This English translation is made for reference purposes only, and in the event of any discrepancies
between the English version and the Japanese version, the Japanese version prevails.
Securities Code: 5988
June 9, 2017

To Our Shareholders:
51 Iwai-cho, Hodogaya-ku,
Yokohama-shi, Kanagawa

Piolax, Inc.
Yukihiko Shimazu, President

Notice of the 101st Annual Meeting of Shareholders
The Company would hereby like to request shareholders to attend the Company’s 101st Annual
Meeting of Shareholders as described below.
If you are unable to attend the meeting on the date, you may also exercise your voting rights
in writing. We kindly request you to read the following Reference Document for the Annual
Meeting of Shareholders, indicate “for” or “against” on each agenda item on the voting form
enclosed herewith, and return it no later than the end of business at 5:30 p.m., June 27, 2017
(Tuesday).
Sincerely yours,

1.

Date:

10:00 a.m., June 28 (Wednesday), 2017

2.

Venue:

4F Hall, Yokohama Technical Center, Piolax, Inc.
179 Kariba-cho, Hodogaya-ku, Yokohama-shi, Kanagawa

3.

Purposes:
Items to be reported:

1.

2.

Items to be resolved:
Agenda No. 1:
Agenda No. 2:
Agenda No. 3:

The Business Report, the Consolidated Financial
Statements and the Results of Consolidated Financial
Statement Audits by the Accounting Auditor and the Audit
and Supervisory Committee for the 101st business period(April 1, 2016 to March 31, 2017)
The Non-Consolidated Financial Statements for the 101st
business period (April 1, 2016 to March 31, 2017)

Appropriation of Retained Earnings
Election of Four (4) Directors (excluding Directors who are
Audit and Supervisory Committee Members)
Decision on Amount andCompensation for Directors-1-

SpecificsofStock-based

・ When you attend the meeting, we kindly request that you submit the enclosed voting form to
the receptionist at the venue. Please also bring this notice to the meeting with you to help us
preserve resources.
・ Of the matters to be included in this notice, the following matters are not listed in this notice, but
are put on the Company’s website (http://www.piolax.co.jp/en/) in accordance with laws andregulations and the provisions of Article 19 of the Company’s Articles of Incorporation.
・

Notes to the Consolidated Financial Statements

・

Notes to the Non-Consolidated Financial Statements

・ The Consolidated Financial Statements and Non-Consolidated Financial Statements audited by the
Audit and Supervisory Committee and Accounting Auditors in the preparation of the Auditor’sReport and the Accounting Auditor’s Report respectively include the matters stated in the document
attached to this notice. They also include matters to be reported in the Notes to the Consolidated
Financial Statements and Notes to the Non-Consolidated Financial Statements.

・ If there are any revisions to the Reference Document for the Annual Meeting of Shareholders,the Business Report, and/or the Non-Consolidated and the Consolidated Financial Statements,
such revisions will be listed on the Company’s website. (URL: http://www.piolax.co.jp/en/)-2-

Reference Document for the Annual Meeting of Shareholders
Meeting Agenda and Referential Matters

Agenda No. 1:

Appropriation of Retained Earnings

The Company’s fundamental policy on the appropriation of profits is to execute balanced
management on steady returns of earnings to shareholders and adequate internal reserves tostrengthen the business foundations. Based on this policy, the Company proposes theyear-end dividends and the appropriation of other retained earnings for the fiscal year underreview as follows.
1. Year-end Dividend(1)Type in which dividends are paid
Cash payment(2)

Allocation of dividends and total amount of dividends
The Company would like to disburse 60.00 yen per common share of the Company.
In this case, the total amount of dividends shall be 740,478,360 yen.
As a result, the dividends on an annual basis will be 100.00 yen per share including theinterim dividends of 40.00 yen per share.

(3)

Effective date on which dividends are disbursed from retained earnings
June 29, 2017

2. Appropriation of Other Retained Earnings(1)

Increased retained earning item and its amount
General reserve(2)

3,800,000,000 yen

Reduced retained earning item and its amount
Retained earnings brought forward

3,800,000,000 yen-3-Agenda No. 2:

Election of Four (4) Directors (excluding Directors who are Audit
and Supervisory Committee Members)

The term of office of all four (4) Directors (excluding Directors who are Audit andSupervisory Committee Members; hereinafter the same applies in this agenda) will expire
upon conclusion of this Annual Meeting of Shareholders.
Accordingly, the Company hereby proposes the election of four (4) Directors.
The Audit and Supervisory Committee confirmed that, after reviewing this agenda, it foundno areas in need of attention.
The candidates for Directors are as follows.
Candi
date
No.

