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 otherforms of damages arising from the translations.
(Stock code: 6246)
June 9, 2023

To our shareholders
Masami Yanai
President and Representative Director

Techno Smart Corp.
2-5-28 Kyutaromachi, Chuo-ku, Osaka

Notice of Convocation of the 89th Ordinary General Meeting of Shareholders
We are pleased to inform you that the 89th Ordinary General Meeting of Shareholders (the “Meeting”) will
be held as detailed below.
In convening the Meeting, we have taken electronic provision measures for information contained in the
Reference Documents for the General Meeting of Shareholders and other documents (the “Matters Subject toElectronic Provision Measures”). They are posted on our website, etc. as the “Notice of Convocation of the89th Ordinary General Meeting of Shareholders.” Please access one of the following websites to review the
information.

The Company’s Website
https://www.technosmart.co.jp/en/cat_ir/notification/(Access the Company’s website above to review the information by clicking on “PDF” at the rightof “Notice of Convocation of the 89th Ordinary General Meeting of Shareholders.”)

If you will not attend the Meeting in person, you have the option to exercise your voting right via the Internet
or in writing. We cordially request that you review the Reference Documents for the General Meeting of
Shareholders and exercise your rights by 5:35 p.m. on Monday, June 26, 2023.

-1-

1.

Date and Time

Tuesday, June 27, 2023 at 10:00 a.m.

2.

Place

Meeting Room Nos. 5 and 6, Tekko Hall,
Midosuji Honmachi Urban Building 11F,
3-5-12 Kitakyuhojimachi, Chuo-ku, Osaka

3.

PurposeMatters to be reported: Notice of Convocation of the 89th Ordinary General Meeting of
Shareholders (for the Period of April 1, 2022 to March 31, 2023)
Matters to be resolved:
Proposal No. 1
Appropriation of Surplus
Proposal No. 2
Election of Five (5) Directors (Excluding Directors Who Are Audit &Supervisory Committee Members)
Proposal No. 3
Election of Three (3) Directors Who Are Audit & Supervisory Committee
Members
Proposal No. 4
Election of One (1) Substitute Director Who Is an Audit & Supervisory
Committee Member
Proposal No. 5
Introduction of a Performance-Linked, Share-Based Remuneration
System for Directors (Excluding Directors and Outside Directors Who
Are Audit & Supervisory Committee Members)

4.

Matters Decided upon Convocation(1) If you exercise your voting right via both the Internet and by the voting form, the vote exercised
via the Internet will be counted as valid. If you exercise your voting right multiple times via theInternet, the last vote you enter will be counted as valid.
(2) If there is no indication of either approval or disapproval of the respective proposals on thevoting form, it will be deemed a vote of approval.

 When attending the Meeting in person, please submit the voting form that has been sent to you together
with this Notice of Convocation to the reception desk at the venue.
 Any amendments to the Matters Subject to Electronic Provision Measures will be posted on the Company’s
website, the TSE’s website, and the website for general meeting of shareholders materials.
 Shareholders considering attending the Meeting in person are kindly requested to take care of their healthand take all precautions before the date of the Meeting. In addition, please be advised that the Company’s
executives and staff may wear masks.

-2-

Reference Documents for the General Meeting of Shareholders
Proposals and Matters for Reference
Proposal No. 1 Appropriation of Surplus
Based on a basic principle of continuous dividend payments to shareholders, the Company proposesa year-end dividend of ¥55 per share, which consists of an ordinary dividend of ¥20 per share and a
special dividend of ¥35 per share, in consideration of the Company’s business results for the fiscal year
under review, future management environment, and internal reserves for business development.

Year-End Dividends❶ Dividends to be paid

Cash

❷ Allotment of dividend assets forshareholders and total amount¥55 per common share of the Company(¥20 ordinary dividend, ¥35 special dividend)
Total amount: ¥676,219,060
This results in an annual dividend, including interim
dividends, of ¥74 per share for the fiscal year underreview.

