022

The form must be received by
5:00 p.m. JST on Friday,
June 24, 2022

Monday, June 27, 2022
10:00 a.m. JST

How to fill out the Voting Rights Exercise Form
Example for filling out
Voting Rights Exercise Form
If you agree with the management proposal and theIf you disagree with the management proposal and theopinion of the Board of Directors of the Company
Management Proposals

opinion of the Board of Directors of the Company
Management Proposals

Proposal

For or Against

Proposal

Proposal No. 1

For

Against

Proposal No.1

For

Against

Proposal No. 2

For

Against

Proposal No.2

For

AgainstFor

AgainstFor

Against

Proposal No. 3

Proposal No.3
ExcludingFor

Excluding
AgainstFor

Proposal No. 4

ExcludingShareholder Proposals

Shareholder Proposals

Proposal2.
3.

Against

Proposal No.4
Excluding1.

For or Against

For or Against

Proposal

For or Against

Proposal No. 5

For

Against

Proposal No.5

For

Against

Proposal No. 6

For

Against

Proposal No.6

For

AgainstIf there is no indication of whether a shareholder is for or against each proposal, it will be deemed that theshareholder voted in favor of the management proposals and against the shareholder proposals.
To indicate different intentions for some candidate(s) in Proposal No. 3 and Proposal No. 4, please enter the
relative candidate number(s).
If you vote both by postal mail and online, only the vote placed online will be deemed valid. If you vote multiple
times online, only the last vote will be deemed valid.

- 3 -How to vote online
How to enter the login ID andtemporary password

How to scan the QR code
You can log in to the voting rights exercise site without entering
the login ID or temporary password on the Voting Rights Exercise Form.

Voting rights exercise site http://evote.tr.mufg.jp(in Japanese only)

Help Desk, Stock Transfer Agency Department
Mitsubishi UFJ Trust and Banking

If you are unsure how to use your computer or smartphone toexercise your voting rights online, please contact the help deskon the right.

0120－173－027（Toll free in Japan 9:00 a.m. - 9:00 p.m. JST）

- 4 -

Reference Documents for the General Meeting of Shareholders<Management Proposals>
Proposals and References
Proposal No. 1 Appropriation of Surplus
The Company intends to allocate the surplus as follows, taking into account business results and the businessenvironment in the fiscal year under review, while ensuring sufficient internal reserves.
Year-end dividend
Type of assets distributed as dividends⑴
Cash
Allocation of dividend assets to shareholders and total amount⑵
Per share of common stock¥28
Total amount¥421,758,876
Effective date for dividend⑶
June 28, 2022
<Company proposals>
Proposal 2 Partial Amendments to the Articles of Incorporation
1. Reason for the amendments
In accordance with the amended provisions stipulated in a proviso to Article 1 of the Supplementary
Provisions of the “Act for Partial Amendment of the Companies Act” (Act No. 70 of 2019), which will
come into effect on September 1, 2022, the Company will make the following necessary amendments
to its Articles of Incorporation in order to introduce a system for the electronic provision of materials
for general meetings of shareholders.
1.

2.

3.

4.

Article 15 (Measures for electronic provision of information, etc.), Paragraph 1 of the proposed
amendments is to be newly introduced, as the Company will be obliged to stipulate in its Articles ofIncorporation that it will take measures for the electronic provision of the information contained inreference documents for general meetings of shareholders, etc.
Article 15 (Measures for electronic provision of information, etc.), Paragraph 2 of the proposed
amendments is to be newly introduced in order to allow the scope of the matters described in the
documents to be delivered to shareholders who have requested document delivery to be limited to thescope specified by the Ordinance of the Ministry of Justice, with respect to those matters for whichmeasures for electronic provision of information are to be taken concerning the information containedin reference documents for general meetings of shareholders, etc.
Article 15 (Disclosure of reference documents for general meeting of shareholders, etc. via the Internet
and deemed provision) of the current Articles of Incorporation is to be deleted, as its provisions will
become unnecessary once the system of electronic provision of materials for general meetings ofshareholders is introduced.
Supplementary provisions are to be established concerning the effectiveness of the above newly
introduced and deleted provisions. These supplementary provisions shall be deleted after the appropriate
period has elapsed.