1

Name
(Date of birth)

Brief profile, position and responsibility at the Company(Significant concurrent positions)

Number of theCompany’s
shares owned

October 1966
Joined Piolax, Inc.
NovemberDirector
1968
General Manager, Materials Department,
Kazuhiko Kato
Piolax, Inc.
335,000(April 12,
1940)
June 1977
Managing Director, Piolax, Inc.
June 1984
President, Piolax, Inc.
April 2010
Chairman, Piolax, Inc. (incumbent)
Reason for the election:
As President and Representative Director of the Company during the period from June 1984 toMarch 2010, Mr. Kazuhiko Kato led the Company toward growth and has made contributions
as a keystone for the formation of the corporate culture of the Company. After assuming theposition of Chairman and Representative Director of the Company in April 2010, Mr. Kato
served as Chairman and Director of the Company’s subsidiary specializing in the manufactureof medical devices from January 2011 to June 2016 and has provided the Group with a broad
range of directions needed to implement business strategies.
The Company believes that Mr. Kato would continue to make use of his abundant experience,
considerable insight and extensive networks gained over the years for contributing todecision-making at the Board of Directors and bringing benefits for business development on a
global scale and improvement in corporate value. Accordingly, the Company proposes that he
be a candidate for Director.

-4-Candi
date
No.

Name
(Date of birth)

Brief profile, position and responsibility at the Company(Significant concurrent positions)
March 1981
July 1999

Yukihiko
Shimazu(September
10, 1957)

2

August 2001
June 2005
June 2006

Joined Piolax, Inc.
General Manager, Overseas Sales
Department, Piolax, Inc.
President, Piolax Corporation
Director, Piolax, Inc.
Director
General Manager, Overseas Sales
Department, Piolax, Inc.
President, Piolax, Inc. (incumbent)

Number of theCompany’s
shares owned

15,700April 2010
(Responsibility)
Supervision of Sales Department(Significant concurrent positions)
CEO, Wuhan Piolax Co., Ltd.
CEO, Dongguan Piolax Co., Ltd.
Reason for the election:
Mr. Yukihiko Shimazu served as President and Representative Director of the Company from
April 2010 up to the present and has led domestic and overseas the Company group companies
under the slogan, “ONE PIOLAX,” toward growth. He had undertaken the role of President of
the U.S. subsidiary of the Company from August 2001 to May 2006, and currently has theconcurrent position of CEO (Chairman) of two Chinese subsidiaries of the Company, thus
having made contributions to transforming the Company as a global entity.
The Company believes that Mr. Shimazu would continue to make use of his abundant
experience, considerable insight and extensive networks gained over the years for contributing
to decision-making of the Board of Directors, and bringing benefits for business development
on a global scale as well as improvement in corporate value of the Company. Accordingly, theCompany proposes that he be a candidate for Director.

-5-Candi
date
No.

Name
(Date of birth)

Brief profile, position and responsibility at the Company(Significant concurrent positions)
April 1979
June 2003

June 2007
July 2007

April 2008
MichioNagamine(March 15,
1957)

June 2008

June 2012
April 20133
April 2015

Joined Japan Development Bank (current
Development Bank of Japan Inc.)
General Manager, Information Resources
Department, Development Bank of Japan
Inc.
Advisor, Piolax, Inc.
Advisor
General Manager, ERP Promotion
Department, Piolax, Inc.
Advisor
General Manager, Purchasing
Department, Piolax, Inc.
Director
General Manager, Purchasing
Department, Piolax, Inc.
Director
General Manager, HR Office, Piolax, Inc.
Managing Director
General Manager, HR Office, Piolax, Inc.
Managing Director, Piolax, Inc.
(incumbent)

