The transactions pursuant to the joint share transfer described in this document involve securities of a Japanesecompany. The joint share transfer is subject to disclosure requirements of Japan that are different from those of
the United States. Financial information included in this document, if any, was excerpted from financial
statements prepared in accordance with foreign accounting standards that may not be comparable to the financial
statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal
securities laws, since the issuer is located in Japan and some or all of its officers and directors reside outside of
the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court
for violations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates tosubject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the joint share transfer, such as in the open market or through privately negotiatedpurchases.
This document has been translated from 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. Riken and
NPR assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(Securities identification code: 6462)
June 7, 2023
To our shareholders:
Yasunori Maekawa
President (CEO & COO)
Riken Corporation
8-1, Sanbancho, Chiyoda-ku, Tokyo

Notice of the 99th Ordinary General Meeting of Shareholders
We are pleased to announce the 99th Ordinary General Meeting of Shareholders of Riken Corporation (the“Company”), which will be held as described below.
When convening this general meeting of shareholders, the Company takes measures for providing informationthat constitutes the content of reference documents for the general meeting of shareholders, etc. (items for whichmeasures for providing information in electronic format are to be taken) in electronic format, and posts thisinformation as “Notice of the 99th Ordinary General Meeting of Shareholders” on each of the websites shown
below. Please access one of those websites to review the information.
· The Company’s website:
https://www.riken.co.jp/ir/stock/shareholders (in Japanese)· TSE website (Listed Company Search):https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show (in Japanese)(Access the TSE website by using the Internet address shown above, enter “Riken” in “Issue name (company
name)” or the Company’s securities code “6462” in “Code,” and click “Search.” Then, click “Basic information”
and select “Documents for public inspection/PR information.” Under “Filed information available for public
inspection,” click “Click here for access” under “[Notice of General Shareholders Meeting /Informational
Materials for a General Shareholders Meeting].”)If you are not attending the meeting in person, you may exercise your voting rights in writing (via postal
mail) or via the Internet, etc.

-1-Please review the Reference Documents for the General Meeting of Shareholders, and exercise your voting
rights in writing (via postal mail) or by the method of exercising voting rights on page 5 and 6 no later
than 5:30 p.m., Thursday, June 21, 2023 (Japan Standard Time).

-2-

Meeting Details
1.
2.

Date and time:
Venue:

3.

Purposes of the Meeting:Items to be reported:

Friday, June 23, 2023 at 10:00 a.m. (Japan Standard Time)
Lecture Hall, 2F annex
The International House of Japan
5-11-16, Roppongi, Minato-ku, Tokyo

1. Business Report and Consolidated Financial Statements for the 99th
Term (from April 1, 2022 to March 31, 2023), as well as the results of
the audit of the Consolidated Financial Statements by the Accounting
Auditor and the Audit and Supervisory Committee
2. Non-Consolidated Financial Statements for the 99th Term (from April
1, 2022 to March 31, 2023)

Items to be resolved:
Proposal 1:
Proposal 2:
Proposal 3:
Proposal 4:
Proposal 5:

4.

Approval of the share transfer plan with Nippon Piston Ring Co., Ltd.
Appropriation of surplus
Election of four (4) Directors (excluding Directors who are Audit andSupervisory Committee Members)
Election of three (3) Directors who are Audit and Supervisory Committee
Members
Election of one (1) substitute Director who is an Audit and Supervisory
Committee Member

Exercising Voting Rights
If there is no indication of approval or disapproval of a proposal on the voting form, it will be treated asintention of approval.
If you exercise your voting rights multiple times via the Internet, etc., your last vote shall be deemed
effective.
If you exercise your voting rights through multiple methods such as in writing (by postal mail) and via
the Internet, etc., the vote via the Internet, etc. shall be deemed effective.

-3-

5.

Other information regarding this notice
In accordance with the provisions of laws and regulations and Article 15 of the Company’s Articles ofIncorporation, the following items are excluded from paper-based documents delivered to shareholders
who have made a request for delivery of such documents. Such excluded items are posted on the
Company’s website and the TSE website as “Items Subject to Measures for Electronic Provision When
Convening the 99th Ordinary General Meeting of Shareholders.”(1) Matters Related to Company Stock Acquisition Rights, etc. from Business Report(2) System to Ensure the Appropriateness of Operations from Business Report(3) Consolidated Statement of Changes in Equity from Consolidated Financial Statements(4) Notes to the Consolidated Financial Statements(5) Statement of Changes in Equity from Non-Consolidated Financial Statements(6) Notes to Non-Consolidated Financial Statements(7) Financial statements of the final fiscal year of the other wholly-owned subsidiary in share transfer(Nippon Piston Ring Co., Ltd.) in the Proposal 1 “Approval of the share transfer plan with Nippon
Piston Ring Co., Ltd.” of the Reference Documents for the General Meeting of Shareholders
Accordingly, Business Report, Consolidated Financial Statements and Non-Consolidated Financial
Statements included in the paper-based documents are part of the documents audited by the financial
auditor in preparation of the financial audit report and by Audit and Supervisory Committee Member in
preparation of the audit report.
If revisions to the items subject to measures for electronic provision arise, the Company will notify therevisions and the details of the items before and after the revisions on the Company’s website and theTSE website.

1.

When attending the meeting, please submit the voting form enclosed with this notice at the reception
desk.

2.

We request your understanding about the fact that we will refrain from giving out souvenirs on thisoccasion in light of fairness, etc., between shareholders who visit the venue and those who havedifficulty visiting the venue.

3.

Starting from the next general meeting of shareholders, as a general rule, the Company may only
provide information necessary for accessing the websites. (Excluding shareholders who request
paper-based documents to be delivered.) Thank you for your understanding.

4.

If there are any major changes in the operation of the general meeting of shareholders due to future
situations, the Company will notify such changes on the Company’s website(https://www.riken.co.jp/news/).

-4-

Guide to Exercising Voting Rights
You may exercise your voting rights by using one of the three methods shown below.
If you are attending the meeting in person
Please submit the voting form at the reception desk.
Date and time:
Friday, June 23, 2023 at 10:00 a.m. (Japan Standard Time)
Venue:
5-11-16, Roppongi, Minato-ku, Tokyo
The International House of Japan, Lecture Hall, 2F annex(Please refer to the “Venue of the General Meeting of Shareholders” at the end of document.)
If you are exercising your voting rights in writing (via postal mail)Please indicate your approval or disapproval of the proposals on the voting form enclosed with this notice,and send it via postal mail without postage stamp.
If there is no indication of approval or disapproval of a proposal on the voting form, it will be treated asintention of approval.
Exercise Due Date:
To be received no later than 5:30 p.m. on Thursday, June 22, 2023 (Japan Standard Time)If you are exercising your voting rights via the Internet
Please access the voting website (https://www.web54.net) from a computer or smartphone, enter the “votingcode” and “password” provided on the enclosed voting form, and follow the instructions on the screen to
indicate your approval or disapproval of the proposals.
Exercise Due Date:
No later than 5:30 p.m. on Thursday, June 22, 2023 (Japan Standard Time)(a) Please note that shareholders using the voting website will be required to change your password on the said
website to prevent unauthorized access by someone other than the shareholder (“impersonation”) andmanipulation of voting details.
(b) The Company will notify shareholders a new “voting code” and “password” each time a general meeting ofshareholder is convened.
(c) Costs incurred in accessing the voting website (Internet connection fees, telephone fees, etc.) will be theresponsibility of the shareholder. Similarly, fees required for the usage of mobile phones such as packet
communication fees or other fees related to the usage of mobile phones will also be the responsibility of theshareholder.

-5-

Guide to Exercising Voting Rights via the Internet
Scanning a QR code for “Smart Voting”
You can log into the voting website without entering your “voting code” and “password.”
1. Please scan the QR code printed on the lower right corner of the voting form.
※ “QR Code” is a registered trademark of DENSO WAVE INCORPORATED.
2. Once logged in, please follow the instructions on the screen to indicate your approval or disapproval of the
proposals.
You can exercise your voting rights only once by “Smart Voting.”
If you wish to change your vote after exercising your voting rights, please access the website for personal computer,log in by entering your “voting code” and “password” printed on the voting form, and exercise your voting rights
again.
※ Please scan the QR code again to be redirected to the website for personal computer.
Entering your voting code and password
Voting website: https://www.web54.net
1. Please access the voting website.
Click “Proceed to the next step”
2. Enter your “voting code” printed on the voting form.
Enter your “Voting Code”
Click “Log In”
3. Please enter your “password” printed on the voting form.
Enter your “Password”
Please set up a new password which you will use.
Click “Register”
4. Once logged in, please follow the instructions on the screen to indicate your approval or disapproval of the
proposals.
※ The operation screens displayed are for illustration purposes.
If you have any questions about how to navigate your personal computer or smartphone
to exercise your voting rights via the Internet, please contact the number listed on theright.
Sumitomo Mitsui Trust Bank, Limited. Stock Transfer Agency Web Support Hotline
Phone: 0120-652-031 (Toll Free)(Hours: 9:00 a.m. to 9:00 p.m.)
Institutional investors may use the electronic voting platform for institutional investors
operated by ICJ, Inc.

-6-

Reference Documents for the General Meeting of Shareholders
Proposals and Notes
Proposal 1:
Approval of a share transfer plan with Nippon Piston Ring Co., Ltd.
The Company and Nippon Piston Ring Co., Ltd. (hereinafter referred to as “NPR”; the Company
and NPR referred to collectively as “both companies”), based on a Memorandum of Understanding
concerning a business merger signed by both companies on July 27, 2022 (hereinafter the“Memorandum of Understanding”), and subject to approval at shareholders’ meetings of bothcompanies and the approval of relevant authorities, etc., resolved in meetings of their respective Boardof Directors held on May 23, 2023 to enact a joint share transfer (hereinafter the “Share Transfer”) to
establish (hereinafter the “Consolidation”) NPR-RIKEN CORPORATION (hereinafter the “Joint
Holding Company”), which will become a wholly owning parent company of both companies effective
October 2, 2023 (hereinafter the “Effective Date”). Moreover, on May 23, 2023, both companies
signed a consolidation agreement (hereinafter the “Consolidation Agreement”) grounded in a spirit ofequality and jointly prepared a share transfer plan (hereinafter the “Share Transfer Plan”) to effect theshare transfer.
Therefore, we request your approval of the Share Transfer Plan.
The reason for carrying out the share transfer, an overview of the contents of the Share Transfer
Plan, and other matters related to this proposal are shown below.
1. Reason for the share transfer(1) Background of the share transfer
The Company was founded in 1927 with the aim of bringing research results from the Instituteof Physical and Chemical Research to the market, and since then, we have continued refining oursurface treatment technologies, processing technologies, and material technologies for our main
products including piston rings. In this way, we have contributed to the development of the global
automobile industry for over 90 years.
NPR was established in 1934, and has been supplying high-performance, high-quality internal
combustion engine parts including piston rings, valve seats, and camshafts based on their own
technology, and in this way, have contributed to the progress of motorization globally.
The automobile industry is undergoing a once-in-a-century transformation, and market
awareness of engine parts has become more severe. At the same time, while people are focusing
more on environmental issues, internal combustion engines will continue to be the main
powertrains for the foreseeable future, so it is the mission of both companies to develop engine
parts that are environmentally friendly. We believe that it is necessary to increase investment in
new business areas in addition to internal combustion engine peripheral parts based on global
trends such as SDGs, ESG, and decarbonization.
As a first step toward future development, both companies will utilize their brands that havebeen established over many decades through management integration. We recognize that byproperly allocating management resources and developing new core business under integrated
governance, it will be possible to accelerate efforts to achieve decarbonization as we generate
powerful synergies, and evolve into a completely new business entity, which will result insustainable growth and improve the corporate value for both companies.
Both companies have already discussed and examined the establishment of a Joint Holding
Company by means of a joint share transfer based on the Memorandum of Understanding and theexecution of a Consolidation. On 23rd of May, adhering to that spirit of equality, the twocompanies have reached a final agreement and concluded a Consolidation Agreement under theconviction that the Consolidation is the optimal choice for the shareholders, employees, and all
stakeholders of both companies.
(2) Purpose of the share transfer and expected synergistic effect
Under this share transfer, both companies will endeavor to integrate and utilize the management
resources of both companies by creating synergies in order to strengthen the profitability ofexisting businesses, especially automobile engine parts, and will work with a sense of urgency on
new core businesses and creation of new products for non-automotive engine parts related toships, hydrogen, new energy, thermal engineering, EMC (Electromagnetic Compatibility),
METAMOLDS (metal powder injection molding), medical equipment, and axial gap type motors-7-

(thin, disk-shape high-torque motors). Our aim is to achieve global development of uniquefunctional parts and key components that can be applied to the proprietary technologies of bothcompanies with the goal of further improving corporate value by evolving into a completely new
type of leading company.
(i) Strengthening existing businesses by shifting management resources and quickly developing newcore productsCompanies in the automobile industry have been forced to improve their technical capabilities
and reform their organizations in recent years in response to newly developed fields such as
CASE and MaaS Both companies must collaborate with external institutions and researchfacilities to develop technological capabilities that will result in differentiation, and ensure
resources for creating innovation. The purpose of this share transfer is to achieve the following:[Strengthen ability to generate cash flow in existing businesses]
Both companies will work to improve business efficiency and strengthen development
capabilities by adjusting the capital investment level, optimizing production over a wide area,and by centralizing and effectively utilizing development themes. Based on such efforts,
earning power will be improved and our ability to generate cash flow will strengthen while also
meeting the expectations of customers for high-quality, low-cost products.
[New core businesses and creation of new products]
Improving the efficiency of existing businesses will make it possible to integrate resourcesthat had been allocated to the development of internal combustion engines for making a bold
shift to new core businesses and new product fields. We will accelerate investment in effective
new product development, promote sharing between technologies and bases, and quickly
develop new products that have high added value and cost competitiveness.
(ii) Strengthening ability to respond in an increasingly decarbonized society
The world is moving toward a decarbonized society. Therefore, both companies must respondto global environmental issues. By combining and developing the technologies and resources
related to products and production cultivated by both companies, it will be possible to develop
technologies in the environmental field and accelerate product decarbonization. We will actively
work to reduce carbon dioxide emissions throughout the supply chain and actively contributetoward realizing a sustainable society.
(iii) Reducing cost through shared resource usage including infrastructure
By improving productivity throughout the supply chain, from purchasing and production tosales, and by standardizing the in-house production processes of both companies, we will reduce
outflow costs, reduce procurement costs through joint purchasing, and improve efficiency byeliminating duplicate systems and indirect operations, resulting in better operational efficiency
and cost reduction while ensuing competitive advantage.
(iv) Reducing manufacturing costs through better production efficiency based on complementary
products, and timely and appropriate responses to supply responsibilities
By taking advantage of the technologies and infrastructure owned by both companies, it will bepossible to promote shared use of factories and optimize production bases beyond theconventional framework with the goal of realizing significant productivity improvements,
expanding the system for supplying high-quality products, and reducing fixed costs. We also
intend to fulfill supply responsibilities to customers in a timely and appropriate manner by
establishing a sustainable production system.
(v) Enhancing human skills by exchanging people and technologies
Actively exchanging the knowledge and technologies possessed by executives and employees
in both companies will produce opportunities in various areas and positions for creating new ideasthat leverage the strengths of both companies. We will therefore endeavor to establish anenvironment in each workplace that allows for greater employee engagement.
2. Overview of the Share Transfer Plan details-8-The following “Share Transfer Plan (Copy)” provides details on the Share Transfer Plan.
Share Transfer Plan (Copy)
Riken Corporation (hereinafter referred to as the “First Party”) and Nippon Piston Ring Co., Ltd.
(hereinafter referred to as the “Second Party”) have agreed to carry out a share transfer through a joint
share transfer, and have jointly prepare this Share Transfer Plan (hereinafter referred to as the “Plan”)
according to the following.
Article 1 (Share transfer)According to the provisions of this Plan, the First and Second Parties shall establish a wholly owningparent company (hereinafter referred to as the “New Company”) via by means of a joint share transfer
that causes the New Company to acquire all of the issued shares of the First Party and Second Party on
the date of establishment (as defined in Article 7; the same shall apply hereinafter) by means of a sharetransfer (hereinafter referred to as the “share transfer”), and the First and Second Parties shall become
wholly owned subsidiaries of the New Company.
Article 2 (Purpose of the New Company, trade name, location of head office, total number ofauthorized shares, and other matters stipulated in the Articles of Incorporation)
1. The purpose, trade name, location of the head office and total number of authorized shares of the
New Company shall be according to the following items.
(1) Purpose
The purpose of the New Company shall be as described in Article 2 of the Articles ofIncorporation in Attachment 1.
(2) Trade name
The trade name of the New Company shall be リケン NPR 株式会社, and the name in English
shall be NPR-RIKEN CORPORATION.
(3) Location of head office
The head office of the New Company shall be located in Chiyoda-ku, Tokyo, and the address ofthe head office shall be 8-1, Sanbancho, Chiyoda-ku, Tokyo.
(4) Total number of authorized shares
The total number of authorized shares of the New Company shall be 59,935,000 shares.
2. In addition to the matters listed in the preceding paragraphs, matters stipulated in the Articles ofIncorporation of the New Company shall be as stated in Attachment 1 of the Articles ofIncorporation.
Article 3 (Names of Directors and names of Accounting Auditors at the time the New Company isestablished)
1. The names of the Directors at the time the New Company is established (excluding Directors at
the time of incorporation who are Audit and Supervisory Committee members at the time ofincorporation) shall be according to the following.
Director (Plan to appoint Representative Director, Chairman and CEO) Yasunori Maekawa
Director (Plan to appoint Representative Director, President and COO) Teruo Takahashi
Director
Kaoru ItohDirector
Yuji Sakamoto
Director
Hidehiro Sakaba
Director
Masaaki Fujita
Outside Director (Part-time)
Eiji Hirano
Outside Director (Part-time)
Masako Kurosawa
2. The names of the Directors at the time of establishment who serve as Audit and Supervisory
Committee members at the time the New Company is established shall be according to thefollowing.
Director (Audit and Supervisory Committee Member)
Kouei Watanabe
Director (Audit and Supervisory Committee Member)
Hiroto Koeba
Outside Director (Audit and Supervisory Committee Member) (Part-time)
Osamu
Honda
-9-

3.

Outside Director (Audit and Supervisory Committee Member) (Part-time)
Hiroki
KimuraOutside Director (Audit and Supervisory Committee Member) (Part-time)
Tatsuya
SakumaThe names of the Accounting Auditor at the time the New Company is established shall beaccording to the following.
Deloitte Touche Tohmatsu LLC

Article 4 (Matters related to the number of shares of the New Company to be issued upon the sharetransfer, and their allotment)
1. For shareholders of the First and Second Parties just prior to the time that all of the issued sharesof the First and Second Parties are acquired (hereinafter referred to as the “base time”), at the timeof the share transfer, the New Company shall issue common stock of the New Company(hereinafter referred to as “issued shares”) equal to the total number obtained by multiplying thetotal number of common shares issued by the First Party at the time of the base time by 2, and thetotal number of common shares issued by the Second Party at the time of the base time multipliedby 1.02 in place of the common shares of the First and Second Parties held respectively by them.
2. The New Company shall allocate the shares to be issued according to the provisions of thepreceding paragraph to the shareholders of the First and Second Parties at the time of the basetime according to following ratio (hereinafter referred to as the “share transfer ratio”).
(1) For shareholders of the First Party, two shares of common stock of the New Company for eachshare of common stock of the First Party held
(2) For shareholders of the Second Party, 1.02 shares of common stock of the New Company foreach share of common stock of the Second Party held
3. For the calculations in the preceding two paragraphs, fractions of less than one share shall behandled in accordance with Article 234 of the Companies Act and other related laws andregulations.
Article 5 (Matters related to the amount of capital and reserves of the New Company)
The amount of capital and reserves on the date the New Company is established shall be according to
the following.
(1) Amount of capital: 5,000,000,000 yen(2) Amount of legal capital surplus: 1,250,000,000 yen(3) Amount of legal reserved surplus: 0 yen(4) Amount of capital surplus: This shall be the amount obtained by subtracting the total amount of(1) and (2) above from the change in shareholders equity as stipulated in Article 52, paragraph 1of the Regulations on Corporate Accounting
Article 6 (Stock acquisition rights to be issued upon share transfer and their allocation)
1. Issuance of Stock Acquisition Rights(1) At the time of the share transfer, the New Company shall issue the stock acquisition rights listedin Column 2 for the New Company that are equal to the total number of the relevant stockacquisition rights as of the time of the base time to persons with stock acquisition rights foreach stock acquisition right issued by the First Party listed in ① to ④ of Column 1 in thefollowing table as of the time of the base time in place of the stock acquisition rights of the First
Party owned by each party.
Column 1
Name

Column 2
Contents

Name

Attachment 2

1st Stock Acquisition Rights of 2023

Attachment 2

1-①(Stock Compensation-type Stock

2-①

Riken Corporation
Issuance of Stock Acquisition Rights in①

June 2014(Stock Compensation-type Stock

NPR-RIKEN CORPORATION

Options)

Options)
Riken Corporation② Issuance of Stock Acquisition Rights inContents

Attachment 2

NPR-RIKEN CORPORATION

Attachment 2

1-②

2nd Stock Acquisition Rights of 2023

2-②

- 10 -

June 2015

(Stock Compensation-type Stock(Stock Compensation-type Stock

Options)

Options)
Riken Corporation
Issuance of Stock Acquisition Rights in③

June 2016(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 2

3rd Stock Acquisition Rights of 2023

Attachment 2

1-③(Stock Compensation-type Stock

2-③

Options)

Options)
Riken Corporation
Issuance of Stock Acquisition Rights in④

June 2017(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 2

4th Stock Acquisition Rights of 2023

Attachment 2

1-④(Stock Compensation-type Stock

2-④

Options)

Options)(2) At the time of the share transfer, the New Company shall issue the stock acquisition rights listedin Column 2 for the New Company that are equal to the total number of the relevant stockacquisition rights as of the time of the base time to persons with stock acquisition rights foreach stock acquisition right issued by the Second Party listed in ① to ⑧ of Column 1 in thefollowing table as of the time of the base time in place of the stock acquisition right of theSecond Party owned by each party.
Column 1
Name

Column 2
Contents

Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition Rights in①

June 2008(Stock Compensation-type Stock

Attachment 3

5th Stock Acquisition Rights of 2023

Attachment 3

1-①(Stock Compensation-type Stock

2-①

Options)

Nippon Piston Ring Co., Ltd.

②

June 2013(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 3

6th Stock Acquisition Rights of 2023

Attachment 3

1-②(Stock Compensation-type Stock

2-②

Options)

Options)
Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition Rights in③

June 2014(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 3

7th Stock Acquisition Rights of 2023

Attachment 3

1-③(Stock Compensation-type Stock

2-③

Options)

Options)
Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition Rights in④

June 2015(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 3

8th Stock Acquisition Rights of 2023

Attachment 3

1-④(Stock Compensation-type Stock

2-④

Options)

Options)
Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition Rights in⑤

June 2016(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 3

9th Stock Acquisition Rights of 2023

Attachment 3

1-⑤(Stock Compensation-type Stock

2-⑤

Options)

Options)
Nippon Piston Ring Co., Ltd.

⑥

NPR-RIKEN CORPORATION

Issuance of Stock Acquisition Rights in Attachment 3
June 2017

Contents

NPR-RIKEN CORPORATION

Options)
Issuance of Stock Acquisition Rights in

Name

1-⑥

(Stock Compensation-type Stock

10th Stock Acquisition Rights of 2023

Attachment 3(Stock Compensation-type Stock

2-⑥

Options)- 11 -

Options)
Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition Rights in⑦

June 2018(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 3

11th Stock Acquisition Rights of 2023

Attachment 3

1-⑦(Stock Compensation-type Stock

2-⑦

Options)

Options)
Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition Rights in⑧

June 2019(Stock Compensation-type Stock

NPR-RIKEN CORPORATION
Attachment 3

12th Stock Acquisition Rights of 2023

Attachment 3

1-⑧(Stock Compensation-type Stock

2-⑧

Options)

Options)2.

Allotment of Stock Acquisition Rights(1) When Stock Transfer is performed, for one stock acquisition right listed in ① to ④ ofColumn 1 of the table in (1) of the preceding paragraph owned by persons with stockacquisition rights of the First Party at the time of the base time, the New Company shall allocate
one stock acquisition right of the New Company listed in Column 2, respectively.
(2) When Stock Transfer is performed, for one stock acquisition right listed in ① to ⑧ ofColumn 1 of the table in (2) of the preceding paragraph owned by persons with stockacquisition rights of the Second Party at the time of the base time, the New Company shallallocate one stock acquisition right of the New Company listed in Column 2, respectively.

Article 7 (Date of establishment of the New Company)
The date on which the establishment of the New Company is registered (hereinafter referred to as the“establishment date”) shall be October 2, 2023. However, this may be changed upon mutual agreement
between the First and Second Parties due to necessary proceedings related to the share transfer andother reasons.
Article 8 (Shareholders meetings for approval of the share transfer Plan)
1. The First Party shall convene a general meeting of shareholders on June 23, 2023 for gaining
approval of the Plan and passing resolutions for matters necessary for the share transfer.
2. The Second Party shall convene a general meeting of shareholders on June 23, 2023 for gaining
approval of the Plan and passing resolutions for matters necessary for the share transfer.
3. If necessary for share transfer procedures or other reasons, the date of each General Meeting of
Shareholders for gaining approval of the Plan stipulated in the preceding two paragraphs and for
resolutions on the matters necessary for the share transfer may be changed based on mutual
agreement after consultation.
Article 9 (Stock listing and administrator of shareholder registry for the New Company)
1. On the establishment date, the New Company plans to list the common stock to be issued on theprime market of the Tokyo Stock Exchange, and necessary procedures for the listing shall be
performed with mutual cooperation based on consultation between the First and Second Parties.
2. The First and Second Parties shall cooperate with each other to carry out necessary procedures formaintaining the listing of common stock issued by the New Company on the Prime Market of theTokyo Stock Exchange.
3. Sumitomo Mitsui Trust Bank, Limited shall be the shareholder register administrator at the timeof the establishment of the New Company.
Article 10(Dividends of surplus)
1. Dividends of surplus up to 60 yen per share may be paid by the First Party to shareholders or
registered pledgees of shares listed or recorded in the final shareholder registry as of March 31,
2023. In addition, if the date of establishment of the New Company is on or after October 1, 2023,
the First Party may pay interim dividends up to 60 yen per share to the shareholders or registeredpledgees of shares listed or recorded in the final shareholder register as of September 30, 2023.
- 12 -

2.

3.

Dividends of surplus up to 50 yen per share may be paid by the Second Party to shareholders or
registered pledgees of shares listed or recorded in the final shareholder registry as of March 31,
2023. In addition, if the date of establishment of the New Company is on or after October 1, 2023,
the Second Party may pay interim dividends up to 35 yen per share to the shareholders or
registered pledgees of shares listed or recorded in the final shareholder register as of September
30, 2023.
Except for cases specified in the preceding two paragraphs, after the creation of this Plan, the Firstand Second Parties shall not adopt any resolution for dividends of surplus with a record date prior
to the establishment date of the New Company. However, this shall not apply in cases where anagreement has been made after consultation between the First and Second Parties.

Article 11(Cancellation of treasury stock)
Based on a resolution of their respective boards of directors held by the day before the establishment
date of the New Company, the First and Second Parties shall cancel all of the treasury stock held by
each party at the base time (including treasury stock acquired in response to a request from dissenting
shareholders for purchase of shares as specified in Article 806, paragraph 1 of the Companies Act
issued at the stock transfer).
Article 12(Management of company assets, etc.)
1. After the creation of this Plan, the First and Second Parties shall execute their business andmanage and operate their assets with the care of a good manager until the establishment date of
the New Company, and shall have their subsidiaries execute their duties and manage and operateproperty with the care of a good manager. Unless otherwise specified in this Plan, the First andSecond Parties shall consult in advance and obtain the consent of the other party before taking any
action that could have a significant impact on their property or rights and obligations, or have theother party execute it.
2. During the period from the creation of the Plan until the establishment date of the New Company,
if the First or Second Parties finds any reason or event that may have a significant negative effecton the execution of the share transfer or the rationality of the share transfer ratio, the First andSecond Parties shall promptly notify the other party to that effect in writing, and the First andSecond Parties shall discuss the matter in good faith.
Article 13(Effectiveness of this plan)This Plan shall become invalid if the First Party or Second Party is not able to obtain approval of thePlan and resolutions on matters necessary for the share transfer at the general meeting of shareholders
as stipulated in Article 8, or if permission or approval required for the implementation of the sharetransfer is not obtained from the relevant government agencies by the establishment date of the New
Company, or if the share transfer is canceled pursuant to the following article.
Article 14(Change in the share transfer terms or cancellation of the share transfer)
The First Party and Second Party may change the contents of this Plan or the terms and conditions of
the share transfer, etc. or cancel this Plan if a significant change occurs in the financial or management
status of either the First Party or Second Party during the period from the creation of this Plan until theestablishment date of the New Company, or if a serious obstacle to the implementation of the sharetransfer arises or becomes apparent, or if it becomes extremely difficult to achieve the objectives of the
Plan.
Article 15(Consultation in good faith)
Matters not stipulated in this Plan and other matters necessary for the share transfer shall be
determined based on mutual consent after consultation in good faith between the First and Second
Parties in accordance with the purpose of the Plan.

In witness whereof, the parties hereto certify that this Plan has been prepared in duplicate as describedabove with each party retaining one copy after affixing their name and seal.
- 13 -

May 23, 2023
(First Party)
8-1, Sanbancho, Chiyoda-ku, Tokyo
Riken Corporation
Representative Director and President Yasunori Maekawa(Second Party)
5-12-10, Honmachi-Higashi, Chuo-ku, Saitama City, Saitama
Nippon Piston Ring Co., Ltd.
Representative Director and President Teruo Takahashi- 14 -

Attachment 1
NPR-RIKEN CORPORATION Articles of Incorporation
Chapter 1
General Rules(Trade name)
Article 1 The name of the Company shall be リケン NPR 株式会社, and the name in English shall be
NPR-RIKEN CORPORATION.
(Purpose)
Article 2 The purpose of the Company shall be to manage the business activities of the following
companies by operating the following businesses and owning shares or equity in the companies that
operate these businesses.
(1) Development, manufacture and sale of precision machine parts(2) Development, manufacture and sale of parts for transportation, construction machinery,
agricultural machinery, ships and aircraft(3) Development, manufacture and sale of plumbing equipment(4) Development, manufacture and sale of heating wires and heating equipment(5) Development, manufacture and sale of electrical, communication and electronic equipment
and parts(6) Development, manufacture and sale of medical and disaster emergency equipment,machinery, instruments and related products such as parts and materials(7) Development and installation of industrial furnaces and incinerators(8) Development and installation of electromagnetic environment testing facilities, sale of suchtesting equipment, and measurement services(9) Development, manufacture and sale of equipment and parts for renewable energy anddecarbonization, and power generation services(10) Construction, real estate, transportation, temporary staffing, sale of goods, fuel sales,
insurance sales, operation of sports facilities, financial services, etc.
(11) Any businesses incidental or related to the preceding items(Location of head office)
Article 3 The head office of the Company shall be located in Chiyoda-ku, Tokyo.
(Institution)
Article 4 As a company with an Audit and Supervisory Committee, the Company shall have thefollowing organizations in addition to the General Meeting of Shareholders and Directors.
(1) Board of Directors(2) Audit and Supervisory Committee(3) Accounting Auditor(Publishing method)
Article 5 The Company’s method for public notice shall be electronic public notice. However, if it is
not possible to make an electronic public notice due to some accident or other unavoidable reason, it
shall be published in the Nihon Keizai Shimbun.
Chapter 2
Shares(Total number of shares that can be issued)
Article 6 The total number of authorized shares of the Company shall be 59,935,000 shares.
(Acquisition of treasury shares)
Article 7 According to the provision of Article 165, paragraph 2 of the Companies Act, the Company
may acquire its own shares through market transactions, etc. based on a resolution by the Board of
Directors.
(Share unit number)
Article 8 The share unit number of the Company shall be 100 shares.
- 15 -

(Rights regarding fractional shares)
Article 9 Company shareholders may not exercise rights other than the rights listed below regarding
shares held by the Company that constitute less than one unit (hereinafter referred to as “fractional unit
shares”).
(1) Rights listed in each item of Article 189, paragraph 2 of the Companies Act.
(2) Right to make requests under Article 166, paragraph 1 of the Companies Act.
(3) Right to receive an allotment of shares for subscription and allotment of stock acquisitionrights for subscription based on the number of shares held by shareholders(4) Right to make requests shown in the following article(Demand for sale of fractional unit shares)
Article 10
According to the provisions in the Rules for Handling Shares, Company
shareholders may request the sale of the number of shares that, together with the fractional unit shares
held by the Company, constitute the share unit number.
(Rules for Handling Shares)
Article 11
In addition to stipulations in laws and regulations or the Articles ofIncorporation, the handling of Company shares and fees shall be according to the Rules for Handling
Shares established by the Board of Directors.
(Shareholder Registry Administrator)
Article 12
The Company shall appoint a Shareholder Registry Administrator.
2 The Shareholder Registry Administrator and their place of business shall be determined by aresolution of the Board of Directors and shall be announced publicly.
3 The Shareholder Registry Administrator shall be entrusted with the preparation and maintenance of
the Company shareholder registry and stock acquisition rights registry, as well as other clerical work
related to shares and stock acquisition rights, and such shall not be handled by the Company.
Chapter 3

General Meeting of Shareholders(Convocation)
Article 13
The Company’s Ordinary General Meeting of Shareholders shall be convened inJune of each year, and extraordinary general meetings of shareholders shall be convened whenevernecessary.
(Record Date for Ordinary General Meeting of Shareholders)
Article 14
The record date for voting rights at the Company’s Ordinary General Meeting of
Shareholders shall be March 31 of each year.
(Convenor and Chairman)
Article 15
General Meetings of Shareholders shall be convened and chaired by the
Representative Director based on a resolution of the Board of Directors.
2 If there is more than one Representative Director, General Meetings of Shareholders shall be
convened and chaired according to the order predetermined by the Board of Directors.
3 If there is an accident involving the Representative Director, another Director shall convene theGeneral Meeting of Shareholders according to the order predetermined by the Board of Directors andact as the chairperson.
(Electronic provision measures, etc.)
Article 16
When the Company convenes a general meeting of shareholders, it shall takemeasures for providing information that constitutes the content of reference documents for the general
meeting of shareholders, etc. in electronic format.
2 Among items for which the measures for providing information in electronic format will be taken,
the Company may exclude all or some of those items designated by the Ministry of Justice Order fromstatements in the paper-based documents to be delivered to shareholders who requested the delivery of
paper-based documents by the record date of voting rights.
- 16 -

(Method of Resolutions)
Article 17
Unless otherwise provided for by laws and regulations or the Articles ofIncorporation, resolutions of a General Meeting of Shareholders shall be made by a majority of thevotes of the shareholders who are present at the meeting and entitled to exercise their votes at suchmeetings.
2 Resolutions of a General Meeting of Shareholders as prescribed in Article 309, paragraph 2 of theCompanies Act shall be made by at least two-thirds of the votes of the shareholders present at themeeting where the shareholders holding at least one-third of the voting rights of the shareholders
entitled to exercise their votes at such meetings are present.
(Exercise of voting rights by proxy)
Article 18
A shareholder of the Company may exercise their voting rights by authorizing one(1) other shareholder of the Company with voting rights to act as a proxy.
However, a letter of proxy must be submitted to the Company for each General Meeting of
Shareholders.
(Meeting minutes)
Article 19
A summary of the progress of the agenda of the General Meeting of Shareholders
and the results thereof, along with other matters provided for by laws and regulations shall be specified
or recorded in the meeting minutes.
Chapter 4
Directors and Board of Directors(Number of members)
Article 20
The Company shall have no more than ten Directors (excluding Directors who are
Audit and Supervisory Committee Members), and shall have no more than six Directors who are Audit
and Supervisory Committee Members.
(Method of appointment)
Article 21
Directors shall be elected at the General Meeting of Shareholders and distinguishedas Directors who are Audit and Supervisory Committee Members and other Directors.
2 Elections of Directors shall be resolved by a majority of the votes of the shareholders present at themeeting where shareholders holding at least one-third of the voting rights of the shareholders entitled
to exercise their votes at such meetings are present.
3 The election of Directors shall not be conducted by cumulative voting.
(Term of office)
Article 22
The term of office of Directors (excluding Directors who are Audit and Supervisory
Committee Members) shall be until the conclusion of the Ordinary General Meeting of Shareholders
for the last business year ending within one year after their election.
2 The term of office of Directors who are Audit and Supervisory Committee Members shall be until
the conclusion of the Ordinary General Meeting of Shareholders for the last business year ending
within two years after their election.
3 The term of office of Directors who are Audit and Supervisory Committee Members elected as a
substitute for a Director who is an Audit and Supervisory Committee Member and resigned before theexpiration of their term of office shall be until the expiration of the term of office of the retired
Director who is an Audit and Supervisory Committee Member.
4 Unless shortened by such resolution, the effective period of the resolution for the appointment of a
Substitute Audit and Supervisory Committee Member shall be until the commencement of theOrdinary General Meeting of Shareholders for the last business year ending within two years after such
resolution.
(Representative Director and Executive Director)
Article 23
The Board of Directors shall elect a Representative Director from among the
Directors (excluding Directors who are Audit and Supervisory Committee Members) by means of aresolution.
- 17 -

2 The Company may, by resolution of the Board of Directors, appoint one President, as well as one
Chairperson and a small number of Vice Presidents as needed from among the Directors (excluding
Directors who are Audit and Supervisory Committee Members).
(Convener and Chairperson of the Board of Directors, Authority of Directors)
Article 24
Board of Director Meetings shall be convened and chaired by a Director selected bya resolution of the Board of Directors, excluding particular instances stipulated in laws and regulations.
2 In cases where the Chairperson of the Board of Directors meeting stipulated in the preceding
paragraph is prevented from acting due to absence or an accident, another Director designatedaccording an order of priority determined in advance by the Board of Directors shall so act.
(Notice of Convocation of Board of Directors)
Article 25
Notices of convocation of meetings of the Board of Directors shall be issued to each
Director at least two days prior to the date of the meeting. However, this period may be shortened incases of emergency.
2 If agreed upon by all Directors, a meeting of the Board of Directors may be held without going
through the convocation procedures.
(Method of Resolutions by the Board of Directors)
Article 26
A resolution of the Board of Directors shall be adopted by a majority vote at asession with an attendance of a majority of Directors eligible for voting.
(Omission of Board Resolution)
Article 27
For passing a matter to be resolved, it shall be deemed that the resolution of theBoard of Directors has been passed for passing the matter to be resolved when all directors agree in
writing or electronically on matters to be resolved by the Board of Directors.
(Minutes of the Board of Directors)
Article 28
The minutes of Board of Directors meetings shall be prepared in writing or in anelectronic record as stipulated by laws and regulations, and the Directors present shall write and seal
their names or provide an electronic signature.
(Delegation to Directors)
Article 29
In accordance with Article 399-13, paragraph 6 of the Companies Act, theCompany may delegate all or part of a decision regarding execution of important duties that should be
resolved at a Board of Directors meeting to a Director by resolution of the Board of Directors(excluding matters set forth in items of paragraph 5 of the same Article).
(Remuneration, etc.)
Article 30
Remuneration, bonuses and other property benefits received by Directors from theCompany in exchange for the execution of duties shall be determined by a resolution of the General
Meeting of Shareholders after distinguishing according to Directors who are Audit and Supervisory
Committee Members and other Directors.
(Contract for Limitation of Liability of Directors)
Article 31
Pursuant to Article 427, paragraph 1 of the Companies Act, the Company may enter
into contracts with Directors (excluding those are Executive Directors, etc.) that will limit their
liabilities specified in Article 423, paragraph 1 of the Companies Act to the minimum liability amountas specified in applicable laws and regulations.
(Board of Directors Regulations)
Article 32
Matters concerning the Board of Directors shall be governed by laws andregulations, these Articles of Incorporation, and the Board of Directors Regulations established by the
Board of Directors.
Chapter 5

Audit and Supervisory Committee- 18 -

(Full-Time Audit and Supervisory Committee Members)
Article 33
The Audit and Supervisory Committee may, by its resolution, elect full-time Audit
and Supervisory Committee Members.
(Notice of Convocation of Audit and Supervisory Committee)
Article 34
Notices of Audit and Supervisory Committee meetings shall be issued to each Audit
and Supervisory Committee Member at least two days prior to the date set for such meeting. However,this period may be shortened in cases of emergency.
2 If agreed upon by all Audit and Supervisory Committee Members, a meeting of the Audit andSupervisory Committee may be held without going through the convocation procedures.
(Audit and Supervisory Committee Regulations)
Article 35
Matters related to the Audit and Supervisory Committee shall be governed byRegulations on the Audit and Supervisory Committee stipulated by the Audit and Supervisory
Committee, in addition to laws and regulations and these Articles of Incorporation.
Chapter 6

Accounting Auditor(Method of appointment)
Article 36
Accounting Auditors shall be appointed by means of a resolution at a General
Meeting of Shareholders.
(Term of office)
Article 37
The term of office of Accounting Auditors shall be until the conclusion of theOrdinary General Meeting of Shareholders for the last business year ending within one year after theirelection.
2 Unless otherwise resolved at the Ordinary General Meeting of Shareholders in the preceding
paragraph, the Accounting Auditor shall be deemed to have been reelected at such Ordinary General
Meeting of Shareholders.
(Remunerations, etc.)
Article 38
Remuneration, etc. for Accounting Auditors shall be determined by the
Representative Director based on the consent of the Audit and Supervisory Committee.
Chapter 7
Calculation(Business Years)
Article 39
The business year of the Company shall commence on April 1st of each year andend on March 31st of the following year.
(Record Date for Year-end Dividends of Surplus)
Article 40
The record date of the year-end dividends of the Company shall be March 31st ofeach year.
2 The record date for interim dividends of the Company shall be September 30th of each year.
3 In addition to the preceding paragraphs, the Company may set other record dates and distributedividends of surplus.
(Institution for Determining Dividends of Surplus, etc.)
Article 41
Unless otherwise provided for by laws and regulations, the Company may, byresolution of the Board of Directors, determine dividends of surplus and other matters set forth in theitems of Article 459, paragraph 1 of the Companies Act.
(Exemption period for dividends, etc.)
Article 42
In cases where the dividend property is monetary and the dividends have not been
received after the lapse of three full years from the date of commencement of payment thereof, theCompany shall be exempt from the obligation to pay such dividends. No interest shall accrue on theunpaid dividend property.
- 19 -

Supplementary Provisions(First year of business)
Article 1 Notwithstanding the provisions in Article 39, the first year of business of the Company shallbe from the Company establishment date until March 31, 2024.
(Initial remunerations for Directors, etc.)
Article 2 Notwithstanding the provisions in Article 30, within the remuneration, etc. for Directors(excluding Directors who are Audit and Supervisory Committee Members) from the Company
establishment date until the conclusion of the first Ordinary General Meeting of Shareholders, the total
amount paid in cash shall be no more than 400,000,000 yen.
2 Notwithstanding the provisions in Article 30, the total amount of remuneration, etc. for Directors
who are Audit and Supervisory Committee Members from the Company establishment date until theconclusion of the first Ordinary General Meeting of Shareholders shall be no more than 60,000,000
yen.
3 Notwithstanding the provisions of Article 30, the total amount of monetary compensation to be
paid as compensation, etc. related to restricted stock allocated as stock compensation (hereinafterreferred to as the “Restricted Stock”) as part of the remuneration, etc. for Directors (excluding
Directors who are Audit and Supervisory Committee Members and Outside Directors; hereinafterreferred to as “Eligible Directors”) from the Company establishment date until the conclusion of thefirst Ordinary General Meeting of Shareholders shall be shall be no more than 100,000,000 yen, with amaximum of 100,000 shares in allocated stock, as described below.
(1) Eligible Directors who receive an allotment of Restricted Stock may not, in relation to such
Restricted Stock, transfer, establish a pledge of rights, establish a security interest, gift while
alive, bequest or undertake any other form of disposal to a third party during the period fromthe day when the allotment was received until the day of retirement from office as both the
Director and Executive Officer of the Company and its subsidiaries (hereinafter referred to as“Restriction Period”).
(2) The Company shall naturally acquire the Restricted Stock allotted to Eligible Directors
without contribution, if Eligible Directors who received an allotment of Restricted Shares
have retired from office as both the Director and Executive Officer of the Company and its
subsidiaries by the day preceding the day on which the Company’s first Ordinary General
Meeting of Shareholders is held following the commencement of the Restriction Period,
except in cases where the Company’s Board of Directors acknowledge the reason as being
justified. In addition, the Company shall naturally acquire any allotted Restricted Stock forwhich Transfer Restrictions have not been removed in accordance with the provisions of theremoval of transfer restrictions without contribution when the Restriction Period has expired.
(3) The Company shall pay Eligible Directors the monetary compensation within the scope of theaforementioned per annum amount as compensation for Restricted Shares in accordance withthe resolution of the Board of Directors, and each Eligible Director shall receive an allotmentof Restricted Shares with all such monetary compensation provided using the investment inkind method.
(4) The payment amount for Restricted Shares shall be determined by the Board of Directors to
the extent not particularly favorable to the Eligible Directors subscribing to such Restricted
Shares on the basis of the closing price of the Company’s common shares on the Tokyo Stock
Exchange on the business day preceding the date of the resolution of the Board of Directors(if no trades are made on this day, the closing price on the most recent day of trading beforethat) pertaining to such issue or disposal. In addition, the payment of the aforementioned
monetary compensation is subject to Eligible Directors agreeing to the aforementioned
investment in kind and executing a restricted stock allotment agreement.
(5)(Deletion of Supplementary Provisions)
Article 3 These supplementary provisions shall be deleted at the conclusion of the Company’s first
Ordinary General Meeting of Shareholders.

- 20 -

Attachment 2
1 Stock Acquisition Rights issued by Riken Corporation① Details of stock acquisition rights (Stock compensation-type stock options) issued by Riken
Corporation in June 2014
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)Amount to be paid upon exercise of stock acquisition rights (transfer(Note) 2
price) (yen)From July 15, 2014
Exercise period for stock acquisition rights
to July 14, 2044
Share issue price and capitalization amount (yen) when shares are issued(Note) 3
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights(Note) 4
Acquisition of the stockacquisition rights by transfer
Matters concerning transfer of stock acquisition rights
shall require the approval of theBoard of Directors.
Acquisition terms of stock acquisition rights(Note) 5
Matters concerning the issuance of stock acquisition rights related to(Note) 6
organizational restructuring② Details of stock acquisition rights (Stock compensation-type stock options) issued by Riken
Corporation in June 2015
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)Amount to be paid upon exercise of stock acquisition rights (transfer(Note) 2
price) (yen)From July 15, 2015
Exercise period for stock acquisition rights
to July 14, 2045
Share issue price and capitalization amount (yen) when shares are issued(Note) 3
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights(Note) 4
Acquisition of the stockacquisition rights by transfer
Matters concerning transfer of stock acquisition rights
shall require the approval of theBoard of Directors.
Acquisition terms of stock acquisition rights(Note) 5
Matters concerning the issuance of stock acquisition rights related to(Note) 6
organizational restructuring③ Details of stock acquisition rights (Stock compensation-type stock options) issued by Riken
Corporation in June 2016
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)Amount to be paid upon exercise of stock acquisition rights (transfer(Note) 2
price) (yen)From July 14, 2016
Exercise period for stock acquisition rights
to July 13, 2046
Share issue price and capitalization amount (yen) when shares are issued(Note) 3
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights(Note) 4- 21 -

Matters concerning transfer of stock acquisition rights
Acquisition terms of stock acquisition rights
Matters concerning the issuance of stock acquisition rights related toorganizational restructuring

Acquisition of the stockacquisition rights by transfer
shall require the approval of theBoard of Directors.
(Note) 5(Note) 6④ Details of stock acquisition rights (Stock compensation-type stock options) issued by Riken
Corporation in June 2017
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)Amount to be paid upon exercise of stock acquisition rights (transfer(Note) 2
price) (yen)From July 13, 2017
Exercise period for stock acquisition rights
to July 12, 2047
Share issue price and capitalization amount (yen) when shares are issued(Note) 3
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights(Note) 4
Acquisition of the stockacquisition rights by transfer
Matters concerning transfer of stock acquisition rights
shall require the approval of theBoard of Directors.
Acquisition terms of stock acquisition rights(Note) 5
Matters concerning the issuance of stock acquisition rights related to(Note) 6
organizational restructuring(Notes)1. Number of shares to be issued upon exercise of stock acquisition rights
The number of shares to be issued upon exercise of stock acquisition rights (hereinafter referred
to as the “number of allotted shares”) shall be 100 shares. However, if Riken Corporation
conducts a stock split of [Riken Corporation] common stock (including gratis allotment of Riken
Corporation common stock; the same applies to the description of the stock split hereinafter) or astock merger which affects the number of allotted shares according to the following formula, any
fractions of less than one share resulting from the adjustment shall be rounded down.
Number of allotted shares after adjustment = Number of allotted shares before adjustment ×
Ratio of stock split or stock merger
The number of allotted shares after adjustment shall apply from the next day of the record dateof the stock split in the case of a stock split (if the record date is not set, from the effective date),and from the effective date of the stock merger in case of a stock merger. However, when a stock
split is performed with the condition that a proposal to reduce the amount of surplus and increase
capital or reserves is approved at the General Meeting of Shareholders, if the record date for the
split is determined to be a day prior to the date of the conclusion of the relevant General Meetingof Shareholders, the number of allotted shares after the adjustment shall be applied retroactively tothe day after the record date after the day following the date of the conclusion of the General
Meeting of Shareholders.
Moreover, if Riken Corporation performs a merger or company split and it is necessary toadjust the number of allotted shares in accordance with such cases, Riken Corporation may adjust
the number of allotted shares as appropriate within a reasonable degree.
When adjusting the number of allotted shares, Riken Corporation shall notify or give public
notice to the holders of each stock acquisition right recorded in the stock acquisition rights ledger(hereinafter referred to as “holders of stock acquisition rights”) by the day before the date when
the number of allotted shares after adjustment is applied. However, if notice or public notice- 22 -

cannot be made by the day before the applicable date, notice or public notice shall be madepromptly thereafter.
2.

