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.
(Stock Exchange Code 4047)
June 11, 2024
(Electronic Provision Measures Commencement Date) June 4, 2024
To Shareholders with Voting Rights:
Jun’ichi Hasegawa
President
Kanto Denka Kogyo Co., Ltd.
Yusen Building 3-2, Marunouchi 2-chome,
Chiyoda-ku, Tokyo, JapanNOTICE OF THE 117TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
We are pleased to inform you that we will hold the 117th 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 117th Ordinary General Meeting of Shareholders” and “Other Items Provided Electronicallyfor the 117th 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 26, 2024, Japan time.
1. Date and Time:
2. Place:

Thursday, June 27, 2024, at 10:00 a.m. Japan time
5F Conference Room, Headquarters of the Company
Yusen Building 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
117th Fiscal Year (April 1, 2023‒March 31, 2024) 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 117th Fiscal Year
(April 1, 2023‒March 31, 2024)-1-

Proposals to be resolved:
Proposal 1:
Partial Amendments to the Articles of Incorporation
Proposal 2:
Election of Nine Directors
Proposal 3:
Election of Four Auditors
Proposal 4:
Election of One Substitute Auditor
Proposal 5:
Revision of Director Remuneration, etc. Amount
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. 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.
4. 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. The documents for audit, including thefollowing items, have been audited by the auditors and by the Accounting Auditor.
・ The Systems for Ensuring Appropriate Business Activities and Status of System Operation(Summary) in the Business Report
・ The Consolidated Statement of Changes in Equity and the Notes to the Consolidated Financial
Statements in the Consolidated Financial Statements
・ The Statement of Changes in Equity and the Notes to the Non-consolidated Financial Statementsin the Non-consolidated Financial Statements
5. 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, 2023 to March 31, 2024)
1. Matters Related to the Status of the Corporate Group(1) Business Progress and Achievements
In the fiscal year ended March 31, 2024, the Japanese economy showed signs of a gradual recovery due
to the positive effects of various government policies under an improving employment and income
environment. However, severe conditions continued to prevail. Overseas, the outlook remained uncertain
due to the need for caution amid downside risks stemming from such factors as global monetary
tightening and concerns over the prospects for the Chinese economy, as well as inflation, geopoliticaltensions in the Middle East, 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.
Against this backdrop, although the Kanto Denka Group has been actively promoting sales activities,business performance was greatly impacted, primarily due to a significant decline in demand in the Fine
Chemicals Division.
Net sales amounted to ¥64,768 million, down ¥13,906 million, or 17.7%, year on year. Meanwhile,
ordinary loss totaled ¥1,304 million compared with ordinary profit of ¥13,679 million in the previous
fiscal year. The loss was mainly due to the persistent high cost of sales for battery materials andrecognition of a loss on valuation of inventories, in addition to the decline in net sales. In terms of net
profit and loss, the loss attributable to owners of parent amounted to ¥4,610 million compared with profit
attributable to owners of parent of ¥9,382 million in the previous fiscal year. This was due to thedecreased profitability of battery materials, which led to the inability to recover a portion of theinvestment, resulting in the recording of impairment losses as extraordinary losses.
The following provides an overview for each segment.
Fundamental Chemicals Division
Net Sales

9,409

FY2022(Millions of yen)

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

8,836

Organic Products
Sales of trichloroethylene were down due to the lower sales volume. Salesof perchloroethylene were down due to the lower sales volume and decrease
in selling price.

FY2023As a result of the above, net sales in the Fundamental Chemicals Division
amounted to ¥8,836 million, down ¥572 million or 6.1% year on year.
Operating loss amounted to ¥139 million (versus operating profit of ¥325
million in the previous fiscal year).

-3-

Fine Chemicals Division
Net Sales(Millions of yen)

63,943
51,253

FY2022

FY2023

Fluorochemicals
Sales of fluorochemicals for semiconductors decreased year on year due toa decline in sales volume for nitrogen trifluoride, tungsten hexafluoride, andhexafluoro-1,3-butadiene.
Battery Materials
Sales of lithium hexafluorophosphate, a battery material, were down due toa decrease in sales volume and decrease in selling price.
As a result of the above, net sales in the Fine Chemicals Division amounted
to ¥51,253 million, down ¥12,689 million or 19.8% year on year. An
operating loss of ¥2,824 million was recorded, compared with operating
profit of ¥11,450 million in the previous fiscal year. The loss was mainly
due to the persistent high cost of sales for battery materials and recognitionof a loss on valuation of inventories, in addition to the decline in net sales.

Ferrochemicals Division
Net Sales(Millions of yen)

2,666
1,813

FY2022

Sales of reprographic carriers, used in developers for copiers and printers,
were down year on year due to lower sales volumes. 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 ¥1,813 million, down ¥853 million or 32.0% year on year. Operating
profit totaled ¥172 million, down ¥513 million or 74.9% year on year.

FY2023

Commercial Business Division
Net Sales
746

FY2022(Millions of yen)
698

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 ¥698 million, down ¥48 million or 6.4%. Operating profit
totaled ¥190 million, down ¥8 million or 4.2% year on year.

FY2023

Facilities Division
Net Sales

1,908

FY2022(Millions of yen)
2,165

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¥2,165 million, up ¥257 million or 13.5%. Operating profit amounted to¥668 million, up ¥66 million or 11.0%.

FY2023-4-

(2) Capital Investment and Financing
Total capital investment amounted to ¥13,875 million.
Main activities here include the expansion of manufacturing facilities for fluorochemicals and battermaterials.
These requirements were funded by cash on hand and borrowings.
(3) Issues to Be Addressed
Looking ahead, the economy is expected to continue rebounding moderately on the back of various
governmental policies under an improving employment and income environment. Nonetheless, attention
must be paid to the risk of downward pressure on the Japanese economy caused by the slowdown in the
global economy, the risk of soaring raw material and energy prices squeezing corporate earnings,
worldwide geopolitical risks, and the risk of fluctuations in financial and capital markets. As such, thefuture remains highly uncertain, and the business environment is expected to remain a challenging one.
Against this backdrop, the Group launched its new medium-term management plan, “Dominate 1000,”in the fiscal year ended March 31, 2023 with the goal of achieving ¥100 billion in consolidated net sales
in the fiscal year ending March 31, 2025. However, taking into account the evolving business landscapeand performance trends, we have reevaluated the plan and extended it by two years. We will implement
new strategies and measures in addition to the initially planned key strategies to enhance corporate value.
Specifically, we will expand business, predominantly in the Fine Chemicals Division, reform ourbusiness portfolio, pursue management leveraging return on invested capital (ROIC), strengthen investor
relations (IR) activities, and reduce cross-shareholdings. These and other efforts seek to revitalize
profitability while also prioritizing management mindful of capital costs.
As we look ahead to the society we envision in 2030, we are committed to providing a safe work
environment that fosters job satisfaction and supporting technologies that are cutting-edge on a global
stage with our superior, original products. By building on a stable management foundation, we aim togrow into an innovative, development-driven company that contributes to a 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

FY2020

FY2021

FY2022

FY2023

Net sales(Millions of yen)

51,92762,28678,67564,768

Ordinary profit(Millions of yen)

5,582

11,145

13,679(1,304)

Profit attributable toowners of parent(Millions of yen)

3,605

7,762

9,382

(4,610)

(Yen)

62.73

135.12163.32(80.25)(Millions of yen)

92,324

109,902130,762

125,302

Basic Earnings per ShareTotal assets

Net Sales (Millions of yen)

Ordinary Profit (Millions of yen)

Profit Attributable to Owners of Parent (Millions of yen)

13,679
11,14578,67551,92764,76862,286

7,762
5,582

9,382

3,605
–4,610–1,304FY2020
FY2020

FY2021

FY2022

FY2021

FY2022

FY2023

FY2023

Basic Earnings per Share (Yen)

Total Assets (Millions of yen)

163.32135.12

130,762
109,902125,302

92,32462.73–80.25

FY2020

FY2021

FY2022

FY2023

FY2020

FY2021-6-

FY2022

FY2023

FY2020

FY2021

FY2022

FY2023

(5) Significant Subsidiaries (As of March 31, 2024)
Company Name

Kanto Denka
Kogyo’s Shareof Investment

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

Kanden Kosan Co., Ltd.

