Note: This document has been translated from a part of the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original, the original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translation.
(Securities Code 7242)
June 10, 2021
To Shareholders with Voting Rights:
Masao Ono
Representative Director,
President Executive Officer
KYB Corporation
World Trade Center Bldg.,
2-4-1, Hamamatsu-cho,Minato-ku, TokyoNOTICE OF
THE 99TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
We would like to express our appreciation for your continued support and patronage.
We are pleased to inform you that the 99th Ordinary General Meeting of Shareholders of KYB Corporation(the “Company”) will be held for the purposes as described below.
With a view to preventing the spread of COVID-19, we kindly request shareholders to consider refraining
from attending the meeting in person and choose instead to exercise their voting rights in advance in writing or
via the Internet, etc. We appreciate your understanding and cooperation.
Please exercise your voting rights by 5:15 p.m. on Thursday, June 24, 2021 (Japan time), after taking the time
to consult the attached reference documents for the General Meeting of Shareholders.
Moreover, video recording of the shareholder’s meeting will be uploaded via the Internet at a later date.
Friday, June 25, 2021 at 10:00 a.m. (Reception starts at 9:00 a.m.) (Japan time)
1. Date and Time:
2. Place:

Hamamatsucho Convention Hall, 5th Floor Main Hall
Nippon Life Hamamatsucho Crea Tower, 2-3-1, Hamamatsu-cho, Minato-ku,
Tokyo

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
99th Fiscal Year (April 1, 2020 - March 31, 2021) and results of audits by the
Accounting Auditor and the Audit & Supervisory Board of the Consolidated
Financial Statements
2. Non-consolidated Financial Statements for the Company’s 99th Fiscal Year
(April 1, 2020 - March 31, 2021)
Proposals to be resolved:
Approval for Absorption-Type Merger Agreement between the Company andProposal 1:
Kayaba System Machinery Co., Ltd.
Partial Amendments to the Articles of Incorporation
Proposal 2:
Issuance of Class A Preferred Shares by Third-Party Allotment
Proposal 3:
Reduction in Amount of Legal Capital Surplus
Proposal 4:
Appropriation of Surplus
Proposal 5:
Election of Seven (7) Members of the Board of Directors
Proposal 6:
Election of One (1) Audit & Supervisory Board Member
Proposal 7:
Election of One (1) Substitute Audit & Supervisory Board Member
Proposal 8:
Payment of Performance-Linked Bonuses to Members of the Board of Directors
Proposal 9:-1-

4. Exercise of voting rights:
If you vote both in writing on the Voting Rights Exercise Form and via the Internet, only your vote placed
via the Internet will be counted.
If you vote multiple times via the Internet, only the last vote will be counted.

-------------------------------------------------------------------------------------------------------------------------------------------- When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the reception desk.
For the purpose of saving resources, please bring this NOTICE OF THE 99TH ORDINARY GENERALMEETING OF SHAREHOLDERS to the meeting.
We do not prepare gifts for shareholders attending the meeting. We appreciate your understanding.

- The following items, which are available only in Japanese, have been posted on the Company’s website(https://www.kyb.co.jp/) in accordance with laws and regulations and the provisions of Article 15 of the Articles ofIncorporation of the Company and are accordingly not included in this NOTICE OF THE 99TH ORDINARY
GENERAL MEETING OF SHAREHOLDERS.
・Of “Proposal 1: Approval for Absorption-Type Merger Agreement between the Company and Kayaba
System Machinery Co., Ltd.” in the Reference Documents for the General Meeting of Shareholders,the content of the Non-consolidated Financial Statements, etc., for the final fiscal year of the company
dissolving in the absorption-type merger
・Systems for ensuring the properness of business activities
・Outline of operation of systems for ensuring the properness of business activities
・Basic policies regarding control of the company
・Consolidated Statements of Changes in Equity; Notes to the Consolidated Financial Statements
・Statements of Changes in Equity; Notes to the Non-consolidated Financial Statements
The Consolidated Financial Statements and the Non-consolidated Financial Statements included in this
NOTICE OF THE 99TH ORDINARY GENERAL MEETING OF SHAREHOLDERS are part of theConsolidated Financial Statements and the Non-consolidated Financial Statements audited by the
Accounting Auditor and the Audit & Supervisory Board Members for the preparation of the Accounting
Audit Report and Audit & Supervisory Board’s Report.
- Any revisions to the Reference Documents for the General Meeting of Shareholders, the Business Report,
the Consolidated Financial Statements, or the Non-consolidated Financial Statements will be posted on the
Company’s website (https://www.kyb.co.jp/).
- Please note that persons who are not shareholders, such as non-shareholder proxies or persons
accompanying shareholders, are not allowed to attend the meeting.

-2-

Reference Documents for the General Meeting of Shareholders
Proposal 1: Approval for Absorption-Type Merger Agreement between the Company and Kayaba System
Machinery Co., Ltd.
On May 20, 2021, the Company entered into an absorption-type merger agreement (the “Absorption-typeMerger Agreement”) with Kayaba System Machinery Co., Ltd. (“KSM”), a wholly owned subsidiary of theCompany, which states that an absorption-type merger (the “Absorption-type Merger”) will be conducted with
the Company as the surviving company and KSM as the dissolving company, by the method of absorption-typemerger as provided for in the Companies Act.
As KSM is in a state of insolvency, the Company is expected to record a so-called loss on merger inassociation with the Absorption-type Merger. Accordingly, the Company hereby requests shareholders’ approval
for the Absorption-type Merger Agreement at this General Meeting of Shareholders.
1. Reasons for conducting an absorption-type merger
Given nonconforming acts in the inspection process, etc. for seismic isolation/mitigation oil dampers
manufactured by the Company and KSM, the Company has been accelerating groupwide reorganization toprevent recurrences with an eye on establishing a compliance-oriented management style. In doing so, it isworking to eliminate the lack of job rotation in human resource management and failure in the governance ofgroup companies, namely, the factors considered as the causes of the nonconforming acts.
With good progress being made recently in the adaptation of seismic isolation/mitigation oil dampers, theCompany has decided to conduct the Absorption-type Merger to finalize measures that have been taken toprevent recurrences, while simultaneously seeking to vitalize job rotation in the human resource management,
strengthen its corporate governance system and reduce the risk of wrongdoing.
Furthermore, in addition to the Absorption-type Merger, at a meeting of the Board of Directors held on
February 9, 2021, the Company passed a resolution concerning a basic policy to conduct an absorption-typemerger with the Company as the surviving company and KYB Engineering and Service Co., Ltd. (“ES”), a
wholly owned subsidiary of the Company that sells hydraulic equipment, as the dissolving company, and theCompany is making preparations with the aim of this absorption-type merger becoming effective on January 1,
2022. In the absorption-type merger with ES, the Company aims to vitalize job rotation in the human resource
management and strengthen corporate governance on a groupwide basis, as described above, while also
strengthening its sales and marketing capabilities and reinforcing the Company’s financial base on a nonconsolidated basis. The absorption-type merger with ES will be an absorption-type merger with a wholly owned
subsidiary of the Company as the dissolving company, and the Company is not expected to record a loss onmerger. Accordingly, the absorption-type merger is expected to satisfy the criteria for a simple merger, as
stipulated in Article 796, Paragraph 2 of the Companies Act, and therefore the Company will not request
approval at a General Meeting of Shareholders. As part of the Group’s series of restructuring measures, however,
it is hereby reported along with the content of this proposal.
2. Outline of content of absorption-type merger agreement
The content of the Absorption-type Merger Agreement will be as follows.
Absorption-type Merger Agreement (Copy)KYB CORPORATION (“KYB”) and KAYABA SYSTEM MACHINERY CO., LTD. (“KSM”) hereby enter
into an absorption-type merger agreement (“this Agreement”), as follows.
Article 1 (Method of the Merger)
KYB and KSM will conduct a merger (the “Merger”), with KYB as the company surviving in the absorptiontype merger and KSM as the company dissolving in the absorption-type merger, in accordance with theprovisions of this Agreement.
Article 2 (Parties involved)
The trade names and addresses of KYB and KSM are as follows.
(1)
KYB (company surviving in the absorption-type merger)
Trade name: KYB Corporation
-3-

(2)

Address: World Trade Center Bldg., 2-4-1, Hamamatsu-cho, Minato-ku, Tokyo, JapanKSM (company dissolving in the absorption-type merger)
Trade name: Kayaba System Machinery Co., Ltd.
Address: 1129-11, Nagatsune-cho, Kumozu, Tsu-shi, Mie, Japan

Article 3 (Cash, etc. to be delivered upon the Merger)
When conducting the Merger, KYB will not deliver any cash, etc. to the shareholders of KSM in exchange for
their shares held (including shares of the surviving company and cash). There will be no increase in the capitalor legal capital surplus of KYB upon the Merger.
Article 4 (General Meeting of Shareholders to approve the Merger)
1. KYB will convene an Ordinary General Meeting of Shareholders to be held on June 25, 2021, where it willseek approval for this Agreement; provided, however, that the date of this General Meeting of Shareholders
may be changed when there are unavoidable reasons for doing so.
2. KSM will conduct the Merger without obtaining approval for this Agreement at a General Meeting of
Shareholders, in accordance with the provisions of Article 784, Paragraph 1 of the Companies Act.
Article 5 (Effective date)
1. The date the Merger takes effect (the “Effective Date”) will be July 1, 2021; provided, however, that theeffectiveness of the Merger will be subject to the condition precedent that an absorption-type split takes effectbetween KSM and KYB-CS Co., Ltd. in relation to the customer service businesses of KSM pertaining toisolation and mitigation devices, simulator devices, construction machinery, environmental and industrial
machinery, etc. (however, this will exclude the customer service business pertaining to defense equipment),
pursuant to the absorption-type company split agreement dated May 20, 2021.
2. The Effective Date of the Merger may be changed by consultation between KYB and KSM for reasons related
to the progress of obtaining permissions, approvals, etc. from the relevant government agencies as provided
for in laws and regulations, or other reasons.
Article 6 (Management of property)
1. From the conclusion of this Agreement to the Effective Date, KYB will execute its business operations aswell as manage and operate its property with the due care of a prudent manager, and any actions that will
significantly affect its property or related rights and obligations will only be conducted after advanceconsultation with KSM.
2. From the conclusion of this Agreement to the Effective Date, KSM will execute its business operations aswell as manage and operate its property with the due care of a prudent manager, and any actions that will
significantly affect its property or related rights and obligations will only be conducted after advanceconsultation with KYB (however, this will exclude the absorption-type split provided for in the proviso to
Article 5, Paragraph 1).
Article 7 (Succession of rights and obligations)
On the Effective Date, KSM will transfer to KYB all of its assets, debts, employment contracts, and otherrights and obligations (however, this will exclude those transferred to KYB-CS Co., Ltd. from KSM pursuant
to the absorption-type merger described in the proviso to Article 5, Paragraph 1), based on the balance sheet of
KSM as of March 31, 2021 and other calculations as of the same date, and KYB will succeed thereto.
Article 8 (Changes to terms, etc.)
From the conclusion of this Agreement to the Effective Date, the terms of the Merger may be changed, or
this Agreement canceled, by consultation between KYB and KSM, in the event of significant changes to theproperty or business status of KYB or KSM owing to natural disaster or other reasons.
Article 9 (Effect of Agreement)This Agreement will be null and void if approval is not obtained at a General Meeting of Shareholders of
KYB, as provided for in Article 4, Paragraph 1, or if permissions, approvals, etc. are not obtained from therelevant government agencies as provided for in laws and regulations, by the day immediately preceding theEffective Date.
-4-

