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: 4047)
June 9, 2023
(Electronic Provision Measures Commencement Date) June 6, 2023
To Shareholders with Voting Rights:
Jun’ichi Hasegawa
President
Kanto Denka Kogyo Co., Ltd.
3-2, Marunouchi 2-chome, Chiyoda-ku,
Tokyo, JapanNOTICE OF THE 116TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
We are pleased to inform you that we will hold the 116th Ordinary General Meeting of Shareholders of Kanto
Denka Kogyo Co., Ltd. (the “Company”) as described below.
In convening this General Meeting of Shareholders, the Company has taken measures for providing
information that constitutes the content of reference documents for the general meeting of shareholders, etc.
(items for which the measures for providing information in electronic format will be taken) in electronic format.
It has posted the items for which the measures for providing information in electronic format will be taken as
the “Notice of the 116th Ordinary General Meeting of Shareholders” and “Other Items Provided Electronicallyfor the 116th Ordinary General Meeting of Shareholders (Matters Omitted in the Paper-Based Documents to be
Delivered)” (Japanese only) on the Company’s website on the Internet.
The Company’s website: https://www.kantodenka.co.jp/english/ir/
To confirm the items for which the measures for providing information in electronic format will be taken,
please access, in addition to the website above, the Tokyo Stock Exchange (TSE) website (TSE Listed Company
Information Service) at the URL below, enter the Company’s name in “Issue name (company name)” or our
securities code in “Code,” and click “Search.” Then, select “Basic Information” and “Documents for public
inspection/PR information” in that order.
TSE website (Listed Company Search):https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show
If you are unable to attend the meeting, you can exercise your voting rights in writing or via the Internet.
Please review the Reference Documents for the General Meeting of Shareholders and exercise your voting
rights by 5:30 p.m. on Wednesday, June 28, 2023, Japan time.

-1-1. Date and Time:
2. Place:

Thursday, June 29, 2023, at 10:00 a.m. Japan time
5F Conference Room, Headquarters of the Company
Yusen Building 5F, 3-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
116th Fiscal Year (April 1, 2022‒March 31, 2023) 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 116th Fiscal Year
(April 1, 2022‒March 31, 2023)
Proposals to be resolved:
Proposal:
Election of 12 Directors
1. When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the receptiondesk.
2. On the day of the meeting, the Company will adopt “Cool Biz” attire. Shareholders are also encouraged
to attend the meeting in light clothing.
3. Due to a change in the Japanese government’s basic policy on measures against COVID-19 infections,
the wearing of masks is now left to individual judgment. Shareholders attending this Ordinary General
Meeting of Shareholders are kindly requested to make a determination about their own mask-wearing inconsideration of their physical condition and the risk of infection.
4. Although the Company has launched the system for providing informational materials for general
meetings of shareholders in electronic format, in order to avoid confusion among shareholders, we will
uniformly send paper-based documents stating the items for which the measures for providing
information in electronic format will be taken for this General Meeting of Shareholders, regardless ofwhether or not a request for delivery of paper-based documents has been made.
5. Of the items for which the measures for providing information in electronic format will be taken, thefollowing items are not included in this Notice pursuant to the provisions of laws and regulations as well
as Article 14 of the Company’s Articles of Incorporation. Accordingly, this Notice is a part of the
documents audited by the Audit & Supervisory Board members and the Accounting Auditor in preparing
their audit reports.
・ The Notes to the Consolidated Financial Statements in the Consolidated Financial Statements andthe Notes to the Non-consolidated Financial Statements in the Non-consolidated Financial
Statements
6. In the event of revision to the items for which the measures for providing information in electronic format
will be taken, the content of the revisions will be posted on the respective websites listed.

-2-

Business Report(From April 1, 2022 to March 31, 2023)
1. Matters Related to the Status of the Corporate Group(1) Business Progress and Achievements
In the consolidated fiscal year ended March 31, 2023, while the Japanese economy showed signs of amoderate recovery due to the effects of various government policies, severe conditions continued toprevail amid factors such as rising raw material and fuel prices, and sharp fluctuations in exchange rates.
Overseas, outlooks remained uncertain due to the need for caution amid downside risks from such factors
as the prolonged situation in Ukraine and fluctuations in financial and capital markets.
The chemical industry also continued to face a challenging business environment, with rising raw
material, fuel and logistics prices coupled with the impact of production adjustments in thesemiconductor and electronic materials industries.
Amid these circumstances, the Kanto Denka Group worked to strengthen the earning power of its
fundamental chemicals, fine chemicals, and ferrochemicals businesses, while striving to develop new
products that leverage its competitive fluorochemical technologies.
Net sales for the fiscal year under review amounted to ¥78,675 million, up ¥16,388 million or 26.3%
year on year, mainly due to higher sales in the Fine Chemicals Division. For profit and loss, ordinary
profit amounted to ¥13,679 million, up ¥2,534 million or 22.7% year on year, and profit attributable toowners of parent amounted to ¥9,382 million, up ¥1,620 million or 20.9% year on year, mainly due tohigher sales in the Fine Chemicals Division, despite increases in raw material and fuel prices anddepreciation.
The following provides an overview for each segment.
Fundamental Chemicals Division
Net Sales(Millions of yen)

9,409
7,966

FY2021

Inorganic Products
Sales of caustic soda and hydrochloric acid were up year on year due toeffects from price revisions, despite lower sales volumes.
Organic Products
Sales of trichloroethylene and perchloroethylene were up due to effects
from price revisions, despite lower sales volumes.

FY2022

As a result of the above, net sales in the Fundamental Chemicals Division
amounted to ¥9,409 million, up ¥1,442 million or 18.1%. Operating profit
amounted to ¥325 million (versus operating loss of ¥69 million in theprevious fiscal year).

-3-

Fine Chemicals Division
Net Sales(Millions of yen)

63,94349,000

Fluorochemicals
For fluorochemicals for semiconductors, sales of nitrogen trifluoride wereup year on year due to effects from price revisions, despite lower sales
volumes. Sales of tungsten hexafluoride and hexafluoro-1,3-butadiene wereup due to higher sales volumes.
Battery Materials
Sales of lithium hexafluorophosphate, a battery material, were up due toeffects from price revisions.

FY2021

FY2022

As a result of the above, net sales in the Fine Chemicals Division amounted
to ¥63,943 million, up ¥14,943 million or 30.5%. Operating profit
amounted to ¥11,450 million, up ¥1,407 million or 14.0%.

Ferrochemicals Division
Net Sales
2,580(Millions of yen)
2,666

Sales of reprographic carriers, used in developers for copiers and printers,
were up year on year due to switching to new products. Sales of iron oxide
were down due to lower sales of colorants.
As a result of the above, net sales in the Ferrochemicals Division amounted
to ¥2,666 million, up ¥86 million or 3.4%. Operating profit amounted to¥685 million, up ¥145 million or 27.0%.

FY2021

FY2022

Commercial Business Division
Net Sales
837

FY2021(Millions of yen)

746

Commercial business sales were down year on year due to lower sales ofchemical products.
As a result of the above, net sales in the Commercial Business Division
amounted to ¥746 million, down ¥91 million or 10.9%. Operating profit
amounted to ¥199 million, up ¥4 million or 2.6%.

FY2022

Facilities Division
Net Sales(Millions of yen)

1,901

1,908

FY2021

FY2022

Net sales in chemical facility plant and general industrial plant construction
were up year on year due to an increase in contract work.
As a result of the above, net sales in the Facilities Division amounted to¥1,908 million, up ¥6 million or 0.4%. Operating profit amounted to ¥602
million, up ¥222 million or 58.7%.

-4-

(2) Capital Investment and Financing
Total capital investment amounted to ¥16,624 million.
Main activities here include the expansion of manufacturing facilities for fluorochemicals.
These requirements were funded by cash on hand and borrowings.
(3) Issues to Be Addressed
Looking ahead, as social and economic activities increase in intensity, impact from various policies is
expected to gradually lead to a rebound. However, attention must be paid to the risk that a downturn inoverseas economies may put downward pressure on the Japanese economy, global geopolitical risks, andthe risk of fluctuations in financial and capital markets. Amid these factors, the future remains highly
uncertain, and the business environment is expected to remain a challenging one.
Here, the Group has launched its new medium-term management plan, “Dominate 1000 —Sustainable
Growth and Fostering Competitiveness—,” starting in fiscal 2022, ended March 31, 2023. In this plan,we will strive to achieve our target of ¥100 billion in consolidated net sales in fiscal 2024 through thecore strategies of “promote expansion of the fine chemicals business,” “raise the level of the production
technology,” “enhance human resource development,” and “increase social value.”
Furthermore, we have established the prime initiatives of our business activity as “giving the highest
priority to safety,” “being a profitable company,” and “development by and for everyone.” With this, astable management foundation, and an eye on where we want to be in 2030, we will provide a safe work
environment with job satisfaction, support technologies that are cutting-edge on a global stage with our
superior, original products, and aim to be an innovative, development-driven company to contribute toa sustainable society.
It is my hope that you, our valued shareholders, will continue to lend your support going forward.

-5-(4) Changes in Assets and Income
Item

FY2019FY2020

FY2021

FY2022

Net sales(Millions of yen)

53,67951,92762,28678,675

Ordinary profit(Millions of yen)

7,840

5,582

11,145

13,679Profit attributable toowners of parent(Millions of yen)

5,021

3,605

7,762

9,382

(Yen)

87.29

62.73

135.12163.32(Millions of yen)

84,061

92,324

109,902130,762

Basic earnings per share
Total assets
Net Sales (Millions of yen)

Ordinary Profit (Millions of yen)
13,679FY201951,927

FY202062,286

7,762

7,840

5,021

5,582

FY2021

FY2022

Basic Earnings per Share (Yen)FY2019FY20203,605

FY2021

FY2022

Total Assets (Millions of yen)

163.32

130,762135.12
84,061

87.29

92,324

109,90262.73

FY2019FY2020

FY2021

FY2022

9,382

11,14578,67553,679Net Profit Attributable to Owners of Parent (Millions of yen)
S l

FY2019FY2020-6-

FY2021

FY2022FY2019FY2020

FY2021

FY2022

(5) Significant Subsidiaries (As of March 31, 2023)
CapitalKanto Denka
Kogyo’s Shareof Investment

Kanden Kosan Co., Ltd.

¥10 million

100.0%

Jobi Engineering Co., Ltd.

¥120 million

49.4%

Company Name

Major Business Lines
Sale of chemical products and maintenanceof containers
Manufacture and sale of chemical industry
equipment

Morishita Bengara Kogyo Co.,Ltd.
Kanto Denka Korea Co., Ltd.

¥27 million

100.0%

Manufacture and sale of iron oxide₩300 million

100.0%

Sale of fluorine compounds

Taiwan Kanto Denka Co., Ltd.

NT$7 million

100.0%

Sale of fluorine compounds

Kanto Denka Fine Products₩42,000 million
100.0%
Manufacture and sale of fluorine compounds
Korea Co., Ltd.
Xuancheng KDK Technology
US$50 million
98.3%
Manufacture and sale of fluorine compounds
Co., Ltd.
(Notes) 1. During fiscal 2022, Morishita Bengara Kogyo Co., Ltd. purchased treasury shares, which increased the Company’s
share of investment from 99.9% at the end of the previous fiscal year to 100.0%.
2. Morishita Bengara Kogyo Co., Ltd. changed its name to Kanto Denka Finetech Co.,Ltd. on April 1, 2023.
3. During fiscal 2022, Kanto Denka Korea Co., Ltd. purchased and canceled treasury shares, which increased theCompany’s share of investment from 90.0% at the end of the previous fiscal year to 100.0%.

(6) Major Business Activities (As of March 31, 2023)
Segment

Principal Products and Services

Compositionof Net Sales(Inorganic products)
Caustic soda, hydrochloric acid, sodium hypochlorite, aluminum chloride, etc.
Fundamental Chemicals (Organic products)
Trichloroethylene, perchloroethylene, vinylidene chloride, cyclohexanol, etc.