❸ Effective date of payment of
surplus available for dividends

June 28, 2023

-3-

Proposal No. 2 Election of Five (5) Directors (Excluding Directors Who Are Audit & Supervisory Committee
Members)
The term of office of all five (5) directors (excluding directors who are Audit & Supervisory Committee
members) will expire at the closing of the Meeting. Accordingly, the Company proposes the election offive (5) directors (excluding directors who are Audit & Supervisory Committee members).
For reference, this proposal has been reviewed by the Audit & Supervisory Committee, which has
expressed its opinion that the candidates are suitable as directors (excluding directors who are Audit &Supervisory Committee members) of the Company in light of their execution of duties, performance,experience, etc. during the fiscal year under review.
The candidates for election as directors (excluding directors who are Audit & Supervisory Committee
members) are as follows:

Candidate
No.

Name(Date of Birth)

Career Summary, Positions, Responsibilities, and Significant Concurrent Positions
April 1972
April 2004
April 2007
April 2008
April 2010
October 2013
June 2014

Masami Yanai
1(December 26, 1953)

June 2015
June 2016
June 2017
April 2019

Joined the Company
Senior Manager of the Mechanical Engineering Department,
Engineering Division
Senior Manager of the Outsourcing Management Department,
Procurement Division
Acting Division Manager of the Procurement Division
Division Manager of the Procurement Division
Senior General Manager and Division Manager of the
Procurement Division
Director and General Manager of the Administration Division,and General Manager of the Mechanical Engineering Division
Director and General Manager of the Administration
Department, and General Manager of the Engineering
Department
Managing Director in charge of the Engineering Department,
the Procurement Department, and the Information Systems
Department
Managing Director in charge of the Engineering Department,
the Procurement Department, and the Manufacturing
Department
President and Representative Director(to present)

Number of Company
Shares Owned

12,900Reasons for Nomination
Mr. Masami Yanai has been re-nominated as a director since he possesses a wealth of experience and track record in the engineering andprocurement divisions of the Company as well as managerial insight into the entire company, including the manufacturing and administration
divisions, and has exercised strong leadership in his direction and supervision over business management in general.

-4-Candidate
No.

Name
(Date of Birth)

Career Summary, Positions, Responsibilities, and Significant Concurrent Positions
April 1988
April 2010
April 2012
April 2013
April 2015
June 2015

Haruhiro Iida
2

June 2016(October 28, 1964)
April 2019
April 2021
June 2021
June 2022

3

Joined the Company
Senior Manager of the Planning & Design Department,
Engineering Division
Acting Department Manager of the Planning & Design
Department, Engineering Division
Group Manager of the Planning & Design Group,Engineering Department
Senior General Manager and Group Manager of the
Planning & Design Group and R&D Group, Engineering
Department
Director and Deputy General Manager of the Engineering
Department, and Department Manager of the Information
Systems Department
Director and General Manager of the Sales Department,
Manager of the Tokyo Branch, and Head of the Planning &Design Group, Engineering Department
Managing Director in charge of the Engineering Department,
the Manufacturing Department, and the Procurement
Department
Managing Director in charge of the Engineering,
Manufacturing, and Procurement Division, and Manager of
the Shiga Plant
Managing Director in charge of the Engineering,
Manufacturing, Procurement, and Administration Division
Managing Director and Manager of the Shiga Plant, andOverall Manager of the Procurement and Administration
Division(to present)

Number of Company
Shares Owned

7,500

Reasons for Nomination
Mr. Haruhiro Iida has been re-nominated as a director since he has been deemed to be capable of making appropriate decisions on key
managerial matters as a director of the Company due to his wealth of experience and track record in the mechanical design division of theCompany as well as managerial insight through his contribution in winning orders in the sales division.
April 1994
Joined the Company
April 2011
Senior Section Manager of the Section I, MechanicalEngineering Department
April 2013
Acting Department Manager of Engineering Department
April 2015
Department Manager of Engineering Department
October 2015
Group General Manager of the Mechanical EngineeringGroup I, Engineering Department
Toshikazu Shimomura
3,200
May 2017
Senior General Manager and Group General Manager of the(August 13, 1971)
Mechanical Engineering Group I, Engineering Department
June 2017
Director and General Manager of the Engineering
Department, and Department Manager of the Information
Systems Department
April 2021
Director and General Manager of the Engineering Division(to present)
Reasons for Nomination
Mr. Toshikazu Shimomura has been re-nominated as a director since he has been deemed to be capable of making appropriate decisions on key
managerial matters as a director of the Company due to his wealth of experience and track record in the mechanical design division of theCompany, deep knowledge in the Company’s mechanical engineering, and managerial insight.

