[Translation]
Dear Shareholders,(Securities Code: 6736)
June 8, 2022
Representative Director and President: Ryusuke Utsumi
SUNCORPORATION
250 Asahi, Kochino-cho, Konan-shi, Aichi
Notice of Convocation of the 51st Ordinary General Meeting of Shareholders
We express our deep appreciation to each of the shareholders for their continued support.
Please be notified that the 51st Ordinary General Meeting of Shareholders of SUNCORPORATION(“the Company”) will be held as outlined below.
In order to prevent infections of COVID-19 and its spread, we would like to ask each of the shareholders
to exercise their voting rights by mail as much as possible. Also, in order to avoid the “Three Cs”(closed spaces, crowded places, close-contact settings) at the venue, we will limit the number ofattendees to the first 30 or so on the day of the meeting. We would appreciate your understanding.
After reviewing the reference documents concerning the general meeting of shareholders described
below, please indicate your approval or disapproval on the enclosed voting rights exercise form andsend it to arrive by 6:00 p.m., Wednesday, June 22, 2022.
Yours sincerely,
1.
2.
3.

◎

Time and Date: Thursday, June 23, 2022 at 10:00 a.m.
Venue:
Conference room on the 3rd floor of the Company’s Konan Office
250 Asahi, Kochino-cho, Konan-shi, Aichi(Please see the venue guide map at the end)
Subject matter of the General Meeting of Shareholders
Matters to be reported
1: The business report, consolidated financial statements, and audit results of theconsolidated financial statements by the Accounting Auditor and the Audit andSupervisory Committee for the 51st fiscal year (from April 1, 2021 to March
31, 2022)
2: The non-consolidated financial statements for the 51st fiscal year (from April 1,
2021 to March 31, 2022)
Matters to be resolved
Proposal No. 1: Appropriation of surplus
Proposal No. 2: Partial amendment to the Articles of Incorporation
Proposal No. 3: Appointment of six directors (excluding directors who are Audit andSupervisory Committee Members)
Proposal No. 4: Appointment of three directors as members of the Audit and Supervisory
Committee
Proposal No. 5: Appointment of the Auditor
Proposal No.6: Revision of the remuneration for directors (excluding the directors who aremembers of the Audit and Supervisory Committee) in connection with
the introduction of a post-delivery type stock compensation system
Of the documents that should be provided in this convocation notice, the “notes to theconsolidated financial statements” and “notes to the non-consolidated financial statements” areposted on our website (https://www.sun-denshi.co.jp) based on laws and regulations and theprovisions of Article 14 of the Company’s Articles of Incorporation, and are not described in
the materials attached to this convocation notice. The consolidated and non-consolidated
financial statements included in the attached documents of this convocation notice are part ofthe consolidated and non-consolidated financial statements audited by the Accounting Auditor
and the Audit and Supervisory Committee in preparing the accounting audit report and the◎audit report.
Please note that any amendments to the matters stated in the “business report, consolidated
financial statements, non-consolidated financial statements, and reference documents
concerning the general meeting of shareholders” will be posted on our website(https://www.sun-denshi.co.jp).

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Reference Documents Concerning the General Meeting of Shareholders
Agenda and relevant information
Proposal No. 1: Appropriation of surplus
The Company proposes to appropriate surplus as given below.
Our basic policy regarding dividends is to actively and flexibly pay dividends in line with businessperformance, taking into consideration the medium to long-term free cash flow and dividend payout
ratio, in order to develop business for the future, strengthen the management foundation, and increase
corporate value over the medium to long term.
Based on this policy, we propose to pay the year-end dividend for the current fiscal year as follows,
taking into consideration the solid performance of the current fiscal year and our financial position.
Matters concerning year-end dividends(1) Type of dividend property: Cash
(2) Matters concerning the allocation of dividend assets to shareholders and the total amount thereof
Total amount: 478,821,320 yen
20 yen per share of common stock of SUNCORPORATION(3) Effective date of the distribution of surplus
June 24, 2022-