12.0%

(Fluorochemicals)
Sulfur hexafluoride, carbon tetrafluoride, trifluoromethane, hexafluoroethane,
nitrogen trifluoride, hexafluoro-1,3-butadiene, octafluoropropane, tungsten
hexafluoride, silicon tetrafluoride, chlorine trifluoride, octafluorocyclobutane,
monofluoromethane, carbonyl sulfide, iodine pentafluoride, etc.
(Battery materials)
Lithium hexafluorophosphate, lithium tetrafluoroborate, etc.
(Other products)
Organic fluorine compounds, etc.

81.3%

Fine Chemicals

Ferrochemicals
Commercial Business
Facilities

Carriers, magnetite, toner, etc.
Sale of chemical products, maintenance of containers, insurance agency services,etc.
Factory plant construction, plant facility maintenance work, etc.

-7-

3.4%
0.9%
2.4%

(7) Major Sales Offices and Plants (As of March 31, 2023)
1. Kanto Denka Kogyo Co., Ltd. Headquarters: 3-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan
Sales Offices: Osaka Branch Office, Nagoya OfficePlants: Shibukawa Plant (Gunma Prefecture), Mizushima Plant(Okayama Prefecture)
Research Laboratories: Research & Development Center (Gunma
Prefecture), Research & Development Center
Shibukawa Branch (Gunma Prefecture),
Research & Development Center Mizushima
Branch (Okayama Prefecture)
2. Subsidiaries
Kanden Kosan Co., Ltd. (Tokyo, Gunma Prefecture, Okayama
Prefecture), Jobi Engineering Co., Ltd. (Tokyo, Gunma Prefecture,
Okayama Prefecture), Morishita Bengara Kogyo Co., Ltd. (Mie
Prefecture, Tokyo, Osaka Prefecture, Aichi Prefecture), Kanto Denka
Korea Co., Ltd. (South Korea), Taiwan Kanto Denka Co., Ltd. (Taiwan,
Singapore), Kanto Denka Fine Products Korea Co., Ltd. (South Korea),
Xuancheng KDK Technology Co., Ltd. (China)(8) Status of Employees (As of March 31, 2023)
Segment

No. of Employees

Year-on-Year Change

Fundamental Chemicals

39–8

Fine Chemicals

555

+58

Ferrochemicals

49+3

Commercial Business

45–1

Facilities

104

+5

Company-wide (shared)

267

+20

1,059

+77

Total

(9) Major Lenders (As of March 31, 2023)
LenderBorrowing Balance (Millions of yen)Mizuho Bank, Ltd.

10,484The Gunma Bank, Ltd.

6,851

The Chugoku Bank, Ltd.

5,052

Sumitomo Mitsui Trust Bank, Limited

4,412

Asahi Mutual Life Insurance Company

4,010

2. Matters Related to Company Shares (As of March 31, 2023)(1) Total Number of Authorized Shares

200,000,000 shares(2) Total Number of Shares Issued

57,546,050 shares(Notes) 1. The total number of shares issued includes 22,592 treasury shares.
2. Treasury shares do not include 70,545 shares held in trust account for the stock-based remuneration plan.

(3) Number of Shareholders

10,581-8-

(4) Major Shareholders (Top 10)
Status of Investment in Kanto Denka Kogyo Co., Ltd.
Number of Shares Held
Share of Investment (%)(thousand shares)

Shareholder Name
The Master Trust Bank of Japan, Ltd. (trust account)

5,807

10.10

Goldman Sachs International

4,348

7.56

Asahi Mutual Life Insurance Company

3,570

6.21

Zeon Corporation

3,550

6.17

Custody Bank of Japan, Ltd. (trust account)

3,208

5.58

The Gunma Bank, Ltd.

1,600

2.78

J.P. MORGAN SECURITIES PLC FOR AND ON
BEHALF OF ITS CLIENTS JPMSP RE CLIENTASSETS-SEGR ACCT

1,526

2.65

The Chugoku Bank, Ltd.

1,400

2.43

Mizuho Bank, Ltd.

1,202

2.09

ADEKA Corporation

1,148

2.00

(Note) Treasury shares (22,592 shares) are excluded when calculating share of investment.

(5) Shares Issued to Corporate Officers as Compensation for Execution of Duties during the Fiscal
Year Under Review
Stock-based remuneration issued during the fiscal year under review is as follows.
Number of Shares Held(shares)

Item
Directors (excluding outside directors)

3,780

-9-

Number of Eligible Officers
13. Matters Related to Corporate Officers(1) Names and Other Information for Directors and Audit & Supervisory Board Members (As of
March 31, 2023)
Position
President
Director and Managing
Executive Officer
Director and Executive
Officer
Director and Executive
Officer
Director and Executive
Officer
Director and Executive
Officer
Director and Executive
Officer
Director

Name
Jun’ichi Hasegawa
Yasunari Yamaguchi
Kazuki Niimi
Yuki Abe
Kunihiko Uramoto
Ryoji Masujima
Go Takikawa
Hideki Matsui

Areas of Responsibility and Significant Concurrent Positions
General Manager, Business Div., in charge of Internal Auditing Dept.
General Manager, Technical Div., in charge of Purchasing Dept.
In charge of Accounting & Finance Dept., Information Systems Dept.
Deputy General Manager, Business Div.; Representative Director,
Kanto Denka Korea Co., Ltd.
In charge of Sustainability Dept., Legal & General Affairs Dept.,
Personnel Dept., Business Support Dept.
General Manager, Corporate Planning Dept., in charge of Corporate
Planning Dept., Overseas Business Development Dept.
General Manager, New Products Development Div.; Plant Manager,
Mizushima Plant
Co-Representative Attorney-at-law, Marunouchi Sogo Law OfficeDirector

Masaharu Sugiyama

Director

Hitoshi Habuka

Professor Emeritus, National University Corporation Yokohama
National University
Lecturer (part-time), Faculty of Engineering, National University
Corporation Yokohama National University

Director
Full-time Audit &Supervisory Board
MemberFull-time Audit &Supervisory Board
MemberAudit & Supervisory
Board Member

Yuko Kariya

Outside Director, NIPPON KINZOKU CO.,LTD.

Takeaki Yajima
Masatomo Hayashi
Naozumi Furukawa

Honorary Chairman, Zeon Corporation

Director and Managing Executive Officer (In charge of Corporate
Planning Div., Research & Public Relations Dept., and Overseas andDirect Business Unit), Asahi Mutual Life Insurance Company(Notes) 1. Directors Hideki Matsui, Masaharu Sugiyama, Hitoshi Habuka, and Yuko Kariya are outside directors. Each is anindependent officer as stipulated by the rules of the Tokyo Stock Exchange.
2. Audit & Supervisory Board members Naozumi Furukawa and Kenichi Ikeda are outside Audit & Supervisory Board
members. Each is an independent officer as stipulated by the rules of the Tokyo Stock Exchange.
3. Takeaki Yajima has many years of experience in banking and considerable knowledge of finance and accounting.
4. Position changes for officers during the fiscal year under review are as follows.
Retirement and resignation:
Effective as of the conclusion of the 115th Ordinary General Meeting of Shareholders held on
June 29, 2022, Fuyuhiko Ishii retired from the position of director.
Election: At the 115th Ordinary General Meeting of Shareholders held on June 29, 2022, Ryoji Masujima,
Go Takikawa, and Yuko Kariya were newly elected as directors.
Audit & Supervisory
Board Member

Kenichi Ikeda(2) Overview of Limited Liability Agreement
Pursuant to Article 427, Paragraph 1 of the Companies Act (“the Act”), the Company has entered into
agreements with its outside directors and outside Audit & Supervisory Board members to limit their
liabilities stipulated in Article 423, Paragraph 1 of the Act to the total of the amounts stipulated in each
item of Article 425, Paragraph 1 of the Act.
(3) Overview of Directors and Officers Liability Insurance Agreement
The Company has entered into a directors and officers liability insurance agreement for directors andAudit & Supervisory Board members of the Company and its subsidiaries (excluding subsidiaries forwhich the Company holds all shares) as insureds, which is outlined below. The Company plans to renew
the agreement in October 2023.
1) Outline of events insured against
The agreement covers damages that may arise due to insured directors, Audit & Supervisory Board- 10 -

members, officers, etc. being held liable for the execution of his or her duties or being subject to aclaim for this liability. However, the policy does include certain exemption clauses, such as forliabilities arising from acts committed by insureds while aware that doing so would be in violationof laws and regulations.
2) Premiums
Insurance premiums will be fully borne by the Company.
(4) Matters Related to Remuneration of Corporate Officers
Total Amount of Remuneration for Directors and Audit & Supervisory Board Members
Officer Remuneration

Total
Remuneration
Amount(Millions of yen)

Total Remuneration Amount by Type (Millions of yen)
PerformanceFixed
Non-Monetary
LinkedRemuneration
Remuneration
Remuneration
185
80
10
(21)
(—)
(—)

Officers Paid

Directors(Outside Directors)
Audit & Supervisory
Board Members(Outside Audit &Supervisory Board
Members)

276
(21)

12
(4)

52
(11)

52
(11)

—
(—)

—
(—)

4
(2)

Total

328

237

80

10

16

(Notes) 1. The above table is inclusive of the one director who retired from the position at the conclusion of the 115th Ordinary
General Meeting of Shareholders held on June 29, 2022.
2. The total amount of remuneration for directors does not include employee salaries.

Remuneration for Directors
1) Basic approach to director remuneration
The Company determines the remuneration of its directors with care toward the balance between
fixed and variable remuneration, and between short-term and medium- to long-term remuneration,in order to provide healthy incentives to improve business performance and corporate value.
Specifically, remuneration for directors (excluding outside directors) consists of monthly
remuneration (fixed portion), officer bonuses (performance-linked portion, short-term
remuneration), and stock-based remuneration (medium- to long-term remuneration), while
remuneration for outside directors consists solely of monthly remuneration.
2) Monthly remuneration (fixed portion)
Monthly remuneration is a fixed amount (in cash) determined for each position (chairman, president,
director and senior managing executive officer, director and managing executive officer, director
and senior executive officer, director and executive officer, and outside director).
The Company reviews remuneration levels as necessary, with consideration to business performance,
peer remuneration levels, social conditions, and other factors.
(Notes) 1. The total amount of monthly remuneration for directors (not exceeding ¥24 million) was resolved at the100th Ordinary General Meeting of Shareholders held on June 28, 2007 (the number of directors at theconclusion of said meeting was 10).
2. For the position of director and executive officer, employee bonuses (for the executive officer role) are
paid in addition to monthly remuneration. However, for those with the position of director and executive
officer who are not concurrently serving as employees, the remuneration amount is determined by adding
the amount of the employee bonuses to the monthly remuneration amount.

3) Officer bonuses (performance-linked portion and short-term remuneration)
As an incentive to improve business performance for each fiscal year, a certain percentage of theCompany’s ordinary profit, a solid indicator of earnings, is paid in cash to directors (excluding
outside directors) in July of each year. This payment is explained in detail below.
・ Officer bonuses shall be paid at a level of 0.8% of the Company’s ordinary profit (rounded down
to the nearest million yen) for the relevant fiscal year, with an upper limit of ¥80 million. However,if the Company’s ordinary profit for the relevant fiscal year is less than ¥1 billion, no officer
bonuses shall be paid. Note that the Company’s ordinary profit for the fiscal year under review- 11 -

was ¥12.2 billion.
・ Officer bonuses are paid to all directors (excluding outside directors). However, this excludes
directors who have performed their duties for less than one-half of the relevant fiscal year.
・ The distribution of officer bonuses per director is as follows.
Total amount of officer bonuses ×

Rank points
Total of all rank points for eligible officers(Notes) 1. Rank points for each rank are as follows. Chairman: 2.0; president: 2.0; director, vice president andexecutive officer: 1.5; director and senior managing executive officer: 1.3; director and managing
executive officer: 1.0; director and executive officer: 0.1. However, if there is a period during the relevant
fiscal year in which the officer in question does not serve as a director, the number of months of service(periods of less than one month shall be counted as one month) shall be divided by 12 and then multipliedby the number of rank points. In the event of a change in position during the relevant fiscal year, thenumber of months shall be prorated.
2. By resolution at the 100th Ordinary General Meeting of Shareholders held on June 28, 2007, the bonus(performance-linked remuneration) for directors was set at 0.8% of the Company’s ordinary profit for the
relevant fiscal year, with ¥80 million as the upper limit. (However, if the Company’s ordinary profit for
said fiscal year is less than ¥1 billion, no payment shall be made. The number of directors at the conclusionof said meeting was 10).