-5-

Candidate
No.

Name
(Date of Birth)

Career Summary, Positions, Responsibilities, and Significant Concurrent Positions
April 1979
October 2001
January 2002
June 2007
April 2015
May 2017

Ichiro Enomoto(February 3, 1957)
4

June 2017
April 2018
April 2019
June 2019
April 2021

5

Notes: 1.
2.

Joined Marubeni Corporation
General Manager of the Machinery Department, Marubeni
Korea Corporation
Seconded to Marubeni Tekmatex Corporation (nowMarubeni Techno-Systems Corporation)
Director of Marubeni Tekmatex Corporation (now Marubeni
Techno-Systems Corporation)
Transferred to Marubeni Tekmatex Corporation (nowMarubeni Techno-Systems Corporation)
Resigned as Director of Marubeni Tekmatex Corporation(now Marubeni Techno-Systems Corporation)
Joined the Company and was appointed Department
Manager in charge of the Tokyo Branch, Sales Department
Senior General Manager and Group General Manager of
the Tokyo Branch, Sales Department
Senior General Manager and Department Manager of theSales Department, and Manager of the Tokyo Branch
Director and General Manager of the Sales Department,
and Manager of the Tokyo Branch
Director and General Manager of the Sales Division, andManager of the Tokyo Branch(to present)

Number of Company
Shares Owned

3,200

Reasons for Nomination
Mr. Ichiro Enomoto has been re-nominated as a director since he has been deemed to be capable of making appropriate decisions on key
managerial matters as a director of the Company due to his many years of involvement in overseas sales in the industrial machinery area, his
contribution to net sales for the fiscal year under review and overall sales activities as general manager of the Sales Division, leveraging his
wealth of knowledge and experience gained through his previous job, and his excellent management skills.
April 1988
Joined Hitachi Maxell, Ltd.
(now Maxell, Ltd.)May 2006
Chief Engineer of the Manufacturing Department, Kyoto
Plant of Hitachi Maxell, Ltd. (now Maxell, Ltd.)
November 2017 Joined the Company
Yoshiki Nishimiya
April 2018
Group General Manager of the Manufacturing Group,
1,200
Manufacturing Department(December 28, 1964)
April 2021
Senior General Manager and Deputy General Manager ofthe Manufacturing Division
June 2022
Director and General Manager of the Manufacturing Division(to present)
Reasons for Nomination
Mr. Yoshiki Nishimiya has been re-nominated as a director since he has been deemed to be capable of making appropriate decisions on key
managerial matters as a director of the Company due to his many years of experience in the launch and quality improvement of mass production
facilities for rechargeable batteries and the launch of plants abroad, his contribution to business streamlining in the manufacturing division, safety
promotion and work improvement after joining the Company, leveraging the above knowledge and experience, and his excellent management
skills.
There are no special financial interests between the candidates and the Company.
The Company has entered into a directors and officers (D&O) liability insurance policy with an insurance company as prescribed in Article 430-3, Paragraph(1) of the Companies Act. This policy is designed to indemnify the directors, who are the insureds, from damages that arise while pursuing their official
responsibilities or that result from personal lawsuits brought against them seeking compensation on the grounds of such responsibilities. However, there arecertain exclusions, such as cases where an act is carried out with the knowledge that it is in violation of the law. 90% of the insurance premium is borne by
the Company and 10% by the insured. Each candidate will be included as an insured of the insurance policy. The Company plans to renew the insurance
policy with the same terms and conditions at the next renewal.