Proposal 2: Partial amendment to the Articles of Incorporation
Reasons for the changes
The amendment stipulated in the provision of Article 1 of the Supplementary Provision of the"Law Partially Amending the Companies Act" (Law No. 70 of 2022) will come into effect on
September 1, 2022, and the Company proposes to amend its Articles of Incorporation as follows
in order to prepare for the introduction of the electronic provision system of materials for the
General Meeting of Shareholders.
(1) Article 14, Paragraph 1 of the Proposed Amendment provides that the Company shall takemeasures to provide information that is the content of the Reference Documents for the
General Meeting of Shareholders, etc. electronically.
(2) Paragraph 2 of Article 14 of the Proposed Amendment will establish a provision to limit thescope of matters to be included in the document to be delivered to shareholders who haverequested delivery of the document.
(3) The provision for Internet disclosure and the deemed provision of reference documents for
the General Meeting of Shareholders, etc. (Article 14 of the current Articles of Incorporation)
shall be deleted as it is no longer necessary.
(4) In accordance with the above new establishment and deletion, supplementary provisions
regarding the effective date, etc. are to be established.
Details of the changes
The details of the changes are as follows.
(The underlines indicate the changes.)
Current Articles of Incorporation
Proposed Changes(Internet Disclosure and the Deemed Provision ofReference Documents for the General Meeting of< Deletion >Shareholders, etc.)
Article 14. The Company shall be deemed to haveprovided to its shareholders, at the time of
convocation of a general meeting ofshareholders, information pertaining tomatters to be stated or indicated in thereference documents for the general meetingof shareholders, business report, financial
statements and consolidated financial
statements by disclosing such information
via the Internet in accordance with theprovisions of the applicable Ordinance ofthe Ministry of Justice. The Company may
deem that it has provided such information
to shareholders by disclosing it via theInternet in accordance with the applicable
Ordinance of the Ministry of Justice.
(Electronic provision measures, etc.)< Newly established >Article 14. The Company shall, at the time of
convening a general meeting of shareholders,
take measures to provide electronically the
information that is the content of the reference
documents, etc. for the general meeting ofshareholders.
(2) The Company may not include all or part ofthe matters for which electronic provision
measures are taken, which are provided for in
the Ordinance of the Ministry of Justice, in the
document to be delivered to shareholders who-have made a written request by the Record Date
for Voting Rights.

< Newly established >(Supplementary Provisions)
1. The deletion of Article 14 (Internet Disclosureand the Deemed Provision of Reference
Documents for General Meetings ofShareholders, etc.) of the current Articles ofIncorporation and the establishment of Article
14 (Measures for Electronic Provision, etc.) of
the proposed amendment shall become effective
as of the date of enforcement of the amended
provisions prescribed in the proviso of Article 1of the Supplementary Provisions of the Law to
Amend the Companies Act (Law No. 70 of
2049) (the "Enforcement Date").
2. Notwithstanding the provisions of the preceding
paragraph, Article 14 of the present Articles ofIncorporation shall remain in force with respect
to shareholders' meetings whose date is within
six months from the effective date.
3. These Supplementary Provisions shall bedeleted after six (6) months have elapsed fromthe effective date or after three (3) months haveelapsed from the date of the General Meeting of
Shareholders set forth in the preceding
paragraph, whichever is later.

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Proposal 3: Appointment of Six (6) Directors (excluding Directors who are Audit Committee Members)
As the terms of office of all directors (excluding directors who are members of the Audit
Committee) will expire at the conclusion of this General Meeting of Shareholders, the Company
proposes the appointment of six (6) Directors (excluding directors who are members of the Audit
Committee). The Audit Committee has stated that there are no particular matters to be pointed out
in connection with this proposal.
The nominees for directors (excluding directors who are Audit Committee Members) are as
follows.
candidaNamete(Date of birth)
No.