Amount of assets to be contributed upon exercise of stock acquisition rights
The amount of assets to be contributed upon the exercise of each stock acquisition right shall be
determined by multiplying the per-share value by the number of allotted shares, where the value
per share to be received by the exercise of each stock acquisition right shall be ¥1.

3.

Matters concerning the amount of capital and legal capital surplus to be increased if the Company
issues shares upon exercise of stock acquisition rights(i) The amount of capital to be increased in the event that the Company issues shares upon exerciseof stock acquisition rights shall be one-half of the amount of the maximum limit on the increasein capital as calculated according to Article 17, paragraph 1 of the Regulations on Corporate
Accounting. Any fraction of less than one yen resulting from the calculation mentioned above
shall be rounded up to the nearest yen.
(ii) The amount of legal capital surplus to be increased in the event that the Company issues shares
upon exercise of stock acquisition rights shall be obtained by deducting the amount of capital
to be increased as set forth in the above (i) from the amount of the maximum limit on theincrease in capital provided in the above (i).

4.

Conditions for the exercise of stock acquisition rights(i) Holders of stock acquisition rights may exercise their stock acquisition rights from the day
following the day on which they cease to hold the office of Director and Executive Officerof Riken Corporation.
(ii) The above (i) is not applicable to a successor who acquires the stock acquisition rights
through inheritance.
(iii) Holders of stock acquisition rights who have abandoned their stock acquisition rights cannot
exercise such stock acquisition rights.

5.

Acquisition terms of the stock acquisition rights
Riken Corporation may acquire the stock acquisition rights without compensation on the dateseparately prescribed by the Riken Corporation’s Board of Directors, in the case that one of thefollowing agenda items (i), (ii), (iii), (iv) or (v) is approved at a General Meeting of Shareholdersof Riken Corporation (or, if approval of the General Meeting of Shareholders is not required, is
resolved at the Riken Corporation’s Board of Directors or determined by an executive officerdelegated in accordance with the provisions of Article 416, paragraph 4 of the Companies Act).
(i) A merger agreement under which Riken Corporation shall be extinguished.
(ii) An absorption-type company split agreement or an incorporation-type company split plan,under which Riken Corporation shall be split.
(iii) A share exchange agreement or a share transfer plan, under which Riken Corporation shallbecome a wholly owned subsidiary.
(iv) An amendment to the articles of incorporation to establish new provisions by which any
proposed transfer of shares issued by Riken Corporation shall require the approval of Riken
Corporation.
(v) An amendment to the articles of incorporation to establish new provisions by which any
proposed transfer of any class shares to be issued upon exercise of the stock acquisition rights
shall require the approval of Riken Corporation or by which Riken Corporation may acquire
all of the class shares to be issued upon exercise of the stock acquisition rights by a General
Meeting of Shareholders.

6.

Treatment of stock acquisition rights upon Company reorganization
If Riken Corporation performs a merger (limited to the case where Riken Corporation is to be
extinguished as a result of the merger), absorption-type company split or incorporation-typecompany split (limited to the case where Riken Corporation becomes a split company), a share- 23 -

exchange or a share transfer (limited to the case where Riken Corporation becomes a wholly
owned subsidiary respectively) (hereinafter collectively referred to as “acts of structural
reorganization”), stock acquisition rights of the companies listed in (a) to (e) of Article 236,
paragraph 1, item 8, of the Companies Act (hereinafter referred to as the “ReorganizedCompany”) shall be issued, in each of the above cases, to right holders who hold the stockacquisition rights remaining (hereinafter referred to as “Remaining Stock Acquisition Rights”)
just before the effective date of the relevant acts of structural reorganization (for an absorptiontype merger, the date on which the absorption-type merger takes effect; for a consolidation
merger, the date of establishment of the joint stock company; for an absorption-type company
split, the date on which the absorption-type company split takes effect; for an incorporation-typecompany split, the date of establishment of the stock company incorporated in the incorporationtype company split; for a share exchange, the date on which the share exchange takes effect; for ashare transfer, the date of establishment of the wholly owning parent company incorporated in theshare transfer; the same shall apply hereinafter) according to the following conditions. However,the provision above shall apply only in cases where the allotment of stock acquisition rights of theReorganized Company under the following terms and conditions is stipulated in the relevant
absorption-type merger agreement, consolidation-type merger agreement, absorption-typecompany split agreement, incorporation-type company split plan, share exchange agreement, or
share transfer plan.
(i) Number of stock acquisition rights to be issued by the Reorganized Company
The same number of stock acquisition rights as the number of outstanding stock acquisitionrights held by each holder shall be allotted.
(ii) Class of shares of the Reorganized Company to be issued or transferred upon exercise of stockacquisition rights
It shall be shares of common stock of the Reorganized Company.
(iii) Number of shares of the Reorganized Company to be issued or transferred upon exercise ofstock acquisition rights
It shall be determined in accordance with the above 1. based on the consideration of
conditions for the acts of structural reorganization, etc.
(iv) Amount of assets to be contributed upon exercise of stock acquisition rights
The value of the property to be invested upon exercise of each stock acquisition right to beissued shall be the amount obtained by multiplying the exercise price after reorganization
specified below by the number of shares of the Reorganized Company subject to the stockacquisition rights determined according to the above (iii). The exercise price after
reorganization shall be 1 yen per share of the Reorganized Company that can be allotted byexercising each issued stock acquisition right.
(v) Period for exercise of stock acquisition rights
From the start date of the period when stock acquisition rights can be exercised or theeffective date of the reorganization, whichever is later, until the expiration date of the period
for exercising stock acquisition rights.
(vi) Matters concerning the amount of capital and legal capital surplus to be increased if theCompany issues shares upon exercise of stock acquisition rights
It shall be determined according the above 3.
(vii) Restrictions on transfer of stock acquisition rights
Any proposed transfer of stock acquisition rights shall be subject to the approval of theCompany’s Board of Directors of the Reorganized Company.

2 Stock acquisition rights issued by NPR-RIKEN CORPORATION① Details of 1st stock acquisition rights (Stock compensation-type stock options) issued by NPRRIKEN CORPORATION
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)Amount to be paid upon exercise of stock acquisition rights (transfer(Note) 2
price) (yen)- 24 -

Exercise period for stock acquisition rights
Share issue price and capitalization amount (yen) when shares are issued
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights
Matters concerning transfer of stock acquisition rights
Acquisition terms of stock acquisition rights
Matters concerning the issuance of stock acquisition rights related toorganizational restructuring

From October 2, 2023
to July 14, 2044
(Note) 3(Note) 4
Acquisition of the stockacquisition rights by transfer
shall require the approval of theBoard of Directors.
(Note) 5(Note) 6② Details of 2nd stock acquisition rights (Stock compensation-type stock options) issued by NPRRIKEN CORPORATION
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)Amount to be paid upon exercise of stock acquisition rights (transfer(Note) 2
price) (yen)From October 2, 2023
Exercise period for stock acquisition rights
to July 14, 2045
Share issue price and capitalization amount (yen) when shares are issued(Note) 3
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights(Note) 4
Acquisition of the stockacquisition rights by transfer
Matters concerning transfer of stock acquisition rights
shall require the approval of theBoard of Directors.
Acquisition terms of stock acquisition rights(Note) 5
Matters concerning the issuance of stock acquisition rights related to(Note) 6
organizational restructuring③ Details of 3rd stock acquisition rights (Stock compensation-type stock options) issued by NPRRIKEN CORPORATION
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)Amount to be paid upon exercise of stock acquisition rights (transfer(Note) 2
price) (yen)From October 2, 2023
Exercise period for stock acquisition rights
to July 13, 2046
Share issue price and capitalization amount (yen) when shares are issued(Note) 3
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights(Note) 4
Acquisition of the stockacquisition rights by transfer
Matters concerning transfer of stock acquisition rights
shall require the approval of theBoard of Directors.
Acquisition terms of stock acquisition rights(Note) 5
Matters concerning the issuance of stock acquisition rights related to(Note) 6
organizational restructuring④ Details of 4th stock acquisition rights (Stock compensation-type stock options) issued by NPRRIKEN CORPORATION
Number of shares to be issued upon exercise of stock acquisition rights(Note) 1(shares)- 25 -

Amount to be paid upon exercise of stock acquisition rights (transfer
price) (yen)(Note) 2
From October 2, 2023
to July 12, 2047

Exercise period for stock acquisition rights
Share issue price and capitalization amount (yen) when shares are issued
upon exercise of stock acquisition rights
Conditions for exercising stock acquisition rights
Matters concerning transfer of stock acquisition rights
Acquisition terms of stock acquisition rights
Matters concerning the issuance of stock acquisition rights related toorganizational restructuring(Note) 3(Note) 4
Acquisition of the stockacquisition rights by transfer
shall require the approval of theBoard of Directors.
(Note) 5(Note) 6(Notes)1. Number of shares to be issued upon exercise of stock acquisition rights
The number of shares to be issued upon exercise of stock acquisition rights (hereinafter referred
to as the “number of allotted shares”) shall be 200 shares. However, if NPR-RIKENCORPORATION conducts a stock split of NPR-RIKEN CORPORATION common stock(including gratis allotment of NPR-RIKEN CORPORATION common stock; the same applies tothe description of the stock split hereinafter) or a stock merger which affects the number ofallotted shares according to the following formula, any fractions of less than one share resulting
from the adjustment shall be rounded down.
Number of allotted shares after adjustment = Number of allotted shares before adjustment ×
Ratio of stock split or stock merger
The number of allotted shares after adjustment shall apply from the next day of the record dateof the stock split in the case of a stock split (if the record date is not set, from the effective date),and from the effective date of the stock merger in case of a stock merger. However, when a stock
split is performed with the condition that a proposal to reduce the amount of surplus and increase
capital or reserves is approved at the General Meeting of Shareholders, if the record date for the
split is determined to be a day prior to the date of the conclusion of the relevant General Meetingof Shareholders, the number of allotted shares after the adjustment shall be applied retroactively tothe day after the record date after the day following the date of the conclusion of the General
Meeting of Shareholders.
Moreover, if NPR-RIKEN CORPORATION performs a merger or company split and it isnecessary to adjust the number of allotted shares in accordance with such cases, NPR-RIKENCORPORATION may adjust the number of allotted shares as appropriate within a reasonable
degree.
When adjusting the number of allotted shares, NPR-RIKEN CORPORATION shall notify orgive public notice to the holders of each stock acquisition right recorded in the stock acquisitionrights ledger (hereinafter referred to as “holders of stock acquisition rights”) by the day before thedate when the number of allotted shares after adjustment is applied. However, if notice or public
notice cannot be made by the day before the applicable date, notice or public notice shall be madepromptly thereafter.
2.

Amount of assets to be contributed upon exercise of stock acquisition rights
The amount of assets to be contributed upon the exercise of each stock acquisition right shall be
determined by multiplying the per-share value by the number of allotted shares, where the value
per share to be received by the exercise of each stock acquisition right shall be ¥1.

3.

Matters concerning the amount of capital and legal capital surplus to be increased if the Company
issues shares upon exercise of stock acquisition rights(i) The amount of capital to be increased in the event that the Company issues shares upon exercise- 26 -

of stock acquisition rights shall be one-half of the amount of the maximum limit on the increasein capital as calculated according to Article 17, paragraph 1 of the Regulations on Corporate
Accounting. Any fraction of less than one yen resulting from the calculation mentioned above
shall be rounded up to the nearest yen.
(ii) The amount of legal capital surplus to be increased in the event that the Company issues shares
upon exercise of stock acquisition rights shall be obtained by deducting the amount of capital
to be increased as set forth in the above (i) from the amount of the maximum limit on theincrease in capital provided in the above (i).
4.

Conditions for the exercise of stock acquisition rights(i) Holders of stock acquisition rights may exercise their stock acquisition rights from the day
following the day on which they cease to hold the office of Director and Executive Officer
of NPR-RIKEN CORPORATION.
(ii) The above (i) is not applicable to a successor who acquires the stock acquisition rights
through inheritance.
(iii) Holders of stock acquisition rights who have abandoned their stock acquisition rights cannot
exercise such stock acquisition rights.

5.

Conditions for acquisition of the stock acquisition rights
NPR-RIKEN CORPORATION may acquire the stock acquisition rights without compensationon the date separately prescribed by the NPR-RIKEN CORPORATION’s Board of Directors, inthe case that one of the following agenda items (i), (ii), (iii), (iv) or (v) is approved at a General
Meeting of Shareholders of NPR-RIKEN CORPORATION (or, if approval of the General
Meeting of Shareholders is not required, is resolved at the NPR-RIKEN CORPORATION’s
Board of Directors or determined by an executive officer delegated in accordance with theprovisions of Article 416, paragraph 4 of the Companies Act).
(i) A merger agreement under which NPR-RIKEN CORPORATION shall be extinguished(ii) An absorption-type company split agreement or an incorporation-type company split plan,under which NPR-RIKEN CORPORATION shall be split.
(iii) A share exchange agreement or a share transfer plan, under which NPR-RIKENCORPORATION shall become a wholly owned subsidiary.
(iv) An amendment to the articles of incorporation to establish new provisions by which any
proposed transfer of shares issued by NPR-RIKEN CORPORATION shall require the approvalof NPR-RIKEN CORPORATION(v) An amendment to the articles of incorporation to establish new provisions by which any
proposed transfer of any class shares to be issued upon exercise of the stock acquisition rights
shall require the approval of NPR-RIKEN CORPORATION or by which NPR-RIKENCORPORATION may acquire all of the class shares to be issued upon exercise of the stockacquisition rights by a General Meeting of Shareholders.

6.

Treatment of stock acquisition rights upon Company reorganization
If NPR-RIKEN CORPORATION performs a merger (limited to the case where NPR-RIKENCORPORATION is to be extinguished as a result of the merger), absorption-type company split
or incorporation-type company split (limited to the case where NPR-RIKEN CORPORATION
becomes a split company), a share exchange or a share transfer (limited to the case where NPRRIKEN CORPORATION becomes a wholly owned subsidiary respectively) (hereinaftercollectively referred to as “acts of structural reorganization”), stock acquisition rights of thecompanies listed in (a) to (e) of Article 236, paragraph 1, item 8, of the Companies Act(hereinafter referred to as the “Reorganized Company”) shall be issued, in each of the above
cases, to right holders who hold the stock acquisition rights remaining (hereinafter referred to as“Remaining Stock Acquisition Rights”) just before the effective date of the relevant acts ofstructural reorganization (for an absorption-type merger, the date on which the absorption-typemerger takes effect; for a consolidation merger, the date of establishment of the joint stockcompany; for an absorption-type company split, the date on which the absorption-type company
split takes effect; for an incorporation-type company split, the date of establishment of the stock- 27 -

company incorporated in the incorporation-type company split; for a share exchange, the date on
which the share exchange takes effect; for share transfer, the date of establishment of the wholly
owning parent company incorporated in the share transfer; the same shall apply hereinafter)
according to the following conditions. However, the provision above shall apply only in cases
where the allotment of stock acquisition rights of the Reorganized Company under the following
terms and conditions is stipulated in the relevant absorption-type merger agreement,
consolidation-type merger agreement, absorption-type company split agreement, incorporationtype company split plan, share exchange agreement, or share transfer plan.
(i) Number of stock acquisition rights to be issued by the Reorganized Company
The same number of stock acquisition rights as the number of outstanding stock acquisitionrights held by each holder shall be allotted.
(ii) Class of shares of the Reorganized Company to be issued or transferred upon exercise of stockacquisition rights
It shall be shares of common stock of the Reorganized Company.
(iii) Number of shares of the Reorganized Company to be issued or transferred upon exercise ofstock acquisition rights
It shall be determined in accordance with the above 1. based on the consideration of
conditions for the acts of structural reorganization, etc.
(iv) Amount of assets to be contributed upon exercise of stock acquisition rights
The value of the property to be invested upon exercise of each stock acquisition right to beissued shall be the amount obtained by multiplying the exercise price after reorganization
specified below by the number of shares of the Reorganized Company subject to the stockacquisition rights determined according to the above (iii). The exercise price after
reorganization shall be 1 yen per share of the Reorganized Company that can be allotted byexercising each issued stock acquisition right.
(v) Period for exercise of stock acquisition rights
From the start date of the period when stock acquisition rights can be exercised or theeffective date of the reorganization, whichever is later, until the expiration date of the period
for exercising stock acquisition rights.
(vi) Matters concerning the amount of capital and legal capital surplus to be increased if theCompany issues shares upon exercise of stock acquisition rights
It shall be determined according the above 3.
(vii) Restrictions on transfer of stock acquisition rights
Any proposed transfer of stock acquisition rights shall be subject to the approval of theCompany’s Board of Directors of the Reorganized Company.

Attachment 3
1 Stock acquisition rights issued by Nippon Piston Ring Co., Ltd.
(1) Details of stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. in June
2008
Number of shares to be acquired upon exercise of the stockacquisition rights (shares)(Note) 1

Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)(Note) 2

Exercise period of stock acquisition rights

August 1, 2008 - July 31, 2033

- 28 -

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(2)

Details of the stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. inJune 2013
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)

Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

August 1, 2013 - July 31, 2038

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(3)

Details of the stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. inJune 2014
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)- 29 -

Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

August 1, 2014 - July 31, 2039

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(4)

Details of the stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. inJune 2015
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

August 1, 2015 - July 31, 2040

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6- 30 -

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(5)

Details of the stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. inJune 2016
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

July 30, 2016 - July 29, 2041

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights(Note) 3(yen)
Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(6)

Details of the stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. inJune 2017
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

August 1, 2017 - July 31, 2042

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)- 31 -(Note) 3

Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(7)

Details of the stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. inJune 2018
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

August 1, 2018 - July 31, 2043

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(8)

Details of the stock acquisition rights (incentive stock option) issued by Nippon Piston Ring Co., Ltd. inJune 2019
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)- 32 -

Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

August 1, 2019 - July 31, 2044

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising stock acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(Notes)1
Number of shares to be issued upon exercise of the stock acquisition rights
Number of shares to be issued upon exercise of each stock acquisition right (hereinafter referred to as the“Number of Shares Granted”) shall be 100 shares.
Provided, however, in case Nippon Piston Ring Co., Ltd. carries out a share split (including allotment ofshares of its common stock without contribution; the same applies to following references to the share split)
or share consolidation, the Number of Shares Granted shall be adjusted according to the following formula.
Such adjustment shall be made for the number of shares to be issued upon exercise of the stock acquisitionrights that have not been exercised at the time, with the resulting fractions of less than one (1) shareoccurring upon such adjustment rounded down.
Number of Shares Granted after adjustment = Number of Shares Granted before adjustment × Ratio ofshare split or share consolidation
In the case of a share split, the Number of Shares Granted after adjustment shall apply from the day
immediately following the record date (or the day the share split becomes effective when a record date is
not specified) of the said share split, and in the case of a share consolidation, the Number of Shares Granted
after adjustment shall apply from the day the share consolidation becomes effective. Provided, however, incases where the Company conducts a share split conditional on approval at a general meeting ofshareholders of Nippon Piston Ring Co., Ltd of a proposal to reduce surplus and increase capital or capitalreserve, and the record date for the share split is the day prior to the day on which said shareholders’meeting closes, the Number of Shares Granted after adjustment shall apply from the day immediately
following the day the said shareholders’ meeting closes.
In addition to above, in cases where Nippon Piston Ring Co., Ltd carries out a merger, company split orshare exchange after the allotment date, or any other cases where it is necessary to adjust the Number of
Shares Granted, Nippon Piston Ring Co., Ltd. may make adjustment to the Number of Shares Granted thatis deemed necessary by the Board of Directors of Nippon Piston Ring Co., Ltd.
2
Value of property to be contributed upon exercise of stock acquisition rights
The value of property to be contributed upon exercise of stock acquisition rights shall be the exercise priceof one (1) yen per share to be delivered upon exercise of each stock acquisition right, multiplied by the
Number of Shares Granted.

- 33 -

3

4

5

6

Matters regarding increase in capital and capital reserve by the issuance of shares upon exercise of stockacquisition rights(a) The amount of increase in capital by issuing shares upon exercise of stock acquisition rights shall behalf of the maximum amount of increase in capital calculated in accordance with the provisions ofArticle 17, paragraph (1) of the Regulations on Corporate Accounting, and the resulting fractions ofless than one (1) yen occurring upon such calculation shall be rounded up.
(b) The amount of increase in capital reserve by issuing shares upon exercise of stock acquisition rights
shall be the maximum amount of capital increase as described in (a) above less the amount of increasein capital set out in (a) above.
Conditions for exercising shares acquisition rights(a) Holders of stock acquisition rights may exercise their rights only for ten days from the day
immediately following the day when they lose their positions as Directors of Nippon Piston Ring Co.,Ltd.
(b) In the event of the death of a holder of stock acquisition rights, his/her heirs may exercise the rights.
Conditions for the exercise of the stock acquisition rights by heirs shall be as set forth in theagreement described in (c) below.
(c) Other conditions shall be as set forth in the Stock Acquisition Right Allotment Agreement to be
executed between Nippon Piston Ring Co., Ltd and the holders of stock acquisition rights based on the
resolution of the Board of Directors.
Acquisition terms of stock acquisition rights
In case that a resolution for the approval of any of the proposals (a), (b), (c), (d), or (e) below is approved ata general meeting of shareholders of Nippon Piston Ring Co., Ltd (or by resolution at a meeting of theBoard of Directors of Nippon Piston Ring Co., Ltd, or by decision of an executive officer delegatedpursuant to provisions of Article 416, paragraph (4) of the Companies Act, if resolution at a general
meeting of shareholders is not required), the Nippon Piston Ring Co., Ltd. may acquire the stock acquisitionrights without contribution on the date separately determined by the Board of Directors of Nippon Piston
Ring Co., Ltd.
(a) Proposal for approval of a merger agreement under which Nippon Piston Ring Co., Ltd. will become theabsorbed company(b) Proposal for approval of a company split agreement or a company split plan under which Nippon Piston
Ring Co., Ltd. will become the splitting company(c) Proposal for approval of a share exchange agreement or a share transfer plan under which Nippon Piston
Ring Co., Ltd. will become a wholly-owned subsidiary(d) Proposal for approval of amendment of the Articles of Incorporation to create a provision to the effectthat, as a feature of all shares issued by Nippon Piston Ring Co., Ltd., approval of Nippon Piston Ring
Co., Ltd. is required for the acquisition of such shares by transfer(e) Proposal for approval of amendment of the Articles of Incorporation to create a provision to the effectthat, as a feature of the class of shares underlying the stock acquisition rights, approval of Nippon Piston
Ring Co., Ltd. is required for the acquisition of such class of shares by transfer, or to the effect that
Nippon Piston Ring Co., Ltd. will acquire all of such class of shares by resolution of a general meetingof shareholders
Matters concerning the delivery of stock acquisition rights in organizational restructuring
In the event that Nippon Piston Ring Co., Ltd. carries out a merger (only if Nippon Piston Ring Co., Ltd
becomes a dissolving company due to the merger), an absorption-type company split or an incorporationtype company split (only if Nippon Piston Ring Co., Ltd becomes the splitting company in both cases), a
share exchange or a share transfer (but only if Nippon Piston Ring Co., Ltd becomes a wholly-owned
subsidiary in both cases) (hereinafter collectively referred to as the “Organizational Restructuring”), stockacquisition rights of a stock company listed in Article 236, paragraph (1), item (viii), (a) through (e) of theCompanies Act (hereinafter referred to as the “Reorganized Company”) shall be granted to holders of stockacquisition rights who hold remaining stock acquisition rights immediately prior to the effective date of theOrganizational Restructuring (refers to the day on which the absorption-type merger takes effect, the day on
which a stock company is incorporated through the consolidation-type merger, the day on which theabsorption-type company split takes effect, the day on which a stock company is incorporated through theincorporation-type company split, the day on which the share exchange takes effect, or the day on which awholly-owning parent company is incorporated by the share transfer; the same shall apply hereinafter)(hereinafter referred to as “Remaining Stock Acquisition Rights”). Provided, however, that the foregoingshall apply only to cases in which the delivery of stock acquisition rights of the Reorganized Company inaccordance with the following conditions is stipulated in the absorption-type merger agreement, theconsolidation-type merger agreement, the absorption-type company split agreement, the incorporation-typecompany split plan, the share exchange agreement or the share transfer plan.
(a) Number of stock acquisition rights of the Reorganized Company to be delivered- 34 -

The Company shall deliver stock acquisition rights the number of which shall equal the number ofRemaining Stock Acquisition Rights held by the holders of the stock acquisition rights.
(b) Class of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
Common stock of the Reorganized Company(c) Number of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
To be decided according to the aforementioned “Class and number of shares to be issued upon
exercise of stock acquisition rights” after taking into consideration the conditions, etc. of theOrganizational Restructuring.
(d) Value of property to be contributed upon exercise of stock acquisition rights
The value of property to be contributed upon exercise of each stock acquisition right to be delivered
shall be the amount obtained by the post-restructuring exercise price as stipulated below multiplied by
the number of shares of the Reorganized Company to be issued upon exercise of the stock acquisitionrights as determined in accordance with (c) above. The post-restructuring exercise price shall be one(1) yen per share of the Restructured Company that shall be delivered upon the exercise of each stockacquisition right to be delivered.
(e) Exercise period in which stock acquisition rights may be exercised
The period shall start from the later of either the commencement date of the exercise period of stockacquisition rights as stipulated in the aforementioned “Exercise period of stock acquisition rights” orthe effective date of the Organizational Restructuring, and end on the expiration date of the exercise
period in which stock acquisition rights may be exercised as stipulated in the aforementioned“Exercise period of stock acquisition rights.”(f) Matters regarding increase in capital and capital reserve by the issuance of shares upon exercise of stockacquisition rights
To be determined in accordance with the aforementioned “Matters regarding increase in capital andcapital reserve by the issuance of shares upon exercise of stock acquisition rights.”(g) Restriction on acquisition of stock acquisition rights by transfer
Acquisition of the stock acquisition rights by transfer shall require the approval by resolution of theBoard of Directors of the Reorganized Company.
(h) Conditions for exercising shares acquisition rights
To be determined in accordance with the aforementioned “Conditions for exercising sharesacquisition rights.”(i) Acquisition terms of stock acquisition rights
To be determined in accordance with the aforementioned “Acquisition terms of stock acquisitionrights.”2 Stock acquisition rights to be issued by NPR-Riken Corporation(1) Details of the 5th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 31, 2033

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights
Acquisition terms of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.
(Note) 5- 35 -

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(2) Details of the 6th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)

Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 31, 2038

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(3) Details of the 7th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 31, 2039

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4- 36 -

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(4) Details of the 8th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 31, 2040

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(5) Details of the 9th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 29, 2041

- 37 -

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(6) Details of the 10th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 31, 2042

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(7) Details of the 11th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)- 38 -

Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 31, 2043

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(8) Details of the 12th Series Stock Acquisition Rights of NPR-Riken Corporation (incentive stock option)
Number of shares to be acquired upon exercise of the stock(Note) 1
acquisition rights (shares)
Amount to be paid (transfer price) upon exercise of thestock acquisition rights (yen)Exercise period of stock acquisition rights(Note) 2

October 2, 2023 - July 31, 2044

Issuance price of shares and amount to be incorporated into
capital if shares are issued upon exercise of the stockacquisition rights (yen)(Note) 3

Conditions for exercising shares acquisition rights(Note) 4

Matters regarding the transfer of stock acquisition rights

Acquisition of the stock acquisition rights by transfer shallrequire the approval of the Board of Directors.

Acquisition terms of stock acquisition rights(Note) 5

Matters concerning the delivery of stock acquisition rights inorganizational restructuring(Note) 6- 39 -

Fractions of less than one (1) share in the number of shares
to be delivered to holders of stock acquisition rights who
exercised stock acquisition rights shall be rounded down.

Rules pertaining to fractions of less than one (1) sharearising from the exercise of stock acquisition rights(Notes)1
Number of shares to be issued upon exercise of the stock acquisition rights
Number of shares to be issued upon exercise of each stock acquisition right (hereinafter referred to as the“Number of Shares Granted”) shall be 102 shares.
Provided, however, in case NPR-Riken Corporation carries out a share split (including allotment of sharesof its common stock without contribution; the same applies to following references to the share split) or
share consolidation, the Number of Shares Granted shall be adjusted according to the following formula.
Such adjustment shall be made for the number of shares to be issued upon exercise of the stock acquisitionrights that have not been exercised at the time, with the resulting fractions of less than one (1) shareoccurring upon such adjustment rounded down.
Number of Shares Granted after adjustment = Number of Shares Granted before adjustment × Ratio ofshare split or share consolidation
In the case of a share split, the Number of Shares Granted after adjustment shall apply from the day
immediately following the record date (or the day the share split becomes effective when a record date is
not specified) of the said share split, and in the case of a share consolidation, the Number of Shares Granted
after adjustment shall apply from the day the share consolidation becomes effective. Provided, however, incases where the Company conducts a share split conditional on approval at a general meeting ofshareholders of NPR-Riken Corporation of a proposal to reduce surplus and increase capital or capitalreserve, and the record date for the share split is the day prior to the day on which said shareholders’meeting closes, the Number of Shares Granted after adjustment shall apply from the day immediately
following the day the said shareholders’ meeting closes.
In addition to above, in cases where NPR-Riken Corporation carries out a merger, company split or shareexchange after the allotment date, or any other cases where it is necessary to adjust the Number of Shares
Granted, NPR-Riken Corporation may make adjustment to the Number of Shares Granted that is deemednecessary by the Board of Directors of NPR-Riken Corporation.
2
Value of property to be contributed upon exercise of stock acquisition rights
The value of property to be contributed upon exercise of stock acquisition rights shall be the exercise priceof one (1) yen per share to be delivered upon exercise of each stock acquisition right, multiplied by the
Number of Shares Granted.
3
Matters regarding increase in capital and capital reserve by the issuance of shares upon exercise of stockacquisition rights(a) The amount of increase in capital by issuing shares upon exercise of stock acquisition rights shall behalf of the maximum amount of increase in capital calculated in accordance with the provisions ofArticle 17, paragraph (1) of the Regulations on Corporate Accounting, and the resulting fractions ofless than one (1) yen occurring upon such calculation shall be rounded up.
(b) The amount of increase in capital reserve by issuing shares upon exercise of stock acquisition rights
shall be the maximum amount of capital increase as described in (a) above less the amount of increasein capital set out in (a) above.
4
Conditions for exercising shares acquisition rights(a) Holders of stock acquisition rights may exercise their rights only for ten days from the day
immediately following the day when they lose their positions as Directors of NPR-Riken Corporation.
(b) In the event of the death of a holder of stock acquisition rights, his/her heirs may exercise the rights.
Conditions for the exercise of the stock acquisition rights by heirs shall be as set forth in theagreement described in (c) below.
(c) Other conditions shall be as set forth in the Stock Acquisition Right Allotment Agreement to be
executed between NPR-Riken Corporation and the holders of stock acquisition rights based on the
resolution of the Board of Directors.
5
Acquisition terms of stock acquisition rights
In case that a resolution for the approval of any of the proposals (a), (b), (c), (d), or (e) below is approved ata general meeting of shareholders of NPR-Riken Corporation (or by resolution at a meeting of the Board of
Directors of NPR-Riken Corporation, or by decision of an executive officer delegated pursuant toprovisions of Article 416, paragraph (4) of the Companies Act, if resolution at a general meeting ofshareholders is not required), the NPR-Riken Corporation may acquire the stock acquisition rights without
contribution on the date separately determined by the Board of Directors of NPR-Riken Corporation.
(a) Proposal for approval of a merger agreement under which NPR-Riken Corporation will become theabsorbed company- 40 -

6(b) Proposal for approval of a company split agreement or a company split plan under which NPR-Riken
Corporation will become the splitting company(c) Proposal for approval of a share exchange agreement or a share transfer plan under which NPR-Riken
Corporation will become a wholly-owned subsidiary(d) Proposal for approval of amendment of the Articles of Incorporation to create a provision to the effectthat, as a feature of all shares issued by NPR-Riken Corporation, approval of NPR-Riken Corporationis required for the acquisition of such shares by transfer(e) Proposal for approval of amendment of the Articles of Incorporation to create a provision to the effectthat, as a feature of the class of shares underlying the stock acquisition rights, approval of NPR-Riken
Corporation is required for the acquisition of such class of shares by transfer, or to the effect that NPRRiken Corporation will acquire all of such class of shares by resolution of a general meeting ofshareholders
Matters concerning the delivery of stock acquisition rights in organizational restructuring
In the event that NPR-Riken Corporation carries out a merger (only if NPR-Riken Corporation becomes adissolving company due to the merger), an absorption-type company split or an incorporation-typecompany split (only if NPR-Riken Corporation becomes the splitting company in both cases), a shareexchange or a share transfer (but only if NPR-Riken Corporation becomes a wholly-owned subsidiary inboth cases) (hereinafter collectively referred to as the “Organizational Restructuring”), stock acquisitionrights of a stock company listed in Article 236, paragraph (1), item (viii), (a) through (e) of the Companies
Act (hereinafter referred to as the “Reorganized Company”) shall be granted to holders of stock acquisitionrights who hold remaining stock acquisition rights immediately prior to the effective date of theOrganizational Restructuring (refers to the day on which the absorption-type merger takes effect, the day on
which a stock company is incorporated through the consolidation-type merger, the day on which theabsorption-type company split effect, the day on which a stock company is incorporated through theincorporation-type company split, the day on which the share exchange takes effect, or the day on which awholly-owning parent company is incorporated by the share transfer; the same shall apply hereinafter)(hereinafter referred to as “Remaining Stock Acquisition Rights”). Provided, however, that the foregoingshall apply only to cases in which the delivery of stock acquisition rights of the Reorganized Company inaccordance with the following conditions is stipulated in the absorption-type merger agreement, theconsolidation-type merger agreement, the absorption-type company split agreement, the incorporation-typecompany split plan, the share exchange agreement or the share transfer plan.
(a) Number of stock acquisition rights of the Reorganized Company to be delivered
The Company shall deliver stock acquisition rights the number of which shall equal the number ofRemaining Stock Acquisition Rights held by the holders of the stock acquisition rights.
(b) Class of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
Common stock of the Reorganized Company(c) Number of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
To be decided according to the aforementioned “Class and number of shares to be issued upon
exercise of stock acquisition rights” after taking into consideration the conditions, etc. of theOrganizational Restructuring.
(d) Value of property to be contributed upon exercise of stock acquisition rights
The value of property to be contributed upon exercise of each stock acquisition right to be delivered
shall be the amount obtained by the post-restructuring exercise price as stipulated below multiplied by
the number of shares of the Reorganized Company to be issued upon exercise of the stock acquisitionrights as determined in accordance with (c) above. The post-restructuring exercise price shall be one(1) yen per share of the Restructured Company that shall be delivered upon the exercise of each stockacquisition right to be delivered.
(e) Exercise period in which stock acquisition rights may be exercised
The period shall start from the later of either the commencement date of the exercise period of stockacquisition rights as stipulated in the aforementioned “Exercise period of stock acquisition rights” orthe effective date of the Organizational Restructuring, and end on the expiration date of the exercise
period in which stock acquisition rights may be exercised as stipulated in the aforementioned“Exercise period of stock acquisition rights.”(f) Matters regarding increase in capital and capital reserve by the issuance of shares upon exercise of stockacquisition rights
To be determined in accordance with the aforementioned “Matters regarding increase in capital andcapital reserve by the issuance of shares upon exercise of stock acquisition rights.”(g) Restriction on acquisition of stock acquisition rights by transfer
Acquisition of the stock acquisition rights by transfer shall require the approval by resolution of theBoard of Directors of the Reorganized Company.
(h) Conditions for exercising shares acquisition rights- 41 -

(i)To be determined in accordance with the aforementioned “Conditions for exercising sharesacquisition rights.”
Acquisition terms of stock acquisition rights
To be determined in accordance with the aforementioned “Acquisition terms of stock acquisitionrights.”3 Matters concerning the reasonableness of provisions related to matters provided under Article 773, paragraph(1), items (v) and (vi) of the Companies Act(1) Matters concerning the shares of the joint holding company to be delivered by the joint holding company toshareholders of both companies upon the share transfer, and the allotment of shares of the joint holding
company
Both companies have determined the allotment ratio for common shares of the joint holding company to be
allotted and delivered to the shareholders of each company upon the establishment of the joint holding
company by the share transfer (hereinafter referred to as the “Share Transfer Ratio”) as follows.
(a)

Details of the allotment pertaining to the share transfer (Share Transfer Ratio)
Company name
The Company
Share Transfer Ratio
2

NPR
1.02

(Note 1) Details of the allotment pertaining to the share transfer
For each share of the common stock of the Company, 2 shares of the common stock of the joint
holding company will be allotted and delivered, and for each share of the common stock of
NPR, 1.02 shares of the common stock of the joint holding company will be allotted anddelivered. However, in the event of material change in the conditions underlying the calculationof the above share transfer ratio, the ratio may be changed through consultation between the twocompanies
The number of shares that constitute one unit of shares of the Joint Holding Company isscheduled to be 100 shares.
In the event that fractions of less than one (1) share of common stock of the joint holding
company arise that must be delivered to shareholders of both companies in the joint sharetransfer, a monetary amount equivalent to the fractional portion less than one (1) share will be
paid to those shareholders, in accordance with the provisions of Article 234 of the Companies
Act and other related laws and regulations.
(Note 2) Number of new shares to be granted by the Joint Holding Company through the Share Transfer(scheduled): Common stock: 28,031,005 shares
The above number is based on the total number of outstanding shares (10,688,866 shares) of
Riken as of March 31, 2023 and on the total number of outstanding shares (8,374,157 shares) of
NPR as of March 31, 2023. However, as Riken and NPR intend, by resolutions of meetings oftheir respective Boards of Directors convened by the day before the Effective Date of the Share
Transfer, to cancel all treasury stock held by each company (including treasury shares acquiredby the companies on the occasion of the Share Transfer through share purchase requests madepursuant to the provisions of Article 806, paragraph 1 of the Companies Act) immediately prior
to the Effective Date (hereinafter the “Base Time”), 646,482 shares of common stock that aretreasury shares held by Riken as of March 31, 2023 and 583,728 shares of common stock thatare treasury shares held by NPR as of March 31, 2023 are excluded from the scope of the
granting of new shares in the above calculation.
The number of treasury shares that will be retired by the Base Time is currently undetermined,
and the number of new shares to be granted by the Joint Holding Company is subject to change
in the future.
(Note 3) Handling of shares of less than one unit
Shares of the Joint Holding Company that will be allotted to shareholders of Riken and NPR as aresult of the Share Transfer are scheduled to be listed on the Tokyo Stock Exchange via
application. If said application is approved, trading of shares of the Joint Holding Company on
the Tokyo Stock Exchange will be possible. Accordingly, the companies intend for shares of the
Joint Holding Company to offer continued liquidity to shareholders of Riken or NPR who hold50 or more shares of stock of Riken or 99 or more shares of stock of NPR and who receive
allotment of 100 or more shares, i.e., one unit of shares, of the Joint Holding Company throughthe Share Transfer.
While shareholders of Riken and NPR who receive an allotment of less than 100 shares of stockof the Joint Holding Company will not be able to sell said allotted shares on the Tokyo Stock
Exchange or on other financial instruments exchanges, it will be possible to request the purchase- 42 -

of such odd-lot shares to the Joint Holding Company. Pursuant to provisions scheduled to be
stipulated in the Articles of Incorporation of the Joint Holding Company, the ability to purchaseadditional shares from the Joint Holding Company that, in combination with the number of oddlot shares held, constitute one unit of shares is also planned.
(b) Grounds, etc. for details of allotments related to the Share Transfer(i) Grounds and reasons for the details of the allotment
In order to ensure the fairness and validity of the share transfer ratio calculated as described in“3 (1) (a) Details of the allotment pertaining to the share transfer (Share Transfer Ratio)” above(hereinafter the “Share Transfer Ratio”), Riken has selected IR Japan, Inc. (hereinafter “IRJapan”) and NPR has selected Nomura Securities Co., Ltd. (hereinafter “Nomura Securities”) toserve as financial advisors and third-party valuation bodies independent from either company.
Based on advice and on calculations of share transfer ratio submitted by the third-party valuationbody IR Japan noted in “i Acquisition of calculation reports from independent third-party
valuation bodies” in “3 (1) (b) (d) Measures to ensure fairness” below, based on legal advice
from City-Yuwa Partners noted in “ii Advice from an independent law firm” in “3 (1) (b) (d)Measures to ensure fairness” below, and based on the findings of due diligence concerning NPR
conducted by Riken and its advisors, and as a result of careful discussion and consideration
taking into account the financial conditions, performance trends, stock price movements, etc. ofboth companies, Riken has arrived at the conclusion that the Share Transfer Ratio noted in “3 (1)(a) Details of the allotment pertaining to the share transfer (Share Transfer Ratio)” above is valid
and is in the interest of Riken shareholders.
Based on advice and on calculations of share transfer ratio submitted by the third-party valuationbody Nomura Securities noted in “i Acquisition of calculation reports from independent thirdparty valuation bodies” in “3 (1) (b) (d) Measures to ensure fairness” below, based on legal
advice from Marunouchi Sogo Law Office noted in “ii Advice from an independent law firm” in“3 (1) (b) (d) Measures to ensure fairness” below, and based on the findings of due diligenceconcerning Riken conducted by NPR and its advisors, and as a result of careful discussion andconsideration taking into account the financial conditions, performance trends, stock pricemovements, etc. of both companies, NPR has arrived at the conclusion that the Share Transfer
Ratio noted in “3 (1) (a) Details of the allotment pertaining to the share transfer (Share Transfer
Ratio)” above is valid and is in the interest of NPR shareholders.
In this way, with reference to calculations and analyses by these third-party valuation bodies andthe advice of legal advisors, and based on the findings of due diligence conducted by each of thecompanies on the other party, and furthermore as a result of repeated negotiations anddiscussions between the two companies comprehensively taking into account factors including
financial status, share price movements, and the future outlook for both companies, theconclusion was ultimately reached that the Share Transfer Ratio described in “3 (1) (a) Details of
the allotment pertaining to the share transfer (Share Transfer Ratio)” above is valid and is in theinterests of the shareholders of both companies. Having resolved to conclude the Consolidation
Agreement at meetings of the Boards of Directors of both companies convened on 23 rd of May,
the companies entered into the Consolidation Agreement and jointly created the Share Transfer
Plan.
(ii) Matters related to calculations(a) Names of the calculation institutions and their relationships with the counterpart company
Neither IR Japan, the financial advisor (third-party calculation institution) of the Company,
nor Nomura Securities, the financial advisor (third-party calculation institution) of NPR,
are related parties of the Company or NPR. Neither has any material special interests that
require disclosure in regard to the joint share transfer.
(b) Matters related to calculations
IR Japan calculated the Share Transfer Ratio in accordance with the market share priceaveraging method, given that shares of both Riken and NPR are listed on the Tokyo Stock
Exchange Prime Market and a market share price exists for each. IR Japan also performed
calculations using the comparable multiple valuation method due to the facts that multiple
listed companies exist that are comparable to Riken and NPR and that analogizing stock
prices through comparable company valuation is possible, and further performed
calculations using the discounted cash flow method (hereinafter “DCF method”) in order toreflect the state of future business activities in the evaluation.
The results of calculations based on each method are as stated below. The calculation
ranges of the Share Transfer Ratio below are the calculation ranges for the number ofcommon shares of the joint holding company to be allotted per common share of NPR, in- 43 -

the event that two (2) common share of the joint holding company is allotted per commonshare of the Company.
Methods used
Calculation range of the Share Transfer
Ratio
Market share price averaging method
0.97～1.09
Comparable multiple valuation method0.95～1.26
DCF method
0.65～1.42
With regard to the market share price averaging method, setting July 26, 2022, the business
day prior to July 27, 2022 (the date on which conclusion of the Memorandum ofUnderstanding was announced), as calculation reference date (i), calculation was
performed of the closing stock price on calculation reference date (i), the average closing
stock price for the one-month period from June 27, 2022 to calculation reference date (i),the average closing stock price for the three-month period from April 27, 2022 to
calculation reference date (i), as well as the average closing stock price for the six-month
period from January 27, 2022 to calculation reference date (i); and, setting May 22, 2023
as calculation reference date (ii), calculation was performed of the closing price on
calculation reference date (ii), the average closing stock price for the one-month period
from April 24, 2023 to calculation reference date (ii), the average closing stock price forthe three-month period from February 24, 2023 to calculation reference date (ii), as well as
the average closing stock price for the six-month period from November 24, 2022 to
calculation reference date (ii).
In calculating the above share transfer ratio, IR Japan used information provided by bothcompanies, publicly available information, etc., doing so under the assumption that all of
the materials, information, etc. are accurate and complete and without conducting
independent verification of the accuracy or completeness of these. With regard to the assets
and liabilities of the two companies and their affiliates (including financial derivatives, offthe-book assets and liabilities, and other contingent liabilities), independent valuation,
appraisal, or assessment was not performed, including analysis and valuation of individual
assets and liabilities, and appraisal and assessment by a third party was not requested. IR
Japan’s calculation of the share transfer ratio incorporates information and economic
conditions up to the date of May 22, 2023. Financial projections and other forward-looking
information concerning Riken was rationally prepared on the basis of best-effort and goodfaith forecasts and judgments currently available to the management of Riken. Financial
projections and other forward-looking information concerning NPR was rationally
examined and confirmed on the basis of best-effort and good-faith forecasts and judgments
currently available to the management of NPR. IR Japan’s calculation of the Share
Transfer Ratio assumes that the financial status of Riken and of NPR will change in linewith these forecasts.
The business plans of Riken and NPR, used by IR Japan as premises for calculation under
the DCF method, do not incorporate synergies resulting from the Consolidation. The
business plans of Riken and NPR for the period from the fiscal year ending March 31,
2024 to the fiscal year ending March 31, 2026, used by IR Japan as premises forcalculation under the DCF method, include fiscal years in which significant fluctuations in
profit are anticipated. Specifically, Riken is expected to achieve a significant increase inprofit for the fiscal year ending March 31, 2025, mainly attributable to passing through ofincreases in procurement costs, such as raw material costs, energy prices, and outsourcing
costs, to sales prices, and corporate efforts such as rationalization activities. Moreover,
NPR is expected to achieve a significant increase in profit for the fiscal year ending March
31, 2024, with a contribution to earnings form the passing through of procurement costs tosales prices and corporate efforts.
Nomura Securities calculated the Share Transfer Ratio in accordance with the market shareprice averaging method, given that shares of both NPR and Riken are listed on the Tokyo
Stock Exchange Prime Market and a market share price exists for each. Nomura Securities
also conducted calculations using the comparable multiple valuation method due to thefacts that multiple listed companies exist that are comparable to NPR and Riken and that
analogizing stock prices through comparable company valuation is possible, and further
performed calculations using the DCF method in order to reflect the state of futurebusiness activities in the evaluation.
The results of calculations based on each method are as stated below. The calculation
ranges of the Share Transfer Ratio below are the calculation ranges for the number of- 44 -

(c)common shares of the joint holding company to be allotted per common share of NPR, in
the event that two (2) common share of the joint holding company is allotted per commonshare of the Company.
Methods used
Calculation range of the Share Transfer
Ratio
Market share price averaging method
0.97～1.09
Comparable multiple valuation method
0.94～1.44
DCF method
0.92～1.30
With regard to the market share price averaging method, setting July 26, 2022, the business
day prior to July 27, 2022 (the date on which conclusion of the Memorandum ofUnderstanding was announced), as calculation reference date (i), calculation was
performed of the closing stock price on calculation reference date (i), the average closing
stock price for the five-day period from July 20, 2022 to calculation reference date (i), theaverage closing stock price for the one-month period from June 27, 2022 to calculationreference date (i), the average closing stock price for the three-month period from April 27,
2022 to calculation reference date (i), as well as the average closing stock price for the sixmonth period from January 27, 2022 to calculation reference date (i); and, setting May 22,2023 as calculation reference date (ii), calculation was performed of the closing price on
calculation reference date (ii), the average closing stock price for the five-day period fromMay 16, 2023 to calculation reference date (ii), the average closing stock price for the onemonth period from April 24, 2023 to calculation reference date (ii), the average closing
stock price for the three-month period from February 24, 2023 to calculation reference date(ii), as well as the average closing stock price for the six-month period from November 24,
2022 to calculation reference date (ii).
In calculating the above share transfer ratio, Nomura Securities used information provided
by both companies, publicly available information, etc., doing so under the assumption that
all of the materials, information, etc. are accurate and complete and without conducting
independent verification of the accuracy or completeness of these. With regard to the assets
and liabilities of the two companies and their affiliates (including financial derivatives, offthe-book assets and liabilities, and other contingent liabilities), independent valuation,
appraisal, or assessment was not performed, including analysis and valuation of individual
assets and liabilities, and appraisal and assessment by a third party was not requested.
Nomura Securities’ calculation of the share transfer ratio incorporates information andeconomic conditions up to the date of May 22, 2023. Financial projections and otherforward-looking information concerning NPR was rationally prepared on the basis of besteffort and good-faith forecasts and judgments currently available to the management of
NPR. Financial projections and other forward-looking information concerning Riken wererationally examined and confirmed on the basis of best-effort and good-faith forecasts andjudgments currently available to the management of Riken. Nomura Securities’ calculationof the Share Transfer Ratio assumes that the financial status of NPR and of Riken willchange in line with these forecasts.
The business plans of NPR and Riken, used by Nomura Securities as premises forcalculation under the DCF method, do not incorporate synergies resulting from theConsolidation. The business plan of NPR from the fiscal year ending March 31, 2024 to
the fiscal year ending March 31, 2026, used by Nomura Securities as premises forcalculation under the DCF method, includes a business year in which a significant increasein profit is anticipated. Specifically, in the fiscal year ending March 2024, a significant
year-on-year increase in profit is expected as the company’s efforts to pass thoughprocurement costs to sales prices contribute to earnings. Furthermore, the business plan of
Riken from the fiscal year ending March 31, 2024 to the fiscal year ending March 31,
2026, used by Nomura Securities as premises for calculation under the DCF method,
includes a business year in which a significant increase in profit is anticipated. Specifically,in the fiscal year ending March 31, 2025, Riken is projected to achieve a significant
increase in profit from the previous fiscal year, mainly attributable to the passing throughof increases in procurement costs, such as raw materials costs, energy prices, andoutsourcing costs, to sales prices and corporate efforts such as rationalization activities.
Matters concerning application for listing of the Joint Holding Company
Both companies plan to apply for a new listing (technical listing) on the Tokyo Stock
Exchange Prime Market for shares of the established Joint Holding Company. The date oflisting is scheduled for October 2, 2023, the registration date for establishment of the Joint
Holding Company.