- 5 -2. Substance of the amendments
The proposed amendments are as follows.
（Amended parts are indicated by underlining）
Current Articles of Incorporation

Proposed Amendments(Disclosure of reference documents for general
meeting of shareholders, etc. via the Internet anddeemed provision
Article 15. When convening a general meeting of（Deletion）

shareholders, it shall be deemed that theCompany has provided shareholders withnecessary information that should be
described or presented in reference
documents for the general meeting ofshareholders, business reports, and nonconsolidated and consolidated financial
statements, if they are disclosed via theInternet in accordance with the Ministry ofJustice Ordinance.
Measures for electronic provision of
information, etc.

（Newly introduced）

Article 15. ①When convening a general meeting ofshareholders, the Company shall takemeasures for the electronic provision of
information contained in reference
documents for general meetings ofshareholders, etc.
②With respect to all or part of the mattersfor which measures for electronic
provision of information are to be taken as
specified by the Ordinance of the Ministryof Justice, the Company can elect not toinclude such matters in the documents to
be delivered to shareholders who havemade a request for document delivery by
the record date for voting rights.

- 6 -Current Articles of Incorporation

Proposed Amendments

Supplementary Provisions

Supplementary Provisions（Transitional measures concerning the exemption（Transitional measures concerning the exemption

from liability for Auditors）

from liability for Auditors

Article 1 （Text abbreviated）

Article 1 （No change）（Transitional measures concerning the electronic
provision of information, etc.）（Newly introduced）

Article 2 ①The deletion or revision of Article 15(Disclosure of reference documents forgeneral meeting of shareholders, etc. via
the Internet and deemed provision) andthe introduction of Article 15 (Measuresfor electronic provision of information,etc.) of the Articles of Incorporation shallbecome effective as of September 1, 2022.
②Notwithstanding the provisions of thepreceding paragraph, Article 15(Disclosure of reference documents forgeneral meeting of shareholders, etc. via
the Internet and deemed provision) of the
Articles of Incorporation shall remain in
effect for any general meeting ofshareholders held on a date within six
months from September 1, 2022.
③The provisions of this Article shall bedeleted after six months have elapsed
from September 1, 2022, or three months
have elapsed from the date of a general
meeting of shareholders as specified in
the preceding paragraph, whichever islater.

- 7 -<Management Proposal>
Proposal No. 3 Election of Eight Directors (excluding directors who are Audit and Supervisory Committee
members)
The term of office of all eight (8) Directors (excluding Directors who are Audit and Supervisory Committee
members) will expire at the conclusion of the Ordinary General Meeting of Shareholders. In that regard, theCompany proposes the election of eight Directors (excluding Directors who are Audit and Supervisory
Committee members).
The Audit and Supervisory Committee has expressed the opinion that there are no matters which requireparticular mention regarding this proposal.
The candidates for Director (excluding Directors who are Audit and Supervisory Committee members) are
as follows.
Candidate
No.

Name（ Age ）

Reappointment
Kaoru Okada( 63 )
１【Number of Company shares
held】

29,773【Attendance at Board of
Directors Meetings】
18 of 18（100％）

Reappointment
Munenori Yasui( 62 )
２【Number of Company shares
held】

12,312【Attendance at Board of
Directors Meetings】
18 of 18（100％）

Reappointment
Tsugio Kaneko( 61 )
３【Number of Company shares
held】

15,688【Attendance at Board of
Directors Meetings】
18 of 18（100％）Career summary, positions, responsibilities, and significant concurrent
positions
March
July
June
June

1981 Joined the Company
2013 Deputy Manager, Design Department
2014 Director
2015 President and Representative Director (current position)＜Significant concurrent positions＞
HIRANO K&E Co., Ltd.
President and Representative Director【Reasons for nomination as a candidate for Director】
Kaoru Okada has been primarily involved in Design and Production technology
since he joined the Company, and has a wealth of experience and knowledge in the
Manufacturing Department. The Company has determined that as a director, he isan appropriate person to supervise overall management, make sound decisions onimportant matters, and achieve the sustainable enhancement of corporate value.
The Company therefore requests the reappointment of Mr. Okada as Director.
March
April
June
June
April