1

2

Brief Personal History, Positions,
Number of
Responsibilities and Important
our shares
Concurrent Positions
heldMar. 2008 Chubu
Association
forManagement
Information Technology Aichi Venture House
Incubation Manager
Jun. 2009 Manager, Industrial Support Department, Chubu
Aerospace Technology Center
Jun. 2012 Joined SUNCORPORATION
Oct. 2018 General Manager, Internal Control Office
Ryusuke Utsumi Apr. 2019 General Manager, Internal Audit Office
900 shares(October 8, 1965) Apr. 2020 Director of the SUNCORPORATION
Apr. 2020 Director, Cellebrite DI Ltd.
Apr. 2020 Director, E-Dream Corporation (to present)
Jul. 2020 Director, SUNTAC Corporation
Feb.2021 Chairman, Cellebrite DI Ltd.
Jun. 2021 Representative
Directorof
SUNCORPORATION (to present)
Aug. 2021 Director, Cellebrite DI Ltd. (to present)
Reasons for the appointment as a candidate
Since assuming the position of Director of SUNCORPORATION in April 2020, he has beenpromoting the review of sales methods and rationalization of management for the
restructuring of management and further growth of each business by utilizing his experiencein a wide range of fields and his extensive knowledge and personal connections as a corporate
manager. He has demonstrated a high degree of drive and leadership in the management ofeach subsidiary and in various measures to strengthen the Company's management base.
Pete Mauik Mitchell Accounting Firm (nowOct. 1972
KPMG)
Sep. 1978 George Takahashi Accounting OfficeFeb. 1980 Mackin Industries
Sep. 1984 President and Consultant, System Pro USA
Showa Ota & Co. (now Ernst & Young
Oct. 1989
ShinNihon LLC)
General Manager, Internal Audit Office,Nov. 1994
Goodman Co.
Managing Director and General Manager of
Sep. 1997
Administration Division of the same company
Yoshimi Kimura
3,100
shares(April 3, 1948)
Managing Director, General Manager of
Sep. 2004 Overseas Business Management Division andGeneral Manager of Administration DivisionSep. 2006 Chairman, Avantech Vascular, Inc.
Dec. 2006 Light Lab Imaging, Inc. Controller
Sep. 2008 Full-time Auditor of Goodman Corporation
Sep. 2014 Auditor, Greens Inc.
Director and Audit Committee Member of theMar. 2016
same company
Jul. 2018 Consultant for SUNCORPORATION
Jun. 2019 President and Representative Director of-

candida
Namete(Date of birth)No.
Jun. 2021

Brief Personal History, Positions,
Responsibilities and Important
Concurrent Positions
SUNCORPORATION
Senior Managing Director and Representative
Director of SUNCORPORATION (to present)

Number ofour shares
held

Reasons for the appointment as a candidate
He has abundant experience in overseeing corporate management and administration atseveral domestic and overseas companies over many years, as well as sufficient knowledge
and experience to carry out management restructuring, including investing in and growing
startup companies, launching new businesses, and improving operations, and was appointed
as a director in June 2019. Since then, he has promoted the rationalization of the Company's
management and is expected to further strengthen the functions of the Board of Directors.

-

candida
Namete(Date of birth)No.

Brief Personal History, Positions,
Responsibilities and Important
Concurrent Positions
Aug. 2006 Forensic
Accountant,
RGL
Forensics
Accountants and Consultants, London
Aug. 2009 From ICAEW (Institute of Chartered
Accountants in England and Wales)
Accredited by the Association of Chartered
Certified Accountants (ACA)
Yonatan Domnitz Jan. 2010 forensic accountant, C. Lewis & Company LLP(April 21, 1981)(London and Hong Kong)

3

4

Number ofour sharesheld

0 sharesAug. 2012 Director and Strategic Analyst (to present),
Oasis Management Company Ltd.
Apr. 2020 Director of SUNCORPORATION (to present)
Apr. 2020 Director, Cellebrite DI Ltd. (to present)
Jul. 2020 Director, Bacsoft,Ltd.
Reasons for the appointment as a candidate
He has engaged in financial analyses and various risk investigations for many years and has
the specialized knowledge of advanced financial fields and the ability to supervise ourgroup’s finance and accounting departments. He is expected to contribute to the enhancementof SUNCORPORATION's corporate value and medium to long term development byimproving profitability, improving operations, strengthening competitiveness, andimplementing corporate governance reforms.
Sep.
Clerkship, Hamburger, Evron Law Firm (Israel)
1994
Jan.
Lawyer, Sadot Law Firm (Israel)
1996(Member of the Israeli Bar Association sinceNovember 1995)
Jul.
Tokyo correspondent, Maariv Daily Newspaper
1999(Israel)Business Development Manager, Japan Israel
Nov.
Investment Corporation, Ltd.
2002
Business Development Consultant, ZlichaJul.
Consulting, Inc.
2004
(to present)
Yakov Zlicha
Jun.
OEM Sales Manager, Mentor Graphics Japan K.K. 300 shares(October 4, 1966) 2007
(acquired Valor Computerized Systems Japan)
Jun.
2012
Nov.
2015