Article 10 (Consultation)
With regard to the Merger, any matters not provided for in this Agreement and any matters not agreed upon
between the parties to this Agreement will be resolved by consultation in good faith between KYB and KSM,
and the same will apply in cases where doubts arise concerning the interpretation of this Agreement or relatedagreements.
IN WITNESS WHEREOF, two originals of this Agreement are hereby executed and, upon the inscription andseal of KYB and KSM, each party will hold one original thereof.
May 20, 2021
(KYB)

World Trade Center Bldg., 2-4-1, Hamamatsu-cho, Minato-ku,
Tokyo, JapanKYB Corporation
Representative Director, President
Masao Ono
[SEAL](KSM)

1129-11, Nagatsune-cho, Kumozu, Tsu-shi, Mie, Japan
Kayaba System Machinery Co., Ltd.
President and Representative Director
Shizuka Sakai [SEAL]

3. Outline of content of matters provided for in each item of Article 191 of the Ordinance for Enforcement of
the Companies Act (excluding item (vi) and item (vii)) on the date matters listed in Article 298, Paragraph 1of the Companies Act are decided(1) Matters related to the appropriateness of the fact that there are no provisions for the matters provided for initems (ii) and (iii) of Article 749, Paragraph 1 of the Companies Act
The Company, which is the company surviving in the absorption-type merger, will not deliver any sharesor other cash, etc. to the shareholders of KSM, which is the company dissolving in the absorption-type merger,
upon the Merger, but the Company has judged that this is appropriate as the relationship between the Company
and KSM is that of wholly owning parent company and wholly owned subsidiary company.
(2) Details of the financial statements, etc. of the company dissolving in the absorption-type merger for the mostrecent fiscal year
The details of the financial statements, etc. of KSM, which is the company dissolving in the absorptiontype merger, for the most recent fiscal year are posted on the Company’s website (https://www.kyb.co.jp/)
pursuant to the provisions of laws and regulations and Article 15 of the Company’s Articles of Incorporation,and therefore are not provided in the Reference Documents for the General Meeting of Shareholders.
(3) Disposal of material property, assumption of material debts, and other events materially affecting the statusof the property of the company dissolving in the absorption-type merger after the final day of the most recent
fiscal year
On May 20, 2021, KSM entered into an absorption-type company split agreement with KYB-CS Co., Ltd.,a wholly owned subsidiary of KSM, to the effect that KSM will be the company splitting in the absorptiontype split and KYB-CS Co., Ltd. will be the company succeeding in the absorption-type split, and KYB-CS
Co., Ltd. will succeed to all rights and obligations related to the customer service businesses of KSM pertaining
to isolation and mitigation devices, simulator devices, construction machinery, environmental and industrial
machinery, etc. (however, this will exclude the customer service business pertaining to defense equipment).
Furthermore, in this absorption-type split agreement, the effective date of the absorption-type split (the“Absorption-type Split”) pursuant to the agreement is July 1, 2021, and the Effective Date of the Absorptiontype Merger falls on the same date, but the Absorption-type Merger will be subject to the condition precedentthat the Absorption-type Split becomes effective, and the Absorption-type Merger will become effective
immediately thereafter.
(4) Disposal of material property, assumption of material debts, and other events materially affecting the statusof the property of the Company after the final day of the most recent fiscal year
(Issuance of preferred shares by third-party allotment)-5-

At a meeting of the Board of Directors of the Company held on May 13, 2021, the Company resolved toissue class A preferred shares by third-party allotment to the following parties (payment date: June 28, 2021,
amount of funds to be raised: 12,500,000,000 yen), subject to receiving approval for the issuance of the class
A preferred shares and approval for a proposal concerning partial changes to the Articles of Incorporation
regarding the new establishment, etc. of provisions related to the class A preferred shares at this General
Meeting of Shareholders: Mizuho Bank, Ltd., Development Bank of Japan Inc., Meiji Yasuda Life Insurance
Company, Ogaki Kyoritsu Bank, Ltd., The 77 Bank, Ltd., Sompo Japan Insurance Inc., Fuyo General Lease
Co., Ltd., and Mizuho Leasing Company, Limited. The Company also entered into a share underwriting
agreement with each of the planned allottees on May 13, 2021.
(Decrease in amounts of capital and legal capital surplus)
The Company plans to record the distributable amount, and in order to return to stable financial foundations
and facilitate agile and flexible capital policies in future, it will decrease the amount of capital (amount ofdecrease in capital: 6,250,000,000 yen), subject to receiving payment for the issuance of the class A preferredshares from the third-party allotment, in addition to decreasing the amount of legal capital surplus (amount ofdecrease in legal capital surplus: 19,583,920,000 yen), subject to obtaining the required approval at this
General Meeting of Shareholders and receiving payment for the issuance of class A preferred shares in thethird-party allotment. The Company then intends to transfer both amounts to other capital surplus.

-6-

Proposal 2: Partial Amendments to the Articles of Incorporation
1. Reasons for amendments to the Articles of Incorporation
In order to enable the issuance of class A preferred shares, as described in Proposal 3 “Issuance of Class A
Preferred Shares by Third-Party Allotment” to be resolved at this General Meeting of Shareholders, class A
preferred shares will be added as a new class of shares, and provisions related to class A preferred shares willbe established.
For details of the reasons for issuing class A preferred shares, please refer to Proposal 3 “Issuance of Class
A Preferred Shares by Third-Party Allotment.”
Furthermore, the effectiveness of this proposal will be subject to the passing and approval of Proposal 3“Issuance of Class A Preferred Shares by Third-Party Allotment” as originally proposed.
2. Content of amendments to the Articles of Incorporation
The content of the amendments is as follows:(Underlined sections are amended.)
Current Articles of Incorporation

Proposed amendments(Total number of shares authorized to be issued by theCompany)
Article 6 The total number of shares authorized to be issued
by the Company shall be fifty-seven million three hundred
thousand (57,300,000) shares.

(Total number of shares authorized to be issued and total
number of class shares authorized to be issued by theCompany)
Article 6 The total number of shares authorized to be issued
by the Company shall be fifty-seven million three hundred
thousand (57,300,000) shares, and the total number of sharesof each class authorized to be issued by the Company shall be
as follows:
Common shares
Fifty-seven million three hundred
thousand (57,300,000) sharesClass A preferred shares One hundred twenty five (125)shares(Number of shares constituting one unit)
Article 7 The number of shares constituting one unit of sharesof the Company shall be 100 shares.

(Number of shares constituting one unit)
Article 7 The number of shares constituting one unit of sharesof common stock of the Company shall be 100 shares, andthe number of shares constituting one unit of class A
preferred shares shall be one (1) share.

(Newly established)

Chapter II-II CLASS A PREFERRED SHARES(Newly established)(Dividends of surplus)
Article 10-2 When paying dividends of surplus, the Company
shall pay dividends of surplus in cash in the amount per class
A preferred share set forth in Paragraph (2) (hereinafter, thecash paid as these dividends is referred to as “class A
preferred dividends”) to shareholders holding class A
preferred shares (“class A preferred share shareholders”) andregistered pledgees of class A preferred shares (“class A
preferred share registered pledgees”) listed or recorded in the
final register of shareholders on the record date of thedividends of surplus (the “dividend record date”), ahead ofshareholders holding common shares (“common share
shareholders”) and registered pledgees of common shares(“common share registered pledgees”) listed or recorded in
the final register of shareholders on the dividend record date.
(2) The amount of class A preferred dividends per class A
preferred share shall be the amount of cash calculated bymultiplying the amount paid for the class A preferred sharesby an annual rate of 7.5% when the dividend record datebelongs to a fiscal year ending by no later than March 31,
2026, or an annual rate of 8.5% when the dividend record
date belongs to a fiscal year ending on or after April 1, 2027,
and the amount shall be calculated in proportion with theratio of the actual number of days in the period from the firstday of the fiscal year to which the dividend record datebelongs (however, this shall be the payment date when thedividend record date belongs to the fiscal year ending March
31, 2022) (including this day) until the dividend record date-7-

(including this day) to a year consisting of 365 days
(however, this shall be 366 days when the relevant fiscal year
includes a leap day). In addition, if the dividend record datebelongs to the fiscal year ending March 31, 2027, when thedividend record date falls on a day between April 1, 2026 andJune 28, 2026, the amount of class A preferred dividends perclass A preferred share shall be the amount of cash calculated
by multiplying the amount paid for the class A preferredshares by an annual rate of 7.5%, calculated in proportion
with the ratio of the actual number of days in the period from
April 1, 2026 (including this day) until the dividend record
date (including this day), to a year consisting of 365 days,
and when the dividend record date falls on a day between
June 29, 2026 and March 31, 2027, the amount of class A
preferred dividends per class A preferred share shall be theamount of cash calculated by multiplying the amount paid forthe class A preferred shares by an annual rate of 8.5%,
calculated in proportion with the ratio of the actual number ofdays in the period from June 29, 2026 (including this day)until the dividend record date (including this day) to a year
consisting of 365 days, plus the amount of class A preferred
dividends calculated assuming that June 28, 2026 is thedividend record date; provided, however, that when dividendsof surplus have been paid to class A preferred share
shareholders or class A preferred share registered pledgees
with a record date prior to the dividend record date in thefiscal year to which the dividend record date belongs, theamount of class A preferred dividends per class A preferredshare shall be the amount after subtracting the total amount ofclass A preferred dividends per class A preferred share ineach dividend payment (class A preferred dividends shall becalculated to two (2) decimal places (hundredths of one yen),and the result shall be rounded to one (1) decimal place).
(3) If the total amount of dividends of surplus per share paid
to class A preferred share shareholders or class A preferredshare registered pledgees with a record date belonging to agiven fiscal year (excluding any dividends equivalent tocumulative unpaid class A preferred dividends (as defined
below) paid in accordance with the provisions of thisparagraph as class A preferred dividends for any fiscal year
prior to the relevant fiscal year) is less than the amount ofclass A preferred dividends for the relevant fiscal year(referring to the amount of class A preferred dividends
calculated in accordance with the provisions of Paragraph(2), assuming that dividends of surplus shall be paid with arecord date of the final day of the relevant fiscal year;
provided, however, that the subtraction provided for in theproviso to Paragraph (2) shall not apply to this calculation),
the shortfall shall accumulate from the fiscal year after the
relevant fiscal year (hereinafter, referred to as the“unqualified fiscal year” in this paragraph). In this case,during the period from the first day of the fiscal year
following the unqualified fiscal year (including this day) until
the day the accumulated amount is actually paid to class A
preferred share shareholders and class A preferred shareregistered pledgees (including this day), in each fiscal year
from the fiscal year following the unqualified fiscal year, anamount shall be added to the accumulated amount, calculated
as simple interest, at an annual rate of 7.5% when therelevant fiscal year ends on March 31, 2026 or earlier, anannual rate of 7.5% for the period from April 1, 2026 to June
28, 2026 and an annual rate of 8.5% for the period from June29, 2026 to March 31, 2027 when the relevant fiscal year
ends on March 31, 2027, and an annual rate of 8.5% when
the relevant fiscal year begins on April 1, 2027 or later.
Furthermore, this calculation shall be calculated on aprorated, daily basis, based on a year consisting of 365 days
(however, this shall be 366 days when the relevant fiscal year
includes a leap day), and the division shall be the final stage-8-