1982 Joined the Company
2007 Deputy Manager, General Affairs Department
2012 Director
2018 Managing Director
2019 Managing Director, Supervisor of General Affairs andProduction Departments, Manager of Quality Assurance
Department（current position）＜Significant concurrent positions＞
Hirano Giken Kogyo Co., Ltd.
President & Representative Director【Reasons for nomination as a candidate for Director】
Munenori Yasui has been primarily involved in the Production and General
Affairs Departments since he joined the Company, and has experience in
Production and Administrative operations. As the officer in charge of R&D, he
has led new technology development. Mr. Yasui has management skills as the
person in charge of a wide range of fields, and the Company has determined that
he is an appropriate person to achieve the sustainable enhancement of corporate
value. The Company therefore requests the reappointment of Mr. Yasui as
Director.
March
April
June

1983 Joined the Company
2010 Deputy Manager, Design Department
2013 Director, Manager of Machinery Department (current position)【Reasons for nomination as a candidate for Director】
Tsugio Kaneko has held positions primarily in the Design Department since hejoined the Company. In the Sales Department, as the person in charge he has led
the sales strategy and worked to develop new markets, contributing to the stabilityof the Company’s management base and earnings improvement. The Company has
determined that Mr. Kaneko is an appropriate person to achieve the sustainableenhancement of corporate value, and requests his reappointment as Director.

- 8 -Candidate
No.

Name
（ Age ）
Reappointment
Fumikazu Okada( 62 )

４【Number of Company shares
held】

14,777【Attendance at Board of
Directors Meetings】
18 of 18（100％）Career summary, positions, responsibilities, and significant concurrent
positions
March
October
June【Reasons for nomination as a candidate for Director】
Fumikazu Okada has been primarily involved in the Production Department
since he joined the Company. He has contributed to improvements in basic
production technologies for machining and production technology, and has
knowledge and experience as an administrator. The Company has determined that
Mr. Okada is an appropriate person to achieve the sustainable enhancement ofcorporate value, and requests his reappointment as Director.
April
April
June

Reappointment
Masashi Hara
( 57 )
５【Number of Company shares
held】

5,481
【Attendance at Board of
Directors Meetings】
18 of 18（100％）

Reappointment
Katsuhiro Omori( 56 )
６【Number of Company shares
held】

11,081【Attendance at Board of
Directors Meetings】
18 of 18（100％）

1983 Joined the Company
2012 Deputy Manager, Production Department
2016 Director, Production Department Manager（current position）

April
June

1989 Joined The Sanwa Bank, Ltd. (now MUFG Bank Ltd.）2014 Branch Manager, The Sanwa Bank Namba
2017 Seconded to Hirano Tecseed Co., Ltd. as Deputy Manager,
General Affairs Department
2018 Joined the Company as Deputy Manager, General Affairs
Department
2018 Director, General Affairs Department Manager (current
position）【Reasons for nomination as a candidate for Director】
Masashi Hara has in-depth knowledge of finance and accounting from his
extensive financial institution experience. In June 2018 he was appointed as adirector, and fulfills his responsibilities appropriately in that capacity with his
involvement in general administrative operations. The Company has determinedthat Mr. Hara is an appropriate person to achieve the sustainable enhancement ofcorporate value, and requests his reappointment as Director.
March
April
June

1988 Joined the Company
2016 Design Department Manager
2018 Director, Design Department Manager (current position)【Reasons for nomination as a candidate for Director】
Katsuhiro Omori has been primarily involved in the Design Department since hejoined the Company, and has contributed to improvements in the Company’s coating
technologies through the development of various equipment. In June 2018 he wasappointed as a director, and fulfills his responsibilities appropriately in that capacity
as the Design Department Manager. The Company has determined that Mr. Omori
is an appropriate person to achieve the sustainable enhancement of corporate value,
and requests his reappointment as Director.

- 9 -

Name
(Age)

Candidate
No.