Director of Business Development, Screenovate
Technologies Ltd. (Israel)
Representative Director and Country Manager
Incredibuild Japan K.K.

Apr.
Outside Director of SUNCORPORATION
2020
Jul.
Director of SUNCORPORATION (to present)
2020
Jul.
Director, Bacsoft, Ltd. (to present)
2020
Reasons for the appointment as a candidate
He has many years of extensive experience in business development in both Japan and Israel,and his outstanding expertise as a lawyer is expected to strengthen the functions of the Boardof Directors.

-

candida
Namete(Date of birth)No.

Akira Iwata(November 30,
1950)
5

6

Brief Personal History, Positions,
Responsibilities and Important
Concurrent Positions
Apr. 1985 Associate Professor, Department of Computer
Science and Engineering, Nagoya Institute ofTechnology
Apr. 1993 Professor, Department of Electrical andComputer Engineering, Nagoya Institute ofTechnology
Apr. 1997 Chairman, Department of Electrical andComputer Engineering, Nagoya Institute ofTechnology
Nov. 2002 Vice President, Nagoya Institute of Technology
Jan. 2004 Professor, Graduate School of Engineering,
Nagoya Institute of Technology
Apr. 2004 Professor, Graduate School of Engineering,
Nagoya Institute of Technology
General Manager, Intellectual Property
Management Division, Techno Innovation
Center (concurrent position)
Apr. 2016 Professor Emeritus, Nagoya Institute ofTechnology (current position)
Apr. 2016 Representative
Director,
Encephalon
Corporation (to present) a startup company anda national university corporation from Nagoya
Institute of Technology,

Number ofour shares
held

100 shares

Apr. 2020 Outside Director of SUNCORPORATION (topresent)
Reasons for the nomination as a candidate and the expected roles
He has advanced technical expertise in the fields of artificial intelligence (AI), neuralnetworks, deep learning, and information security, as well as extensive consulting experiencein the planning, development, and manufacturing of IoT sensor systems. He is expected tocontribute to the growth and development of SUNCORPORATION's group, and is therefore
nominated as a candidate for Outside Director again.
Israeli Air Force Intelligence Squadron
May.
1989
Sep. 1996 Air Force Weapons Procurement Manager in New
York, Israel Ministry of Defense
Aug. 1999 Director, Systems Integration, DM Incorporated
Jul. 2001 Co-founder and Managing Director, Sparta
Systems Europe
Senior Global Project Manager
Yaniv Vardi(August 31, 1973) Apr. 2004 Vice President of Operations of the same company 0 shares
Jun. 2008 Managing Director of the same company
Nov. 2012 Chief Executive Officer, Panoramic Power, Inc.
Oct. 2015 Managing Director in International BusinessCentrica Business Solutions, Inc.
Apr. 2020 Outside Director of SUNCORPORATION (topresent)
Aug.2020 Director and Chief Executive Officer of Claroty(to present)
Reasons for the nomination as a candidate and the expected roles
He has been involved in the formulation of strategies for various global businesses for many
years, and has a wealth of experience and accomplishments in achieving global growth andsuccess. He is expected to contribute to the growth and development of
SUNCORPORATION’s group, and is therefore nominated as a candidate for Outside
Director.