¥10 million

100.0%

Jobi Engineering Co., Ltd.

¥120 million

49.4%

Kanto Denka Finetech Co., Ltd.

¥27 million

100.0%

Manufacture and sale of iron oxide

Kanto Denka Korea Co., Ltd.

₩300 million

100.0%

Sale of fluorine compounds

Taiwan Kanto Denka Co., Ltd.

NT$7 million

100.0%

Sale of fluorine compounds₩42,000 million

100.0%

Manufacture and sale of fluorine compounds

US$50 million

98.3%

Manufacture and sale of fluorine compounds

Kanto Denka Fine Products
Korea Co., Ltd.
Xuancheng KDK Technology
Co., Ltd.

(6) Major Business Activities (As of March 31, 2024)
Compositionof Net Sales

Segment

Principal Products and Services

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

13.6%

Fine Chemicals(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, KSG-14, etc.
(Battery materials)
Lithium hexafluorophosphate, lithium tetrafluoroborate, lithium
difluorophosphate, etc.
(Other products)
Organic fluorine compounds, etc.

79.1%

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-

2.8%
1.1%
3.4%

(7) Major Sales Offices and Plants (As of March 31, 2024)(i) 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)(ii) Subsidiaries
Kanden Kosan Co., Ltd. (Tokyo, Gunma Prefecture, Okayama
Prefecture), Jobi Engineering Co., Ltd. (Tokyo, Gunma Prefecture,
Okayama Prefecture), Kanto Denka Finetech Co., Ltd. (Mie Prefecture,
Tokyo, Osaka), 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, 2024)
Segment

No. of Employees

Year-on-Year Change

Fundamental Chemicals

40+1

Fine Chemicals

620

+65

Ferrochemicals

49—

Commercial Business

44–1

Facilities

104—

Company-wide (shared)

288

+21

1,145

+86

Total

(9) Major Lenders (As of March 31, 2024)
LenderBorrowing Balance (Millions of yen)Mizuho Bank, Ltd.

11,827

The Gunma Bank, Ltd.

7,429

The Chugoku Bank, Ltd.

5,696

Sumitomo Mitsui Trust Bank, Limited

4,988

Asahi Mutual Life Insurance Company

4,062

-8-

2. Matters Related to Company Shares (As of March 31, 2024)(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 22,662 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

10,115(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
Goldman Sachs International

5,956

10.35

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

5,046

8.77

Asahi Mutual Life Insurance Company

3,570

6.21

Zeon Corporation

3,550

6.17

Custody Bank of Japan, Ltd. (trust account)

2,084

3.62

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

1,528

2.66

The Chugoku Bank, Ltd.
STATE STREET BANK AND
TRUST COMPANY 505223
Mizuho Bank, Ltd.

1,400

2.43

1,322

2.30

1,202

2.09

ADEKA Corporation

1,148

2.00

(Note) Treasury shares (22,662 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
No shares were issued during the fiscal year under review.

-9-3. Matters Related to Corporate Officers(1) Names and Other Information for Directors and Audit & Supervisory Board Members (As of
March 31, 2024)
Position
President
Director and Managing
Executive Officer
Director and Executive
Officer
Director and Executive
Officer

Name

Areas of Responsibility and Significant Concurrent Positions

Jun’ichi Hasegawa

In charge of Internal Auditing Dept.

Yasunari Yamaguchi

General Manager, Technical Div., in charge of Purchasing Dept.

Kazuki Niimi

In charge of Accounting & Finance Dept., Information Systems Dept.

Yuki Abe

General Manager, Business Div.

Director and Executive
Officer

Kenichi YakoIn charge of Sustainability Dept., Legal & General Affairs Dept.,
Public Relations & Investor Relations Dept., Personnel Dept., BusinessSupport 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
In charge of Overseas Plants, Representative Director, Kanto Denka
Fine Products Korea Co., Ltd.

Director

Hideki Matsui

Co-Representative Attorney-at-law, Marunouchi Sogo Law OfficeDirector

Masaharu Sugiyama

Director

Hitoshi Habuka

Director

Yuko Kariya

Director and Executive
Officer
Director and Executive
Officer
Director and Executive
OfficerFull-time Audit &Supervisory Board
MemberFull-time Audit &Supervisory Board
MemberAudit & Supervisory
Board Member
Audit & Supervisory
Board Member

Kunihiko Uramoto
Ryoji Masujima
Go Takikawa

Professor Emeritus, National University Corporation Yokohama
National University
Outside Director, NIPPON KINZOKU CO., LTD.
Outside Director (Audit & Supervisory Committee Member), Welby,
Inc.

Takeaki Yajima
Masatomo Hayashi
Naozumi Furukawa
Kenichi Ikeda

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. Eachis an independent 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 andaccounting.
4. Position changes for officers during the fiscal year under review are as follows.
Election: At the 116th Ordinary General Meeting of Shareholders held on June 29, 2023, Kenichi Yako
was newly elected as director.

(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, Audit& Supervisory Board members, executive officers, and certain employees (including managers) of theCompany and its subsidiaries as insureds, which is outlined below. The Company plans to renew theagreement in October 2024.
- 10 -

(i) Outline of events insured against
The agreement covers damages that may arise due to the insured directors, Audit & Supervisory
Board members, and 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, suchas for liabilities arising from acts committed by insureds while aware that doing so would be in
violation of laws and regulations.
(ii) 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
216
—
14
(24)
(—)
(—)

Officers Paid

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

230
(24)

12
(4)

54
(12)

54
(12)

—
(—)

—
(—)

4
(2)

Total

284

270

—

14

16

(Note) The total amount of remuneration, etc. for directors does not include the amount of employee's salary (including
bonuses) of directors who concurrently serve as employees. However, no such employee salaries were paid
during the fiscal year under review.

Remuneration for Directors(i)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.

(ii)

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 businessperformance, 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 byadding the amount of the employee bonuses to the monthly remuneration amount.

(iii) 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- 11 -

bonuses shall be paid. Note that ordinary profit for the fiscal year under review was a loss of ¥2.8
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 therelevant fiscal year in which the officer in question does not serve as a director, the number of monthsof service (periods of less than one month shall be counted as one month) shall be divided by 12 andthen multiplied by the number of rank points. In the event of a change in position during the relevant
fiscal year, the number of months shall be prorated.
2. By resolution at the 100th Ordinary General Meeting of Shareholders held on June 28, 2007, thebonus (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 conclusion of said meeting was 10).