Career summary, positions, responsibilities, and significant concurrent
positions
April
June
June
June

Reappointment

７

Candidate for

Independent

Outside Director

Director＜Significant concurrent positions＞
New Japan Chemical Co., Ltd.
Chairman
JFE Container Co., Ltd.
Outside Director【Reasons for nomination as a candidate for Outside Director and expectedroles】
Mantaro Fujimoto has served as President & Representative Director and as
Chairman of New Japan Chemical Co., Ltd. and has extensive knowledge and【Number of Company shares
held】
experience in corporate management. He has a deep knowledge of the chemical
400
industry and has been involved in Sales and Corporate Planning & Administration【Attendance at Board offor many years. From this experience, he is able to oversee management, strengthen
Directors Meetings】
the Company’s internal controls and provide objective advice and recommendations
12 of 13（92.3％）
in order to achieve the sustainable enhancement of corporate value. The Company
has determined that Mr. Fujimoto is able to perform his duties appropriately as an
outside director and therefore nominates him as a candidate for Outside Director. He
will have served as an Outside director for one year at the conclusion of the General
Meeting of Shareholders.
Mantaro Fujimoto( 69 )

Reappointment

８1975 Joined New Japan Chemical Co., Ltd
2004 President and Representative Director of New Japan ChemicalCo., Ltd.
2020 Chairman, New Japan Chemical Co., Ltd.
2021 Outside Director of Hirano Tecseed Co., Ltd. (current position）

Candidate for

Independent

Outside Director

Director

February 1985 Joined Toyo Tanso Co., Ltd.
March
2016 President and Representative Director of Toyo Tanso Co., Ltd.
May2018 Resigned as President and Representative Director of Toyo Tanso
Co., Ltd.
May2018 President and Representative Director of Ohwada Carbon
Industry Co., Ltd.
January 2019 Advisor to Ohwada Carbon Industry Co., Ltd.
March2020 Resigned from Ohwada Carbon Industry Co., Ltd.
June
2021 Outside Director, Hirano Tecseed Co. Ltd.（current position）【Reasons for nomination as a candidate for Outside Director and expectedroles】
Takashi Konishi served as President & Representative Director of Toyo Tanso Co.,Ltd.
and of Ohwada Carbon Industry Co., Ltd. and has extensive knowledge and【Number of Company shares
experience in corporate management. For many years he has been involved in
held】
None
Technology, Quality Assurance, and Production departments, contributing to the【Attendance at Board ofenhancement of corporate value. From this experience, he is able to oversee
Directors Meetings】
management, strengthen the Company’s internal controls and provide objective
13 of 13（100％）
advice and recommendations in order to achieve the sustainable enhancement ofcorporate value. The Company has determined that Mr. Konishi is able to perform
his duties appropriately as an Outside director and therefore nominates him as a
candidate for Outside Director. He will have served as an Outside director for one
year at the conclusion of the General Meeting of Shareholders.
Takashi Konishi( 61 )- 10 -

（Note）
1.
2.

None of the candidates has any special interest relationship with the Company.
Mantaro Fujimoto and Takashi Konishi are candidates for Outside Director as stipulated in Article 2 Paragraph 3, Item 7of the Regulations for Enforcement of the Companies Act.

3.

Mantaro Fujimoto and Takashi Konishi satisfy the Criteria for Independence of Outside Directors as stipulated by the
Tokyo Stock Exchange. If the reappointment of the two candidates is approved at the General Meeting of Shareholders,the Company will notify the Tokyo Stock Exchange that they are Independent Directors.

4.

Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company has concluded an agreement with Mantaro
Fujimoto and Takashi Konishi that limits their liability for damages due to neglect of duties. If their reappointment isapproved at the General Meeting of Shareholders, the company plans to continue this agreement with them. The limit ofliability based on the contract is the amount prescribed in the relevant laws and regulations.

5.