of the calculation. In addition, the calculation shall be
performed to two (2) decimal places (hundredths of one yen),and the result shall be rounded to one (1) decimal place.
When paying dividends of surplus, the Company shall pay
any shortfall accumulated in accordance with the provisionsof this paragraph (“cumulative unpaid class A preferred
dividends”) as dividends to class A preferred share
shareholders or class A preferred share registered pledgees
ahead of class A preferred dividends and dividends of surplus
for common share shareholders and common share registeredpledgees in fiscal years from the following fiscal year
onward.
(4) The Company shall not pay dividends of surplus to class
A preferred share shareholders or class A preferred shareregistered pledgees in excess of the class A preferred
dividends; provided, however, that this may not apply to
dividends of surplus paid while the Company is undergoingprocedures for an absorption-type company split, as provided
for in Article 758, item (viii), (b) of the Companies Act or
Article 760, item (vii), (b) of the same, or while the Company
is undergoing procedures for an incorporation-type company
split, as provided for in Article 763, Paragraph 1, item (xii),(b) of the same or Article 765, Paragraph 1, item (viii), (b) of
the same.
(Newly established)(Distribution of residual assets)
Article 10-3 When distributing residual assets, for each class
A preferred share, the Company shall distribute 100,000,000
yen plus the amount of any cumulative unpaid class A
preferred dividends, any class A unpaid dividends for theprevious fiscal year (as defined below), and any class A
unpaid dividends for the current fiscal year (as defined
below) as cash to class A preferred share shareholders orclass A preferred share registered pledgees, ahead of commonshare shareholders and common share registered pledgees.
“Class A unpaid dividends for the previous fiscal year” refers
to any shortfall in class A preferred dividends for the previous
fiscal year, in the event that there are class A preferred
dividends that have not actually been paid by the residual
assets distribution date, for the fiscal year prior to the fiscal
year to which the residual assets distribution date belongs,
regardless of the record date thereof (however, this shallexclude any amounts included in cumulative unpaid class A
preferred dividends).
“Class A unpaid dividends for the current fiscal year” refers
to the amount of preferred dividends calculated on a prorated
daily basis in accordance with the provisions of Article 10-2,
Paragraph (2) for the number of days from the first day of the
fiscal year to which the residual assets distribution datebelongs (however, this shall be the payment date when theresidual assets distribution date belongs to the fiscal year
ending March 31, 2022; hereinafter, the same applies in thisparagraph) (including this day) until the residual assets
distribution date (including this day), assuming that therecord date of the dividends of surplus is the same as theresidual assets distribution date, minus the total amount ofany dividends that have actually been paid on or after the firstday of the fiscal year to which the residual assets distribution
date belongs (including this day) with a record datebelonging to the relevant fiscal year (excluding any
cumulative unpaid class A preferred dividends and any class
A unpaid dividends for the previous fiscal year).
(2) The Company shall not distribute any residual assets toclass A preferred share shareholders or class A preferredshare registered pledgees in excess of the amounts provided
for in the foregoing.

-9-

(Newly established)(Voting rights)
Article 10-4 Class A preferred share shareholders shall notpossess any voting rights at the general meeting ofshareholders.

(Newly established)(Put option (conversion rights) with common shares as
consideration)
Article 10-5 At any time on or after the payment date, class A
preferred share shareholders may request that the Company
acquires all or part of any class A preferred shares held, in
exchange for the delivery of the number of common shares
determined in Paragraph (4) (a “conversion request”), uponwhich the Company shall deliver the number of commonshares determined in Paragraph (4), within the scopepermitted by laws and regulations, in exchange for theacquisition of the class A preferred shares for whichconversion was requested. Furthermore, in accordance withthe provisions of Paragraph (6), the date the conversion
request becomes effective is hereinafter referred to as the“conversion request effective date.”(2) The initial conversion price shall be 3,150 yen.
(3) Conversion price adjustment(a) If any of the circumstances described below occur, therespective adjustment shall be made to the conversion priceas follows.
1) If a share split or gratis allotment of shares is conducted inregard to the Company’s common shares, the conversion
price shall be adjusted with the following formula.
Furthermore, in the case of a gratis allotment of shares, in the
below formula, the “number of common shares outstanding
prior to the split” shall be read as the “number of commonshares outstanding prior to the gratis allotment (provided,
however, that common shares held by the Company at thattime shall be excluded),” and the “number of common shares
outstanding after the split” shall be read as the “number ofcommon shares outstanding after the gratis allotment(provided, however, that this shall exclude common shares
held by the Company at that time).”Adjusted
conversion
price

=

Unadjusted
conversion
price

×

Number of common shares
outstanding prior to the split
Number of common shares
outstanding after the split

The adjusted conversion price shall be applied from the day
after the record date of the share split or the effective date of
the gratis allotment of shares (or the day after the record date,if a record date for the gratis allotment of shares isdetermined).
2) If a consolidation of common shares is conducted, theconversion price shall be adjusted with the following
formula.
Adjusted
conversion
price

=

Unadjusted
conversion
price

×

Number of common shares
outstanding prior to theconsolidation
Number of common shares
outstanding after the
consolidation

The adjusted conversion price shall be applied from theeffective date of the consolidation of shares.
3) If the Company issues common shares or disposes ofcommon shares held by the Company for a payment amountthat is below the fair value per common share as determinedin (d) below, the conversion price shall be adjusted with thefollowing formula (the “conversion price adjustment
formula”) (excluding gratis allotments of shares; theacquisition of shares or stock acquisition rights (including
those attached to bonds with stock acquisition rights;
hereinafter, the same applies in this paragraph) in exchange
for the delivery of common shares; issuance or disposal
owing to the exercise of stock acquisition rights with
underlying common shares; and the delivery of common- 10 -

shares owing to a merger, share exchange, or company split).
If nonmonetary property is contributed, the “amount to be
paid per share” in the conversion price adjustment formula
shall be the appropriately appraised value of the respective
property. The adjusted conversion price shall be applied fromthe day after the payment date (or the final day of thepayment period, if a period for payment is determined) or the
day after the record date, if a record date for the allotment toshareholders is determined (the “shareholder allotment
date”). Furthermore, if the Company disposes of commonshares held, in the below formula, the “number of shares
newly issued” and “number of treasury shares” shall be readas the “number of shares to be disposed of” and “number oftreasury shares prior to the disposal,” respectively.

Adjusted
conversion
price

Unadjusted= conversion
price

×

(Number ofcommon sharesalready issued
Number oftreasury shares)+

Numberof shares
newly
issued×

Amount to
be paid per
share

Fair value(Number of shares already issued - Number oftreasury shares) + Number of shares newly issued4) If the Company issues or disposes of shares that entitle theholder to receive delivery of common shares at a conversion
price per common share below the fair value per commonshare determined in (d) below, through causing the shares tobe acquired by the Company or otherwise having the sharesacquired by the Company (including gratis allotments ofshares), then on the payment date for these shares (or the
final day of the payment period, if a period for payment isdetermined; hereinafter, the same applies in this item 4)), or
the effective date in the case of a gratis allotment of shares (ifa record date for the gratis allotment of shares is determined,
this record date; hereinafter, the same applies in this item 4)),or the shareholder allotment date, if there is such a date, allshares to be issued or disposed of shall be deemed to havebeen acquired at the initial terms and common shares thus
delivered, and the amount calculated using this amount as the“amount to be paid per share” in the conversion priceadjustment formula shall be the adjusted conversion price.
The adjusted conversion price shall be applied from the day
after the payment date, or in the case of a gratis allotment ofshares, the day after the effective date thereof, or if there is ashareholder allotment date, the day after that date.
Notwithstanding the provisions of the above, if theconsideration for the common shares to be delivered uponacquisition has not been determined at the above time, thenwhen calculating the adjusted conversion price, all shares tobe issued or disposed of shall be deemed acquired under theterms applicable when the consideration is determined andthe common shares thus delivered when the consideration isdetermined, and the adjusted conversion price shall beapplied from the day after the consideration is determined.
5) If the Company issues stock acquisition rights that entitle
the holder to receive delivery of common shares at a price atwhich the total of the payment amount for the stockacquisition rights per common share and the property to becontributed when exercising the stock acquisition rights (ifnonmonetary property is contributed, the appropriately
appraised value of the respective property; hereinafter, thesame applies in this item 5)) is below the fair value percommon share as set forth in (d) below, through the exerciseof the stock acquisition rights or their acquisition by theCompany (including a gratis allotment of stock acquisitionrights), then on the allotment date of these stock acquisitionrights, or the effective date in the case of a gratis allotment ofstock acquisition rights (or the record date, if a record date
for the gratis allotment of stock acquisition rights isdetermined; hereinafter, the same applies in this item 5)), or
the shareholder allotment date if there is such a date, all stock- 11 -

acquisition rights to be issued shall be deemed to have been
exercised or acquired under the initial terms and commonshares thus delivered, and the amount calculated using thetotal of the payment amount for the stock acquisition rights
per common share and the value of property to be contributed
per common share when exercising the stock acquisitionrights as the “amount to be paid per share” in the conversion
price adjustment formula shall be the adjusted conversion
price. The adjusted conversion price shall be applied from the
day after the allotment date of the stock acquisition rights, orin the case of a gratis allotment of stock acquisition rights,
the day after the effective date thereof, or if there is ashareholder allotment date, the day after that date.
Notwithstanding the provisions of the above, if theconsideration for the common shares to be delivered uponacquisition or exercise has not been determined at the above
time, then when calculating the adjusted conversion price, allstock acquisition rights to be issued shall be deemed
exercised or acquired under the terms applicable when theconsideration is determined and the common shares thus
delivered when the consideration is determined, and theadjusted conversion price shall be applied from the day after
the consideration is determined;(b) In addition to the circumstances described in the above(a), the Company shall make appropriate adjustments to theconversion price in cases falling under any of the following
items 1) through 3), after providing advance notice in writing
to class A preferred share shareholders and class A preferredshare registered pledgees to that effect, together with thereasons thereof, the adjusted conversion price, the date ofapplication, and any other necessary information.
1) When it is necessary to adjust the conversion price owing
to a merger, share exchange, acquisition of all outstanding
shares of another stock company through a share exchange,
share transfer, absorption-type company split, succession of
all or part of the rights and obligations held by anothercompany in relation to the businesses thereof through anabsorption-type company split, or incorporation-typecompany split;
2) When two or more circumstances occur one after anotherin which the conversion price should be adjusted, and it isnecessary to consider the effect of one set of circumstanceson the fair value that should be used in the calculation of theadjusted conversion price based on the other set ofcircumstances;3) When it is otherwise necessary to adjust the conversion
price owing to the occurrence of circumstances under which
there is a change or possibility of change in the number ofcommon shares outstanding (however, this excludes thenumber of common shares held by the Company).
(c) If calculation is required when adjusting the conversion
price, the calculation shall be performed to two (2) decimal
places (hundredths of one yen), and the result shall be
rounded to one (1) decimal place.
(d) The fair price per common share used in the conversion
price adjustment formula shall be the average VWAP over the
30 consecutive trading days starting from the 45th trading
day prior to the date the adjusted conversion price will beapplied.
(e) If the adjustment to the conversion price is calculated andthe difference between the adjusted conversion price and theunadjusted conversion price is less than 0.1 yen as a result,the conversion price will not be adjusted; provided, however,that any adjustments deemed unnecessary under theprovisions of this item (e) shall be carried forward, and taken
into consideration when calculating subsequent adjustments.