- 45 -

Through the Share Transfer, both companies will become wholly owned subsidiaries of the
Joint Holding Company, and, in accordance with the listing of the Joint Holding Company,
are scheduled to be delisted effective September 28, 2023. If listing of the Joint Holding
Company is approved, the shareholders of both companies will be able to trade shares of
the Joint Holding Company granted through the Share Transfer on the Tokyo Stock
Exchange.
Common stock of NPR is currently listed on the Tokyo Stock Exchange Prime Market. As
the stock does not meet the criterion for market capitalization of tradable stock included
among the criteria for maintaining listing in said market, on November 29, 2021 thecompany submitted a Plan for Meeting the Criteria for Maintenance of Listing in the New
Market Segment (hereinafter the “Plan”) and has been subjected to the application ofinterim measures. It is assumed at present that the market capitalization of tradable stock of
the Joint Holding Company scheduled to be listed will satisfy the above criteria. While thePlan is on hold pending the condition that the above technical listing application isapproved by the Tokyo Stock Exchange, the company will continue striving to enhance its
corporate value in accordance with the aims of the plan.
(d) Measures to ensure fairness
To ensure the fairness of the Share Transfer Ratio and of the Share Transfer, bothcompanies have implemented the following measures.
i
Acquisition of calculation reports from independent third-party valuation bodies
On behalf of the shareholders of the Company, the Company has obtained acalculation report on the share transfer ratio, dated May 23, 2023, from IR Japan, athird-party valuation body independent from both companies. See “(ii) Mattersrelated to calculations” in “3 (1) (b) Grounds, etc. for details of allotments related to
the Share Transfer” for an overview of the calculation report.
Conversely, on behalf of the shareholders of NPR, NPR has obtained a calculation
report on the share transfer ratio, dated May 23, 2023, from Nomura Securities, athird-party valuation body independent from NPR and Riken. See “(ii) Mattersrelated to calculations” in “3 (1) (b) Grounds, etc. for details of allotments related to
the Share Transfer” for an overview of the calculation report.
ii. Advice from an independent law firm
The Company has received advice from a legal perspective from City-Yuwa Partners
as its legal advisor for the Share Transfer, concerning procedures for the Share
Transfer and methods and processes for decision-making by the Board of Directors.
Conversely, NPR has received advice from a legal perspective from Marunouchi
Sogo Law Office as its legal advisor for the Share Transfer, concerning proceduresfor the Share Transfer and methods and processes for decision-making by the Boardof Directors.
Both City-Yuwa Partners and Marunouchi Sogo Law Office are independent fromboth companies and have no material interests of note with both companies.
(e) Measures to avoid conflicts of interest
As no particular conflicts of interest will arise between both companies in connection with
the Share Transfer, no special measures have been taken.
(2) Matters regarding the amounts of capital and capital reserve of the Joint Holding Company
The Company and NPR have determined the amounts of capital and capital reserve of the Joint Holding
Company upon the establishment of the Joint Holding Company by the Share Transfer as follows.
(1) Amount of capital
5,000,000,000 yen(2) Amount of capital reserve
1,250,000,000 yen(3) Amount of legal reserve
0 yen
These amounts of capital and reserves have been determined within the range stipulated in Article 52 of theRegulations on Corporate Accounting after comprehensively considering and examining the size and othercircumstances of the Joint Holding Company and upon consultation between the Company and NPR.
4

Matters concerning the reasonableness of provisions related to matters provided under Article 773,
paragraph (1), items (ix) and (x) of the Companies Act
Upon the Share Transfer, the Joint Holding Company will deliver stock acquisition rights listed in Column
2 of the table below that is equal to the total number of stock acquisition rights subject to allotment(hereinafter referred to as the “stock acquisition rights issued by the joint holding company”) in lieu ofstock acquisition rights subject to allotment to the holders of each stock acquisition right listed in Column 1of the table below that has been issued by the Company and NPR (hereinafter referred to as the “stockacquisition rights subject to allotment”) as of the Base Time. The Joint Holding Company will allot one (1)- 46 -

stock acquisition right issued by the joint holding company for one (1) stock acquisition right subject toallotment held by holders of stock acquisition rights subject to allotment as of the Base Time.
The Company determined that, on the premise of the Share Transfer Ratio of the Share Transfer, handlingof these matters is appropriate as the Joint Holding Company will deliver stock acquisition rights issued by
the joint holding company that are substantially the same in nature and number as the stock acquisitionrights subject to allotment.
The Company
Column 1
Column 2
Contents
Contents
Name
Name
Riken Corporation①

Issuance of Stock Acquisition
Rights in June 2014
(Stock Compensation-type Stock
Options)

NPR-RIKEN CORPORATION
Attachment 2
1-①

Riken Corporation②③

Issuance of Stock Acquisition
Rights in June 2015
(Stock Compensation-type Stock
Options)2023(Stock Compensation-type Stock
Options)

Attachment 2
1-②

2nd Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Riken Corporation

NPR-RIKEN CORPORATION

Issuance of Stock Acquisition

3rd Stock Acquisition Rights ofRights in June 2016
(Stock Compensation-type Stock
Options)
Issuance of Stock Acquisition
Rights in June 2017
(Stock Compensation-type Stock
Options)

Attachment 2
2-①

NPR-RIKEN CORPORATION

Attachment 2
1-③

Riken Corporation④

1st Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Attachment 2
2-②

Attachment 2
2-③

NPR-RIKEN CORPORATION
Attachment 2
1-④

4th Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Attachment 2
2-④

NPR
Column 1

Column 2
Name

Contents

Nippon Piston Ring Co., Ltd.

①

Issuance of Stock Acquisition
Rights in June 2008
(Stock Compensation-type Stock
Options)

Attachment 3
1-①

Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition②

Rights in June 2013
(Stock Compensation-type Stock

5th Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Attachment 3
1-②

6th Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Nippon Piston Ring Co., Ltd.

NPR-RIKEN CORPORATION

Rights in June 2014
(Stock Compensation-type StockContents

Attachment 3
2-①

NPR-RIKEN CORPORATION

Options)
Issuance of Stock Acquisition③

Name
NPR-RIKEN CORPORATION

Attachment 3
1-③

Options)

7th Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)- 47 -

Attachment 3
2-②

Attachment 3
2-③

Column 1

Column 2
Name

Contents

Nippon Piston Ring Co., Ltd.
Issuance of Stock Acquisition④

Rights in June 2015
(Stock Compensation-type Stock

1-④

Attachment 3
1-⑤(Stock Compensation-type Stock

9th Stock Acquisition Rights of2023(Stock Compensation-type Stock

Options)

Options)

Nippon Piston Ring Co., Ltd.

NPR-RIKEN CORPORATION

Issuance of Stock Acquisition
Rights in June 2017
(Stock Compensation-type Stock
Options)

Attachment 3
1-⑥

Issuance of Stock Acquisition
Rights in June 2018
(Stock Compensation-type Stock
Options)
Issuance of Stock Acquisition
Rights in June 2019
(Stock Compensation-type Stock
Options)

10th Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Attachment 3
2-④

Attachment 3
2-⑤

Attachment 3
2-⑥

NPR-RIKEN CORPORATION
Attachment 3
1-⑦

Nippon Piston Ring Co., Ltd.

⑧

2023

NPR-RIKEN CORPORATION

Nippon Piston Ring Co., Ltd.

⑦

8th Stock Acquisition Rights of

Nippon Piston Ring Co., Ltd.

(Stock Compensation-type Stock⑥

Attachment 3

Options)

Rights in June 2016

Contents

NPR-RIKEN CORPORATION

Options)
Issuance of Stock Acquisition

⑤

Name

11th Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Attachment 3
2-⑦

NPR-RIKEN CORPORATION
Attachment 3
1-⑧

12th Stock Acquisition Rights of2023(Stock Compensation-type Stock
Options)

Attachment 3
2-⑧

Details of the Attachments are provided from page 21 to page 41.
5Matters related to NPR(1) Details of financial statements of NPR’s final fiscal year (Fiscal year ended March 31, 2023)
Details of NPR’s financial statements for fiscal year ended March 31, 2023 are excluded from thisdocument in accordance with the provisions of laws and regulations and Article 15 of the Company’s
Article of Incorporation. Such details are posted on the Company’s website and the TSE website.
(2) Details of events materially affecting the status of corporate property that occurred after the last day of
the final fiscal year
There are no applicable items.

- 48 -

6

Details of events materially affecting the status of corporate property that occurred in the Company after thelast day of the final fiscal year
(Business combination through acquisition)
The Company acquired 76.56% of the shares in JFE Pipe Fitting Mfg. Co., Ltd. from JFE Steel Corporation
on May 9, turning it into a subsidiary. The names of the company was changed that same day to NIPPONPIPE FITTING Corporation (hereinafter referred to as “Nippon-PF”).
1.
(i)

Overview of the business combination
Name and description of business of the acquired company
Name of the acquired company:
JFE Pipe Fitting Mfg. Co., Ltd.
Description of business:
Manufacture and sale of fittings for gas, water and other piping,and parts for architectural and industrial machines; andprocessing of prefabricated pipes(ii) Primary reasons for the business combination
In recent year, the automobile industry has faced what is referred to as a once a hundred year major
revolution and the market awareness surrounding engine components, a mainstay business of theCompany, has become severe. As put forward in our mid-term strategic plan “PLAN2022,” theCompany is planning to expand Non-ICE (Internal-combustion engine) business as a next generation
new business, and has considered the aggressive use of M&A to expand the portfolio in businessdomains with which the Company has a high affinity.
Nippon-PF manufactures and sells a broad range of pipe fittings and has solid relationships throughtransactions with many customers over a long period of time due to its high quality productcapabilities, and is positioned a leading player within the industry.
Nippon-PF has a firm presence in the gas pipe fittings domain and we are aware that its mainstay
products are adequately separated from those of the Company. This acquisition of shares is expected
to create wide-ranging synergies to enable both companies to fulfill their responsibilities tomanufacture and supply pipe fittings that play an important role in supporting critical infrastructure
in a timely and appropriate manner. Furthermore, in addition to major improvements in productivity
and being able to establish sustainable systems that can supply high quality products, we decided toacquire the shares in the belief that this will enable us to accelerate initiatives to address climatechange issues towards the Group’s carbon neutral target.
The Company aims to achieve sustained growth and improved corporate value through medium tolong-term management stability by continuing to provide customers with high quality products bywelcoming Nippon-PF to the Group and utilizing the strengths of both companies.
(iii) Date of business combination
May 9, 2023 (deemed acquisition date: April 1, 2023)(iv) Legal form of the business combination
Share acquisition in consideration of cash(v) Company name after business combination
NIPPON PIPE FITTING Corporation(vi) Ratio of voting rights to acquire
76.56%(vii) Main grounds for determining the acquiring company
The Company acquired the shares for cash as consideration.
2.

Acquisition cost of acquired company and the breakdown by consideration typeNot disclosed due to arrangements with the counterparty to this acquisition of shares.
The acquisition cost of the shares is determined based on the share value reasonably calculated by athird-party.

3.

Content and amount of major acquisition-related costs
The major acquisition-related costs are advisory fees, which are not yet determined.

4.

Amount of goodwill, reason for recognition, amortization method and amortization period
Not yet determined.

5.

Assets acquired and liabilities assumed on the date of business combination and the main breakdown
Not yet determined.

(Large amount of borrowings)- 49 -

In accordance with a resolution at the Board of Directors meeting held on March 22, 2023, the Company
undertook borrowings on April 28, 2023, mainly to provide the funds required to acquire the shares of
NIPPON PIPE FITTING Corporation (formerly, JFE Pipe Fitting Mfg. Co., Ltd.), as follows.
(1)
(2)
(3)
(4)
(5)
(6)

Lender:Amount of borrowing:
Interest rate on borrowings:
Date of borrowing:
Period of borrowing:
Collateral:

Mizuho Bank, Ltd.
3,000 million yen
Base interest rate + spread
April 28, 2023
5 years
No collateral, no guarantee- 50 -

7

Regulations for Enforcement of the Companies Act regarding persons who will become Directors of thejoint holding company (excluding Directors who are Audit and Supervisory Committee Members)
Matters stipulated in Article 74
Persons who will become Directors of the joint holding company (excluding Directors who are Audit andSupervisory Committee Members) are as follows.
(1) Number of theCompany’s shares
ownedCareer summary, position and responsibilities, andName(2) Number of NPR’s
No.
significant concurrent positions outside the(Date of birth)shares owned
Company(3) Number of the joint
holding company’s
shares allotted
March 1986
Joined Riken Corporation
February
General Manager of Nagoya Sales
2004
Division of Riken Corporation
June 2010
Director, Chairman of Overseas
Committee of Riken Corporation
May 2013
Director of Riken Corporation
June 2015
Managing Director of Riken
Corporation
May 2016
Director, Managing Executive
Officer of Riken Corporation
April
2019
Director, Senior Managing
Yasunori(1) 24,900
Executive Officer of Riken
Maekawa(2) –Corporation(February 27,(3) 49,800
June 2019
Representative Director, Senior
1958)
Managing Executive Officer ofRiken Corporation
1
April 2020
Representative Director, President(COO) of Riken Corporation
April 2022
Representative Director, President(CEO & COO) of Riken
Corporation
DecemberRepresentative Director, President
2022(CEO, COO, CIO & CISO) of
Riken Corporation (present
position)(Reasons for nomination as candidate for Director)
Yasunori Maekawa has contributed to the sustained growth of the Riken Group and to increasing its
medium-to long-term growth by directing management and working on global business expansion
and management issues following long years of service in leading overseas sales, domestic sales andoverseas business.
He has extensive knowledge and experience in overall management, so he is considered to bequalified to make decisions on important matters and supervise business execution and the Company
nominates him as a candidate for Director of the newly established Joint Holding Company.

- 51 -

No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside theCompany

April 1981

2

3(1) Number of theCompany’s shares
owned(2) Number of NPR’s
shares owned(3) Number of the joint
holding company’s
shares allotted

Joined Nippon Piston Ring Co.,Ltd.
April 2005
General Manager, ProductEngineering Department II of
Nippon Piston Ring Co., Ltd.
June 2006
Executive Officer and General
Manager, Product Engineering
Department II, Development
Division of Nippon Piston Ring
Co., Ltd.
(1) –Teruo Takahashi
June 2009
Director and General Manager,(2) 15,300(February 10,
Product Engineering Department(3) 15,606
1959)
II, in charge of Research andDevelopment Department of
Nippon Piston Ring Co., Ltd.
June 2016
Managing Director, in charge of
Research and Development
Department of Nippon Piston Ring
Co., Ltd.
June 2020
Representative Director andPresident, in charge of Internal
Auditors Office of Nippon Piston
Ring Co., Ltd. (present position)(Reasons for nomination as candidate for Director)
Teruo Takahashi has led corporate management and contributed to the Nippon Piston Ring Group’s
sustainable growth and medium to long term corporate value enhancement through various businessdevelopments. We nominated him as a candidate for Director of the Joint Holding Company to be
newly established based on his continuing extensive knowledge and experience in all aspects ofmanagement and his qualifications for making decisions on important matters and supervising theexecution of business operations.
April 1976
Joined The Industrial Bank ofJapan, Limited
April 2005
Managing Executive Officer ofMizuho Bank, Ltd.
March 2008 President and CEO of Mizuho
Research Institute Ltd.
June 2012Managing Director of Riken
Corporation
June 2013
Senior Managing Director,
Chairman of the Corporate Strategy (1) 29,900
Kaoru Itoh
Committee of Riken Corporation(2) –(April 9, 1953)(3) 59,800
June 2015
Representative Director, President(COO) of Riken Corporation
April 2018
Representative Director, President(CEO & COO) of Riken
Corporation
April 2020
Chairman (CEO) of Riken
Corporation
April 2022
Representative Director, Chairmanof Riken Corporation (present
position)(Reasons for nomination as candidate for Director)- 52 -

No.

(1) Number of theCompany’s shares
ownedCareer summary, position and responsibilities, andName(2) Number of NPR’ssignificant concurrent positions outside the(Date of birth)shares owned
Company(3) Number of the joint
holding company’s
shares allotted
Kaoru Itoh has contributed to the sustained growth of the Riken Group and to increasing its
medium-to long-term growth by directing management and working on global business expansion
and management issues. He has extensive knowledge and experience in overall management, so heis considered to be qualified to make decisions on important matters and supervise businessexecution and the Company nominates him as a candidate for Director of the newly established Joint
Holding Company.

- 53 -

No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside theCompany

July 1977
April 2001

4(1) Number of theCompany’s shares
owned(2) Number of NPR’s
shares owned(3) Number of the joint
holding company’s
shares allotted

Joined Nippon Piston Ring Co., Ltd.
General Manager, Tokyo East Sales
Department of Nippon Piston Ring
Co., Ltd.
April 2004
Executive Officer and General
Manager, Tokyo Sales Department,
Sales Division of Nippon Piston
Ring Co., Ltd.
June 2006
Director, Deputy General Manager,
Sales Division, and General
Manager, Sales Planning
Department, Sales Division of
Nippon Piston Ring Co., Ltd.
June 2013
Managing Director, in charge ofsales departments of Nippon Piston
Ring Co., Ltd.
(1) –June 2020
Representative Director, Managing
Yuji Sakamoto(2) 19,780
Director, in charge of sales(October 22, 1957)(3) 20,175
departments of Nippon Piston Ring
Co., Ltd.
June 2021
Representative Director, Senior
Managing Executive Officer, incharge of Production Control
Department, Global Procurement
Department and Tochigi Plant of
Nippon Piston Ring Co., Ltd.
April 2023
Representative Director, Executive
Vice President, in charge of
Production Control Department,
Global Procurement Department
and Tochigi Plant of Nippon Piston
Ring Co., Ltd. (present position)(Significant concurrent positions)
Director and Chairman, NPR Singapore Pte. Ltd.
Director, NPR of Europe GmbH
(Reasons for nomination as candidate for Director)
Yuji Sakamoto has extensive knowledge of all aspects of the management, and has contributed to
the Nippon Piston Ring Group’s sustainable growth and enhancement of its corporate value over the
medium to long term. We nominated him as a candidate for Director of the Joint Holding Company
to be newly established based on his continuing extensive knowledge and experience in all aspectsof management and his qualifications for making decisions on important matters and supervising theexecution of business operations.

- 54 -

No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside theCompany

April 1985

Joined Riken Corporation

June 2011

5(1) Number of theCompany’s shares
owned(2) Number of NPR’s
shares owned(3) Number of the joint
holding company’s
shares allotted

General Manager of Corporate
Planning Division of Riken
Corporation
May 2016
Executive Officer, General Manager
of Corporate Planning Division of
Riken Corporation
June 2020
Executive Officer of Riken
Corporation, President of Riken
Mexico, S.A. DE C.V.
Hidehiro Sakaba(1) 9,800
April
2022
Managing Executive Officer of(November 22,(2) –Riken Corporation, President of
1962)(3) 19,600
Riken Mexico, S.A. DE C.V.
May 2022
Managing Executive Officer,
General Manager of Corporate
Management Head Office of Riken
Corporation
June 2022
Director, Managing Executive
Officer, General Manager ofCorporate Management Head
Office of Riken Corporation(present position)(Reasons for nomination as candidate for Director)
Hidehiro Sakaba has in-depth expertise in corporate planning, accounting and finance, and corporate
management divisions. He has contributed to the sustained growth of the Riken Group and toincreasing its medium-to long-term growth. He has extensive knowledge and experience in overallmanagement, so the Company deems him qualified to make decisions on important matters andsupervise business execution and the Company nominates him as a candidate for Director of the
newly established Joint Holding Company.

- 55 -

No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside theCompany

April 1984
April 2005

6(1) Number of theCompany’s shares
owned(2) Number of NPR’s
shares owned(3) Number of the joint
holding company’s
shares allotted

Joined Nippon Piston Ring Co., Ltd.
General Manager, Corporate
Planning Department of Nippon
Piston Ring Co., Ltd.
June 2006
President of NPR of America, Inc.
July 2012
Operating Officer of Nippon Piston
Ring Co., Ltd.
President of NPR of America, Inc.
June 2013
Director, General Manager,
Corporate Planning Department, incharge of Corporate Planning
Department and Overseas Operation
Control Department of Nippon
Piston Ring Co., Ltd.
June 2021
Director, Managing Executive
Officer (present position) in charge(1) –of Corporate Planning Department
Masaaki Fujita(2) 13,924
and Accounting and Finance(May 30, 1961)(3) 14,202
Department of Nippon Piston Ring
Co., Ltd.
September
In charge of Corporate Planning2022
Department, Accounting and
Finance Department, and Related
Business Department of Nippon
Piston Ring Co., Ltd.
April 2023
In charge of Corporate
Administration Department,
Accounting and Finance
Department, and Related Business
Department of Nippon Piston Ring
Co., Ltd. (present position)(Significant concurrent positions)
Komisaris, PT. NT Piston Ring Indonesia
Komisaris, PT. NPR Manufacturing Indonesia
Director, NPR of America, Inc.
(Reasons for nomination as candidate for Director)
Masaaki Fujita holds a high level of expertise in the corporate planning department and corporate
administration department, and has contributed to the Nippon Piston Ring Group’s sustainablegrowth and medium to long term enhancement of corporate value. We nominated him as a candidate
for Director of the Joint Holding Company to be newly established based on his continuing
extensive knowledge and experience in all aspects of management and his qualifications for making
decisions on important matters and supervising the execution of business operations.

- 56 -

No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside theCompany

April 1973
May 1999

7(1) Number of theCompany’s shares
owned(2) Number of NPR’s
shares owned(3) Number of the joint
holding company’s
shares allotted

Joined Bank of Japan
Director-General of International
Department of Bank of Japan
June 2002
Executive Director of Bank ofJapan
June 2006
Director, Vice President of Toyota
Financial Services Corporation
May 2015
Director, Representative Statutory
Executive Officer of MetLife, Inc.
June 2015
Outside Director of Riken
Corporation (present position)
Eiji Hirano
June 2016
Outside Director of NTT DATA
(1) –Corporation (present position)(2) –(September 15,(3) –September
Director, Vice Chairman of
1950)
2017
MetLife, Inc. (present position)
October
Chairperson of the Board of2017
Governors of Government Pension
Investment Fund
June 2022
Outside Director of Ichiyoshi
Securities Co., Ltd. (present
position)(Significant concurrent positions)
Director, Vice Chairman of MetLife, Inc.
Outside Director of NTT DATA Corporation
Outside Director of Ichiyoshi Securities Co., Ltd.
(Reasons for nomination as candidate for Outside Director and outline of expected role)
Eiji Hirano held a top post in the Bank of Japan, has in-depth expertise in overall corporate
management such as at financial institutions as well as extensive international experience and broad
insights. He has proactively provided his opinions of the overall management of the Riken Group
from an objective perspective, while fulfilling his role of supervising management. The Company
has nominated him as a candidate for Outside Director as we expect him to fulfill his important roleof providing recommendations and advice to ensure the adequacy and appropriateness of the Boardof Directors decision making also at the newly established Joint Holding Company from an
independent perspective.

- 57 -

No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside theCompany

November
1991

8

Masako Kurosawa(July 23, 1962)

Research Fellow, Institute for
Research on Higher Education,
University of Pennsylvania,
Philadelphia, USA
September
Visiting Assistant Professor,
1994
Economics Department, Barnard
College, New York, USA
April 1995
Associate Professor, Josai
University, Department of
Economics
April 1998
Visiting Associate Professor, The
Open University of Japan, Industry
and Technology
April 2000
Associate Professor, Meiji Gakuin
University, Department of
Economics
April 2004
Professor of National Graduate
Institute for Policy Studies (present
position)
Director, Tokyo Foundation for
Employment Services(present position)
April 2005
Faculty Fellow, Research Instituteof Economy, Trade and Industry
April 2012
Member of the Managing Council,
Japan Organization for Employmentof the Elderly, Persons with
Disabilities and Job Seekers(present position)
September
Visiting Fellow, Columbia Business
2015
School, Centre on Japanese
Economy and BusinessFebruary
Chair of the Committee
2020
Investigation the Integration of the
National Trades Skill Test, Skill
Assessment Office, Human
Resources Development Division,
Ministry of Health, Labour andWelfare (present position)
April 2021
Director and Vice President,
National Graduate Institute for
Policy Studies (present position)
April 2022
Standing Member of Productivity
Committee, Japan Productivity
Center (present position)
April 2023
Member of Employment Security
Committee, Labour Policy Council,
Employment Security Bureau,
Ministry of Health, Labor andWelfare (present position)(Significant concurrent positions)
Director, Vice President and Professor, National
Graduate Institute for Policy Studies(1) Number of theCompany’s shares
owned(2) Number of NPR’s
shares owned(3) Number of the joint
holding company’s
shares allotted- 58 -

(1) –
(2) –
(3) –

No.

(1) Number of theCompany’s shares
ownedCareer summary, position and responsibilities, andName(2) Number of NPR’ssignificant concurrent positions outside the(Date of birth)shares owned
Company(3) Number of the joint
holding company’s
shares allotted(Reasons for nomination as candidate for Outside Director and outline of expected role)
Masako Kurosawa has no past experience in management of a company, but she has a high level ofexpertise in labor economics as an academic. For this reason the Company has nominated her as a
candidate for Outside Director as we expect her to fulfill her important role of providing
recommendations and advice to ensure the adequacy and appropriateness of the Board of Directors
decision making also at the newly established Joint Holding Company.

(Notes)1
The class and number of shares of the Company and NPR held by each candidate are based on theshareholding status as of March 31, 2023, and the class and number of shares of the joint holding company
to be allotted are based on the said shareholding status, taking into account the Share Transfer Ratio.
Therefore, the actual number of shares of the joint holding company to be allotted may vary depending on
the number of shares held immediately prior to the date of the establishment of the joint holding company.
2
There are no special interests between each candidate and the Company and NPR, nor are they expected tohave any special interests with respect to the joint holding company.
3
Eiji Hirano and Masako Kurosawa are candidates for Outside Directors.
4
If Eiji Hirano and Masako Kurosawa are elected as Outside Directors, the joint holding company plans toregister them as independent directors without any risk of conflict of interest with general shareholders with
the Tokyo Stock Exchange.
5
If each of the candidates for Outside Directors assumes the office, the joint holding company will enter into
an agreement with each of them limiting his/her liability for damages to the joint holding company to theextent stipulated in legislation under Article 423, paragraph (1) of the Companies Act.
6
If each of the candidates for Directors assumes the office, the joint holding company will enter into aliability insurance contract for officers, etc. (D&O Insurance Contract) under Article 430-3, paragraph (1) of
the Companies Act with an insurance company, under which legal damages or legal costs, etc. that shall beborne by the insured will be covered, with all the Directors including Directors who are Audit andSupervisory Committee Members as the insured.

- 59 -

8

Matters stipulated in Article 74-3 of the Regulations for Enforcement of the Companies Act regarding
persons who will become Directors who are Audit and Supervisory Committee Members of the joint
holding company
Persons who will become Directors who are Audit and Supervisory Committee Members are as follows.
(1) Number of theCompany’s shares owned
Career summary, position and(2) Number of NPR’s shares
NameNo.
responsibilities, and significant concurrent
owned(Date of birth)
positions outside the Company(3) Number of the joint
holding company’s sharesallotted
April 1983
Joined Riken Corporation
October
General Manager of Quality
2014
Assurance Division of Riken
Corporation
April 2017
Executive Officer, General
Manager of Piston Ring
Division # 2 of Riken
Corporation
April 2020
Managing Executive Officer,
General Manager of theTechnology Management(1) 12,200
Kouei Watanabe
Division of Riken Corporation (2) –(November 19,(3) 24,400
1958)
April 2021
Managing Executive Officer,
General Manager ofTechnology Management
1
Head Office of Riken
Corporation
June 2021
Director, Managing Executive
Officer, Chief Technical
Officer (CTO) of Riken
Corporation
April 2023
Director of Riken Corporation(present position)(Reasons for nomination as candidate for Director who is Audit and Supervisory Committee
Member)Kouei Watanabe has in-depth expertise mainly in technology fields and has contributed to increase
the corporate value of the Riken Group. For this reason, the Company deems him qualified to audit
the business execution of Directors from an objective and fair perspective and to audit the newly
established Joint Holding Company, so the Company has nominated him as a candidate for Director
who is an Audit and Supervisory Committee Member.

- 60 -

No.

Name(Date of birth)

Career summary, position andresponsibilities, and significant concurrent
positions outside the Company

April 1988

2

(1) Number of theCompany’s shares owned(2) Number of NPR’s shares
owned(3) Number of the joint
holding company’s sharesallotted

Joined Nippon Piston Ring
Co., Ltd.
April 2012
General Manager, Accounting
and Finance Department of
Nippon Piston Ring Co., Ltd.
July 2016
Executive Officer, General
Manager, Accounting and
Finance Department of
Nippon Piston Ring Co., Ltd.
July 2018
Executive Officer, Assistant to
Officer Responsible for
Accounting and Finance
Department of Nippon Piston
Ring Co., Ltd.
(1) –Hiroto Koeba(2) 1,882
June 2020
Audit & Supervisory Board(April 4, 1965)(3) 1,919
Member of Nippon Piston
Ring Co., Ltd.
June 2021
Directors who is Audit &Supervisory Committee
Member of Nippon Piston
Ring Co., Ltd. (present
position)(Significant concurrent positions)Audit & Supervisory Board Member of NPR
IWATE CO., Ltd.
Audit & Supervisory Board Member of NPR
Fukushima Works Co., Ltd.
Audit & Supervisory Board Member of
NORMECA ASIA CO., LTD.
(Reasons for nomination as candidate for Director who is Audit and Supervisory Committee
Member)Hiroto Koeba has in-depth expertise mainly in the accounting field and has contributed to auditing
the business execution of Directors from an objective and fair perspective and ensuring thesoundness of management. For these reasons, the Company deems him qualified to audit the newly
established Joint Holding Company and has nominated him as a candidate for Director who is an
Audit and Supervisory Committee Member.

- 61 -

No.

Name(Date of birth)

Career summary, position andresponsibilities, and significant concurrent
positions outside the Company

April 1981

3(1) Number of theCompany’s shares owned(2) Number of NPR’s shares
owned(3) Number of the joint
holding company’s sharesallotted

Joined The Industrial Bank ofJapan, Limited
April 2009
Executive Officer, General
Manager, Corporate PlanningGroup HR Division ofMizuho Securities Co., Ltd.
June 2011
Vice President and Director ofJapan Securities Agents, Ltd.
June 2012
Director of Japan Information
Processing Service Co., Ltd.
June 2015
Director, Senior Managing
Executive Officer ofSecurities Japan, Inc.
(1) –Osamu Honda(2) –June 2017
Representative Director and(March 4, 1958)(3) –Senior Managing Director of
Nitchitsu Co., Ltd.
June 2019
Representative Director andVice President of NitchitsuCo., Ltd.
June 2021
Outside Auditor of Kurimoto
Ltd. (present position)
June 2021
Outside Directors who is
Audit and Supervisory
Committee Member of Riken
Corporation (present position)(Significant concurrent positions)
Outside Auditor of Kurimoto Ltd.
(Reasons for nomination as candidate for Outside Director who is Audit and Supervisory Committee
Member and outline of expected role)
Osamu Honda has in-depth expertise, extensive experience and broad insights on corporate
management overall such as financial institutions, as well as management experience at othercompanies. He has contributed to auditing the business execution of Directors from an objective andfair perspective and ensuring the soundness of management. For these reasons, the Company expects
he will adequately supervise management and audit the execution of duties at the newly established
Joint Holding Company as well, so the Company has nominated him as a candidate for Outside
Director who is an Audit and Supervisory Committee Member.

- 62 -

No.

Name(Date of birth)

Career summary, position andresponsibilities, and significant concurrent
positions outside the Company

April 1984
April 2012

July 2013

June 2014
April 2015

April 2016

4

Hiroki Kimura(January 19, 1962)
June 2016

April 2017

March 2019

June 2020

June 2021

March 2023

Joined Asahi Mutual Life
Insurance Company
Executive Officer, Head ofFinance and Real Estate
Division, Asset Management
Administration Division,
Asahi Mutual Life Insurance
Company
Director, Executive Officer
and Head of AssetManagement Administration
Division, Asahi Mutual Life
Insurance Company
Outside Auditor, Kanto Denka
Kogyo Co., Ltd.
Director, Managing Executive
Officer in charge of AssetManagement Planning
Department and Securities
Management Department,
Asahi Mutual Life Insurance
Company
Director, Managing Executive
Officer in charge of Corporate
Planning Department and
Finance Department, Asahi
Mutual Life Insurance
Company
Audit & Supervisory Board
Member (Outside) of Nippon
Piston Ring Co., Ltd.
President and Representative
Director, Asahi Mutual Life
Insurance Company (present
position)
Audit & Supervisory Board
Member (Outside), The
Yokohama Rubber Co., Ltd.
Audit & Supervisory Board
Member (External), Zeon
Corporation (present position)
Outside Director who is Audit& Supervisory Committee
Member of Nippon Piston
Ring Co., Ltd. (present
position)
Member of the Board,
Member of the Audit &Supervisory Committee(Outside) of The Yokohama
Rubber Co., Ltd. (present
position)- 63 -(1) Number of theCompany’s shares owned(2) Number of NPR’s shares
owned(3) Number of the joint
holding company’s sharesallotted

(1) –
(2) –
(3) –

No.

Name
(Date of birth)

Career summary, position andresponsibilities, and significant concurrent
positions outside the Company(Significant concurrent positions)
President and Representative Director, Asahi
Mutual Life Insurance Company
Member of the Board, Member of the Audit& Supervisory Committee (Outside) of The
Yokohama Rubber Co., Ltd.
Audit & Supervisory Board Member(External), Zeon Corporation- 64 -(1) Number of theCompany’s shares owned(2) Number of NPR’s shares
owned(3) Number of the joint
holding company’s sharesallotted

No.

(1) Number of theCompany’s shares owned
Career summary, position and(2) Number of NPR’s shares
Nameresponsibilities, and significant concurrent
owned(Date of birth)
positions outside the Company(3) Number of the joint
holding company’s sharesallotted(Reasons for nomination as candidate for Outside Director who is Audit and Supervisory Committee
Member and outline of expected role)
Hiroki Kimura has extensive experience and broad insights on overall management in the life
insurance industry. He has contributed to auditing the business execution of Directors from an
objective and fair perspective and ensuring the soundness of management. For these reasons, theCompany expects he will adequately supervise management and audit the execution of duties at the
newly established Joint Holding Company as well, so the Company has nominated him as a
candidate for Outside Director who is an Audit and Supervisory Committee Member.

- 65 -

No.

Name(Date of birth)

Career summary, position andresponsibilities, and significant concurrent
positions outside the Company

April 1983

September
1999
January
2003

June 2004

December
2005

January
2007
5

Tatsuya Sakuma(October 2, 1956)

July 2008

July 2010

January
2019
March 2019
June 2019

November
2019

March 2022

Public Prosecutor of Tokyo,
Naha and Niigata District
Public Prosecutors Offices, of
Criminal Affairs Bureau of the
Ministry of Justice, and asFirst Secretary of Embassy ofJapan in the United States ofAmerica
Chief of Investigations,
Human Rights Bureau of the
Ministry of Justice
Chief of Public Security
Division, Criminal Affairs
Bureau of the Ministry ofJustice
Chief of Criminal Affairs
Division, Criminal Affairs
Bureau of the Ministry ofJustice
Deputy Head of special
investigation task force of theTokyo District Public
Prosecutors Office
Head of General Affairs
Department of the Tokyo
District Public Prosecutors
OfficeHead of special investigation
task force of the Tokyo
District Public Prosecutors
OfficeChief Public Prosecutor ofOtsu, Maebashi and Chiba
District Public Prosecutors
Offices, Director of United
Nations Asia and Far East
Institute, and Director-Generalof the Research and Training
Institute of the Minister ofJustice
Retired from the position
Outside Director of bitFlyer,
Inc.
Outside Director of AEON
Financial Service Co., Ltd.
(present position)
Registered as an attorney-atlaw
Attorney-at-law of Aoyama
TS Law Office (present
position)
External Director of PowerX,
Inc. (present position)- 66 -(1) Number of theCompany’s shares owned(2) Number of NPR’s shares
owned(3) Number of the joint
holding company’s sharesallotted

(1) –
(2) –
(3) –

No.

Name
(Date of birth)

Career summary, position andresponsibilities, and significant concurrent
positions outside the Company(Significant concurrent positions)
Outside Director of AEON Financial Service
Co., Ltd.
External Director of PowerX, Inc.
Attorney-at-law of Aoyama TS Law Office- 67 -(1) Number of theCompany’s shares owned(2) Number of NPR’s shares
owned(3) Number of the joint
holding company’s sharesallotted

No.

(1) Number of theCompany’s shares owned
Career summary, position and(2) Number of NPR’s shares
Nameresponsibilities, and significant concurrent
owned(Date of birth)
positions outside the Company(3) Number of the joint
holding company’s sharesallotted(Reasons for nomination as candidate for Outside Director who is Audit and Supervisory Committee
Member and outline of expected role)
Tatsuya Sakuma has no past experience in management of a company other than as an outside
officer, but he has extensive experience and broad insights in legal circles, as well as experience asan outside director at other companies. For these reasons, the Company expects he will adequately
supervise management and audit the execution of duties at the newly established Joint Holding
Company as well, so the Company has nominated him as a candidate for Outside Director who is an
Audit and Supervisory Committee Member.

(Notes)1
The class and number of shares of the Company and NPR held by each candidate are based on theshareholding status as of March 31, 2023, and the class and number of shares of the joint holding company
to be allotted are based on the said shareholding status, taking into account the Share Transfer Ratio.
Therefore, the actual number of shares of the joint holding company to be allotted may vary depending on
the number of shares held immediately prior to the date of the establishment of the joint holding company.
2
There are no special interests between each candidate for Directors who are Audit and Supervisory
Committee Members and the Company and NPR, nor are they expected to have any special interests withrespect to the joint holding company.
3
Osamu Honda, Hiroki Kimura and Tatsuya Sakuma are candidates for Outside Directors who are Audit andSupervisory Committee Members.
4
If Osamu Honda, Hiroki Kimura and Tatsuya Sakuma are elected as Outside Directors who are Audit andSupervisory Committee Members, the joint holding company plans to register them as independent
directors without any risk of conflict of interest with general shareholders with the Tokyo Stock Exchange.
5
If each of the candidates for Directors who are Audit and Supervisory Committee Members assumes theoffice, the joint holding company will enter into an agreement with each of them limiting his/her liability
for damages to the joint holding company to the extent stipulated in legislation under Article 423, paragraph(1) of the Companies Act.
6
If each of the candidates for Directors who are Audit and Supervisory Committee Members assumes theoffice, the joint holding company will enter into a liability insurance contract for officers, etc. (D&O
Insurance Contract) under Article 430-3, paragraph (1) of the Companies Act with an insurance company,
under which legal damages or legal costs, etc. that shall be borne by the insured will be covered, with all the
Directors including Directors who are Audit and Supervisory Committee Members as the insured.

- 68 -

9

Matters stipulated in Article 77 of the Regulations for Enforcement of the Companies Act regarding an
entity that will become the accounting auditor of the joint holding company
The entity which will become the accounting auditor of the joint holding company is as follows.
(As of February 28, 2023)
Name
Location of the principal
officeHistory

Deloitte Touche Tohmatsu LLC
Marunouchi Nijubashi Building
2-3, Marunouchi 3-chome, Chiyoda-ku, Tokyo
May 1968
Establishment of Tohmatsu Awoki & Co.
May 1975
Joined Touche Ross International (currently Deloitte Touche
Tohmatsu Limited) allianceFebruary 1990
Name changed to Tohmatsu & Co.
July 2009
Transitioned to a limited liability company and changed name to
Deloitte Touche Tohmatsu LLC
Number of audit clients
3,244 companies (As of May 31, 2022)
Paid-in capital
1,138 million yen
Partners and staff
Partners (Certified Public Accountants):
486 persons
Specified partners:
59 persons
Staff
Certified Public Accountants:
2,586 persons
Successful applicants of the CPA examination, etc.
(including junior Certified Public Accountants):
1,176 persons
Other professional staff:
3,142 persons
Administrative staff:
85 persons
Total:
7,534 persons(Note)
Deloitte Touche Tohmatsu LLC was selected as a candidate for the accounting auditor because thesaid auditing firm has the expertise, independence and internal control systems, etc., required of theaccounting auditor of the joint holding company and therefore was determined as qualified.

Proposal 2:

Appropriation of surplus
The Company aims to deliver stable shareholder returns while considering the Company’s
current performance as well as the future business climate and prospects for businessdevelopment.
According to the policy, the Company proposes as a term-end dividend to pay 60 yen per
share.
The Company has already paid an interim dividend of 60 yen per share. Accordingly, theproposed annual dividend for the fiscal year under review amounts to 120 yen per share.
1. Matters related to year-end dividends(1) Type of dividend property
Cash(2) Allotment of dividend property to shareholders and their aggregate amount
60 yen per common share of the Company
Total amount of dividends: 602,543,040 yen(3) Effective date of distribution of dividends of surplus
June 26, 2023

- 69 -

Proposal 3:

Election of four (4) Directors (excluding Directors who are Audit and Supervisory
Committee Members)
The terms of office of all seven (7) Directors (excluding Directors who are Audit andSupervisory Committee Members; hereinafter the same shall apply in this proposal) will
expire at the conclusion of this Meeting.
Considering the fact that business integration with Nippon Piston Ring Co., Ltd. isscheduled, the Company requests the election of four (4) Directors by reducing the number of
Directors by three (3), to enable more strategic and agile decision-making in the Board of
Directors.
Selection of candidates for Director has undergone deliberations by our voluntary
Nomination and Compensation Committee, of which a majority of members are independent
Outside Directors.
In addition, in relation to this proposal, the Audit and Supervisory Committee of theCompany has determined that all of the candidates for Director are suitable for these roles.
The candidates for Director are as follows:- 70 -

No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company
March 1986
February
2004
June 2010
May 2013
June 2015
May 2016
April 2019
June 2019

April 2020
April 2022

1

Yasunori Maekawa(February 27, 1958)[Reelection]

December
2022

Joined the Company
General Manager of Nagoya Sales
Division of the Company
Director, Chairman of Overseas
Committee of the Company
Director of the Company
Managing Director of the Company
Director, Managing Executive Officerof the Company
Director, Senior Managing Executive
Officer of the Company
Representative Director, Senior
Managing Executive Officer of theCompany
Representative Director, President(COO) of the Company
Representative Director, President(CEO & COO) of the Company
Representative Director, President(CEO, COO, CIO & CISO) of theCompany (present position)

Reasons for nomination as candidate for Director
During his long years of service in the Company,
Yasunori Maekawa has engaged in overseas sales,
domestic sales and overseas business and contributed to
the global expansion of the Group. Since becoming
COO in 2020 and CEO in 2022, he has steadily andsuccessfully worked on management issues including theformulation and execution of a medium-term
management plan. We have nominated him again for thepost of Director, believing his wide-ranging experienceand competence to be invaluable to the Company’s
management.
Attendance at the Board of Directors Meetings
during the fiscal year
19/19 (100%)- 71 -

Number of theCompany’s
shares owned

24,900No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company
April 1985
June 2011
May 2016

June 2020

April 2022

May 2022

June 2022
Hidehiro Sakaba
2(November 22, 1962)[Reelection]

Joined the Company
General Manager of Corporate Planning
Division of the Company
Executive Officer, General Manager ofCorporate Planning Division of theCompany
Executive Officer of the Company,
President of Riken Mexico, S.A. DE
C.V.
Managing Executive Officer of theCompany, President of Riken Mexico,
S.A. DE C.V.
Managing Executive Officer, General
Manager of Corporate Management
Head OfficeDirector, Managing Executive Officer,
General Manager of Corporate
Management Head Office (present
position)

Reasons for nomination as candidate for Director
During his long years of service in the Company,
Hidehiro Sakaba has led corporate management in suchareas as corporate planning and accounting and finance,
and the formulation and promotion of management
plans, including external alliances, in addition to which,as the president of the Company’s main overseas
manufacturing subsidiary since 2020, he has contributed
to enhancing the corporate value of the Company. We
have nominated him again for the post of Director,
believing his wide-ranging experience and competence
to be invaluable to the Company’s management.
Attendance at the Board of Directors Meetings
during the fiscal year
15/15 (100%)- 72 -

Number of theCompany’s
shares owned

9,800

No.

Name
(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company
April 1983
June 2012
January 2016
April 2019
June 2020

October 2020
3

Akiyoshi Takizawa(February 10, 1961)[New election]

Joined the Company
General Manager of Piston Ring
Division of the Company
President of Riken Mexico, S.A. DE
C.V.
Executive Officer, President of Riken
Mexico, S.A. DE C.V.
Executive Officer, General Manager ofPiston Ring Business, General Manager
of Kashiwazaki Plant of the Company
Managing Executive Officer, General
Manager of Piston Ring Business Head
Office, General Manager ofKashiwazaki Plant of the Company(present position)

Reasons for nomination as candidate for Director
During his long years of service in the Company,
Akiyoshi Takizawa has led the Piston Ring Division,
which handles one of the Company’s key products, andset up a piston ring manufacturing base in Mexico,
helping the Company increase profitability. We have
newly nominated him for the post of Director, believing
his wide-ranging experience and competence to beinvaluable to the Company’s management.

- 73 -

Number of theCompany’s
shares owned

10,000No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company
April 1973
May 1999
June 2002
June 2006
May 2015
June 2015
June 2016
September
2017
October 2017

June 2022
Eiji Hirano(September 15,
1950)[Reelection][Outside][Independent]

4

Number of theCompany’s
shares owned

Joined Bank of Japan
Director-General of International
Department of Bank of Japan
Executive Director of Bank of Japan
Director, Vice President of Toyota
Financial Services Corporation
Director, Representative Statutory
Executive Officer of MetLife, Inc.
Outside Director of the Company(present position)
Outside Director of NTT DATA
Corporation (present position)
Director, Vice Chairman of MetLife,
Inc. (present position)
Chairperson of the Board of Governorsof Government Pension Investment
Fund
Outside Director of Ichiyoshi Securities
Co., Ltd. (present position)

Reasons for nomination as candidate for Outside
Director and outline of expected role
Eiji Hirano held a top post in the Bank of Japan andsubsequently held executive posts in a number ofcompanies. We have nominated him again for the post of
Outside Director because we expect that the Company’s
management will benefit from his in-depth expertise andglobal and extensive experience. In addition, if he isreelected, the Company would like him to continue to bea member of the voluntary Nomination andCompensation Committee of the Company, and be
involved in selection of candidates for officer of theCompany and decisions on compensation for officer
from an objective and neutral standpoint. He will have
served as Outside Director for eight (8) years at theconclusion of this General Meeting of Shareholders.

0

Attendance at the Board of Directors Meetings
during the fiscal year
18/19 (94.5%)(Notes)1. There is no special interest between each of the candidates and the Company.
2.
Eiji Hirano is a candidate for Outside Director. In addition, he satisfies the requirements under “Standards for Judgment
3.

of Independence of Outside Directors” (page 82) provided by the Company.
The Company has designated Eiji Hirano as an independent officer according to the rules of the Tokyo Stock Exchange,
Inc., and has registered him with the said exchange. If he is reelected, he will continue to be registered as anindependent officer.

4.

5.

In accordance with Article 427 (1) of the Companies Act, the Company has entered into an agreement with Eiji Hirano
regarding liability for damages under Article 423 (1) of the Companies Act to the Company, limiting his liability to theextent stipulated in legislation. The Company intends to continue this agreement if he is reelected.
The Company has concluded a liability insurance contract for officers, etc. (D&O Insurance Contract) under Article
430-3 (1) of the Companies Act with an insurance company, with all the Directors including Directors who are Audit- 74 -

and Supervisory Committee Members as the insured. Under the insurance contract, damages or legal costs, etc. that may
be incurred by the insured due to claims for damages being filed arising due to acts (including omissions) committed by
the insured based on the status of company officer, etc. will be covered. However, there are certain exclusion reasons,such as damages arising from an act upon recognition of the illegality of the act not being covered. Insurance premiums
for the insurance contract are covered by the Company, based on approval by the Board of Directors and the consent of
the Outside Directors.
If election of candidates for Director is approved, they will be included in the insured under the insurance contract.
The Company plans to renew the insurance contract with the same terms at the next renewal in February 2024.

- 75 -

Proposal 4:

Election of three (3) Directors who are Audit and Supervisory Committee Members
The terms of office of all three (3) currently serving Directors who are Audit and Supervisory
Committee Members will expire at the conclusion of this General Meeting of Shareholders.
As such, the Company requests the election of three (3) Directors who are Audit andSupervisory Committee Members again.
Selection of candidates for Director who is an Audit and Supervisory Committee Member
has undergone deliberations by our voluntary Nomination and Compensation Committee, of
which a majority of members are independent Outside Directors.
Moreover, the Audit and Supervisory Committee has given its consent to this proposal.
The candidates for Director who is an Audit and Supervisory Committee Member are as
follows:No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company
April 1983
October 2014
April 2017

April 2020

April 2021

June 2021
April 2023
1

Kouei Watanabe(November 19, 1958)[New election]

Number of theCompany’s
shares owned

Joined the Company
General Manager of Quality Assurance
Division of the Company
Executive Officer, General Manager ofPiston Ring Division # 2 of theCompany
Managing Executive Officer, General
Manager of the Technology
Management Division of the Company
Managing Executive Officer, General
Manager of the Technology
Management Head Office of theCompany
Director, Managing Executive Officer(CTO) of the Company
Director of the Company (present
position)

Reasons for nomination as candidate for Director
who is Audit and Supervisory Committee Member
During his long years of service in the Company, Kouei
Watanabe has led manufacturing operations, quality
assurance operations and technical management
operations for piston rings, one of the Company’s key
products, which has helped the Company increase
profitability. We have nominated him for the post of
Director who is an Audit and Supervisory Committee
Member, because we believe that the Company’s audits
will benefit from his in-depth specialist knowledge andexperience.
Attendance at the Board of Directors Meetings
during the fiscal year
19/19 (100%)- 76 -

12,200No.