4) Stock-based remuneration (medium- to long-term remuneration)
The Company pays stock-based remuneration through a stock issuance trust to directors (excluding
outside directors) for the purpose of increasing their awareness of contributing to enhancement of
the Company’s performance and corporate value over the medium- to long-term. This is achievedby presenting a clear link between director remuneration and the value of Company shares, andhaving directors share the benefits and risks associated with share price fluctuations withshareholders. The Company will contribute up to ¥70 million over the applicable period (five years),
and will grant up to 20,000 points per fiscal year (one point is equivalent to one share of theCompany’s stock), which will be allocated annually on the date of the Ordinary General Meeting of
Shareholders in proportion to the position held by each director. In principle, these Company shares,
which are calculated based on the number of points accumulated, are issued to directors at the timeof their retirement from the position of director. In accordance with the rules on share issuance,
directors eligible under this plan shall be granted points in proportion to their position each year on
the date of the Ordinary General Meeting of Shareholders and, at the time of their retirement fromthe position of director, shall be granted shares of Company stock calculated based on the numberof points accumulated.
(Notes) 1. By resolution at the 113th Ordinary General Meeting of Shareholders held on June 26, 2020, the Company
decided to contribute up to ¥70 million over the applicable period (five years) to directors (excluding
outside directors). It was also resolved to grant 20,000 points per fiscal year (one point is equivalent to
one share of the Company’s stock) in proportion to the position held by each director. In principle, theseCompany shares, which are calculated based on the number of points accumulated, are issued to directors
at the time of their retirement from the position of director (the number of directors [excluding outside
directors] at the conclusion of said meeting was six).
2. In consideration of tax treatment outside of Japan, non-resident directors are to join the officers’
shareholding association, which shall contribute to the purchase of shares.

5) Policy for determining the ratio of the amount of monthly remuneration, the amount of officer
bonuses (performance-linked portion), and the amount of stock-based remuneration, to the amountof remuneration paid to each individual director
The Company determines the ratio of remuneration to directors (excluding outside directors) per
remuneration type with care toward the balance between fixed and variable remuneration, andbetween short-term and medium- to long-term remuneration, in order to provide healthy incentives.
Although the ratio of remuneration by type will vary depending on the Company’s ordinary profit
and stock price levels, calculation based on past performance shows that monthly remuneration isapproximately 60–70%, officer bonuses are approximately 25–35%, and stock-based remuneration
is approximately 5%.
6) Matters related to procedures for determining individual remuneration for directors
Individual remuneration for directors is determined by resolution of the Board of Directors after
consulting with the Nomination & Compensation Committee, whose members include independent
outside directors, on remuneration proposals.
- 12 -

7) Important matters related to determining individual remuneration for directors
In cases where there are reasonable grounds for paying no officer bonus to a director, such as when
they have inflicted serious harm to the Company, said director shall be excluded from those eligible
for payment.
8) Alignment between individual remuneration for directors for the fiscal year under review and theaforementioned policy
Policies on director remuneration (the basic policy and determination method for each remuneration
amount per individual) are determined by resolution of the Board of Directors after consultation with
the Nomination & Compensation Committee, and individual remuneration for directors is calculatedby the individual determination method per remuneration amount. Therefore, the details of
individual remuneration for directors are in alignment with the aforementioned policy.
Remuneration for Audit & Supervisory Board members
Remuneration for Audit & Supervisory Board members consists solely of monthly remuneration,emphasizing independence and objectivity on management. Remuneration amounts per Audit &Supervisory Board member are determined in discussion among Audit & Supervisory Board members.
(Note) The total amount of monthly remuneration for Audit & Supervisory Board members was resolved to be no
more than ¥5 million at the 100th Ordinary General Meeting of Shareholders held on June 28, 2007 (thenumber of Audit & Supervisory Board members at the conclusion of said meeting was four).

(5) Matters Related to Outside Officers
1) Status of concurrent positions of executive officers, outside officers, etc. at other corporations (Asof March 31, 2023)
Item

Name

Outside Director

Hideki Matsui

Status of concurrent positions at other corporations

Outside Director

Masaharu Sugiyama

Outside Director

Hitoshi Habuka

Professor Emeritus, National University Corporation Yokohama
National University
Lecturer (part-time), Faculty of Engineering, National University
Corporation Yokohama National University

Outside Director

Yuko Kariya

Outside Director, NIPPON KINZOKU CO.,LTD.

Co-Representative Attorney-at-law, Marunouchi Sogo Law OfficeOutside Audit &Supervisory Board
Naozumi Furukawa Honorary Chairman, Zeon Corporation
MemberOutside Audit &Director and Managing Executive Officer (In charge of Corporate
Supervisory Board
Kenichi Ikeda
Planning Div., Research and Public Relations Div., and Overseas andMemberDirect Business Unit), Asahi Mutual Life Insurance Company(Notes) 1. Marunouchi Sogo Law Office is an advisory body to the Company to which the Company pays fees for legal
services.
2. There are no material transactions or other special relationships between the Company and National University
Corporation Yokohama National University or NIPPON KINZOKU CO.,LTD.
3. Zeon Corporation holds 3,550,000 shares (6.17% share of investment) in the Company. Although there aretransactions between Zeon Corporation’s group and the Group, these transactions in fiscal 2022 constituted lessthan 1% of the Company’s consolidated net sales.
4. Asahi Mutual Life Insurance Company holds 3,570,000 shares (6.21% share of investment) in the Company. In
addition, the Company has received financing from Asahi Mutual Life Insurance Company.

- 13 -

2) Major activities during the fiscal year under review(a) Outside directors
Name

Status of Board of
Directors Meeting
Attendance

Activity Status

Hideki Matsui has been engaged in corporate legal affairs as an
attorney-at-law for many years and has a wealth of experienceand broad insights. He has met expectations by making
Hideki Matsui
13 of 14comments as appropriate at the Board of Directors and has fully
fulfilled his management oversight function.
Masaharu Sugiyama has been engaged in corporate accounting
as a certified public accountant for many years and has a wealthof experience and broad insights. He has met expectations by
Masaharu Sugiyama
14 of 14making comments as appropriate at the Board of Directors andhas fully fulfilled his management oversight function.
Hitoshi Habuka has been engaged in technology development
and R&D at universities and other companies for many years
and has a wealth of experience and broad insights. He has met
Hitoshi Habuka
14 of 14expectations by making comments as appropriate at the Boardof Directors and has fully fulfilled his management oversightfunction.
Yuko Kariya has engaged in management of a pharmaceuticalmanufacturer as director for many years, and has a wealth ofexperience and broad insights. She has met expectations by
Yuko Kariya
9 of 10making comments as appropriate at the Board of Directors andhas fully fulfilled her management oversight function.
(Note) Yuko Kariya was appointed as director on June 29, 2022; therefore, the number of Board of Directors meetings
she was eligible to attend differs from other directors.

(b) Outside Audit & Supervisory Board members
Name

Status of Board of Status of Audit &Directors Meeting Supervisory Board
Attendance
Meeting Attendance

Naozumi Furukawa

13 of 145 of 6

Kenichi Ikeda

14 of 14

6 of 6- 14 -

Activity Status
Naozumi Furukawa utilized his wealth ofexperience in company management at
manufacturers operating on a global scale,making comments as appropriate at the Board of
Directors and Audit & Supervisory Board. In
addition, he performed audits in accordancewith audit policies established by the Audit &Supervisory Board and fully exercised his
auditing function.
Kenichi Ikeda utilized his wealth of experiencein company management at financial
institutions, making comments as appropriate at
the Board of Directors and Audit & Supervisory
Board. In addition, he performed audits inaccordance with audit policies established by
the Audit & Supervisory Board and fully
exercised his auditing function.

4. Matters Related to the Accounting Auditor(1) Name
Ernst & Young ShinNihon LLC(2) Amount of Remuneration for the Fiscal Year under Review(i) Remuneration as accounting auditor for the fiscal year under review¥37 million(ii) Total amount of money and other financial benefits to be paid by the¥37 million
Company and its subsidiaries to the accounting auditor(Notes) 1. The Audit & Supervisory Board has reviewed audit content, hours, and fees over time, as well as the statusof audit plans and results for past fiscal years, in accordance with the Practical Guidelines for Cooperation
with Accounting Auditors issued by the Japan Audit & Supervisory Board Members Association, and has
considered the appropriateness of estimates for audit hours and fees for the fiscal year under review. Basedon this, the Audit & Supervisory Board consents to the remuneration for the accounting auditor as stipulated
in Article 399, Paragraph 1 of the Companies Act.
2. Since the audit contract between the Company and the accounting auditor does not distinguish between theamount of audit fees for audits based on the Companies Act and the amount of audit fees for audits basedon the Financial Instruments and Exchange Act, the amount in (i) above includes the amount of audit fees
for audits based on the Financial Instruments and Exchange Act.
3. Among the Company’s significant subsidiaries, Kanto Denka Korea Co., Ltd., Taiwan Kanto Denka Co.,
Ltd., Kanto Denka Fine Products Korea Co., Ltd., and Xuancheng KDK Technology Co., Ltd. are auditedby auditing firms other than the Company’s accounting auditor.

(3) Non-Audit Services
Not applicable.
(4) Policy on Dismissal or Non-Reappointment Decisions
The Audit & Supervisory Board shall make decisions on dismissal or non-reappointment of theaccounting auditor after comprehensively considering the independence and reliability of the accounting
auditor and other conditions related to its performance of duties, as required by laws, regulations, andstandards.
If the Audit & Supervisory Board determines that it is necessary to take such action, such as when there
are impedances to the performance of the accounting auditor’s duties, the Audit & Supervisory Board
will determine the content of the relevant proposal to be submitted to the General Meeting of
Shareholders regarding the dismissal or non-reappointment of the accounting auditor. If the accounting
auditor is found to fall under any of the items of Article 340, Paragraph 1 of the Companies Act, theAudit & Supervisory Board shall dismiss the accounting auditor with the unanimous consent of its
members. In such an event, an Audit & Supervisory Board member selected by said board shall report
the dismissal of the accounting auditor and the reasons thereof at the first General Meeting of
Shareholders convened after the dismissal.
Note that if the Board of Directors determines that dismissal or non-reappointment of the accounting
auditor is necessary, such as when there are impedances to the execution of the accounting auditor’s
duties, the Board of Directors shall request the Audit & Supervisory Board to cause the dismissal or nonreappointment of the accounting auditor to be proposed to the General Meeting of Shareholders. The
Audit & Supervisory Board shall determine whether this request is appropriate and determine the content
of the relevant proposal to be submitted to the General Meeting of Shareholders.