Pursuant to the provisions of Article 430, Paragraph 3, Item 1 of the Companies Act, the Company has concluded a D&O
liability insurance agreement with an insurance company. Under the agreement, if there is a claim against an insured
party by a shareholder or a third party during the insurance period for damages incurred by individuals as a result of anact or omission in performing their duties as directors and officers of the Company, damages are covered by the insurance
agreement.
The individuals covered by this insurance agreement are Directors and Corporate Auditors under the Companies Act.
The Company bears the full insurance premium for all the insured persons.
There are reasons for exemption of coverage, such as damages caused by insured individuals’ intentional violation oflaws or criminal acts.
Each candidate who is elected and assumes office as Director will be included as insured persons covered in theagreement. When the D&O liability insurance agreement is due for renewal in October 2022, it is expected to be renewedwith the same content.

- 11 -

<Management Proposal>
Proposal No. 4 Election of Three Directors who are Audit and Supervisory Committee Members
The terms of office of all three (3) directors currently serving as Audit and Supervisory Committee members(herein “auditors”) will expire at the conclusion of this Ordinary General Meeting of Shareholders. In thatregard, the Company proposes the election of three directors who are Audit and Supervisory Committee
members.
The Audit and Supervisory Committee has given its consent to this proposal.
The candidates for Director who are Audit and Supervisory Committee members are as follows.
Name
(Age)

Candidate
No.

Reappointment
Kenji Tazawa(1960年6月28日生)( 61 )
1【Number of Company shares
held】
9,000
【Attendance at Board of
Directors Meetings】
18 of 18（100％）【Attendance at Audit andSupervisory Committee
meetings】
14 of 14（100％）

Reappointment
Candidate for

Independent

Outside Director

Director

Kazumitsu Takaya(1958年12月１日生)( 63 )
2【Number of Company shares
held】

None

【Attendance at Board of
Directors Meetings】
18 of 18（100％）【Attendance at Audit andSupervisory Committee
meetings】
14 of 14（100％）Career summary, positions, responsibilities, and significant
concurrent positions
April
April
June
June

2011 Joined the Company
2014 Deputy Manager, General Affairs Department
2014 Full-time Corporate Auditor
2016 Director and Audit and Supervisory Committee Member (fulltime, current position）【Reasons for nomination as a candidate for Director who is a member of the
Audit and Supervisory Committee】
Kenji Tazawa has served as auditor since June 2014. Based on his experienceand achievements, the Company has determined that he is able to audit thelegality of the Company’s execution of business accurately, fairly, and efficiently,
strengthen its audit system, and further improve the effectiveness of the Board of
Directors’ decision-making and supervisory functions. Therefore, Mr. Tazawa has
been nominated again as a candidate for Director who is a member of the Audit
and Supervisory Committee.
March1989 Registered as a certified public accountant
August1992 Registered as a certified public tax accountant
March2004 Established Takaya CPA office（current position）
December 2004 Representative Partner, Nexus Audit Corporation (current
position)
June
2006 Auditor, Hirano Tecseed Co., Ltd.
June
2016 Outside Director and Audit & Supervisory Committee Member(current position）＜Significant concurrent positions＞
Nexus Audit Corporation Representative Partner
Nippon Pillar Packing Co. Ltd. Outside Director（Audit and Supervisory
Committee member）【Reasons for nomination as a candidate for Outside Director who is a member ofthe Audit and Supervisory Committee】
Kazumitsu Takaya has a high level of expertise and extensive experience as acertified public accountant, and from his professional viewpoint he provides
objective advice and recommendations that contribute to the improvement ofmanagement transparency and corporate governance. He has never been involvedin corporate management except as an outside officer, but for the above reasons it
has been determined that he can properly perform his duties as a director who is amember of the Audit and Supervisory Committee. Therefore, Mr. Takaya has
been nominated again as a candidate for Outside Director who is a member of the
Audit and Supervisory Committee. He will have served as an Outside director forsix years at the conclusion of this General Meeting of Shareholders.

- 12 -

Candidate
No.