-6-Proposal No. 3 Election of Three (3) Directors Who Are Audit & Supervisory Committee Members
The term of office of all three (3) directors who are Audit & Supervisory Committee members will expire
at the closing of the Meeting. Accordingly, the Company proposes the election of three (3) directors who
are Audit & Supervisory Committee members.
The consent of the Audit & Supervisory Committee has been obtained for this proposal.
Furthermore, each director who is an Audit & Supervisory Committee member reviewed this proposal
but expressed no opinion.
The candidates for election as directors who are Audit & Supervisory Committee members are as
follows:
Candidate
No.

Name(Date of Birth)

Career Summary, Positions, Responsibilities, and Significant Concurrent Positions
April 1984
March 1990
July 1992

1

Number of Company
Shares Owned

Joined Asahi Kasei Corporation
Joined LCA Japan
Joined Sanwa Research Institute Corp. (now Mitsubishi UFJ
Research and Consulting Co., Ltd.)
April 2002
General Manager of Management Strategy Department No. 1,
UFJ Institute, Ltd.
April 2006
General Manager of Management Strategy Department,
Mitsubishi UFJ Research and Consulting Co., Ltd.
June 2014
Corporate Officer, Deputy Head of the Osaka Unit, Consulting& International Business Division, and General Manager of
Personnel Strategy Department of Mitsubishi UFJ Research
Toru Aoki
0and Consulting Co., Ltd.
(July 11, 1961)
March 2016
Resigned from Mitsubishi UFJ Research and Consulting Co.,Ltd.
April 2016
Representative of Caliber Management AOKI and Chief
Advisor of Consulente HYAKUNEN
June 2017
Outside Director [Audit & Supervisory Committee Member] of
the Company(to present)(Significant Concurrent Positions)Representative of Caliber Management AOKI and Chief Advisor of Consulente
HYAKUNEN
Reasons for Nomination and Outline of Expected Roles
Mr. Toru Aoki has been re-nominated as an outside director who is an Audit & Supervisory Committee member since we believe he will be able
to perform his duties as an Audit & Supervisory Committee member appropriately from an objective standpoint independent of executive membersof management, leveraging his wealth of knowledge and insight in corporate management based on his knowledge and experience gained frommany years of involvement in management consulting. The main role expected of Mr. Aoki is to promote appropriate operation of the Company’s
audit system based on this knowledge and experience.

-7-

Candidate
No.

Name
(Date of Birth)

Career Summary, Positions, Responsibilities, and Significant Concurrent Positions
April 1983
February 1990