- 15 -

5. Systems for Ensuring Appropriate Business Activities and Status of System Operation (Summary)(1) Basic Policy for Internal Control Systems
The Company has resolved a basic policy for internal control systems, as follows, to establish a systemfor ensuring appropriate business activities.
(i) Basic policy for business operation
The management philosophy, presented below, serves as the basis of Company management.
Management Philosophy
Through the quest for constant corporate growth and acquisition of optimum profits while achieving
harmony with nature, Kanto Denka is working with all its shareholders, users and employees to create asuccessful company and a sustainable society.
To achieve this end, we are endeavoring to ensure our unique technologies and superior services meet therequirements of our users and build a trusted company based on the principles of sincerity, creativity,
prompt response and harmony with nature.
Furthermore, the Company has established the following six principles of conduct that transform theaforementioned management philosophy into specific actions, as a guidepost for our daily businessactivities.
Principles of Conduct• Put the customer first at all times, and act courteously and with passion.
• Observe relevant laws and regulations as well as company regulations, and act openly.
• Practice 5S & PDCA, and make a commitment to efforts to develop a safe and people-friendly work
environment.
• Strive to improve our own abilities while nurturing the next generation, and aim to be professionals atwhat we do.
• Develop products, using creative technology, that our customers can use with a feeling of security.
• Proactively work to conserve and act in harmony with nature in order to develop a sustainable society.
(ii) Systems to ensure that director and employee execution of duties complies with laws,
regulations, and the Articles of Incorporation
The Company has established the Compliance and Risk Management Committee, chaired by the
President and attended by outside attorneys, as an organization managing overall compliance. In
addition, the Company has established the RC Promotion Council, chaired by the president, as anorganization with exclusive responsibility for environment and safety-related laws and regulations,which are important issues for a chemical manufacturer.
To promote compliance, we have established the Compliance Manual of the Kanto Denka Kogyo
Group, and provide guidance through training and other means to ensure that all officers andemployees conduct their business operations with a sense of ownership of compliance at each
workplace.
The Company has established a system for consultation and reporting, and stipulates that if any
officer or employee discovers a compliance violation or believes one will be committed internally,
they are obliged to report this to the general manager of the Legal & General Affairs Department, afull-time Audit & Supervisory Board member, or to an outside attorney (anonymous reporting is also
acceptable). The Company shall keep the content of the report confidential and will not treat theperson filing the report unfavorably. A contact system has also been established for instances ofreports received on compliance issues from external parties, such as business partners.
The Company firmly rejects antisocial forces and any unreasonable demands they may make.
Furthermore, the Internal Auditing Department carries out internal audits for all operations under
the direct supervision of the president.
(iii) Regulations and other systems for managing the risk of loss
The Company has established the RC Promotion Council, chaired by the president, as anorganization with exclusive responsibility for environmental and safety risks. The Safety andEnvironment Committee, Quality Assurance Committee, and Logistics Safety Committee have been
established as subordinate organizations to this. Here, the relevant divisions conduct audits on health- 16 -

and safety, the environment, product safety, and logistics given their specialized positions. In
addition, each plant has received certification for occupational health and safety management
systems as the Company continues to strive toward occupational safety.
The Company has established the Compliance and Risk Management Committee as an organizationthat oversees overall risk management, and in the event of an emergency, the Emergency Response
Headquarters, headed by the president, will be responsible for crisis management.
During normal times, each division of the Company shall identify its own risks and work to mitigate
these risks. During emergencies, the Company as a whole shall respond in accordance with theEmergency Response Manual.
(iv) Systems to ensure appropriateness of financial reporting
With regard to internal controls for financial reporting, in accordance with the basic policy on
financial reporting established by the Board of Directors, the Company maintains relevant rules andoperational documents within each division, and the Internal Auditing Department independently
evaluates these internal controls.
(v) Systems to ensure the efficient execution of director duties
The Company’s Board of Directors meets once a month to make decisions on important matters andsupervise the directors’ execution of their duties. To further strengthen the functions of the Board of
Directors and improve management efficiency, the Management Committee, attended by directors
and executive officers responsible for execution of Company business, meets once a month toflexibly make decisions on fundamental and important matters related to business execution. In
addition, the Company has established the Business Promotion Meeting, with directors as main
members. This organization discusses more refined themes.
For business operations, the Company formulates medium-term management plans and annual
budgets based on the future business environment, and sets company-wide targets. Each division
formulates and implements specific measures to achieve these targets.
The term of office for directors is set at one year to facilitate agility in addressing the rapidlychanging business environment. In addition, an executive officer system has been adopted toseparate functions of business decision-making and supervision from functions of businessexecution, as well as to strengthen the checking function of the Board of Directors.
(vi) Systems for the storage and management of information related to the execution of director
dutiesThe Company stores documents and other materials in accordance with laws, regulations, andinternal rules.
The Company also handles information management by establishing guidelines for information
security and a basic policy regarding the protection of personal information.
(vii) Systems to ensure appropriate business activities in the Company’s corporate group
The Company has established a mechanism for sharing compliance and other internal control
policies within the Company’s corporate group. The Company also appoints compliance managers
at each company within the Company’s corporate group, while the Compliance and Risk
Management Committee oversees and promotes compliance for the entire Group. Furthermore, theCompliance Manual of the Kanto Denka Kogyo Group and the consultation and reporting system
are both designed to cover the entire Group.
Regarding management of affiliated companies, while respecting affiliates’ autonomy, the Company
regularly receives reports on their business activities and conducts advance discussions about
important matters in accordance with its affiliated company management regulations. In addition,
the Company dispatches officers to each Group company to check the status of business operations
and internal controls there.

- 17 -

(viii) Matters related to employees assigned to assist the duties of Audit & Supervisory Board
members and their independence from directors
Although there are currently no employees assigned to assist the duties of Audit & Supervisory
Board members, such staff may be assigned as necessary. Directors and Audit & Supervisory Board
members will exchange opinions on personnel matters for such employees.
(ix) Systems for reporting to Audit & Supervisory Board members and other systems to ensure
effective audits by Audit & Supervisory Board members
Audit & Supervisory Board members hold regular meetings with the president to exchange opinions.
In addition, Audit & Supervisory Board members receive presentations on accounting audit details
from the Internal Auditing Department and Ernst & Young ShinNihon LLC, the Company’s
accounting auditor, and collaborate with them through information exchange and other means.
If any officer or employee of the Company or any Group company discovers any fact that may causesignificant damage to any of these companies, they are obliged to immediately report this to an Audit& Supervisory Board member in accordance with laws and regulations. The Company and its Group
companies shall not treat the person filing the report unfavorably.
Full-time Audit & Supervisory Board members shall attend meetings of the Board of Directors aswell as important meetings, such as that of the Compliance and Risk Management Committee andthe Management Committee in order to understand the process behind important decision-making
and the status of business execution. Full-time Audit & Supervisory Board members shall also view
key approval documents and other important documents related to business execution and, as
necessary, request that directors and/or employees make presentations regarding these.
If an Audit & Supervisory Board member requests advance payment or reimbursement of expenses
necessary for the performance of their duties, the Company shall promptly grant such expenses ordispose of liabilities.

- 18 -

(2) Status of Internal Control System Operations (Summary)
The Company’s internal controls are operated in accordance with its basic policy for internal control
systems, as follows.
The management philosophy serves as the basis of Company management, and the principles of conduct
guide daily business operations, with educational programs provided as appropriate.
With regard to compliance, the Compliance and Risk Management Committee and the RC Promotion
Council meet on a regular basis. The content of these meetings, including the status of internal reporting,is reported to the Board of Directors.
The RC Promotion Council plays a central role in managing the risk of loss, as well as environmental
and safety risks. The Compliance and Risk Management Committee has overall control with regard torisk, including others than those previously mentioned.
The Internal Auditing Department independently evaluates the appropriateness of financial reporting
while cooperating as appropriate with the accounting auditor. The results of its evaluations are reported
to the Board of Directors.
As for efficient execution of director duties, the Company has implemented an executive officer systemand has appropriately established the purpose, roles, and participating members of various meetings,
including of the Board of Directors and the Management Committee, to ensure efficient business
operations. In addition, performance levels are tracked with respect to budgets.
Information is stored and managed appropriately in accordance with internal rules.
With regard to the management of each of the Company’s corporate group companies, each of these istasked with regular reporting on the details of their business operations, and the Company’s officers andothers are dispatches to meetings of the board of directors to confirm the appropriateness of theirbusiness operations. Audit & Supervisory Board members and the Internal Auditing Department also
conduct audits for them.
Although there are no full-time employees assigned to assist the duties of Audit & Supervisory Board
members, the relevant divisions work together to provide this assistance.
Information necessary for audits is provided to Audit & Supervisory Board members as appropriate,
ensuring effective audits by said members. Furthermore, Audit & Supervisory Board members share
information with the Internal Auditing Department and the accounting auditor and appropriately
exchange opinions with the president.

- 19 -

6. Basic Policy on the Control of Stock Corporations(1) Basic Policy on Company Financial and Business Policy Decision Controllers (Summary; hereinreferred to the “Basic Policy”)
As a public company, the Company permits the shares of the Company to be traded freely. Accordingly,
we believe that the intent of shareholders should ultimately be reflected in who the person controlling
decisions on the Company’s financial and business policies should be. We also believe that any largescale purchase of share certificates, etc. of the Company should not be denied unless it is inappropriate
or insufficient from the perspective of protecting and improving the corporate value of the Company,
and in turn, the common interests of the shareholders of the Company over the medium- to long-term.
However, there is a possibility that a large-scale purchaser is unwilling to provide the Board of Directorsof the Company and shareholders with sufficient information and time to determine whether the largescale purchaser is appropriate as a person controlling decisions on the Company’s financial and business
policies. There is also a possibility that a large-scale purchaser is inappropriate or insufficient from theperspective of protecting and improving the corporate value of the Company, and in turn, the common
interests of the shareholders of the Company over the medium- to long-term, given the purpose, etc., ofthe large-scale purchase. This can include those that would be clearly detrimental to the aforementioned
corporate value and common shareholder interests, or those that would effectively force shareholders tosell the share certificates, etc. of the Company.
For these reasons, the Board of the Directors of the Company has determined that a large-scale purchasershould only be allowed to commence a large-scale purchase in accordance with certain rules that theCompany established and disclosed in advance (hereinafter referred to as the “Large-Scale Purchase
Rules”).
(2) Efforts to Improve Corporate Value for Realization of the Basic Policy (Summary)
The Company has established the following management policy: “Through the quest for constantcorporate growth and acquisition of optimum profits while achieving harmony with nature, Kanto Denka
is working with all its shareholders, users and employees to create a successful company and asustainable society. To achieve this end, we are endeavoring to ensure our unique technologies andsuperior services meet the requirements of our users and build a trusted company based on the principlesof sincerity, creativity, prompt response and harmony with nature.” In other words, the Company’s
corporate goal is to contribute to the realization of a sustainable society while enhancing its corporate
value. To realize this goal, the Company is working to establish a good relationship with stakeholders
including shareholders, local communities, users, and employees.
The Company believes that the source of its corporate and social value is its unique proprietary
technologies developed through steady research activities, and that the foundation of these technologies
is its human resources supporting technologies and generating new innovative ones. Since its founding
in 1938, the Company has focused on the core technologies of electrolysis, fluorination, chlorination,and organic/inorganic synthesis. In particular, to this day, the Company has accumulated expertise inhydrofluoric acid electrolysis technology, which efficiently generates large amounts of high-purity
fluorine gases, and fluorine-related technology, which has a wide range of applications including battery
materials and medical and agricultural chemicals.
For fluorochemicals, the Company utilizes its unique fluorination technology to supply fluorinated gas
products such as etching gases, cleaning gases, and wiring material gases. These products are essential
in the manufacture of semiconductors, liquid crystals, and other products. While fluorine is dangerous
and very difficult to handle, the Company produces and supplies various fluorinated gas products in astable and efficient manner. This is done through the electrolysis of anhydrous hydrofluoric acid togenerate fluorine and reacting this with nitrogen, tungsten, and other substances. The Company’s coretechnology of hydrofluoric acid electrolysis may also be converted to military applications. The
Amendment to the Foreign Exchange and Foreign Trade Act, which came into effect on May 8, 2020,
was enacted with the aim of appropriately responding to investments that may undermine national
security. In this act and related ministerial ordinances and notices, the Company is listed as a listedcompany that operates within what are called “core industries” among a series of designated industries.
For battery materials products, the Company is the only manufacturer in Japan that produces and sells
high-purity electrolytes for lithium-ion secondary batteries. Amid the urgent worldwide need for- 20 -