(iv) 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 toenhancement of the Company’s performance and corporate value over the medium- to long-term.
This is achieved by presenting a clear link between director remuneration and the value ofCompany shares, and having directors share the benefits and risks associated with share pricefluctuations with shareholders. 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 the Company’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 time of their retirement from the position of director. In accordance with therules on share issuance, directors eligible under this plan shall be granted points in proportion totheir position each year on the date of the Ordinary General Meeting of Shareholders and, at thetime of their retirement from the position of director, shall be granted shares of Company stock
calculated based on the number of points accumulated.

(Notes) 1. By resolution at the 113th Ordinary General Meeting of Shareholders held on June 26, 2020, theCompany 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 isequivalent to one share of the Company’s stock) in proportion to the position held by each director. In
principle, these Company shares, which are calculated based on the number of points accumulated, areissued 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.

(v)

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%.

(vi) 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- 12 -

independent outside directors, on remuneration proposals.
(vii) 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.
(viii) 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 eachremuneration 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 calculated by the individual determination method per remuneration amount. Therefore,
the details of individual remuneration for directors are in alignment with the aforementioned policy.

(Note) With regard to remuneration, etc. for directors, Proposal 5: Revision of Director Remuneration, etc. Amount
has been proposed for this General Meeting of Shareholders. The main revisions in this proposal are as
follows. Subject to the approval of this proposal, the Company has decided on the Policy on Determinationof Details of Individual Directors’ Remuneration, etc., and the following content is in line with said policy
after such decision.
Monthly remuneration in (ii) above is limited to ¥20 million per month for directors, including up to ¥4
million per month for outside directors.
Bonuses for officers in (iii) will be changed to a method that is linked to the performance of each position.
Since the transfer from fixed remuneration to stock-based remuneration will be separately implemented,
the remuneration ratio in (v) will be approximately 55–65% for monthly remuneration, 25–35% for officers’
bonuses, and 10% for stock-based remuneration.

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(i) Status of concurrent positions of executive officers, outside officers, etc. at other corporations (Asof March 31, 2024)
Item

Name

Outside Director

Hideki Matsui

Outside Director

Masaharu Sugiyama

Outside Director

Hitoshi Habuka

Outside Director

Yuko Kariya

Status of concurrent positions at other corporations
Co-Representative Attorney-at-law, Marunouchi Sogo Law Office
Professor Emeritus, National University Corporation Yokohama
National University
Outside Director, NIPPON KINZOKU CO., LTD.
Outside Director (Audit & Supervisory Committee Member), Welby,
Inc.

Outside 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 & Public Relations Dept., 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 forlegal services.
2. There are no material transactions or other special relationships between the Company and National
University Corporation Yokohama National University, NIPPON KINZOKU CO., LTD., or Welby, Inc.
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 2023 constituted
less than 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 -

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

Status of Board of
Directors Meeting
Attendance

Hideki Matsui

13 of 14Masaharu Sugiyama

14 of 14

Hitoshi Habuka

14 of 14

Yuko Kariya

14 of 14

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
comments 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 bymaking 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
expectations 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 bymaking comments as appropriate at the Board of Directors andhas fully fulfilled her management oversight function.

(b) Outside Audit & Supervisory Board members
Name

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

Naozumi Furukawa

11 of 14

6 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 ¥43 million(ii) Total amount of money and other financial benefits to be paid by the¥43 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 thestatus of 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. Based on this, the Audit & Supervisory Board consents to the remuneration for theaccounting 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 distinguishbetween the amount of audit fees for audits based on the Companies Act and the amount of audit fees
for audits based on the Financial Instruments and Exchange Act, the amount in (i) above includes theamount 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 audited by 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. Basic Policy on Control Over the Listed Company(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- 16 -

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.
(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 theshareholders 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- 17 -

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.
(Notes) At the Board of Directors meeting held on May 15, 2024, the Company resolved not to continue the Response
Policy and to abolish it at the conclusion of the 117th Ordinary General Meeting of Shareholders to be heldon June 27, 2024, the expiration date of the Policy. For details, please refer to the May 15, 2024 press release“Discontinuance (Abolition) of Policy toward Large-Scale Purchase of Share Certificates, etc. of theCompany(Takeover
DefenseMeasures)”publishedontheCompany’s
website(https://www.kantodenka.co.jp/english/ir/).

6. 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.
In addition, although we set a target dividend payout ratio of 20% in our medium-term management plan,“Dominate 1000,” introduced in April 2022, we have increased this to 30% following a review of the planin November 2023.
(Note) The year-end dividend for the fiscal year under review was set at ¥7 per share at the Board of Directors meeting heldon May 28, 2024, after comprehensive consideration of the business performance and environment for the fiscal year
ended March 31, 2024. This makes the annual dividend per share ¥14, including the interim dividend already paid.
Note that the start date for payment of the year-end dividend will be June 28, 2024.
(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.

- 18 -

Consolidated Balance Sheet
As of March 31,2024

As of March 31,
2023(Reference)

63,26872,91925,40922,355

14,835

20,560

1,292

1,130

6,943

7,055

6,475

9,332

Current portion of longterm borrowings
Lease obligations

3,993

7,516

4,359

5,030

(41)

(62)

62,034

57,842

49,04247,404Long-term borrowings

12,71910,93019,767

19,291

2,677

2,657

256

266

Construction in progress

10,012

10,512

Other

3,609

3,745

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

752
752

Liabilities:
Current liabilities
Notes and accounts
payable—trade

9,762

9,224
11
2,093

7,399
14
1,404

Other

916

950

Allowance for doubtful
accounts(7)(7)

125,302130,762

33,680

7,287

9,620

Electronically recorded
obligations—operating

1,021

1,022

Short-term borrowings

5,028

4,516

9,022

6,914

160

135

Income taxes payable

272

2,701

Provision for bonuses to
officers

60

134

8,038

8,634

28,83228,30826,872

25,591

Lease obligations

598

635

Deferred tax liabilities

10

36

151

143

33

18

1,084

1,805

Other

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

676
676

(Millions of yen)
As of March 31,
2023(Reference)

30,891

Non-current liabilities

12,238

Total assets

As of March 31,
2024

81

75

Total liabilities

59,724

61,988

Net assets:
Shareholders’ equity

56,821

63,157

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
52,149(66)

1,859
58,486
(65)

7,185

4,323

3,939

2,512

2,402

1,534

843

275

1,572

1,293

Total net assets
Total liabilities and net
assets65,57868,774125,302130,762

Capital- 19 -

Consolidated Statement of Income(Millions of yen)
From April 1, 2023
to March 31, 2024

From April 1, 2022
to March 31, 2023 (Reference)

Net sales

64,76878,675

Cost of sales

57,602

56,107Gross profit
Selling, general and administrative
expenses

7,166

22,567

9,135

9,619

Operating profit (loss)(1,968)12,947

1,519

1,164

Non-operating profit
Interest income

58

20

Dividend income

255

248

Foreign exchange gains

831

112

Gain on sales of prototypes－

515

Miscellaneous income

373

268

Non-operating expenses

855

432

Interest expenses

473

318

Loss on valuation of derivatives

173

59

Loss on sale of trial products

146－

Miscellaneous loss

61

53

(1,304)