-

(Notes) There are no special interests between the director candidates and SUNCORPORATION.
1.
Mr. Akira Iwata and Mr. Yaniv Vardi are currently outside directors of the Company who are2
not members of the Audit Committee, and will have been in office for two years and threemonths at the conclusion of this General Meeting of Shareholders.
The Company has appointed Mr. Akira Iwata as an independent director as stipulated by the
3.
Tokyo Stock Exchange and has notified the Tokyo Stock Exchange to that effect.
4.
The Company's Articles of Incorporation stipulate that the Company may enter into
agreements with outside directors to limit their liability for damages to the Company to acertain extent so that the Company can attract competent human resources as outside directors.
If this proposal is approved and Mr. Akira Iwata and Mr. Yaniv Vardi are elected, the Company
plans to continue the liability limitation agreement with them. The maximum amount ofliability under such contracts shall be the minimum liability limit stipulated by laws andregulations.
5.
The Company has concluded a directors' and officers' liability insurance policy (management
risk protection insurance policy) with an insurance company as stipulated in Article 430-3 of
the Companies Act and plans to renew the policy in July 2022. The insurance policy covers
the costs of disputes and damages incurred by the insured due to corporate lawsuits, third-party
lawsuits, shareholder derivative actions, etc. Other details are as described in the Business
Report (see page 20). If the candidates are reappointed, they will be included as an insured
under the policy.
The "Number of shares held" shows the number of shares as of March 31, 2022.
6.

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Proposal 4: Appointment of Three (3) Directors as Audit Committee Members
As the terms of office of all Directors who are Audit & Supervisory Committee Members will
expire at the conclusion of this General Meeting of Shareholders, we request the appointment of
three (3) new Directors who are Audit & Supervisory Committee Members.
The Company has obtained the prior consent of the Audit Committee with respect to this proposal.
The nominees for the position of director as a member of the Audit Committee are as follows.
candidaBrief Personal History, Positions,
Number ofNameteResponsibilities and Important
our shares(Dateofbirth)
No.
Concurrent Positions
held
Nov.
Joined SUNCORPORATION
1992
Mar.
General Manager, Product Management Dept.
2010
Oct.
Executive Officer, General Manager of Product2013
Management Dept.
Jul.
General Manager, Internal Control Office
Yasushi Muto 2016
400 shares(May 5, 1963) Oct.
General Manager, Internal Audit Office
2018
1
Apr.
General Manager, Product Management Dept.
2019
Apr.
Corporate Auditor, E-Dream Corporation (to2020present)
Jun.
Director of SUNCORPORATION (Member of2020
the Audit Committee) (to present)
Reasons for the appointment as a candidate for director
He has engaged in manufacturing and purchasing departments and internal control operations
for many years and has abundant experience and achievements, and is expected to strengthen
the functions of the Board of Directors.
Oct.
Joined Cosmos &Co.
1994
Apr.
Registered as a Certified Public Accountant
1998
(New
Nov.
Employee, Cosmos & Co.
appointment)
2003
0 sharesTomonori Shinkai Jun.
Representative Partner, Cosmos & Co.
(October 22,
2007
1968)
Jul.
Supervisory Representative Partner, Cosmos &2
2019
Co. (to present)
Jun.
Appointed Auditor, Pacific Industrial Co.Ltd (to2020present)
Reasons for the nomination as a candidate for the outside director and expected roles
He is nominated as a candidate for outside director of the board of directors because he has awealth of expertise and experience as a certified public accountant and is expected tostrengthen the functions of the board of directors. Although he has never been involved in
the management of an organization in the past except as a corporate auditor, we believe that
he will be able to appropriately perform his duties as an outside director and a member of the
Audit and Supervisory Committee for the reasons stated above.
Dec.
Registered as a lawyer
2008
Dec.
Joined Kawakami & Hara Law Office (now2008
Olympia Law Office)
(New
Jan.
Established Matsui Law Officeappointment) 2012
0 shares3
Takashi Matsui Apr.
Steering Committee Member of Nagoya Branch,(November 1, 2013
Japan Intellectual Property Arbitration Center
1976)(present post)
Sep.
Part-time Lecturer (Copyright Law), Nanzan
2015
University Law School
Jan.
Lecturer at the Japan Patent Attorneys
2019
Association for Specific Infringement Litigation-

candida
Namete(Date of birth)
No.
Nov.
2019
Dec.
2020

Brief Personal History, Positions,
Responsibilities and Important
Concurrent Positions
Representation (current position)
Selection Committee Member, Okazaki City
Regional Electricity Retail Business Partner
Outside Director and Audit Committee Memberof Goodspeed Corporation (to present)
Member,NagoyaCity
Administrative
Complaint Review Board (to present)