environmental reforms to curb global warming, the move toward electrification of society is acceleratingin Japan, with the declaration of carbon neutrality by 2050 and the ban on the sale of new gasoline anddiesel vehicles by mid-2030. The Company is also the only Japanese provider of high-purity electrolytes
for lithium-ion secondary batteries, a core component of this market and one that is expected to grow. It
supplies world-class, high-grade products that meet the demanding needs of customers, supports the highperformance and long life of lithium-ion secondary batteries, and plays an important role in the supply
chain toward the realization of a decarbonized society.
The Company will continue to create unique proprietary technologies by building the capabilities of its
human resources and harnessing its accumulated specialized technologies. We believe that this will
improve our corporate value and contribute to the realization of a sustainable society.
(3) Efforts to Prevent Decisions on the Company’s Financial and Business Policies from Being
Controlled by Inappropriate Parties in the Context of the Basic Policy (Summary)
In line with the Basic Policy, and with the aim of securing and enhancing the Company’s corporate value
and the common interests of its shareholders over the medium- to long-term, the Company has adopted
the Policy toward Large-Scale Purchase of Share Certificates, Etc. of the Company (Takeover Defense
Measures; herein referred to as the “Policy”) at the General Meeting of Shareholders held on June 29,
2021. Within the Policy, the Company has stipulated the Large-Scale Purchase Rules. The outline of therules are that (i) the Company shall request that the large-scale purchaser provides necessary andsufficient information regarding the large-scale purchase, (ii) a certain assessment period for the Boardof Directors of the Company shall be secured, (iii) the Board of Directors of the Company shall present
the plans, alternatives, etc., of the Company’s management to shareholders and conduct negotiations
with the large-scale purchaser, and (iv) in principle, a General Meeting of Shareholders or otherappropriate meeting shall be held to confirm the shareholders’ intent as to whether to takecountermeasures against the large-scale purchase. With these procedures established, the large-scalepurchaser shall only commence the large-scale purchase after the completion of the procedures describedin (i) to (iv) above so as to secure the opportunity to confirm the shareholders’ intent.
(Note) For details on the Policy, please refer to the May 14, 2021 press release “Notice of the Policy toward Large-Scale
Purchase of Share Certificates, Etc. of the Company (Takeover Defense Measures)” published on the Company’s
website (https://www.kantodenka.co.jp/) (Japanese only).

(4) The Policy’s Compliance with the Basic Policy, Non-Harmfulness to Company Shareholder
Common Interest, Non-Pursuance of Maintaining the Status of the Company Officers, and the
Reasons Therefor(i) The Policy’s compliance with the Basic Policy
In the Policy, it is stipulated that a large-scale purchaser is required to provide the Board of Directorsof the Company with all necessary and sufficient information concerning the large-scale purchase inadvance, that it is required to commence the large-scale purchase only after a certain assessment
period for the Board of Directors of the Company has elapsed and the intention of shareholders as
to whether the Board of Directors should take countermeasures has been confirmed directly, inprinciple, at a General Meeting of Shareholders, etc., and that the Board of Directors of the Company
may take countermeasures against any large-scale purchaser who does not observe these rules. In
addition, it is stipulated that, even if the large-scale purchaser observes the Large-Scale Purchase
Rules, in the event that the Board of Directors of the Company judges that the large-scale purchaseby the large-scale purchaser is inappropriate or insufficient from the perspective of protecting andimproving the corporate value of the Company and the common interests of the shareholders of theCompany over the medium- to long-term, the Board of Directors of the Company may takecountermeasures against the large-scale purchaser, in principle, based on the judgment of theshareholders at a General Meeting of Shareholders or other appropriate meeting. As set forth above,
the Policy is consistent with the Basic Policy.
(ii) The Policy shall not be harmful to the common interests of shareholders of the Company
The Policy is consistent with the Basic Policy and intended to ensure that shareholders of theCompany are provided with the information necessary to decide whether or not to accept a largescale purchase, the opinion of the Board of Directors of the Company, and the opportunity to receive
alternative plans, so that ultimately the shareholders can decide whether countermeasures should betaken at the time the Company has received the proposal for a large-scale purchase. Because the- 21 -

shareholders of the Company and investors can make proper investment judgments through the
Policy, it does not damage the common interests of the shareholders of the Company, but rather
contributes to their interests.
(iii) The Policy shall not pursue the maintenance of the status of the Company officers
The Policy has a broad principle that leaves the final decision whether or not a large-scale purchaseshall be accepted to the judgment of the shareholders of the Company, while requiring compliancewith the Large-Scale Purchase Rules and allowing countermeasures to the extent necessary to protect
the common interests of the shareholders of the Company. The Policy discloses instances where theBoard of Directors of the Company may take countermeasures in advance and in detail, and any
countermeasures by the Board of Directors will be taken in accordance with the provisions of the
Policy. In addition, the Policy prescribes that when the Board of Directors of the Company intends
to take countermeasures against a large-scale purchase, it shall, in principle, hold a General Meetingof Shareholders or other appropriate meeting to seek the judgment of the shareholders. Furthermore,in exceptional situations in which the Board of Directors makes a decision to take suchcountermeasures or any other important judgment concerning the Policy without holding a General
Meeting of Shareholders or other appropriate meeting, the Board of Directors shall request advice
from outside experts and others, as necessary, and consult with the Special Committee consisting ofmembers who are independent of the management team operating businesses of the Company andgive utmost respect to the recommendation of the Special Committee. As such, the Policy includes
procedures through which the appropriate operations by the Board of Directors of the Company are
ensured. As described above, it is clear that the Policy is not designed arbitrarily to pursue themaintenance of the status of the Company officers.

- 22 -

7. Policy for Determining Dividends from Surplus, etc.
In determining dividends from surplus, the Company’s basic policy is to provide appropriate return of profits
while securing funds for capital investment, an indispensable driver of greater earnings, and strengthening
its financial position. These actions are founded in its business plans over the medium- to long-term and take
into consideration trends of business performance over time.
The target dividend payout ratio is 20% pursuant to the medium-term management plan, “Dominate 1000,”
introduced in April 2022.
(Note) The year-end dividend for the fiscal year under review was set at ¥23 per share at the Board of Directors meeting heldon May 26, 2023, after comprehensive consideration of the business performance and environment for the fiscal year
ended March 31, 2023. This makes the annual dividend per share ¥33, including the interim dividend already paid.
Note that the start date for payment of the year-end dividend will be June 30, 2023.
(Note) Figures in this business report are rounded down to the indicated unit for monetary amounts and share amounts, androunded off for ratios and figures otherwise.

- 23 -

Consolidated Balance Sheet
As of March 31,2023

As of March 31,
2022(Reference)

72,91961,70522,35526,72820,56016,921

1,130

1,101

7,055

5,182

9,332

4,416

Current portion of longterm borrowings
Lease obligations

7,516

3,526

5,030

3,896

(62)

(68)

57,842

48,19647,404

38,221Long-term borrowings

10,9308,872

19,291

11,655

2,657

2,633

266

351

Construction in progress

10,512

11,001

Other

3,745

3,707

Assets:Current assets
Cash and deposits
Notes and accounts
receivable—trade, andcontract assets
Electronically recordedmonetary claims—
operatingMerchandise andfinished goods
Work in process
Raw materials andsupplies
Other
Allowance for doubtful
accounts
Non-current assets
Property, plant andequipment
Buildings and structures
Machinery andequipment
Land
Lease assets

Intangible assets
Other
Investments and otherassetsInvestment securities
Retirement benefit assets
Deferred tax assets

676
676

Liabilities:
Current liabilities
Notes and accounts
payable—trade

9,246

7,399
14
1,404

7,464
—
1,165

Other

950

621

Allowance for doubtful
accounts(7)(4)

130,762

109,90227,265

9,620

8,068

Electronically recorded
obligations—operating

1,022

835

Short-term borrowings

4,516

4,200

6,914

5,886

135

100

Income taxes payable

2,701

2,600

Provision for bonuses to
officers

134

134

8,634

5,439

28,30822,72725,591

20,166

Lease obligations

635

558

Deferred tax liabilities

36

23

143

137

18

11

1,805

1,754

Other

Provision for retirement
benefits for directors(and other officers)
Provision for shareawards for directors (andother officers)
Retirement benefit
liability
Other

728
728

(Millions of yen)
As of March 31,
2022(Reference)

33,680Non-current liabilities

9,762

Total assets

As of March 31,
2023

75

75

Total liabilities

61,98849,993

Net assets:
Shareholders’ equity

63,15755,122

2,877

2,877

Capital surplus
Retained earnings
Treasury shares
Accumulated othercomprehensive income
Valuation difference on
available-for-salesecurities
Foreign currencytranslation adjustment
Remeasurements ofdefined benefit plans
Non-controlling interests

1,859
58,486(65)

1,829
50,483
(68)

4,323

3,132

2,512

2,527

1,534

413

275

191

1,293

1,654

Total net assets
Total liabilities and net
assets

68,77459,908130,762

109,902

Capital- 24 -

Consolidated Statement of Income(Millions of yen)
From April 1, 2022
to March 31, 2023

From April 1, 2021
to March 31, 2022 (Reference)

Net sales

78,67562,286

Cost of sales

56,10742,421

22,567

19,864Gross profit
Selling, general and administrative expenses

9,619

8,700

12,947

11,164Non-operating profit

1,164

694

Interest income

20

10Dividend income

248

204

Foreign exchange gains

112

243

Operating profit

Gain on sales of prototypes

515—

Miscellaneous income

268

235

Non-operating expenses

432

713

Interest expenses

318

313

Loss on valuation of derivatives

59

84

Loss on sale of trial products—

204

Miscellaneous loss

53

110

Ordinary profit

13,679

11,145Extraordinary income—

131

Gain on sale of investment securities

—

131

254

116

Loss on retirement of non-current assets

242

116

Loss on valuation of investment securities

11—

Profit before income taxes

13,425

11,160

Income taxes—current

4,166

3,234

Income taxes—deferred

(244)

(36)

Profit

9,503

7,961

121

198

9,382

7,762

Extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent- 25 -

Consolidated Statement of Changes in Equity(From April 1, 2022 to March 31, 2023)(Millions of yen)

Shareholders’ equity
CapitalBalance on April 1, 2022

Retainedearnings

Capital surplus

2,877

1,829

Treasury shares

50,483(68)

Total
shareholders’equity55,122

Changes during the consolidated fiscal year
Dividends of surplus(1,380)

Profit attributable to owners of parent

9,382(1,380)
9,382

Purchase of treasury shares

(0)

(0)

Disposal of treasury shares
Increase (decrease) in capital surplus resulting
from change in equity interest in consolidated
subsidiaries
Net changes in items other than shareholders’equity during the consolidated fiscal year

2

2

30

Total changes during the consolidated fiscal year
Balance on March 31, 2023

30

—

30

8,002

2

8,035

2,877

1,859

58,486(65)

63,157

Accumulated other comprehensive income

Balance on April 1, 2022

Valuationdifference on
availablefor-salesecurities

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensi
ve income

Noncontrollinginterests

2,527

413

191

3,132

1,654

Total net
assets59,908Changes during the consolidated fiscal year
Dividends of surplus(1,380)

Profit attributable to owners of parent

9,382

Purchase of treasury shares
Disposal of treasury shares
Increase (decrease) in capital surplus
resulting from change in equity interest inconsolidated subsidiaries
Net changes in items other thanshareholders’ equity during theconsolidated fiscal year
Total changes during the consolidated fiscal
year
Balance on March 31, 2023

(0)
2
30
(14)

1,121

84

1,191

(360)

830

(14)

1,121

84

1,191

(360)

8,865

2,512

1,534

275

4,323

1,293

68,774- 26 -

Balance Sheet
As ofMarch 31,2023

As of March
31, 2022(Reference)

55,41846,664

9,369

14,743757

462

Assets:Current assets
Cash and deposits
Notes receivable—trade

As ofMarch 31,2023

(Millions of yen)
As of March
31, 2022(Reference)