13,679

586

－

586

－

4,598

254

336

242

Ordinary profit (loss)
Extraordinary income
Gain on sale of investment securities
Extraordinary losses
Loss on retirement of non-current assets
Impairment losses
Loss on valuation of investment securities
Profit (loss) before income taxes

4,262

－

－

11

(5,317)

13,425

Income taxes—current

415

4,166

Income taxes—deferred(1,335)(244)

Profit (loss)
Profit attributable to non-controllinginterests(4,397)

9,503

212

121

Profit (loss) attributable to owners of parent(4,610)9,382- 20 -

Balance Sheet
As ofMarch 31,2024

As of March
31, 2023(Reference)

47,762

55,41813,721

9,369

282

757

1,089

961

15,26920,081

4,010

4,473

5,758
3,700
25

0

264

246

1,130

Assets:Current assets
Cash and deposits
Notes receivable—trade
Electronically recordedmonetary claims—operating
Accounts receivable—trade
Merchandise and finished
goodsWork in process
Raw materials and supplies
Advance payments to
suppliersPrepaid expenses
Short-term loans receivablefrom subsidiaries and associates
Accounts receivable—other
Other
Allowance for doubtful
accounts

Non-current assets

Liabilities:
Current liabilities

26,55027,230

79

67

1,203

1,117

Accounts payable—trade

4,053

5,260

3,050

3,050

8,282

6,440

8,941

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

77

71

7,141

Accounts payable—other

3,025

2,686

Accrued expenses

1,097

1,308

Income taxes payable

－

2,392

144

Derivatives liabilities

17

－

2,492

3,282

Advances received

－

1,716

34

39

Deposits received

53

65

(17)

(22)

Notes payable—facilities

3

774

5,605

2,199

－

80

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

58,041

54,84830,071

29,878

Buildings

5,026

5,491

Structures

2,993

2,460

Long-term borrowings

Machinery and equipment

11,153

13,684

Lease obligations

35

24

Tools, furniture and fixtures

2,848

3,089

Land

2,065

2,065

197

244

5,750

2,819

Intangible assets

405

493

Software

400

488

Other

5

5

Property, plant and equipment

VehiclesLease assets
Construction in progress(Millions of yen)
As of
As of March
March 31,
31, 2023
2024(Reference)Non-current liabilities

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

26,591

24,79524,27822,560

123

174

2,144

2,029

33

18

11

11

53,14152,025

Shareholders’ equity

48,93655,910Capital

2,877

2,877

Capital surplus

1,524

1,524

1,524

1,524

44,601

51,575

Total liabilities
Net assets:

Legal capital surplus
Investments and otherassetsInvestment securities
Shares of subsidiaries andassociates
Investments in capital ofsubsidiaries and associates
Long-term loans receivablefrom subsidiaries and associates
Long-term loans receivablefrom employees
Deferred tax assets
Other
Allowance for doubtful
accounts
Total assets

27,56424,475

8,077

6,395

Legal retained earnings

436

436

4,704

4,704

Other retained earnings

44,165

51,139

5,393

5,393

Reserve for dividends

371

371

6,538

6,214

General reserve

4,608

4,608

8

9

Retained earnings brought forward

39,185

46,159

2,385

1,246

462

518

(6)

(6)

105,804

110,267

Retained earnings

Treasury shares

(66)

(65)

Valuation and translation adjustments
Valuation difference on available-forsale securities
Total net assets

3,725

2,331

3,725

2,331

52,66258,241

Total liabilities and net assets

105,804

110,267- 21 -

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

From April 1, 2023
to March 31, 2024
Net sales

55,691

72,044

Cost of sales

52,88853,162

2,803

18,882Gross profit
Selling, general and administrative expenses

7,021

7,670

(4,217)

11,211Non-operating profit

1,967

1,293

Interest income

237

123

Dividend income

330

303

Operating profit (loss)

Foreign exchange gains
Gain on sales of prototypes
Miscellaneous income

1,052

101

－

515

347

249

Non-operating expenses

596

288

Interest expenses

226

177

Loss on valuation of derivatives

173

59

Loss on sale of trial products

146－

Miscellaneous loss
Ordinary profit (loss)
Extraordinary income
Gain on sale of investment securities
Extraordinary losses
Loss on retirement of non-current assets
Impairment losses
Loss on valuation of investment securities
Profit (loss) before income taxes
Income taxes—current

49

50(2,846)

12,217

449

－

449

－

4,422

278

160

266

4,262

－

－

11

(6,819)11,938

(52)

3,683

Income taxes—deferred(1,519)(148)

Profit (loss)(5,247)8,404- 22 -

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

May 24, 2024
Ernst & Young ShinNihon LLC
Tokyo Office
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant Shigeyuki Honda
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant Tsuyoshi Nakano

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, 2023 through March 31, 2024.
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- 23 -

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.
The auditor reports to Audit & Supervisory Board members and the Audit & Supervisory Board regarding the- 24 -

observance 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 measures that are in place to eliminate obstacles or
any safeguards that have been applied to reduce obstacles to an acceptable level.
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.

- 25 -

Accounting Audit Report
Independent Auditor’s Report(English Translation)
Kanto Denka Kogyo Co., Ltd.
The Board of Directors of Kanto Denka Kogyo Co., Ltd.

May 24, 2024

Ernst & Young ShinNihon LLC
Tokyo Office
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant Shigeyuki Honda
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant Tsuyoshi Nakano
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, 2023 through March 31, 2024.
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.

- 26 -

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 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 thefinancial 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 thefinancial statements including related notes, and whether the financial statements fairly present thetransactions and accounting 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 measures that are in place to eliminate obstacles or
any safeguards that have been applied to reduce obstacles to an acceptable level.

- 27 -

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

- 28 -

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, 2023 to March
31, 2024, 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
the status 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 asprescribed in Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies
Act, as a system 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 of enterprises comprised of the relevant stock company and its subsidiaries, members
regularly received reports on its structure and operation status from directors, employees, and otherparties, asked for explanations as necessary, and expressed their opinions, in accordance with theauditing 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 ofthese have also been examined based on the status of deliberations at the Board of Directors
meetings and other 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 stateof performance 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 (as listed in the items of Article 131 of the Ordinance for Corporate Accounting) had been
established in accordance with the Standard for Quality Control Concerning Audits (the BusinessAccounting Council), 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.