- 12 -

(4) Number of common shares to be delivered in exchange
for acquisition
Number ofcommonshares to bedelivered in
exchange foracquisition=

Number of class
A preferredshares for whicha conversion
request was made×(100,000,000 yen+ Cumulative unpaid class A preferred
dividends+ Class A unpaid dividends for theprevious fiscal year
+ Class A unpaid dividends for the current
fiscal year)
Conversion price

Furthermore, in this paragraph, the “residual assets
distribution date” in the calculation of class A unpaid
dividends for the previous fiscal year and class A unpaid
dividends for the current fiscal year as provided for in Article
10-3, Paragraph (1) shall be read as the “conversion request
effective date” when calculating class A unpaid dividends forthe previous fiscal year and class A unpaid dividends for thecurrent fiscal year.
(5) Place accepting conversion requests
Stock Transfer Agency Department, Mizuho Trust & Banking
Co., Ltd.
(6) Effectiveness of conversion requests
Conversion requests shall take effect when documents
required for the conversion request arrive at the place
accepting conversion requests, as set forth in Paragraph (5),or the intended effective date written in these documents,
whichever is later.
(7) Restrictions on conversion
Notwithstanding the provisions of the above, class A
preferred share shareholders shall not be able to makeconversion requests where the cumulative total number ofcommon shares to be delivered based on the conversion
requests will exceed 2,574,843 shares (if a share split, gratis
allotment, or consolidation of common shares is conducted,
this number will be adjusted in accordance with the ratio of
the share split, gratis allotment, or consolidation).
(8) Banking Holding Company Act of 1956 (US) (“BHCAct”)
Notwithstanding the other provisions of this article, if a class
A preferred shareholder has provided written and nonwithdrawable notification to the Company to the effect thatthe BHC Act applies and they will comply with theprovisions of this paragraph and the following paragraph(hereinafter, class A preferred share shareholders who havesubmitted such notification are referred to as “BHC
shareholders”) and the total number of common shares heldby the BHC shareholder and its affiliates (referring to“affiliates” as provided for in Article 2 (k) of the BHC Act;
hereinafter, the same applies in this paragraph) after aconversion request in relation to class A preferred shares held
will exceed 4.99% (or, notwithstanding the provisions ofArticle 4 (k) of the BHC Act, if the proportion permitted by
Article 4 (c) (6) of the BHC Act is changed to a higher orlower proportion as a result of amendments to the BHC Act,the relevant proportion) of the number of common shares
outstanding (excluding common shares held by theCompany), conversion requests may not be made for theexcess portion. Furthermore, BHC shareholders must notify
the Company in writing if they have any affiliates holding
common shares of the Company or other securities or rights
entitling them to receive delivery of common shares(including stock acquisition rights with underlying commonshares and class A preferred shares).

- 13 -

(9) Persons to whom class A preferred shares are transferredfrom BHC shareholders
Notwithstanding the provisions of this article, persons towhom class A preferred shares are transferred from BHC
shareholders (“specified transferees”) may not makeconversion requests in regard to class A preferred shares held;
provided, however, that this may not apply in cases when aspecified transferee has received class A preferred shares as aresult of a transfer of class A preferred shares from a BHC
shareholder defined in items (a) through (c) below.
(a) Secondary distribution of class A preferred sharesconducted broadly and publicly by a BHC shareholder(b) Transfers when no transferee, including the specified
transferee, will receive class A preferred shares entitling themto acquire 2% or more of the number of common shares
outstanding of the Company (excluding common shares heldby the Company), either themselves or in concert with otherparties(c) Transfers to persons holding a majority of the number ofcommon shares outstanding of the Company (excludingcommon shares held by the Company) prior to receiving theshares from the BHC shareholder(Newly established)(Acquisition clause with cash as consideration)
Article 10-6 Upon the arrival of a day separately determinedby the Board of Directors of the Company (the “redemptiondate”), on or after June 28, 2026, the Company may acquire
all or part of the class A preferred shares and deliver anamount of cash determined in Paragraph (2) to class A
preferred share shareholders or class A preferred shareregistered pledgees in exchange, up to the limit of the
distributable amount determined in Article 461, Paragraph 2of the Companies Act on the redemption date of the class A
preferred shares, after providing notice to the class A
preferred share shareholders or class A preferred shareregistered pledgees by no later than two (2) weeks prior to
the redemption date, regardless of the will of the class A
preferred share shareholders or class A preferred shareregistered pledgees. Furthermore, if acquiring part of theclass A preferred shares, the class A preferred shares to beacquired shall be determined by the method of proportional
distribution in accordance with the number of class A
preferred shares eligible for acquisition.
(2) The redemption value of each class A preferred share
shall be 100,000,000 yen, plus any cumulative unpaid class A
preferred dividends, class A unpaid dividends for theprevious fiscal year, and class A unpaid dividends for thecurrent fiscal year. Furthermore, in this paragraph, the“residual assets distribution date” in the calculation of class A
unpaid dividends for the previous fiscal year and class A
unpaid dividends for the current fiscal year as provided for in
Article 10-3, Paragraph (1) shall be read as the “redemptiondate” when calculating class A unpaid dividends for theprevious fiscal year and class A unpaid dividends for thecurrent fiscal year.

(Newly established)(Transfer restrictions)
Article 10-7 The approval of the Board of Directors of theCompany must be obtained for the acquisition of class A
preferred shares by transfer.

(Newly established)(Consolidation or split of shares and gratis allotment ofshares)
Article 10-8 Unless otherwise provided for in laws andregulations, the Company shall not conduct a consolidationor split of shares in regard to the class A preferred shares.
Class A preferred share shareholders shall not be granted theright to be allotted shares offered or stock acquisition rights
offered, and no gratis allotment of shares or stock acquisition- 14 -

rights shall be conducted for these shareholders.
(Newly established)(General meeting of class shareholders)
Article 10-9 The provisions of Article 13 shall also apply to
the general meeting of class shareholders in cases whenmatters to be resolved at the ordinary general meeting ofshareholders require a resolution at a general meeting of classshareholders in addition to resolution at the ordinary general
meeting of shareholders.
(2) The provisions of Articles 12, 14, 15, and 17 shall also
apply to the general meeting of class shareholders.
(3) The provisions of Article 16, Paragraph (1) shall apply toresolutions at the general meeting of class shareholders, as
provided for in Article 324, Paragraph 1 of the Companies
Act.
(4) The provisions of Article 16, Paragraph (2) shall apply toresolutions at the general meeting of class shareholders, as
provided for in Article 324, Paragraph 2 of the Companies
Act.

- 15 -

Proposal 3: Issuance of Class A Preferred Shares by Third-Party Allotment
1. Reasons for proposal
The Company hereby requests shareholders’ approval for the issuance of class A preferred shares by thirdparty allotment (the “Third-Party Allotment”) as follows, pursuant to the provisions of Article 199 of theCompanies Act, to the following parties: Mizuho Bank, Ltd. (“Mizuho Bank”), Development Bank of Japan Inc.
(“DBJ”), Meiji Yasuda Life Insurance Company (“Meiji Yasuda Life”), Ogaki Kyoritsu Bank, Ltd. (“Ogaki
Kyoritsu Bank”), The 77 Bank, Ltd. (“77 Bank”), Sompo Japan Insurance Inc. (“Sompo Japan”), Fuyo General
Lease Co., Ltd. (“Fuyo General Lease”), and Mizuho Leasing Company, Limited (“Mizuho Leasing”;
hereinafter referred to together with Mizuho Bank, DBJ, Meiji Yasuda Life, Ogaki Kyoritsu Bank, 77 Bank,
Sompo Japan, Fuyo General Lease as the “planned allottee(s),” either individually or collectively).
Furthermore, the effectiveness of this proposal will be subject to the passing and approval of Proposal 2“Partial Amendments to the Articles of Incorporation” as originally proposed at this General Meeting of
Shareholders.
2. Outline of the offering of class A preferred shares(1)

Payment dateJune 28, 2021

(2)Class and number of sharesClass A preferred shares(3)

Payment amount

100,000,000 yen per share(4)

Amount of funds to be procured

125 shares

12,500,000,000 yen
Capital(5)(Amount of increase in capital andlegal capital surplus)(6)

Method of offering or allotment(planned allottees)

(7)

Other

6,250,000,000 yen(50,000,000 yen per share)
Legal capital surplus 6,250,000,000 yen(50,000,000 yen per share)
To be allotted by the method of third-party allotment.
Mizuho Bank
35 shares
DBJ
25 shares
Meiji Yasuda Life
15 shares
Ogaki Kyoritsu Bank
10 shares
77 Bank
10 shares
Sompo Japan
10 shares
Fuyo General Lease
10 shares
Mizuho Leasing
10 shares
For details of the class A preferred shares, please refer to Proposal 2“Partial Amendments to the Articles of Incorporation.”

3. Reasons for issuing class A preferred shares by third-party allotment(1) Background and objectives of the Third-Party Allotment
The Company has supplied products that “control vibrations” and “control power” across a broad range ofindustries and technology fields, based on our core technical expertise in hydraulics, which has been passed
from generation to generation since the Company’s founding in 1919. At present, the Company has establisheda solid position with a large share of the global market in its main products. The Company has two main
businesses. In Automotive Components Operations (“AC Operations”), the Company primarily produces
hydraulic shock absorbers for automobiles, hydraulic shock absorbers for motorcycles, and hydraulic equipment
for automobiles, mainly vane pumps for power steering systems and CVT (continuously variable transmissions).
In Hydraulic Components Operations (“HC Operations”), the Company primarily produces hydraulicequipment for industrial use, mainly for construction machinery, and hydraulic equipment for railroad cars. The
Company also manufactures and sells a broad range of products in addition to these main businesses, including
theater equipment, equipment for military vessels, devices for take-off and landing of aircrafts and steering
components, and special-function vehicles. Despite fluctuations in market conditions in each sector where theCompany operates, the Company believes it has limited the impact of these fluctuations and achieved steady
growth with its ability to address the needs of a wide variety of industries, technology fields, and customer bases.
In fact, the Company achieved its highest ever net sales in the fiscal year ended March 31, 2019, at 412.2 billion
yen. In addition, the Company has also generated stable segment profit against the above backdrop.
On the other hand, between the fiscal year ended March 31, 2019 and the fiscal year ended March 31, 2020,
the Company faced significant declines in its capital, owing primarily to three factors: 1) losses related tononconforming acts in the inspection process, etc. for seismic isolation/mitigation oil dampers for buildings
manufactured by the Company and a subsidiary of the Company, as announced on October 16, 2018; 2) refunds
to the Ministry of Defense in relation to nonconforming acts, etc., as announced on January 24, 2020; and 3)- 16 -

impairment losses and the reversal of deferred tax assets in the fiscal year ended March 31, 2020, triggered by
the global spread of COVID-19. As a result, the ratio of equity attributable to owners of the parent (consolidated),
which was 43.7% as of March 31, 2018, had fallen to 18.1% as of March 31, 2020, and the equity ratio (nonconsolidated), which was 43.5% as of March 31, 2018, had fallen to 8.8% as of March 31, 2020.
It is the Company’s understanding that its core AC Operations and HC Operations are facing periods of rapidchange, of the type that could be said to occur only once in a century.
In the automotive industry, where stringent environmental regulations are being implemented at a fast pace,manufacturers must increasingly respond to the transition to xEVs (Note 1) as a means of reducing
environmental impact, as well as further reduce environmental impact in manufacturing processes.
Manufacturers also face the issue of responding to MaaS (Note 2) and CASE (Note 3), as the automotive
industry itself goes through a complete transformation from an industry that “manufactures automobiles” to one
that “provides mobility systems and mobility services,” as a result of actions not just by existing finished auto
manufacturers, but also as a result of participation by companies in the IT and electric machinery industries andother new entrants looking to develop new markets. Amid these changes in the surrounding environment, theCompany’s customers, finished auto manufacturers, are demanding an increasingly diversified range of
products, with functions including not just lighter weight and vibration mitigation, but also the use ofenvironmentally-friendly materials and better riding comfort in self-controlled and self-driving situations. In
addition, the industry is expected to transition in future from development led by finished auto manufacturers
to modular development. As a result of such changes in business structures, the demands placed on the
Company’s products and development are becoming increasingly varied and complex, and the Company
believes that competition to secure earnings from AC Operations is intensifying.
(Note 1)xEVs is a collective term for electric vehicles that includes hybrid electric vehicles and fuel cell vehicles(Note 2)MaaS is an abbreviation for Mobility as a Service, which is a general concept for thinking of all transportation methods as a single
service(Note 3)