Number ofour shares
held

Apr.
2022
Reasons for the nomination as a candidate and the expected roles
He is nominated as a candidate for outside director of the board of directors because he has
extensive expertise and experience as a lawyer and is expected to strengthen the functions of
the board of directors. Although he has not been involved in the management of the Company
in any way other than being an Outside Director or Audit & Supervisory Board Member in thepast, we believe that he will be able to appropriately perform his duties as an Outside Director
and an Audit & Supervisory Board Member for the reasons stated above.
(Notes) There are no special interests between SUNCORPORATION and each candidate for director
1. who is a member of the Audit Committee.
2. Mr. Tomoyuki Shinkai and Mr. Takashi Matsui are candidates for outside directors.
Upon the election of both candidates, the Company will appoint them as independent directors
as stipulated by the Tokyo Stock Exchange, and will notify the Exchange of such designation.
3. Mr. Tomoyuki Shinkai and Mr. Takashi Matsui, the candidates for Outside Directors as
members of the Audit Committee, have never been an executive or an officer of the Company
or its subsidiaries.
4. Mr. Tomoyuki Shinkai and Mr. Takashi Matsui, the candidates for Outside Directors as
members of the Audit Committee, are not parent companies, etc. (limited to natural persons)of the Company, nor have they been parent companies, etc. (limited to natural persons) of theCompany in the past five years.
5. Mr. Tomoyuki Shinkai and Mr. Takashi Matsui, the candidates for outside directors who are
Audit & Supervisory Board Members, are not, and have not been in the past five years, officers
or directors of any business entity in a special relationship with the Company.
6. Mr. Tomoyuki Shinkai and Mr. Takashi Matsui, the candidates for outside directors who aremembers of the Audit Committee, do not plan to receive, and have not received in the past two
years, any large amount of money or other assets from the Company or any entity in a special
relationship with the Company.
7. Mr. Tomoyuki Shinkai and Mr. Takashi Matsui, the candidates for outside directors who aremembers of the Audit Committee, are not spouses, relatives within the third degree of kinship,or other similar person of a parent company, etc. of the Company(limited to natural persons),a business executor or officer of the Company or a business entity in a special relationship with
the Company.
8. Neither Mr. Tomoyuki Shinkai nor Mr. Takashi Matsui, the candidates for Outside Directors
as members of the Audit and Supervisory Board, has been an executive officer immediately
prior to any merger, absorption-type company split, incorporation-type company split, ortransfer of business in the past two years in which the Company has succeeded to their rights
and obligations.
9. If Mr. Yasushi Mutoh, a candidate for Director as a member of the Audit and Supervisory
Committee, is elected, the Company will continue to enter into an agreement with him to limit
his liability for compensation under Article 423, Paragraph 1 of the Companies Act. The
maximum amount of liability based on such agreement shall be the amount stipulated in Article
425, Paragraph 1 of the Companies Act.
10. Upon the election of Mr. Tomoyuki Shinkai and Mr. Takashi Matsui, the candidates for
Outside Directors as members of the Audit and Supervisory Board, the Company will enter
into an agreement with them to limit their liability for damages under Article 423, Paragraph
1 of the Companies Act. The maximum amount of liability based on such agreement shall be
the amount stipulated in Article 425, Paragraph 1 of the Companies Act.
11. The Company has concluded a directors' and officers' liability insurance policy (management
risk protection insurance policy) with an insurance company as stipulated in Article 430-3 of
the Companies Act and plans to renew the policy in July 2022. The insurance policy covers
the costs of disputes and damages incurred by the insured due to corporate lawsuits, third-party
lawsuits, shareholders’ derivative actions, etc. Other details are as described in the Business
Report (see page 20). If the candidates are appointed, they will be included as insured under
the policy.
12. The "Number of shares held" shows the number of shares as of March 31, 2022.