- 29 -

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
fact of 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; and(iv) That there are no matters to be pointed out regarding the Basic Policy on Company Financial andBusiness Policy Decision Controllers as listed in the business report, and that the efforts listed in thebusiness report corresponding to Article 118, Item 3, (b) of the Ordinance for Enforcement of theCompanies 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 thepositions of the Company 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 24, 2024

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)- 30 -

Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal 1: Partial Amendments to the Articles of Incorporation(1) Reasons for proposal
1) The proposal intends to delete a business purpose in Article 2 (Purpose) of the current Articles ofIncorporation that is not currently implemented and to add a business purpose in order to clarify thenature of the business.
2) At the Ordinary General Meeting of Shareholders held on June 29, 2006, the Company, with the
purpose of securing and improving medium- to long-term corporate value and therefore profits
shared with shareholders, resolved to adopt the Policy toward Large-Scale Purchase of Share
Certificates, etc. of the Company (Takeover Defense Measures; hereafter, the “Response Policy”)
and has subsequently maintained the basic contents of that policy over five Ordinary General
Meetings of Shareholders up to the present, with the approval of shareholders.
As the Response Policy is approaching its expiration, the Company has repeatedly given carefulconsideration to that approach in light the opinions of institutional investors and other shareholders
in Japan and overseas, the latest trends in takeover defense measures and changes in the businessenvironment, among other factors. At the Board of Directors meeting held on May 15, 2024, theCompany resolved not to continue the Response Policy and to abolish it at the conclusion of this
General Meeting of Shareholders, which is when the Response Policy will expire.
Therefore, this proposal intends to delete Article 17 (Introduction of Takeover Defenses) of thecurrent Articles of Incorporation.
3) In order to ensure the flexible operation of the Board of Directors, Article 18 (Number of Directors)of the current Articles of Incorporation shall be amended to change the maximum number of
directors from 12 to 10.

(2) Details of the amendments
The details of the proposed amendments are as follows:- 31 -

(Underlined portions indicate changes.)
Pre-amendment Articles of Incorporation

Proposed Amendments

Article 1: (Text omitted)

Article 1: (Unchanged)(Purpose)(Purpose)

Article 2: The purpose of the Company shall be toengage in the following businesses.

Article 2: The purpose of the Company shall be toengage in the following businesses.

(1) Manufacture and sale of caustic soda, chlorine andchlorine compounds, hydrogen and products
utilizing hydrogen, and other related industrial
products, pharmaceuticals and by-products thereof(1) Manufacture and sale of caustic soda, chlorine andchlorine compounds, hydrogen and products
utilizing hydrogen, and other related industrial
products, pharmaceuticals and by-products thereof(2) Manufacture and sale of fluorine and fluorinecompounds and related products(2) Manufacture and sale of fluorine and fluorinecompounds and related products(3) Manufacture and sale of petrochemical products
and related products(3) Manufacture and sale of petrochemical products
and related products(4) Manufacture and sale of iron oxides and related
products(4) Manufacture and sale of iron oxides and related
products(5) Manufacture and sale of magnetic and electronicmaterials(5) Manufacture and sale of magnetic and electronicmaterials(6) Manufacture and sale of powder alloys and molded
products thereof(6) Manufacture and sale of powder alloys and molded
products thereof(7) Manufacture and sale of products created bychemical treatment of agricultural and fisheryproducts(7) Design, manufacture and sale of equipment related
to each of the preceding items, as well as sale oftechnology and consulting(8) Any and all businesses incidental or related to thepreceding items(8) Any and all businesses incidental or related to thepreceding items

Article 3 to 16: (Text omitted)

Article 3 to 16: (Unchanged)- 32 -

(Underlined portions indicate changes.)
Pre-amendment Articles of Incorporation

Proposed Amendments(Introduction of Takeover Defenses)
Article 17: Introduction of Takeover Defenses Decided
at the General Meeting of Shareholders(Deleted)

2. The introduction of takeover defenses specified in
the preceding paragraph refers to Company-specified
procedures that a person executing a takeover bid
should comply with in regard to acquisition of sharesand other rights the Company has issued in order toprevent the determination of financial and business
policies of the Company from being controlled by aninappropriate person, in light of the Basic Policy on
the way a person is to control the determination offinancial and business policies of the Company.
3. When it is clear that a bid to acquire shares and otherrights issued by the Company will cause
considerable harm to the overall interests ofshareholders, the Board of Directors may take steps
to prevent harm to the overall interests ofshareholders, Paragraph 1 notwithstanding.
(Number of Directors)(Number of Directors)

Article 18: The Company shall have no more than 12
directors.

Article 17: The Company shall have no more than 10
directors.

Article 19 to 40: (Text omitted)

Article 18 to 39: (Unchanged)- 33 -

Proposal 2: Election of Nine Directors
The terms of office of all 12 directors will expire at the conclusion of this General Meeting of Shareholders.
Therefore, in order to further strengthen the flexible operation of the Board of Directors and the corporate
governance system, the Company proposes to increase the number of outside directors by one while reducing thetotal number of directors by three, thereby proposing the election of nine directors (including five outside directors).
The candidates for director are as follows:
No.

1

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.

June 2009

Director and Executive Officer; General Manager, Sales Div.

January 2011

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

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

Director and Executive Officer of the Company; Chairman
and Managing Director, Kanto Denka Kogyo (Shanghai) Co.,Ltd.
President

June 2019

President; General Manager, Business Div.

June 2023

President (to present)(In charge of Internal Auditing Dept.)

Number ofshares of theCompany held

49,239Of which, numberof shares to bedelivered in thestock-based
remuneration plan

10,239[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.

2

April 1984

Joined Asahi Mutual Life Insurance Company

April 2006

General Manager, Finance Unit, Asahi Mutual Life Insurance
Company

April 2010

General Manager, Accounting Unit, Asahi Mutual Life
Insurance Company

April 2013

General Manager, Bond Management Unit, Asahi Mutual Life
Insurance Company

April 2015

General Manager, Securities Management Dept., Asahi
Mutual Life Insurance Company

Kazuki Niimi(September 22, 1960) April 2016
Reappointment
Male
April 2020
June 2020

General Manager, Financial Controller Dept., Asahi MutualLife Insurance Company
General Manager, in charge of Financial Controller Dept.,
Asahi Mutual Life Insurance Company
Director and Executive Officer of the Company (to present)(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.

- 34 -

12,585
Of which, numberof shares to bedelivered in thestock-based
remuneration plan

7,285

No.

3

Name
(Date of birth)

Kenichi Yako
(January 11, 1969)
Reappointment
Male

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

Joined the Company

April 2009

General Manager, Production Engineering Dept., Shibukawa
Plant

June 2013

General Manager, Production Dept.-I, Shibukawa Plant

January 2017

General Manager, Overseas Business Development Dept.

November 2017

General Manager, Overseas Business Development Dept.;
Representative Director, Kanto Denka Fine Products Korea
Co., Ltd.
Executive Officer; General Manager, Overseas Business
Development Dept. of the Company; Representative Director,
Kanto Denka Fine Products Korea Co., Ltd.

June 2020

April 2023

Executive Officer; Representative Director, Kanto Denka Fine
Products Korea Co., Ltd.

June 2023

Director and Executive Officer; Representative Director,
Kanto Denka Fine Products Korea Co., Ltd. (to present)(In charge of Overseas Plants)

Number ofshares of theCompany held

3,500

[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, at an overseas subsidiary, and as director, and he also has broad
insights concerning the overall management of the Company.