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company

April 1981
April 2009

June 2011
June 2012
June 2015
June 2017
June 2019
June 2021
June 2021

2

Osamu Honda(March 4, 1958)[Reelection][Outside][Independent]

Number of theCompany’s
shares owned

Joined The Industrial Bank of Japan,
Limited
Executive Officer of Mizuho Securities
Co., Ltd.
General Manager, Corporate PlanningGroup HR Division
Vice President and Director of Japan
Securities Agents, Ltd.
Director of Japan Information
Processing Service Co., Ltd.
Director, Senior Managing Executive
Officer of Securities Japan, Inc.
Representative Director and Senior
Managing Director of Nitchitsu Co.,
Ltd.
Representative Director and Vice
President of Nitchitsu Co., Ltd.
Outside Auditor of Kurimoto Ltd.
(present position)
Outside Director who is an Audit andSupervisory Committee Member of theCompany (present position)

Reasons for nomination as candidate for Outside
Director who is Audit and Supervisory Committee
Member and outline of expected role
We have nominated Osamu Honda again for the post of
Outside Director who is an Audit and Supervisory
Committee Member because we expect that theCompany’s audits will benefit from his extensive
experience and in-depth specialist knowledge offinancial matters based on his many years of experienceat financial institutions as well as his experience inmanagement at other companies.
In addition, if he is reelected, the Company would likehim to continue to be a member of the voluntary
Nomination and Compensation Committee of theCompany, and be involved in selection of candidates forofficer of the Company and decisions on compensationfor officers from an objective and neutral standpoint. He
will have served as Outside Director for two (2) years at
the conclusion of this General Meeting of Shareholders.
Attendance at Audit and Supervisory Committee
Meetings during the fiscal year
15/15 (100%)
Attendance at the Board of Directors Meetings
during the fiscal year
19/19 (100%)- 77 -

0

No.

Name
(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company
April 1983

September
1999
January 2003

June 2004

December
2005
January 2007

July 2008

July 2010

3

Tatsuya Sakuma(October 2, 1956)[New election][Outside][Independent]

January 2019
March 2019
June 2019

November
2019

Public Prosecutor of Tokyo, Naha andNiigata District Public Prosecutors
Offices, of Criminal Affairs Bureau of
the Ministry of Justice, and as First
Secretary of Embassy of Japan in the
United States of America
Chief of Investigations, Human Rights
Bureau of the Ministry of Justice
Chief of Public Security Division,
Criminal Affairs Bureau of the Ministryof Justice
Chief of Criminal Affairs Division,
Criminal Affairs Bureau of the Ministryof JusticeDeputy Head of special investigation
task force of the Tokyo District Public
Prosecutors Office
Head of General Affairs Department of
the Tokyo District Public Prosecutors
OfficeHead of special investigation task forceof the Tokyo District Public Prosecutors
OfficeChief Public Prosecutor of Otsu,
Maebashi and Chiba District Public
Prosecutors Offices, Director of United
Nations Asia and Far East Institute, andDirector-General of the Research andTraining Institute of the Minister ofJustice
Retired from the position
Outside Director of bitFlyer, Inc.
Outside Director of AEON Financial
Service Co., Ltd.
(present position)
Registered as an attorney-at-law
Attorney-at-law of Aoyama TS Law
Office (present position)

Reasons for nomination as candidate for Outside
Director who is Audit and Supervisory Committee
Member and outline of expected role
While Tatsuya Sakuma has not been involved incorporate management aside from serving as an outside
officer, we have nominated him for the post of Outside
Director who is an Audit and Supervisory Committee
Member, because we expect that the Company’s audits
will benefit from his knowledge and experience as apublic prosecutor and attorney and his experience as an
outside director at other companies. In addition, if hiselection is approved, the Company would like him to bea member of the voluntary Nomination andCompensation Committee of the Company, and be- 78 -

Number of theCompany’s
shares owned

0

No.

Name
(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company

Number of theCompany’s
shares owned

involved in selection of candidates for officer, etc. of theCompany and decisions on compensation for officer
from an objective and neutral standpoint.
(Notes)1.
There is no special interest between each of the candidates and the Company.
2.

Osamu Honda and Tatsuya Sakuma are candidates for Outside Director. In addition, both satisfy the requirements under“Standards for Judgment of Independence of Outside Directors” (page 82) provided by the Company.

3.

Osamu Honda was a business executor at Mizuho Bank, Ltd. until March 2002 and Mizuho Securities Co., Ltd. until
June 2011. The Company and the two (2) companies conduct transactions; however, the transaction amount is less than
1% of the respective consolidated sales of the Company and the two (2) companies, and the amount of borrowings from
Mizuho Bank, Ltd. does not exceed 2% of the consolidated assets of the Company. Moreover, although Mizuho Bank,
Ltd. is a shareholder in the Company, its shares are less than 10% of the total.
The Company determines that both of the above matters satisfy the requirements for “Standards for Judgment of
Independence of Outside Directors” (page 82), and will have no impact on independence as an Outside Director who is
an Audit and Supervisory Committee Member.

4.

5.

The Company has designated Osamu Honda as an independent officer according to the rules of the Tokyo Stock
Exchange, Inc., and has registered him with the said exchange. If he is elected, he will continue to be registered as anindependent director. If Tatsuya Sakuma is elected, he will be newly registered as an independent officer.
In accordance with Article 427 (1) of the Companies Act, the Company has entered into an agreement with Osamu
Honda regarding liability for damages under Article 423 (1) of the Companies Act to the Company, limiting his liability
to the extent stipulated in legislation. The Company intends to continue this agreement if his reelection is approved. If
the election of Kouei Watanabe and Tatsuya Sakuma is approved, the Company plans to enter into the same limited
liability agreement with them.

6.

The Company has concluded a liability insurance contract for officers, etc. (D&O Insurance Contract) under Article
430-3 (1) of the Companies Act with an insurance company, with all the Directors including Directors who are Audit
and Supervisory Committee Members as the insured. Under the insurance contract, damages or legal costs, etc. that may
be incurred by the insured due to claims for damages being filed arising due to acts (including omissions) committed by
the insured based on the status of company officer, etc. will be covered. However, there are certain exclusion reasons,such as damages arising from an act upon recognition of the illegality of the act not being covered. Insurance premiums
for the insurance contract are covered by the Company, based on approval by the Board of Directors and the consent of
the Outside Directors.
If election of candidates for Director who is an Audit and Supervisory Committee Member is approved, they will be
included in the insured under the insurance contract.
The Company plans to renew the insurance contract with the same terms at the next renewal in February 2024.

- 79 -

Proposal 5:

Election of one (1) substitute Director who is an Audit and Supervisory Committee
Member
The Company requests election of one (1) substitute Director who is an Audit andSupervisory Committee Member in preparation for the case where the number of Directors who
are Audit and Supervisory Committee Members falls short of the number stipulated by laws
and regulations.
The substitute Director who is an Audit and Supervisory Committee Member will assume
office to fill a vacancy in the Audit and Supervisory Committee that would otherwise cause theboard to fall short of its legally mandated quorum. The term of office of the substitute Director
who is an Audit and Supervisory Committee Member will be for the remainder of the term ofoffice of the previous member whom they substitute.
Selection of candidates has undergone deliberations by our voluntary Nomination andCompensation Committee, of which a majority of members are independent Outside Directors.
Moreover, the Audit and Supervisory Committee has given its consent to this proposal.
The candidate for substitute Director who is an Audit and Supervisory Committee Member is
as follows:

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company

April 1975

July 2002
April 2005
February
2012
April 2017
Koji Tanabe(February 1, 1952)[Outside]

June 2019
January
2021

Joined the Ministry of International
Trade and Industry (currently the
Ministry of Economy, Trade andIndustry)
Director-General of Research andStatistics Department of the Ministry of
Economy, Trade and Industry
Professor of Graduate School of
Innovation Management of Tokyo
Institute of Technology
Director of the Japan Asia Group
LimitedProfessor Emeritus of Tokyo Institute ofTechnology (present position)
Outside Director of the Company(present position)
Director of Intron Space Inc. (present
position)

Reasons for nomination as candidate for substituteOutside Director who is Audit and Supervisory
Committee Member and outline of expected role
Koji Tanabe worked as a professor at the Tokyo Instituteof Technology after serving at the Ministry of Economy,
Trade and Industry for many years. We have nominatedhim for the post of substitute Director who is an Audit
and Supervisory Committee Member because we expectthat the Company’s audits will benefit from his in-depth
expertise and extensive experience in innovation
management, as well as his management experience atother companies and the Company.

- 80 -

Number of theCompany’s
shares owned0(Notes)
1.
There is no special interest between the candidate and the Company.
2.

Koji Tanabe is a candidate for substitute Outside Director who is an Audit and Supervisory Committee Member. He
was an Outside Director of the Company for four (4) years from June 2019.

3.

If Koji Tanabe assumes the office of Outside Director who is an Audit and Supervisory Committee Member, theCompany will enter into an agreement with him limiting his liability for damages to the extent stipulated in legislation

4.

under Article 427 (1) of the Companies Act.
The Company has concluded a liability insurance contract for officers, etc. (D&O Insurance Contract) under Article
430-3 (1) of the Companies Act with an insurance company, with all the Directors including Directors who are Audit
and Supervisory Committee Members as the insured. Under the insurance contract, damages or legal costs, etc. that may
be incurred by the insured due to claims for damages being filed arising due to acts (including omissions) committed by
the insured based on the status of company officer, etc. will be covered. However, there are certain exclusion reasons,such as damages arising from an act upon recognition of the illegality of the act not being covered. Insurance premiums
for the insurance contract are covered by the Company, based on approval by the Board of Directors and the consent of
the Outside Directors.
If Koji Tanabe assumes the office of Outside Director who is an Audit and Supervisory Committee Member, he will be
included in the insured under the insurance contract.

- 81 -

(Reference) Standards for Judgment of Independence of Outside Directors
The Company will elect persons who are judged not to fall under any of the following items as independent
Outside Director, in order to ensure objectiveness and transparency of management.
1. Business executors of the Group (executive directors, executive officers, operating officers, and otherequivalent persons and employees; the same shall apply hereinafter), or persons who used to be businessexecutors of the Group in the past ten (10) years
2. The Company’s current major shareholders (shareholders who hold 10% or greater on a voting rights basis
in their own name or in the name of others at the end of the most recent fiscal year of the Company) or theirbusiness executors
3. Major business partners of the Group that fall under any of the following items or business executors
thereof(i) Business partners to whom the Group provides products, etc., who have paid the Company 2% or greaterof the Company’s annual consolidated sales in the most recent fiscal year.
(ii) Business partners who provide products, etc. to the Group and have received payment of 2% or greater of
the annual consolidated sales of those parties in the most recent fiscal year.
(iii) Financial institutions from which the Group borrows funds and from which the actual borrowing balance(after offsetting deposits) exceeds 2% of the Company’s consolidated total assets at the end of the mostrecent three (3) fiscal years of the Company.
4. Persons who belong to an audit firm that is an accounting auditor of the Company or its consolidated
subsidiaries
5. Parties (if it is an organization such as a corporation or association, etc., persons who belong to the relevantorganization) who provide professional services such as consultants, lawyers, certified accountants, etc.
who receive a large amount of money or other property* from the Group in addition to officer
compensation.
6. Parties who have received a large amount of donations from the Group (meaning the case of the annual
amount exceeding 10 million yen in the most recent fiscal year) (if a party is a group such as a corporation
or association, etc., a business executor of the relevant group)
7. Business executors of companies that have appointed a business executor of the Group as their officer
8. Those who used to fall under any of the above 2 to 7 in the past five (5) years
9. Spouses or relatives within the second degree of kinship of parties that fall under any of the above 1 to 7
10. Persons who have been in office as outside officers of the Company for ten (10) years or longer in total
11. Any other persons who have a risk of conflict of interest with general shareholders and have circumstances
under which they are reasonably judged to be unable to perform duties as independent outside directors.
※ “Large amount of money or other property” is defined as follows.
If the party who provides professional services is an individual: those that exceed 10 million yen per year on average inthe most recent three (3) fiscal years
If the party who provides professional services is a group: those that exceed 2% of consolidated sales or annual total
income of the relevant group on average in the most recent three (3) fiscal years- 82 -

(Reference) List of Officers After the Conclusion of this Meeting
If Proposal 3 “Election of four (4) Directors (excluding Directors who are Audit and Supervisory Committee
Members)” and Proposal 4 “Election of three (3) Directors who are Audit and Supervisory Committee Members”
are approved and adopted in their original forms, officers of the Company after the conclusion of this Meeting
will be as follows.
Position in the
Company

Name

Representative Director,
President

Yasunori Maekawa

Director

Hidehiro Sakaba

Director

Akiyoshi Takizawa

Outside Director

Eiji Hirano

Director(Full-Time Audit andSupervisory Committee
Member)Outside Director(Audit and Supervisory
Committee Member)
Outside Director(Audit and Supervisory
Committee Member)

Responsibilities and significant concurrent
positions outside the Company
CEO (Chief Executive Officer), COO (Chief
Operating Officer), General Manager of Sales
Head Office
Managing Executive Officer, CIO (Chief
Information Officer), CISO (Chief Information
Security Officer), General Manager of Corporate
Management Head Office, in charge of Marine andIndustrial Business
Managing Executive Officer, General Manager ofPiston Ring Business Head Office, General
Manager of RPS Promotion Division, General
Manager of Kashiwazaki Plant
Director, Vice Chairman of MetLife, Inc.
Outside Director of NTT DATA Corporation
Outside Director of Ichiyoshi Securities Co., Ltd.

Kouei Watanabe

Osamu Honda

Outside Auditor of Kurimoto Ltd.

Tatsuya Sakuma

Outside Director of AEON Financial Service Co.,Ltd.
Outside Director of PowerX, Inc.
Attorney at Aoyama TS Law Office- 83 -

Corporate
management
○
○
○
○
○
○

Main areas in which Directors are expected to have experience
Legal affairs
Global/ Governance
Finance /Innovation /Manufacturing
management/ RiskAccounting
R&D
management
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○

- 84 -

Sales /
Marketing○(Attachment)

Business Report(From April 1, 2022 to March 31, 2023)

1. Matters Regarding the Current Status of the Corporate Group
1-1

Business Progress and Results
During the current consolidated fiscal year (April to March in Japan and India, January to
December in the rest of the world), global economies showed signs of recovery thanks to theeasing of restrictions on activities aimed at preventing the spread of COVID-19. However, theeconomies remained weak due to high inflation caused by geopolitical risks and policy rate
hikes mainly in the U.S. and Europe.
In Japan, as well, although there have been signs of a recovery in economic activities suchas consumer spending, the economy has not seen a strong recovery due to soaring raw material
and energy prices and sharp fluctuations in foreign exchange rates.
With regard to the automobile industry, which has a close relationship with the Group,
although automobile production has increased compared to the previous year, it still has not
fully recovered due to such factors as the shortage of semiconductor parts in many countries.
Amid these conditions, the Group's net sales for the current consolidated fiscal year
increased to 86,382 million yen (up 10.2% year-on-year) due to a recovery in automobile
production and the foreign exchange impact of a weaker yen. Operating profit was 4,676
million yen (down 8.7% year-on-year) due to the impact of soaring raw material and energy
prices, despite the positive impact of a weaker yen. Ordinary profit was 7,374 million yen (up12.9% year-on-year) due to increased profits from overseas equity-method affiliates, insuranceincome, etc. Profit attributable to owners of parent was only 4,318 million yen (down 0.3%
year-on-year), mainly due to an increase in impairment losses.

1-2

Status of Capital Investments, etc.
The total amount of capital investment made by the Group during the current consolidated
fiscal year was 2,878 million yen, with the main investments being as follows.

(1)

Major facilities completed during the current consolidated fiscal year
• Kashiwazaki Plant
Additional machine processing and surface treatment facilities (Automotive & Machinery Parts
Business)• Kumagaya Plant
Additional machine processing and surface treatment facilities (Automotive & Machinery Parts
Business)(2)

New and enhanced major facilities during the current consolidated fiscal year
Kashiwazaki Plant
Additional machine processing and surface treatment facilities (Automotive & Machinery Parts
Business)
Hydrogen engine business-related R&D facilities (Automotive & Machinery Parts Business)
Kumagaya Plant
Additional machine processing and surface treatment facilities (Automotive & Machinery Parts
Business)
R&D facilities for new business creation (Other)
Riken Heat Techno Co., Ltd.
Thermal engineering-related manufacturing facilities (Other)
RIKEN AUTOMOBILE PARTS (WUHAN) CO., LTD.
Additional machine processing facilities (Automotive & Machinery Parts Business)

•

•

•
•

-1-

1-3

Status of Financing
There were no special items to be noted during the current consolidated fiscal year.

1-4

Issues that Need to be Addressed
The global economy in FY2023 is forecasted to grow at a low rate, impacted by suchfactors as rising prices and turmoil in the financial sector. While the economy is gradually
emerging from the stagnation of economic growth caused by COVID-19 and supply chain
disruptions, geopolitical risks such as Russia's invasion of Ukraine and the U.S.-China trade
conflict remain high, and uncertainty remains in the global economic forecast.
The automotive industry, which has a close relationship with the Group, is in the midst of a“once-in-a-century period of great transformation” with an increase in the number ofenvironmentally friendly vehicles such as electric vehicles and the development of technologies
such as automated driving, etc. The Company projects that the global market will expand withaccelerated “social transformation” and qualitative changes impacted by to the spread of
COVID-19 infection.
The global trend toward carbon neutrality is on the rise, which is leading to an increase in
the number of environmentally friendly vehicles and a further acceleration in the diversificationof power sources for automobiles. It can be said that the decarbonization of mobility is entering
an increasingly diverse stage of development, as decarbonized fuels, which are rapidly gaining
momentum in Europe in particular, are becoming a realistic option. The increasing instability ofworld affairs and geopolitical risks have also highlighted the vulnerabilities of existing supply
chains, while at the same time drawing greater attention to the instability of the supply of raw
materials, such as rare metals, which are extremely unevenly distributed. In addition to thesetypes of environmental changes, the diversification of automotive power is making it difficult topredict the future, as evidenced by the review of life cycle assessment of carbon dioxide
emission reductions, which is an indicator in the quest for carbon neutrality.
For the Company, in order to overcome all possible scenarios and develop our business, wewill continue to “strengthen the cost competitiveness of our core businesses,” “restructure ourmanagement base in response to crises,” and “expand our new core next-generation businessand new products of non-internal combustion engines.”
In “strengthening cost competitiveness of our core businesses,” the Company aims to win
the battle in existing engine parts such as piston rings, while expanding our existing non-internal
combustion engines business and strengthening cost competitiveness. Until the mid-2020s, wewill expand profits and business of existing parts and products, including engine-related parts,
shift management resources, and streamline domestic and overseas investments with the
keywords of building an optimal production system. We will subsequently manage and control
strictly the investment in increased production of engine parts in particular, both in Japan andoverseas, until around 2030, and promote rationalization and labor-saving investments.
In “restructuring of management base in response to crises,” we will strive to lower the
break-even point by reviewing the operation system, streamlining operations, and further
improving productivity. To achieve this, our policy is to continue to reduce fixed costs, such aslabor and expenses, through measures such as selection and concentration without sanctuary,
and to further promote business reforms through DX (Digital Transformation). By pursuing“cost competitiveness in our core businesses” and “restructuring our management base,” we will
strengthen our capacity to generate cash flow from existing businesses and shift the cash wehave generated to investments for the “expansion of our next-generation core businesses andnew products in non-internal combustion engines,” as well as in reducing greenhouse gases inour manufacturing processes to achieve a decarbonized society, and in developing products withsuperior environmental performance.

-2-

Also, for the “expansion of our next-generation core businesses and new products in noninternal combustion engines,” by pursuing open innovation through business and capitalalliances and joint development with other companies, will further accelerate the developmentof new products mainly for next-generation automobiles and the creation and expansion of nonautomotive businesses through vertical and horizontal expansion taking advantage of M&A andother opportunities around existing non-automotive internal combustion engine business areas.
For this reason, in addition to transforming “materials technologies” “processing technologies,”and “surface treatment technology” derived from our existing businesses into our nextgeneration core businesses and new products, we are developing “technologies related to newtype engines that utilize hydrogen, e-Fuel, and other next-generation fuels,” “technologies suchas high-performance resins and technologies for heterogeneous material joining,” “EMC(electromagnetic compatibility) technologies for anechoic chambers, radio frequency absorbers,
and next-generation noise suppression shields,” and “thermal engineering technologies forindustrial electric furnaces and high-performance electric heating wires for high-temperatureapplications.” We will continue to invest aggressively in these businesses in order to develop
advanced technologies that will lead to new products that are compatible with CASE and carbon
neutrality, which have become popular in the world’s automotive and mobility industries, suchas engineering technologies for industrial electric furnaces and high-performance electricheating wires for high temperature bands, and new engine technologies that utilize nextgeneration fuels. This May 9, NIPPON PIPE FITTING Corp., a manufacturer of plumbing
fittings known as the Yubiwa brand, joined the Group. Through this addition, from now on wewill further increase the ratio of sales of non-internal combustion engines and strive to further
expand earnings by creating synergies with the existing piping components business.
Also, in light of the inconvenience and concern caused to our stakeholders by the illicit
attacks on Company servers last fiscal year, we are building a robust cyber security system andwill strive to prevent a recurrence by maintaining and improving this system.
By pursuing these measures, we will strive to strengthen the Company's competitivenessand continuously increase the Company's corporate value.
Lastly, regarding the business consolidation between the Company and Nippon Piston Ring
Co., Ltd. after the basic agreement on July 27, 2022, the two companies have been discussing
and considering the consolidation, and on May 23 of this year, the two companies signed abusiness consolidation agreement and formulated a share transfer plan.
Subject to the approval of the General Meeting of Shareholders, NPR-Riken Corporation
will be established as of October 2 of this year as the wholly owning parent company of bothcompanies by means of a mutual share transfer.
The Consolidation, in addition to strengthening the profitability of existing businesses
centered on automotive engine parts, will allow the two companies to consolidate andeffectively utilize their management resources to create the next core businesses and new
products with a greater sense of urgency in the non-automotive engine parts domain, such as
marine vessels, hydrogen, new energy projects, thermal engineering, EMC business, Metamold(metal powder injection molding parts), medical equipment, and axial gap motors (disk-shaped
thin high torque motors). We will evolve into a completely new leading company that develops
distinctive functional parts and key components globally that harness the techniques
and technologies developed by both companies, and further enhance corporate value in linewith the global trend toward carbon neutrality.

-3-

1-5

Changes in the Status of Assets and Gains or Losses(1)

Changes in the status of assets and gains or losses of the corporate group

Category

96th Term(FY2019)

97th Term(FY2020)98th Term(FY2021)99th Term(FY2022)[current
consolidated
fiscal year]

Net sales (millions of yen)

84,53069,72078,37286,382

Ordinary profit (millions of yen)

5,964

4,323

6,529

7,374

Profit attributable to owners ofparent (millions of yen)

3,517

1,880

4,329

4,318

Earnings per share (yen)355.26

189.05433.47431.60Total assets (millions of yen)

107,920

110,544

115,707

123,728

Net assets (millions of yen)

75,90580,14287,082

94,983

Net assets per share (yen)7,059.13

7,507.92

8,109.98

8,810.30(2)

Changes in the Status of the Company's Assets and Gains or Losses

Category

96th Term(FY2019)

97th Term(FY2020)98th Term(FY2021)99th Term(FY2022)[Current fiscal
year]

Net sales (millions of yen)

53,41446,09951,08051,909Ordinary profit (millions of yen)

2,623

2,012

4,172

7,285

Profit (millions of yen)

2,293

1,030

3,784

5,625

Earnings per share (yen)231.63103.58378.84562.27

Total assets (millions of yen)

68,82069,31472,29377,027

Net assets (millions of yen)

42,61644,62747,86953,272

Net assets per share (yen)4,280.02

4,487.84

4,775.90

5,295.07

-4-

1-6

Status of Important Parent Companies and Subsidiaries(1)

Relationship with parent company
Not applicable.

(2)

Status of important subsidiaries and affiliated companies
Status of important subsidiaries
Company nameShare capital

Shareholding
ratio

Primary businesses

RIKEN CASTEC Co,.Ltd.

200 million yen

100.0%

Manufacture of casting partsfor automobiles, etc.

RIKEN ENVIRONMENTALSYSTEM Co.,Ltd.

100 million yen

100.0%

Manufacture of anechoic
chamber equipment

Riken Heat Techno Co., Ltd.

30 million yen

100.0%

Manufacture of electric heating
wire and industrial furnaces

4,150 million rupiah

40.0%

Manufacture of casting partsfor automobiles, etc.

RIKEN AUTOMOBILE PARTS(WUHAN) CO., LTD.

US$19 million

60.0%

Manufacture of automotive
parts

RIKEN MEXICO, S.A. DE C.V.

620 million pesos

100.0%

Manufacture of automotive
parts

RIKEN OF AMERICA, INC.

US$ 250,000

100.0%

Sales of the Company products
in North America

EURO-RIKEN GMBH

664,000 euros

100.0%

Sales of the Company productsin Europe

P.T. PAKARTI RIKEN
INDONESIA

Note: Shareholding ratios include indirect holdings.

1-7

Primary Content of Business (as of March 31, 2023)
The Group is primarily engaged in the manufacturing and sales of automotive andindustrial machinery parts, including piston rings and camshafts, as well as industrial products
such as steel pipe fittings and electric heating wires. We have a global presence with operations
in both domestic and international markets. (See details below)
Automotive & Machinery Parts Business:
Engine Parts (piston rings, camshafts, etc.)
Transmission Parts (seal rings, differential cases, etc.)
Drive and Chassis Parts (knuckles, brake calipers, etc.)
Other:
Piping Products (steel pipe fittings, stainless steel pipe fittings, etc.)
Thermal Engineering Products (electric heating wires, industrial furnaces, etc.)
EMC Products (Shield Rooms, Radio Frequency Anechoic Chambers, etc)

1-8Primary Sales Offices and Plants (as of March 31, 2023)(Domestic sales offices)
Head Office (Chiyoda-ku, Tokyo), Sapporo Sales Office (Sapporo, Hokkaido), Sendai Sales
Office (Sendai, Miyagi), Kanagawa Sales Office (Atsugi, Kanagawa), Hamamatsu Sales
Office (Hamamatsu, Shizuoka), Nagoya Sales Office (Nagoya, Aichi), Osaka Sales Office(Osaka), Hiroshima Sales Office (Hiroshima), Fukuoka Sales Office (Fukuoka City, Fukuoka
Prefecture), Riken Trading Co. Ltd. (Chiyoda-ku, Tokyo)-5-

(Domestic Plants)
Kashiwazaki Plant (Kashiwazaki City, Niigata), Kumagaya Plant (Kumagaya City, Saitama),
RIKEN CASTEC Co,.Ltd. (Kashiwazaki City, Niigata), Riken Kikai Co., Ltd. (Kashiwazaki
City, Niigata), NIHON MEKKI INDUSTRY CO.,LTD. (Kashiwazaki City, Niigata),
Kashiwazaki Piston Ring Co. Ltd. (Kashiwazaki City, Niigata), Riken EP Corporation(Kashiwazaki City, Niigata), RIKEN ENVIRONMENTAL SYSTEM CO., Ltd. (Kumagaya
City, Saitama), Riken Heat Techno Co.,LTD. (Kumagaya City, Saitama), BROTHERPRECISION IND. CO., LTD. (Chiryu, Aichi)(Overseas sales offices)
RIKEN OF AMERICA, INC. (USA), EURO-RIKEN GMBH (Germany), PT. RIKEN OF
ASIA (Indonesia), RIKEN SALES AND TRADING (THAILAND) CO., LTD. (Thailand)(Overseas Plants)
P.T. PAKARTI RIKEN INDONESIA (Indonesia), RIKEN AUTOMOBILE PARTS(WUHAN) CO., LTD. (China), RIKEN SEAL PRODUCTS (WUHAN) CO., LTD. (China),
RIKEN MEXICO, S.A. DE C.V. (Mexico), TAIWAN RIKEN IND. CO., LTD. (Taiwan),
SIAM RIKEN IND. CO., LTD. (Thailand), SHRIRAM PISTONS &RINGS LTD. (India),
XIAMEN RIKEN IND. CO., LTD. (China), Riken Power System (Nanjing) Co., Ltd.
(China)1-9

Status of Employees (as of March 31, 2023)(1)

Status of corporate group employees
Number of employees at the end of the current
consolidated fiscal year
(persons)

Increase (decrease) from the end of the previous
consolidated fiscal year
(persons)

4,153

(2)

Status of company employees
End of the current
fiscal year
No. of employees(persons)

Compared to the end of
previous fiscal year
Increase (decrease)(persons)

1,206

1-10

Decrease of 179

Decrease of28

Average years of
employment(years)Average age(years of age)
42.6

18.8

Primary lenders (as of March 31, 2023)
LenderLoans outstanding (millions of yen)Mizuho Bank, Ltd.

3,150

MUFG Bank, Ltd.

2,250

Nippon Life Insurance Company

1,760

Daishi Hokuetsu Bank, Ltd.

1,250

-6-

2. Matters Regarding the Company's Stock (as of March 31, 2023)
2-1

Total number of authorized shares
20,000,000

2-2

Total number of shares issued
10,688,866 (including 646,482 treasury shares)

2-3

Number of shareholders
11,689 (including one (1) shareholder holding treasury shares)

2-4

Major shareholders
Shares held
(thousands of shares)

Shareholding ratio(%)

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

982

9.78

Mizuho Bank, Ltd.

486

4.84

Nippon Life Insurance Company

428

4.27

Daishi Hokuetsu Bank, Ltd.

320

3.19

Custody Bank of Japan, Ltd.

275

2.75

Sumitomo Mitsui Trust Bank, Limited

261

2.61

MUFG Bank, Ltd.

255

2.54

Riken Kashiwazaki Shareholding Association

241

2.40

Sompo Japan Insurance Inc.

190

1.89

Proterial, Ltd.

177

1.76

Shareholder nameNote: Shareholding ratio is calculated excluding treasury shares.

2-5

Status of shares issued to Company Executives as compensation for the executionof their duties during the current fiscal year
The details of the stock-based compensation granted during the current fiscal year are as
follows.
At a meeting of the Board of Directors held on February 28, 2023, the following resolution
to issue new shares as restricted stock-based compensation was passed.
Total shares issued to Directors and other Officers by category
Number of shares

Director(excluding Outside Directors and Directors who are Audit andSupervisory Committee Members)-7-

22,700shares

Number of persons tobe granted
5 persons3. Matters Regarding Company Executives
3-1

Names of Directors (as of March 31, 2023)

Position in the Company

Responsibilities and significant concurrent
positions outside the Company

Name

Representative Director,
Chairman

Kaoru Itoh

Chairman of the Board of Directors, Chairman of
the Sustainability Committee

Representative Director,
President

Yasunori Maekawa

CEO, COO, CIO (Chief Information Officer）,
CISO (Chief Security Officer）

Kouei Watanabe

Managing Executive Officer, CTO (Chief Technical
Officer), General Manager of Technology
Management Head Office, Chairman of theTechnical Committee, in charge of Quality
Assurance, Precision Components Business,
Thermal Engineering Business, EMC Business, andsupervising Kumagaya Plant

Director

Takashi Ohashi

Managing Executive Officer, in charge of Global
Procurement, Maintenance Division, Engineered
Plastic Products Business, Casting Components
Business, Marine and Industrial Business, andCamshaft Business, General Manager ofKashiwazaki Plant

Director

Hidehiro Sakaba

Managing Executive Officer, General Manager ofCorporate Management Head OfficeOutside Director

Eiji Hirano

Director, Vice Chairman of MetLife, Inc.
Outside Director of NTT DATA Corporation
External Director, Ichiyoshi Securities Co., Ltd.

Outside Director

Koji Tanabe

Professor Emeritus of Tokyo Institute ofTechnology
Director of Intron Space Inc.

Director(Full-Time Audit andSupervisory Committee
Member)Akira Kunimoto

Director

Outside Director(Audit and Supervisory
Committee Member)

Shuji Iwamura

Outside Auditor of CANON ELECTRONICS INC.
Outside Corporate Auditor of The Hokkaido Bank,Ltd.
Outside Director of Hayashikane Sangyo Co., Ltd.
Attorney at T&K Partners

Outside Director(Audit and Supervisory
Committee Member)

Osamu Honda

Outside Auditor of Kurimoto Ltd.

-8-

*1.

*2.

*3.
*4.
*5.
*6.
*7.
*8.
*9.
*10.
*11.
*12.
*13.

*14.

*15.

Outside Directors are as follows.
Eiji Hirano
Koji Tanabe
Outside Directors (Audit and Supervisory Committee Members) are as follows.
Shuji Iwamura
Osamu Honda
There is no special interest between MetLife and the Company.
There is no special interest between NTT DATA Corporation and the Company.
There is no special interest between Ichiyoshi Securities Co., Ltd. and the Company.
There is no special interest between Tokyo Institute of Technology and the Company.
There is no special interest between Intron Space Inc. and the Company.
There is no special interest between CANON ELECTRONICS INC. and the Company.
There is no special interest between The Hokkaido Bank, Ltd. and the Company.
There is no special interest between Hayashikane Sangyo Co., Ltd. and the Company.
There is no special interest between T&K Partners and the Company.
There is no special interest between Kurimoto Ltd. and the Company.
Based on the provisions of Article 427, Paragraph 1 of the Companies Act, the Company has enteredinto a limited liability agreement with Outside Directors Eiji Hirano and Koji Tanabe, Outside
Directors (Audit and Supervisory Committee Members) Shuji Iwamura and Osamu Honda, andDirector (Audit and Supervisory Committee Member) Akira Kunimoto, which limits their liability to
the minimum liability amount stipulated by the Act with respect to liability under Article 423,
Paragraph 1 of the same Act.
The Company appoints Full-Time Audit and Supervisory Committee Members for the purpose ofcollecting information and enhancing the effectiveness of audits, including continuous and effective
attendance at important meetings other than meetings of the Board of Directors.
The Company appointed Eiji Hirano, Koji Tanabe, Shuji Iwamura and Osamu Honda as independent
officers with the Tokyo Stock Exchange per the regulations of the Exchange.

3-2

Amount of Director Compensation(1)

Policies Regarding the Determination of Details of Compensation for Officers, etc.
The following resolutions were passed at the General Meeting of Shareholders held on
June 21, 2019 regarding compensation for officers.
As of the close of this General Meeting of Shareholders, there were eight (8) directors(excluding Director who are Audit and Supervisory Committee Members) and three (3) Audit
and Supervisory Committee members.
• Directors (excluding Directors who are Audit and Supervisory Committee Members)“An annual amount not exceeding ¥400 million (including officers' bonuses)”• Directors who are Audit and Supervisory Committee Members “not exceeding anannual amount of ¥60 million”• Stock-based compensation (excluding Directors who are Audit and Supervisory
Committee Members and outside Directors) “An annual amount not exceeding ¥100
million”
The Articles of Incorporation stipulate that the number of directors (excluding Directors
who are Audit and Supervisory Committee Members) shall be limited to ten (10), and thenumber of Directors who are Audit and Supervisory Committee Members shall be limited to
five (5). As of March 31, 2023, there were seven (7) Directors (excluding Directors who are
Audit and Supervisory Committee members) and three (3) Audit and Supervisory Committee
Members.

-9-

At a meeting of the Board of Directors held on March 24, 2021, the Company resolved apolicy for determining the content of compensation for individual Directors (excluding
Directors who are Audit and Supervisory Committee members).
a.

Basic Policy
Under the Company's compensation for officers system, a standard amount of totalcompensation for each officer’s position (hereinafter referred to as “Standard Total
Compensation”) shall be set, and the Nomination and Compensation Committee shallannually verify the appropriateness of the standard amount by benchmarking each level ofcompensation to a middle level of listed companies in Japan based on the results of acompensation survey conducted by external compensation consultants.
The Standard Total Compensation shall consist of fixed compensation andperformance-linked compensation in the form of cash bonuses and stock-based
compensation.
Furthermore, Audit and Supervisory Committee member directors, external Directors,
and foreign national directors who are paid an annual salary shall receive only fixedcompensation.

b.

The policy concerning the determination of the amount of compensation (monetarycompensation not linked to performance) or the method of calculation thereof (including
the policy concerning the determination of the timing or conditions of granting
compensation, etc.)
Fixed compensation (cash) shall be paid on a monthly basis with a pre-determined
standard amount based on the Standard Total Compensation based on the officer’s position.

c.

The policy concerning the determination of the details and the method of calculation of theamount or number of performance-linked compensation and non-monetary compensation(including the policy concerning the determination of the timing or conditions of granting
compensation, etc.).
Cash bonuses, which are short-term performance-linked compensation, are determinedannually by multiplying the evaluation coefficient, which is calculated as a result of a“company performance evaluation,” using the consolidated ordinary profit target value ofthe Medium-term Management Plan and the Single-year Management Plan as theevaluation indicator and an “individual performance evaluation” of each officer, by apredetermined standard amount based on the Standard Total Compensation based on theofficer’s position. The amount shall be paid at a certain time each year.
<Calculation Method of the Short-term Performance-linked Compensation Payment Amount>• Cash bonus = Cash bonus standard compensation x Company performance evaluation
coefficient x Individual performance evaluation coefficient
As non-monetary compensation, etc., stock-based compensation (restricted stock), an
incentive compensation that fluctuates based on performance, will be introduced to share asense of profit with shareholders and to motivate them to achieve their medium to longterm goals. The following two types of stock-based compensation (restricted stock) withdifferent “restricted transfer periods” will be established.
(i) Type I shares with transfer restrictions: For a period between two and five years, as
determined by the Company's Board of Directors.
(ii) Type II shares with transfer restrictions: 30-year restricted transfer period
Stock-based compensation (restricted stock) shall be paid at a certain time each yearwith a pre-determined base amount based on Standard Total Compensation based on theofficer’s position.

- 10 -

d.

Policy regarding the determination of the percentage of each type of compensation, etc.
The ratio of the amount of compensation by type shall be as follows.
Composition of compensation for officers
Monetary compensation
Officer category
Fixedcompensation

Short-term performance-linked
Bonus

Director

62%

Stock-based compensation

13%

Long-term
performancelinked

Type I shares

Type II shares

11%

14%

Total

100%

(Note) 1: Excluding Outside Directors, Directors who are Audit and Supervisory Committee
members, and foreign national Directors.
(Note) 2: This table is a model for when 100% of the performance-linked compensation baseamount is paid, and the above percentages will vary depending on the Company's
performance, stock price fluctuations, etc.

e.

(2)

Matters concerning the determination of the details of compensation for individual
Directors
Individual compensation for officers shall be categorized by Directors (excluding
persons who are Audit and Supervisory Committee Members) and those who are membersof the Audit and Supervisory Committee. Compensation for Directors (excluding persons
who are Audit and Supervisory Committee members) shall be deliberated and determinedby the Nomination and Remuneration Committee, while that for Audit and Supervisory
Committee members shall be determined by the Board of Directors who are Audit andSupervisory Committee Members through discussion.

Reasons why the Board of Directors judged that compensation for individual Directors for thecurrent fiscal year is in line with the policy for determining the content of compensation
Compensation for individual Directors is discussed by the Nomination and Remuneration
Committee, the majority of whose members are independent outside Directors, and passed a
resolution by the Board of Directors based on the Committee's recommendation.
The Nomination and Compensation Committee, in deliberating and determining the detailsof compensation for individual Directors, considers the industry and the level of remunerationof other executives and employees of the Company, as well as the consistency of such details
with the policy for determining the content of compensation. In addition, the Board of Directors
also confirms that the details of compensation for individual Directors are in line with the policy
for determining the content of compensation and determines compensation for individual
Directors.

- 11 -

(3)Total amount of compensation, etc. for the current fiscal year

Officer category

Total amount of compensation, etc by type
Total amount of
Number of(millions of yen)compensation,
officers
Restrictedetc
covered
Fixed
Bonus
Stock options stock-based(millions of yen) compensation(Persons)
compensation.

Directors (excluding Audit andSupervisory Committee
members)(of which are Outside Directors)

247
(12)

150
(12)

38
()


()

57
（)

7
(2)

Director (Audit and Supervisory
Committee Member)(of which are Outside Directors)

34
(16)

34
(16)


()


()


()

3
(2)

Total
(of which are Outside Directors)

281
(28)

185
(28)

38
()


()

57
()

10
(4)

Bonuses to officers for the fiscal year are as follows and are included in the amount ofcompensation above.
• Officers' bonuses scheduled to be paid in June 2023
Director
42 Millions of yen (of which is external - millions of yen)
Under the Company's compensation for officers system, officer compensation consists ofmonthly remuneration as fixed compensation, a cash bonus as performance-linked
compensation (excluding outside Directors and Audit and Supervisory Committee member
members), and stock-based compensation (restricted stock). The amount of fixed compensation,
cash bonus, and stock-based compensation for each officer position is determined in advance asa base amount based on the base amount of total compensation for each officer’s position.
Based on the standard bonus amount, the ratio of fixed compensation to performancelinked compensation is generally 6:4.
Currently, there are two types of stock-based compensation (restricted stock) with different
restricted transfer periods. Type I shares with a two-year restricted transfer period and Type II
shares with a 30-year restricted transfer period. Type I shares are paid once a year to supplement
cash bonuses as short-term performance-linked compensation and to raise awareness of theCompany's performance and stock price. Type II shares are also paid once a year as long-term
performance-linked compensation, with the restriction being lifted when the Company's officers
actually retire from their positions as either Directors or Executive Officers.
Regarding cash bonuses, the amount of each officer's base bonus is determined bymultiplying the evaluation coefficient calculated as a result of the "Company performance
evaluation" and each officer's "Individual performance evaluation" by the standard bonus
amount for each officer’s position. The “Company performance evaluation” uses theconsolidated ordinary profit target of the Medium-term Management Plan and the single-year
Management Plan as the evaluation indicator. When a serious accident, scandal, or
extraordinary loss occurs, the standard bonus amount is adjusted in consideration of the severityof the situation. The “Individual performance evaluation” is also based on the CEO's overall
assessment of the contribution to management on a five-point scale based on the achievement of
the three key issues, quantitative targets, and qualitative evaluation items. The reason for
selecting the consolidated ordinary profit target as an evaluation indicator is that we judged that
ordinary profit excluding extraordinary gains or losses, which is a temporary and transitory agains or losses item, is an appropriate indicator of the company's ability.
While the consolidated ordinary profit targets of the Medium-term Management Plan andthe single fiscal year management plan for FY2022 were ¥6,000 million and ¥6,100 million,
respectively, the actual consolidated ordinary profit was ¥7,374 million, exceeding the targets.
As a result, the evaluation coefficient for the "Company performance evaluation" was +30%.

- 12 -

3-3

Matters Regarding Outside Officers
Director Hirano attended 18 out of the 19 Meetings of the Board of Directors held during
the current fiscal year. Based on his extensive experience and insight at the Bank of Japan,
Toyota Financial Services, and other organizations, Mr. Hirano has provided opinions mainly
from a professional perspective on international finance and treasury matters, and he plays anappropriate role in ensuring the validity and appropriateness of decision-making processes toensure sound decision-making. Also, as the Chairman of the Nomination and Compensation
Committee, he attended all 2 Committee meetings held during the current fiscal year and led thesupervisory function in the process of appointing candidates for officers and determining
compensation for officers from an objective and neutral standpoint.
Director Tanabe attended all of the 19 meetings of the Board of Directors held during thecurrent fiscal year. Based on his extensive experience and insight at the Ministry of Economy,
Trade and Industry, Tokyo Institute of Technology, etc., he has provided his opinions mainly
from an expert perspective on innovation management and technology management, and heplays an appropriate role in ensuring the validity and appropriateness of decision-making
processes to ensure sound decision-making. Also, as a member of the Nomination andCompensation Committee, he attended all 2 Committee meetings held during the current fiscal
year and fulfilled his supervisory function in the process of appointing candidates for officers
and determining compensation for officers from an objective and neutral standpoint.
Director Iwamura (Audit and Supervisory Committee member) attended 17 of the 19
meetings of the Board of Directors and also all of the 15 Audit and Supervisory Committee
meetings held during the current fiscal year. Based on his extensive experience and insight as aprosecutor and lawyer, as well as his experience as an auditor of other companies, he has madestatements at meetings of the Board of Directors to ensure the validity and appropriateness ofdecision-making, and has made necessary statements at Audit and Supervisory Committee
meetings regarding the Company's audit as appropriate. Also, as a member of the Nomination
and Compensation Committee, he attended all 2 Committee meetings held during the current
fiscal year and fulfilled his supervisory function in the process of appointing candidates forofficers and determining compensation for officers from an objective and neutral standpoint.
Director Honda (Audit and Supervisory Committee member) attended all 19 meetings ofthe Board of Directors held after his appointment and also attended all 15 Audit and Supervisory
Committee meetings held after his appointment. Based on his experience in finance at financial
institutions and experience and insight in the management of other companies, he has stated atmeetings of the Board of Directors to ensure the validity and appropriateness of decisionmaking, and at Audit and Supervisory Committee meetings, he has made necessary statements
as needed regarding the Company's audits. Also, as a member of the Nomination andRemuneration Committee, he has attended 2 committee meetings held since his appointment
and has fulfilled his supervisory function in the process of appointing candidates for theCompany's officers and determining compensation for officers from an objective and neutral
standpoint.

3-4

Overview of the Details of the Officers' Liability Insurance Policy
The Company has concluded a liability insurance contract for officers, etc. (D&O
Insurance Contract) under Article 430-3 (1) of the Companies Act with an insurance company,
with all the Directors including Directors who are Audit and Supervisory Committee Members
as the insured. Under the insurance contract, damages or legal costs, etc. that may be incurredby the insured due to claims for damages being filed arising due to acts (including omissions)committed by the insured based on the status of company officer, etc. will be covered. However,there are certain exclusion reasons, such as damages arising from an act upon recognition of theillegality of the act not being covered. Insurance premiums for the insurance contract arecovered by the Company, based on approval by the Board of Directors and the consent of theOutside Directors.

- 13 -

4. Status of Accounting Auditor
4-1

Name of Accounting Auditor
Deloitte Touche Tohmatsu LLC

4-2

Amount of Compensation to the Accounting Auditor for the Current Fiscal Year

(1)

Amount of compensation for work stipulated in Article 2, Paragraph 1 of the Certified Public
Accountants Act
88 Millions of yen(2)

Amount of remuneration for work other than the work stipulated in Article 2, Paragraph 1 of theCertified Public Accountants Act- Millions of yen(3)

Total amount of compensation to be paid by the Company and its consolidated subsidiaries to
the Accounting Auditor
88 Millions of yen(Notes) 1. With respect to such amount, after receiving an explanation of the audit plan (audit policy,
audit items, scheduled audit time, etc.) from the Accounting Auditor, the Company considered
the details and the estimated amount of compensation based on the evaluation of the results ofthe previous fiscal year, by comparing the plan for the previous fiscal year with the actual
results, total compensation, and unit price of compensation per hour, and by confirming theinformation and views of the accounting department. As a result, the Company judged theamount of compensation, etc. to be appropriate and gave its consent as stipulated in Article
399, Paragraph 1 of the Companies Act.
2. Of the Company's significant subsidiaries, the Company's overseas subsidiaries are audited byauditing firms other than the Company’s Accounting Auditor.

4-3

Policies for Determining the Dismissal or Non-reappointment of Accounting
Auditors
If the Company’s Audit and Supervisory Committee judges that the Accounting Auditor
falls under any of the items of Article 340, Paragraph 1 of the Companies Act, the Accounting
Auditor shall be dismissed with the unanimous consent of all Audit and Supervisory Committee
members.
In the event that the Audit and Supervisory Committee determines that proper auditing isdifficult due to the Company's circumstances or factors that would impair the qualifications of
the Accounting Auditor, the Committee will decide on the content of the proposal for dismissal
or non-reappointment of the Accounting Auditor to be submitted to the General Meeting of
Shareholders. The Board of Directors will then decide to convene the General Meeting of
Shareholders to resolve on such proposal.

- 14 -

5. Basic Policy for the Control of the Company
The contents of the Basic Policy regarding who should control decisions regarding thefinancial and business policies of the Company, efforts to realize the Basic Policy, and“Measures to Respond to a Large-Scale Acquisition of Our Company’s Stock” are as follows:<Basic Policy Regarding Who Should Oversee Decisions Regarding the Financial and Business
Policies of the Company>

5-1

Details of the Basic Policy
As a publicly traded company, we believe that shareholders come to us thanks to a freedom
to trade on the share market. Therefore, we believe that the final decision concerning whether or
not to accept proposals regarding acquisitions accompanying the transfer of control of theCompany should lie with the shareholders. Also, even if a Large-Scale Acquisition does occur, it
will not generally rejected if its purpose contributes to the Company’s corporate value and thecommon interests of its shareholders.
However, some large-scale share acquisitions can undermine the value of the Company or
the common interests of our shareholders, including those that may virtually force shareholders
into selling their shares or those that do not provide the Board of Directors and shareholders of
the Company with the reasonably needed amount of time and information to consider the detailsof the acquisition. As an exception, the Company considers any person who undertakes this kindof inappropriate large-scale acquisitions to be unfit to oversee decisions concerning the financial
and business policies of the Company.

5-2

Efforts that Contribute to the Realization of the Basic Policy
In order to ensure that many investors continue to invest in the Company over the longterm, the Company implements the following measures to enhance the Company's corporate
value and, in turn, the common interests of its shareholders.
We believe that these efforts will also contribute to the realization of the Basic Policy
described in (1) above.
<Enhancement of Corporate Value Through the Implementation of our Management Philosophy
and Medium-term Management Plan>
In 1927, RIKEN, formerly known as the Institute of Physical and Chemical Research, wasfounded to commercialize its own invention, the piston ring manufacturing method. Since then,the Company has been operating globally by providing a wide variety of products, including, ofcourse, piston rings which are its core competency, camshafts and other internal-combustion
engine parts, cast iron parts for automobiles and industrial machinery, piping materials, andproducts for thermal engineering and EMC businesses. The Company has defined the Group
Mission Statements outlined in the following paragraph. It also sets out the following Guiding
Principles: “Be Customer Driven. Be Compliant with the Law. Be focused on the Basics. Be
Open. Be Proactive. Be Prompt.” In addition, it developed the Midterm Strategic Plan and theAnnual Management Plan in its effort to help its customers strengthen their global
competitiveness and to develop and sell products that are highly satisfactory in terms of quality,
technology, and price.
<Mission Statement>••

We continue to be a corporate citizen committed to protecting global environment andserving the society in which we conduct our business.
We are committed to creating corporate value from a global perspective by effectively
utilizing the capital invested by our shareholders.