Number of theCompany’s
shares owned-(Responsibility)
Supervision of Planning and Administration Department,
Purchasing Department, Information Technology
Department, and affiliated companies
Reason for the election:
Mr. Michio Nagamine has served as Managing Director of the Company since April 2013 up
to the present, and contributed to the growth of the Company by undertaking roles as General
Manager responsible for Planning and Administration, Purchasing, and Information
Technology Departments, as well as operations of the affiliates of the Company. He has gained
considerable knowledge and insight in IT and finance fields through managerial jobs including
the management of Development Bank of Japan Inc. prior to joining the Company in June
2007.
The Company believes that Mr. Nagamine would continue to make use of his abundant
experience, sufficient insight and extensive networks gained over the years for contributing todecision-making of the Board of Directors, and bringing benefits for business development ona global scale as well as improvement in corporate value of the Company. Accordingly, theCompany proposes that he be a candidate for Director.

-6-

Candi
date
No.

Name
(Date of birth)

Brief profile, position and responsibility at the Company(Significant concurrent positions)
March 1978
October 2002
April 2004
June 2011

Seiichi Sato
(May 31,
1955)
June 2014

4

Number of theCompany’s
shares owned

Joined Piolax, Inc.
President, Piolax OC Systems Co., Ltd.
Executive Officer, Piolax, Inc.
President, Piolax OC Systems Co., Ltd.
Managing Executive Officer
Director
General Manager, Design Department,
Piolax, Inc.
Managing Director
General Manager, Design Department,
Piolax, Inc. (incumbent)

8,500(Responsibility)
Supervision of Design Department, Production andLogistics Department, and Quality Assurance Department
Reason for the election:
Mr. Seiichi Sato has served as Managing Director of the Company since June 2014 up to thepresent, and contributed to the growth of the Company by undertaking roles as General
Manager responsible for Design, Production and Logistics, and Quality Assurance
Departments. He also gained managerial experience through the role as President of theCompany’s subsidiary from October 2002 to September 2005 and accumulated knowledge andinsight in the fields of finance as well as design and production.
The Company believes that Mr. Sato would continue to make use of his abundant experience,
sufficient insight and extensive networks gained over the years for contributing todecision-making of the Board of Directors, and bringing benefits for business development ona global scale as well as improvement in corporate value of the Company. Accordingly, theCompany proposes that he be a candidate for Director.

Notes: 1. There are no special conflicts of interests between the candidates and the Company.
2. The number of the Company’s shares held by each candidate is current as of March 31, 2017.

-7-

Agenda No. 3:

1.

Decision on Amount and Specifics of Stock-based Compensation for
Directors

Reason for proposal and rationale for the compensation
Remuneration of Directors (excluding Directors who are External Directors or Audit andSupervisory Committee Members; hereinafter the same applies in this agenda) consists of abasic remuneration and a bonus. Under this agenda, the Company propose to implement a
new stock compensation plan for Directors (hereinafter the “Plan”). The Company alsoasks you to leave the specifics of the Plan to the discretion of the Board of Directors within
the scope described in 2 below.
Designed to clearly link the Company’s stock value with Directors’ remuneration, the Plan
will allow Directors to not only receive the benefits of a stock price increase but also share
the risks associated with a fall in the stock price. By allowing Directors to share thebenefits and risks of stock price fluctuations on an equal footing with shareholders, thePlan aims to motivate them in enhancing the Company’s performance and corporate value
over the medium to long run. Once the Plan is implemented, remuneration of Directors willconsist of the basic remuneration, bonus, and stock compensation. The Company believes
that the implementation of the Plan is reasonable.
Specifically, the Company requests your approval to go beyond the remuneration limit set
for Directors (up to 250 million yen per year) that was approved at the 100th Annual
Meeting of Shareholders held on June 28, 2016 in providing new stock compensation to
Directors who will in office during seven (7) years from the fiscal year ending March 31,2018 until the fiscal year ending March 31, 2024 (hereinafter the “Plan Period”).
Once “Agenda No. 2: Election of Four (4) Directors (excluding Directors who are Audit
and Supervisory Committee Members)” is approved as drafted, the number of Directors
who are eligible for the Plan will be 4 (four) upon conclusion of this Annual Meeting of
Shareholders.
The Audit and Supervisory Committee confirmed that, after reviewing this agenda, it foundno areas in need of attention.

2.