2

3

Number of Company
Shares Held

Joined Management System Laboratory Co., Ltd.
Registered as a tax accountant (Kinki Certified Public Tax
Accountants’ Association)
March 1990
Opened Oka Accounting Firm
June 2015
Outside Auditor of Sankyo Kasei Corporation
June 2019
Outside Director [Audit & Supervisory Committee Member] ofSankyo Kasei Corporation
June 2021
Outside Director [Audit & Supervisory Committee Member] of
Kenji Oka
0
the Company(February 27, 1961)(to present)
June 2023
To retire as Outside Director [Audit & Supervisory Committee
Member] of Sankyo Kasei Corporation(Significant Concurrent Positions)Tax accountant (head of Oka Tax Firm), Outside Director [Audit & Supervisory
Committee Member] of Sankyo Kasei Corporation (scheduled to retire in June
2023)
Reasons for Nomination and Outline of Expected Roles
Mr. Kenji Oka has been re-nominated as an outside director who is an Audit & Supervisory Committee member since, although he has not been
directly involved in corporate management other than by becoming an outside executive, we believe he will be able to perform his duties as an
Audit & Supervisory Committee member appropriately from an objective standpoint independent of executive members of management,leveraging his advanced knowledge and experience in tax affairs and accounting gained from his many years of service as a tax accountant andhis knowledge and experience gained from serving as auditor and director who is an Audit & Supervisory Committee member of several
companies. The main role expected of Mr. Oka is to improve the Company’s corporate structure and audit system in terms of tax affairs andaccounting.
October 2002
Registered as an attorney (Osaka Bar Association)
Joined Kyoei Law Office
July 2014
National Tax Trial Examiner, Osaka National Tax Tribunal
July 2018
Re-registered as an attorney (Osaka Bar Association)
August 2018
Registered as a tax accountant (Kinki Certified Public Tax
Accountants’ Association)
August 2020
Partner of Kyoei Law Office
April 2020
Audit Committee Member, Ikoma CityMay 2020
Administrative Appeal Examination Board Member, Osaka City
December 2020 Fixed Asset Evaluation Review Committee Member, Toyonaka
City
Ayako Hiramatsu
0June 2021
Outside Director [Audit & Supervisory Committee Member] of(October 23, 1974)
the Company
December 2022 Fixed Asset Evaluation Review Committee Member, MoriguchiCity(to present)
June 2023
To be appointed Outside Director [Audit & Supervisory
Committee Member] of ODK Solutions Co., Ltd.
(Significant Concurrent Positions)
Attorney (Partner of Kyoei Law Office), tax accountant,
Outside Director [Audit & Supervisory Committee Member] of ODK Solutions
Co., Ltd. (scheduled to be appointed in June 2023)
Reasons for Nomination and Outline of Expected Roles
Ms. Ayako Hiramatsu has been re-nominated as an outside director who is an Audit & Supervisory Committee member since, although she has
not been directly involved in corporate management, we believe she will be able to reflect her advanced expertise and experience gained fromher many years of service as an attorney and tax accountant and in other roles in local government, such as Audit Committee member, to theCompany’s audit system. The main role expected of Ms. Hiramatsu is to enhance the Company’s audit system appropriately, leveraging thisexpertise and experience.

-8-

Notes: 1.
2.
3.
4.
5.

6.

There are no special financial interests between the candidates and the Company.
Messrs. Toru Aoki, Kenji Oka, and Ayako Hiramatsu are candidates for election as outside directors who are Audit & Supervisory Committee members.
The years served as the Company’s outside director who is an Audit & Supervisory Committee members will be six years for Mr. Toru Aoki and two years
for Messrs. Kenji Oka and Ayako Hiramatsu at the closing of the Meeting.
In accordance with Article 427, Paragraph (1) of the Companies Act, the Company has entered into agreements with Messrs. Toru Aoki, Kenji Oka, andAyako Hiramatsu that limit their liability to the minimum amount stipulated in Article 425, Paragraph (1) of said Act. The agreements will be continued if thecandidates are re-elected.
The Company has entered into a directors and officers (D&O) liability insurance policy with an insurance company as prescribed in Article 430-3, Paragraph(1) of the Companies Act. This policy is designed to indemnify the directors, who are the insureds, from damages that arise while pursuing their official
responsibilities or that result from personal lawsuits brought against them seeking compensation on the grounds of such responsibilities. However, there arecertain exclusions, such as cases where an act is carried out with the knowledge that it is in violation of the law. 90% of the insurance premium is borne by
the Company and 10% by the insured. Each candidate will be included as an insured of the insurance policy. The Company plans to renew the insurance
policy with the same terms and conditions at the next renewal.
The Company has registered Messrs. Toru Aoki, Kenji Oka, and Ayako Hiramatsu as independent officers with the Tokyo Stock Exchange. The Company
requests Kyoei Law Office, of which Ms. Ayako Hiramatsu has been a partner since August 2020, to prepare contracts and provide legal advice as needed.
However, there have been no requests since October 2017, and the number of requests and total fees paid in the six years prior to that were six and ¥3.75
million, respectively. The Company has requested Ms. Hiramatsu to provide harassment prevention training to all employees of the Company and has paid
approximately ¥600,000 in total between March and June 2022 as compensation. However, these payments have no significance that would affect her
independence.