- 15 -

••We will offer products and services that continually exceed our global customers’
increasing expectations through constant innovation and continued advancements inknowledge and technology.
We have high aspirations and a broad vision, and we are always willing to change.

<Enhancement of Corporate Value by Improving Corporate Governance>
The Company aims for continuous improvement in corporate value by fulfilling its
responsibilities in a variety of fields including economy, environment, and society. It regards theimplementation of corporate governance as the top-priority management issue.
The Company has introduced an executive officer system to separate the businessexecution function from the management decision-making and supervision function.
The Company transitioned from a Company with a Board of Corporate Auditors to a"Company with an Audit and Supervisory Committee" in June 2019 in an effort to further
strengthen the audit and supervisory functionality of the Board of Directors and to further
promote corporate governance. The Company’s Audit and Supervisory Committee consists of
one Full-Time Audit Committee Member and two Outside Directors who are independent andmaintain a neutral and fair position, thereby strengthening the functionality of the Audit andSupervisory Committee with respect to the directors' execution of their duties.
Furthermore, in May 2019, the Company established the Nomination and Compensation
Committee, which is a voluntary advisory body with the majority of members being
independent outside directors, in its efforts to reinforce the supervision function of the Board of
Directors by assuring the transparency and objectivity of the procedure related to thenomination and compensation of directors, etc., and further enhance corporate governance.
Thus far, the Company has been working to appropriately operate management bodies(Board of Directors and Management Meeting) and ensure corporate transparency, efficiency
and soundness, such as thorough compliance and complete risk management in accordance with
the Basic Policy for Developing an Internal Control System (the development of systems
necessary to ensure that the execution of the duties by the directors complies with the laws andregulations and the articles of incorporation, and other systems prescribed by Ministry of Justice
Order as systems necessary to ensure the properness of operations of a Stock Company).
Furthermore, the Company has reinforced internal control by establishing the Sustainability
Committee and the Compliance Committee, and works to improve further by having the entire
Group oversee environmental activities, activities that contribute to society, accurate andappropriate information disclosure, the creation of CS (customer satisfaction), etc.

5-3Overview of measures to prevent decisions concerning the financial and business
policies of the Company from being controlled by persons deemed inappropriate inlight of the Basic Policy.
In order to prevent decisions concerning the financial and business policies of theCompany from being controlled by persons deemed inappropriate in light of the Basic Policy
and to ensure and enhance the corporate value of the Company and, in turn, the common
interests of its shareholders, at a Meeting of the Board of Directors held on May 24, 2022, theCompany adopted the "Measures to Respond to a Large-Scale Acquisition of Our Company’s
Stocks" (hereinafter referred to as “the Plan”). Approval for the continuation of the Plan was
obtained at the 98th Ordinary General Meeting of Shareholders held on June 24, 2022.
A Large-Scale Acquisition of Our Company's Stocks subject to the Plan is defined as an
acquisition of the Company's shares with the aim of increasing the ratio of voting rights of a
specific group of shareholders to 20% or more, or an acquisition of the Company's shares that
results in a specific group of shareholders holding 20% or more of the voting rights of theCompany, and an entity involved in such acquisitions is referred to as a “large-scale purchaser.”In this plan, certain rules regarding the provision of information and the allocation of
sufficient time for consideration during a large-scale acquisition (referred to as the "Large-scale
Acquisition Rules") are as follows: (1) The large-scale purchaser must provide adequate- 16 -

information to the Company’s Board of Directors in advance; (2) After the completion ofnecessary information provision, in the case of a public tender offer for all shares of ourcompany with cash consideration only, a maximum Board of Directors evaluation period of 60days will be set or for other forms of large-scale acquisition, a maximum Board of Directors
evaluation period to evaluate and consider of 90 days will be set. Upon the expiration of theBoard of Directors evaluation period, the large-scale acquisition may commence. However, if aGeneral Meeting of Shareholders is held to confirm the will of shareholders regarding thedetails of the countermeasure, the Large-Scale Acquisition may not be commenced until theprocedures for implementation or non-implementation of the countermeasure have been
completed.
Under the Plan, when a large-scale purchaser complies with the Large-scale Acquisition
Rules, the Company will not, in principle, take any countermeasures against the large-scalepurchase. However, in the event that a large-scale purchaser fails to comply with the abovementioned Large-scale Acquisition Rule, or even if the large-scale purchaser complies with theabove-mentioned Large-scale Acquisition Rule, when it is judged that the large-scale acquisition
will cause irreparable damage to the Company or otherwise materially damage the Company’s
corporate value and/or the common interests of shareholders, the Company can, to the extent
necessary and reasonable, implement countermeasures that can be considered under theCompanies Act, other laws, and the Company's Articles of Incorporation, such as the gratis
allotment of share acquisition rights.
In this way, in the event that countermeasures are taken, in order to ensure thereasonableness and fairness of such judgments, the Board of Directors, prior to judging whether
or not to take the countermeasures, shall consult with an Independent Committee consisting ofoutside Directors who are independent of the management team that conducts the Company's
business, or members appointed from outside experts, as to the appropriateness of taking thecountermeasures. The Independent Committee shall make a recommendation on theappropriateness of taking the countermeasures within the Board of Directors evaluation period.
In judging whether or not to implement countermeasures, the Company's Board of Directors
will follow the recommendation of the Independent Committee.
Furthermore, the effective period of the Plan shall expire at the conclusion of the 101stOrdinary General Meeting of Shareholders of the Company to be held in June 2025. However,(1) if a resolution is passed at a General Meeting of Shareholders of the Company for thecancellation of the Plan, or (2) if such a resolution is passed by the Board of Directors of theCompany, the Plan shall be canceled immediately.
For more information on the Plan, please refer to the Company's website athttps://www.riken.co.jp/.

5-4

That Complies With Our Basic Policies and Seeks to Enhance the Common
Interests of Our Shareholders, Instead of Focusing on Maintaining the Positions of
the Company Executives
The efforts mentioned above in (2) to enhance the corporate value of the Company and, inturn, the common interests of its shareholders are in line with the Basic Policy. As described in(3) above, in designing this Plan, we have given due consideration to the following points theCompany has given due consideration and believes that this Plan is in line with the Basic Policy
and consistent with the corporate value of the Company and the common interests of its
shareholders, and believes it is not aimed at maintaining the status of the Company's Executives.
1) The Plan satisfies the requirements of policies regarding takeover defense measures.
2) The Plan with the aim of securing and improving the common interests of shareholders
continues.
3) The plan reflects the intent of the shareholders.
4) The Plan respects the decision made by independent external entities.
5) The Plan does not constitute a dead-hand or slow-hand takeover defense measure.

- 17 -

6. Policy Regarding Determination of Dividends from Surplus, etc.
Regarding the distribution of surplus earnings, the Company believes that its basic policy is
to maintain a stable dividend level by paying an interim dividend and a year-end dividend twicea year, taking into consideration the Company's business performance, dividend payout ratio,etc.
The Company will use retained earnings to invest in future business growth and tostrengthen its financial position.

- 18 -

Consolidated balance sheets(March 31, 2023)(Millions of yen)
AssetsItem
Current assets
Cash and deposits
Notes and accounts receivable - trade,and contract assets
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Non-current assets
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles

Liabilities
AmountItem

66,321
23,818Amount19,0639,881

10,598
3,649
3,738
2,611
(57)
57,406
26,135
10,475
10,329Current liabilities
Notes and accounts payable - trade
Current portion of long-termborrowing
Income taxes payable
Provision for bonuses
Other
Non-current liabilities
Long-term borrowings
Retirement benefit liability
Provision for product warranties
Provision for environmental measures
Other

Land

2,514

Total liabilities

28,745Construction in progress

1,830

Other
Intangible assets
Leased assets
Other
Investments and other assets

985
2,248
1,652
595
29,022

21,962

Investment securities

23,144

Deferred tax assets

1,205

Retirement benefit asset

3,576

Insurance funds
Other
Allowance for doubtful accounts

Total assets

61
1,038
(4)

123,728

3,000
512
1,713
3,956
9,681
7,000
1,293
285
9
1,093

Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Accumulated other comprehensive
incomeValuation difference on available-forsale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Share acquisition rights
Non-controlling interests

80,554
8,627
7,178
67,644(2,896)

Total net assets

94,983

Total liabilities and net assets

123,728- 19 -

7,922
1,908
10
3,474
2,529
97
6,409

Consolidated statements of income(From April 1, 2022 to March 31, 2023)(Millions of yen)
Item

AmountNet sales

86,382

Cost of sales

69,138Gross profit

17,244

Selling, general and administrative expenses

12,567

Operating profit

4,676

Non-operating income
Interest and dividend income

540

Share of profit of entities accounted for using equity
method1,428

Foreign exchange gains

66

Dividend income of life insurance

160

Subsidy income

8

Insurance income

600

Other

205

3,010

Non-operating expenses
Interest expenses

111

Other

201

Ordinary profit

312
7,374

Extraordinary income
Gain on sale of non-current assets

30

30

Extraordinary losses
Loss on retirement of non-current assets

69

Impairment losses

539

System failure response costs

145

Loss on sale of investment securities

116

Profit before income taxes

871
6,533

Income taxes - current

1,571

Income taxes - deferred

162

Profit

1,734
4,799

Profit attributable to non-controlling interests

481

Profit attributable to owners of parent

4,318- 20 -

Balance Sheet(March 31, 2023)(Millions of yen)
AssetsItem
Current assets
Cash and deposits
Notes receivable - trade

Liabilities
AmountItem39,86912,374
2,896

Accounts receivable - trade

13,870

Merchandise and finished goods
Raw materials and supplies
Work in process
Prepaid expenses
Short-term loans receivable fromsubsidiaries and associates
Income taxes receivable
Other
Allowance for doubtful accounts
Non-current assets
Property, plant and equipment
Buildings

4,176
1,222
2,284
201

Structures

Current liabilities
Notes payable - trade
Accounts payable - trade
Current portion of long-termborrowings
Lease obligations
Accounts payable - otherAccrued expenses
Income taxes payable

913
418
1,777
(267)
37,15812,7396,057
572

AmountDeposits received

1,040
614
53
7,137
7,000
57

Total liabilities

23,755Tools, furniture and fixtures322

Net assets

Land
Leased assets
Construction in progress
Intangible assets
Leasehold right
Software
Software in progress
Leased assets
Other
Investments and other assets

1,158
102
785
2,065
30
222
142
1,652
16
22,353

Shareholders' equity
Share capital
Capital surplus
Legal capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for dividends
Reserve for overseas businessReserve for reduction entry
Reserve for reduction entry of
replaced property
General reserve

Shares of subsidiaries and associates
Investments in capital of subsidiaries
and associates
Deferred tax assets
Prepaid pension cost

6,172

9
70

51,319
8,627
6,658
6,658
38,9291,457
37,471
4,000
10,0001031
5,500
17,9292,560

Retained earnings brought forward

1,090
272

Treasury shares
Valuation and translation adjustments
Valuation difference on available-forsale securities
Deferred gains or losses on hedges
Share acquisition rights
Total net assets(2,896)
1,855

Total liabilities and net assets

77,027

Insurance funds

51

Other
Allowance for doubtful accounts

276
(4)

Total assets

23
248
965
79

Provision for bonuses
Notes payable - facilities
Other
Non-current liabilities
Long-term borrowings
Lease obligations
Provision for environmental
measures
Other

3,726
14

11,932

3,000

3,136

Machinery and equipment
VehiclesInvestment securities

16,6183,433
4,022

77,027- 21 -

1,844
11
97
53,272

Non-consolidated statements of Income(Millions of yen)
Item

AmountNet sales

51,909

Cost of sales

41,762Gross profit

10,146

Selling, general and administrative expenses

8,745

Operating profit

1,401

Non-operating income
Interest income

27

Dividend income

5,124

Dividend income of life insurance

148

Foreign exchange gains

68

Insurance income

600

Other

129

6,098

Non-operating expenses
Interest expenses

94

Other

119

Ordinary profit

214
7,285

Extraordinary income
Gain on sale of non-current assets

16

16

Extraordinary losses
Loss on retirement of non-current assets

40

Impairment losses

154

System failure response costs

138

Loss on sales of investment securities
Provision of allowance for doubtful accounts for
subsidiaries and associates

116
138

Profit before income taxes

589
6,713

Income taxes - current

697

Income taxes - deferred

390

Profit

1,087
5,625

- 22 -

Certified Copy of the Accounting Auditor Audit Report on the Consolidated Financial
Statements
Independent Auditor’s Audit Report
May 22, 2023
Riken Corporation
To the Board of Directors
Deloitte Touche Tohmatsu LLC
Tokyo Office
Designated Limited Liability Partner,
Engagement Partner

Masahiro Ide, CPA
Designated Limited Liability Partner,
Engagement Partner

Yae Sugiura, CPA
Designated Limited Liability Partner,
Engagement Partner

Yoshi Ishikawa, CPA
Audit Opinion
Pursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the consolidated financial
statements of Riken Corporation (the “Company”) for its consolidated financial year from April 1, 2022 to March
31, 2023, which are, specifically, the Consolidated Balance Sheet, Consolidated Statement of Income,Consolidated Statement of Changes in Equity, Notes to Consolidated Financial Statements.
In our opinion, the Consolidated Financial Statements referred to above present fairly, in all material
respects, the financial position and results of operations for the period covered by the relevant Consolidated
Financial Statements of the corporate group consisting of Riken Corporation and its consolidated subsidiaries inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We performed our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under the standards are further described in the Auditor’s Responsibilities for the Audit of theConsolidated Financial Statements section of our report. We are independent of the Company and its consolidated
subsidiaries in accordance with the provisions related to professional ethics in Japan, and we have fulfilled ourother ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Other Statements
The other statements are the Business Report and supplementary schedules. Management is responsible forthe preparation and disclosure of the other statements. The Audit and Supervisory Committee are also responsible
for overseeing execution of duties by Directors relating to the design and operation of the reporting process for theother statements.
Our audit opinion on the Consolidated Financial Statements does not include other statements, and we
express no opinion on other statements.
Our responsibility in the audit of the Consolidated Financial Statements is to read through the otherstatements and, in the course of reading through the other statements, to consider whether there are material
differences between the other statements and the Consolidated Financial Statements or knowledge we haveacquired in the course of our audit. We also pay attention to whether there are any other indications of material
errors in the other statements.
Based on the work we have performed, we are required to report that fact when we judge that there arematerial errors in the other statements.
We have no matters to report with respect to the other statements.

- 23 -

Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the Non-consolidated Financial
Statements and Schedules in accordance with accounting principles generally accepted in Japan, and for thedesign and operation of internal controls that management determines are necessary to enable the preparation andfair presentation of the Consolidated 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 or not
it is appropriate to prepare the Consolidated Financial Statements based on the assumption of a going concern, andin accordance with accounting principles generally accepted in Japan, for disclosing, as necessary, matters related
to going concern.
The Audit and Supervisory Committee are responsible for overseeing execution of duties by Directors
relating to the design and operation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether or not the Consolidated Financial
Statements as a whole are free from material misstatement, whether due to fraud or error, based on the audit
performed by us and to express our opinion on the Consolidated Financial Statements in the audit report from an
independent point of view. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the decisions of users of these Consolidated
Financial Statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit process, and conduct the following.
• We identify and assess the risks of material misstatement, whether due to fraud or error, and design andperform audit procedures responsive to those risks. Selection and application of audit procedures is at thediscretion of the auditor. In addition, we obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.
• The purpose of an audit of the Consolidated Financial Statements is not to express an opinion on theeffectiveness of the entity’s internal control; however, in making risk assessments, the auditor considers
internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
• We evaluate the appropriateness of accounting policies used by management and their method of application,
as well as the reasonableness of accounting estimates made by management and the validity of related notes.
• We make a conclusion on the appropriateness of the Consolidated Financial Statements and Schedules being
prepared by management based on the assumption of a going concern, and based on the audit evidence
obtained, on whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
regarding going concern exists, we are required to draw attention in our audit report to the related notes in
the Consolidated Financial Statements or, if such notes are inadequate, to express a qualified opinion withexceptions on the Consolidated Financial Statements. Our conclusions are based on the audit evidence
obtained up to the date of the audit report. However, future events or conditions may cause the Company tocease to continue as a going concern.
• We evaluate whether the presentation of the Consolidated Financial Statements and Notes thereto are inaccordance with accounting principles generally accepted in Japan, as well as the overall presentation,
structure, and content of the Consolidated Financial Statements, including the related Notes thereto, andwhether the Consolidated Financial Statements represent the underlying transactions and accounting eventsin a manner that achieves fair presentation.
• We obtain sufficient and appropriate audit evidence regarding the financial information of the Company andits consolidated subsidiaries to express an opinion on the Consolidated Financial Statements. We areresponsible for the direction, supervision and performance of the audit of the Consolidated Financial
Statements. We are solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit process, and other matters required by auditing standards.
We also provide the Audit and Supervisory Committee with a statement that we have complied with theprovisions related to professional ethics in Japan concerning independence, and communicate with them mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards in order toeliminate or reduce obstruction factors.
- 24 -

Interest RelationshipOur firm and its engagement partners do not have any interest in the Company and its consolidated
subsidiaries that is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
End of document- 25 -

Certified Copy of the Accounting Auditor Audit Report on the Non-consolidated Financial
Statements
Independent Auditor’s Audit Report
May 22, 2023
Riken Corporation
To the Board of Directors
Deloitte Touche Tohmatsu LLC
Tokyo Office
Designated Limited Liability Partner,
Engagement Partner

Masahiro Ide, CPA
Designated Limited Liability Partner,
Engagement Partner

Yae Sugiura, CPA
Designated Limited Liability Partner,
Engagement Partner

Yoshi Ishikawa, CPA
Audit Opinion
Pursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the Non-consolidated
Financial Statements of Riken Corporation (the “Company”) for the 99th fiscal year from April 1, 2022 to March
31, 2023, which are, specifically, the Non-consolidated Balance Sheet, Non-consolidated Statement of Income,Non-consolidated Statement of Changes in Equity, Notes to the Non-consolidated Financial Statements, and their
supplementary schedules (hereinafter, “Non-consolidated Financial Statements and Schedules”).
In our opinion, the Non-consolidated Financial Statements and Schedules referred to above present fairly, inall material respects, the status of assets and income for the period covered by the Non-consolidated Financial
Statements and Schedules in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We performed our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under the standards are further described in the Auditor’s Responsibilities for the Audit of theNon-consolidated Financial Statements and Schedules section of our report. We are independent of the Company
in accordance with the provisions related to professional ethics in Japan, and we have fulfilled our other ethicalresponsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Other Statements
The other statements are the Business Report and supplementary schedules. Management is responsible forthe preparation and disclosure of the other statements. The Audit and Supervisory Committee are also responsible
for overseeing execution of duties by Directors relating to the design and operation of the reporting process for theother statements.
Our audit opinion on the non-consolidated financial statements does not include any other statements, and we
express no opinion on other statements.
Our responsibilities in auditing the non-financial statements are to read the other statements carefully and, inthe process of reading it, to consider whether there are any material differences between the other statements andthe non-consolidated financial statements or our knowledge of them as a result of our audit. We also to pay
attention to whether there is any indication of material errors in the other statements other than such material
differences.
Based on the work we have performed, we are required to report that fact when we judge that there arematerial errors in the other statements.
We have no matters to report with respect to the other statements.

- 26 -

Responsibilities of Management and the Audit and Supervisory Committee for the Non-consolidated
Financial Statements and Schedules
Management is responsible for the preparation and fair presentation of the Non-consolidated Financial
Statements and Schedules in accordance with accounting principles generally accepted in Japan, and for thedesign and operation of internal controls that management determines are necessary to enable the preparation andfair presentation of the Non-consolidated Financial Statements and Schedules that are free from material
misstatement, whether due to fraud or error.
In preparing the Non-consolidated Financial Statements and Schedules, management is responsible forassessing whether or not it is appropriate to prepare the non-consolidated financial statements and Schedules
based on the assumption of a going concern, and in accordance with accounting principles generally accepted inJapan, for disclosing, as necessary, matters related to going concern.
The Audit and Supervisory Committee are responsible for overseeing execution of duties by Directors
relating to the design and operation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements and Schedules
Our responsibilities are to obtain reasonable assurance about whether or not the Non-consolidated Financial
Statements and Schedules as a whole are free from material misstatement, whether due to fraud or error, based on
the audit performed by us and to express our opinion on the Non-consolidated Financial Statements and Schedules
in the audit report from an independent point of view. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence thedecisions of users of these Non-consolidated Financial Statements and Schedules.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit process, and conduct the following.
• We identify and assess the risks of material misstatement, whether due to fraud or error, and design andperform audit procedures responsive to those risks. Selection and application of audit procedures is at thediscretion of the auditor. In addition, we obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.
• The purpose of an audit of the Non-consolidated Financial Statements is not to express an opinion on theeffectiveness of the entity’s internal control; however, in making risk assessments, the auditor considers
internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
• We evaluate the appropriateness of accounting policies used by management and their method of application,
as well as the reasonableness of accounting estimates made by management and the validity of related notes.
• We make a conclusion on the appropriateness of the Non-consolidated Financial Statements and Schedules
being prepared by management based on the assumption of a going concern, and based on the audit evidence
obtained, on whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
regarding going concern exists, we are required to draw attention in our audit report to the related notes in
the Non-consolidated Financial Statements and Schedules or, if such notes are inadequate, to express aqualified opinion with exceptions on the Non-consolidated Financial Statements and Schedules. Our
conclusions are based on the audit evidence obtained up to the date of the audit report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
• We evaluate whether the presentation of the Non-consolidated Financial Statements and Schedules and Notes
thereto are in accordance with accounting principles generally accepted in Japan, as well as the overall
presentation, structure, and content of the Non-consolidated Financial Statements and Schedules, including
the related Notes thereto, and whether the Non-consolidated Financial Statements and Schedules represent
the underlying transactions and accounting events in a manner that achieves fair presentation.
We communicate with the Audit and Supervisory Committee regarding the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit process, and other matters required by auditing standards.
We also provide the Audit and Supervisory Committee with a statement that we have complied with theprovisions related to professional ethics in Japan concerning independence, and communicate with them mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards in order toeliminate or reduce obstruction factors.
Interest RelationshipOur firm and its engagement partners do not have any interest in the Company that is required to be disclosed
pursuant to the provisions of the Certified Public Accountants Act of Japan.
End of document- 27 -

Certified Copy of the Audit and Supervisory Committee Audit Report
Audit Report
The Audit and Supervisory Committee has audited the execution of duties by Directors for the 99th fiscal
year from April 1, 2022 to March 31, 2023. The methods and results are reported as follows.
1. Audit Methods and Their Description
The Audit and Supervisory Committee regularly received reports from Directors and employees regarding
the details of the Board of Directors' resolutions concerning matters prescribed in Article 399-13, Paragraph 1,
Items 1(b) and 1(c) of the Companies Act and the status of the establishment and operation of the systems(internal control systems) based on such resolutions, and requested explanations and expressed opinions asnecessary, and conducted its audit in the following manner. Furthermore, with respect to internal control overthe financial reporting, they received reports from Directors, etc. and Deloitte Touche Tohmatsu LLC
regarding the status of evaluation and audit of such internal control, and requested explanations as necessary.
(1) Pursuant to the Audit and Supervisory Committee’s audit policy, audit plan, and assignment of duties forthe current fiscal year and in accordance with the Audit and Supervisory Committee's audit standards
established by the Company's Internal Audit Department and other departments in charge of internal
control, utilizing various means, such as via the telephone or the Internet, etc., they attended important
meetings, received reports from Directors and employees regarding matters concerning the execution of
their duties, requested explanations, as necessary, particularly with respect to priority audit items, andhandling of incidents, etc., attended individual meetings, etc., viewed important decision documents, etc.,
and also examined the status of operations and assets at the Head Office and main offices of theCompany. Also, with respect to domestic and overseas subsidiaries, they requested business reports fromsubsidiaries as necessary and examined the status of their operations and assets.
(2) Audit & Supervisory Board Members reviewed and discussed, based on deliberations by the Board of
Directors and other committees, the particulars indicated in the Business Report to be given due
consideration under Item (iii) (a) of Article 118 of the Regulations for Enforcement of the Companies Act
and the basic policy and each of the initiatives under Item (iii) (b) of the same article of the ordinance.
(3) Audit & Supervisory Board Members monitored and verified whether the Accounting Auditor maintained
its independence and conducted audits appropriately, received reports from the Accounting Auditor on theperformance of its duties, and requested explanations as necessary. In addition, Audit & Supervisory
Board Members were informed by the Accounting Auditor that “systems for ensuring that theperformance of the duties of financial auditor is being carried out correctly” (matters stipulated in theitems of Article 131 of the Regulations on Corporate Accounting) are being developed in accordance with
the Quality Control Standards for Audits (Business Accounting Council, October 28, 2005) and otherstandards and requested explanations as necessary. Furthermore, with regard to principal matters forconsideration in our audit process, they deliberated with Deloitte Touche Tohmatsu LLC, received reportson the status of their audits, and requested explanations as necessary.
Based on the aforesaid methods, Audit & Supervisory Board Members examined the Business Reports
and its supplementary schedules, the Non-consolidated Financial Statements (Non-consolidated Balance Sheet,
Nonconsolidated Statement of Income, Non-consolidated Statement of Changes in Equity, and Notes to the
Nonconsolidated Financial Statements) and their supplementary schedules, and the Consolidated Financial
Statements (Consolidated Balance Sheet, Consolidated Statement of Income, Consolidated Statement of
Changes in Equity, and Notes to the Consolidated Financial Statements) for the relevant fiscal year.

- 28 -

2. Results of Audit(1) Results of Audit of Business Report and Other Relevant Documentsi) We acknowledge that the Business Report and its supplementary schedules accurately present thestatus of the Company in accordance with laws, regulations, and the Articles of Incorporation.
ii) We acknowledge there is no misconduct or material fact in violation of the law, regulations, or the
Articles of Incorporation related to the execution of duties by Directors.
iii) We acknowledge that the resolutions of the Board of Directors related to internal control systems areappropriate. We also did not find any matter bearing mention related to statements in the Business
Report or the execution of duties by Directors in connection with internal control systems, includinginternal control over the financial reports. Moreover, as described in the Business Report, in
response to the cyber incident that occurred at the Company, the Audit and Supervisory Committee
confirmed that the Company is implementing measures to prevent recurrence by strengthening
security and rebuilding the emergency response system based on an investigation and analysis of thecauses.
iv) We acknowledge that the basic policy on the individuals who control decision-making of financial
and business policies of the business corporation as described in the business report is appropriate.
We acknowledge that each of the initiatives prescribed in Article 118, Item (iii) (b) of theRegulations for Enforcement of the Companies Act, as described in the Business Report, is in linewith the said basic policy, is not harmful the interests of the Company and the common interests ofour shareholders, and is not intended to maintain the status of the Company's officers.
(2) Results of Audit of Non-consolidated Financial Statements and Supplementary Schedules
We acknowledge that the audit methods and findings of the Accounting Auditor, Deloitte Touche
Tohmatsu LLC, are appropriate.
(3) Results of Audit of Consolidated Financial Statements
We acknowledge that the audit methods and findings of the Accounting Auditor, Deloitte Touche
Tohmatsu LLC, are appropriate.
3. Post-Balance Sheet Event
At a meeting of the Board of Directors held on November 4, 2022, a resolution was passed to acquire
shares of JFE Fittings Corporation and acquire JFE Pipe Fitting Mfg. Co., Ltd. n JFE Fittings Corporation, andbased on a share transfer agreement executed on the same day, the transfer of the company’s shares wascompleted on May 9, 2023.
May 22, 2023
Riken Corporation Audit and Supervisory Committee
Full-Time Audit and Supervisory Committee
MemberAkira Kunimoto

Seal

Audit and Supervisory Committee Member

Shuji Iwamura

Seal

Audit and Supervisory Committee Member

Osamu Honda

Seal(Note) Audit and Supervisory Committee members Mr. Shuji Iwamura and Mr. Osamu Honda are outside Directors as
defined in Article 2, Item 15 and Article 331, Paragraph 6 of the Companies Act.

- 29 -

Matters to be Provided in Electronic Format When Convening the 99th Ordinary
General Meeting of Shareholders

Matters Related to Company Stock Acquisition Rights, etc.
Systems to Ensure the Appropriateness of Operations
Consolidated Statement of Changes in Equity
Notes to Consolidated Financial Statements
Statement of Changes in Equity
Notes to the Non-Consolidated Financial Statements
for the 99th Term (from April 1, 2022 to March 31, 2023)

RIKEN CORPORATION

The above matters have been omitted from the documents (document stating the matters provided
in electronic format) to be delivered to shareholders who have requested delivery of the document,
based on the provisions of laws and regulations and Article 15 of the Company's Articles ofIncorporation.

1

1. Matters Related to Company Stock Acquisition Rights, etc.
Status of stock acquisition rights for Company Executives (as of March 31, 2023)(Based on a resolution passed by the Board of Directors on June 25, 2014)• Number of stock acquisition rights
23 (100 shares per stock acquisition right)• Type and number of shares to be acquired upon the exercise
2,300 common shares• Exercise price
100 yen (per stock acquisition right)• Vesting conditions
Rights may be exercised on and after the day following the day on which the person loses
his/her position as a director or executive officer of the Company. However, such rights may not
be exercised when waived.
• Exercise period
July 15, 2014 - July 14, 2044
• Status of unexercised stock acquisition rights held by officers of the Company of the above
Category

Number of stockacquisition rights

Directors of the Company(excluding Outside
directors/members of the Audit
and Supervisory Committee)

23Type and number of shares tobe acquired upon the exercise

Number ofholders

2,300 common shares

2 persons(Based on a resolution passed by the Board of Directors on June 23, 2015)• Number of stock acquisition rights
38 (100 shares per stock acquisition right)• Type and number of shares to be acquired upon the exercise
3,800 common shares• Exercise price
100 yen (per stock acquisition right)• Vesting conditions
Rights may be exercised on and after the day following the day on which the person loses
his/her position as a director or executive officer of the Company. However, such rights may not
be exercised when waived.
• Exercise period
July 15, 2015 - July 14, 2045
• Status of unexercised stock acquisition rights held by officers of the Company of the above
Category

Number of stockacquisition rights

Directors of the Company(excluding Outside
directors/members of the Audit
and Supervisory Committee)

38

2

Type and number of shares tobe acquired upon the exercise

Number ofholders

3,800 common shares

2 persons(Based on a resolution passed by the Board of Directors on June 24, 2016)• Number of stock acquisition rights
57 (100 shares per stock acquisition right)• Type and number of shares to be acquired upon the exercise
5,700 common shares• Exercise price
100 yen (per stock acquisition right)• Vesting conditions
Rights may be exercised on and after the day following the day on which the person loses
his/her position as a director or executive officer of the Company. However, such rights may not
be exercised when waived.
• Exercise period
July 14, 2016 - July 13, 2046
• Status of unexercised stock acquisition rights held by officers of the Company of the above
Category

Number of stockacquisition rights

Directors of the Company(excluding Outside
directors/members of the Audit
and Supervisory Committee)

57

Type and number of shares tobe acquired upon the exercise

Number ofholders

5,700 common shares

2 persons(Based on a resolution passed by the Board of Directors on June 22, 2017)• Number of stock acquisition rights
41 (100 shares per stock acquisition right)• Type and number of shares to be acquired upon the exercise
4,100 common shares• Exercise price
100 yen (per stock acquisition right)• Vesting conditions
Rights may be exercised on and after the day following the day on which the person loses
his/her position as a director or executive officer of the Company. However, such rights may not
be exercised when waived.
• Exercise period
July 13, 2017 - July 12, 2047
• Status of unexercised stock acquisition rights held by officers of the Company of the above
Category

Number of stockacquisition rights

Directors of the Company(excluding Outside
directors/members of the Audit
and Supervisory Committee)

41

3

Type and number of shares tobe acquired upon the exercise

Number ofholders

4,100 common shares

2 persons2. Systems to Ensure the Appropriateness of Operations
The matters concerning the basic policy for the development of internal control systems passed a
resolution by the Company's directors are as follows:(Basic policy)
The Group has defined the Group Mission Statements outlined in the following paragraph. It also
sets out the following Guiding Principles: “Be Customer Driven. Be Compliant with the Law. Be
focused on the Basics. Be Open. Be Proactive. Be Prompt.” and promotes our corporate activities
accordingly.
Furthermore, it is the Company's basic policy that the Directors and employees of the Group shallperform their duties based on the RIKEN Group Code of Conduct, internal company regulations, andsocial good sense, in accordance with laws, regulations, and social norms.
<Mission Statement>• We continue to be a corporate citizen committed to protecting global environment and serving
the society in which we conduct our business.
• We are committed to creating corporate value from a global perspective by efficiently utilizing
the capital invested by our shareholders.
• We will offer products and services that continually exceed our global customers’ increasing
expectations through constant innovation and continued advancements in knowledge andtechnology.
• We have high aspirations and a broad vision, and we are always willing to change.
Under this Mission Statement, the Company recognizes that it is an important management
responsibility to establish and operate a system for proper business execution, and will strive to further
improve the Group's internal control system to make it more appropriate.

(1)

Systems necessary to ensure that the execution of the duties by directors andemployees complies with laws and regulations and our articles of incorporation

The Group recognizes that thorough compliance (Be Compliant with the Law) is essential for thesurvival of a company, and all Directors and employees shall comply with laws, regulations, and social
norms, act based on fair ethical standards, and strive to establish a management system that will be
widely trusted by society.
(i)

In order to establish a system for the Directors and employees of the Group to comply with laws,
regulations, and the Articles of Incorporation and to conduct appropriate business activities, theCompany has established a Code of Conduct and Guiding Principles that shall apply to the entire
Group.
(ii) To enhance the soundness and efficiency of management, the Company shall establish an Audit
and Supervisory Committee Meeting in which the majority of members shall be Outside
Directors.
(iii) In order to establish a management system that is trusted by society, the Compliance Committee,
a company-wide committee chaired by the CEO, shall be established to promote various activities
necessary to ensure that compliance takes root and is thoroughly implemented.
(iv) In an effort to ensure thorough compliance, the HR and General Affairs Divisions shallsystematically and systematically provide compliance education to directors and employees.
(v) The Company has also established an external contact point for consultation on compliancematters and reporting of misconduct and operates an internal reporting system that protects
whistleblowers.

4

(vi) The Internal Control Department shall conduct periodic internal audits to ascertain the status of
the Company's business operations, investigate and verify whether all business operations are
conducted properly, appropriately, and reasonably in accordance with laws, the Articles ofIncorporation, and internal rules and regulations, and whether the Company's systems,
organization, and rules and regulations are proper and appropriate, and report the audit results to
the President and the Audit Committee.
(vii) The above compliance-related activities shall be reported to the Board of Directors on a regularbasis.

(2)

Systems for the storage and management of information related to the execution ofduties by directors

Company shall properly record information related to the execution of duties by directors inaccordance with laws and regulations and document management rules, including records related todecision-making at meetings of the Board of Directors and other important meetings and documents
approved by each director based on the segregation of duties and decision-making standards, and shallretain such records for the prescribed period.
(i) Based on laws and regulations and document management rules, the following documents(including electromagnetic records) shall be stored together with related materials.
(i)-1 Documents required by laws and regulations• Minutes of General Meeting of Shareholders (Companies Act, Article 318), Minutes of
Directors' Meetings (Companies Act, Article 369)(i)-2 Documents based on document management rules• Management Committee minutes, Technology Committee minutes, Sustainability
Committee minutes, Compliance Committee minutes• Minutes of other meeting committee meetings chaired and presided over by a director• Decision documents in which a director is the decision-maker• Other important documents as stipulated in the document management rules(ii) Unless otherwise stipulated by law, the above documents shall be managed by the department incharge of each document based on the document management rules.

(3)

Regulations and Other Systems for Managing Risk of Loss

The Group shall strive to develop an organized response to various risks of loss in order tominimize the risk of loss by preparing appropriate countermeasures in advance according to the size ofthe risk and the likelihood of its occurrence.
(i) To establish a risk management system for the whole Group, and to implement appropriate risk
responses, risk management rules and related regulations, including a basic risk management
policy, shall be established.
(ii) The Company has established a Risk Management Subcommittee and a BCM Subcommittee
under the Sustainability Committee to promote various activities necessary for the establishment
and promotes the thorough operation of risk management and business continuity plans.
(iii) Based on the risk management rules, we identify and evaluate the risks of business opportunities
and risks associated with the execution of business activities in the Group every year, andformulate and promote a risk mitigation plan.
(iv) The Company aims to prevent large-scale accidents, disasters, scandals, etc., and when theyoccur, a Crisis Response Headquarters with the President (or a person designated by the
President) as its chairperson shall be established to address the situation.
(v) The activities related to risk management described above shall be reported regularly to the Boardof Directors.

5

(4)

Systems to ensure that directors execute their duties efficiently

The Company formulates and promotes its Mid-term Management Plan and Annual Management
Plan in order to respond to changes in the environment. We strive to improve the efficiency of ourdirectors' day-to-day execution of their duties with the aim of achieving the objectives of the
management plans.
(i) The duties and decision-making authority of directors shall be stipulated in the Organization
Rules, the Rules on Segregation of Duties, and the Rules on Decision-Making Standards.
(ii) The Board of Directors shall make decisions on management policies, matters required by law
and other important matters concerning management, and supervise the status of directors'
execution of their duties.
(iii) Under the Board of Directors, a Management Committee chaired by the President shall beestablished (held, generally, twice a month) to deliberate in advance on matters passed a
resolution by the Board of Directors, and to deliberate and make decisions on the execution of theCompany's business and the implementation of measures, etc., within the scope of the authority
delegated by the Board of Directors.

(5)

Systems to ensure the appropriateness of operations of the GroupThe Company aims to establish an internal control system for the RIKEN Group, including its
affiliated companies, and strives for appropriate Group management while respecting the autonomy ofeach subsidiary based on the “Affiliated Companies Management Regulations.”(i) As group management, we share our Mission Statement and Code of Conduct, and compliancerelated regulation manuals with affiliated companies, and collaboratively promote the RIKENGroup Management Plan.
(ii) For domestic affiliated companies, the Corporate Planning Department, and for overseas
affiliated companies, overseas business units will participate in each company's Board of
Directors Meetings and conduct interviews to confirm the legality and efficiency of the
management.
(iii) The Internal Control Department periodically conducts audits of affiliated companies.
(iv) For our major affiliated companies, the Company's Audit and Supervisory Committee members
shall be appointed as Corporate Auditors and shall conduct accounting and operational audits.

(6)

Employees who assist Audit and Supervisory Committee members in their duties

When the Audit and Supervisory Committee member requests a full-time employee to assist the
Audit and Supervisory Committee in the performance of its duties, the Company shall assign such
employee after consultation with the Audit and Supervisory Committee.

(7)Matters related to the independence of employees set forth in the preceding
paragraph from directors (excluding directors who are Audit and Supervisory
Committee Members)

The employees set forth in the preceding paragraph shall not receive orders from directors(excluding directors who are Audit and Supervisory Committee Members), but shall be under the
direction and orders of the Audit and Supervisory Committee. The Audit and Supervisory Committee
shall be informed of and approve any personnel transfers and evaluations in advance.

6

(8)

Systems for directors (excluding directors who are Audit and Supervisory
Committee Members) and employees to report to the Audit and Supervisory
Committee and other systems related to reporting to the Audit and Supervisory
Committee.

Directors (excluding directors who are Audit and Supervisory Committee Members) andemployees of the Group shall report to the Audit and Supervisory Committee facts that may causesignificant damage to the Group and other important matters concerning business operations. Directors(excluding directors who are Audit and Supervisory Committee Members) and employees who reportto the Audit and Supervisory Committee shall not receive any disadvantageous treatment because ofsuch reporting. We actively promote awareness and thorough understanding of this policy.
Matters to be reported to the Audit and Supervisory Committee and the method of reporting shallbe established in consultation with the Audit and Supervisory Committee, and directors (excluding
directors who are Audit and Supervisory Committee Members) and employees shall carry out
appropriate reporting.
Also, the Audit and Supervisory Committee shall establish, in consultation with the Audit andSupervisory Committee, meetings of the Conference Committee at which Audit and Supervisory
Committee members shall attend the Committee Meetings and review meeting materials and minutes.

(9)Matters related to the policy for processing expenses related to the execution ofduties by the Audit Committee members.

When the Company receives a request from Audit Committee members for advance payment or
reimbursement of expenses incurred in the performance of their duties as Audit Committee members
and other necessary expenses, such as processing of expenses or obligations incurred in theperformance of such duties, the Company shall bear these expenses, except when it is deemed thatsuch expenses are not made clear that such expenses are necessary for the performance of their duties.

(10) Systems to ensure that other Supervisory Committee's audits are conductedeffectively
In an effort to ensure mutual communication with the President, the Audit and Supervisory
Committee shall hold regular meetings and collaborate with the Internal Control Department, theaccounting auditor, and Corporate Auditors of affiliated companies to ensure the effectiveness of the
Audit and Supervisory Committee's audits.

(11) Overview of the status of operation of systems to ensure the appropriateness ofoperations
The Company continuously confirms through internal audits and other means the status of thedevelopment and operation of internal control systems with respect to the aforementioned systems toensure the appropriateness of operations, and reports the status of the systems to the Board of
Directors on a quarterly basis. The Company strives to operate a more appropriate internal control
system by taking corrective actions for points identified as a result of internal audits.
The status of the operation of the internal control systems for Group during the current
consolidated fiscal year is as follows

7

(i)

Compliance-related efforts
The Company convenes the Compliance Committee, a company-wide committee chaired by theCEO, to promote the establishment and thorough operation of compliance.
The Company has also established an external contact point for consultation on compliancematters and reporting of misconduct, and operates an internal reporting system that protects
whistleblowers and reports quarterly to the Board of directors.
In addition, the company strives to instill compliance awareness among officers and employees
through training programs.

(ii) Strengthening of risk management systems
In order to establish a Group-wide risk management system and respond appropriately to risks,
the Company has established a Risk Management Subcommittee and a BCM Subcommittee
under the Sustainability Committee to ensure that risk management and business continuity plans
are firmly in place and thoroughly implemented.
(iii) The Audit and Supervisory Committee’s audit systems
The Audit and Supervisory Committee meets regularly with the Representative Director to ensure
mutual communication. The Audit and Supervisory Committee also strives to ensure theeffectiveness of its audits by holding regular quarterly meetings with the Internal Control
Department and the accounting auditor, as well as holding meetings as necessary.

8Consolidated Statement of Changes in Equity(From April 1, 2022 to March 31, 2023)(Millions of yen)
Shareholders' equity
Share capital
Balance at beginning of current
periodChanges of items during period
Issuance of new shares

Capital surplus

8,573

7,119

53

53

Retainedearnings
64,526

Total
shareholders'equity(2,894)

77,324107

Distribution of dividends ofsurplusProfit attributable to owners ofparentAcquisition of treasury shares
Appropriation of treasury
sharesChange in ownership interestof parent due to transactions
with non-controlling interests
Net changes of items during
period other than shareholders'equityTotal changes of items during
periodBalance at end of current period

Treasury shares(1,200)(1,200)

4,318

4,318

(0)

(1)

(1)

0

(0)

5

5

53

59

3,118

(1)

3,229

8,627

7,178

67,644(2,896)80,554

Accumulated other comprehensive income

Balance at beginning of current
periodChanges of items during period

Other
Valuationdifference
on availablefor-salesecurities

Deferred
gains orlosses onhedges

1,045

(60)

Share
Total
Foreign Remeasurem
accumulated acquisition
currency
ents ofotherrightstranslation
definedcomprehensi
adjustment benefit plans
ve income

622

2,189

3,797

97

Noncontrollinginterests

5,863

Issuance of new shares

Total net
assets87,082

107

Distribution of dividends ofsurplusProfit attributable to owners ofparentAcquisition of treasury shares(1,200)Appropriation of treasury
sharesChange in ownership interestof parent due to transactions
with non-controlling interests
Net changes of items during
period other than shareholders'equityTotal changes of items during
periodBalance at end of current period

(0)

4,318
(1)

5

862

71

2,851

339

4,125

862

71

2,851

339

4,125

1,908

10

3,474

2,529

7,922

9

546

4,671



546

7,900

97

6,409

94,983

Notes to Consolidated Financial Statements(Notes regarding important matters concerning the preparation of the consolidated financial
statements)
1.

Amounts are rounded down to the nearest million yen.

2.

Matters related to the scope of consolidation(1) Status of consolidated subsidiaries
Number of consolidated subsidiaries:
20 companies
Names of main consolidated subsidiaries:
RIKEN CASTEC Co,. Ltd.
RIKEN ENVIRONMENTAL SYSTEM Co., Ltd.
RINKEN HEAT TECHNO CO., LTD.
P.T. PAKARTI RIKEN INDONESIA
RIKEN AUTOMOBILE PARTS (WUHAN) CO., LTD.
RIKEN MEXICO, S.A. DE C.V.
RIKEN OF AMERICA, INC.
EURO-RIKEN GMBH
(2) Status of non-consolidated subsidiaries
Number of non-consolidated subsidiaries:
1 company
Name of non-consolidated subsidiary:
AMTEK RIKEN
It is a small-scale company, and its total assets, net sales, net income/loss, and retained
earnings do not have a material effect on the consolidated financial statements.
3.

Matters related to the application of the equity method of accounting(1) Status of affiliated companies accounted for by the equity method
Number of affiliated companies accounted for by the equity method:
4 companies
Names of affiliated companies accounted for by the equity method:
Taiwan Riken Corp
SIAM RIKEN IND. CO., LTD.
SHRIRAM PISTONS & RINGS LTD.
Riken Power System (Nanjing) Co., Ltd.
(2) Status of non-consolidated or affiliated companies not accounted for by the equity method
Names of affiliated companies not accounted for by the equity method:
Yaesu Export & Import Co., Ltd.
Companies not accounted for by the equity method are not accounted for by the equity method
because they do not have a material impact on current fiscal year net income/loss, retained
earnings, etc., and are not significant in the aggregate so are excluded from the application of
the equity method.

 10 

4.

Matters related to the fiscal year of consolidated subsidiaries

The closing date for Riken Corporation of America, RIKEN OF AMERICA, INC., RIKENMEXICO, S.A. DE C.V., EURO-RIKEN GMBH, P.T. PAKARTI RIKEN INDONESIA, RIKEN
AUTOMOBILE PARTS (WUHAN) CO., LTD., PT. RIKEN SEAL PRODUCTS (WUHAN) CO.,LTD., RIKEN OF ASIA, RIKEN SALES AND TRADING (THAILAND) CO., LTD. is December 31,
2022. In preparing the consolidated financial statements, the financial statements as of the current date
are used, and necessary adjustments are made to reflect significant transactions that occurred between
the current date and the consolidated balance sheet date.
5.

Matters related to accounting policies(1) Valuation criteria and methods for significant assets(i)Securities
Held-to-maturity debt securities:
Calculated using the amortized cost method (straight-line method).
Other securities
Other than stocks and other securities with no market value:
Calculated using the market value method (valuation differences are processed by the total
direct capitalization method and the cost of sales is determined by the moving averagemethod).
Stocks, etc. without market prices:
Calculated using the cost method using the moving-average method.

(ii) Inventories:
Mainly calculated using the cost method (a method of book value devaluation determined on
decline in profitability) using the moving-average method.
(iii) Derivatives:
Market value method(2) Methods of depreciation and amortization of significant depreciable assets
Property, plant and equipment (excluding leased assets):
Mainly calculated using the declining-balance method.
However, we apply the straight-line method to buildings (excluding building fixtures)acquired on or after April 1, 1998 and for building fixtures and structures acquired on or after
April 1, 2016. Useful life and residual value are mainly calculated using the same criteria as
stipulated in the Corporation Tax Law.
Intangible assets (excluding leased assets):
Calculated using the straight-line method. Useful life is mainly determined by the same
criteria as stipulated in the Corporation Tax Law.
Software (for internal use) is amortized by the straight-line method based on the period ofinternal use (5 to 10 years).
Leased assets:
Leased assets related to finance lease transactions that transfer ownership of the leased assets
to the lessee are calculated using the same depreciation method as that applied to owned fixed
assets. Lease assets related to finance lease transactions that do not transfer ownership of theleased assets to the lessee are calculated using a method in which the lease period is deemed as
the useful life of the asset and the residual value is set at zero.

 11 

(3) Criteria for recording significant allowances
Allowance for doubtful accounts:
To provide for possible bad debt losses, the Company records allowances for general
receivables based on historical bad debt ratios, and allowances for specific doubtfulreceivables based on the financial condition assessment method.
Allowance for bonuses:
To provide for the payment of bonuses to employees, the Company provides for the estimatedamount of bonuses to be paid to employees, which is attributable to the current consolidated
fiscal year.
Allowance for environmental measures:
To provide for expenditures for the disposal of polychlorinated biphenyls (PCBs), an
estimated amount of expenditures that can be reasonably estimated was recorded.
Allowance for product warranties:
Domestic consolidated subsidiaries provide for expenditures for repair work projected to be
incurred in the Radio Frequency Anechoic Chambers/Shield Rooms business by posting an
estimated amount of expenditures that can be reasonably estimated.
(4) Criteria for recording significant income and expenses
The Group is primarily engaged in the manufacture and sale of automotive and machinery parts.
We also construct Radio Frequency Anechoic Chambers/Shield Rooms
With respect to sales of merchandise and products, the performance obligation is satisfied whenthe merchandise and products are delivered to the customer; therefore, income is recognized at thatpoint in time.
Also, for the construction of Radio Frequency Anechoic Chambers/Shield Rooms, the Company
recognizes income based on the percentage of completion based on the cost incurred when theperformance obligation is fulfilled over a certain period of time based on the contract and the degreeof completion can be reasonably estimated. Also, when the degree of progress cannot be reasonably
estimated, we recognize as income an amount equal to the section of the cost incurred that is expected
to be recovered.
(5) Method of accounting for retirement benefits(i)Method of attributing estimated retirement benefits to periods of service
In calculating retirement benefit obligations, we calculate the estimated amount of retirement
benefits attributed to the period through the end of the current consolidated fiscal year using thebenefit calculation method.

(ii) Method of processing prior service costs and actuarial calculation differences
We process prior service costs based on a certain number of years (10 years) within the averageremaining service period of employees when incurred.
Actuarial calculation differences are amortized by the straight-line method over a fixed number ofyears (10 to 13 years) within the average remaining service period of employees at the time ofaccrual of each consolidated fiscal year and the amount is amortized from the following
consolidated fiscal year from when incurred.
(6) Criteria for converting foreign currency-denominated assets and liabilities into Japanese yen
Assets and liabilities of overseas subsidiaries are translated into yen at the spot exchange rate
prevailing at the end of the fiscal year, income and expenses are translated into yen at the averageexchange rate during the fiscal year, and translation adjustments are included in foreign currencytranslation adjustments and noncontrolling interests in net assets.