Name
(Age)

Career summary, positions, responsibilities, and significant
concurrent positions
October
October
April
March
June

Reappointment
Candidate for
Outside Director

April

Independent
Director

June
Junko Tsuji(1964年8月25日生)( 57 )
３【Number of Company shares
held】
None
【Attendance at Board of
Directors Meetings】
18 of 18（100％）【Attendance at Audit andSupervisory Committee
meetings】
14 of 14（100％）

2000 Registered as an attorney at law
2012 Registered as a patent attorney2015 Established Tsuji Law & Patent Office（current position）
2017 Member of the Industrial Property Council, Japan Patent Office（current position）
2017 Member of the Japan Federation of Bar Associations’ (JFBA)
Committee on Intellectual Property Rights (current position)
2019 Member of the Cabinet Secretariat’s Expert Panel for the
Promotion of Health and Medical Care Strategies（current
position）
2019 Outside Director and Audit and Supervisory Committee Member（current position）＜Significant concurrent positions＞
Tsuji Law & Patent Office
Representative【Reasons for nomination as a candidate for Director who is a member of the
Audit and Supervisory Committee】
Junko Tsuji has a high level of expertise as a lawyer and patent attorney and awealth of experience serving as a member of various expert committees. From her
professional viewpoint she provides objective advice and recommendations that
contribute to the improvement of management transparency and corporate
governance. She has never been involved in corporate management except as an
outside officer, but for the above reasons it has been determined that she canproperly perform her duties as a director who is a member of the Audit andSupervisory Committee. Therefore, Ms. Tsuji has been nominated again as a
candidate for Director who is a member of the Audit and Supervisory Committee.
She will have served as an Outside director for three years at the conclusion ofthis General Meeting of Shareholders.

（Note）
1.
None of the candidates has any special interest relationship with the Company.
2.
The Company has notified the Tokyo Stock Exchange (TSE) that Kazumitsu Takaya and Junko Tsuji are
independent directors as stipulated by the TSE. If they are reappointed as directors who are members of the Audit
and Supervisory Committee, the Company will notify the TSE.
3.
Pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act, the Company has concluded anagreement with Kenji Tazawa, Kazumitsu Takaya, and Junko Tsuji that limits their liability for damages due to theneglect of duties. If they are reappointed, the Company plans to continue this agreement with them. The limit ofliability based on the contract is the amount prescribed in the relevant laws and regulations.

- 13 -

＜Reference＞
If Proposals No. 3 and No. 4 are approved at the General Meeting of Shareholders, the skills matrix in the
Company’s management structure will be as follows.
Expertise and Experience
Name

PositionIndependent

Corporate
Management

Kaoru Okada

President &Representative
Director〇

Munenori Yasui

Managing Director〇

Tsugio Kaneko

Director

Fumikazu Okada

Director

Masashi Hara

Director

Katsuhiro Omori

Director

Mantaro Fujimoto

Outside Director●〇

Takashi Konishi

Outside Director●〇

Kenji Tazawa

Kazumitsu
TakayaJunko Tsuji

Outside Director（Audit &Supervisory
Committee
Member）
Outside Director（Audit &Supervisory
Committee
Member）
Outside Director（Audit &Supervisory
Committee
Member）

Sales

Finance &Development

Accounting

〇

&

Legal

Production

〇

〇

〇
〇
〇

〇
〇

〇

〇

〇
〇

〇

〇

〇

●

〇

（Note）The above does not indicate all areas of expertise and knowledge of each candidate.