-9-

(Reference) Skill Matrix of Directors after the Closing of the Meeting
The skill matrix of directors if Proposal Nos. 2 and 3 of the Meeting are approved as proposed will be as
follows:
Skill Matrix of Directors
Name

Attribute

Masami Yanai
President andRepresentative Director

Haruhiro Iida

Corporate
Finance &Risk
Personnel &Legal affairs
management accounting
management labor affairs











Manufacturing,
technology,
R&D









Sales

GlobalexperienceManaging Director

Toshikazu
Shimomura

Director

Ichiro Enomoto







Director

YoshikiNishimiyaDirector

Toru Aoki
Director(Audit & Supervisory
Committee Member)

Kenji Oka
Director(Audit & Supervisory
Committee Member)

Ayako Hiramatsu
Director(Audit & Supervisory
Committee Member)

OutsideIndependentOutsideIndependentOutsideIndependent









- 10 -

Proposal No. 4 Election of One (1) Substitute Director Who Is an Audit & Supervisory Committee Member
To prepare for a shortage in the statutory number of directors who are Audit & Supervisory Committee
members, the Company proposes the election of one (1) substitute director who is an Audit & Supervisory
Committee member.
The consent of the Audit & Supervisory Committee has been obtained for this proposal.
Furthermore, each director who is an Audit & Supervisory Committee member reviewed this proposal
but expressed no opinion.
The candidate for election as a substitute director who is an Audit & Supervisory Committee member is
as follows:
Name(Date of Birth)

Career Summary and Significant Concurrent Positions

NumberofCompany
Shares
Owned

Shoichi Nakashita

April 1991
Joined The Sanwa Bank, Ltd. (now MUFG Bank, Ltd.)
September 2005 Resigned from the bank (now MUFG Bank, Ltd.)
October 2005
Joined AIG Edison Life Insurance Company (now The
Gibraltar Life Insurance Co., Ltd.)
June 2007
Founder and Representative Director of One To One SynergyCo., Ltd.
June 2009
Director of Kamitsu Seisakusho Ltd. (now TMT Kamitsu, Inc.)
April 2015
Representative Director of Kamitsu Seisakusho Ltd. (now TMT
Kamitsu, Inc.)
May 2015
Representative Director of Sun Business Support Co., Ltd.
April 2020
Joined Fujii Electric Works Co., Ltd.
August 2020
Representative Director of Fujii Electric Works Co., Ltd.
(to present)(Significant Concurrent Positions)Representative Director of One To One Synergy Co., Ltd.
Representative Director of Sun Business Support Co., Ltd.
Representative Director of Fujii Electric Works Co., Ltd.

0(May 9, 1968)

Reasons for Nomination and Outline of Expected Roles
Mr. Shoichi Nakashita has been nominated as a substitute outside director who is an Audit & Supervisory Committee member since we believe he will beable to appropriately reflect his knowledge and experience in corporate management gained from his management consulting operations and his direct
involvement in management as representative directors of business enterprises to the Company’s audit system if he is appointed director who is an Audit& Supervisory Committee member. The main role expected of Mr. Nakashita is to offer advice on the increase of corporate value and reinforcement of theaudit system from a wide range of viewpoints.
Notes: 1.
2.
3.
4.

There are no special financial interests between the candidate and the Company.
Mr. Shoichi Nakashita is a candidate for election as a substitute outside director. If he is appointed outside director who is an Audit & Supervisory Committee
member, the Company plans to register him as an independent officer with the Tokyo Stock Exchange.
If Mr. Shoichi Nakashita is appointed outside director who is an Audit & Supervisory Committee member, the Company plans to enter into an agreement with
him that limits his liability to the minimum amount stipulated in Article 425, Paragraph (1) of the Companies Act in accordance with Article 427, Paragraph(1) of said Act.
The Company has entered into a directors and officers (D&O) liability insurance policy with an insurance company as prescribed in Article 430-3, Paragraph(1) of the Companies Act. This policy is designed to indemnify the directors, who are the insureds, from damages that arise while pursuing their official
responsibilities or that result from personal lawsuits brought against them seeking compensation on the grounds of such responsibilities. However, there arecertain exclusions, such as cases where an act is carried out with the knowledge that it is in violation of the law. 90% of the insurance premium is borne by
the Company and 10% by the insured. If Mr. Shoichi Nakashita is appointed outside director who is an Audit & Supervisory Committee member, he will be
included as an insured of the insurance policy. The Company plans to renew the insurance policy with the same terms and conditions at the next renewal.