 12 

(7) Processing of hedge accounting
Method of hedge accounting:
The Company has adopted deferred hedge processing. The allocation method is applied toforward exchange contracts when they meet the requirements for the allocation processing.
Hedging methods:
Forward exchange contracts
Hedging target:
Operating receivables in foreign currencies
Hedging policy:
Our basic policy on derivatives transactions is determined by the Management Committee,
which has established internal management regulations that stipulate transaction authority andtransaction limits, and we use forward exchange contracts to avoid foreign exchange
fluctuation risks.
Method of evaluating hedging effectiveness:
Forward exchange contracts are based on scheduled future transactions (e.g., exports), and theassessment of validity is omitted because the probability of execution is extremely high.
(Changes in accounting policies)
Not applicable.
(Notes regarding Accounting Estimates)
1.

Impairment of fixed assets(1) Amount recorded in the Consolidated Financial Statements
Major fixed assets of domestic subsidiaries that have been identified as impaired (After
impairment loss is recorded)
Buildings and structures
1,302 millions of yen
Machinery, equipment and vehicles
441 millions of yen
Land
714 millions of yen
Other
314 millions of yen
Major fixed assets of the Company's business units that have been identified as impaired.
Buildings and structures
649 millions of yen
Machinery, equipment and vehicles
1,098 millions of yen
Land
55 millions of yen
Other
11 millions of yen

 13 

(2) Information that contributes to an understanding of the details of accounting estimates
In the current consolidated fiscal year, the Company identified signs of impairment for the fixed
assets of the Company’s business units that have reported operating losses for two consecutive fiscal
years, and compared the total undiscounted future cash flows from the division's operations with thecarrying amount of the assets. As a result of comparing the total undiscounted future cash flows fromthe operations of the units with their carrying amount, no impairment loss was recognized becausesuch undiscounted cash flows exceeded its carrying amount.
Also, during the current consolidated fiscal year, the Company identified an impairment loss for adomestic subsidiary that has reported operating losses for two consecutive fiscal years and a domestic
subsidiary that is expected to continue to report operating losses. As a result of comparing the total
undiscounted future cash flows from the operations of the subsidiary with its carrying amount, an
impairment loss was recognized for the subsidiary whose undiscounted cash flows were less than its
carrying amount.
We estimate these future results and cash flows based on the assumption that profitability will
improve to a certain degree in the next fiscal year and thereafter.
In the event that the assumptions used in these estimates need to be revised due to externalchanges in the environment, such as a shortage of semiconductors or increases in raw material prices
and energy costs, additional impairment losses may be recognized in the next fiscal year.
2.

Recoverability of deferred tax assets(1) Amount recorded in the Consolidated Financial Statements
Company has recorded deferred tax assets of 1,090 million yen as described in the Notes
regarding Tax Effect Accounting in the Notes regarding Non-Consolidated Financial Statements.
(2) Information that contributes to an understanding of the details of accounting estimates
As described in the Notes regarding Tax Effect Accounting in the Notes regarding NonConsolidated Financial Statements, the Company has deferred tax assets of 3,163 million yen before
offsetting deferred tax liabilities and deducting valuation allowance of 905 million yen from the totaldeferred tax assets of 4,068 million yen related to the temporary differences that will be deducted in
the future
The Company judges the recoverability of deferred tax assets by estimating taxable income
within a reasonably estimable period (generally five years) in the future. Estimates of such taxable
income are affected by factors such as the forecasted production volume of the automotive industry,
which is closely related to the Company.
If the assumptions used in these estimates need to be revised due to changes in the external
environment, such as a shortage of semiconductors or increases in raw material and energy costs, there
is a possibility that deferred tax assets that are not expected to be recovered will be reversed in thefollowing consolidated fiscal year.

 14 

(Additional information)(Change of schedule regarding business consolidation)
As publicly announced in the press release dated July 27, 2022, “Conclusion of a Memorandumof Understanding concerning Consolidation through the establishment of a joint holding company(stock transfer) between Nippon Piston Ring Co., Ltd. and Riken Corporation,” the two companies
have entered into a basic agreement to consolidate their management based on a spirit of equality, andare proceeding with specific discussions and considerations.
Also, in our press release dated November 28, 2022, “Notice Regarding the Schedule for theConsolidation of Riken Corporation and Nippon Piston Ring Co., Ltd.,” in consideration of the timerequired for the examination of the business combination by the Japan Fair Trade Commission, we
announced a change in the schedule for the said corporate consolidation. However, on May 2, 2023,
we received a notice from the Japan Fair Trade Commission that it will not issue a cease and desist
order in connection with the business consolidation, and that all notification and examination
procedures for the business consolidation have been completed.
The two companies will continue discussions and considerations with the aim of realizing thebusiness consolidation as soon as possible. Although the schedule for the future has not yet been
determined, the following schedule will be publicly announced as soon as it is finalized through adecision by the organizations.
Final signing of agreement on business consolidation

May 23, 2023 (scheduled)

Ordinary General Meeting of Shareholders(resolution to approve the stock transfer)

June 23, 2023 (scheduled)Tokyo Stock Exchange delisting date

September 28, 2023 (scheduled)

Effective date of the stock transfer

October 2, 2023 (scheduled)

Note: The above is the current schedule and may be subject to change by mutual agreement upon consultation
between the two companies when necessary due to the progress of the business consolidation process orfor other reasons.

 15 

(Notes regarding Consolidated Balance Sheets)
1.

Accumulated depreciation of property, plant and equipment
98,988 millions of yen(Notes regarding Consolidated Statements of Income)1.

Impairment losses
Impairment losses were recorded for the following asset groups:
USE

Automobile parts
manufacturing equipment
Automobile parts
manufacturing equipment
Automobile parts
manufacturing equipment
Automobile parts
manufacturing equipment

CATEGORY

PLACE

Machinery, equipment
and vehicles
Land
Buildings and structures
Other

AMOUNT(millions of yen)Kashiwazaki City,
Niigata Prefecture
Kashiwazaki City,
Niigata Prefecture
Kashiwazaki City,
Niigata Prefecture
Kashiwazaki City,
Niigata Prefecture

Total

315
108
48
65
539

(Background)
In the automobile parts manufacturing equipment, the Company and its subsidiaries
recognized impairment losses as signs of impairment based on the “Accounting Criteria for
Impairment of Fixed Assets” were recognized due to a decline in profitability, etc.
(Methods of grouping)
The Company's automotive parts manufacturing equipment is grouped as a cash flowgenerating unit, independent of the Company's business units and subsidiaries, that conducts therelevant manufacturing. For idle assets that are not expected to be used in the future, they aregrouped into individual asset units based on management accounting classifications.
(Calculation method of recoverable amount, etc.)
In the Company, it is measured at its net realizable value, which is based on a valuation
reasonably estimated by a third party. The Company's subsidiaries measure the value in use,which is calculated by discounting future cash flows.

 16 

(Notes regarding Consolidated Statement of Changes in Equity)
1.

Matters related to outstanding shares

Common shares
Note:

2.

Current consolidated
fiscal year
Number of shares at
beginning of period(stocks)

Increase in numberof shares (shares)

Decrease in numberof shares (shares)

End of the current
consolidated fiscal
year
Number of shares(shares)

10,648,466

40,400–10,688,866

The increase in common shares was due to the issuance of 40,400 new shares.

Matters related to treasury shares

Common shares

Current consolidated
fiscal year
Number of shares at
beginning of period(stocks)

Increase in numberof shares (shares)

Decrease in numberof shares (shares)

End of the current
consolidated fiscal
year
Number of shares(shares)645,730837

85

646,482

Notes: The increase in treasury stock of common shares was due to the purchase of 837 odd-lot shares.
The decrease in treasury stock of common shares was due to 85 requests for additional purchases of
odd-lot shares.

3.

Matters related to share acquisition rights (excluding those for which the first day of the exercise
period has not yet arrived)
Number of shares to be acquired
Company
nameComprehensive
income attributable toType ofshares to beacquired

The Company

Share acquisitionrights as stock options

CommonsharesBeginning ofcurrent
consolidated
fiscal year

23,100 17 

Increase

Beginning ofcurrent
consolidated
fiscal year

Decrease––

23,1004.

Matters related to dividends(1) Dividends paid

Resolution

Type ofsharesTotal amountof dividends
paid(Millions ofyen)June 24, 2022
Ordinary General
Meeting of
Shareholders

Commonshares600

60.00 March 31, 2022

November 11, 2022
Meeting of the Boardof Directors

Commonshares600

60.00 September 30, 2022 December 6, 2022

Dividend
per share(Yen)

Reference date

Effective dateJune 27, 2022

(2) Of the dividends for the current consolidated fiscal year, those with an effective date in thefollowing consolidated fiscal year
The following proposal was submitted to the Ordinary General Meeting of Shareholders on
June 23, 2023.

Resolution

Type ofsharesTotal amount of
Dividend
Source of dividends paid
per share
dividends (Millions of
(Yen)
yen)

June 23, 2023
Ordinary General
Meeting of
Shareholders

CommonsharesProfitSurplus602

 18 

Reference date

Effective date

60.00 March 31, 2023

June 26, 2023

(Notes regarding Financial Instruments)
1.

Matters related to the status of financial instruments(1) Policy regarding financial instruments
The Group’s principle investment policy is to use short-term deposits, etc., for fund management,
and also to procure funds mainly through borrowings from banks and other financial institutions.
Derivatives are used to hedge the risk of exchange rate fluctuations in accounts receivable, etc but theCompany does not engage in speculative transactions.
(2) Description of financial instruments, their risks and risk management systems
Trade notes and accounts receivable which are operating receivables are exposed to customer
credit risk. To manage this risk, the Company manages due dates and outstanding balances bycounterparty in accordance with the Group's credit management regulations.
We monitor market price fluctuations for stocks, which are investment securities.
For notes and accounts payable-trade, which are operating obligations, most of the payment due
dates are within one year.
Long-term borrowings (generally within 5 years) are mainly for financing capital expenditures
and M&A.
The Company executes and manages derivatives transactions in accordance with internal rulesthat stipulate transaction authority. In addition, in order to mitigate credit risk when using derivatives,
we only enter into transactions with financial institutions with high credit ratings.
2.

Matters related to the fair value of financial instruments

As of March 31, 2023, the consolidated balance sheet amounts, fair values, and their differences
are as follows. Stocks and other securities with no market value (consolidated balance sheet amount:
5,976 million yen) are not included in (1) Investment securities. Also, for cash and deposits, tradenotes and accounts receivable, and trade notes and accounts payable, notes are omitted because the fairvalues approximate their book values due to their short maturities.
(Millions of yen)
Consolidatedbalance sheets
Balance sheet
amounts (*1)

Fair value (*1)

Affiliated companies’ shares

5,300

7,749

2,449

Other securities

11,867

11,867

(10,000)(9,857)

(142)

15

15



Difference(1) Investment securities(2) Long-term borrowings (including current
portion of long-term borrowings)(3) Derivatives transactions (*2)
(*1)
(*2)

Items recorded in liabilities are shown in parentheses.
Net receivables and obligations arising from derivative transactions are presented on a net basis, anditems that, in the aggregate, result in a net liability are presented in parentheses.

 19 

3.

Matters related to the breakdown of the fair value of financial instruments by appropriate
category

The fair value of financial instruments is classified into the following three levels based on theobservability and materiality of the inputs used to calculate fair value.
Level 1 fair value:
Of the inputs used to calculate the observable fair value, the fair value
calculated based on quoted market prices for the assets or liabilities forwhich such fair value is calculated that are formed in an active market.
Level 2 fair value:
Of the inputs used to calculate the observable fair value, the fair value
calculated using the inputs used to calculate the fair value other than Level
1 inputs.
Level 3 fair value:
Fair value calculated using inputs for unobservable fair value calculations
When multiple inputs that have a significant impact on the calculation of fair value are used, fairvalue is classified to the level with the lowest priority in the calculation of fair value among the levels
to which each of those inputs belongs.
(1) Financial instruments whose fair value is recognized in the consolidated balance sheets(Millions of yen)
Category

Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities

11,867––

11,867(2) Financial instruments whose fair value is not recognized in the consolidated balance sheets(Millions of yen)
Category

Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Affiliated companies’ shares

7,749

–

–

7,749

Long-term borrowings (including
current portion of long-termborrowings)

–

9,857

–

9,857

Derivatives transactions

–

15

–

15

Notes: Description of valuation techniques and inputs used in the calculation of fair value
Other marketable securities and stocks of affiliated companies are listed stocks and are valued using
quoted market prices. Listed stocks are classified as Level 1 fair value because they are traded in an
active market.
The fair value of long-term borrowings (including current portion of long-term borrowings) is
calculated based on the discounted present value of the total principal and interest and the interest ratethat takes into account the remaining term of the obligations and credit risk, and is classified as Level 2
fair value.
Derivatives transactions are classified as Level 2 fair value using the discounted current value methodwith observable inputs such as foreign exchange rates.

 20 

(Notes regarding Income Recognition)
1.

Information that disaggregates income arising from contracts with customers
Main geographic markets(Millions of yen)
Automotive &Industrial
Machinery parts
business

Other
(*1)

Total

Japan

33,62812,87346,501Asia

20,357301

20,658

U.S.

10,563169

10,732

Other

8,353

136

8,489

Income arising from contracts with customers

72,902

13,47986,382–––

72,902

13,47986,382Other income
Net sales to external customers(*1)“Other” is a business segment not included in the reportable segments and includes the piping fittingsbusiness, EMC products business, and thermal engineering products business.

Timing of income recognition(Millions of yen)
Automotive &Industrial
Machinery parts
business
Goods or services transferred at some point in
time
Goods or services transferred over a period of time
Income arising from contracts with customers
Other income
Net sales to external customers(*1)

Other (*1)

Total

72,902

12,06584,968

–

1,414

1,414

72,902

13,47986,382–––

72,902

13,47986,382“Other” is a business segment not included in the reportable segments and includes the piping fittingsbusiness, EMC products business, and thermal engineering products business.

 21 

2.

Information that provides a basis for understanding income arising from contracts with customers

As stated in “5. Matters related to accounting policy (4) Criteria for recording significant income
and expenses” in “Notes regarding important matters concerning the preparation of the consolidated
financial statements.”
3.

Information to understand the amount of income for the current consolidated fiscal year and thefollowing consolidated fiscal years and thereafter(1) Balance of contract assets, etc.
(Millions of yen)AmountReceivables arising from contracts with customers (beginning balance)

19,751

Receivables arising from contracts with customers (ending balance)

21,713Contract assets (beginning balance)

78

Contract assets (ending balance)

249

Contract assets arise from the construction of Radio Frequency Anechoic Chambers/ShieldRooms.
(2) Transaction price allocated to remaining performance obligations
Since the Group does not have any significant contracts with an initial projected contract periodof more than one year, the practical expedient method is applied and the statement regarding thetransaction price allocated to the remaining performance obligations has been omitted. The amount ofconsideration received from contracts with customers does not include the amount of significant
variable consideration not included in the transaction price.
(Notes regarding per share information)
1.
2.
3.

Net asset value per share
Earnings per share
Diluted earnings per share for the current fiscal year

 22 

8,810.30 yen
431.60 yen
430.61 yen

(Significant subsequent events)(Corporate consolidation through acquisition)
On May 9, the Company acquired 76.56% of the shares of JFE Pipe Fitting Mfg. Co., Ltd. fromJFE Steel Corporation, making NIPPON JFE Pipe Fitting Mfg. Co., Ltd. a subsidiary of the Company.
Also on the same day, the company implemented a trade name change to NIPPON PIPE FITTING
Corp. (hereinafter, “NIPPON PIPE FITTING”
1.

Overview of corporate consolidation(i)Name of acquired company and its business
Name of acquired company: JFE Pipe Fitting Mfg. Co., Ltd.
Description of business:
Manufacturing and sales of fittings for gas, water, and other piping,as well as parts for construction and industrial machinery,Prefabricated piping processing(ii) Main reason for the corporate consolidation
In recent years, the automotive industry has been undergoing a once-in-a-century
transformation, and the market perception of the Company's core business, engine components,
has become increasingly harsh. As stated in our Midterm Plan “PLAN2022,” the Company plans
the expansion of new next-generation businesses, such as non-ICE (internal-combustion engines,
such as automobile engines), and has been considering proactive use of M&A to expand its
portfolio in a business domain with a high affinity.
NIPPON PIPE FITTING manufactures and sells an extensive lineup of piping fittings andenjoys a position as one of the leading players in the industry, maintaining strong relationships
with many customers over the years for this reason for our high-quality product capabilities.
While NIPPON PIPE FITTING has a solid presence in the field of gas pipe fittings, werecognize that our core products are accurately segregated from those of Company. In order forboth companies to continue to properly and timely fulfill their supply responsibilities in the
manufacture and sale of piping fittings, which are important products that support lifelines, theacquisition of these shares is expected to generate extensive synergies. In addition to enabling
significant productivity improvements and the establishment of a sustainable structure capable ofsupplying high quality products, the decision to acquire the shares was based on our belief thatthe acquisition will accelerate the Company's efforts to become carbon neutral and to address
climate change issues.
By welcoming NIPPON PIPE FITTING to the Group, the Company aims to achievesustainable growth and increased corporate value through mid- to long-term management stability
by continuously providing customers with high-quality products that leverage the strengths ofboth companies.
(iii) Date of corporate consolidation
May 9, 2023 (deemed acquisition date: April 1, 2023)(iv) Legal form of corporate consolidation
Acquisition of shares with cash consideration(v) Name of company after consolidation
NIPPON PIPE FITTING Corp.
(vi) Percentage of voting rights to be acquired
76.56%(vii) Main basis for the decision to acquire the company
The Company is acquiring its shares as cash consideration.

 23 

2.

Acquisition cost of the acquired company and breakdown by type of consideration

As per the agreement with the counterparty of this share acquisition, this information will not be
disclosed.
The acquisition cost of the shares was determined based on the share value reasonably calculated
by a third party.
3.

Details and amounts of major acquisition-related expenses

Major acquisition-related costs include advisory and other expenses, which have not been
finalized at this time.
4. Amount of goodwill incurred, reason for incurrence, amortization method and amortization period
The amount has not been finalized at this time.
5. Assets received and liabilities assumed on the date of corporate consolidation and their major
breakdowns
The amount has not been finalized at this time.
(Borrowing large sum of capital)
Based on a resolution passed on March 22, 2023 by the Company's Board of Directors, theCompany borrowed funds on April 28, 2023 as follows mainly to fund the acquisition of shares in
NIPPON PIPE FITTING Corp. (formerly JFE Pipe Fitting Mfg. Co., Ltd.).
(1)
(2)
(3)
(4)
(5)
(6)

Lender: Mizuho Bank, Ltd.
Loan amount: 3 billion yen
Loan rate: base rate + spread
Loan date: April 28, 2023
Loan period: 5 years
Collateral: Unsecured and unguaranteed 24 

Statement of Changes in Equity(From April 1, 2022 to March 31, 2023)(Millions of yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings

SharecapitalLegalcapitalsurplusTotal
capitalsurplusLegalretainedearnings

8,573

6,604

6,604

1,457

53

53

53

Balance at beginning ofcurrent period
Changes of items during
periodIssuance of newsharesDistribution ofdividends of surplus
Profit for the current
fiscal year
Acquisition oftreasury shares
Appropriation oftreasury shares
Reversal of reserve
for reduction entry
Provision of reserve
for reduction entry of
replaced property
Reversal of reserve
Net changes of items
during period otherthan shareholders'equityTotal changes of items
during period
Balance at end ofcurrent period

Reserve
Reserveforforoverseas reduction
operations
entry

Reservefordividends

4,000

10,00010Total
TreasuryTotalshareholders'sharesretained
equityearnings

Reserveforreduction
entry ofreplaced
property

Generalreserve

Retainedearnings
brought
forward33

5,500

13,501

34,504 (2,894)

46,787

107

(0)
(1)

(1,200) (1,200)(1,200)

5,625

5,625

5,625
(1)

(1)

0

0

(0)

(0)

0

–

–

1

–

–

53

53

53

–

–

–

(0)

(1)

–

4,427

4,425

(1)

4,531

8,627

6,658

6,658

1,457

4,000

10,000

10

31

5,500

17,92938,929 (2,896)

51,319Valuation and translation adjustments

Balance at beginning of current period

Valuation difference
on available-forsale securities

Deferred gains orlosses on hedges

Total of valuationand translation
adjustments

Share acquisitionrights

1,039

(55)

984

97

Total net assets
47,869Changes of items during period
Issuance of new shares

107

Distribution of dividends of surplus(1,200)

Profit for the current fiscal year

5,625

Acquisition of treasury shares(1)

Appropriation of treasury shares

0

Reversal of reserve for reduction
entry

–

Provision of reserve for reduction
entry of replaced property
Reversal of reserve–

Net changes of items during period
other than shareholders' equity
Total changes of items during period
Balance at end of current period

805

66

805

66

871

–

5,403

1,844

11

1,855

97

53,272

 25 

871

–

871

Notes to the Non-Consolidated Financial Statements(Notes regarding matters concerning significant accounting policies)
1.

Amounts are rounded down to the nearest million yen.

2.

Asset valuation criteria and methods(1) Securities
Held-to-maturity debt securities:
Calculated using the amortized cost method (straight-line method).
Stocks of subsidiaries and affiliates:
Calculated using the cost method using the moving-average method.
Other securities
Other than stocks and other securities with no market value:
Calculated using the market value method (valuation differences are processed by the total
direct capitalization method and the cost of sales is determined by the moving averagemethod).
Stocks, etc. without market prices:
Calculated using the cost method using the moving-average method.
(2) Inventories:
Cost method based on the moving average method (method of writing down the book value of
assets due a decline in profitability)(3) Derivatives:
Market value method
3.

Fixed assets depreciation method:
Property, plant and equipment (excluding leased assets):
Calculated using the declining-balance method.
However, we apply the straight-line method to buildings (excluding building fixtures)acquired on or after April 1, 1998 and for building fixtures and structures acquired on or after
April 1, 2016. Useful life and residual value are determined based on the same criteria as
stipulated in the Corporation Tax Law
Intangible assets (excluding leased assets):
Calculated using the straight-line method.
Useful life is determined based on the same criteria as stipulated in the Corporation Tax Law
Note that software (for internal use) is amortized by the straight-line method based on the
period of internal use (5 to 10 years).
Leased assets:
Leased assets related to finance lease transactions that transfer ownership of the leased assets
to the lessee are calculated using the same depreciation method as that applied to owned fixed
assets. Lease assets related to finance lease transactions that do not transfer ownership of theleased assets to the lessee are calculated using a method in which the lease period is deemed as
the useful life of the asset and the residual value is set at zero.

 26 

4.

Criteria for recording allowances
Allowance for doubtful accounts:
To provide for possible bad debt losses, the Company records allowances for general
receivables based on historical bad debt ratios, and allowances for specific doubtfulreceivables based on the financial condition assessment method.
Allowance for bonuses:
To provide for the payment of bonuses to employees, the Company records the estimatedamount of bonuses to be paid to employees attributable to the fiscal year.
Allowance for retirement benefits:
To provide for the payment of retirement benefits to employees, the Company records anamount based on the projected benefit obligations and pension benefit assets at the end of the
fiscal year. When the estimated amount of pension assets is less than the estimated amount ofprojected benefit obligations plus or minus unrecognized prior service costs and unrecognizedactuarial calculation differences, the difference is recorded as allowance for retirement
benefits, and when the difference exceeds the projected benefit obligations, the excess amountis recorded as prepaid pension cost.
(i) Method of attributing estimated retirement benefits to periods of service
In calculating retirement benefit obligations, the estimated amount of retirement benefits
is attributed to the period up to the end of the current fiscal year based on the benefit
calculation method.
(ii) Method of processing prior service costs and actuarial calculation differences
Prior service costs are amortized by the straight-line method over a fixed number of years(10 years) within the average remaining service period of employees at the time the costis incurred.
Actuarial calculation differences are amortized by the straight-line method over a fixed
number of years (10 years) within the average remaining service period of employees at
the time of occurrence of each fiscal year, with the amount prorated from the following
fiscal year of occurrence.
The method of accounting for unrecognized actuarial calculation differences andunrecognized prior service costs related to retirement benefits differs from the method of
accounting for these items in the consolidated financial statements.
Allowance for environmental measures:
To provide for expenditures for disposal of polychlorinated biphenyls (PCBs), etc., theCompany records an estimated amount of expenditures that can be reasonably estimated.

5.

Criteria for recording significant income and expenses

The company is primarily engaged in the manufacture and sale of automotive and machineryparts. For the sale of such goods and products, the performance obligation is satisfied when the goods
and products are delivered to the customer, and therefore income is recognized at that time.
6.

Processing of hedge accounting
Method of hedge accounting:
The Company has adopted deferred hedge processing. The allocation method is applied toforward exchange contracts when they meet the requirements for the allocation processing.
Hedging methods:
Forward exchange contracts
Hedging target:
Operating receivables in foreign currencies

 27 

Hedging policy:
Our basic policy on derivatives transactions is determined by the Management Committee,
which has established internal management regulations that stipulate transaction authority andtransaction limits, and we use forward exchange contracts to avoid foreign exchange
fluctuation risks.
Method of evaluating hedging effectiveness:
Forward exchange contracts are based on scheduled future transactions (e.g., exports), and theassessment of validity is omitted because the probability of execution is extremely high.
(Changes in accounting policies)
N/A 28 

(Notes regarding Accounting Estimates)
1.

Impairment of fixed assets(1) Amount recorded in the Consolidated Financial Statements
Major fixed assets of the Company's business units that were identified in determining theindication of impairment
Buildings and structures
649 millions of yen
Machinery, equipment and vehicles
1,098 millions of yen
Land
55 millions of yen
Other
11 millions of yen(2) Information that contributes to an understanding of the details of accounting estimates
In the current consolidated fiscal year, the Company identified signs of impairment for the fixed
assets of business units that have reported operating losses for two consecutive fiscal years, andcompared the total undiscounted future cash flows from the division's operations with the carrying
amount of the assets. As a result of comparing the total undiscounted future cash flows from theoperations of the units with their carrying amount, no impairment loss was recognized because such
undiscounted cash flows exceeded its carrying amount.
We estimate these future results and cash flows based on the assumption that profitability will
improve to a certain degree in the next fiscal year and thereafter.
In the event that the assumptions used in these estimates need to be revised due to externalchanges in the environment, such as a shortage of semiconductors or increases in raw material prices
and energy costs, additional impairment losses may be recognized in the next fiscal year.
2.

Recoverability of deferred tax assets(1) Amount recorded in the Consolidated Financial Statements
Deferred tax assets 1,090 millions of yen(2) Information that contributes to an understanding of the details of accounting estimates
As stated in the notes to the financial statements regarding tax effect accounting, the Company
has deferred tax assets of 3,163 million yen before offsetting deferred tax liabilities and total deferred
tax assets of 4,068 million yen related to temporary differences, less a valuation allowance of 905
million yen.
The Company judges the recoverability of deferred tax assets by estimating taxable income
within a reasonably estimable period (generally five years) in the future. Estimates of such taxable
income are affected by factors such as the forecasted production volume of the automotive industry,
which is closely related to the Company.
If the assumptions used in these estimates need to be revised due to changes in the external
environment, such as a shortage of semiconductors or increases in raw material and energy costs, there
is a possibility that deferred tax assets that are not expected to be recovered will be reversed in thenext consolidated fiscal year.

 29 

(Notes regarding Balance Sheets)
1.

Accumulated depreciation of property, plant and equipment

2.

Monetary receivables from and monetary obligations to subsidiaries and affiliates(excluding those separately presented)
Short-term monetary receivables
Short-term monetary obligations

67,399 millions of yen

5,737 millions of yen
5,235 millions of yen(Notes regarding Statements of Income)1.

Transaction volume with affiliated companies
Trading volume from operating transactions
Net sales
Amount of goods purchased
Selling, general and administrative expenses
Trading volume from non-operating transactions

13,652 millions of yen
18,758 millions of yen
266 millions of yen
5,174 millions of yen(Notes regarding Statements of Changes in Equity from Non-Consolidated Financial Statements
1.

Matters related to the class and number of treasury shares

Common shares

The fiscal year
Number of shares at
beginning of period(stocks)

Increase in numberof shares (stocks)

Decrease in numberof shares (stocks)

The end of the fiscal
year
Number of shares(stocks)

645,730837

85

646,482

Notes: The increase in treasury stock of common shares was due to the purchase of 837 odd-lot shares.
The decrease in treasury stock of common shares was due to 85 requests for additional purchases of
odd-lot shares.

 30 

(Notes to the financial statements regarding tax effect accounting)1.

Breakdown of deferred tax assets and deferred tax liabilities by major cause
Deferred tax assets
Allowance for bonuses
Accrued expenses
Accrued enterprise tax
Loss on valuation of inventories
Allowance for retirement benefits
Depreciation
Loss on valuation of stocks of affiliated companies
Accrued amount payable
Other
Subtotal
Valuation allowance
Total deferred tax assets

316 million yen
95 million yen
9 million yen
103 million yen
2,193 million yen
598 million yen
414 million yen
3 million yen
332 million yen
4,068 million yen(905 million yen)
3,163 million yen

Deferred tax liabilities
Gain on contribution of securities to retirement benefit trust
Valuation difference on available-for-sale securities
Reserve for reduction entry of replaced property
Reserve for reduction entry
Forward exchange contracts
Total deferred tax liabilities
Net deferred tax assets
2.

(1,242 million yen)(806 million yen)
(13 million yen)
(4 million yen)
(4 million yen)
(2,072 million yen)
1,090 million yen

Breakdown of significant differences between the statutory effective tax rate and the effective tax
rate after the application of tax effect accounting, by major item that caused the differences
Statutory effective tax rate
(Adjustments)
Items not permanently deductible for income tax purposes, such asentertainment expenses
Items not permanently includable in income, such as dividends received
Inhabitant tax on per capita basis
Change in valuation allowance
Tax credit for experimental research expenses
Foreign withholding tax
Other
Income tax expense ratio after application of tax-effect accounting

 31 

30.5%
0.0%–20.4%
0.3%
1.2%
–1.2%
6.0%
–0.1%
16.2%

(Notes regarding transactions with related parties)
1.

Subsidiaries and affiliated companies
Name ofcompany, etc.

Percentage ofRelationvoting rights, etc.
Concurrently
heldBusiness
serving(controlling
relationshipofficers,
etc.
ownership)

Details oftransactions

Transaction
amounts(Millions of
yen)

RIKEN
Subsidiary CASTEC Co.,Ltd.

Ownership
Direct 100.0%

Yes

Outsourcingthemanufacturingof automotive
casting parts,
etc.

Company's
products
outsource
manufacturing

5,800

Accounts
payable675

NIHON MEKKI
Subsidiary INDUSTRY
CO.,LTD.

Ownership
Direct 64.4%

Yes

Outsourcing of
surface
Custody ofprocessing of
funds
piston rings

Deposits

986

Yes

Outsourcing of
camshaft
Loan of funds
manufacturing

Affiliatedcompanies
 Short-term
loans
receivable

817

Yes

Sales ofCompany
products in the
U.S.

Company's
products
consignment
sales

4,847

Accounts
receivable

1,284

No

Sales ofCompany
products in
EuropeCompany's
products
consignment
sales

1,853

Accounts
receivable

697

Attribution

RIKEN
BROTHER
Ownership
Subsidiary PRECISION
Direct 51.0%
INDUSTRYCORPORATIONRIKEN OF
Ownership
Subsidiary
AMERICA, INC. Indirect 100.0%

Subsidiary

EURO-RIKEN
GMBH

Ownership
Direct 100.0%

Item

Balance at
end ofperiod(Millions ofyen)

Notes: 1. For the sale and purchase of products, prices and other transaction terms are determined throughprice negotiations with reference to prevailing market prices, etc.
2. The Company manages the Group's funds in a centralized manner with respect to loans and deposits
of funds. Since balances fluctuate daily based on the basic contract, only balances at end of period
are described. Interest rates are determined based on market interest rates.
3. We recorded 267 million yen as allowance for doubtful accounts for loans to affiliated companies. A
provision for doubtful accounts of 138 million yen was also recorded for this fiscal year.

(Notes regarding Income Recognition)
Information that provides a basis for understanding income arising from contracts with customers
As described in “Notes regarding matters concerning significant accounting policies 5. Criteria
for recording significant revenues and expenses.”(Notes regarding per share information)
1.
2.
3.

Net asset value per share
Earnings per share
Diluted earnings per share for the current fiscal year

5,295.07 yen
562.27 yen
560.98 yen(Significant subsequent events)(Borrowing large sum of capital)
As the same information has been described in the “Notes to the Consolidated Financial
Statements (Significant subsequent events),” this note has been omitted.

 32 

Reference Documents Concerning Nippon Piston Ring Co., Ltd. for the General
Meeting of Shareholders in Relation to Proposal 1

Details of Financial Statements of Nippon Piston Ring Co., Ltd.’s Final Fiscal Year
(Fiscal Year Ended March 31, 2023)(see the following pages)

Business Report(

Fiscal year under review:)
April 1, 2022 to March 31, 2023

1. Outlook of the Company(1) Business Status for the Fiscal Year
① Progress and Results of the Business
During the fiscal year under review, the global economy continued to recover moderately amid theprogress of normalization of economic activities based on the assumption of the new norm to coexist with
COVID-19. However, due to reasons such as international instability caused by the prolonged conflict in
Ukraine, the surge in resource and energy prices worldwide, continuous interest rate hikes, and thebankruptcy of financial institutions in the United States, the situation continued to be unstable.
In Japan, although affected by the seventh to eighth waves of COVID-19, there were signs ofrecovery due to the easing of restrictions on activities and the effects of various policies. On the other
hand, the rapid depreciation of the yen due to the widening interest rate differential between Japan and theUnited States led to higher commodity prices, and the pace of recovery remained slow.
In the automobile industry, in which the Company operates, the impact of the shortage of in-vehicle
semiconductors and the stagnant supply of parts continued, but there was a recovery trend from the same
period of the previous fiscal year when we were compelled major production adjustments, and the global
automobile production volume increased.
Within such business environment, the Company recorded net sales of 58,524 million yen (up 15.2%
year-on-year), due to the effects of the depreciation of yen and the capture of demand in line withcustomer trends, in addition to the effects mentioned above.
In terms of profit and loss, although various cost increases associated with soaring raw materials andfuel costs and the depreciation of the yen were offset by price increases and cost reductions, operating
income was 2,385 million yen (down 9.2% year-on-year), ordinary income was 2,755 million yen (down
9.9% year-on-year), and profit attributable to owners of parent was 1,808 million yen (down 6.3% yearon-year).
In the financial position, interest-bearing debt decreased by 1,911 million yen from the end of theprevious fiscal year to 13,107 million yen. Shareholders’ equity was 36,091 million yen and shareholder'sequity ratio was 52.4%.
Our business results by segment for the fiscal year under review are as follows.
(A) Automotive Products Segment
In the automotive products segment, despite the continued impact of in-vehicle semiconductors
shortage and stagnant supply of parts, global automobile production increased year-on-year, and withthe effect of the depreciation of the yen and the capture of demand in line with customer trends, net
sales amounted to 49,853 million yen, up 13.6% year-on-year.
(a) Piston Rings
Net sales increased 14.8% year-on- year to 29,611 million yen, mainly due to an increase inautomobile production.
(b) Valve Seats
Net sales was 10,427 million yen (up 12.7% year-on-year), mainly due to an increase inautomobile production.
(c) Other Automotive Products
Net sales for other automotive products was 9,814 million yen (up 11.0% year-on-year).
(B) Products for Marine Engine and Other Products Segment
Net sales in products for marine engine and other products segment was 2,241 million yen (down
4.9% year-on-year), due to a decrease in demand for products for industrial equipment, which
temporarily increased in the previous fiscal year.
(C) Others

Net sales in other segments, including merchandise sales business, was 6,429 million yen (up41.5% year-on-year), mainly due to the consolidation of Normeca Asia Co., Ltd.
(Note) “(C) Others” includes net sales 2,608 million yen as “bearing parts” and net sales 1,170 million
yen as “RV-related products.”② Status of Capital Expenditures
Capital expenditures totaled 3,058 million yen in the fiscal year under review.
③ Status of Funding
In the fiscal year under review, the Company repaid 2,633 million yen in long-term loans.
④ Status of Business Transfer, Absorption-type Split or Incorporation-type Split
Not applicable.
⑤ Status of Business Acquisitions of Other Companies
Not applicable.
⑥ Status of Succession of Rights and Obligations Related to the Business of Other
Corporations, etc. Through Absorption-type Merger or Absorption-type split
Not applicable.
⑦ Status of Acquisition or Disposal of Shares, Other Equity Interests, Stock Acquisition
Rights, etc. of Other Companies
Not applicable.
(2) Status of Assets, Profit and LossClassification

124th(fiscal year
ended March
2020)

125th
(fiscal year
ended March
2021)(Yen in millions unless otherwise stated)
127th
126th
(fiscalyear under(fiscal year
review)
ended March(fiscal year ended
2022)
March 2023)

Net sales

54,88145,27650,78358,524

Ordinary income

1,776

355

3,058

2,755

ProfitAttributable to
Owners of Parent
Basic earnings per
share (yen) (Note)

490

(813)

1,928

1,808

59.96

(102.56)

250.40232.90Total assets

63,60861,80967,34968,843

Net assets

31,28930,26735,09938,117(Note) The Company introduced the “Trust-Type Employee Shareholding Incentive Plan (E-Ship)” in
November 2020.
The number of shares of common stock held by the “E-Ship Trust Account” is deducted from theaverage number of shares of common stock during the fiscal year under review, which is used to calculate
basic earnings per share for the 125th fiscal year (fiscal year ended March 2021), 126th fiscal year (fiscal
year ended March 2022) and 127th fiscal year (fiscal year ended March 2023).
(3) Status of Significant Subsidiaries① Status of Significant Subsidiaries
Company name
NPR Fukushima Works Co., Ltd.

Capital/Ownership
Investments inratio of
Main businesscapitalvoting rights
1,612 million
of automotive
100 % Manufacture
JPY
parts, etc.

NPR Iwate Co.,Ltd.

490 million JPY

Noermeca Asia Co., Ltd.

99 million JPY

NPR of America, Inc.

of automotive
100 % Manufactureparts, etc.
of disaster emergency
100 % Sales
medical products, etc.
and sales of
100 % Manufacture
automotive parts, etc.
and sales of
100 % Manufacture
automotive parts, etc.
of automotive parts,
70 % Sales
etc.
and sales of
100 % Manufacture
automotive parts, etc.
and sales of
100 % Manufacture
automotive parts, etc.
and sales of
90 % Packaging
automotive parts, etc.
and sales of
100 % Manufacture
automotive parts, etc.

40 USD
95,000 thousand
SIAM NPR Co., Ltd.
THB
2,500
thousandNPR of Europe GmbH (Note 3)
EUR
19,900thousand
PT.NT Piston Ring Indonesia
USD
NPR Auto Parts Manufacturing
140,049,000(Yizheng) Co., Ltd.
CNYNPR Singapore Pte. Ltd. (Note 4)
118 million yen
13,000 thousand
PT.NPR Manufacturing Indonesia
USD
NPR Auto Parts Manufacturing India Pvt.
and sales of
1,000 million
100 % ManufactureLtd.
automotive parts, etc.
INR
NPR ASIMCO Powdered Metalsof automotive
Manufacturing (Yizheng) Co., Ltd.
54,630,000CNY
50 % Manufactureparts,
etc.
(Note 5)(Note) 1. Capital / Investments in capital is the amount as of March 31, 2023.
2. The Company’s ownership ratio of voting rights includes indirect ownership.
3. Daido Metal Co., Ltd. has contributed 30% of the capital / investments in capital of NPR of EuropeGmbH's capital.
4. Local individual shareholders have contributed 10% of the capital / investments in capital of NPR
Singapore Pte. Ltd.
5. Yizheng Yaxinke Shuanghuan Piston Ring Co., Ltd. has contributed 50% of the capital / investments incapital of NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd.
② Status of Specified Wholly owned Subsidiaries as of the Fiscal Year-end
Not applicable.
(4) Issues to be Addressed
The automotive industry is in the midst of a once-in-a-century transformation, and the environment inwhich the Company’s core engine parts business is located is expected to change drastically in the amid
the popularization of EVs. We believe that the development of environmentally friendly engine parts is our
mission as long as internal combustion engine vehicles continue to be the main vehicles in the world, eventhough environmental issues are attracting global attention. At the same time, we strongly recognize that itis necessary to actively expand into new business domains that capture global trends such as SDGs, ESG,
and decarbonization, without being bound by internal combustion engine peripheral components.
Under these conditions, in fiscal year ending March 2024 is the final year of the Eighth Mid-termManagement Plan, we will simultaneously strengthen the profitability of existing businesses, nurture andestablish new business fields, and promote sustainability management based on the results of our efforts todate. In addition, in order to address management issues more effectively and efficiently with an eye to the
future, we have been discussing and studying specific matters toward the management integration with
Riken Corporation. We will strive to further enhance our corporate value by gaining the understanding of
our shareholders and realizing synergies as a new group at an early stage.
■ Eighth Mid-term Management Plan (FY2021 - FY2023）<Policy>“Change as Chance” – Change brings opportunity –<Targets (FY2023)>(Management Target)
Net sales: 54 billion yen or more, operating income margin: 8% or more; percentage net sales from nonautomobile engine sales: 15% or more
(Environmental Target)
CO2 emissions: -25% (compared to FY2013)<Priority Measures>(1) Build an overall optimized product manufacturing system(2) Promote technical solution proposal-oriented sales through utilizing the core technologies and products(3) Strengthen the development and creation of new products and business(4) Conduct structural reforms of people and organizations (awareness reforms)(5) Take a leap forward toward becoming a sustainable company<Action Guidelines>
New Five S Speed
Speed of responding to changes
Skill
Skill for planning and carrying out strategies
Science Taking decisions scientifically based on data
SpiritEnthusiasm to want to improve the organization
Safety A safe and secure working environment and safety awareness(5) Main Business (as of March 31, 2023)
The Company consists of 14 companies, including the Company and 13 subsidiaries, andmanufactures and sells automobile-related products (piston rings, valve seats and other automobile-related
products) and products for marine engine and other products, and engages in businesses related thereto.
Classification
Piston ring
Automobilerelated products

Valve seat
Other
automobilerelated products
Products for marine engine andother products
OthersMajor productsPiston rings for automobiles, motorcycles and other various
internal combustion engines
Valve seats for automobiles, motorcycles and other various
internal combustion engines
Composite camshafts, cast iron camshafts and cylinder liners
Marine engine components, stationary engine components, andhome appliance components
Merchandise(6) Significant Sales Offices and Production Bases (as of March 31, 2023)① The Company’s Significant Sales Offices and Production BasesBusiness site

Location

Head officeSales
departments/offices
Production Base

Saitama City, Saitama, JapanTokyo (Saitama City, Saitama), Nagoya City (Aichi), Osaka City (Osaka),
Hiroshima City (Hiroshima), Fukuoka City (Fukuoka), Sendai City (Miyagi)
Nogi-machi, Shimotsuga-gun, Tochigi② Subsidiaries
Name of subsidiary

Location

NPR Fukushima Works Co., Ltd.

Kawamata-machi, Date-gun, Fukushima

NPR Iwate Co., Ltd.

Ichinoseki City, Iwate

Normeca Asia Co., Ltd.

Koshigaya City, Saitama

NPR of America, Inc.

Bardstown, Kentucky, USA

SIAM NPR Co., Ltd.

PT.NT Piston Ring Indonesia

Saraburi, Thailand
Korntal-Münchingen, Baden-Württemberg,
Germany
Karawang, Jawa Bratat, Indonesia

NPR Auto Parts Manufacturing (Yizheng) Co., Ltd.

Yizheng, Jiangsu, China

NPR Singapore Pte. Ltd.

Singapore

PT.NPR Manufacturing Indonesia

Pasuruan, Jawa Timur, Indonesia

E.A Associates Sdn. Bhd.

Subang Jaya, Selangor, Malaysia

NPR Auto Parts Manufacturing India Pvt. Ltd.

Kolar, Karnataka, India

NPR ASIMCO Powdered Metals Manufacturing(Yizheng) Co., Ltd.

Yizheng, Jiangsu, China

NPR of Europe GmbH(7) Status of Employees (as of March 31, 2023)① Status of Employees of the Company
Number of employees

Increase (Decrease) from the end of FY2021

3,036 people+ 9 people(Note) The above figures does not include temporary workers, etc.
② Status of Employees of the Company
Number of employees

Increase (Decrease)from end of FY2022

Average age

656 people- 22 people

42.3 years old

Averageduration ofservice18.4 years(Note) The above figures does not include temporary workers, etc.
(8) Status of Major Lenders (as of March 31, 2023)
Lenders

Amount borrowed (yen in millions)

SBI Shinsei Bank, Limited

3,223

MUFG Bank, Ltd.

1,048

Sumitomo Mitsui Banking Corporation

1,112

Saitama Resona Bank, Limited

1,787

Development Bank of Japan Inc.

680

(9) Other Significant Matters Regarding the Status of the Company
Not applicable.
2. Outlook of the Company(1) Status of Shares (as of March 31, 2023)① Total number of shares authorized② Total number of shares issued③ Number of shareholders④ Major shareholders

19,545,000 shares
8,374,157 shares
10,540Name of shareholders
The Master Trust Bank of Japan, Ltd. (Trust
Account)
Nippon Piston Ring Employee Shareholding
Association
Tokio Marine & Nichido Fire Insurance Co., Ltd.

Number of shares(1,000 shares)
597

Percentage ofshareholding (%)
7.45

283

3.53

267

3.33

Custody Bank of Japan, Ltd. (Trust account)

263

3.28

Asahi Mutual Life Insurance Company
The Nomura Trust and Banking Co., Ltd. (Nippon
Piston Ring Employee Shareholding Association
Trust Account)
Nippon Piston Ring Business Partners Shareholding
Association
SBI Shinsei Bank, Limited

259

3.23

225

2.82

188

2.35

165

2.06

Mitsubishi UFJ Trust and Banking Corporation

148

1.85

INTERACTIVE BROKERS LLC

124

1.56

(Note) 1. The shareholding ratio is calculated after deducting the number of shares of treasury stock (358,000

shares) and is rounded to the third decimal place.
2. 358,028 shares of treasury stock does not include the 225,700 shares of the Company owned by The
Nomura Trust and Banking Co., Ltd. (Nippon Piston Ring Employee Shareholding Association Trust
Account).
⑤ Status of shares delivered to officers of the Company as remuneration for the execution of duties
during the fiscal year under review
The details of the share-based remuneration delivered during the fiscal year under review are as follows.
Number of officers to
Position
Number of shareswhom shares were issued
Directors (excluding Directors
who are Audit & Supervisory
11,050 shares
Five (5) people
Committee Members andOutside Directors)(2) Status of Stock Acquisition Rights
Status of stock acquisition rights issued to and held by officers of the Company as remuneration for
the execution of duties (as of March 31, 2023)
Class andnumber ofAmount Amount ofsharestobe
to beassets to be
Number of Number
Name of stock
issuedor
paidincontributedofacquisition rights holders
ofstocktransferred
for
stock
upon
exercise Exercise period
stock(Date of issuance acquisitionacquisiti
upon
acquisitiof stock
resolution)
on rights
exercise ofon rights acquisitionrightsstock(perrightsacquisition
share)(per share)rights
1st stock
One (1)1,800
August 1, 2008 to
acquisition rights Director of
18
common 1,450 yen
1 yen
July 31, 2033
(June 27, 2008)
the Company
shares
2nd stockThree (3)3,800
August 1, 2013to
acquisition rights Directors of38
common 1,460 yen
1 yen
July 31, 2038
(June 27, 2013)
the Company
shares
3rd stockThree (3)3,400
August 1, 2014 toacquisition rights Directors of34
common 2,040 yen
1 yen
July 31, 2039
(June 27, 2014)
the Company
shares
4th stockThree (3)3,500
August 1, 2015 toacquisition rights Directors of
35
common 1,900 yen
1 yen
July 31, 2040
(June 25, 2015)
the Company
shares
5th stock
Four (4)8,000
July 30, 2016 toacquisition rights Directors of80
common 1,203 yen
1 yen
July 29, 2041
(June 29, 2016)
the Company
shares
6th stock
Four (4)5,600
August 1, 2017 toacquisition rights Directors of56
common 1,885 yen
1 yen
July 31, 2042
(June 29, 2017)
the Company
shares
7th stock
Four (4)6,400
August 1, 2018 toacquisition rights Directors of64
common 1,927 yen
1 yen
July 31, 2043
(June 27, 2018)
the Company
shares
8th stock
Four (4)11,200August 1, 2019 toacquisition rights Directors of112
common 1,175 yen
1 yen
July 31, 2044
(June 26, 2019)
the Company
shares(Note) 1. Directors does not include Directors who are Audit & Supervisory Committee Members or Outside
Directors.
2. The conditions to exercise the stock acquisition rights are as follows.
① A holder of stock acquisition rights may exercise his/her stock acquisition rights for a limited periodof 10 days from the day following the date on which he/she loses his/her position as a Director of theCompany.
② In the event that the holder of stock acquisition rights passes away, his/her heir may exercise his/herstock acquisition rights. The conditions for the exercise of stock acquisition rights by the heir shall be
as set forth in the agreement of ③ below.
③ Other conditions shall be stipulated in the “Agreement on Allotment of Stock Acquisition Rights” tobe entered into between the Company and the holders of stock acquisition rights based on the
resolution of the Board of Directors.
(3) Status of Officers

① Status of Directors (as of March 31, 2023)
Position
Director andPresident(Representativ
e Director)
Representative
Director
Director

Director

Director

Director

Area of responsibility or status of significant concurrent
positionsTeruo Takahashi Internal Auditors OfficeNameYuji Sakamoto

In charge of Production Control Department, Global Procurement
Department and Tochigi Plant, Director and Chairman at NPR
Singapore Pte. Ltd., and Director at NPR of Europe GmbH
Masaaki Fujita In charge of Corporate Planning Department, Accounting and
Finance Department and Related Operations Control Businesses
Department, Komisaris at PT. NT Piston Ring Indonesia,
Komisaris at PT. NPR Manufacturing Indonesia, and President at
NPR of America, Inc.
Zhongliang Yang In charge of Production Engineering Department I, Production
Engineering Department II and Production Engineering
Department III, President at NPR Iwate Co., Ltd., President at
NPR Fukushima Works Co., Ltd., Director at NPR Auto Parts
Manufacturing (Yizheng) Co., Ltd., Chairman and President at
NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co.,
Ltd., and Director at NPR of America, Inc.
Nobuyasu Nara In charge of Corporate Management Department, General Affairs
Department, Information System Department and Safety and
Health Promotion Department, Director at NPR Iwate Co., Ltd.,
Director at NPR Fukushima Works Co., Ltd., and Director andChairman at SIAM NPR Co., Ltd.
Hiromi Nakazawa Directors Who Are Audit & Supervisory from outside theCompany at RICOH LEASING COMPANY, LTD.
Hiroto Koeba
Audit & Supervisory Board Member at NPR Iwate Co., Ltd.,
Audit & Supervisory Board Member at NPR Fukushima WorksCo., Ltd., and Audit & Supervisory Board Member at Noermeca
Asia Co., Ltd.