CASE is an acronym formed from the words Connected, Autonomous/Automated, Shared, and Electric, and it refers to trends in theautomotive industry

In the industrial hydraulic equipment industry, which mainly provides equipment for construction machinery,
demand is expected to increase for electronic controls and other high-performance controls, centered on
developed countries. In construction machinery, the IoT and automation are making progress, and theimportance of electronic controls is increasing. The Company believes that the growing importance of highperformance controls for systems as a whole will also bring about a greater shift from product-based sales tosystem-based sales in hydraulic products. On the other hand, in emerging markets, price competition with local
manufacturers is becoming increasingly fierce amid continuing strong demand for low-cost products, and theCompany’s HC Operations must respond to multiple areas of market demand, namely advanced technology andlow prices. In addition to the intensifying competitive environment, the spread of COVID-19 has resulted in awithdrawal of demand and a change in regions with heavy demand. As such, the Company believes thatmaintaining cost-competitiveness has become more important than ever before.
In order to ensure that the Company generates earnings as the business environment experiences this periodof dramatic change, the Company’s AC and HC Operations must address market needs and respond to complex
changes in the business environment centered on the withdrawal of demand and a shift in the sources of demand.
With this aim, the Company is in the midst of promoting strategies to develop the optimal base network,
including consolidating and reorganizing mainstay bases. Still, in order to create stable business foundations
that also have the potential for growth, the Company must execute more strategic capital expenditures and R&D
investment on an ongoing basis, while at the same time carrying forward strategies targeting its base networkand enhancing and systematizing product performance. As such, in order to execute strategic capital
expenditures, etc. on an ongoing basis, the Company understands that it should prioritize the emergence fromits difficult financial position as soon as possible, along with the building of stable fund-raising capabilities andthe endurance to survive unexpected business risks.
As the first step toward these measures, since September 2019, the Company has repeatedly analyzed ways
to recover stable financial foundations by increasing capital, methods of raising capital to contribute funds tocapital expenditures and R&D that factor in the medium- to long-term business environment, specific designs
for financial instruments, and other factors. After selecting investors able to support the Company over the
medium to long term, based on an understanding of the business environment surrounding the Company, making
requests to investors to consider opportunities for a third-party allotment, performing due diligence, andengaging in final deliberations on the design of financial instruments, etc., the Company has now decided toissue class shares via the Third-Party Allotment.
The planned allottees are primarily the main financial institutions used by the Company, and they have deep
understanding of the Company’s business objectives, management policies, business strengths, and other factors,
as well as approving of the main intent of the Third-Party Allotment, namely to recover the Company’s financial- 17 -

foundations, which have temporarily worsened, to a stable level as soon as possible, and to secure funds for
growth investment in business facilities and R&D that factor in the medium- to long-term business environment.
Through the planned allottees’ holding of the class A preferred shares over the medium to long term, theCompany believes that it will be able to recover stable financial foundations and achieve further growth. In
addition, based on the aforementioned intent of the Third-Party Allotment, the Company believes that its
stakeholders will be able to understand that the holding of the class A preferred shares by the planned allottees
will contribute to enhancing corporate value.
(2) Reasons for raising funds through the Third-Party Allotment
The Company believes that it is necessary and appropriate to increase capital by raising funds as equity,
instead of raising funds as debt, based on the main intent of the Company’s fundraising, namely recovering
stable financial foundations by increasing capital, and achieving medium- to long-term growth by allocating
funds raised to capital expenditures and R&D, as described in the above “(1) Background and objectives of theThird-Party Allotment.”
In addition, the Company judged that raising funds as equity by issuing common shares could harm theinterests of common share shareholders through the dilution of the Company’s common shares, taking into
consideration such factors as current economic trends, the status of capital markets, the management
environment surrounding the Company, the financial position of the Company, and the Company’s management
results. Furthermore, the Company considered the possibility of a gratis allotment of stock acquisition rights(rights offering), in which stock acquisition rights are allotted to existing shareholders, and an equity
commitment line, in which stock acquisition rights are allotted to one or more securities firms. With thesemethods, it cannot be guaranteed that all stock acquisition rights will be exercised, as it would rely on the
judgment of the allottees based on trends in the share price, and, in addition, shareholders may not agree to an
allotment to shareholders in the event of an allotment of shares to existing shareholders. Therefore it would not
be clear to the Company how much funds will be raised ultimately, and as such, it judged that these methods
would not be an appropriate choice at this time. The Company applies international accounting standards to its
consolidated accounting, and as such, perpetual subordinated bonds and perpetual subordinated loans may
increase capital on consolidated financial statements, without fail, when issued, depending on theirmerchantability. On the other hand, however, the Company uses Japanese accounting standards for its nonconsolidated accounting, and funds raised through debt with an equity component would be classified as aliability, which would not increase capital on non-consolidated financial statements but rather result in an
increase in interest-bearing debt. Hence the Company has judged that it would not be an appropriate choice atthis time.
In contrast to above methods, by increasing capital through third-party allotment using class shares, theCompany can reliably raise funds and at the same time achieve increased capital on both consolidated and nonconsolidated financial statements, depending on the design of the instrument, while also avoiding sudden
dilution and changes in the shareholder composition. Furthermore, this scheme enables the Company to selectappropriate allottees to achieve the objectives of its fundraising, and as such, it has judged that this is the mosteffective choice for the Company. Accordingly, after selecting investors, making requests to investors toconsider opportunities for a third-party allotment, performing due diligence, and engaging in final deliberations
on the design of financial instruments, etc., the Company has now decided to issue class shares via the ThirdParty Allotment as described in the above “(1) Background and objectives of the Third-Party Allotment.”
In addition, the exercise conditions of the put options attached to the class A preferred shares with commonshares as consideration have been agreed upon with the planned allottees, and these put options are designed
such that they will not be exercised unless there is a violation of obligations or clauses related to representations
and warranties under the Underwriting Agreement (referring to the share underwriting agreement concluded
between the Company and the planned allottees; hereinafter, the same applies) (however, with regard to
violations of obligations, this applies only to significant violations of obligations). Accordingly, unless thesecircumstances occur, there will be no dilution in the amount of equity per common share. Moreover, even if theput options with common shares as consideration are exercised when there is a violation of obligations or clauses
related to representations and warranties under the Underwriting Agreement, the design is such that the numberof common shares that will be issued as a result of the put options with common shares as consideration will belimited to 2,574,843 shares in total (a number equivalent to 10% of the number of common shares outstanding
as of May 13, 2021; however, if a share split, gratis allotment of shares, or share consolidation of the Company’scommon shares is conducted, this number will be adjusted in line with the ratio of the split, gratis allotment, or
consolidation of shares). This means the Company can limit any excessive dilution, and the design is such that
there will be no immediate impact on shareholder composition immediately after issuance.
Adding to the above, the Company also intends to enhance its external creditworthiness with the issuance ofthe class A preferred shares. 50% of the amount paid for the class A preferred shares are to be recognized as the- 18 -

aggregate equity credit amount, categorized under “Class 3, equity credit of 50” in Rating and Investment
Information Inc.’s evaluation of equity credit. The acquisition clause of the class A preferred shares may not be
exercised until five (5) years have passed since issuance, and a replacement clause has also been established, tothe effect that when exercising the acquisition clause or acquiring the class A preferred shares by purchase(hereinafter, collectively referred to as “redemption, etc.”), refinancing must be conducted through the raisingof funds, using equity instruments approved by rating institutions as having equity credit attributes equal to or
greater than the preferred shares, in an amount equal to or greater than the aggregate equity credit amount of thepreferred shares to be redeemed, etc.; provided, however, from June 28, 2026 onward, the class A preferredshares may be redeemed, etc. without refinancing in cases that satisfy both of the criteria in the below (i) and(ii). In addition, if the criteria in (i) are satisfied, the amount in (iii) may be subtracted from the aggregate equity
credit amount.
(i)
The adjusted consolidated equity ratio (* 1)) at the end of the consolidated fiscal year or quarterly
consolidated accounting period immediately prior to the redemption, etc. is at least equivalent to the
combined total of equity attributable to owners of the parent as of March 31, 2021 and the amount paid
for the class A preferred shares, divided by the combined total of liabilities and capital, plus the amount
paid for the class A preferred shares.
(ii) The amount of adjusted consolidated shareholders’ equity (* 2)) at the end of the consolidated fiscal year
or quarterly consolidated accounting period immediately prior to the redemption, etc. is at least equivalent
to the combined total of consolidated shareholders’ equity as of March 31, 2021, plus the amount paid
for the class A preferred shares.
(iii) If the amount of adjusted consolidated shareholders’ equity (* 2)) at the end of the consolidated fiscal
year or quarterly consolidated accounting period immediately prior to the redemption, etc. exceeds thisamount as of March 31, 2021, the higher of the two amounts multiplied by 50%.
* 1) Adjusted consolidated equity ratio= (Total equity attributable to owners of the parent - amount paid for class A preferred shares) ÷ (total
liabilities and capital - amount paid for class A preferred shares)* 2) Adjusted consolidated shareholders’ equity= Capital + other capital surplus + treasury shares + retained earnings - amount paid for class A preferredsharesThe Company intends to raise funds of 12.5 billion yen through the Third-Party Allotment. The Company
decided upon this amount after comprehensively considering factors including the strengthening of current
capital, the achievement of stable financial foundations over the medium to long term, the uses of the funds, andthe probability of the acquisition of the class A preferred shares with cash as consideration. Furthermore, as
benchmarks for stable financial foundations for the time being, the Company will target a ratio of equity
attributable to owners of the parent (consolidated) of at least 25% and an equity ratio (non-consolidated) of atleast 20%, while also building greater resilience to risk by accumulating more capital over the medium to longterm. On the other hand, after achieving a certain level of internal reserves, the Company’s policy for the fullamount of 12.5 billion yen will be to acquire the class A preferred shares via the attached acquisition clause withcash as consideration, in order to limit the amount of dividends paid to class A preferred shares over the longterm. As described above, the planned allottees will not be able to exercise the put options attached to the class
A preferred shares with common shares as consideration unless there is a violation of obligations or clauses
related to representations and warranties under the Underwriting Agreement (however, with regard to violationsof obligations, this applies only to significant violations of obligations), and therefore the Company is able tosecure time to accumulate capital and enhance corporate value. In order to acquire the class A preferred sharesas soon as possible, the Company will implement various initiatives aimed at recovering stable financial
foundations and achieving further growth.
(3) Reasons for selecting the planned allottees
As described in the above “(2) Reasons for raising funds through the Third-Party Allotment,” the Company
believes that ensuring that the class A preferred shares are held by multiple financial institutions with whom it
has a transactional relationship, primarily the main financial institutions used by the Company, will contributeto further stabilizing the financial foundations of the Company. In addition, the planned allottees sufficiently
understand the business environment surrounding the Company, the status of management, and the Company’s
approach to capital measures. Based on the above considerations, the Company judged that raising funds withthe class A preferred shares will contribute to enhancing corporate value, and selected the planned allottees.
(4) Grounds for calculation of the payment amount and specific details thereof- 19 -