- 14 -

Experience

〇

〇

●

International

Proposal 5 and Proposal 6 are proposals from individual shareholders (hereinafter “proposal shareholder”).
The summary of the proposals of shareholders and the reasons thereof have been translated from the original
document.
<Shareholder proposal>
Proposal 5 Determination of Remuneration Under the Restricted Stock Compensation System(1) Summary of proposal
The remuneration amount for the Company’s Directors (excluding directors who are members of the Audit& Supervisory Committee) was set at an annual amount of ¥120 million or less (not including the salariesof those serving concurrently as an employee and director) and the amount for directors who are membersof the Audit & Supervisory Committee was set at an annual amount of ¥40 million or less at the ordinary
general meeting of shareholders of June 26, 2019. However, with the aim of incentivizing the directors tocontinually seek to raise the corporate value and to further improve the shared values between directors andshareholders, separately to this limit, a monetary remuneration claim should be established for the Restricted
Stock Compensation System under which directors can be awarded up to 60,000 shares with a maximum
value of ¥120 million per year and directors who are members of the Audit & Supervisory Committee up to
20,000 shares with a maximum value of ¥40 million per year. Restrictions on the transfer of the stock should
last for three years from the date of the award. The details on the timing and distribution should be decided
by the Board of Directors, but a Restricted Stock Compensation System should be introduced andimplemented in the Company with a three-year limit on stock transfer as an earnings-linked incentive system
to reward directors for meeting earnings benchmarks equivalent to three times their fixed remuneration
amounts on a cumulative basis.
(2) Reasons for Proposal
Although the Company already has a Restricted Stock Compensation System (hereinafter “this system”),
the limits are set at a low level, and it cannot be said to fully represent the shared values of directors andshareholders. I believe that this system should be expanded to not only cover all directors (including directors
who are members of the Audit & Supervisory Committee), but also to cover all the top 20 management
executives including executive officers. In addition, I propose that the executives covered by this systemshould be eligible to receive restricted stock with the restrictions on transfer of three years with a value
equivalent to three times fixed remuneration and bonuses on a cumulative basis. As noted in the Ministry of
Economy, Trade and Industry’s “Guidebook for Introducing Incentive Plans for Sustainable Corporate
Growth as Board Members’ Remuneration to Promote Proactive Business Management,” first published in
April 2014 and subsequently revised on numerous occasions, stock-based remuneration for executives isdesirable as an appropriate and effective way of encouraging management from a shareholder perspective
and incentivizing efforts to raise medium- to long-term performance.

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◇Opinion of the Board of Directors on the above shareholder’s proposal
The Board of Directors OPPOSES this shareholder’s proposal
The Company’s basic policy on director remuneration is to appropriately reward each management
position, deciding remuneration for each director based on a remuneration system linked to shareholder
profit in order to adequately incentivize the continual raising and improvement of the Company’s corporate
value.
Specifically, remuneration for executive directors who are not members of the Audit & Supervisory
Committee is comprised of a base remuneration in the form of a fixed remuneration which is determinedaccording to recent earnings and of stock-based remuneration, while remuneration for outside directors withauditing functions is solely in the form of a base remuneration consistent with their duties. In addition,
remuneration for directors who are members of the Audit & Supervisory Committee is decided through thediscussions with directors who are members of the Audit & Supervisory Committee to reflect their auditing
responsibilities and management roles.
In respect to stock-based remuneration, it was decided at the ordinary general meeting of shareholders ofJune 2019 to abolish the system of directors’ retirement bonuses and introduce the Restricted Stock
Compensation System with the aim of incentivizing the directors (excluding outside directors and directors who
are members of the Audit & Supervisory Committee) to continually seek to raise corporate value and to further
improve shared values between directors and shareholders. In accordance with the introduction of this system,
the appropriacy of the overall level of remuneration is considered with reference to data collected and analyzed
on directors’ remuneration from external research agencies.
In addition, in order to ensure objectivity and fairness in directors’ remuneration, the company has
established a Remuneration Committee as an advisory body to the Board of Directors, chaired by anindependent outside director and comprised of a majority of independent outside directors, which studies
matters related to directors’ remuneration including the reasonableness and appropriateness of the Restricted
Stock Compensation System and the necessity for reform (such as the introduction of a more active
performance-linked remuneration system) .
Furthermore, the fixed basic remuneration is decided with reference to the aforementioned data on
directors’ remuneration and takes into account the roles and responsibilities demanded of each director.
The total amount of a monetary remuneration claim to support the Restricted Stock Compensation System
which is sufficient to achieve the stated objective and to pay the current level of directors’ remuneration
while considering the balance with the fixed basic remuneration based on the aforementioned data on
directors’ remuneration is set to within ¥40 million per year (not including the salaries of those serving
concurrently as an employee and director), with up to 50,000 shares of the Company’s ordinary shares being
delivered as restricted stock (with this upper limit to be adjusted in a reasonable fashion in the case of astock split, etc.), and this was approved at the ordinary general meeting of shareholders of June 2019.
Under this remuneration system, we believe that the shareholder’s proposal for directors (excluding
directors who are members of the Audit & Supervisory Committee) to be awarded up to 60,000 shares witha maximum value of ¥120 million per year and directors who are members of the Audit & Supervisory
Committee who are currently not covered by this system to be awarded up to 20,000 shares with amaximum value of ¥40 million per year would lack balance with basic remuneration set in place and would
also significantly diverge from the Company’s basic policy on directors’ remuneration, and we believe it
would create an excessive remuneration structure that is heavily at odds with the balance with stakeholders
given the size of the Company and its operating income level.
Moreover, the shareholder’s proposal calls for the introduction of a Restricted Stock Compensation Systemthat covers all directors, including directors who are members of the Audit & Supervisory Committee, but
the Company’s policy is for directors who are members of the Audit & Supervisory Committee not to be
included in the Restricted Stock Compensation System owing to the expectation that they oversee andsupervise the business execution of the Board of Directors and work to strengthen the auditing functions ofmanagement by the Board of Directors.
As a result of these points, the Board of Directors opposes this shareholder’s proposal.