Amount and specifics of remuneration to be paid under the Plan

(1) Overview of the Plan
The Plan is a stock compensation plan under which a trust created using the money
contributed by the Company (hereinafter the “Trust”) will acquire the Company’s shares.
These shares will be granted to eligible Directors through the Trust in a quantity equivalent
to the number of points the Company will have awarded them. As a general rule, suchshares will be granted to Directors upon their retirement. Please see “For Your Reference”
below for more information about the Plan.
(2) Maximum amount of money to be contributed by the Company
The duration of the Trust will initially be seven (7) years. During this period, the Company
will contribute up to 560 million yen to the Trust. The money will be used to acquire thenecessary number of the Company’s shares to be granted to those Directors who meetcertain beneficiary eligibility requirements, under the Plan, as remuneration for those whoare in office during the Plan Period. The Trust will use the money deposited by theCompany as the source of funds to acquire the Company’s shares either through the stock
market (including off-floor trading) or via disposal of its treasury shares.

-8-Note: The actual amount of money to be deposited in trust by the Company will be the sum of theabove-mentioned funds used to acquire shares and for the estimated amount of necessary
expenses, including a trust fee and a trust administrator fee.
Upon expiration of the trust period, the Company’s Board of Directors may resolve toretain the Plan by extending the said period. In such a case, the Company will contribute up
to 80 million yen annually to the Trust during the extended period as funds for acquiring
additional shares of the Company to be granted to Directors under the Plan. At the sametime, in response to the continuation of the Plan and the extension of the trust period, theCompany will extend the duration of the Plan Period and continue awarding points as
described in (3)(i) below, as well as granting the Company’s shares as described in(4) below during the extended trust period.
However, even in the case where the Company does not continue to award the points, if
there is any Director who has been awarded points but has not yet retired upon expirationof the trust period, the Company may extend the period of the Trust until he/she retires andhas been granted the Company’s shares in full.
(3) Method of calculating the number of shares to be granted to Directors and the upper limit(i) Method of awarding points to Directors and maximum number of points to be awarded
Pursuant to the stock grant rules stipulated by the Board of Directors, the Company
will award points to Directors at the end of each May during the trust period. The
number of points to be awarded will be calculated according to the position held by
each Director in the fiscal year ending immediately before the said date.
The total number of points the Company will award to Directors in each fiscal year
will not exceed 60,000.
(ii) Granting of the Company’s shares according to the number of points awarded
In accordance with the procedures described in (4) below, eligible Directors will be
granted the Company’s shares in the quantity corresponding to the number of points
awarded to them pursuant to (i) above.
The number of the Company’s shares to be granted to each Director will be thenumber of points awarded to him/her multiplied by 1.0 (provided, however, that in theevent of a share split, reverse share split, or any other cause for which it would beconsidered reasonable to adjust the number of the Company’s shares to be granted, thesaid number of shares will be adjusted to the extent reasonable depending on the split
or reverse split ratio, etc.).
(4) Granting of the Company’s shares to Directors
After following the prescribed procedures to confirm his/her eligibility as a beneficiaryupon his/her retirement, each eligible Director will be granted the Company’s shares by theTrust as described in (3) above. An eligible Director may receive a certain percentage ofthese shares in money in lieu of shares after they are sold and converted into cash by theTrust.
An eligible Director may also receive money instead of shares if the Company’s shares
held in the Trust have been sold through a takeover bid, or in other circumstances where
the Company’s shares held in the Trust have been converted into cash.

-9-

(For Your Reference)(Excerpt from “Notice Concerning the Introduction of a New Stock Compensation Plan for
Directors of the Company," dated May 11, 2017)
Notice Concerning the Introduction of a New Stock Compensation Plan
for Directors of the Company
PIOLAX, Inc. resolved at the Board of Directors’ meeting held today to introduce a new stockcompensation plan (hereinafter the “Plan”) for its Directors (excluding Directors who are External
Directors or Audit and Supervisory Committee Members; hereinafter the same applies) using atrust. Accordingly, the Company will propose the introduction of the Plan at the 101st Annual
Meeting of Shareholders to be held on June 28, 2017 (hereinafter the “Annual Meeting of
Shareholders”). Details are as noted below.