Director who
is a full-time
Audit &
Supervisory
Committee
MemberDirector who
Hiroki Kimura President and Representative Director at Asahi Mutual Lifeis an Audit &Insurance Company, Councilor at The Institute of Medical
Supervisory
Science, Asahi Life Foundation, Audit & Supervisory Board
Committee
Member (Outside) at The Yokohama Rubber Co., Ltd., and Audit
Member& Supervisory Board Member (External) at Zeon Corporation
Director who
Yoshihide Hino Partner at Tokyo Hatchobori Law Office
is an Audit &Supervisory
Committee
Member(Notes) 1. Among the Directors, Ms. Hiromi Nakazawa, Mr. Hiroki Kimura and Mr. Yoshihide Hino are Outside
Directors. The Company has reported Ms. Hiromi Nakazawa, Mr. Hiroki Kimura and Mr. Yoshihide
Hino as independent directors who does not have conflicts of interest with shareholders and investors,in accordance with the rules of Tokyo Stock Exchange, Inc.
2. The Company has appointed Mr. Hiroto Koeba as Full-time Audit & Supervisory Committee Member.
The reasons for the selection is to enhance the effectiveness of the activities of the Audit & Supervisory
Committee by establishing an auditing environment and sharing information among all Audit &Supervisory Committee Members obtained through attending important meetings, regular hearing ofbusiness reports from business execution departments, as well as collaborations with the Accounting
Auditor and the Internal Audit Department, etc.
3. The Audit & Supervisory Committee Members’ knowledge of finance and accounting is as follows.
Mr. Hiroto Koeba, Full-time Audit & Supervisory Committee Member, has many years of experiencein the Accounting and Finance Department of the Company and has considerable knowledge of financeand accounting.
Mr. Hiroki Kimura, Outside Audit & Supervisory Committee Member, has extensive experience inoverall management in the life insurance industry and has considerable knowledge of finance andaccounting.
② Overview of the Limited Liability Agreement
The Company has entered into an agreement with the respective Outside Directors (including
Directors who are Audit & Supervisory Committee Members) in accordance with Article 427, Paragraph 1

of the Companies Act to limit his/her liability pursuant to Article 423, Paragraph 1 of the Companies Act.
The maximum amount of liability pursuant to the agreement is the amount stipulated by laws andregulations.
③ Overview of the Directors and Officers Liability Insurance Policy
The Company has entered into a directors and officers liability insurance policy as defined under
Article 430-3, Paragraph 1 of the Companies Act, to ensure that the legally liable damages and associatedlitigation cost incurred by the insured person in the event of a claim for damages made against the insured
person during the insurance period due to acts performed by him/her based on his/her position will be
indemnified under such insurance policy. However, the Company takes measures to ensure that theappropriateness of the execution of duties by Directors and officers is not impaired by exempting
compensation for damages caused by criminal acts such as bribery or intentional violations. In addition,
there is a provision for an exemption amount in the insurance contract and damages up to the exemption
amount are not covered.
The insured persons under the directors and officers’ liability insurance policy are Directors of theCompany and its subsidiaries (including Outside Directors and Directors who are Outside Audit &Supervisory Committee Members), Audit & Supervisory Board Members, Executive Officers, important
employees (such as managers appointed by the Board of Directors), retiring officers, and the Company
pays the full amount of the insurance premium for all insured persons.
④ Policy for Determining the Details of Remuneration for Individual Directors(a) Method for Determining the Policy for Determining the Amount of Remuneration for Directors
As for the basic policy for determining the amount of remuneration for Directors of the Company,
Directors (excluding Directors who are Audit & Supervisory Committee Members) and Directors who
are Audit & Supervisory Committee Members are distinguished, and the policy for determining the
remuneration of Directors (excluding Directors who are Audit & Supervisory Committee Members) isdetermined upon the resolution of the Board of Directors based on the deliberations and reports ofNomination and Remuneration Advisory Committee, and the policy for determining the remunerationof Directors who are Audit & Supervisory Committee Members is determined by discussion of the
Audit & Supervisory Committee.
(b) Basic Policy for Determining the Amount of Remuneration for Directors
The remuneration of the Company’s Directors is appropriate for attracting and maintaining
excellent human resources who practice the realization of the Company’s Corporate philosophy andare arousing their motivation to thoroughly fulfill their expected roles in the sustainable enhancementof corporate and shareholder value. Specifically, remuneration for Directors responsible for businessexecution consists of basic remuneration, performance-based remuneration, and share-based
remuneration. Remuneration for Directors who are Audit & Supervisory Committee Members andOutside Directors responsible for supervisory functions consists of basic remuneration only.
In order to fulfill the accountability to shareholders and other stakeholders with regard to thecontent of remuneration for Directors, the Company ensures rationality, objectivity, and transparency
in both the content of remuneration and the decision-making process.
(c) Remuneration Structure for Directors (excluding Directors who are Audit & Supervisory Committee
Members and Outside Directors)
The remuneration for Directors (excluding Directors who are Audit & Supervisory Committee
Members and Outside Directors) consists of basic remuneration, which is a fixed remuneration, andperformance-based remuneration and share-based remuneration, which fluctuate depending on
business performance. The ratio of basic remuneration, performance-based remuneration and sharebased remuneration is approximately 7:2:1.
ⅰ. Basic Remuneration
Basic remuneration is a monetary fixed remuneration paid on a monthly basis. The amount of basic
remuneration shall be determined according to the position, responsibility, and other factors, and shallbe reviewed as appropriate and based on deliberations and reports by the Remuneration Advisory
Committee in consideration of performance, remuneration packages at other companies, social
conditions, etc.
ⅱ. Performance-based Remuneration
・Details of the Performance Indicator and the Reasons for Their Selection
In order to realize sustainable enhancement of corporate value, the Company strives to improvegrowth potential and efficiency, and for performance-based remuneration for Directors (excluding
Directors who are Audit & Supervisory Committee Members and Outside Directors), ordinary income(consolidated) is used as an indicator taking into account the characteristics of the Company's
business.
・Method for Calculating the Amount or Number of Performance-based Remuneration
The Company introduced performance-based remuneration into monetary remuneration for
Directors (excluding Directors who are Audit & Supervisory Committee Members and Outside
Directors). Performance-based remuneration under monetary remuneration is paid at a certain time
every year, up to a maximum of 100 million yen, calculated using the consolidated ordinary income ofeach fiscal year as an indicator in order to raise awareness of performance improvement, and based on
points corresponding to each Director’s position based on the following formula determined by the
Board of Directors. The reason for using consolidated ordinary income as an indicator is based on the
judgment that non-operating profits and losses, such as interest costs and incomes and foreignexchange profits and losses, for which risk control should be carried out in the course of management,
should also be taken into consideration.
Changes in ordinary income (consolidated) including the fiscal year under review are as describedin “(2) Status of Assets, Profit and Loss,” under “1. Status of the Company” and the payment month isJune.

Method of Calculation for Performance-based Remuneration
Consolidated ordinary income (rounded down to the nearest million yen) × 1.2% = a (rounded
down to the nearest million yen)a × each Director’s points / Total points of Directors
Number and points of Directors by position
Number of
Total
Position
Pointspersons
pointsRepresentative Director and
1
100
100
President
Representative Director and
082
0
Executive Vice President
Representative Director andSenior Managing Executive
1
77
77
Officer
Director and Managing
3
68
204
Executive Officer
Total

5

-

381

(Notes) The above figures are calculated based on the number of Directors as of March 31 2023.
(Other Considerations)・Directors are executive officers as stipulated in Article 34, Paragraph 1, Item 3 of the
Corporation Tax Act.
・The consolidated ordinary income (“indicators on profits” as stipulated in Article 34, Paragraph
1, Item 3 (a) of the Corporation Tax Act) used in the above formula is the consolidated ordinary
income before performance-based remuneration is recorded as expenses.
・The “defined amount” as stipulated in Article 34, Paragraph 1, Item 3 (a) (1) of the Corporation
Tax Act is limited to 100 million yen.
・The difference due to the rounding of individual payments is deducted from the amount paid to
the Representative Director and President.
・In the event that a Director leaves office during the period of execution of his/her duties due tounavoidable circumstances, remuneration is paid based on the number of months the Director has
been enrolled in during the period of execution of his/her duties (rounded up to one month).
ⅲ. Non-monetary Renumeration
For the purpose of providing an incentive to further share value with shareholders and to improve
medium- to long-term business performance by having Directors who are responsible for businessexecution acquire and hold a certain amount of shares during their term, the Company grants such
Directors restricted stocks with a transfer restriction period of 25 years at a certain time each year. The
number of shares to be granted is determined based on the position, responsibilities, share price, andother factors.
(d) Reasons for the Board of Directors to Determine that the Contents of the Remuneration for
Individual Directors are in Line with the Policy
In determining the content of the remuneration, etc. for individual Directors, the Nomination andRemuneration Advisory Committee, which the majority of its members are comprised of Outside
Directors, examines the draft from various angles, including the consistency with the decision policy.
The Board of Directors also thoroughly considers the draft to be in line with the decision policy basedon the report of the Advisory Committee.
⑤ Matters Related to Resolutions of the General Meeting of Shareholders with Respect toRemuneration for Directors
At the 127th Annual General Meeting of Shareholders held on June 24, 2021, the remuneration ceilingfor Directors (excluding Directors who are Audit & Supervisory Committee Members) was approved at“not more than 280 million yen per annum (including officers’ bonuses)” (of which, the portion for
Outside Directors is within 30 million yen per annum), and the remuneration ceiling for Directors who are

Audit & Supervisory Committee Members was approved at not more than 53 million yen per annum.
However, the amount of remuneration for Directors (excluding Directors who are Audit & Supervisory
Committee Members) does not include salaries as employees of Directors who concurrently serve as
employees.
In addition, at said Annual General Meeting of Shareholders, it has been separately approved thattransfer restricted share-based remuneration be introduced for Directors (excluding Directors who are
Audit & Supervisory Committee Members and Outside Directors) and that the ceiling of monetary claims
thereto is 70 million yen or less per year.
There were six (6) Directors (excluding Directors who are Audit & Supervisory Committee Members) at
the conclusion of the said General Meeting of Shareholders (including one (1) Outside Director) and three(3) Directors who are Audit & Supervisory Committee Members (including two (2) Outside Directors).
⑥ Amount of Remuneration for Directors

Category of officer
Directors (excluding
Directors who are Audit& Supervisory Committee
Members)(of which Outside
Directors)
Directors who are Audit& Supervisory Committee
Members(of which Outside
Directors)
Total

Total amountof
remuneration(million yen)

Total amount of remuneration by type of
remuneration (million yen)
Performance- Non-monetary
Basic
based
renumeration
remuneration
remuneration

Number of
eligible
officers

157
(7)

110
(7)

33
(N/A)

14
(N/A)

6
(1)

30
(12)

30
(12)

N/A
(N/A)

N/A
(N/A)

3
(2)

187

140

33

14

9

(Note) 1. The amount of remuneration for Directors (excluding Directors who are Audit & Supervisory
Committee Members) does not include salaries as employees of Directors who concurrently serve as
employees.
⑦ Matters Related to Outside Officers(a) Significant Concurrent Positions of the Outside Officers and Relationship with the Company
Relationship with the Company andName
Significant concurrent positions
the companies where Outside Officers
hold a significant concurrent position
OutsideThere are no significant transactions or
Directors Who Are Audit & Supervisory
Directorother relationships with the company wherefrom outside the Company at RICOH
HiromiMs. Hiromi Nakazawa holds a significant
LEASING COMPANY, LTD.
Nakazawa
concurrent position.
OutsidePresident and Representative Director,
Director
Asahi Mutual Life Insurance Company
Asahi Mutual Life Insurance Company(Audit &holds 259,000 shares of the Company.
Councilor at The Institute of Medical
Supervisory Science, Asahi Life Foundation,
There are no significant transactions or
Audit & Supervisory Board Member
other relationships with the other companies
Committee(Outside), The Yokohama Rubber Co., Ltd. where Mr. Hiroki Kimura holds a
Member)Audit & Supervisory Board Member
significant concurrent position.
Hiroki(External), Zeon Corporation
KimuraOutsideDirector(Audit &There are no significant transactions orSupervisory
other relationships with the company where
Partner, Tokyo Hatchobori Law OfficeCommittee
Mr. Yoshihide Hino holds a significant
Member)concurrent position.
YoshihideHino(b) Major Activities for the Fiscal Year Under Review

Name

Major activities

OutsideDirector
HiromiNakazawa

She attended all 14 meetings of the Board of Directors held during the fiscal year underreview. From the viewpoint of an accounting expert, she has provided advice andopinions as appropriate to ensure the appropriateness and reasonableness of decisionmaking by the Board of Directors. In addition to the above, she served as a member of
the Nomination and Remuneration Advisory Committee of the Company and attended
all meetings held in the fiscal year under review. By expressing opinions from an
independent and objective standpoint, she played an important role in deliberating on thenomination of and remuneration for Directors and other officers and reporting it to theBoard of Directors.

OutsideDirector(Audit &Supervisory
Committee
Member)Hiroki
KimuraOutsideDirector(Audit &Supervisory
Committee
Member)YoshihideHino

He attended 13 meetings out of all 14 meetings of the Board of Directors and all 12
meetings of the Audit & Supervisory Committee held in the fiscal year under review.
From the viewpoint of a company manager, he has expressed his opinions as appropriate
to ensure the appropriateness of business operations. In addition to the above, he served
as a member of the Nomination and Remuneration Advisory Committee of the Company
and attended all meetings held in the fiscal year under review. By expressing opinionsfrom an independent and objective standpoint, he played an important role indeliberating on the nomination of and remuneration for Directors and other officers andreporting it to the Board of Directors.
He attended all 14 meetings of the Board of Directors and all 12 meetings of the Audit &Supervisory Committee held during the fiscal year under review. He expressed opinions
as appropriate to ensure the adequacy of business operations mainly from a legal point ofview. In addition to the above, he served as a member of the Nomination andRemuneration Advisory Committee of the Company and attended all meetings held in
the fiscal year under review. By expressing opinions from an independent and objective
standpoint, he played an important role in deliberating on the nomination of andremuneration for Directors and other officers and reporting it to the Board of Directors.

(4) Status of Accounting Auditor① Name of Accounting Auditor

Ernst & Young ShinNihon LLC② Compensation to Accounting Auditor
Amount paid (million yen)Compensation to Accounting Auditor for the fiscal year under55
review
Total amount of cash and other property benefits payable by the61
Company and its subsidiaries(Notes) 1. The Audit & Supervisory Committee closely examined the Accounting Auditor’s audit plan (thenumber of audit days, the number of auditors, the verification and evaluation of performance against
the audit plan for the previous fiscal year, the appropriateness of the performance of audits by the
Accounting Auditor, basis for calculating the estimated compensation and others) for which
explanation was received from the Accounting Auditor and changes in the compensations to accounting
auditors, and thereupon decided that the amount of compensation to the Accounting Auditor isappropriate and agreed thereto pursuant to Article 399, Paragraph 1 of the Companies Act.
2. The Company’s significant overseas subsidiaries are audited by certified public accountants or audit
firms other than the Company’s Accounting Auditor.
3. The audit agreement between the Accounting Auditor and the Company does not distinguish between
the compensation for auditing services under the Financial Instruments and Exchange Act and theCompanies Act, as it is practically impossible to distinguish them. Therefore, the amount of
remuneration to be paid to the Accounting Auditor is the aggregate amount of the aforementioned
remunerations.
③ Details of Non-audit Services Provided by the Accounting Auditor
Not applicable.
④ Policy Regarding Decisions on the Dismissal or Non-reappointment of the Accounting
AuditorIf the Board of Directors determines that a situation has arisen in which the Accounting Auditor ismaterially impairing the Company's auditing services, the Board of Directors will propose the dismissal or
non-reappointment of the Accounting Auditor at a general meeting of shareholders with the consent of the
Audit & Supervisory Committee Members or at the request of the Audit & Supervisory Committee as
described below. If the Audit & Supervisory Committee determines that a situation has arisen in which the
Accounting Auditor is materially impairing the Company's auditing services, it will request the Board of
Directors to submit a proposal for the dismissal or non-reappointment of the Accounting Auditor at a general
meeting of shareholders. In the event that the Accounting Auditor is determined to fall under any of theitems of Article 340, Paragraph 1 of the Companies Act, the Audit & Supervisory Committee will dismiss
the Accounting Auditor upon the unanimous consent of the Audit & Supervisory Committee Members after
discussing within the Audit & Supervisory Committee.
In this case, the Audit Supervisory Committee Member chosen by the Audit Committee will report thedismissal of the Accounting Auditor and the reasons thereof at the first general meeting of shareholders
convened after the dismissal.
⑤ Description on Limited Liability Agreement
Not applicable〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰
Figures reported in the Business Report are rounded down to the nearest unit, except for the ratios stated in “①Progress and Results of the Business” under “(1) Business Status for the Fiscal Year” under “1. Outlook of theCompany” and “④ Major shareholders” under “Status of Shares” under “2. Outlook of the Company.”Consolidated Balance Sheets(As of March 31, 2023)(Unit: million yen)
Item
Amount(Liabilities)
32,654Current liabilities
22,416Notes
andaccounts
payable5,606
3,725
trade
Electronically recorded
11,7194,326
obligations
7,614
Short-term loans payable
5,940
Current
portionof
long-term
2,612
2,720
loans payable
3,078
Lease liabilities
142
2,048
Accrued Income taxes
380(24)
Notes payable-equipments
116
Non-operating electronically
36,188
1,034
recorded obligations
28,382
Other
4,029
7,351
Fixed liabilities
8,309
13,715Long-term loans payable
3,939
5,784
Lease liabilities
364
723
Deferred tax liabilities
1,034
Defined benefit plan
807
2,819
liabilities
930
Other
151
231
Total liabilities
30,725
698(Net Assets)
6,875
Shareholders’ equity
31,417
5,198
Capital stock
9,839
1,408
Capital surplus
6,080
95
Retained earnings
16,265
175
Treasury shares(767)
Accumulated other
(2)
4,673
comprehensive income
Other securities valuation
2,743
differences
Foreign currency translation
3,060
adjustment
Accumulated remeasurements(1,130)of defined benefit plan
Share options
67
Non-controlling interests
1,958
Total net assets
38,117
Total assets
68,843
Total liabilities and net assets
68,843(Note) Stated amounts are rounded down to the nearest million yen.
Item
(Assets)
Current assets
Cash and deposits
Notes receivable-trade,
accounts receivable-trade,and contract assets
Merchandise and products
Work in progress
Raw materials and supplies
Other
Allowance for doubtful
accounts
Fixed assets
Property, plant, andequipments
Buildings and structures
Machinery and transport
equipments
Land
Construction in progress
Other
Intangible fixed assets
Goodwill
Other
Investment and other assets
Investment securities
Defined benefit plan assets
Deferred tax assets
Other
Allowance for doubtful
accounts

AmountConsolidated Profit and Loss Statement(From April 1, 2022 to March 31, 2023)(Unit: million yen)Item
Net sales
Cost of sales
Gross profit
Selling, general, andadministrative expenses
Operating profit
Non-operating revenue
Interest income
Dividend income
Foreign exchange gains
Subsidy income
Government grant income
Gain on sale of scrap
Other
Non-operating expenses
Interest payable
Loss on disposal of fixed assets
Commitment fees
Depreciation of assets for rent
Other
Ordinary profit
Extraordinary profit
Gain on sale of investment
securities
Extraordinary loss
Impairment loss
Profit before tax
Income taxes-current
Income taxes-deferred
ProfitProfit attributable to non-controllinginterests
Profit attributable to owners of parent(Note) Stated amounts are rounded down to the nearest million yen.

Amount58,524
46,271
12,252
9,867
2,385
607
12
156
80
64
85
88
120
237
93
9
10
32
91
2,755
104
104
35
35
2,824
898
30
1,895
87
1,808

Consolidated Statement of Changes in Net Assets(From April 1, 2022 to March 31, 2023)(Unit: million yen)
Shareholders’ Equity
Capital Stock Capital Surplus
Balance at beginning of
periodCumulative effect ofchanges in accounting
policies
Balance at beginning of
period reflecting changes
to accounting policies
Changes of items during
periodDividends of surplus
Profit attributable toowners of parent
Acquisition of treasury
shares
Disposal of treasury
sharesTransfer of loss on
disposal of treasury
sharesChanges of items otherthan shareholders’equity (net)Total changes of items
during period
Balance at end of period

Balance at beginning of
periodCumulative effect ofchanges to accounting
policies
Balance at beginning of
period reflecting changes
to accounting policies
Changes of items during
periodDividends of surplus
Profit attributable toowners of parent
Acquisition of treasury
shares
Disposal of treasury
sharesTransfer of loss on
disposal of treasury
sharesChanges of items otherthan shareholders’equity (net)Total changes of items
during the period

9,839

6,080

9,839

6,080

14,885

Total
Shareholders’Equity(835)
29,969136

136

Retained
Earnings

Treasury
Shares15,021

(835)

(560)

(560)

1,808

1,808

(4)

－

30,105

4

(4)

－

1,243

(0)

(0)

68

64
－

68

1,312

9,839
6,080
16,265(767)
31,417
Accumulated Other Comprehensive Income
Foreign Accumula
Total
Other Currency
ted
NonAccumula
Securities Translatio Remeasur ted Other Share Controllin Total Net
Options
Valuationements of Compreheg Interests AssetsnDifferenc Adjustme
Definednsive
esBenefits Income
nt
Plan
3,351

3,351

838

(1,018)

3,171

8

(52)

(43)

846

(1,070)

3,127

67

1,798

35,006
92

67

1,798

35,099

(560)
1,808
(0)
64
－

(607)

2,213

(60)

1,545

－

160

1,705

(607)

2,213

(60)

1,545

－

160

3,018

Balance at end of period
2,743
3,060
(1,130)4,673(Note) Stated amounts are rounded down to the nearest million yen.

67

1,958

38,117

Non-Consolidated Balance Sheets(As of March 31, 2023)
Item(Assets)
Current assets
Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Merchandise and products
Work in progress
Raw materials and supplies
Prepaid expenses
Advance payments
Short-term loans to relatedcompanies
Accounts receivable-other
Other
Fixed assets
Property, plant, and equipment
Buildings
Structures
Machinery and equipment
Vehicles and transport
equipment
Tools, instruments, andfurnishings
Land
Construction in progress
Intangible fixed assets
Software
Other
Investment and other assets
Investment securities
Related company shares
Capital contributions
Capital contributions torelated companies
Long-term loans to relatedcompanies
Prepaid pension expenses
Other
Allowance for doubtful
accounts

Amount17,013
407
1,428
7,848
1,582
1,154
586
85
23
2,629
1,004
262
39,107
13,706
3,564
125
5,768
4

Item
(Liabilities)
Current liabilities
Notes payable-trade
Electronically recorded
obligations
Accounts payable-trade
Short-term loans payable
Current portion of long-termloans payable
Lease liabilities
Accounts payable-otherAccrued expenses
Advances received
Accrued income taxes
Deposits
Notes payable-equipment
Non-operating electronicallyrecorded obligations
Fixed liabilities
Long-term loans payable
Lease liabilities
Deferred tax liabilities

243
Other
3,764 Total liabilities
235(Net assets)
186
Shareholders’ equity
181
Capital stock4
Capital surplus
25,215
Capital reserves
5,198
Retained earnings
16,276
Other retained earnings
Reserve for reduction entry
1of fixed assets
2,536
Special reserve
Retained earnings brought
260
forward822
Treasury shares
Valuation and translation121
differences
Other securities valuation(2)
differences
Share options
Total net assets
Total assets
56,120Total liabilities and net assets(Note) Stated amounts are rounded down to the nearest million yen.

(Unit: million yen)Amount18,740
93
2,391
6,538
4,770
2,560
62
252
1,085
4
171
287
52
469
5,099
3,699
172
1,163
63
23,83929,470
9,839
5,810
5,810
14,587
14,5876
1,600
12,981
(767)
2,743
2,743
67
32,28056,120Non-Consolidated Profit and Loss Statement(From April 1, 2022 to March 31, 2023)(Unit: million yen)Item
Net sales
Cost of sales
Gross profit
Selling, general, andadministrative expenses
Operating profit
Non-operating revenue
Interest income
Dividend income
Rent income
Foreign exchange gains
Other
Non-operating expenses
Interest payable
Loss on disposal of fixed assets
Depreciation of assets for rent
Other
Ordinary profit
Extraordinary profit
Gains on sale of investment
securities
Profit before tax
Income taxes-current
Income taxes-deferred
Profit(Note) Stated amounts are rounded down to the nearest million yen.

Amount34,94528,755
6,190
5,906
283
1,796
22
1,508
37
152
75
209
94
7
32
75
1,870
104
104
1,974
342
(57)
1,689

Non-Consolidated Statement of Changes in Net Assets(From April 1, 2022 to March 31, 2023
(Unit: million yen)

Balance at beginning of
periodChanges of items
during period
Reversal of reserve
for reduction entry of
fixed assets
Dividends of surplus
ProfitAcquisition oftreasury shares
Disposal of treasury
sharesTransfer of loss on
disposal of treasury
sharesChanges of items
other thanshareholders’ equity(net)
Total changes of items
during period
Balance at end of
periodShareholders’ Equity
Capital Surplus
Retained Earnings
Other Retained Earnings
Reserve
Capital
Other
Total
for
Retained Total
Capital Capital
Stock
Capital Reductio Special Earnings Retained
Reserves Surplus Surplus
n Entry Reserve Brought Earnings
of Fixed
ForwardAssets
9,839
5,810
5,810
6
1,600 11,855 13,461
－

0

－

(560)
1,689

(560)
1,689

(0)

(4)

(4)

4

4

－
(4)

(4)

－

－

－

－

(0)

－

1,126

1,125

9,839

5,810

－

5,810

6

1,600

12,981

14,587

Shareholders’Valuation and Translation
EquityDifferences
Total
Other
Total
Treasury Sharehold Securities
Valuation andSharesers’
Valuation
Translation
EquityDifferences
Differences
Balance at beginning of(835)
28,276
3,351
3,351
periodChanges of items
during period
Reversal of reserve
for reduction entry of
fixed assets
Dividends of surplus(560)
Profit1,689
Acquisition of(0)(0)
treasury shares
Disposal of treasury
68
64
sharesTransfer of loss on
disposal of treasury
sharesChanges of items
other than
(607)
(607)
shareholders’ equity(net)
Total changes of items
68
1,193
(607)
(607)
during period
Balance at end of(767)
29,4702,743
2,743
period(Note) Stated amounts are rounded down to the nearest million yen.

Share
Options
67

Total Net
Assets31,694

－
(560)
1,689
(0)
64
－
(607)
－

586

67

32,280Accounting Audit Report on Consolidated Financial Statements
Independent Auditor’s Report(English Translation*)
May 17, 2023
To the Board of Directors of Nippon Piston Ring Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo Head Office
Designated
Limited Liability
PartnerEngagement
Partner
Designated
Limited Liability
PartnerEngagement
Partner

CPA

Yuji Mukaide

CPA

Masaki Yoshioka

OpinionWe have audited, pursuant to Article 444, Paragraph 4 of the Companies Act of Japan, theaccompanying consolidated financial statements, which comprise the consolidated balance sheet, theconsolidated statement of profit and loss, the consolidated statements of changes in net assets and thenotes to consolidated financial statements, of Nippon Piston Ring Co., Ltd. (the “Company”) for the
fiscal year from April 1, 2022 to March 31, 2023.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position and the financial performance of the Company and its consolidated
subsidiaries for the period covered by the consolidated financial statements in accordance with theaccounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of theCompany and its consolidated subsidiaries in accordance with the relevant professional ethicalrequirements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Other Information
The other information comprises the Business Report and its accompanying supplementaryschedules. Management is responsible for the preparation and disclosure of the other information and
the Audit & Supervisory Committee is responsible for overseeing the Directors’ execution of duties
relating to the design and operation of the reporting process of the other information.
Our opinion on the consolidated financial statements does not cover the descriptions in otherinformation and we do not express any form of opinion thereon.
Our responsibility in connection with our audit of the consolidated financial statements is to readthe other information and, in doing so, consider whether the other information is materiallyinconsistent with the consolidated financial statements, or our knowledge obtained in the course of theaudit or otherwise pay close attention to appearances of material misstatements.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit & Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the auditing standards generally accepted in Japan, and for the designand operation of such internal control as management determines is necessary to enable the preparationand fair presentation of the consolidated financial statements that are free from material misstatements,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theappropriateness of use of the going concern basis of accounting and disclosing, as applicable, mattersrelated to going concern in accordance with the auditing standards generally accepted in Japan.
The Audit & Supervisory Committee is responsible for overseeing the performance of duties of the
Directors in the design and operation of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our responsibilities are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatements, whether due to fraud or error, and to issue
an opinion in a report from an independent standpoint. Misstatements can arise from fraud or error andare considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances when assessing the risks, while thepurpose of the consolidated financial statements audit is not to express an opinion on theeffectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies and their applications which management
adopted, and the reasonableness of the accounting estimates and the appropriateness of therelated disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis ofaccounting in preparing the consolidated financial statements and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s ability to continue as a going concern. If we conclude thata material uncertainty exists with respect to the going concern basis, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
• Assess whether the presentation of the consolidated financial statements and the related
disclosures therein are prepared in accordance with the auditing standards generally acceptedin Japan, as well as whether the presentations, compositions, and contents of the consolidated
financial statements and related disclosures therein properly present the transactions andaccounting events on which the consolidated financial statements are based.
• Obtain sufficient and appropriate audit evidence about the financial information of theCompany and its consolidated subsidiaries to express an opinion on the consolidated financial
statements. The auditor is responsible for the direction, supervision, and implementation of theaudit of the consolidated financial statements. The auditor is solely responsible for the audit
opinion.
We communicate with the Audit & Supervisory Committee regarding, among other mattersrequired by the auditing standards, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit & Supervisory Committee with a statement that we have complied with
relevant professional ethical requirements in Japan regarding independence and communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards in order to remove or reduce the risk of matters which may
deteriorate our independence.
Interests required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company and its
consolidated subsidiaries that is required to be disclosed pursuant to the provisions of the Certified
Public Accountants Act of Japan.
* Notes to the Readers of Independent Auditor’s Report
This is an English translation of the Independent Auditor’s Report as required by the Companies Act ofJapan for the conveniences of the readers.

Accounting Audit Report on Non-consolidated Financial Statements
Independent Auditor’s Report(English Translation*)
May 7, 2023
To the Board of Directors of Nippon Piston Ring Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo Head Office
Designated
LimitedLiability Partner
Engagement
Partner
Designated
LimitedLiability Partner
Engagement
Partner

CPA

Yuji Mukaide

CPA

Masaki Yoshioka

OpinionWe have audited, pursuant to Article 436, Paragraph 2, Item 1 of the Companies Act of Japan, theaccompanying financial statements, which comprise the balance sheet, statement of profit and loss,
statement of changes in net assets and notes to the financial statements, and the supplementaryschedules (the “Financial Statements”) of Nippon Piston Ring Co., Ltd. (the “Company”) for the 127th
fiscal year from April 1, 2022 to March 31, 2023.
In our opinion, the Financial Statements referred to above present fairly, in all material respects, thefinancial position and the financial performance of the Company for the period covered by the
Financial Statements in accordance with the accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements and the Supplementary Schedules section of our report. We are
independent of the Company in accordance with the relevant professional ethical requirements inJapan, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.
Other Information
The other information comprises the Business Report and its accompanying supplementaryschedules. Management is responsible for the preparation and disclosure of the other information and
the Audit & Supervisory Committee is responsible for overseeing the Directors’ execution of duties
relating to the design and operation of the reporting process of the other information.
Our opinion on the Financial Statements does not cover the other information and we do not
express any form of opinion thereon.
Our responsibility in connection with our audit of the Financial Statements is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with the
Financial Statements or our knowledge obtained in the course of audit or otherwise pay close attention
to appearances of material misstatements.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit & Supervisory Committee for the Financial Statements
Management is responsible for the preparation and fair presentation of the Financial Statements inaccordance with the auditing standards generally accepted in Japan, and for the design and operation ofsuch internal control as management determines is necessary to enable the preparation and fairpresentation of the Financial Statements that are free from material misstatements, whether due tofraud or error.
In preparing the Financial Statements, management is responsible for assessing the appropriatenessof use of the going concern basis of accounting, and disclosing, as applicable, matters related to going
concern in accordance with the auditing standards generally accepted in Japan.
The Audit & Supervisory Committee is responsible for overseeing the performance of duties of the
Directors in the design and operation of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements

Our responsibilities are to obtain reasonable assurance about whether the Financial Statements as awhole are free from material misstatements, whether due to fraud or error, and to issue an opinion in areport from an independent standpoint. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the Financial Statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances when assessing the risks, while thepurpose of the Financial Statements audit is not to express an opinion on the effectiveness of
the Company’s internal control.
• Evaluate the appropriateness of accounting policies and their applications which management
adopted, and the reasonableness of the accounting estimates and the appropriateness of therelated disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis ofaccounting in preparing the Financial Statements and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists with respect to the going concern basis, we are required to draw attention in
our auditor’s report to the related disclosures in the Financial Statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
• Assess whether the presentation of the Financial Statements and the related disclosures therein
are prepared in accordance with the auditing standards generally accepted in Japan, as well as
whether the presentations, compositions, and contents of the Financial Statements and related
disclosures therein properly present the transactions and accounting events on which the
Financial Statements are based.
We communicate with the Audit & Supervisory Committee regarding, among other mattersrequired by the auditing standards, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit & Supervisory Committee with a statement that we have complied with
relevant professional ethical requirements in Japan regarding independence and communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence
and, if applicable, related safeguards in order to remove or reduce the risk of matters which may
deteriorate our independence.
Interests required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company that isrequired to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
* Notes to the Readers of Independent Auditor’s Report
This is an English translation of the Independent Auditor’s Report as required by the Companies Act ofJapan for the conveniences of the readers.

Audit & Supervisory Committee’s Report
Audit Report
The Audit & Supervisory Committee has audited the execution of duties by the Directors of Nippon
Piston Ring Co., Ltd. (the “Company”) during the 127th fiscal year from April 1, 2022 to March 31,
2023, and reports on its methods and results as follows.
1. Methods and Contents of Audit
The Audit & Supervisory Committee received regular reports from Directors, employees, etc.
regarding the details of the resolutions of the Board of Directors concerning matters listed in Article399-13, Paragraph 1, Item 1(b) and (c) of the Companies Act of Japan and the status of the design andoperation of the internal control system established based on such resolutions, requested explanations
as necessary, expressed opinions, and conducted audits in the following manner.
Based on the Audit & Supervisory Committee Rules adopted by the Audit & Supervisory①
Committee, in accordance with audit policies and assignment of duties and in cooperation with
the internal audit department of the Company, the Audit & Supervisory Committee attended themeetings of the Board of Directors and other important meetings in person or online, andrequested explanations as necessary, and thoroughly understood the progress and results ofdeliberations on matters to be discussed and reported. The Audit & Supervisory Committee also
reviewed important approval documents and surveyed operations and assets at the Company’shead office and major business sites. Furthermore, the Audit & Supervisory Committee attended
the meeting of the Board of Directors and other important meetings of the subsidiaries in personor online, exchanged opinions and information with the Directors and Audit & Supervisory
Committee Members thereof, and received reports on business from them, as necessary.
With regard to the basic policy set forth in Article 118, Item 3(a) of the Regulations for②
Enforcement of the Companies Act of Japan and the respective initiatives set forth in (b) of thesame item, as well as the matters noted in Article 118, Item 5 (a) and the judgement and reason
set forth in (b) of the same item, which are all described in the Business Report, the details were
examined based on the status of deliberations at meetings of the Board of Directors and othermeetings.
The Audit & Supervisory Committee monitored and verified whether the Accounting③
Auditor maintained its independence and conducted appropriate audits and received reports
from the Accounting Auditor on the status of the execution of their duties and requested
explanations as necessary. The Audit & Supervisory Committee also received notice from the
Accounting Auditor and requested explanations as necessary confirming that the “systems for
ensuring that the performance of the duties of financial auditor are being carried out correctly”(as described in each item of Article 131 of the Regulations on Corporate Accounting of Japan)
in accordance with the Standard on Quality Control for Audits (Business Accounting Council,
October 28, 2005) has been properly designed.
Based on the aforementioned methods, the Audit & Supervisory Committee considered theBusiness Report and its supplementary schedules, financial statements (balance sheet, statement of
profit and loss, statement of changes in net assets and notes to non-consolidated financial statements)
and their supplementary schedules as well as the consolidated financial statements (consolidatedbalance sheet, consolidated statement of profit and loss, consolidated statement of changes in net
assets, and notes to consolidated financial statements).
2. Results of Audit(1) Audit Results Concerning the Business Report① The Business Report and its supplementary schedules accurately represent the Company’ssituation as required by laws and regulations and the Articles of Incorporation.
② No irregularity or significant violation of applicable laws or regulations or the Articles ofIncorporation was found with respect to the execution of duties by the Directors.
③ Resolutions of the Board of Directors concerning the internal control system are appropriate.
The Audit & Supervisory Committee has nothing to point out concerning the descriptions in
the Business Report or the execution of duties by the Directors with respect to the internal
control system.
④ No matters to be pointed out with regard to the basic policy on the persons who control
decisions on the Company's financial and business policies were found in the Business Report.
The Audit & Supervisory Committee acknowledges that Article 118, Item 3(b) of theRegulations for Enforcement of the Companies Act of Japan described in the Business Reportis in line with the said basic policy and are not detrimental to the common interests of theCompany's shareholders, nor are they intended to maintain the status of the Company's
corporate officers.

(2) Audit Results Concerning Non-consolidated Financial Statements and its Supplementary
Schedules
The auditing method of Ernst & Young ShinNihon LLC, the Accounting Auditor, and theresults of the audit, are appropriate.
(3) Audit Results of Consolidated Financial Statements
The auditing method of Ernst & Young ShinNihon LLC, the Accounting Auditor, and theresults of the audit, are appropriate.
May 22, 2023
Audit & Supervisory Committee of Nippon Piston Ring Co.,Ltd.
Full-time Audit &Supervisory Committee
Hiroto Koeba(seal)
MemberOutside Audit &Supervisory Committee
Hiroki Kimura (seal)
MemberOutside Audit &Yoshihide
Supervisory Committee(seal)
Hino
MemberNote: Hiroki Kimura and Yoshihide Hino, who are Audit & Supervisory Committee Members, areOutside Directors as stipulated in Article 2, Item 15 and Article 331, Paragraph 6 of theCompanies Act of Japan.

Electronic Provision Measures Commencement Date: June 1, 2023

Convocation of the 129th Annual General Meeting of Shareholders
Other Electronic Provision Measures Matters(matters omitted from delivered documents)■ Business Report(1) Systems for Ensuring the Properness of Business Activities(2) Basic Policy on the Control over the Company■ Consolidated Financial Statements
Notes to Consolidated Financial Statements■ Financial Statements
Notes to Non-Consolidated Financial Statements(From April 1, 2022 to March 31, 2023)

(1) Systems for Ensuring the Properness of Business Activities
The following provides an outline of the systems for ensuring that the execution of theduties of Directors complies with laws, regulations, and the Articles of Incorporation and theoperation of those systems.
Please note that a resolution partially revising these systems was adopted at the meeting of
the Board of Directors held on April 27, 2023.
1.

Systems for Ensuring that the Execution of Duties of Directors and Employees of theCompany and its Subsidiaries Complies with Laws, Regulations, and the Articles ofIncorporation① The Company has established a “Compliance Policy” for the Group and directs theGroup’s officers and employees to always carry out day-to-day activities appropriatelyfrom the perspectives of laws and regulations, corporate ethics, and compliance withinternal rules. The Company also responds to the enactment and revision of new
business activity-related laws and regulations with timely and substantial measures.
② At the same time that it established the “Compliance Policy,” the Company set up a“Compliance Consultation Hotline (internal and external contact points),” and pursuant
to the Whistle-Blower Protection Act has implemented a system enabling the Group’s
officers and employees to immediately consult with this hotline when conduct believed
to be in breach of laws, regulations, or the Articles of Incorporation is discovered.
③ In the “Compliance Policy,” the Group has set forth rules regarding the banning ofrelationships with antisocial forces and organizational responses to antisocial forces,and endeavors to ensure that the Group’s officers and employees are thoroughly awareof them.
④ In order to appropriately prepare internal control reports stipulated in Article 24-4-4 of
the Financial Instruments and Exchange Act, the Board of Directors passed a resolution
for the “Internal Control Policy for Financial Reporting,” and the Company established“Rules Regarding ‘Internal Control for Financial Reporting’,” implemented a system
for facilitating those internal controls and put in place a system for its operation, under
the supervision of the President.
⑤ The Company has appointed multiple Outside Directors and ensures the supervisory
function of the Board of Directors. The Company’s Audit & Supervisory Committee
Members attend meetings of the Board of Directors and other important meetings, andrequest reports from Directors, etc. as necessary. (excluding Directors who are Audit &Supervisory Committee Members) and audit the execution of duties by Directors(excluding Directors who are Audit & Supervisory Committee Members). The
Company has also established an internal audit department (Internal Auditors Office),
implements audits of business activities to confirm whether there are any breaches oflaws, regulations, or internal rules in relation to the Group’s internal business activities,
and has established a close-knit cooperative relationship with the Audit & Supervisory
Committee.
⑥ The Company is engaged in organization-wide initiatives to sever ties with antisocial
forces and has put in place systems to exclude antisocial forces such as organizedcrime groups and their members, in order to ensure the safety of officers andemployees and for the purpose of fair trade practices.

2.

Systems for the Retention and Management of Information Regarding the Executionof Duties of Directors of the Company① The Company has internal rules regarding the Company’s organization, systems, andoperation of other business activities (“Document Architecture Regarding General
Management”). Within this, the Company has set forth “Standards Management
Rules,” maintains and manages the establishment, revision, abolition, andpromulgation, etc. of rules in the Company, and also processes the retention andmanagement of information regarding the execution of duties of Directors pursuant tosuch “Standards Management Rules.”② The Company has set forth “Information Management Rules” regarding the protection
and prevention of external leaks of important information concerning the Company’s
management and manages information pursuant to those rules.
③ Rules created by each supervisory department are strictly examined, recorded, retained,
and managed by the department responsible for management.

3.

Rules Regarding Management of the Risk of Loss for the Company and its
Subsidiaries and Other Systems
The Company has established a BCP Subcommittee, examines, calculates, and assesses therisks surrounding the Company’s business, and continuously works to reduce risk.

4.

Systems for Ensuring that the Duties of Directors of the Company and its
Subsidiaries Are Carried out Efficiently① The Company has introduced an executive officer system, and business activities forwhich decisions have been made by the Board of Directors are executed under the
direction and supervision of the President. This system makes it possible for Directors
to delegate authority to executive officers and facilitates the streamlining ofmanagement.
② In order to make the execution of business nimbler, an officer-in-charge system has
been introduced at departments that execute business, interim and annual businessplans are prepared, and together with the sharing of that information, supervision andmonitoring are carried out.
③ In addition to the Board of Directors, the Company has the following committees:(a) Management Strategy Committee
Comprised of executive officers nominated by the Directors (excluding Directors who
are Audit & Supervisory Committee Members) and the President; deliberates management
policies and management strategies, etc. (once (1) per month in principle).
(b) Executive Committee
Comprised of Directors (excluding Directors who are Audit & Supervisory Committee
Members), Audit & Supervisory Committee Members, executive officers, department
heads, etc.; manages the progress status of business activities and ensures thoroughknowledge of other important matters (once (1) per month in principle)

5.

Systems for Ensuring the Properness of Business Activities in the Group① In order to promote the development of the Group and mutual interests, the Company
has set forth the “Affiliated Company Management Rules” and carries out appropriate
management.
② The Company’s full-time Audit & Supervisory Committee Member concurrently
serves as company auditor at material consolidated subsidiaries in Japan. This systemhas been implemented in order for the Company’s supervision and monitoring function
to work effectively with respect to domestic consolidated subsidiaries.
6.

System for the Company’s Audit & Supervisory Committee Members to Request
Employees be Appointed to Assist their Duties, Matters for Ensuring theIndependence of Such Employees from Directors (excluding Directors who are who
Audit & Supervisory Committee Members) and the Effectiveness of Directions to
Such Employees① In the “Rules of the Audit & Supervisory Committee,” the Company stipulates that
Audit & Supervisory Committee Members may, as necessary, request appropriate
assistants from among company employees with the consent of Directors (excluding
Directors who are Audit & Supervisory Committee Members) and executive officers,
and when such necessity arises, the Company will put in place a system pursuant tosuch rules.
② The fact that such employees who are to assist the duties of Audit & Supervisory
Committee Members are in a position that is independent of Directors (excluding
Directors who are Audit & Supervisory Committee Members) and serve pursuant to
the directions and orders of Audit & Supervisory Committee Members is publicknowledge at the Company.

7.

System for Reporting to Audit & Supervisory Committee Members① Pursuant to the “Rules of the Audit & Supervisory Committee,” it is possible for the
Audit & Supervisory Committee may, as necessary, request reports from the
Accounting Auditor, Directors (excluding Directors who are Audit & Supervisory
Committee Members), and employees of the internal audit department (Internal
Auditors Office), and Audit & Supervisory Committee Members are able to collectinformation by receiving such reports.
② Audit & Supervisory Committee Members may attend meetings of important boards
and committees, etc., such as the Board of Directors and the Executive Committee, andcollect information.
③ The Group has implemented a system enabling officers and employees to immediately
consult the “Compliance Consultation Hotline (internal and external contact points)”
regarding facts that could significantly damage the Company or its subsidiaries, such asbreaches of laws, regulations, or the Articles of Incorporation, whenever they are
discovered. The department in charge of the Group’s “Compliance Consultation
Hotline (internal and external contact points)” periodically reports to the Audit &Supervisory Committee Members whistleblowing reports from the Group’s officers
and employees.
④ The Group’s Directors (excluding Directors who are Audit & Supervisory Committee
Members) and employees will not be treated disadvantageously for the reason of
having made such a report, and the Group ensures that this is well known within theGroup.

8.

Matters Regarding Policies for the Processing of Expenses, etc. Incurred with
Respect to the Execution of Duties of Audit & Supervisory Committee Members
If a claim for necessary expenses is received from an Audit & Supervisory Committee
Member, such as procedures for advance payment or reimbursement of expenses incurredwith respect to the execution of duties of Audit & Supervisory Committee Members or theprocessing of other expenses or liabilities incurred with respect to the execution of the duties
of Audit & Supervisory Committee Members, the Company shall bear such expenses, except
for cases where they are found to clearly not be necessary for the execution of duties of
Audit & Supervisory Committee Members.
9.

Systems for Ensuring that Audits by Audit & Supervisory Committee Members are
Conducted Effectively① Pursuant to the “Rules of the Audit & Supervisory Committee” and the like, the Audit& Supervisory Committee periodically meets with the President and carries out an
exchange of opinions regarding material issues in the audit of issues, etc. that thecompany needs to address.
② In addition, when conducting audits, Audit & Supervisory Committee Members strive
to coordinate closely with the Accounting Auditor, the internal audit department(Internal Auditors Office), and the Group’s company auditors.

[Outline of Operation of Systems]
1.

Initiatives in order for the Execution of Duties of the Companies Directors to be
Carried out Efficiently
In order to further increase transparency and objectivity with respect to the nomination andremuneration of Directors, the Company has established a Nomination and Remuneration
Advisory Committee, comprising a majority of members who are Outside Directors, as adiscretionary advisory committee of the Board of Directors. The committee met twice in
FY2022.

2.

Initiatives in Relation to the CSR Promotion Committee
The CSR Promotion Committee meets periodically to deliberate important issues
regarding safety, quality, human rights, labor, the environment, compliance, information
disclosure, risk management, and contribution to society, and also confirms the roll-out status
of internal activities and instructs each subcommittee established under the CSR Promotion
Committee (compliance, risk management, etc.) and the responsible departments to examine
measures for each issue.
In FY2022, the Compliance Subcommittee conducted interviews for the purpose ofstrengthening governance at overseas bases and implemented measures after examining theissues. In order to respond to the wide range of risks facing companies these days, the Risk
Management Subcommittee was integrated with the BCP Subcommittee, risk assessments
were organized (extracting high risks), and business continuity plans were prepared forbusinesses deemed to be high risk.

3.

Audit System of the Audit & Supervisory Committee
Pursuant to policies and plans formulated at the Audit & Supervisory Committee, Audit &Supervisory Committee Members attend meetings of important boards and committees suchas the Board of Directors to audit the execution of duties of Directors (excluding Directors
who are Audit & Supervisory Committee Members). In order to enhance the effectiveness ofaudits, the Audit & Supervisory Committee also exchanges opinions with the President, the
Accounting Auditor, the internal audit department (Internal Auditors Office), and theGroup’s company auditors, respectively, as well as attending meetings of the CSR Promotion
Committee and confirming the situation with regard to compliance and risk management.