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<Shareholder proposal>
Proposal 6 Acquisition of the Company’s Treasury Shares(1) Summary of proposal
Pursuant to Article 156, Paragraph 1 of the Companies Act of Japan, the Company shall within one year of
the conclusion of this ordinary general meeting of shareholders exchange its ordinary stock for cash up to alimit of 1,500,000 total shares and an acquisition cost of ¥3,000,000,000.
(2) Reason for proposal
With the aim of expanding shareholder returns and improving capital efficiency, the Company should
acquire around 10% of the Company’s total number of issued shares (excluding treasury shares) and retirethem in accordance with Article 178 of the Companies Act.
◇Opinion of the Board of Directors on the above shareholder’s proposal
The Board of Directors OPPOSES this shareholder’s proposal
The Company pursues balance between financial soundness, capital efficiency, and shareholder returns,
while also aiming to raise corporate value through capital investment in the development of new businesses,
growth investment in areas such as operating alliances and M&As, and improvement in capital efficiency togrow profits.
In addition, distribution of profits is conducted with the aim of maintaining a certain level of consolidated
dividend payouts, while also deciding a dividend for each fiscal year that maintains a stable dividend level
without excessively relying on profit in any one fiscal year given the characteristics and significant volatility
in the Company’s business and based on the forecasts of business conditions and the financial situation in themedium- to long term. Moreover, the Company maintains retained earnings as core funds for developing newtechnologies that have strong long-term prospects, as well as expanding businesses and improving efficiency
and labor saving in the management structure, all with the aim of strengthening the corporate structure andboosting competitiveness.
Under these basic policies, the Company has made continuous returns to shareholders as shown in the tablebelow and, for FY2021, plans to pay an annual dividend of ¥56 per share (a consolidated annual dividend
payout ratio of 27.2%, compared to a consolidated annual dividend payout ratio of more than 25% between
FY2018 and FY2020).
Furthermore, the Company has formulated a medium-term business plan for FY2021 to FY2023 with afinancial target of an ordinary profit margin of at least 10%, and based on a firm understanding of theCompany’s capital costs, the plan includes detailed measures such as revising the business portfolio toachieve the basic policies and targets for areas such as earning capability and capital efficiency and investingin equipment and human resources, all with a focus on future social and economic trends.
The Company is aware that the acquisition of the Company’s treasury shares is one effective form ofshareholder returns, but believes it should take a flexible approach to decisions and execution of such moves,
taking into account the state of the share price and its finances at the time, capital policies, the earnings
forecast, undisclosed material facts, and its plans for investment in growth, and that any execution done inhaste has the potential to result in harm to shareholder profits.
The above shareholder’s proposal for the acquisition of the Company’s treasury shares would require alevel of net income much higher than the ¥2.6 billion forecast for FY2022 and appears to be based only on ashort-term viewpoint. If this proposal were to be adopted, we believe it would damage the aforementioned
funds for growth investment thus potentially slowing the medium- to long-term growth of the Company andits corporate value, while also threatening its financial stability, resulting in harm to shareholder profits.
As a result of these points, the Board of Directors opposes this shareholder’s proposal.
(Reference) Historical DPS
Full-year DPS

FY2016FY2017FY2018FY2019FY2020

¥28

¥30

¥45

¥46

¥37

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