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Proposal 5: Appointment of the Accounting Auditor
The term of office of the accounting auditor KPMG AZSA & Co. will expire at the time of this
General Meeting of Shareholders, and therefore, based on the decision of the Audit Committee,
we request your approval for the appointment of Frontier Audit Corporation as the new accounting
auditor.
The Audit Committee nominated Frontier Audit Corporation as a candidate for the position of
accounting auditor because, although the current accounting auditor has sufficient systems inplace to ensure that accounting audits are conducted appropriately and properly, it has been in
office since July 2007, which is a long period of continuous auditing. The Company judged that
Frontier Audit Corporation was suited for the position after comprehensively taking account of
the length of time the current accounting auditor has been in office (July 2007), the audit responsecommensurate with the scale of the Company’s business, and the appropriateness of audit costs.
The name, address of principal office, and history of the candidate for accounting auditor are as
follows.
Name
Address of the head
officeEstablishment

OutlineFrontier Audit Corporation
Frontier Building, 25-3, Nishi-Gotanda 2-chome, Shinagawa-ku,
Tokyo
In February 2007 as Frontier Audit Corporation
Capital contribution: 10 million yen
Composition:
7 employees
24 Certified Public Accountants (including part-time)
6 other staff members
Total 37
Companies involved: 10-

Proposal No. 6: Revision of the remuneration for directors (excluding the directors who are members of
the Audit and Supervisory Committee) in connection with the introduction of a post-delivery type stockcompensation system
According to the resolution passed at the Company’s 45th Ordinary General Meeting of
Shareholders held on Jun 23, 2016, the maximum amount of remuneration for the directors of theCompany (excluding directors who are members of the Audit and Supervisory Committee) is 200
million yen per year. In addition, the 43rd Ordinary General Meeting of Shareholders held on June25, 2014 approved a resolution that stock acquisition rights be allocated to directors as stockcompensation-type stock options, separate from monetary compensation, in an amount notexceeding 50 million yen per year and a maximum number of 50,000 shares per year.
For the purpose of achieving sustainable growth in the Company’s corporate value and promoting
further value sharing with shareholders, the Company proposes to review the remuneration systemfor directors (excluding directors who are members of the Audit and Supervisory Committee andincluding outside directors; hereinafter referred to as the "relevant directors") and abolish the stock
option scheme as stock-based compensation and introduce a post-delivery type stockcompensation system as follows (the "Plan").
The Board of Directors has determined that the ratio of the total number of shares to be delivered
under this proposal to the total number of shares issued by the Company is expected to average
2.3% or less for a single fiscal year and is therefore appropriate for the above purposes.
In calculating the number of shares to be delivered, the expected role and other factors shall betaken into consideration based on the amount of base salary, including outside directors.
If Proposal 3 is approved as proposed, the number of directors (excluding directors who aremembers of the Audit and Supervisory Committee) will be six (6) (including two (2) outside
directors).
1. The Outline of the System
This is a stock compensation plan under which, after a certain period of time has elapsed after the
grant of rights, shares of the Company's common stock are delivered in a predetermined number
or in a predetermined manner, subject to the satisfaction of certain conditions, and consists ofRestricted Stock Units ("RSUs") with no performance conditions attached and Performance Share
Units ("PSUs") with performance conditions attached. The plan consists of Restricted Stock Units("RSUs"), which are not subject to performance conditions, and Performance Share Units("PSUs"), which are subject to performance conditions.
(1) RSUAll directors of the Company will be granted the number of shares of common stock of theCompany in the base number of shares determined on the date of grant of the rights after the
expiration of the relevant period, on condition that they continue to be directors of the Company
or hold certain positions determined by a resolution of the Board of Directors of the Company
from the date of grant of the rights until the expiration of the vesting period, and on otherconditions.
The vesting period is one year from the grant date for one-third of the RSUs granted, two years
from the grant date for one-third, and three years from the grant date for one-third of the RSUs
granted.
(2) PSUFor the relevant directors who engage in business execution, on condition that they continuously
hold directorships or certain other positions determined by the resolution of the Board of Directorsof the Company during the relevant period of the company’s medium-term management plan(three consecutive years), the rights to the Company’s ordinary shares will be granted. The numberof shares will be determined in accordance with the degree of achievement of the performancetargets set in the relevant medium-term management plan. Coefficients will also be determinedaccording to the performances. The shares will be delivered after all the performances are
confirmed.