- 11 -

Proposal No. 5 Introduction of a Performance-Linked, Share-Based Remuneration System for Directors(Excluding Directors and Outside Directors Who Are Audit & Supervisory Committee
Members)
The remuneration system for the Company’s directors (excluding directors who are Audit & Supervisory
Committee members) consists of base remuneration and profit-linked remuneration linked to theperformance of a single fiscal year. The amounts of base remuneration and profit-linked remuneration wereapproved at the 85th Ordinary General Meeting of Shareholders held on June 25, 2019 as an annual amountnot exceeding ¥280,000 thousand. (However, this does not include employee salaries and bonuses for
directors who concurrently serve as employees.)
The Company has decided to review the officers’ remuneration system and seeks approval for introducing
a new, performance-linked, share-based remuneration system (the “System”), which is remuneration basedon the percentage of achievement of certain performance targets during the evaluation period, for theCompany’s directors (excluding directors who are Audit & Supervisory Committee members and outside
directors; hereinafter, the “Eligible Directors”) with the aim of providing them with incentives to continuously
increase corporate value of the Company by further strengthening the link between the remuneration of the
Eligible Directors and the Company’s performance and stock value and to further promote value-sharing
with shareholders. It also seeks approval for paying remuneration to the Eligible Directors under the System
as described in section I. below within the remuneration limit of the System, which shall be within the
remuneration limit mentioned above (no more than ¥280,000 thousand annually).
The number of Eligible Directors is currently five. If Proposal No. 2 is approved as proposed, the number
of Eligible Directors will remain the same as the present at five.
I. Outline of the System
It is a performance-linked, share-based remuneration system that grants monetary compensation claims
to provide the Eligible Directors with the number of Company shares in accordance with the percentage ofachievement of numerical targets as remuneration for the performance evaluation period. The numericaltargets are targets for the Company’s performance during the performance evaluation period that consistsof the fiscal years corresponding to the Company’s medium-term management plan and are set in advanceby the Company’s Board of Directors. Therefore, the payment of the monetary compensation claims to the
Eligible Directors will be made after the end of the performance evaluation period, in principle.
The Eligible Directors shall pay the monetary compensation claims calculated in 2. and 3. below as
investment-in-kind assets to receive issuance or disposal of Company shares. The payment of monetarycompensation claims and the delivery of the Company’s common shares to the Eligible Directors will bemade after the end of the period subject to evaluation, which is stipulated in 1. below. Therefore, whether or
not this issuance or payments will be made to the Eligible Directors and the number of common shares of
the Company to be delivered or paid to them were not determined at the time of introduction of the System.
1. Target period
The period for evaluating the degree of achievement of performance targets shall be the three fiscal
years that correspond to the Company’s third Medium-Term Management Plan announced on March 24,
2023, which is from the fiscal year ending March 2024 to the fiscal year ending March 2026 (the “Period
Subject to Evaluation”). In principle, the System will continue to be implemented after the end of the initial
Period Subject to Evaluation, with the following three fiscal years as the Period Subject to Evaluation.
- 12 -