Liabilities:
Current liabilities
Notes payable—trade
Electronically recorded
obligations—operating

27,23023,038

67

79

1,117

881

Electronically recordedmonetary claims—operating
Accounts receivable—trade

961

930

Accounts payable—trade

5,260

5,165

20,081

16,024

3,050

3,050

Merchandise and finished goods

4,473

3,402

6,440

5,418

Work in process

8,941

4,191

Short-term borrowings
Current portion of long-termborrowings
Lease obligations

71

73

Raw materials and supplies

7,141

3,318

Accounts payable—other

2,686

2,532

Advance payments to suppliers

0

1,461

Accrued expenses

1,308

1,174

Prepaid expenses
Short-term loans receivable fromsubsidiaries and associates
Accounts receivable—other

246

203

Income taxes payable

2,392

2,326

144

549

Derivatives liabilities

—

42
10

3,282

1,371

Advances received

1,716

Other

39

23

Deposits received

65

55

Allowance for doubtful accounts

(22)

(18)

Notes payable—facilities
Electronically recorded
obligations—facilities
Provision for bonuses to officers

774

171

2,199

1,980

80

75

Non-current assets
Property, plant and equipment

54,84846,74529,87826,200Non-current liabilities

Buildings

5,491

4,860

Structures

2,460

2,066

Long-term borrowings

Machinery and equipment

13,684

10,135

Lease obligations

24

18

Tools, furniture and fixtures

3,089

3,289

Land

2,065

2,065

VehiclesLease assets

Provision for retirement benefits
Provision for share awards for
directors (and other officers)
Other
Total liabilities

24,795

19,151

22,56017,001

174

241

2,029

1,879

18

11

11

18

52,02542,190

244

314

2,819

3,449

Intangible assets

493

548

Shareholders’ equity

55,91048,884

Software488

543

Capital

2,877

2,877

Other

5

5

Capital surplus

1,524

1,524

Construction in progress

Net assets:

Legal capital surplus
Investments and other assets

1,524

51,57544,551

24,47519,996

6,395

6,449

Legal retained earnings

436

436

4,704

4,704

Other retained earnings

51,13944,115

5,393

5,393

Reserve for dividends

371

371

6,214

2,070

General reserve

4,608

4,608

9

12

46,15939,135

1,246

1,071

(65)

(68)

Other

518

298

2,331

2,335

Allowance for doubtful accounts

(6)

(2)

2,331

2,335

58,241

51,219110,267

93,410110,267

93,410Investment securities
Shares of subsidiaries andassociates
Investments in capital ofsubsidiaries and associates
Long-term loans receivable fromsubsidiaries and associates
Long-term loans receivable from
employees
Deferred tax assets

Total assets

Retained earnings

1,524

Retained earnings brought
forwardTreasury shares
Valuation and translation
adjustments
Valuation difference on availablefor-sale securities
Total net assets
Total liabilities and net assets- 27 -

Statement of Income(Millions of yen)
From April 1, 2021
to March 31, 2022 (Reference)

From April 1, 2022
to March 31, 2023
Net sales

72,04455,750

Cost of sales

53,16239,603

18,882

16,146Gross profit
Selling, general and administrative expenses

7,670

7,126

11,2119,020

Non-operating profit

1,293

909

Interest income

123

28

Dividend income

303

244

Foreign exchange gains

101

410

Gain on sales of prototypes

515—

Operating profit

249

225

Non-operating expenses

Miscellaneous income

288

528

Interest expenses

177

164

Loss on valuation of derivatives

59

119

Loss on sale of trial products—

204

Miscellaneous loss

50

39

Ordinary profit

12,2179,400

Extraordinary income

—

131

—

131

278

145

Loss on retirement of non-current assets

266

145

Loss on valuation of investment securities

11—

Profit before income taxes

11,938

9,386

Income taxes—current

3,683

2,842

Income taxes—deferred

(148)

(109)

Profit

8,404

6,652

Gain on sale of investment securities
Extraordinary losses- 28 -

Statement of Changes in Equity(From April 1, 2022 to March 31, 2023)(Millions of yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

1,524

1,524

436

(68)

48,884Generalreserve

Retainedearnings
brought
forward

371

4,608

39,13544,551Dividends of surplus(1,380)(1,380)(1,380)

Profit

8,404

8,404

8,404

2,877

Legal
retainedearnings

Total
shareholders’equityReserve fordividends

Balance on April 1, 2022

Total
capitalsurplusTreasurysharesTotal
retainedearnings

CapitalLegalcapitalsurplus

Changes during the fiscal
year

Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other than shareholders’equity during the fiscal
year
Total changes during the
fiscal year
Balance on March 31, 2023

(0)

(0)

2

2

—

—

—

—

—

—

7,023

7,023

2

7,026

2,877

1,524

1,524

436

371

4,608

46,15951,575(65)

55,910

Valuation and translation adjustments
Valuation difference on availablefor-sale securities

Balance on April 1, 2022

Total net assets

Total valuation and translation
adjustments

2,335

2,335

51,219Changes during the fiscal
year
Dividends of surplus(1,380)

Profit8,404

Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other than shareholders’equity during the fiscal
year
Total changes during the
fiscal year
Balance on March 31, 2023

(0)
2
(4)

(4)

(4)

(4)

(4)

7,021

2,331

2,331

58,241- 29 -

Accounting Audit Report on Consolidated Financial Statements
Independent Auditor’s Report(English Translation)
May 22, 2023
The Board of Directors of Kanto Denka Kogyo Co., Ltd.

Ernst & Young ShinNihon LLC
Tokyo Office
Certified Public Accountant Shigeyuki Honda
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant Tsuyoshi Nakano
Designated Limited Liability Partner
Engagement Partner

OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the consolidated financial
statements, which comprise the consolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in equity, and the notes to the consolidated financial statements, of Kanto
Denka Kogyo Co., Ltd. (“the Company”) for the fiscal year from April 1, 2022 through March 31, 2023.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position and results of operations of the corporate group, which consists of the Company and its
consolidated subsidiaries, for the period covered by the consolidated financial statements in conformity withaccounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility
under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Consolidated Financial
Statements.” We are independent of the Company and its consolidated subsidiaries in accordance with theprovisions related to professional ethics in Japan, and are fulfilling other ethical responsibilities as an auditor.
We believe that we have obtained sufficient and appropriate audit evidence to provide a basis for our audit
opinion.
Other Information
Other information is the business report and the supplementary schedules thereof. Management is responsible
for preparation and disclosure of the other information. The Audit & Supervisory Board members and the Audit& Supervisory Board are responsible for monitoring the execution of directors’ duties related to designing andoperating reporting processes for other information.
Other information is not subject to our audit opinion on the consolidated financial statements, and we express
no opinion on the other information.
Our responsibility when auditing the consolidated financial statements is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management, Audit & Supervisory Board Members, and the Audit & Supervisory Board for
the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in- 30 -

accordance with accounting principles generally accepted in Japan. This includes designing and operating suchinternal control as management determines is necessary to enable the preparation and fair presentation of theconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements in accordance with the premise of a going concern,and for disclosing matters relating to going concern when it is required to do so in accordance with accounting
principles generally accepted in Japan.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for monitoring theexecution of directors’ duties related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to express an opinion on the
consolidated financial statements from an independent standpoint in an audit report, based on our audit.
Misstatements can occur as a result of fraud or error, and are deemed material if they can be reasonably expected
to, either individually or collectively, influence the decisions of users taken on the basis of the consolidated
financial statements.
We make professional judgment in the audit process in accordance with auditing standards generally acceptedin Japan, and perform the following while maintaining professional skepticism.
• Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained
to provide a basis for the audit opinion.
• In making risk assessments, the auditor considers internal control relevant to the entity’s audit in order todesign audit procedures that are appropriate in the circumstances, although the purpose of the audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal
control.
• Assess the appropriateness of accounting policies adopted by management and the method of their application,
as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.
• Determine whether it is appropriate for management to prepare the consolidated financial statements on thepremise of a going concern and, based on the audit evidence obtained, determine whether there is a significant
uncertainty in regard to events or conditions that may cast significant doubt on the entity’s ability to continue
as a going concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor
is required to call attention to the notes to the consolidated financial statements in the audit report, or if thenotes to the consolidated financial statements pertaining to the significant uncertainty are inappropriate, issue
a modified opinion on the consolidated financial statements. While the conclusions of the auditor are basedon the audit evidence obtained up to the date of the audit report, depending on future events or conditions, anentity may be unable to continue as a going concern.
• Besides assessing whether the presentation of and notes to the consolidated financial statements are inaccordance with accounting principles generally accepted in Japan, assess the presentation, structure, andcontent of the consolidated financial statements including related notes, and whether the consolidated financial
statements fairly present the transactions and accounting events on which they are based.
• Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The auditor
is responsible for instructing, supervising, and implementing the audit of the consolidated financial statements,
and is solely responsible for the audit opinion.
The auditor reports to Audit & Supervisory Board members and the Audit & Supervisory Board regarding thescope and timing of implementation of the planned audit, material audit findings including material weaknesses
in internal control identified in the course of the audit, and other matters required under the auditing standards.

- 31 -

The auditor reports to Audit & Supervisory Board members and the Audit & Supervisory Board regarding theobservance of provisions related to professional ethics in Japan as well as matters that are reasonably considered
to have an impact on the auditor’s independence and any safeguards that are in place to reduce or eliminate
obstacles.
Interest
Our firm and engagement partners have no interests in the Company or its consolidated subsidiaries requiring
disclosure under the provisions of the Certified Public Accountants Act.

- 32 -

Accounting Audit Report
Independent Auditor’s Report(English Translation)
May 22, 2023
The Board of Directors of Kanto Denka Kogyo Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office
Certified Public Accountant Shigeyuki Honda
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant Tsuyoshi Nakano
Designated Limited Liability Partner
Engagement Partner
OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the financial statements,
which comprise the balance sheet, the statement of income, the statement of changes in equity, the notes to thenon-consolidated financial statements, and the supplementary schedules, of Kanto Denka Kogyo Co., Ltd. (“theCompany”) for the fiscal year from April 1, 2022 through March 31, 2023.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position and results of operations of the Company for the period covered by the financial statements inconformity with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility
under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Financial Statements.”
We are independent of the Company in accordance with the provisions related to professional ethics in Japan,
and are fulfilling other ethical responsibilities as an auditor. We believe that we have obtained sufficient andappropriate audit evidence to provide a basis for our audit opinion.
Other Information
Other information is the business report and the supplementary schedules thereof. Management is responsible
for preparation and disclosure of the other information. The Audit & Supervisory Board members and the Audit& Supervisory Board are responsible for monitoring the execution of directors’ duties related to designing andoperating reporting processes for other information.
Other information is not subject to our audit opinion on the financial statements, and we express no opinion on
the other information.
Our responsibility when auditing the financial statements and the accompanying supplementary schedules is toread the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements and the accompanying supplementary schedules or our knowledge obtained in theaudit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.