-

2. Method of the delivery of shares
Regarding the delivery of the shares, the Company's shares shall be allotted in a number calculated
based on the number of units granted by the company in advance by providing monetarycompensation credits equivalent to the amount of such shares and then delivering all of suchmonetary compensation credits by way of contribution in kind. However, the Company may
substitute all or part of the delivery of the Company's shares with the payment of money equivalent
to the value of the shares.
The amount to be paid in for the company's shares will be determined by the Board of Directorsof the company based on the closing price of the Company's common stock on the Tokyo Stock
Exchange on the business day preceding the date of the meeting of the Board of Directors
concerning the issuance or disposal of such shares (or, if no such shares are traded on the sameday, the closing price of the immediately preceding trading day) to the extent that such amount is
not favorable to the directors who subscribe for such company's shares. The Board of Directorsof the Company shall determine the amount of the subscription price.
3. Calculation method of the number of shares to be delivered and the amount of monetarycompensation claims(1) RSUThe Company will calculate the number of units to be granted to each relevant director based on
the following formula and deliver shares at a rate of 1 share per 1 unit (to be adjusted reasonably
in the event that the Company conducts a stock split, reverse stock split, etc. after granting units).
Number of units granted = base amount (*1) / share price at time of grant (*2)
Fractions of less than 100 units resulting from the calculation are rounded up to the nearest 100
units.
(2) PSUThe Company will calculate the number of units to be granted to each relevant director based on
the same formula as in (1) above, multiply it by the degree of achievement of businessperformance (*3), and then grant one share per unit (to be adjusted reasonably if the Company
conducts a stock split or reverse stock split, etc. after granting units).
*1 The base amount will be determined by the Board of Directors of the Company for eachrelevant director in accordance with the size of his or her responsibilities.
*2 The share price at the time of grant shall be an objective and reasonable price such as theaverage closing price of the Company's common stock on the Tokyo Stock Exchange during
the one-month period prior to the day before the date of the annual general meeting ofshareholders in the year of the grant.
*3 The achievement level of the performance targets will vary from 0% to 150% dependingon the degree of achievement of performance targets determined by the resolution of the Boardof Directors.
4. Total amount of the base amount and the maximum total number of shares
The total base amount of RSUs to be granted to relevant directors in each fiscal year shall be 120
million yen or less, and the total number of shares of common stock of the Company to be issued
or disposed of by relevant directors for each RSU granted in each fiscal year shall be 150,000
shares or less.
The total base amount for PSUs shall not exceed 630 million yen for the period covered by the
Medium-term Management Plan (three fiscal years), and the total number of shares of common
stock of the Company to be issued or disposed of for the relevant director shall not exceed
1,200,000 shares for the relevant period.
5. Grant requirements
Under the Plan, shares of common stock of the Company will be delivered, etc. to each relevant-director upon completion of the applicable period and fulfillment of the following requirements.
Delivery of shares of common stock of the Company shall be made by way of share issuance ordisposition of treasury stock by the Company, and the actual recipients of the shares among therelevant directors and the subscription requirements for such share issuance or disposition oftreasury stock shall be determined at the meeting of the Board of Directors of the Company to beheld after the elapse of the applicable period.
(i) During the applicable period, the relevant director must have continuously served as adirector of the Company or in a certain position determined by a resolution of the Board of
Directors of the Company.
(ii) Certain acts of misconduct as determined by the Company's Board of Directors have notoccurred.
(iii) Other requirements that the Company’s Board of Directors consider necessary in order tofulfill the purpose of the Plan.
6. Clawback
If it is found that the relevant director falls under (ii) or (iii) of 5 above after the delivery of sharesof common stock of the Company under the Plan, by a resolution of the Board of Directors, theCompany can demand the return of the shares of common stock of the Company already delivered(including cash if paid in lieu of such shares).

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