The Company held earnest deliberations with the planned allottees concerning the investment method of theThird-Party Allotment and the details thereof, and as a result, decided upon a payment amount of 100,000,000
yen per class A preferred share. The Company believes that this payment may be deemed reasonable, based on
the merchantability of the class A preferred shares, in addition to the above negotiations.
In order to ensure fairness when determining the issuance terms of the class A preferred shares, the Company
requested a valuation of the class A preferred shares from Akasaka International Accounting Co., Ltd. (“Akasaka
International Accounting”), a third-party valuation institution that is independent of the Company and theplanned allottees, and obtained a class share valuation report (the “Class Share Report”).
After considering calculation methods for the pricing of the class A preferred shares, Akasaka International
Accounting, the third-party valuation institution, used a valuation methodology based on a binomial latticemodel, which is a generally-used valuation model, to calculate the fair value of the class A preferred shares.
After considering the various terms set forth in the issuance requirements of the class A preferred shares,
Akasaka International Accounting used certain assumptions in its calculation (including preferred dividends,
residual assets, voting rights, acquisition clauses with cash or common shares as consideration, price of theCompany’s common shares, volatility in the share price, the expected dividend amount for common shares,
risk-free rate, and credit spreads). In the Class Share Report, the value of the class A preferred shares was given
in a range of 96.2 million yen to 100.6 million yen per share.
The Company thus determined the amount to be paid per class A preferred share after taking into
consideration the above results of the calculation in the Class Share Report by Akasaka International Accounting,a third-party valuation institution that is independent of the Company and the planned allottees, and earnestly
engaging in negotiations and consultations with the planned allottees over many occasions. The payment amountfor the class A preferred shares is within the share value range calculated by Akasaka International Accounting,and the Company believes that the amount to be paid per class A preferred share (100,000,000 yen per share) is
not an amount that would be particularly advantageous to the planned allottees, as per the Companies Act.
However, calculating the fair value of preferred shares without an objective market value requires extremely
advanced and complex calculations, and various interpretations of their valuation are possible. As a result of
these and other factors, the Company believes it appropriate to confirm the will of shareholders, and therefore,
as a precautionary matter, the Company has decided to make the issuance of the class A preferred shares subject
to obtaining approval at via special resolution at a General Meeting of Shareholders for a favorable issuance,
pursuant to Article 199, Paragraph 2 of the Companies Act, at this General Meeting of Shareholders.

- 20 -

Proposal 4: Reduction in Amount of Legal Capital Surplus
1. Reasons for reduction in amount of legal capital surplus
The Company plans to record the distributable amount, and in order to return to stable financial foundations
and facilitate agile and flexible capital policies in future, it will reduce the amount of legal capital surplus andtransfer the amount to other capital surplus, pursuant to the provisions of Article 448, Paragraph 1 of theCompanies Act.
Furthermore, the effectiveness of this proposal will be subject to the passing and approval of Proposal 2“Partial Amendments to the Articles of Incorporation” and Proposal 3 “Issuance of Class A Preferred Shares by
Third-Party Allotment” as originally proposed, as well as the completion of payment for the class A preferredshares.
2. Outline of reduction in legal capital surplus
Amount of reduction in legal capital surplus

19,583,920,000 yen

Amount of increase in other capital surplus

19,583,920,000 yen

Date the reduction in legal capital surplus will take effectJune 28, 2021

Proposal 5: Appropriation of Surplus
Appropriate shareholder return is an important management policy of the Company. In accordance with theCompany’s basic policy and in consideration of business performance for the fiscal year ended March 31, 2021,
future capital investment, and other factors, the Company proposes the payment of year-end dividends for the
fiscal year under review as follows.
Matters concerning year-ended dividends:
1. Type of dividend property
Cash
2. Allocation of dividend property and total amount thereof
75 yen per share of common stock of the Company
Total amount of dividends: 1,915,691,925 yen
3. Effective date of appropriation of surplus
June 28, 2021

- 21 -

Proposal 6: Election of Seven (7) Members of the Board of Directors
The term of office of all the seven (7) Members of the Board of Directors will expire at the conclusion ofthis General Meeting of Shareholders. Therefore, we propose election of seven (7) Members of the Board of
Directors.
The candidates for the Members of the Board of Directors are as follows:
List of candidates for Members of the Board of Directors
Current positions in the
CompanyNo.

NameAttributes

1

Yasusuke Nakajima(Reappointment)

Member of the Board of
Directors, Chairman

2

Masao Ono

(Reappointment)

Representative Director,
President Executive Officer

3

Takaaki Kato

(Reappointment)

Representative Director,
Executive Vice President
Executive Officer

4

Keisuke Saito(Reappointment)

Member of the Board of
Directors, Executive Vice
President Executive Officer

5

Rokurou Tsuruta(Reappointment)

6

Shuhei Shiozawa(Reappointment)

7

Masakazu Sakata(Reappointment)(Candidate forMember of the Boardof Directors(Outside))(Independent Officer)(Candidate forMember of the Boardof Directors(Outside))(Independent Officer)(Candidate forMember of the Boardof Directors(Outside))(Independent Officer)- 22 -

Attendanceof themeetings ofthe Board of
Directors
100%(17/17)100%(17/17)100%(17/17)100%(17/17)

Member of the Board of
Directors (Outside)(17/17)

Member of the Board of
Directors (Outside)(17/17)

Member of the Board of
Directors (Outside)(14/14)

100%

100%

100%

No.

Name
(Date of birth)

Career summary, positions, and responsibilities at the Company
April 1979
April 2005
June 2005

April 2007

June 2009
June 2010
June 2011

April 2012
Yasusuke Nakajima(November 2, 1955)(Reappointment)

1

April 2014

Term of office as aJune 2015
Member of the Boardof Directors: 16 years June 2018
January 2019
Attendance of themeetings of the Boardof Directors: (17/17)
April 2019
June 2019

Joined the Company
General Manager, Hydraulics Sales & Marketing Headquarters,
Hydraulic Components Operations
Member of the Board of Directors, General Manager,
Hydraulics Sales & Marketing Headquarters, HydraulicComponents Operations
Member of the Board of Directors, General Manager,
Hydraulics Sales Headquarters, Hydraulic Components
Operations
Managing Member of the Board of Directors, General
Manager, Hydraulic Components Operations
Senior Managing Member of the Board of Directors, in chargeof purchasing, general affairs and human resources
Member of the Board of Directors, Senior Managing Executive
Officer, in charge of purchasing, general affairs and humanresources
Member of the Board of Directors, Senior Managing Executive
Officer, in charge of purchasing, General Manager, HydraulicComponents Operations
Member of the Board of Directors, Senior Managing Executive
Officer, in charge of purchasing, General Manager, Corporate
Planning Div.
Representative Director, President Executive Officer
Representative Director, Chairman, President Executive
Officer
Representative Director, Chairman, President Executive
Officer, General Manager in charge of Seismic
Isolation/Mitigation Correspondence Operations
Representative Director, Chairman, in charge of Seismic
Isolation/Mitigation Correspondence Operations
Member of the Board of Directors, Chairman, in charge ofSeismic Isolation/Mitigation Correspondence (current position)[Reasons for proposing him as a candidate for Member of the Board of Directors]
He has deep knowledge and a wealth of experience in corporate management. He has
steadily promoted management reforms such as reinforced corporate governance andquality management in the Group and structural reforms on the global level. He has
endeavored for early settlement of the problem of seismic isolation/mitigation oil
dampers for buildings. Moreover, he is also actively involved in various industry
associations for addressing several challenges faced by the industry. We expect that
he will continue to make efforts to restore public trust of the Group. Consequently,
we reappoint him as a candidate for Member of the Board of Directors.
[Significant concurrent positions]None- 23 -

Number ofshares of theCompany held

5,500

No.

Name
(Date of birth)

Career summary, positions, and responsibilities at the Company
April 1979
January 2004
April 2005
June 2006
June 2008
April 2012
April 2014
April 2016
April 2017
June 20172

April 2018
Masao Ono
(November 7, 1956)(Reappointment)
June 2018
Term of office as a
Member of the Boardof Directors: 4 years
January 2019
Attendance of themeetings of the Boardof Directors: (17/17)
April 2019

Joined the Company
General Manager, Operations Planning Dept., Automotive
Devices Business Div.
General Manager, Operations Planning Dept., Automotive
Components Operations
General Manager, Purchasing Dept.
General Manager, Purchasing Div.
Executive Officer, General Manager, Purchasing Div.
Managing Executive Officer, General Manager, Purchasing Div.
Senior Managing Executive Officer, in charge of purchasing, incharge of CSR, General Manager, Corporate Planning Div.
Senior Managing Executive Officer, in charge of purchasing, incharge of audit, General Manager, Corporate Planning Div.
Member of the Board of Directors, Senior Managing Executive
Officer, in charge of purchasing, in charge of audit, General
Manager, Corporate Planning Div.
Member of the Board of Directors, Senior Managing Executive
Officer, in charge of purchasing, General Manager, Corporate
Planning Div.
Member of the Board of Directors, Executive Vice President
Executive Officer, in charge of Special Purpose Vehicles Div.,
domestic affiliate companies and purchasing, General Manager,
Corporate Planning Div.
Member of the Board of Directors, Executive Vice President
Executive Officer, in charge of global business strategy, Aircraft
Components Div., domestic affiliate companies and purchasing,
General Manager, Corporate Planning Div.
Representative Director, President Executive Officer (current
position)[Reasons for proposing him as a candidate for Member of the Board of Directors]
He has strongly promoted the accomplishment of important tasks of the Company,
including reinforcement of the business base, thorough implementation of recurrence
prevention measures for the incidents such as nonconforming of seismic
isolation/mitigation oil dampers for buildings, and reform of the corporate culture,with a wealth of knowledge and experience in the business and operation of theCompany. We expect that he will continue to be able to restore confidence and secure
profits of the overall Group under his strong leadership. Consequently, we reappoint
him as a candidate for Member of the Board of Directors.
[Significant concurrent positions]None- 24 -

Number ofshares of theCompany held

2,900

No.