1. Purpose of the Plan
Designed to clearly link the Company’s stock value with Directors’ remuneration, the Plan willallow Directors to not only receive the benefits of a stock price increase but also share the risks
associated with a fall in the stock price. By allowing Directors to share the benefits and risks ofstock price fluctuations on an equal footing with shareholders, the Plan aims to motivate them inenhancing the Company’s performance and corporate value over the medium to long run.
2. Overview of the Plan
(1) Overview of the Plan
The Plan is a stock compensation plan under which a trust created using the money
contributed by the Company (hereinafter the “Trust”) will acquire the Company’s shares.
These shares will be granted to eligible Directors through the Trust in a quantity equivalent
to the number of points the Company will have awarded them. As a general rule, suchshares will be granted to Directors upon their retirement.

- 10 -

<Framework of the Plan>[Trustor]
The Company(2) Creates a trust <third-party beneficiary trust> (deposits money)(3)’ Pays purchase price(3) Makes payment(3) Disposes of its
treasury shares

Stock market(3)’ Buys shares[Trustee] (tentative)
Sumitomo Mitsui Trust Bank, Limited(6) Sells shares(Re-trusted to Japan Trustee Services Bank, Ltd.)

Stock granting trust(5) Awards points(1) Stipulates stock
grant rules

The Company’s
shares(6) Pays sales proceeds

Money(4) Instructs not to exercise
voting rights(6) Provides shares or money

Trust administrator[Beneficiary]
Director(1) The Company will stipulate stock grant rules applicable to Directors.
(2) The Company will create a stock granting trust (third-party beneficiary trust) of which
Directors will be beneficiaries (hereinafter the “Trust”). In doing so, the Company will
leave money with a trustee in an amount equivalent to the sum of funds needed to acquire
shares (up to an amount approved at the Annual Meeting of Shareholders).
(3) The trustee will acquire all of the Company’s shares that are expected to be granted to
Directors (either by way of a disposal of treasury shares or through the stock market,
including off-floor trading).
(4) The Company will appoint a trust administrator (a party independent of the Company andits Directors), who will be responsible for protecting the interests of the beneficiaries
subject to the stock grant rules and supervising the trustee over the duration of the trust
period. Voting rights associated with the Company’s shares held in the Trust may not be
exercised during the duration of the trust period.
(5) The Company will award points to Directors in accordance with the stock grant rules.
(6) As beneficiaries of the Trust, the Directors who meet the requirements specified in thestock grant rules and the agreement concerning the Trust will receive the Company’s sharesfrom the trustee in the quantity equivalent to the cumulative number of points they haveearned. In certain circumstances, as specified in the stock grant rules and the trust
agreement, the Company will sell a portion of the shares to be granted to Directors in thestock market and provide them with cash instead. The Sumitomo Mitsui Trust Bank,
Limited, who will serve as the trustee under the Plan, will entrust (re-trust) the
management of trust assets to Japan Trustee Services Bank, Ltd.

- 11 -

(2) Creation of a trust
On the condition that the proposed introduction of the Plan be approved at the Annual
Meeting of Shareholders, the Company will create the Trust by contributing the funds
necessary for the Trust to acquire, in advance for a certain specific period of time, such
number of the Company’s shares as is reasonably expected to be required for granting inaccordance with (7) below. As noted in (5) below, the Trust will acquire the Company’s
shares by using the funds contributed by the Company.
The Sumitomo Mitsui Trust Bank, Limited, who will serve as the trustee under the Plan,
will entrust (re-trust) the management of trust assets to Japan Trustee Services Bank, Ltd.
(3) Trust period
The trust period will be approximately seven (7) years from August 2017 (planned) toAugust 2024 (planned). The trust period may be extended as noted in (4) below.
(4) The maximum amount of money to be contributed to the Trust as funds for acquiring
sharesThe duration of the Trust will initially be seven (7) years. During this period the Company
will contribute up to 560 million yen to the Trust. The money will be used to acquire thenecessary number of the Company’s shares to be granted to those Directors who meetcertain beneficiary eligibility requirements, under the Plan, as remuneration for those whoare in office during the Plan Period. The Trust will use the money deposited by theCompany as the source of funds to acquire the Company’s shares either through the stock
market (including off-floor trading) or via disposal of its treasury shares.
Note: The actual amount of money to be deposited in trust by the Company will be the sum of
the above-mentioned funds used to acquire shares and for the estimated amount ofnecessary expenses, including a trust fee and a trust administrator fee.
Upon expiration of the trust period, the Company’s Board of Directors may resolve toretain the Plan by extending the said period. In such a case, the Company will contribute up
to 80 million yen annually to the Trust during the extended period as funds for acquiring
additional shares of the Company to be granted to Directors under the Plan. At the sametime, in response to the continuation of the Plan and the extension of the trust period, theCompany will extend the duration of the Plan Period, and continue awarding points as
described in (6) below, as well as granting the Company’s shares as described in (7) below
during the extended trust period.
However, even in the case where the Company does not continue to award the points, if
there is any Director who has been awarded points but has not yet retired upon expirationof the trust period, the Company may extend the period of the Trust until he/she retires andhas been granted the Company’s shares in full.