4

Taisuke Yonemura(July 14, 1972)
New appointment
Male

April 1998

Joined the Company

April 2017

General Manager, Production Dept.-II, Shibukawa Plant

June 2020

General Manager, Production Dept.-I, Shibukawa Plant

June 2021

Executive Officer; Plant Manager, Shibukawa Plant; General
Manager, Production Dept.-I, Shibukawa Plant

April 2022

Director and Executive Officer; Plant Manager, Shibukawa
Plant; General Manager, Quality Assurance Dept., Shibukawa
Plant

June 2022

0

Executive Officer; Plant Manager, Shibukawa Plant (topresent)[Reasons for nomination as candidate for director]
The Company has nominated Taisuke Yonemura as a candidate for director
because Mr. Yonemura has long experience in the engineering division, including
plant operations of the Company, and he also has broad insights concerning overallmanagement.

5

Hideki Matsui(July 9, 1962)
Reappointment
OutsideMale

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)

June 2015

Outside Director of the Company (to present)[Significant concurrent position]
Co-Representative Attorney-at-law, Marunouchi Sogo Law Office[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.

- 35 -

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

April 2002

6

Hitoshi Habuka(March 25, 1957)
Reappointment
OutsideMale

April 2017

Vice Dean, College of Engineering Science, National
University Corporation Yokohama National University

June 2019

Outside Director of the Company (to present)

April 2022

Professor Emeritus, National University Corporation
Yokohama National University (to present)
Lecturer (non full-time), Faculty of Engineering, National
University Corporation Yokohama National University

Number ofshares of theCompany held

0

[Significant concurrent position]
Professor Emeritus, National University Corporation Yokohama National
University[Reasons for nomination as candidate for outside director and overview of
expected roles]
Although Hitoshi Habuka has not been involved in corporate management otherthan as an outside officer, the Company has nominated him 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.

7

Yuko Kariya(April 15, 1960)
Reappointment
OutsideFemaleApril 1983

Joined Torii Pharmaceutical Co., Ltd.

June 2012

Executive Vice President; Head of Pharmacovigilance &Quality Assurance Group, Torii Pharmaceutical Co., Ltd.

June 2013

Member of the Board, Director; Head of Pharmacovigilance& Quality Assurance Group, Torii Pharmaceutical Co., Ltd.

March 2020

Standing Corporate Advisor, Torii Pharmaceutical Co., Ltd.

March 2021

Retired from Torii Pharmaceutical Co., Ltd.

June 2022

Outside Director of the Company (to present)
Outside Director, NIPPON KINZOKU CO., LTD. (to present)

March 2024

Outside Director (Audit & Supervisory Committee Member),
Welby, Inc. (to present)[Significant concurrent position]
Outside Director, NIPPON KINZOKU CO., LTD.
Outside Director (Audit & Supervisory Committee Member), Welby, Inc.
[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.

- 36 -

0

No.

8

Name
(Date of birth)

Takako Amitani(July 21, 1958)
New appointment
OutsideFemalePast experience, positions, area of responsibility and significant concurrent positions
September 1993

Registered as Certified Public Accountant (CPA)

September 1993

President, Amitani Certified Public Accountant Office (topresent)

March 2005

Registered as a licensed tax accountant

June 2008

Auditor, Public Foundation of Vaccination Research Center (topresent)

June 2019

Outside Director, Shin-Keisei Electric Railway Co., Ltd.

June 2021

Auditor, Japan Center for Certified Public Psychologists (topresent)

June 2023

Outside Director, Keisei Electric Railway Co., Ltd. (to present)[Significant concurrent position]
Outside Director, Keisei Electric Railway Co., Ltd.
[Reasons for nomination as candidate for outside director and overview of
expected roles]
Although Takako Amitani has not been involved in corporate management otherthan as an outside officer, the Company has nominated her as a candidate foroutside director because Ms. Amitani has engaged in corporate accounting andtaxation for many years as a Certified Public Accountant and licensed tax
accountant, and the Company expects her to utilize her wealth of experience andbroad insights for the management of the Company.

- 37 -

Number ofshares of theCompany held

0

No.

9

Name
(Date of birth)

Junko Koshino(September 8, 1969)
New appointment
OutsideFemalePast experience, positions, area of responsibility and significant concurrent positions
April 1993

Joined Nippon Credit Bank, Ltd. (currently Aozora Bank, Ltd.)

January 1997

Investment Analyst, Investment Department, FIL Investments(Japan) Limited

April 2002

Investment Analyst, Investment Department, Capital Researchand Management Company

February 2006

Investment Analyst, Tokyo Representative Office, Halberdier
Capital Management Pte. Ltd.

April 2012

General Manager, Corporate Planning Dept., MORITO CO.,LTD.

October 2015

General Manager, Corporate Planning Office, Otsuka Kagu, Ltd.

April 2016

General Manager, Business Development Dept. and Corporate
Strategy Dept., Corporate Strategy Div., JVCKENWOOD
Corporation

April 2019

Executive Officer, General Manager of Corporate Strategy
Department, JVCKENWOOD Corporation

April 2020

Executive Officer, Assistant to CEO, JVCKENWOOD
Corporation

July 2020

Executive Officer, General Manager, Corporate Planning Dept.,
Company Corporate Planning Division, Frontier Management
Inc.

June 2021

Outside Director, SAXA Holdings, Inc.

June 2022

Outside Director, Rikei Corporation (to present)

Number ofshares of theCompany held

0

[Significant concurrent position]
Outside Director, Rikei Corporation[Reasons for nomination as candidate for outside director and overview of
expected roles]
Junko Koshino is familiar with financial and capital markets through her many
years of activities as an analyst for financial institutions and other organizations.
She was also involved in the management of a publicly traded company as an
executive officer. The Company expects her to utilize this wealth of experienceand broad insights for the management of the Company.
(Notes) 1. The number of shares of the Company held includes shares to be delivered in the stock-based remuneration plan.
2. Hideki Matsui, Hitoshi Habuka, Yuko Kariya, Takako Amitani, and Junko Koshino are candidates for outside
director. Each is a 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 ¥3.2 million for the fiscal year ended March 31, 2024, and this amount does not affect the independenceof Mr. Matsui either from the Company or from the law office.
4. The Company has an agreement with Hideki Matsui, Hitoshi Habuka, and Yuko Kariya to limit 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 a similar agreement withthem. In the case Takako Amitani and Junko Koshino are elected as outside director and assume office as such,
the Company plans to enter into the same agreement with them.
5. The Company has entered into a directors and officers liability insurance agreement for directors, Audit &Supervisory Board members, executive officers, and certain employees (including managers) of the Company andits subsidiaries as insureds, which is outlined below. When each candidate is elected and assumes office as director,
they will all be included as an insured under the said insurance. The Company plans to renew the agreement withthe same content in October 2024.
(i) Outline of events insured against
The agreement covers damages that may arise due to the insured directors, Audit & Supervisory Board
members, and 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 for liabilities
arising from acts committed by insureds while aware that doing so would be in violation of laws andregulations.
(ii) Insurance premiums will be fully borne by the Company.
6. The term of office of Hideki Matsui, Hitoshi Habuka, and Yuko Kariya as outside directors of the Company upon

- 38 -

the conclusion of this General Meeting of Shareholders will be nine years, five years, and two years, respectively.