Name
(Date of birth)

Career summary, positions, and responsibilities at the Company
April 1980
March 2005
April 2008
April 2009
April 2011
April 2013
June 2014
April 2015

Takaaki Kato
(June 12, 1957)(Reappointment)

3

June 2015

April 2016
Term of office as a
Member of the Board
April 2017of Directors: 6 years
Attendance of themeetings of the Boardof Directors: (17/17)

June 2017

Joined The Fuji Bank, Limited (present Mizuho Bank, Ltd.)
General Manager, Hong Kong Branch, Mizuho Corporate Bank,
Ltd. (present Mizuho Bank, Ltd.)
Executive Officer, Mizuho Securities Co., Ltd.
Managing Executive Officer, Mizuho Securities Co., Ltd.
Managing Executive Officer, Mizuho Securities Co., Ltd. andChairman, Mizuho Securities Asia Limited
Joined the Company, Managing Executive Officer, Deputy
General Manager, Finance & Accounting Div.
Managing Executive Officer, General Manager, Finance &Accounting Div.
Senior Managing Executive Officer, General Manager, Finance& Accounting Div.
Member of the Board of Directors, Senior Managing Executive
Officer, in charge of audit, in charge of CSR, General Manager,
Finance & Accounting Div., General Manager, Corporate
Planning Div., and CFO
Member of the Board of Directors, Senior Managing Executive
Officer, and CFO
Member of the Board of Directors, Senior Managing Executive
Officer, and CFO
Representative Director, Executive Vice President Executive
Officer, and CFO (current position)[Reasons for proposing him as a candidate for Member of the Board of Directors]
He has deep knowledge of finance, accounting, and IR, and has actively addressedfinancial challenges due to the problem of seismic isolation/mitigation oil dampers
for buildings, and contributed to the recovery of the Company’s performance andimproving corporate value based on a wealth of international experience and insighthe has acquired and cultivated while working in financial institutions. Moreover, he
has initiated repeated dialogue with investors through IR activities in an effort torestore public trust and we expect that he will be indispensable for increasing thecorporate value for medium and long terms. Consequently, we reappoint him as a
candidate for Member of the Board of Directors.
[Significant concurrent positions]None- 25 -

Number ofshares of theCompany held

2,500

No.

Name
(Date of birth)

Career summary, positions, and responsibilities at the Company
April 1983

4

Joined the Ministry of International Trade and Industry (present
Ministry of Economy, Trade and Industry)
August 2002
General Manager, Beijing Office, Japan-China Economic
Association
September 2005 Director, Industrial Revitalization Division, Economic andIndustrial Policy Bureau, Ministry of Economy, Trade andIndustry
July 2007
Director, Industrial Science and Technology Policy Division,
Industrial Science and Technology Policy and Environment
Bureau, Ministry of Economy, Trade and Industry
July 2008
Director, Finance Division, Minister’s Secretariat, Ministry of
Economy, Trade and Industry
July 2009
Director-General for Energy Conservation and Renewable
Energy Department, Agency for Natural Resources and Energy,
Ministry of Economy, Trade and Industry
September 2010 Special Adviser of the Company
June 2011
Member of the Board of Directors, Senior Managing Executive
Officer, General Manager, Engineering Div. and General
Manager, Corporate Planning Div.
April 2014
Member of the Board of Directors, Senior Managing Executive
Officer, in charge of legal affairs and information technology
Keisuke Saito
administration, General Manager, Engineering Div.
January 2016
Member of the Board of Directors, Senior Managing Executive(August 18, 1959)
Officer, in charge of Information Technology Administration, in(Reappointment)
charge of Aircraft Components Div., General Manager,
Engineering Div.
Term of office as a
Member of the Board of Directors, Senior Managing Executive
Member of the Board April 2017
Officer, in charge of Aircraft Components Div., Generalof Directors: 10 years
Manager, Hydraulic Components Operations
April 2018
Member of the Board of Directors, Senior Managing Executive
Attendance of the
Officer, General Manager, Hydraulic Components Operations
meetings of the Board
and General Manager, Aircraft Components Div.
of Directors: (17/17)
January 2019
Member of the Board of Directors, Senior Managing Executive
Officer, General Manager, Seismic Isolation/Mitigation
Correspondence Operations
June 2019
Member of the Board of Directors, Executive Vice President
Executive Officer, General Manager, Seismic
Isolation/Mitigation Correspondence Operations (current
position)[Reasons for proposing him as a candidate for Member of the Board of Directors]
He has diverse experience and a rich human network gained while working in the
Ministry of Economy, Trade and Industry and deep knowledge cultivated in the
Company in the areas of engineering, research and development. He has demonstrated
strong leadership in carrying out conformation and made achievements based on his
good judgment and ability to deliver as a person responsible for settling issues withseismic isolation/mitigation oil dampers for buildings. We expect that he is a qualified
person to accomplish the conformation of the dampers and able to address
management issues to fulfill the society’s expectations Consequently, we reappoint
him as a candidate for Member of the Board of Directors.

Number ofshares of theCompany held

3,500

[Significant concurrent positions]
None

No.

Name
(Date of birth)

Career summary, positions, and responsibilities at the Company- 26 -

Number ofshares of theCompany held

April 1970
April 2005
July 2006
June 2007
September 2007

5

Rokurou Tsuruta(June 16, 1943)(Reappointment)(Candidate forMember of the Boardof Directors(Outside))(Candidate for
Independent Officer)

June 2012
June 2015
May 2017
June 2017

Prosecutor, Tokyo District Public Prosecutors Office
Superintending Prosecutor, Nagoya High Public Prosecutors
OfficeRegistered as an attorney (Daini Tokyo Bar Association)
Outside Director, TEIKOKU PISTON RING CO., LTD. (present
TPR Co., Ltd.) (current position)
Outside Audit & Supervisory Board Member, J. FRONTRETAILING Co., Ltd.
Outside Corporate Auditor, Sumitomo Mitsui Financial Group,
Inc.
Member of the Board of Directors (Outside) of the Company(current position)
Outside Director, J. FRONT RETAILING Co., Ltd.
Outside Corporate Auditor, Sumitomo Mitsui Banking
Corporation[Reasons for proposing him as a candidate for Member of the Board of Directors(Outside) and overview of expected roles]
Term of office as aSince assuming office as Member of the Board of Directors (Outside) in 2015, he has
Member of the Board
properly performed supervisory functions for business execution in regard toof Directors (Outside):
strengthening of the internal control, compliance, etc. of the Company based on his
6 years
expertise and experience as an attorney, on various occasions such as the Board of
Directors’ meetings. We expect him to continue giving us useful advice.
Attendance of theConsequently, we reappoint him as a candidate for Member of the Board of Directors
meetings of the Board(Outside). Although he has not participated in corporate management other than as anof Directors: (17/17)
outside director or outside audit & supervisory board member, we judge that he will
duly perform his duties as a Member of the Board of Directors (Outside) for theabove-mentioned reasons.
[Significant concurrent positions]
Attorney and representative, Tsuruta Rokurou Law OfficeOutside Director, TPR Co., Ltd.

- 27 -

900

No.

Name
(Date of birth)

Career summary, positions, and responsibilities at the Company
April 1981
April 1987
April 1991
April 1994
January 2001
October 2005
March 2012
June 2016

6

Number ofshares of theCompany held

Assistant, Faculty of Economics, Keio University
Associate Professor, Faculty of Economics, Keio University
Visiting researcher, Institut d'Etudes Politiques de Paris
Professor, Faculty of Economics, Keio University
Director for International Economic Affairs, Cabinet Office
Dean, Faculty of Economics, Keio University
Member of the Board of Directors (Outside), Kenedix, Inc.
Member of the Board of Directors (Outside) of the Company(current position)
Independent Director (Audit & Supervisory Committee
member), Ahresty Corporation (current position)
Professor Emeritus, Keio University (current position)
President, Tokyo International University (current position)

Shuhei Shiozawa(September 19, 1955)(Reappointment)
June 2017(Candidate forMember of the Board April 2019of Directors
April 2019
(Outside))(Candidate for[Reasons for proposing him as a candidate for Member of the Board of Directors
Independent Officer) (Outside) and overview of expected roles]
Since assuming office as Member of the Board of Directors (Outside) in 2016, he has
Term of office as a properly performed supervisory function in regard to business execution on various
Member of the Board occasions such as the Board of Directors’ meetings, such as giving us useful opinionsof Directors (Outside): and recommendations on finance and CSR of the Company based on a wealth of
5 years
knowledge and insight as a specialist in economics. We expect him to continue giving
us useful advice. Consequently, we reappoint him as a candidate for Member of the
Attendance of the Board of Directors (Outside). Although he has not participated in corporate
meetings of the Board management other than as an outside director, we judge that he will duly perform his
of Directors: (17/17) duties as a Member of the Board of Directors (Outside) for the above-mentioned
reasons.
[Significant concurrent positions]
President, Tokyo International University
Professor Emeritus, Keio University
Independent Director (Audit & Supervisory Committee member), Ahresty Corporation- 28 -

700

No.

Name
(Date of birth)

Career summary, positions, and responsibilities at the Company
April 1983
April 2007
April 2010
June 2011

7

Masakazu Sakata(August 2, 1959)(Reappointment)(Candidate forMember of the Boardof Directors(Outside))(Candidate for
Independent Officer)

June 2015
June 2017
April 2019
June 2020
June 2020
October 2020

Joined Fuji Xerox Co., Ltd.
General Manager, Public Relations and Advertisement Dept.,
Fuji Xerox Co., Ltd.
Senior Vice President, Fuji Xerox Advanced Technology Co.,Ltd.
Senior Vice President and Director, Fuji Xerox Advanced
Technology Co., Ltd.
Executive Vice President, Fuji Xerox Information Systems Co.,Ltd.
President and Representative Director, Fuji Xerox Advanced
Technology Co., Ltd.
Senior Adviser, Fuji Xerox Co., Ltd.
Member of the Board of Directors (Outside) of the Company(current position)
Outside Audit & Supervisory Board Member, ULS Group, Inc.
(current position)
Outside Director, PLANET, INC. (current position)

Number ofshares of theCompany held

100

Term of office as a
[Reasons for proposing him as a candidate for Member of the Board of Directors
Member of the Board(Outside) and overview of expected roles]of Directors (Outside):
Since assuming office as Member of the Board of Directors (Outside) in 2020, he has
1 years
properly performed supervisory functions in regard to business execution in areas ofbusiness renovation such as work style reforms that prioritize diversity in the
Attendance of theCompany, the promotion of IT efficiency, and productivity improvements in backmeetings of the Board
office operations based on broad knowledge and experience cultivated at Fuji Xeroxof Directors: (14/14)
Co., Ltd. We expect him to continue to give us useful advice and guidance.
Consequently, we appoint him as a candidate for Member of the Board of Directors(Outside).
[Significant concurrent positions]
Outside Audit & Supervisory Board Member, ULS Group, Inc.
Outside Director, PLANET, INC.
(Note 1) No conflict of interests exists between any of the above candidates and the Company.
(Note 2) The Company has designated Mr. Rokurou Tsuruta, Mr. Shuhei Shiozawa and Mr. Masakazu Sakata, candidates, as
independent officers under the rules of the Tokyo Stock Exchange and filed the designations with the Tokyo Stock
Exchange. If the reappointment of Mr. Rokurou Tsuruta, Mr. Shuhei Shiozawa and Mr. Masakazu Sakata is approved,
the Company will continue to designate them as independent officers.
(Note 3) Liability limitation agreement with Members of the Board of Directors (Outside):
Mr. Rokurou Tsuruta, Mr. Shuhei Shiozawa and Mr. Masakazu Sakata, candidates, have each entered into an agreementwith the Company to limit their liabilities. If the reappointment of Mr. Rokurou Tsuruta, Mr. Shuhei Shiozawa and Mr.
Masakazu Sakata is approved, the Company shall continue the agreement with each of them. The outline of the agreement
is as follows:
If Mr. Rokurou Tsuruta/Mr. Shuhei Shiozawa/Mr. Masakazu Sakata becomes liable to the Company for failure to perform
his duties as a Member of the Board of Directors (Outside) after the conclusion of this agreement, the maximum amountof his liability shall be twice the value of the annual property benefits that he has received or should receive from theCompany as consideration for the execution of his duties during his term of office as calculated by the method provided
in Article 113 of the Ordinance for Enforcement of the Companies Act, and any amount in excess of the maximum
amount shall be exempted from the liability, provided that he has conducted his duties in good faith and without grossnegligence.
(Note4) The Company has entered into a directors and officers liability insurance contract to insure its Members of the Board of
Directors (including Members of the Board of Directors (Outside)), Audit & Supervisory Board Members (including
Audit & Supervisory Board Members (Outside)), and Executive Officers. The insurance contract covers liability of
insured arising in the performance of their duties and damage claims received pertaining to the pursuit of said liability.
However, there are certain exclusions, such as no coverage for liability arising from actions taken with the knowledge
that they were in violation of laws and regulations. The Company bears the entire premium for all the insured parties.
If the candidates assume office, they will become insured persons under said insurance policy.