(2) Basic Policy on the Control over the Company
The details of the basic policy on requirements for persons who control the Company’s
decisions on financial and business policies, initiatives contributing to achieving the basic
policy, and countermeasures against large-scale purchase actions for the Company’s shares (the“Plan”) are as follows.
① Basic policy on requirements for persons who control the Company’s decisions on financial
and business policies
The Company believes that it is desirable that persons who control the Company’s
decisions on financial and business matters have a full understanding of the Company’s
financial and business matters and of the source of its corporate value, and are capable of
ensuring and enhancing the corporate value of the Company and the common interests of ourshareholders in a continuous and sustainable manner.
Nevertheless, as a corporate entity listed on a financial instruments exchange, the Company
respects the free trading of the Company’s shares in the market and will not absolutely deny
any large-scale purchase action by a specific party, as long as it contributes to the corporate
value of the Company and the common interests of our shareholders. The Company also
believes that the decision as to whether to agree to a proposal for a large-scale purchase ofshares should ultimately be made pursuant to the wishes of the shareholders.
However, recently in Japan’s capital market, there are some cases in which a large-scale
share purchase action is undertaken “hostilely” without going through a sufficient discussion
and agreement process with the management team of the target company, and many such largescale purchase actions do not contribute to the corporate value of the target company or thecommon interests of its shareholders. These include 1) those that may clearly harm thecorporate value and common interests of shareholders in light of the objectives of the takeover
and/or management policies after the takeover; 2) those that may effectively force shareholders
to sell their shares; 3) those that do not provide sufficient time or information for the Board of
Directors or shareholders to consider the terms, etc. of the purchase or for the Board of
Directors to present an alternative proposal; and 4) those that require the target company tonegotiate with the purchaser in order to procure conditions more favorable than those originallyproposed by the purchaser.
Furthermore, as outlined below in ②I. below, “The Company’s Corporate Philosophy andSource of corporate value,” the Company’s business is based on the collaboration of various
stakeholders, including our customer companies, employees, and local communities. Creatinga sound system that enables these stakeholders to involve themselves in our business withconfidence, and providing a stable supply of cutting-edge and high-quality services required
globally are essential factors in raising the Company’s corporate value. Unless the person(s)undertaking the large-scale purchase of the Company’s shares can ensure and enhance theCompany’s corporate value in the medium- and long-term based on an understanding of thesesources of the Company’s corporate value, it is possible that the corporate value of theCompany and the common interests of our shareholders will be damaged.
The Company believes that those who conduct such inappropriate large-scale purchases are
not appropriate as individuals who control the Company’s decisions on financial and business
policies, and further believes that it is necessary to ensure the corporate value of the Company
and the common interests of our shareholders by taking necessary and appropriate measuresagainst large-scale purchases of shares by such individuals.
② Initiatives to Contribute to the Source of the Corporate Value of the Company and theRealization of Our Basic Policy
Ⅰ．The Company’s Corporate Philosophy and the Source of Corporate Value
In our efforts to respond promptly and accurately to our customer’s needs, we haveformulated our corporate philosophy and specified our action guidelines as follows: “Let us
build the prosperity of the Company and of our lives by combining the ingenuity and effortsof each individual by strengthening the collaboration between manufacturing, sales andtechnology.”<Corporate Philosophy>
1. We pursue every business operation on the principle of placing the No. 1 priority on
customers.
2. We respond with flexibility to changes in the environment and secure appropriate
levels of profits to reflect our appreciation of our shareholders, suppliers, and business
partners.
3. In harmony with society, we contribute to humanity’s progress by securing the position
as a global comprehensive parts manufacturer.
4. We strive for the prosperity of the corporation and the welfare of its employees
through perpetual efforts for innovation and improvement in performance.
Fully recognizing our role as a global comprehensive manufacturer of parts while valuing
relationships with our customers, employees, and local communities, we attribute the growthof the Company thus far to our shareholders’ support as well as the results of our efforts toestablish a supply system, improve quality, and to make technological innovations, etc.
based on the corporate philosophy stated above. We believe this is the major source of theCompany’s corporate value.
Ⅱ．Initiatives to enhance corporate value
Through the development of products responding to the requirements of fuel efficiency andexhaust emission regulations on the back of the global trend on environmental measures, theCompany proactively works to resolve issues facing society.
In the field of automobile engines, which is an existing business, the Company is moving
forward with the development of products tied to achieving high thermal efficiency and clean
emissions, as well as providing solutions utilizing unique technologies, and has been
undertaking initiatives in its business activities with the aim of becoming a company chosen
by customers for its quality and ability to come up with proposals that meet customer needs.
On the manufacturing front, through the introduction of innovative production lines and thepromotion of cost reduction and automation, etc., the Company strives to implement systems
to produce quality products even more efficiently.
With respect to new business in the field of non-automobile engines, the Company has been
focusing efforts on the development and commercialization of new products, etc. using newmaterials, centered on the medical equipment and motor fields as the core of new businesses
with an eye on the future. In the development of these businesses, the Company will continue
to strive to achieve high levels of innovation to add even more value, through collaboration
with industry, government, and academia, and proactive collaborative business, including
alliances with other companies, using its own technology as the foundation.
The trend of placing greater value on social responsibility in corporate activities has also
strengthened in recent years. In addition to working to reduce the environmental impact of its
core business, the Company plans to proactively engage in important issues from theperspective of sustainability, such as respecting diversity, human rights, and improving
governance, even more actively than it has in the past, together with shareholders, customers,
local communities, suppliers, and employees.
Based on this fundamental awareness, the Company will undertake the 8th Mid-Term

Management Plan with “Change as Chance ～ finding opportunities within change～” as its
basic policy, aim for sustainable growth and medium- to long-term enhancement of corporate
value, and realize further development of the Company.
Ⅲ．Strengthening of Corporate Governance
The Company’s basic policies of corporate governance are to “improve managementtransparency,” “achieve accountability to stakeholders,” and “accelerate management,” andwith the enhancement of these as one of its key action points, the Company has been
undertaking proactive initiatives.
③ Initiatives to prevent unsuitable parties from controlling decisions on the Company’s financial
and business policies in light of the basic policy
Ⅰ．Objectives of the introduction of the plan
The Plan was introduced as an initiative to prevent an unsuitable party from controllingthe decisions on the Company’s financial and business policies in light of the above basic
policy and to deter large-scale purchases that counter the Company’s corporate value andthe common interests of shareholders.
Ⅱ．Details of the Plan(i) Details of Large-Scale Purchase Rules
The Large-Scale Purchase Rules that a large-scale purchaser must comply with before
any large-scale purchase action are as follows: i) The large-scale purchaser presents
necessary and sufficient information concerning the large-scale purchase action to theBoard of Directors in advance; ii) the Board of Directors sets a certain evaluation period
then consults the Independent Committee, to carefully formulate and announce theiropinion as the Board of Directors, including the invoking of countermeasures; and iii) The
large-scale purchaser commences said purchase action after the procedures of i) and ii).
(a) Large-scale purchase actions, etc. subject to the Plan
The Plan applies to acts resulting in the purchaser holding 20% or more of the Company’s
shares, etc. or tender offers that result in holdings of 20% or more, or actions equivalent
thereto or proposals therefor, and large-scale purchasers must comply with the large-scalepurchase rules set forth in the Plan in advance.
(b) Submission of letter of intent and provision of information
Prior to implementing the large-scale purchase action, the large-scale purchaser subject to
the Plan shall submit to the Board of Directors a letter of intent stating matters including
an outline of the large-scale purchaser and their group, the objectives, method, and outlineof the large-scale purchase action, etc., a pledge expressing the intent to comply with theLarge-Scale Purchase Rules prescribed in the Plan, and compensation wording in the eventof a violation.
(c) Evaluation and investigation, etc. by the Board of Directors
The Board of Directors shall set a period during which the Company’s Directors evaluate,
investigate, negotiate, form opinions, and formulate alternative proposals (hereinafter,“Board of Directors’ Investigation Period”) in accordance with the level of difficulty ofevaluating the large-scale purchase action, etc.
(d) Establishment of the Independent Committee and recommendations to the Board of
Directors

The Company has established an Independent Committee as an independent organization
to appropriately implement the Plan and prevent arbitrary decisions by the Board of
Directors. The Independent Committee consists of three or more members who areappointed from among the Company’s Outside Directors, Outside Audit & Supervisory
Board Members, and external experts to ensure fair and neutral judgments.
The Independent Committee shall, during the Board of Directors’ Investigation Period,
investigate the details of the large-scale purchase action, etc. from the perspective ofensuring and enhancing the corporate value of the Company and the common interests ofour shareholders, and shall make recommendations to the Board of Directors, including
the appropriateness of invoking countermeasures.
(e) Resolutions by the Board of Directors, and general meeting of shareholders forconfirmation of shareholders’ intentions
The Board of Directors shall comply with the aforementioned recommendations of the
Independent Committee and, as a body under the Companies Act, pass a resolution
concerning the invoking or non-invoking of countermeasures against the large-scalepurchase action, etc.
However, when invoking countermeasures, in addition to Independent Committee
consultation procedures, the Board of Directors may, after first determining the details of
specific countermeasures, convene a general meeting of shareholders to confirm theintent of the Company’s shareholders regarding the invocation of countermeasures(“General Meeting of Shareholders for Confirmation of Intent”) (i) if the Board of
Directors determines that it is in practice possible to confirm the intent of the Company’s
shareholders – taking into consideration whether a substantive judgment based on thedetails of the large-scale purchase action, etc. from the perspective of ensuring andenhancing corporate value and the common interests of shareholders is necessary andvarious circumstances such as other details of the large-scale purchase action, etc. andthe time available – and that it is appropriate in light of laws, regulations, and the
Directors’ duty of care of a prudent manager, etc. or (ii) if the Independent Committee
makes a recommendation with a reservation that the intent of the Company’s
shareholders should be confirmed with respect to the large-scale purchase action, etc.
(ⅱ) Countermeasures if the large-scale purchase, etc. takes place(a) Conditions for invoking countermeasures(A) When a large-scale purchaser does not comply with the Large-Scale Purchase Rules
In the event that a large-scale purchaser does not comply with the Large-scale Purchase
Rules stipulated in the Plan, and it is not corrected within five business days after the
Board of Directors requests such correction in writing, in cases other than where it isobvious that there is a necessity not to invoke countermeasures for the sake of ensuring
and enhancing the corporate value of the Company and the common interests of ourshareholders or other special circumstances, the Independent Committee shall, in
principle, recommend that the Board of Directors invoke countermeasures.
The Board of Directors shall decide to invoke the countermeasures in accordance withthe recommendations of the Independent Committee. However, in the event that a
General Meeting of Shareholders for Confirmation of Intent is held in addition to therecommendations of the Independent Committee, the Board of Directors shall decide to
invoke countermeasures pursuant to the judgment of shareholders at the General
Meeting of Shareholders for Confirmation of Intent.
(B) When a large-scale purchaser complies with the Large-Scale Purchase Rules

In the event that the large-scale purchaser complies with the Large-Scale Purchasing
Rules, the Independent Committee shall, in principle, recommend that the Board of
Directors does not invoke countermeasures against the large-scale purchase action, etc.
However, even if the Large-Scale Purchase Rules are complied with, if the Independent
Committee determines that the Company’s corporate value and the common interests ofour shareholders will be significantly harmed, the Independent Committee will
recommend that the Board of Directors invoke countermeasures against the large-scalepurchase action, etc.
(b) Details of countermeasures
Countermeasures against the large-scale purchase action, etc. by the Company inaccordance with the Plan shall be based on the gratis allotment of share options prescribedin Article 277 and following articles of the Companies Act.
(ⅲ) Effective term, abolition, and amendment of the Plan
The effective term of the Plan shall be until the conclusion of the annual general meetingof shareholders scheduled to be held in June 2023. However, even prior to the expiration of
the effective term of the Plan, the Company shall review the Plan from time to time fromthe perspective of ensuring and enhancing the corporate value of the Company and thecommon interest of our shareholders, and the Plan shall be abolished or amended byresolution of the general meeting of shareholders or the Board of Directors.
④ The fact that the Plan is in accordance with basic policies does not harm the common interestsof the Company’s shareholders, and is not for the purpose of maintaining the position of theCompany’s officers, and the reasons therefor
Ⅰ．Consistency with guidelines and timely disclosure rules for anti-takeover measures
The Plan is in accordance with details of the “Guidelines Regarding Takeover Defenses
for the Purposes of Protection and Enhancement of Corporate Value and Shareholders’Common Interests” jointly released by the Ministry of Economy, Trade and Industry andthe Ministry of Justice on May 27, 2005 and takes into full consideration the “Takeover
Defense Measures in Light of Recent Environmental Changes” released on June 30, 2008by the Corporate Value Study Group of the Ministry of Economy, Trade and Industry. In
addition, the Plan also fulfils the intent of the various regulations pertaining to theintroduction of anti-takeover measures prescribed by Tokyo Stock Exchange, Inc.
Ⅱ．Introduction for the purpose of ensuring and enhancement of the common interests ofshareholders
Introduction of the Plan is for the purpose of ensurance and enhancement of corporate
value and common interests of shareholders by securing the necessary information andtime required for shareholders to judge whether the large-scale purchase action, etc. isappropriate, and enabling negotiations to be conducted for the benefit of shareholders
when such large-scale purchase action, etc. is carried out against the Company.
Ⅲ．Sufficient respect for shareholders’ Intentions (sunset provision)
The Plan was introduced upon being approved at the annual general meeting ofshareholders held on June 26, 2020. In addition, in the event that the Board of Directors
judges it to be appropriate in light of laws, regulations, or the duty of care of a prudent
manager of the Company’s Directors, or the Independent Committee makes arecommendation with a reservation that the intentions of shareholders should be
confirmed, it shall be possible to confirm the intentions of shareholders with regard to theinvoking or non-invoking of countermeasures at the general meeting of shareholders.
Ⅳ．Eliminating arbitrariness of the Board of Directors
The Company has established the Independent Committee as a unit independent fromthe Board of Directors to appropriately carry out this countermeasure, prevent arbitrary
judgments by the Board of Directors, and to ensure the rationality and fairness of thejudgments. In the event that a large-scale purchase action, etc. is carried out against theCompany, the Independent Committee shall make a substantive judgment as to whether
the large-scale purchase action, etc. will damage the corporate value of the Company andthe common interests of our shareholders, and the Board of Directors shall pass a resolutionin accordance with this judgment as a body under the Companies Act, thus ensuring amechanism for the transparent operation of the Plan in order to maintain the corporate
value of the Company and the common interests of our stockholders.
Ⅴ．Setting objective and reasonable requirements
The Plan is designed in such a way that countermeasures will not be invoked unless the
Independent Committee deems that reasonable and detailed objective requirements havebeen satisfied.
Ⅵ．No dead-hand or slow-hand anti-takeover measure
The Plan is designed in such a way that it may be abolished even prior to the expirationof its effective term by a decision of the Board of Directors, which comprises Directors
appointed at the general meeting of shareholders, and the Company believes that the Plan
is of a completely different nature to the rights plans known as the dead-hand antitakeover measure and the slow-hand anti-takeover measure that make it impossible ordifficult for the management team to abolish a plan.
Ⅶ．Acquiring the opinions of third-party experts
The Plan enables the Independent Committee to receive advice from independent thirdparties (financial advisors, certified public accountants, attorneys-at-law, consultants, andother experts) at the Company’s expense. This mechanism more securely guarantees thefairness and objectivity of judgments by the Independent Committee.

Notes to Consolidated Financial Statements
1. Notes, etc. Regarding Significant Matters Forming the Basis for Preparation ofConsolidated Financial Statements(1) Scope of consolidationa. No. of consolidated
13
subsidiaries
b. Names of main
NPR of America, Inc.
consolidated subsidiaries NPR Fukushima Works Co., Ltd.
NPR Iwate Co., Ltd.
NPR of Europe GmbH
PT. NT Piston Ring Indonesia
SIAM NPR Co., Ltd.
NPR Auto Parts Manufacturing (Yizheng) Co., Ltd.
NPR Singapore Pte. Ltd.
PT. NPR Manufacturing Indonesia
E.A. Associates Sdn. Bhd
NPR Auto Parts Manufacturing India Pvt. Ltd.
NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd.
Normeca Asia Co., Ltd.
(2) Equity method application
Non-consolidated subsidiaries to which the equity method is applied
・Number of non-consolidated subsidiaries or affiliated companies to which the equity method isappliedNot applicable.
(3) Changes to the scope of consolidation and scope of application of the equity method
Not applicable.
(4) Fiscal year end dates, etc. of consolidated subsidiaries
The fiscal year of consolidated subsidiaries is the same as the consolidated fiscal year, with the
exception of NPR of America, Inc., NPR of Europe GmbH, PT. NT Piston Ring Indonesia, SIAMNPR Co., Ltd., NPR Auto Parts Manufacturing (Yizheng) Co., Ltd., NPR Singapore Pte. Ltd., PT.
NPR Manufacturing Indonesia, E.A. Associates Sdn. Bhd, NPR Auto Parts Manufacturing India Pvt.
Ltd., and NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd. for which the fiscal
year ends on December 31. When preparing the consolidated financial statements, necessary
consolidation adjustments are carried out based on the financial statements of each company forsignificant transactions, etc. arising before the end of the consolidated fiscal year.
(5) Accounting policies① Valuation standards and valuation methods for significant assets
a. Securities
Other securities
Fair value method (valuation differences are all included directly in・ Securities otherthan shares, etc.
net assets, and the cost of securities sold is calculated using thewithout amoving average method).
market price・ Shares, etc.
without amarket priceb. Derivatives
c. Inventory

Cost method using the moving average method.

Fair value method.
Mainly cost method using the moving average method (by means ofa write-down of book value due to reduction in profitability)② Depreciation methods for significant depreciable assets
a. Property, plant, andequipment
The straight-line method is mainly used for machinery and transport
・ Property, plant, andequipment other than lease equipment, with the declining balance method mainly used for
assetseverything else.
However, the straight-line method is mainly used for buildings
acquired on or after April 1, 1998 (excluding facilities and equipment
ancillary to buildings) and facilities and equipment ancillary tobuildings and structures acquired on or after April 1, 2016.
Lease assets under finance lease transactions with a transfer of・ Lease assets
ownership
The same depreciation method is applied to fixed assets owned by theCompany.
Lease assets under finance transactions without transfer of ownership
The lease term is used as the useful life, and the straight-line method isused with the residual value set as zero.
b. Intangible
fixed
assets・ Intangible fixed assets otherthan lease assets
Software for internal use The straight-line method based on the internal usable period (five (5)years).
Other intangible fixed
Straight-line method.
assetsLease assets under finance transactions without transfer of ownership・ Lease assets
The lease term is used as the useful life, and the straight-line method
is used with the residual value set as zero.
③ Standards for recording significant allowances
Allowance for
The historical bad debt rate is used to provide for loss due to bad
doubtful accounts
debt for general accounts receivable, and for certain debts, such as
doubtful accounts receivable, the recoverability is examined
individually and the estimated unrecoverable amount is recorded.
④ Standard for conversion of significant foreign currency-denominated assets or liabilities
into Japanese Yen
Foreign currency-denominated assets and liabilities are converted
into Japanese Yen at the foreign exchange spot rate on the last day ofthe consolidated fiscal year and foreign currency translationdifferences are accounted for as loss or profit. The assets andliabilities of foreign subsidiaries are converted into Japanese Yen at
the foreign exchange spot rate on the last day of the consolidated
fiscal year, revenue and expenses are converted to Japanese Yen at
the average rate for the period, and translation differences arerecorded by inclusion in “Foreign currency translation adjustment”
and “Non-controlling interests” under net assets.

⑤ Significant hedge accounting methods
a. Hedge accounting
Deferred hedge accounting is used.
methods
Interest rate swaps that satisfy the requirements for special treatment
are by special treatment, and forward exchange contracts that satisfy
the requirements for allocation treatment are by allocation treatment.
b. Hedging instruments and Hedging instruments: forward exchange contract transactions, interest
hedged items
rate swap transactions.
Hedged items: foreign currency-denominated assets and liabilities,
loans payablec. Method for evaluating the In order to hedge against risks from market rate fluctuations, risk
effectiveness of hedging
management pursuant to internal rules is implemented for assets orpolicies and hedges
liabilities based on actual demand and the effectiveness is evaluated.
⑥ Other significant matters for the preparation of consolidated financial statementsa. Accounting method forWhen calculating retirement benefit liabilities, the method ofretirement benefits
attributing the estimated amount of retirement benefits to the period
until the end of the consolidated fiscal year is based on the benefit
calculation formula.
Actuarial differences are accounted for as expenses from thefollowing consolidated fiscal year after they respectively arise, using
the straight-line method based on the average remaining service
period of employees when it arises.
Unrecognized actuarial differences are recorded as accumulated
remeasurement of defined benefits plan under accumulated othercomprehensive income in the net assets section after adjusting the tax
effect.
b. Goodwill amortization
Goodwill is amortized over a period of 7 years using the straight-line
method and amortization method
periodc. Standards for recording
The main business of the Group is production and sale of automobile
revenue and expenses
products, marine engine products, and other products. In its
automobile product business, the Group manufactures automobile
engine parts including piston rings and valve seat inserts at
manufacturing bases in Japan and overseas, and sells them toautomobile manufacturers, etc. For the replacement parts market, theGroup also sells to business operators, etc., handling automobile
parts. In the marine engine products and other products businesses,
the Group sells piston rings for ships and products applying a metal
injection molding (METAMETAL) process, etc. to ship
manufacturers and industrial equipment manufacturers, etc.
respectively. In the other products business, the Group sells
automobile bearing parts and RV products, etc. to automobile
manufacturers and retailers, etc.
Revenue generated from contracts with customers is recognized at
the time that control of the product transfers to the customer. In
domestic sales, revenue is mainly recognized at the time of shipping
because the time from shipping until control of the product transfers
to the customer is a normal period of time (shipping basis applied).
With respect to domestic sales where shipping basis is not applied,revenue is recognized when the product is delivered to the customer.
With respect to export transactions, revenue is recognized at the timeof delivery to the customer set forth in the International Commercial
Terms.

Transaction consideration is received within one (1) year ofsatisfaction of the performance obligations, and does not include
significant finance components.
2. Notes Regarding Changes to Accounting Policies(Changes to Accounting Policies in Conjunction with Revisions to Accounting Standards, etc.)(Application of ASC 842 Lease Accounting)Foreign subsidiaries that applies the US accounting standards have applied ASC 842 Lease
Accounting since the beginning of the current consolidated fiscal year. Under this standard, parties
taking out leases are in principle required to recognize all leases as assets and liabilities on theirbalance sheets.
When applying this accounting standard, we have adopted a method of recognizing on theapplication commencement date the cumulative effects of the application of accounting standards
permitted as transitional measures.
Consequently, at the end of the current consolidated fiscal year “Intangible fixed assets” increasedby ¥263 million, “Lease liabilities” under current liabilities increased by ¥75 million, and “Leaseliabilities” under fixed liabilities increased by ¥186 million. Please note that the impact on loss or
profit for the current consolidated fiscal year is minor. The impact on loss and profit for the current
consolidated fiscal year is minor.
(Changes to Method of Attribution to Service Period for Retirement Benefits)
In April 2022, the method of recognizing retirement benefits liabilities was clarified by the press
release “Attributing Benefit to Periods of Service” by the Indonesian Financial AccountingStandards Board (Dewan Standar Akuntansi Keuangan or DSAK) of the Institute of Indonesia
Chartered Accountants (Ikatan Akuntan Indonesia or IAI) based on the Agenda Decision of the IFRSInterpretations Committee (IFRIC) Attributing Benefit to Periods of Service (IAS 19 Employee
Benefits). In conjunction with this, in the past, retirement benefits were recognized by corresponding
to employees’ period of service, but from the current consolidated fiscal year, some foreignsubsidiaries apply a method whereby they are recognized by corresponding to the period when theliability burden is incurred.
As a result of recognizing the cumulative effect of the commencement of application of this change
as a revision of the balance of retained earnings and the like at the beginning of the period, the balanceof “retained earnings” at the beginning of the current consolidated fiscal year increased by ¥136
million, “foreign currency translation adjustment” increased by ¥8 million, and the “cumulative
adjustment for retirement benefits” reduced by ¥52 million. The impact on loss and profit for thecurrent consolidated fiscal year is minor.
3. Additional Information(Notes Regarding Transactions Delivering the Company’s Shares to Employees, etc. through a Trust)At the Board of Directors’ meeting held on September 24, 2020, the Company passed a
resolution to introduce a trust-type employee shareholding incentive plan with the aim ofincentivizing employees to improve the Company’s medium- and long-term corporate value.
① Outline of transaction
Under the plan, a trust exclusively for the Nippon Piston Ring Employee Shareholding
Association is established at a trust bank (“Employee Shareholding Trust”) and will acquire inadvance the number of shares of the Company expects to be acquired by the shareholding
association over a five-year period. Subsequently, the Employee Shareholding Trustcontinuously sells the Company’s shares to the shareholding association, and if an amountequivalent to the profit on the sale of shares has accumulated in the Employee Shareholding
Trust when the trust terminates, that amount equivalent to the profit on the sale of shares will be
distributed as residual assets to those who satisfy the beneficiary qualification conditions.

Because the Company is a guarantor for loans payable for the purpose of the Employee
Shareholding Trust acquiring the Company’s shares, if the Company’s share price drops,
causing an amount equivalent to loss on the sale of shares to accumulate within the Employee
Shareholding Trust and there are outstanding loans payable equivalent to the loss on the sale ofsuch shares within the Employee Shareholding Trust when the trust terminates, the Company
shall repay such outstanding liabilities.
② Accounting treatment
With respect to the accounting treatment, “Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees etc. through Trusts” (Practical Issues Task Force No. 30,
March 26, 2015) is applied and accounting treatment is carried out in accordance with suchguidelines.
③ Shares of the Company held by the trust
The shares of the Company held by the Employee Shareholding Trust are recorded as treasury
shares in the net assets section based on the book value in the Employee Shareholding Trust(excluding the amount of ancillary expenses). At the end of the current consolidated fiscal year,
there were 225,700 such treasury shares with a book value of ¥216 million.
④ Book value of loans payable recorded due to the application of the gross method¥164 million at the end of the current consolidated fiscal year.
(Change to Consolidation Schedule)
As announced in the press release “Conclusion of a Memorandum of Understanding concerning
Consolidation through the establishment of a joint holding company (stock transfer) between Nippon
Piston Ring Co., Ltd. and Riken Corporation” dated July 27, 2022, the Company and Riken
Corporation have concluded a memorandum of understanding to consolidate the two companies on
equal terms and started concrete discussions and investigations.
In the press release “Notice Regarding the Schedule for the Consolidation of Nippon Piston Ring
Co., Ltd. And Riken Corporation” dated November 28, 2022, we announced that we have changed
the schedule for the consolidation in consideration of the time required for the business combination
review by the Japan Fair Trade Commission (JFTC), and we hereby give notice that on May 2, 2023,
all procedures for notification to the JFTC and investigation procedures were completed and we
received a notice from the JFTC to the effect that it would not issue a cease-and-desist order. The
two companies will continue discussions and deliberations with the aim of realizing theconsolidation as early as possible. With respect to the schedule that we had stated as “TBD,” we willproceed according to the following schedule and will provide notice again once it is finalized by
officially approved decisions of the two companies.
Conclusion of final contract regarding the consolidation

May 23, 2023 (scheduled)

Annual general meeting of shareholders (resolution approving theJune 23, 2023 (scheduled)share transfer)
September 28, 2023
Date of delisting from Tokyo Stock Exchange (TSE)(scheduled)
Effective date of the Share Transfer and listing date of the joint
October 2, 2023 (scheduled)holding company(Note) The above is the current schedule and it may be changed by agreement upon discussion
between the two companies when necessary due to the progress of the consolidation ornecessary due to other grounds.

4. Notes Regarding Accounting Estimates(Recoverability of Deferred Tax Assets at Nippon Piston Ring Co., Ltd.)(1) Amount recorded in the consolidated financial statements for the current consolidated fiscal year
Deferred tax assets:¥95 million
Deferred tax liabilities: ¥1,034 million
Of which, amounts pertaining to Nippon Piston Ring Co., Ltd
Deferred tax assets:¥－ million
Deferred tax liabilities: ¥1,163 million
The Company has set off ¥358 million of deferred tax assets against deferred tax liabilities.
(2) Other information for understanding the details of estimates① Calculation method
With respect to the taxable temporary difference after taking into consideration the reversal
schedule for taxable temporary difference, we estimate future taxable income and thendetermine the recoverability of deferred tax assets. The estimate of taxable income is based on
the business plan for the following fiscal year approved by the Board of Directors, and its
feasibility is reasonably determined.
② Key assumptions
The key assumptions used to formulate the business plan for the following fiscal year that
forms the basis of the taxable income estimate are the projected volume of sales and the
projected cost of raw materials, assuming a certain business environment, etc.
③ Impact on consolidated financial statements for the following consolidated fiscal year
If changes in the business environment, etc. cause a significant change in the key
assumptions – the projected volume of sales and the projected cost of raw materials – and theestimated amount of taxable income reduces, there is the risk that it will have a material
impact on the determination of recoverability of deferred tax assets.
5. Notes Regarding Consolidated Balance Sheets(1) Assets pledged as collateral
Details and value of collateral assets(Mortgageable factory assets)
Buildings and structures
Machinery and equipment
Land(Other)Buildings and structures
Land
Liabilities secured by the above collateral assets(For mortgageable factory assets)
Short-term loans payable
Current portion of long-termloans payable
Long-term loans payable(Other)Short-term loans payable
Current portion of long-termloans payable
Long-term loans payable(2) Accumulated depreciation ofproperty, plant, and equipment¥2,895 million¥5,354 million¥2,832 million¥477 million¥675 million¥1,851 million¥1,672 million¥2,108 million
504 million¥123 million¥158 million¥91,624 million

6. Notes to Consolidated Statement of Changes in Net Assets(1) Class and total number of issued shares
Number of Shares
Increase in the
Decrease in theat Beginning of
Number of Shares Number of SharesClass of Shares
Current
in Current
in Current
Consolidated
Consolidated
Consolidated
Fiscal Year
Fiscal Year
Fiscal Year
Common stock
8,374,157－－

Number of Shares
at End of Current
Consolidated
Fiscal Year8,374,157(2) Dividends of surplus① Amount of dividends paid
Dividends pursuant to resolution of the 128th Annual General Meeting of Shareholders heldon June 28, 2022
・ Total amount of¥400 Million
dividends
・ Dividend per
¥50
share
March 31, 2022
・ Record dateJune 29, 2022
・ Effective date
(Note)The total amount of dividends pursuant to the June 28, 2022 resolution of theannual general meeting of shareholders includes dividends of ¥4 million for shares
held by the Employee Shareholding Trust (as of the record date of March 31, 2022:
271,200 shares).
Dividends pursuant to resolution of a meeting of the Board of Directors held on November
11, 2022
・ Total amount of¥160 Million
dividends
・ Dividend per
¥20
share
September 30,
・ Record date2022
December 6, 2022
・ Effective date
(Note)The total amount of dividends pursuant to the November 11, 2022 resolution of
the Board of Directors includes dividends of ¥4 million for shares held by the
Employee Shareholding Trust (as of the record date of September 30, 2022: 246,700
shares).
② Dividends with a record date that falls in the current consolidated fiscal year that havean effective date in the subsequent period
The following proposal was made for resolution at the 129th Annual General Meeting of
Shareholders to be held on June 23, 2023
・ Total amount of¥400 Million
dividends
・ Source ofRetained earnings
dividend・ Dividend per
¥50
share
March 31, 2023
・ Record dateJune 26, 2023
・ Effective date
(Note)The total amount of dividends pursuant to the June 23, 2023 resolution of theannual general meeting of shareholders includes dividends of ¥11 million for shares
held by the Employee Shareholding Trust (as of the record date of March 31, 2023:
225,700 shares).

(3) Number of shares underlying share options issued by the Company on the last day of the current
consolidated fiscal year
Common shares
43,7007. Notes Regarding Financial Instruments(1) Financial instruments
The Group raises necessary funds (mainly from bank loans) based on a capital investment
plan in order to carry out its business manufacturing and selling various products, including
automobile products.
Customer credit risk pertaining to notes and accounts receivable-trade is managed for eachbusiness counterparty in accordance with the Group’s Credit Management Rules and thecredit risk for key business counterparties is continuously monitored and risk reduction
implemented.
Additionally, although accounts receivable-trade denominated in foreign currencies are
exposed to foreign exchange risk, derivatives transactions (foreign exchange forward
transactions) are utilized as a hedge in order to mitigate foreign exchange risk and fix theamount recovered for some of these.
Shares, which are investment securities, are exposed to market price fluctuation risks, but
the fair value is assessed quarterly.
Loans payable are used for operating funds (mainly short-term) and capital investment funds(mainly long-term, within five (5) years) and are exposed to interest rate fluctuation risks inthe case of loans payable with variable interest rates, but for some long-term loans payable,
derivatives transactions (interest rate swap transactions) are used for individual agreements inorder to mitigate the risks of fluctuations in interest payable and fix the amount of interest
payable.
The implementation and management of derivatives transactions are carried out inaccordance with the internal rules set forth by our bank of account, and when utilizing
derivatives, in order to reduce credit risk, we only carry out transactions with major financial
institutions. Please note that our policy is to utilize derivatives to mitigate the above foreignexchange risks and interest rate fluctuation risks, and not as speculative transactions.
(2) Fair value, etc. of financial instruments
The value recorded in consolidated balance sheets, fair value, and the difference between
the two as of March 31, 2023, are as follows
Value Recorded in(millions of Difference (millions ofConsolidated Balance Fair Value
yen)
yen)
Sheets (millions of yen)
① Notes, accounts
receivable-trade and11,71911,719contract assets② Investment securities
Other securities
5,195
5,195
Total assets
16,914
16,914③ Notes and accounts
3,725
3,725
payable-trade
Electronicallyrecorded
④
4,326
4,326
obligations
5,940
5,940
⑤ Short-term loans payable
6,659
6,634
⑥ Long-term loans payable(including current portion)
Total liabilities
20,651
20,626(Note 1)
“Cash and deposits” have been omitted because it is cash and deposits have afair value that approximates book value due to being paid in a short time

－
－
－
－
－
－
(25)
(25)

(Note 2)
Shares, etc. without a market price are not included in “② Investment
securities.” The value of these financial instruments recorded in the consolidated balance
sheets is as follows.
Shares, etc. Without a Market Price
Current Consolidated Fiscal
Category
Year (millions of yen)
Unlisted shares
3(3) Breakdown, etc. of fair value level of financial instruments
The fair value of financial instruments is divided into three levels depending on theobservability and importance of inputs for the calculation of fair value.
Level 1 fair value:
Inputs for calculation of an observable fair value where the fair value
calculated using the market price of assets or liabilities whose fair value is being
calculated is formed in an active market
Level 2 fair value:
Inputs for calculation of an observable fair value where the fair value iscalculated using inputs for calculation of fair value other than those for level 1
Level 3 fair value:
Fair value calculated using inputs for the calculation of fair value thatare unobservable
In cases where multiple inputs which have a material effect on the calculation of the fair value
are used, among the levels to which the respective inputs belong, the fair value is categorizedat the level with the lowest priority in the fair value calculation.
① Financial instruments recorded at fair value in consolidated balance sheets
Current Consolidated Fiscal Year (March 31, 2023)
Category
Investment
securities
Total assets

Fair Value (millions of yen)
Level 1

Level 2

Level 3

Total

5,195

－

－

5,195

5,195

－

－

5,195

② Financial instruments other than financial instruments recorded at fair value inconsolidated balance sheets
Current Consolidated Fiscal Year (March 31, 2023)
Category
Notes, accounts
receivable-trade andcontract assets
Total assets
Notes and accounts
payable-trade
Electronicallyrecorded obligations
Short-term loans
payableLong-term loans
payableFair Value (millions of yen)
Level 1

Level 2

Level 3

Total－

11,719－11,719－11,719－11,719

－

3,725

－

3,725

－

4,326

－

4,326

－

5,940

－

5,940

－

6,634

－

6,634

Total liabilities－－

20,626

20,626(Note) Explanation of valuation techniques and inputs used to calculate the fair value
Investment securities
Listed shares are valued using the market price. Because listed shares are traded on active
markets, their fair value is categorized as a level 1 fair value. On the other hand, other securities
held by the Company are not traded on the market and a market price on an active market cannot
be determined, so therefore they are noted as shares without a market price.
Notes, accounts receivable-trade and contract assets
The fair value of notes and accounts receivable–trade is calculated using the discounted cash flow
method based on interest rates considering the claim amount, the period until maturity, and the credit
risk for each claim divided into set periods, and this is categorized as a level 2 fair value.
Notes and accounts payable-trade, electronically recorded claims, and short-term loans payable
The fair value of notes and accounts payable-trade, electronically recorded claims and short-termloans payable is calculated using the discounted cash flow method based on interest rates
considering the future cash flow, the period until the payment due date, and the credit risk for eachobligation divided into set periods, and this is categorized as a level 2 fair value.
Long-term loans payable
The fair value of long-term loans payable with variable interest rates is their book value
because the fair value is regarded as approximating book value since it reflects market interest
rates over the short-term and the credit standing of the Company has not changed significantly
after drawdown. The fair value of long-term loans payable with fixed interest rates is calculated bydiscounting the total amount of principal and interest by the interest rate if a similar loan were
newly taken out, and these are categorized as a level 2 fair value.
8. Notes Regarding Revenue Recognition(1) Analysis information for revenue generated from contracts with customers
Information regarding the breakdown of revenue by main types of goods or services.
(Unit: million yen)
Reporting Segment
Marine Engine
Other
Total
Automobile
and Other
Total
Business
Products
Business
Net salesJapan

16,8981,361

18,2603,450

21,711

Asia

15,663626

16,290208

16,498Europe

4,841

253

5,094

2,614

7,709

North America

6,519

－

6,519

143

6,663

Other regions

5,929

－

5,929

12

5,942

Total
Net sales to externalcustomers

49,8532,241

52,094

6,429

58,52449,8532,241

52,094

6,429

58,524(2) Information for understanding the amount of revenue for the current period and the following
period onwards
a. Balance, etc. of contract liabilities

Current Consolidated
Fiscal Year (millions ofyen)
11,122

Receivables arising from contracts withcustomers (balance at beginning of period)
Receivables arising from contracts with
11,719customers (balance at end of period)
Contract liabilities (balance at beginning of
80
period)Contract liabilities (balance at end of
87
period)Contract liabilities for sales contracts in export transactions mainly for the replacement parts
market are with respect to advances received from customers pursuant to the payment terms.
Contract liabilities are reversed when revenue is recognized.
Of revenue recognized for the current consolidated fiscal year, ¥80 million was included in thebalance of contract liabilities as of the beginning of the period. The main reason for the ¥7 million
increase in contract liabilities in the current consolidated fiscal year was an increase in advances
received pertaining to export transactions at foreign subsidiaries.
The amount of revenue recognized in the current consolidated fiscal year from performanceobligations fulfilled (or partially fulfilled) in past periods is not significant.
b. Transaction price allotted to outstanding performance obligations
As there are no significant transactions for which the expected contract term of an individual
agreement exceeds one year in the Group, practical shortcuts are applied and information on
outstanding performance obligations has been omitted. Additionally, there are no significant
amounts in consideration generated from contracts with customers that has not been included intransaction prices.
9. Notes Regarding Per Share Information(1) Net assets per share¥4,632.77(2) Basic earnings per share¥232.90
The Company introduced the “Trust-Type Employee Shareholding Incentive Plan (Employee
Shareholding Trust)” in November 2020.
When calculating the “Net assets per share,” the Company’s shares held by the employee
shareholding trust account are included in the treasury shares deducted from the total number
of issued shares at the end of the period (225,700 shares in the current consolidated fiscal year),
and when calculating the “Basic earnings per share,” are included in the treasury sharesdeducted when calculating the average number of shares during the period (247,246 shares in
the current consolidated fiscal year).

Notes to Non-Consolidated Financial Statements
1. Notes Regarding Significant Accounting Policies(1) Valuation standards and valuation methods for assets① Securities
a. Shares of
Cost method using the moving average method.
subsidiaries
b. Othersecurities
Fair value method (valuation differences are all included directly in・ Securities other thanshares, etc. without a
net assets, and the cost of securities sold is calculated using themarket pricemoving average method).
Cost method using the moving average method.
・ Shares, etc. without amarket price
Fair value method.
② Derivatives
Cost method using the moving average method (by means of write③ Inventory
down of book value due to reduction in profitability).
(2) Fixed asset depreciation method① Property, plant, andequipmenta. Property,
The straight-line method for machinery and equipment, withplant, anddeclining balance method used for everything else.
equipment
However, the straight-line method is used for buildings acquired onother thanor after April 1, 1998 (excluding facilities and equipment ancillarylease assets
to the building) and facilities and equipment ancillary to buildings
and structures acquired on or after April 1, 2016.
b. Lease assets
Lease assets under finance lease transactions with transfer ofownership
The same depreciation method as is applied to fixed assets owned by
the Company.
Lease assets under finance transactions without transfer of ownership
The lease term is used as the useful life, and the straight-line method
is used with the residual value set as zero.
② Intangible fixed assets
a. Intangible fixed assets other than lease assets
・Software used internally The straight-line method based on the internal usable period (five (5)years).
Straight-line method.
・Other intangible fixed
assetsb. Lease assets
Lease assets under finance transactions without transfer of ownership
The lease term is used as the useful life, and the straight-line method isused with the residual value set as zero.
(3) Standards for recording allowances
The historical bad debt rate is used to provide for loss due to bad debt
① Allowance for doubtful
accounts
for general accounts receivable, and for certain debts, such as doubtful
accounts receivable, the recoverability is examined individually andthe estimated unrecoverable amount is recorded.

② Allowance for retirement
benefits

To provide for employee retirement benefits, the amount arising at theend of the current fiscal year is recorded based on the estimatedretirement benefit obligations and pension assets at the end of thecurrent fiscal year.
Actuarial differences are accounted for as expenses from thefollowing fiscal year after they respectively arise, using the straightline method based on the average remaining service period of
employees when it arises.
(4) Standards for recording revenue and expenses① Details of main performanceThe Company’s main business is the manufacture and sale ofobligations in theautomobile products, marine engine products, and other products. In
company’s main business its automobile product business, the Company manufactures
automobile engine parts including piston rings and valve seat inserts
at manufacturing bases in Japan and oversea, and sells them toautomobile manufacturers, etc. For the replacement parts market, theCompany also sells to business operators, etc. handling automobile
parts. In the marine engine products and other products business, theCompany sells piston rings for ships and products applying a metal
injection molding (METAMETAL) process, etc. to ship
manufacturers and industrial equipment manufacturers, etc.
respectively. In the other products business, the Company sells
automobile-bearing parts and RV products, etc. to automobile
manufacturers and retailers, etc.
Revenue generated from contracts with customers is recognized at the② Time that the company
normally satisfies suchtime that control of the product transfers to the customer. In domestic
performance obligations
sales, revenue is normally recognized at the time of shipping because(the time when revenue is the time from shipping until control of the product transfers to thenormally recognized)
customer is a normal period of time (shipping basis applied). With
respect to domestic sales where a shipping basis is not applied,revenue is recognized when the product is delivered to the customer.
With respect to export transactions, revenue is recognized at the timeof delivery to the customer set forth in the International Commercial
Terms.
Transaction consideration is received within 1 year of satisfaction of
the performance obligations and does not include significant financecomponents.
(5) Significant hedge accounting methods① Hedge accounting methods Deferred hedge accounting is used.
Interest rate swaps that satisfy the requirements for special treatment
are by special treatment, and forward exchange contracts that satisfy
the requirements for allocation treatment are by allocation treatment.
② Hedging instruments and Hedging instruments: forward exchange contract transactions,hedged items
interest rate swap transactions
Hedged items: foreign currency-denominated receivables andpayables, loans payable③ Method for evaluating the In order to hedge against risks from market rate fluctuations, risk
effectiveness of hedging
management pursuant to internal rules is implemented forpolicies and hedges
receivables or payables based on actual demand and theeffectiveness is evaluated.
2.

Notes Regarding Changes to Accounting Policies(Change to Accounting Policies in Conjunction with Revisions to Accounting Standards, etc.)

(1) Application of accounting standards, etc. regarding the calculation of fair value
This has the same content as the notes stated in the Notes to Consolidated Financial Statements so
has been omitted here.
(2) Application of “Accounting standards, etc. regarding revenue recognition” and“Application policies for accounting standards regarding revenue recognition”
This has the same content as the notes stated in the Notes to Consolidated Financial Statements so
has been omitted here.
3.

Notes Regarding Changes to Presentation Methods(Profit and Loss Statement)
As “Commitment fees” recorded as a category in the previous fiscal year has reduced inimportance, it is included in “Other” under “Non-operating revenue.”

4.

Additional Information(Notes Regarding Transactions Delivering the Company’s Shares to Employees, etc. througha Trust)Notes regarding the Employee Shareholding Trust have been omitted here because they have thesame content as stated in “1. Notes, etc. Regarding Significant Matters Forming the Basis for
Preparation of Consolidated Financial Statements (3. Additional Information)” in the Notes toConsolidated Financial Statements.

(Change to Consolidation Schedule)
Notes regarding changes to the schedule for the consolidation of the Company and Riken
Corporation have been omitted here because they consists of the same content as stated in “1. Notes,
etc. Regarding Significant Matters Forming the Basis for Preparation of Consolidated Financial
Statements (3. Additional Information)” in the Notes to Consolidated Financial Statements.
5.

Notes Regarding Accounting Estimates(Recoverability of Deferred Tax Assets)(1) Amount recorded in the non-consolidated financial statements for the current fiscal year
Deferred tax liabilities (net amount): ¥1,163 million
Deferred tax assets before set-off against deferred tax liabilities: ¥358 million(2) Other information for understanding the details of estimates
This has the same content as the notes stated in the Notes to Consolidated Financial
Statements so has been omitted here.

6. Notes Regarding Non-Consolidated Balance Sheets(1) Assets pledged as collateral(Mortgageable factory assets)
Buildings¥2,784 million
Structures¥78 million
Machinery and equipment¥5,353 million
Land¥2,832 million(Other)Buildings¥463 million
Structures¥13 million
Land¥675 million
Liabilities secured by the above collateral assets(For mortgageable factory assets)

Short-term loans payable
Current portion of long-termloans payable
Long-term loans payable(Other)Short-term loans payable
Current portion of long-termloans payable
Long-term loans payable¥1,851 million¥1,672 million(2) Accumulated depreciation ofproperty, plant, and equipment¥44,072 million¥2,108 million¥504 million¥123 million¥158 million(3) Monetary claims and liabilities (excluding those presented by category) against relatedcompanies are as follows¥3,283 million① Short-term monetary claims¥5,908 million② Short-term monetary liabilities

7.

Notes Regarding Profit and Loss Statement
Volume of trade with related companies① Net sales② Purchases③ Volume of trade arising fromtransactions that are notbusiness transactions
Non-operating revenue¥8,791 million¥20,943 million¥1,408 million

8.

Notes Regarding Non-Consolidated Statement of Changes in Net Assets
Class and number of treasury shares
Number of Shares
Increase in the
Decrease in theattheBeginning
Numberof
SharesNumberof Shares
Class of Sharesof the Current
in the Current
in the Current
Fiscal Year
Fiscal Year
Fiscal Year
Common stock
645,290
118
61,6809.

Number of Sharesat the End of theCurrent Fiscal
Year583,728

Notes Regarding Tax Effect Accounting
Breakdown of deferred tax assets and deferred tax liabilities by main causes
The main causes giving rise to deferred tax assets are the allowance for retirement benefits
and unpaid bonuses.
The main causes giving rise to deferred tax liabilities are prepaid pension expenses and othersecurities valuation differences

10. Notes Regarding Transactions with Affiliated Parties
Subsidiaries, etc.
(Unit:
millionyen)

Type

Ratio Details of RelationshipofTransac
Company,
Details of
Voting Number oftion
Business
etc. NameTransactions
Rights, Interlocking, RelationshipValue
etc. Officers, etc.
Purchase, etc.
products

NPR
Manufacture Lending ofThree (3)Fukushima Directof thefunds (Note 2)
Subsidiaryinterlocking
100％
Works
Company’s
officersCo., Ltd.
products
Collection offunds
Receipt ofinterest
Manufacture
Three (3)Delegation of
NPR Iwate Directof theSubsidiaryinterlocking
product
100％Co., Ltd.
Company’s
officers
manufacture
products
Sale ofproducts
NPR ofSubsidiary EuropeGmbH

One (1) Sale of the Lending of
Directinterlocking Company’s funds (Note 2)
70％
officer
products
Collection offunds
Receipt ofinterest
Sale ofproducts

NPR ofSubsidiary America,
Inc.

SIAM
Subsidiary NPR Co.,Ltd.

ManufactureTwo(2)
and sale of Lending of
Directfunds (Note 2)interlocking the100％
officers Company’s
products
Collection offunds
Receipt ofinterest
One (1) Manufacture
DirectReceipt ofinterlocking and sale of100%
dividends
officerthe

Item

Accounts
payabletrade
Short-termloans to1,363
relatedcompanies
8,499

Balanceat EndofPeriod
3,235

1,363

1,189

―

―

5

―

―

Accounts
payabletrade

2,232

8,602

Accounts
3,648 receivabletrade
Short-termloans to624
relatedcompanies

1,439

204

420

―

―

4

―

―

Accounts
2,145 receivabletrade
Short-termloans to971
relatedcompanies

966

801

1,271

―

―

9

―

―

581

―

―

PT. NT
PistonSubsidiary
Ring
Indonesia

Company’s
products
Manufacture
One (1) and sale of
DirectReceipt ofinterlocking the100%
dividends
officerCompany’s
products

675―(Notes) Transaction terms and policy for determining transaction terms
1. Transaction terms on price take into account the market price and are determinedthrough price negotiations.
2. For the lending of funds, interest is reasonably determined taking into account themarket rate for loan interest rates.
3. Transaction amounts do not include consumption tax, etc. With the exception of relatedcompany loans receivable, the balance at the end of the period includes consumption
tax, etc.
11. Notes Regarding Revenue Recognition
Information that is the basis for understanding revenue is the same as stated in the notes in theNotes to Consolidated Financial Statements of Riken Corporation and has therefore been omittedhere.
12. Notes Regarding Per Share Information(1) Net assets per share¥4,135.01(2) Basic earnings per share¥217.65
The Company introduced the “Trust-Type Employee Shareholding Incentive Plan (Employee
Shareholding Trust)” in November 2020.
When calculating the “Net assets per share,” the Company’s shares held by the employee
shareholding trust account are included in the treasury shares deducted from the total number
of issued shares at the end of the period (225,700 shares in the current fiscal year), and whencalculating the “Basic earnings per share,” are included in the treasury shares deducted whencalculating the average number of shares during the period (247,246 shares in the current fiscal
year).

―