- 39 -

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

Name

Corporate
management /Globalization
management
strategy

Jun’ichi Hasegawa√

Kazuki Niimi√

Kenichi Yako√

Taisuke Yonemura√√

Expertise and experience
Sales /
marketingTechnology /Sustainability
R&D√

Finance /accounting

√

√
√

√

Finance and Legal affairs /capitalrisk
markets
management

√

√
√

√

Hideki Matsui√

Hitoshi Habuka
Yuko Kariya√√√

Takako Amitani
Junko Koshino

√
√

√

√

√

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

- 40 -

Proposal 3: Election of Four Auditors
The terms of office of all four Auditors will expire at the conclusion of this General Meeting of Shareholders.
Accordingly, the Company proposes the election of four Auditors.
The candidates for Auditor are as follows. The Audit & Supervisory Board has previously given its approval tothis proposal.
No.

1

Name
(Date of birth)

Takeaki Yajima(April 20, 1963)
Reappointment
Male

Past experience, positions, and significant concurrent positions
April 1987

Joined The Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho
Bank, Ltd.)March 2003

General Manager of Tottori Branch, Mizuho Bank, Ltd.

April 2010

General Manager, Unit No. 8 of Branch Department, Mizuho
Bank, Ltd.

April 2012

General Manager of Tachikawa Branch, Mizuho Bank, Ltd.

April 2014

General Manager, Branch Banking Department No. 2, Mizuho
Bank, Ltd.

April 2015

General Manager, Tokyo Main Office Department No. 1,
Mizuho Bank, Ltd.

June 2018

Corporate Adviser of the Company

June 2018

Director and Executive Officer

June 2021

Full-time Auditor (to present)

Number ofshares of theCompany held

6,175

[Reasons for nomination of the candidate for auditor]
The Company has nominated Takeaki Yajima as a candidate for auditor because
Mr. Yajima has long experience at financial institutions, experience as a director
and auditor of the Company, considerable knowledge in finance and accounting
and broad insights concerning the overall management of the Company.

2

Ryoji Masujima(June 16, 1967)
New appointment
Male

April 1992

Joined the Company

June 2015

General Manager, Corporate Planning Dept.

June 2017

Chairman and Managing Director, Kanto Denka Kogyo(Shanghai) Co., Ltd.

June 2019

Executive Officer of the Company; Chairman and Managing
Director, Kanto Denka Kogyo (Shanghai) Co., Ltd.

March 2021

Executive Officer; General Manager, Legal & General Affairs
Dept.

December 2021

Executive Officer; General Manager of Legal & General Affairs
Dept. and General Manager of Sustainability Dept.

June 2022

Director and Executive Officer; General Manager, Corporate
Planning Dept. (to present)(In charge of Corporate Planning Dept., Overseas Business
Development Dept.)[Reasons for nomination of the candidate for auditor]
The Company has nominated Ryoji Masujima as a candidate for auditor 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 overall management.

- 41 -

6,335
Of which, numberof shares to bedelivered in thestock-based
remuneration plan

4,135

No.

3

Name
(Date of birth)

Past experience, positions, and significant concurrent positions
April 1967

Joined Zeon Corporation

June 1997

Director, Zeon Corporation

June 1999

Senior Director, Zeon Corporation

June 2001

Executive Director, Zeon Corporation

June 2002

Representative Director and Executive Director, Zeon
Corporation

June 2003

President and CEO, Zeon Corporation

Naozumi Furukawa June 2006
(December 22, 1944) June 2013
Reappointment
March 2014
OutsideMale
June 2015
June 2020

Number ofshares of theCompany held

Outside Corporate Auditor, The Yokohama Rubber Co., Ltd.
Chairman, Zeon Corporation
Member of the Board (Outside), The Yokohama Rubber Co.,Ltd.
Outside Auditor of the Company (to present)
Honorary Chairman, Zeon Corporation (to present)[Significant concurrent position]
Honorary Chairman, Zeon Corporation[Reasons for nomination of the candidate for outside auditor]
Naozumi Furukawa has engaged in management at a chemical manufacturer for
many years, and the Company has nominated him as a candidate for outside auditor
to reflect his experience and broad insights in Company audits.

- 42 -

0

No.

4

Name
(Date of birth)

Past experience, positions, and significant concurrent positions
April 1986

Joined Asahi Mutual Life Insurance Company

April 2011

General Manager, Insurance Unit, Office & System
Management Div., Asahi Mutual Life Insurance Company

April 2014

General Manager, Product Development Unit, Sales Planning
Dept., Asahi Mutual Life Insurance Company

April 2015

General Manager, Product Development Dept., Asahi MutualLife Insurance Company

April 2016

General Manager, Sales Planning Dept., Asahi Mutual Life
Insurance Company

April 2017

Executive Officer (In charge of Sales Planning Dept. and
Product Development Dept.), Asahi Mutual Life Insurance
Company

April 2019

Executive Officer (In charge of Sales Planning Dept.,
Marketing Div., and Product Development Dept.), Asahi MutualLife Insurance Company

April 2020

Executive Officer (In charge of Risk Management Div. andCompliance Div.), Asahi Mutual Life Insurance Company

Kenichi Ikeda
June 2020(December 23, 1962) July 2020
Reappointment
OutsideMale
April 2021

April 2022

April 2024

Number ofshares of theCompany held

Outside Auditor of the Company (to present)
Director and Executive Officer (In charge of Risk Management
Div. and Compliance Div.), Asahi Mutual Life Insurance
Company0

Director and Managing Executive Officer (In charge ofCorporate Planning Div. and Research and Public Relations
Div.), Asahi Mutual Life Insurance Company
Director and Managing Executive Officer (In charge ofCorporate Planning Div., Research & Public Relations Dept.,
and Overseas and Direct Business Unit), Asahi Mutual Life
Insurance Company
Director and Senior Managing Executive Officer (In charge ofFinancial Controller Dept., Risk Management Div., ComplianceDiv., ESR Administration Office), Asahi Mutual Life Insurance(to present)[Significant concurrent position]
Director and Senior Managing Executive Officer (In charge of Financial Controller
Dept., Risk Management Div., Compliance Div., ESR Administration Office),
Asahi Mutual Life Insurance[Reasons for nomination of the candidate for outside auditor]
Kenichi Ikeda has many years of experience and broad insights in financial
institutions, and the Company has nominated him as a candidate for outside auditor
to reflect these in Company audits.
(Notes) 1. Naozumi Furukawa and Kenichi Ikeda are outside auditors. Both are candidates for independent officers as
stipulated by the rules of the Tokyo Stock Exchange.
2. The Company has an agreement with Naozumi Furukawa and Kenichi Ikeda to limit their liability as outside
auditor 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. Furukawa and Mr. Ikeda are elected as outside auditors and assume
office as such, the Company plans to continue to enter into a similar agreement with them.
3. The Company has entered into a directors and officers liability insurance agreement for directors, Audit &Supervisory Board members, executive officers, and certain employees (including managers) of the Company
and its subsidiaries as insureds, which is outlined below. When each candidate is elected and assumes office, they
will all be included as an insured under the said insurance. The Company plans to renew the agreement with thesame content in October 2024.
(i) Outline of events insured against
The agreement covers damages that may arise due to the insured directors, Audit & Supervisory Board
members, and 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 for liabilities
arising from acts committed by insureds while aware that doing so would be in violation of laws and- 43 -

regulations.
(ii) Insurance premiums will be fully borne by the Company.
4. The term of office of Naozumi Furukawa and Kenichi Ikeda as outside auditors of the Company upon the
conclusion of this General Meeting of Shareholders will be nine years and four years, respectively.