- 29 -

Proposal 7: Election of One (1) Audit & Supervisory Board Member
Mr. Tomoo Akai will resign from his position as an Audit & Supervisory Board Member at the conclusionof this General Meeting of Shareholders. We propose election of one (1) Audit & Supervisory Board Member.
The Audit & Supervisory Board has given its consent to this proposal in advance.
The candidate for Audit & Supervisory Board Member is as follows.
In accordance with the provisions of the Articles of Incorporation of the Company, the term of office for the
Audit & Supervisory Board Member elected by this General Meeting of Shareholders will expire on the
expiration date of the Audit & Supervisory Board Member who will resign.
Name(Date of birth)

Career summary and positions at the Company
April 1980
January 2004
April 2012
January 2014
April 2016
April 2018
January 2019
April 2019

Hideki Nonoyama(February 28, 1957)(New appointment)

June 2019

April 2020

January 2021

Joined the Company
General Manager, Operations Planning Dept., Automotive
Devices Business Div.
Executive Officer, General Manager, Corporate
Planning Dept., Corporate Planning Div.
Executive Officer; President, KYB Americas Corporation
Managing Executive Officer; President, KYB Americas
Corporation
Managing Executive Officer, Deputy General Manager, Finance& Accounting Div.
Managing Executive Officer, in charge of CSR and safetycontrolManaging Executive Officer, in charge of purchasing, and in
charge of CSR and safety control
Managing Executive Officer, in charge of purchasing, Deputy
General Manager, Seismic Isolation/Mitigation Correspondence
Operations
Managing Executive Officer, in charge of purchasing, Deputy
General Manager, Seismic Isolation/Mitigation Correspondence
Operations and General Manager, Promotion Headquarters
Managing Executive Officer, in charge of purchasing andlogistics, Deputy General Manager, Seismic Isolation/Mitigation
Correspondence Operations and General Manager, Promotion
Headquarters (current position)

Number ofshares of theCompany held

2,200

[Reasons for proposing him as a candidate for Audit & Supervisory Board Member]
He has considerable knowledge of auditing based on his experience in corporate
planning, finance and accounting, and management of overseas group companies. We
expect that he will give us useful opinions and recommendations. Consequently, we
appoint him as a candidate for Audit & Supervisory Board Member.
[Significant concurrent positions]
None(Note 1) No conflict of interests exists between Mr. Hideki Nonoyama, a candidate, and the Company.
(Note 2) Liability limitation agreement with a candidate for Audit & Supervisory Board Member:If the appointment of Mr. Hideki Nonoyama, a candidate, is approved, the Company will enter into an agreement with
him to limit his liabilities. The outline of the agreement is as follows:
If Mr. Hideki Nonoyama becomes liable to the Company for failure to perform his duties as an Audit & Supervisory
Board Member after the conclusion of this agreement, the maximum amount of his liability shall be twice the total valueof the annual property benefits that he has received or should receive from the Company as consideration for the
execution of his duties during his term of office as calculated by the method provided in Article 113 of the Ordinancefor Enforcement of the Companies Act, and any amount in excess of the maximum amount shall be exempted from theliability, provided that he has conducted his duties in good faith and without gross negligence.
(Note 3) The Company has entered into a directors and officers liability insurance contract to insure its Members of the Board of
Directors (including Members of the Board of Directors (Outside)), Audit & Supervisory Board Members (including
Audit & Supervisory Board Members (Outside)), and Executive Officers. The insurance contract covers liability of
insured arising in the performance of their duties and damage claims received pertaining to the pursuit of said liability.

- 30 -

However, there are certain exclusions, such as no coverage for liability arising from actions taken with the knowledge
that they were in violation of laws and regulations. The Company bears the entire premium for all the insured parties.
If Mr. Hideki Nonoyama, a candidate, is appointed as Audit & Supervisory Board Member, he will become an insured
person under said insurance policy.

- 31 -

Proposal 8: Election of One (1) Substitute Audit & Supervisory Board Member
Mr. Atsushi Shigeta was elected as a Substitute Audit & Supervisory Board Member at the 98th Ordinary
General Meeting of Shareholders held on June 25, 2020 by its resolution effective until the commencement of
this General Meeting of Shareholders. To prepare for any case where the number of Outside Audit & Supervisory
Board Members becomes less than the number required by laws and regulations, we propose to elect one (1)Substitute Audit & Supervisory Board Member.
Such Substitute Audit & Supervisory Board Member will assume the office of Audit & Supervisory Board
Member only if the number of Outside Audit & Supervisory Board Members becomes less than the number
required by laws and regulations. Her term of office shall be equal to the remaining term of office of her
predecessor.
The Audit & Supervisory Board has given its consent to this proposal in advance.
The candidate for Substitute Audit & Supervisory Board Member is as follows:
Name(Date of birth)

Career summary
April 1980
April 1999
November 2000
March 2003
March 2006
April 2008
May 2010
May 2011
April 2014

Junko Watanabe(May 26, 1957)(Candidate for
Substitute Audit &Supervisory Board
Member (Outside))

July 2015
July 2018
July 2019
March 2020
July 2020

Joined The Fuji Bank, Limited (present Mizuho Bank, Ltd.)
General Manager, Hachioji-Minamiguchi Branch, The Fuji
Bank, Limited (present Mizuho Bank, Ltd.)
General Manager, em-town Branch, The Fuji Bank, Limited(present Mizuho Bank, Ltd.)
General Manager, Hiyoshi Branch, Mizuho Bank, Ltd.
General Manager, Oji Branch, Mizuho Bank, Ltd.
General Manager, Diversity Promotion Office, Human
Resources Dept., Mizuho Bank, Ltd.
Executive Officer and Deputy General Manager, Membership
Development Dept., Mizuho Research Institute Ltd.
Senior Executive Officer and General Manager, Membership
Development Dept., Mizuho Research Institute Ltd.
Executive Officer and Deputy General Manager, Leisure Resort
Business Div. and General Manager, Sales Dept., Joban Kosan
Co., Ltd.
Director and Executive Officer, and General Manager, Leisure
Resort Business Div., Joban Kosan Co., Ltd.
Director and Executive Officer in charge of Business Strategy
Div. and Workstyle Reforms, Joban Kosan Co., Ltd.
Director and Executive Officer in charge of Corporate Div. andBusiness Strategy Div. and Workstyle Reforms, Joban Kosan
Co., Ltd.
Audit & Supervisory Board Member (Outside), JUKI
CORPORATION (current position)
Managing Director in charge of Spa Resort Hawaiians
Headquarters, in charge of Business Development Div. and KA
PILINA TOWER project, Joban Kosan Co., Ltd. (current
position)

Number ofshares of theCompany held

0

[Reasons for proposing her as a candidate for Substitute Audit & Supervisory Board
Member (Outside)]
We expect that she will give us useful opinions and recommendations to securesoundness of the auditing and corporate management of the Company based on her
experiences not only in financial institutions, but also in sales and business strategy.
Consequently, we appoint her as a candidate for Substitute Audit & Supervisory
Board Member (Outside).
[Significant concurrent positions]Managing Director, Joban Kosan Co., Ltd.
Audit & Supervisory Board Member (Outside), JUKI CORPORATION(Note 1) No conflict of interests exists between Ms. Junko Watanabe, a candidate, and the Company.
(Note 2) Ms. Junko Watanabe, a candidate, once served as an Executive of Mizuho Bank, Ltd., a Specified Associated Service
Provider of the Company. However, it has been ten years since she retired Mizuho Bank, Ltd.
(Note 3) Liability limitation agreement with a candidate for Substitute Audit & Supervisory Board Member:- 32 -

If Ms. Junko Watanabe, a candidate, is elected, the Company will enter into an agreement with Ms. Junko Watanabe tolimit her liability on condition that she assumes office as Audit & Supervisory Board Member.
The outline of the agreement is as follows:・ If Ms. Junko Watanabe becomes liable to the Company for failure to perform her duties as an Audit & Supervisory
Board Member after the conclusion of this agreement, the maximum amount of her liability shall be twice the total
value of the annual property benefits that she has received or should receive from the Company as consideration for
the execution of her duties during her term of office as calculated by the method provided in Article 113 of theOrdinance for Enforcement of the Companies Act, and any amount in excess of the maximum amount shall be
exempted from the liability, provided that she has conducted her duties in good faith and without gross negligence.
(Note 4) The Company has entered into a directors and officers liability insurance contract to insure its Members of the Board of
Directors (including Members of the Board of Directors (Outside)), Audit & Supervisory Board Members (including
Audit & Supervisory Board Members (Outside)), and Executive Officers. The insurance contract covers liability of
insured arising in the performance of their duties and damage claims received pertaining to the pursuit of said liability.
However, there are certain exclusions, such as no coverage for liability arising from actions taken with the knowledge
that they were in violation of laws and regulations. The Company bears the entire premium for all the insured parties.
If Ms. Junko Watanabe, a candidate, assumes office as Audit & Supervisory Board Member, she will become an insured
person under said insurance policy.

Proposal 9: Payment of Performance-Linked Bonuses to Members of the Board of Directors
We propose the payment of bonuses in the total amount of 110.2 million yen to four (4) Members of theBoard of Directors in office as of the end of the fiscal year under review (excluding three (3) Members of theBoard of the Directors (Outside) out of the seven (7) Members of the Board of the Directors) in considerationof various factors, including the business performance of the fiscal year under review.
We kindly ask that the amount to be paid to each Member of the Board of Directors be left to the discretionof the Board of Directors.
(Reasons the payment is appropriate)
Increasing the correlation between the remuneration of each Member of the Board of Directors and businessperformance will lead to increased motivation to improve business performance via appropriate corporate
management, and also with the objective of further promoting value-sharing with our shareholders, theCompany has adopted a performance-linked bonus system for bonuses to Members of the Board of Directors(excluding Members of the Board of Directors (Outside)).
(Policy for performance-linked bonus system)
The total amount of bonuses payable to Members of the Board of Directors (excluding Members of the Boardof Directors (Outside)) under the performance-linked bonus system, which is a variable remuneration linked tothe performance of the Company, shall be calculated in accordance with the degree of actual achievement of theperformance forecast stated in the kessan tanshin (financial results report) on the settlement of accounts for theend of the previous fiscal year. The amount payable to each Member of the Board of Directors shall be decided
on the allotment ratio preliminarily determined according to the position of each Member of the Board of
Directors. However, the maximum amount of bonus will be set in accordance with related laws and regulations.
The total amount for payment shall be decided by a resolution of the Board of Directors upon consultation with
the Remuneration Committee, a body consisting of the Representative Directors and the Members of the Boardof Directors (Outside), and thereupon shall be submitted to the ordinary general meeting of shareholders every
year for approval.
Moreover, the Company has established a policy for determining the remuneration of each Member of theBoard of Directors and determined that the content of this proposal is consistent with the policy and therefore it
is appropriate.
END- 33 -