- 33 -

Responsibilities of Management, Audit & Supervisory Board Members, and the Audit & Supervisory Board for
the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordancewith accounting principles generally accepted in Japan. This includes designing and operating such internal
control as management determines is necessary to enable the preparation and fair presentation of the financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing whether it is appropriate toprepare the financial statements in accordance with the premise of a going concern, and for disclosing mattersrelating to going concern when it is required to do so in accordance with accounting principles generally
accepted in Japan.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for monitoring theexecution of directors’ duties related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements
Our responsibility is to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to express an opinion on the financial statementsfrom an independent standpoint in an audit report, based on our audit. Misstatements can occur as a result offraud or error, and are deemed material if they can be reasonably expected to, either individually or collectively,
influence the decisions of users taken on the basis of the financial statements.
We make professional judgment in the audit process in accordance with auditing standards generally acceptedin Japan, and perform the following while maintaining professional skepticism.
• Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected and applied
as determined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained to provide
a basis for the audit opinion.
• In making risk assessments, the auditor considers internal control relevant to the entity’s audit in order to design
audit procedures that are appropriate in the circumstances, although the purpose of the audit of the financial
statements is not to express an opinion on the effectiveness of the entity’s internal control.
• Assess the appropriateness of accounting policies adopted by management and the method of their application,
as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.
• Determine whether it is appropriate for management to prepare the financial statements on the premise of agoing concern and, based on the audit evidence obtained, determine whether there is a significant uncertainty
in regard to events or conditions that may cast significant doubt on the entity’s ability to continue as a going
concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor is required
to call attention to the notes to the financial statements in the audit report, or if the notes to the financial
statements pertaining to the significant uncertainty are inappropriate, issue a modified opinion on the financial
statements. While the conclusions of the auditor are based on the audit evidence obtained up to the date of theaudit report, depending on future events or conditions, an entity may be unable to continue as a going concern.
• Besides assessing whether the presentation of and notes to the financial statements are in accordance withaccounting principles generally accepted in Japan, assess the presentation, structure, and content of the financial
statements including related notes, and whether the financial statements fairly present the transactions andaccounting events on which they are based.
The auditor reports to Audit & Supervisory Board members and the Audit & Supervisory Board regarding thescope and timing of implementation of the planned audit, material audit findings including material weaknesses
in internal control identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to Audit & Supervisory Board members and the Audit & Supervisory Board regarding theobservance of provisions related to professional ethics in Japan as well as matters that are reasonably considered
to have an impact on the auditor’s independence and any safeguards that are in place to reduce or eliminate
obstacles.

- 34 -

Interest
Our firm and engagement partners have no interests in the Company requiring disclosure under the provisionsof the Certified Public Accountants Act.

- 35 -

Audit & Supervisory Board’s Report
Audit Report(English Translation)
We, the Audit & Supervisory Board, based on the audit report prepared by each Audit & Supervisory Board
member on the performance by the directors of their duties during the fiscal year from April 1, 2022 to March
31, 2023, prepared this audit report upon deliberation and hereby report as follows.
1. Method of Audit by the Audit & Supervisory Board Members and the Audit & Supervisory Board and Details
Thereof(1) The Audit & Supervisory Board determined the audit policy and plans and received from each Audit &Supervisory Board member reports on the state of their performance of audits and the results thereof.
The Board also received reports from the directors and other parties as well as the accounting auditor
on the state of performance of their duties, and sought explanations as necessary.
(2) Each Audit & Supervisory Board member, in accordance with the auditing standards of Audit &Supervisory Board members and the audit policy and plans determined by the Audit & Supervisory
Board, maintained communication with the directors, internal auditing unit, employees, and otherparties in an effort to collect information and improve the environment for auditing, and conducted
audits in accordance with the following methods.
i. Members attended important meetings, such as those of the Board of Directors, received reports
from directors, employees, and other parties about the status of execution of their duties, asked for
explanations as necessary, inspected important approval documents and others, and investigated thestatus of operations and assets at the Headquarters and major business locations. Members worked
to communicate and exchange information with the directors, auditors, and others at subsidiaries,
receiving business reports from these subsidiaries as necessary.
ii. For the system (internal control system) listed in the business report established based on resolutionof the Board of Directors and the content thereof related to the establishment of systems as prescribedin Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act, as asystem for ensuring that the execution of duties of directors complies with laws, regulations, and the
Articles of Incorporation and for ensuring the propriety of business activities in a group ofenterprises comprised of the relevant stock company and its subsidiaries, members regularly
received reports on its structure and operation status from directors, employees, and other parties,
asked for explanations as necessary, and expressed their opinions, in accordance with the auditing
standards related to internal control systems established by the Audit & Supervisory Board.
iii. For the basic policy and efforts listed in the business report corresponding to Article 118, Item 3, (a)and (b) of the Ordinance for Enforcement of the Companies Act, respectively, the contents of thesehave also been examined based on the status of deliberations at the Board of Directors meetings andother meetings.
iv. Members monitored and verified whether the accounting auditor had maintained an independent
position and conducted adequate audits, received from the accounting auditor reports on the state ofperformance of their duties, and requested explanations as necessary. In addition, members received
from the accounting auditor a notice that the systems to secure adequate performance of duties (aslisted in the items of Article 131 of the Ordinance for Corporate Accounting) had been establishedin accordance with the Standard for Quality Control Concerning Audits (the Business Accounting
Council, October 28, 2005), and requested explanations as necessary.
In accordance with these methods, we investigated the business report and its supplementary schedules, nonconsolidated financial statements (the balance sheet, the statement of income, the statement of changes in equity,and the notes to financial statements) and its supplementary schedules, as well as the consolidated financial
statements (the consolidated balance sheet, the consolidated statement of income, the consolidated statement ofchanges in equity, and the notes to consolidated financial statements), for the fiscal year under review.

- 36 -

2. Results of Audit(1) Results of audit of the business report, etc.
We are of the opinion:
i. That the business report and its supplementary schedules fairly present the state of the Company inaccordance with laws and regulations and the Articles of Incorporation;
ii. That in connection with the performance by the directors of their duties, no fraudulent act or material factof violation of laws and regulations and the Articles of Incorporation exists;
iii. That the details of the resolutions of the Board of Directors on internal control systems are proper.
Furthermore, that there are no matters to be pointed out regarding the content of the business report andperformance by the directors of their duties concerning such internal control systems; andiv. That there are no matters to be pointed out regarding the Basic Policy on Company Financial and Business
Policy Decision Controllers as listed in the business report, and that the efforts listed in the business
report corresponding to Article 118, Item 3, (b) of the Ordinance for Enforcement of the Companies Act
are recognized as consistent with this Basic Policy, and these efforts are not found to be detrimental to
the Company’s common shareholder interest, nor are they intended to protect the positions of theCompany officers.
(2) Results of audit of the non-consolidated financial statements and the supplementary schedules
We are of the opinion that the method and results of the audit made by the accounting auditor, Ernst & Young
ShinNihon LLC, are proper.
(3) Results of audit of the consolidated financial statements
We are of the opinion that the method and results of the audit made by the accounting auditor, Ernst & Young
ShinNihon LLC, are proper.
May 22, 2023

Audit & Supervisory Board, Kanto Denka Kogyo Co., Ltd.
Full-time Audit & Supervisory Board Member Takeaki Yajima (Seal)
Full-time Audit & Supervisory Board Member Masatomo Hayashi (Seal)
Outside Audit & Supervisory Board Member Naozumi Furukawa (Seal)
Outside Audit & Supervisory Board Member Kenichi Ikeda (Seal)- 37 -

Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal: Election of 12 Directors
The terms of office of all 11 directors will expire at the conclusion of this year’s Ordinary General Meeting of
Shareholders. Therefore, in order to further strengthen the management structure, the Company proposes theelection of 12 directors, including 1 additional director and 4 outside directors.
The candidates for director are as follows:
No.

Name
(Date of birth)

Past experience, positions, area of responsibility
and significant concurrent positions
January 2000

Joined the Company

July 2004

General Manager, Fine Chemicals Sales Dept.-II, Sales Div.

June 2007

Executive Officer; General Manager, Fine Chemicals Sales
Dept.-II, Sales Div.
Director and Executive Officer; General Manager, Sales Div.

June 2009
January 2011
1

Jun’ichi Hasegawa June 2011
(November 11, 1958)
Reappointment
June 2015

Director and Executive Officer; General Manager, Sales Div.;
General Manager, Fine Chemicals Sales Dept.-I
Director and Executive Officer of the Company; Chairman
and Managing Director, Kanto Denka Kogyo (Shanghai) Co.,Ltd.
President

President; General Manager, Business Div. (to present)(In charge of Internal Auditing Dept.)[Reasons for nomination as candidate for director]
The Company has nominated Jun’ichi Hasegawa as a candidate for director
because Mr. Hasegawa has long experience in the sales division and at overseas
subsidiaries, experience as a director and broad insights concerning the overallmanagement of the Company.

June 2019

April 1990

Joined the Company

April 2009

General Manager, Production Dept.-I, Shibukawa Plant

June 2013

General Manager, Corporate Planning Dept.

June 2015

Executive Officer; Plant Manager, Mizushima Plant

Director and Executive Officer; Plant Manager, Shibukawa
Plant
November 2019 Director and Executive Officer; Plant Manager, Shibukawa
Plant; General Manager, Production Engineering Dept.,
Shibukawa Plant
Director and Executive Officer; Plant Manager, Shibukawa
June 2020
Plant
Director and Executive Officer; General Manager, Technical
June 2021
Div.
Director and Managing Executive Officer; General Manager,
June 2022
Technical Div. (to present)(In charge of Purchasing Dept.)[Reasons for nomination as candidate for director]
The Company has nominated Yasunari Yamaguchi as a candidate for director
because Mr. Yamaguchi has long experience in engineering divisions, including
plant operations as well as corporate planning divisions, experience as a director
and broad insights concerning the overall management of the Company.

Number ofshares of theCompany held

44,489Of which, numberof shares to bedelivered in thestock-based
remuneration plan

7,089

June 20192

Yasunari Yamaguchi(August 1, 1965)
Reappointment- 38 -

10,858
Of which, numberof shares to bedelivered in thestock-based
remuneration plan

5,158

No.

Name
(Date of birth)

Past experience, positions, area of responsibility
and significant concurrent positions
April 1984

Number ofshares of theCompany held

Joined Asahi Mutual Life Insurance Company

General Manager, Finance Unit, Asahi Mutual Life Insurance
Company
General Manager, Accounting Unit, Asahi Mutual Life
April 2010
Insurance Company
General Manager, Bond Management Unit, Asahi Mutual Life
April 2013
Insurance Company
General Manager, Securities Management Dept., Asahi
April 2015
Mutual Life Insurance Company
Kazuki Niimi
General Manager, Financial Controller Dept., Asahi Mutual
April 2016
(September 22, 1960)
Life Insurance Company
Reappointment
General Manager, in charge of Financial Controller Dept.,
April 2020
Asahi Mutual Life Insurance Company
Director and Executive Officer of the Company (to present)
June 2020(In charge of Accounting & Finance Dept., Information
Systems Dept.)[Reasons for nomination as candidate for director]
The Company has nominated Kazuki Niimi as a candidate for director because Mr.
Niimi has long experience at a financial institution, experience as a director,
considerable knowledge in finance and accounting, and broad insights concerning
the overall management of the Company.
April 2006

3

April 1991

Joined the Company

June 2009

Representative Director, Kanto Denka Korea Co., Ltd.

April 2012

General Manager, Fine Chemicals Sales Dept.-II, Sales Div.
of the Company
Executive Officer; General Manager of Osaka Branch Office

June 20184

Yuki Abe(January 21, 1969)
Reappointment

Director and Executive Officer; Deputy General Manager,
Business Div.; General Manager of Osaka Branch OfficeDirector and Executive Officer; Deputy General Manager,
January 2021
Business Div. of the Company; Representative Director,
Kanto Denka Korea Co., Ltd. (to present)[Reasons for nomination as candidate for director]
The Company has nominated Yuki Abe as a candidate for director because Mr. Abe
has long experience in the sales division and at an overseas subsidiary, experience
as a director, and broad insights concerning the overall management of theCompany.
June 2020

April 1982

Joined Asahi Mutual Life Insurance Company

December 2002

Joined the Company

April 2008

General Manager, Personnel & General Affairs Dept.

June 2011

Executive Officer; General Manager, Personnel & General
Affairs Dept.
Senior Executive Officer; General Manager, Legal & General
Affairs Dept.
Full-time Audit & Supervisory Board Member

June 20175

Kunihiko Uramoto(August 24, 1959)
Reappointment

June 2018

Director and Executive Officer (to present)(In charge of Sustainability Dept., Legal & General Affairs
Dept., Personnel Dept., Business Support Dept.)[Reasons for nomination as candidate for director]
The Company has nominated Kunihiko Uramoto as a candidate for director
because Mr. Uramoto has long experience at the personnel and legal & generalaffairs divisions of the Company, experience as an Audit & Supervisory Board
member and director, and broad insights concerning the overall management of theCompany.