- 44 -

Proposal 4: Election of One Substitute Auditor
As the appointment of Substitute Auditor Naotaka Kawamata, who was elected at the 113th Ordinary General
Meeting of Shareholders held on June 26, 2020, will expire at the commencement of this General Meeting of
Shareholders, the Company once again proposes the election of one Substitute Auditor in preparation for the eventthat the number of Auditors is insufficient as stipulated by law.
Pursuant to the stipulations of the Company’s Articles of Incorporation, this election shall be effective until the
beginning of the ordinary general meeting of shareholders concerning the last business year that ends within four
years after the election. The effectiveness of this election shall be able to be revoked only before the assumptionof office by resolution of the Board of Directors with the approval of the Audit & Supervisory Board.
The candidate for Substitute Auditor is as follows. The Audit & Supervisory Board has previously given its
approval to this proposal.
Name(Date of birth)

Naotaka Kawamata(May 1, 1965)
Male

Past experience, positions, and significant concurrent positions
April 1994

Admitted as Attorney-at-Law

April 1994

Joined Marunouchi Sogo Law Office

April 2015

Practicing-Attorney-Professor for civil advocacy, the Legal
Training and Research Institute of the Supreme Court of Japan

June 2016

Outside Director (Audit & Supervisory Committee Member),Torex Semiconductor Ltd. (to present)

June 2017

Outside Director, Nippon Flour Mills Co., Ltd. (currently
NIPPN CORPORATION) (to present)

November 2019

Member of the National Bar Examination Commission (Civil
Code)

June 2020

Outside Director (Audit & Supervisory Committee Member),
NIPPON DENSETSU KOGYO CO., LTD. (to present)[Significant concurrent position]
Partner, Marunouchi Sogo Law OfficeOutside Director (Audit & Supervisory Committee Member), TOREXSEMICONDUCTOR LTD.
Outside Director, NIPPN CORPORATION
Outside Director (Audit & Supervisory Committee Member), NIPPONDENSETSU KOGYO CO., LTD.
[Reasons for nomination of the candidate for substitute outside auditor]
Although Naotaka Kawamata has not been involved in corporate management
other than as an outside officer, the Company has nominated him as a candidate
for substitute outside auditor because Mr. Kawamata has specialized knowledge
and experience, etc. as an attorney at law, and is familiar with corporate legal
affairs.

- 45 -

Number ofshares of theCompany held

0(Notes) 1. Naotaka Kawamata is a candidate for substitute outside auditor.
2. Although Naotaka Kawamata belongs to the Marunouchi Sogo Law Office, with which the Company has alegal advisory retainer contract and to which it pays fees for legal services provided by attorneys, theCompany paid only about ¥3.2 million for the fiscal year ended March 31, 2024, and this amount does notaffect the independence of Mr. Kawamata either from the Company or from the law office.
3. In the case when the number of auditors of the Company becomes insufficient in light of the legally stipulated
number and Mr. Kawamata assumes office as an outside auditor, the Company plans to enter into anagreement with Mr. Kawamata to limit his liability as outside auditor 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.
4. The Company has entered into a directors and officers liability insurance agreement for directors, Audit &Supervisory Board members, executive officers, and certain employees (including managers) of the Company
and its subsidiaries as insureds, which is outlined below. In the case when the number of auditors of theCompany becomes insufficient in light of the legally stipulated number and Naotaka Kawamata assumes
office as an outside auditor, he will be included as an insured under the said insurance. The Company plansto renew the agreement with the same content in October 2024.
(i) Outline of events insured against
The agreement covers damages that may arise due to the insured directors, Audit & Supervisory Board
members, and officers, etc. being held liable for the execution of his or her duties or being subject toa claim 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 violation oflaws and regulations.
(ii) Insurance premiums will be fully borne by the Company.

- 46 -

Proposal 5: Revision of Director Remuneration, etc. Amount
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 longterm remuneration), while remuneration for outside directors consists solely of monthly remuneration.
Of these, monthly remuneration and officer bonuses were approved at the General Meeting of Shareholders held on
June 28, 2007, as described in [Pre-revision] below and effective as of the date of this document. However, as
described below in [Post-revision], the Company proposes to revise the total amount of monthly remuneration inaccordance with changes in the composition of the Board of Directors and to revise the amount of officer bonuses inorder to directly reflect changes in business performance for each position in the amount of each director’s
remuneration.
On May 15, 2024, the Company’s Board of Directors approved the Policy on Determination of Details of Individual
Directors’ Remuneration, etc., subject to the approval of Proposals 1 and 2 and this proposal. The content of thispolicy is a modification of the existing policy based on this proposal, and since this proposal is in line with suchpolicy, we believe it is appropriate.

Pre-revision(i) The total amount of monthly remuneration for directors shall be no more than ¥24 million.
(ii) Separately to the monthly remuneration in (i), 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.
The amount of remuneration, etc. for directors shall not include employee remuneration for officers who concurrently
serve as employees of the Company.

Post-revision(i) The total amount of monthly remuneration for directors shall be no more than ¥20 million (including no morethan ¥4 million for outside directors).
(ii) Separately to the monthly remuneration in (i), the following officer bonuses shall be paid.

・ Officer bonuses are paid to directors (excluding outside directors). However, this excludes directors who
have performed their duties for less than one-half of the relevant fiscal year.
・ The amount shall be calculated by multiplying the consolidated ordinary profit for the relevant fiscal year,
which is a solid indicator of earnings, by a certain percentage determined for each position. However, thelimit of consolidated ordinary profit for these purposes shall be ¥20 billion. In addition, if consolidated
ordinary profit for the fiscal year in question is less than ¥2 billion, or if the final profit for said fiscal
year is a loss (consolidated or non-consolidated), no officer bonuses shall be paid.
・ The formula and minimum and maximum amounts to be determined for each position shall be as follows(rounded down to the nearest ten thousand yen).

- 47 -

Position

Formula (lower limit–upper limit)

Chairman/President

Consolidated ordinary profit x 0.350% (¥0–¥70 million)

Director and Senior Managing Executive Officer

Consolidated ordinary profit x 0.225% (¥0–¥45 million)

Director and Managing Executive Officer

Consolidated ordinary profit x 0.175% (¥0–¥35 million)

Director and (Senior) Executive Officer

Consolidated ordinary profit x 0.018% (¥0–¥3.6 million)

・ The final officer bonuses shall be the amount calculated above and shall vary according to the total
shareholder return (TSR) index. Specifically, if the Company’s TSR for the fiscal year in question
exceeds the TOPIX TSR by 10% or more, the amount calculated above shall be multiplied by 1.1, and if
it falls below 10% or more, the same amount shall be multiplied by 0.9 (rounded down to the nearest ten
thousand yen). As a result, the maximum amount by position is ¥77 million for the Chairman/President,¥49.5 million for Directors and Senior Managing Executive Officers, ¥38.5 million for Directors andManaging Executive Officers, and ¥3.96 million for Directors and Executive Officers.
The amount of remuneration for directors does not include employee salaries for directors who concurrently
serve as employees of the Company.
If Proposal 2 is approved as proposed, the number of directors will be nine (including five outside directors).

- 48 -