2. Upper limits to the number of shares and amount of monetary compensation claims provided to Eligible
Directors
Under the System, the total number of the Company’s common shares to be delivered to the Eligible
Directors shall be no more than 40,000 shares (the “Maximum Number of Shares to be Delivered”), andthe total amount of monetary compensation claims to be paid to the Eligible Directors shall be no morethan ¥70,000 thousand. These upper limits are based on the assumption that the amounts equivalent tothe compensation for the execution of duties over multiple fiscal years corresponding to the Period Subject
to Evaluation will be provided after the end of the Period Subject to Evaluation in a lump sum. Since the
Period Subject to Evaluation is assumed to be three fiscal years, the upper limit per fiscal year will be thenumber of shares and amount that correspond to a third of each of the overall upper limits. If a stock split(including an allotment of Company shares without contribution) or a reverse stock split of the Company’scommon shares is conducted on or after the day of the resolution of this Proposal, the maximum numberof shares to be delivered may be adjusted within a reasonable limit as needed according to the ratio of
the split or reverse split on or after the effective day of the split or reverse split.
3. Calculation method of the final number of shares to be delivered and the final amount to be paid under
the System
The number of the Company’s common shares to be delivered to each Eligible Director (the “Final
Number of Shares to be Delivered”) will be determined by the Company’s Board of Directors. It shall becalculated by dividing the total amount of remuneration for each fiscal year, which is derived by multiplying
the remuneration base amount determined in light of the rank of each Eligible Director by the payment
rate for each fiscal year calculated from the degree of achieving the performance targets for the Period
Subject to Evaluation, by the share price at the time of delivery.
4. Procedures for delivery of shares, etc.
The delivery of the Company’s common shares pertaining to the Final Number of Shares to be Delivered
as determined in 3. above will be made as follows:(i) The Company will pay each Eligible Director monetary compensation claims in the amount calculated
by multiplying the Final Number of Shares to be Delivered to the Eligible Directors by the amount tobe paid for the issuance or disposal of the Company’s common shares and deliver the subject
common shares of the Company in exchange for the contribution in kind of said monetarycompensation claims by the Eligible Directors.
(ii) The amount to be paid for the issuance or disposal of the Company’s common shares stipulated in(i) above will be determined by the Company’s Board of Directors on the basis of the share price atthe time of delivery, to the extent that the amount is not particularly favorable to the Eligible Director
who subscribes to the Company’s common shares.

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5. Requirements for the delivery of shares to Eligible Directors
Under the System, the Company’s common shares will be delivered to the Eligible Directors when the
Period Subject to Evaluation has ended and the following requirements have been satisfied:
1) The Eligible Director continuously held the position of director of the Company or any other position
determined by the Company’s Board of Directors during the Period Subject to Evaluation;2) There was no certain act of misconduct as determined by the Company’s Board of Directors; and
3) Any other requirements stipulated by the Company’s Board of Directors as necessary to achieve
the purpose of the System have been met.
For reference, shares in the number and amount reasonably adjusted may be delivered, or, instead ofsuch delivery, cash in the amount reasonably calculated by the Company’s Board of Directors as an
amount equivalent to said shares may be paid at a time reasonably determined by the Company’s Boardof Directors as needed in the following cases: (a) if an Eligible Director loses his/her position as a directorof the Company or any other position determined by the Company’s Board of Directors due to death orother reasons deemed justifiable by the Company’s Board of Directors; (b) if an individual who was not
an Eligible Director at the start of the Period Subject to Evaluation was newly appointed an Eligible
Director; (c) if a merger agreement in which the Company becomes the merged company, a shareexchange agreement, a share transfer plan, or any other matter concerning a reorganization in which theCompany becomes a wholly owned subsidiary is approved by the Company’s general meeting ofshareholders (or the Company’s Board of Directors if the approval of Company’s general meeting ofshareholders is not required for said reorganization); or (d) if there is any other reason deemed justifiableby the Company’s Board of Directors.
6. Acquisition without consideration after payment of remuneration
If an Eligible Director engages in misconduct, etc. as stipulated by the Company’s Board of Directors,
the Company may request a refund of all remuneration paid to said Eligible Director in accordance with
the System.
II. Reasons for deeming the content of this proposal as appropriate
The System is aimed at providing the Eligible Directors with incentives to continuously increase theCompany’s corporate value by further strengthening the link between the remuneration of the Eligible
Directors and the Company’s performance and stock value and to further promote value-sharing withshareholders.
The Company has set forth a policy for determining the details of the individual remuneration of directors,
the outline of which is described on page 24 of the Business Report. If this proposal is approved, theCompany plans to revise the content of the policy to include the System. The Company deems the contentsof this proposal to be appropriate since the total number of the Company’s common shares that theCompany will issue or dispose of to Eligible Directors is limited to 40,000 shares, the dilution rate of whichis minor at approximately 0.32% of the total number of shares outstanding.

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