June 2021- 39 -

8,622
Of which, numberof shares to bedelivered in thestock-based
remuneration plan

4,922

5,088
Of which, numberof shares to bedelivered in thestock-based
remuneration plan788

14,347
Of which, numberof shares to bedelivered in thestock-based
remuneration plan

3,347

No.

Name
(Date of birth)

Past experience, positions, area of responsibility
and significant concurrent positions
April 1992

Joined the Company

June 2015

General Manager, Corporate Planning Dept.

Chairman and Managing Director, Kanto Denka Kogyo(Shanghai) Co., Ltd.
Executive Officer of the Company; Chairman and Managing
June 2019
Director, Kanto Denka Kogyo (Shanghai) Co., Ltd.
Executive Officer; General Manager, Legal & General Affairs
March 2021
Dept.
December 2021 Executive Officer; General Manager of Legal & General
Affairs Dept. and General Manager of Sustainability Dept.
Director and Executive Officer; General Manager, Corporate
June 2022
Planning Dept., (to present)(In charge of Corporate Planning Dept., Overseas Business
Development Dept.)[Reasons for nomination as candidate for director]
The Company has nominated Ryoji Masujima as a candidate for director because
Mr. Masujima has long experience in the corporate planning division, the legal &general affairs division, and at an overseas subsidiary, experience as a director andbroad insights concerning the overall management of the Company.

Number ofshares of theCompany held

June 2017

6

Ryoji Masujima(June 16, 1967)
Reappointment

April 1994

Joined the Company

April 2010

General Manager, Production Dept.-II, Mizushima Plant

Executive Officer; General Manager, Production Dept.-II,
Mizushima Plant; Deputy General Manager, New Products
Development Div.
Executive Officer; Plant Manager, Mizushima Plant; Deputy
June 2021
General Manager, New Products Development Div.
Director and Executive Officer; General Manager, New
June 2022
Products Development Div.; Plant Manager, Mizushima Plant(to present)[Reasons for nomination as candidate for director]
The Company has nominated Go Takikawa as a candidate for director because Mr.
Takikawa has long experience in the engineering division, including plant
operations, and the new products development division of the Company,
experience as a director and broad insights concerning the overall management of
the Company.
Joined the Company
April 1992

3,072
Of which, numberof shares to bedelivered in thestock-based
remuneration plan

1,772

June 2020

7

Go Takikawa(January 12, 1970)
Reappointment

June 2013

General Manager, Production Engineering Dept., Shibukawa
Plant
General Manager, Production Dept.-I, Shibukawa Plant

January 2017

General Manager, Overseas Business Development Dept.

April 2009

General Manager, Overseas Business Development Dept.;
Representative Director, Kanto Denka Fine Products Korea
Co., Ltd.
Executive Officer; General Manager, Overseas Business
June 2020
Development Dept. of the Company; Representative Director,
Kanto Denka Fine Products Korea Co., Ltd.
Executive Officer; Representative Director, Kanto Denka Fine
April 2023
Products Korea Co., Ltd. (to present)[Reasons for nomination as candidate for director]
The Company has nominated Kenichi Yako as a candidate for director because Mr.
Yako has long experience in the engineering division, including plant management,
and at an overseas subsidiary, and he also has broad insights concerning the overallmanagement of the Company.

3,472
Of which, numberof shares to bedelivered in thestock-based
remuneration plan

1,772

November 20178

Kenichi Yako
(January 11, 1969)
New appointment- 40 -

0

No.

9

Name
(Date of birth)

Hideki Matsui(July 9, 1962)
Reappointment
OutsidePast experience, positions, area of responsibility
and significant concurrent positions
April 1987

Admitted as Attorney-at-Law

April 1987

Joined Marunouchi Sogo Law Office

October 2006

Outside Auditor, Kanebo Cosmetics Inc.

September 2011

Co-Representative Attorney-at-law, Marunouchi Sogo Law
Office (to present)
Outside Director of the Company (to present)

June 2015[Significant concurrent position]
Co-Representative Attorney-at-law, Marunouchi Sogo Law Office

August 1983
May 2002
August 2008
August 2010

10

0

[Reasons for nomination as candidate for outside director and overview of
expected roles]
Although Hideki Matsui has not been involved in corporate management otherthan as an outside officer, the Company has nominated him as a candidate foroutside director because Mr. Matsui has engaged in corporate legal affairs as an
attorney-at-law for many years, and the Company expects him to utilize his wealthof experience and broad insights for the management of the Company.
November 1979

Masaharu Sugiyama(June 20, 1954)
Reappointment
OutsideNumber ofshares of theCompany held

August 2013
August 2014
June 2016

Joined Daiichi Audit Corporation (current Ernst & Young
ShinNihon LLC)
Registered as Certified Public Accountant (CPA)
Representative Partner (current Senior Partner), Ernst &Young ShinNihon LLC
Councilor of Employee Council, Ernst & Young ShinNihon
LLC
Audit Commissioner, Ernst & Young ShinNihon LLC
Chairman of Audit Committee, Ernst & Young ShinNihon
LLC
Vice-Chairman of Employee Council, Ernst & Young
ShinNihon LLC
Outside Director of the Company (to present)[Reasons for nomination as candidate for outside director and overview of
expected roles]
Although he has not been involved in corporate management other than as an
outside officer, the Company has nominated Masaharu Sugiyama as a candidatefor outside director because Mr. Sugiyama has engaged in corporate accounting
for many years as a Certified Public Accountant, and the Company expects him toutilize his wealth of experience and broad insights for the management of theCompany.

- 41 -

0

No.

Name
(Date of birth)

Past experience, positions, area of responsibility
and significant concurrent positions
April 1981

Joined Shin-Etsu Chemical Co., Ltd.

March 2000

Retired from Shin-Etsu Chemical Co., Ltd.

April 2000

Associate Professor, Department of Material Science andChemical Engineering, Faculty of Engineering, Yokohama
National University (current National University Corporation
Yokohama National University)
Professor, Department of Chemical Engineering Science,
Faculty of Engineering, National University Corporation
Yokohama National University
Vice Dean, College of Engineering Science, National
University Corporation Yokohama National University
Outside Director of the Company (to present)

April 2002
April 2017
June 201911

Hitoshi Habuka(March 25, 1957)
Reappointment
OutsideProfessor Emeritus, National University Corporation
Yokohama National University (to present)
Lecturer (part-time), Faculty of Engineering, National
University Corporation Yokohama National University (topresent)[Significant concurrent positions]
Professor Emeritus, National University Corporation Yokohama National
University
Lecturer (part-time), Faculty of Engineering, National University Corporation
Yokohama National University

Number ofshares of theCompany held

April 2022

[Reasons for nomination as candidate for outside director and overview of
expected roles]
Although he has not been involved in corporate management other than as an
outside officer, the Company has nominated Hitoshi Habuka as a candidate foroutside director because Dr. Habuka has worked at Shin-Etsu Chemical Co., Ltd.
and has experience as an engineering advisor and guest researcher, etc. at othercompanies. Also, he has engaged in research and development for many years, andthe Company expects him to utilize his wealth of experience and broad insights forthe management of the Company.

- 42 -

0

No.

Name
(Date of birth)

Past experience, positions, area of responsibility
and significant concurrent positions
April 1983

Joined Torii Pharmaceutical Co., Ltd.

June 2012

March 2020

Executive Vice President; Head of Pharmacovigilance &Quality Assurance Group, Torii Pharmaceutical Co., Ltd.
Member of the Board, Director; Head of Pharmacovigilance& Quality Assurance Group, Torii Pharmaceutical Co., Ltd.
Standing Corporate Advisor, Torii Pharmaceutical Co., Ltd.

March 2021

Retired from Torii Pharmaceutical Co., Ltd.

June 201312

Yuko Kariya(April 15, 1960)
Reappointment
OutsideOutside Director of the Company (to present)
Outside Director, NIPPON KINZOKU CO.,LTD. (to present)[Significant concurrent position]
Outside Director, NIPPON KINZOKU CO.,LTD.
[Reasons for nomination as candidate for outside director and overview of
expected roles]
The Company has nominated Yuko Kariya as a candidate for outside director
because Ms. Kariya has engaged in management of a pharmaceutical manufacturer
as director for many years, and the Company expects her to utilize her wealth ofexperience and broad insights, including with regard to quality assurance, for the
management of the Company.

June 2022

Number ofshares of theCompany held

0

(Notes) 1. The number of shares of the Company held includes shares to be delivered in the stock-based remuneration plan.
2. Hideki Matsui, Masaharu Sugiyama, Hitoshi Habuka, and Yuko Kariya are candidates for outside director. Each isa candidate for independent officer as stipulated by the rules of the Tokyo Stock Exchange.
3. Although Hideki Matsui belongs to the Marunouchi Sogo Law Office, with which the Company has a legal advisory
retainer contract and to which it pays fees for legal services provided by attorneys, the Company paid only about¥3 million for the fiscal year ended March 31, 2023, and this amount does not affect the independence of Mr. Matsui
either from the Company or from the law office.
4. Although Masaharu Sugiyama belonged to Ernst & Young ShinNihon LLC, which is the Company’s accounting
auditor, he retired from the audit firm in June 2016. Although the Company pays compensation for audits conductedby the firm, the Company paid only ¥37 million for the fiscal year ended March 31, 2023, and this amount does notaffect the independence of Mr. Sugiyama with regard to either the Company or the audit firm. Mr. Sugiyama has
not been in charge of audits of the Company.
5. The Company has an agreement with Hideki Matsui, Masaharu Sugiyama, Hitoshi Habuka, and Yuko Kariya tolimit their liability as outside director on the basis of the provisions of Article 427, Paragraph 1, of the Companies
Act with the liability limit set forth in the relevant law. In case Mr. Matsui, Mr. Sugiyama, Mr. Habuka, and Ms.
Kariya are elected as outside directors and assume office as such, the Company plans to continue to enter into asimilar agreement with them.
6. The Company has entered into a directors and officers liability insurance agreement for directors and Audit &Supervisory Board members of the Company and its subsidiaries (excluding subsidiaries for which the Company
holds all shares) as insureds, which is outlined below. The Company plans to renew the agreement in October 2023.
Each candidate who is currently a director is included as an insured under the said agreement, and when eachcandidate is elected and assumes office, they will all be included as an insured under the said agreement.
1) Outline of events insured against
The agreement covers damages that may arise due to insured directors, Audit & Supervisory Board members,
officers, etc. being held liable for the execution of his or her duties or being subject to a claim for this liability.
However, the policy does include certain exemption clauses, such as for liabilities arising from acts
committed by insureds while aware that doing so would be in violation of laws and regulations.
2) Insurance premiums will be fully borne by the Company.
7. The term of office of Hideki Matsui, Masaharu Sugiyama, Hitoshi Habuka, and Yuko Kariya as outside directors of
the Company upon the conclusion of this General Meeting of Shareholders will be eight years, seven years, four
years, and one year, respectively.

- 43 -

[Reference] Director candidate expertise and experience (skill matrix)
The expertise and experience of the candidates for director are as follows:
Expertise and experience
Name

Corporate
management /Globalization
management
strategy

Jun’ichi Hasegawa√

Yasunari Yamaguchi√

Kazuki Niimi√

Yuki Abe√

Kunihiko Uramoto√

Ryoji Masujima√

Go Takikawa√

Kenichi Yako√√

Sales /
marketingTechnology /Sustainability
R&D√

Finance /accounting

√
√

√
√

√

√
√

√

√

√

√
√

√
√

√

Hideki Matsui√

Masaharu Sugiyama√

Hitoshi Habuka
Yuko Kariya

Legal affairs /riskmanagement√√√

Note: The above list is not intended to be an exhaustive list of the expertise and experience possessed by each candidate.

- 44 -