- 12 -

(5) Method the Trust will use to acquire the Company’s shares
The Company plans to have the Trust initially acquire the Company’s shares via a disposalof treasury shares held by the Company or on the stock market using up to the maximum
amount of the funds for acquiring shares described in (4) above. The details of theacquisition method will be decided and made publicly available after the resolution has
been made at the Annual Meeting of Shareholders.
When there is a likelihood that the number of the Company’s shares in the Trust will be
short of the number of shares corresponding to the number of points to be awarded to
Directors during the trust period, due to an increase in the number of Directors or otherreasons, the Company may deposit additional money into the Trust so it can acquire
additional shares. The maximum amount of the additional money to be deposited in the
Trust will be the amount to be approved at the Annual Meeting of Shareholders as stated in(4) above.
(6) Method of calculating points to be awarded to Directors
Pursuant to the stock grant rules stipulated by the Board of Directors, the Company willaward points to Directors at the end of each May during the trust period. The number ofpoints to be awarded will be calculated according to the criteria set forth in the stock grantrules.
The total number of points the Company will award to Directors in each fiscal year will not
exceed 60,000.
(7) Granting of the Company’s shares to Directors
The number of the Company’s shares to be granted to each Director will be the number ofpoints awarded to him/her multiplied by 1.0 (provided, however, that in the event of a share
split, reverse share split, or any other cause for which it would be considered reasonable toadjust the number of the Company’s shares to be granted, the said number of shares will be
adjusted to the extent reasonable depending on the split or reverse split ratio, etc.).
Each eligible Director will be granted the Company’s shares by the Trust after following
the prescribed procedures to confirm his/her eligibility as a beneficiary upon his/her
retirement. An eligible Director may receive a certain percentage of these shares in money
in lieu of shares after they are sold and converted into cash by the Trust. An eligible
Director may also receive money instead of shares if the Company’s shares held in the
Trust have been sold through a takeover bid, or in other circumstances where theCompany’s shares held in the Trust have been converted into cash.
(8) Exercise of voting rights
In accordance with the instructions of the trust administrator who will be independent of
the Company and its Directors, the voting rights associated with the shares held in the Trustshall not be exercised without exception. This will assure the neutrality of the Company’s
management in relation to exercising voting rights associated with these shares.
(9) Handling of dividends
Dividends for the Company’s shares held in the Trust will be received by the Trust and will
be used to pay for the acquisition of the Company’s shares, trustee fees, etc.
(10) Procedures to be followed upon termination of the Trust
Of the assets remaining in the Trust upon its termination, the Company plans to acquire allof the remaining shares at no charge and then, retire them by resolution of the Board of
Directors. Of the assets remaining in the Trust upon its termination, the Company plans todonate a certain amount of remaining cash to special public-interest promotion
corporations that have no conflict of interest with the Company’s Directors in accordancewith the provisions to be stipulated in the stock grant rules and the trust agreement.
- 13 -

(For Your Reference: Overview of the Trust)(i)Name: Stock Granting Trust for Directors(ii)

Trustor: The Company(iii)

Trustee: Sumitomo Mitsui Trust Bank, Limited(Re-trusted to Japan Trustee Services Bank, Ltd.)(iv)

Beneficiaries: Directors who meet the eligibility requirements(v)

Trust administrator: A third party who has no conflict of interest with the Company will beselected.

(vi)Type of trust: Trust fund other than a monetary trust (third-party beneficiary trust)(vii) Date of trust agreement: August 2017 (planned)(viii) Date when funds will be put in trust: August 2017 (planned)(ix)

Trust period: August 2017 (planned) to August 2024 (planned)- 14 -