Note: This document has been translated from a part of the Japanese original for reference purposes only. In
the event of any discrepancy between this translated document and the Japanese original, the original shallprevail. The Company assumes no responsibility for this translation or for direct, indirect or any other formsof damages arising from the translation.
(Stock Exchange Code 1822)
June 5, 2019
To Shareholders with Voting Rights:
Kenichi Osumi
Representative Director
DAIHO CORPORATION
24-4, Shinkawa 1-Chome, Chuo-ku, TokyoNOTICE OF CONVOCATION OF
THE 70TH ANNUAL GENERAL MEETING OF SHAREHOLDERS
We would like to express our appreciation for your continued support and patronage.
You are cordially invited to attend the 70th Annual General Meeting of Shareholders of DAIHOCORPORATION (the “Company”). The meeting will be held for the purposes as described below.
If you are unable to attend the meeting, you may exercise your voting rights in writing or via the Internet
etc. Please review the attached Reference Documents for the General Meeting of Shareholders and exercise
your voting rights in accordance with the guidance on the following pages by 5:30 p.m. on Wednesday, June
26, 2019, Japan time.
1. Date and Time:Thursday, June 27, 2019 at 10:00 a.m. Japan time

2. Place:

2F Conference room at the Corporate Headquarters located at
24-4, Shinkawa 1-Chome, Chuo-ku, Tokyo, Japan

3. Meeting Agenda:
Matters to be reported: 1. The Business Report and Non-Consolidated Financial Statements for theCompany’s 70th Fiscal Year (April 1, 2018 - March 31, 2019)
2. Consolidated Financial Statements for the Company’s 70th Fiscal Year
(April 1, 2018 - March 31, 2019) and results of audits by the Independent
Auditor and the Board of Corporate Auditors of the Consolidated Financial
Statements
Proposals to be resolved:
Appropriation of Surplus
Proposal 1:
Election of 7 Directors
Proposal 2:
Revision to Remuneration Limit for Directors
Proposal 3:
Determination of the Amount and Details of Share-based Remuneration for
Proposal 4:
Directors-1-

4. Disclosure via the Internet:
From among the document to be provided with this Notice, Consolidated Statements of Changes in Net
Assets and Notes to Consolidated Financial Statements of Consolidated Financial Statements, as well as
Non-Consolidated Statements of Changes in Net Assets and Notes to Non-Consolidated Financial Statementsof Non-Consolidated Financial Statements, are posted on the Company’s website (https://www.daiho.co.jp) in
accordance with laws and regulations as well as Article 18 of the Company’s Articles of Incorporation andtherefore are not provided in the Appendix of this Notice.
The Consolidated Statements of Changes in Net Assets, Notes to Consolidated Financial Statements,
Non-Consolidated Statements of Changes in Net Assets and Notes to Non-Consolidated Financial Statements
were also audited by the Independent Auditor and the Board of Corporate Auditors during the preparation of
their respective audit reports as documents that constitute part of the Consolidated Financial Statements andNon-Consolidated Financial Statements.
________________________________________________________________________________________
 When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the reception desk.
 Please note that we will not prepare gifts for meeting attendees from this year. We appreciate yourunderstanding.
 Should the Business Report, Non-Consolidated Financial Statements, Consolidated Financial Statements,
and the Reference Documents for the General Meeting of Shareholders require revisions, the revised
versions will be posted on the Company’s website (https://www.daiho.co.jp).

-2-Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal 1:

Appropriation of Surplus

The Company holds a basic policy of maintaining and enhancing stable dividends while improving thefinancial strength as a basis for long-term development. It is proposed that the year-end cash dividend for the70th fiscal year be ¥75.0 per share of common stock, in comprehensive consideration of the financial results
and management environment during the fiscal year under review.
Matters relating to the year-end cash dividend(1) Matters related to the distribution of dividend properties and the total amount thereof¥75.0 per share of the Company’s common stock
Total amount of dividends ¥1,277,343,600(2) Effective date of dividends of surplus
June 28, 2019-3-

Proposal 2:

Election of 7 Directors

The terms of office of Directors Fumio Tada, Masanobu Nakasugi, Shigeki Murata, Kazumi Imai, Tetsuro
Kawaguchi, and Kimiyoshi Kakitsuba will expire at the conclusion of this year’s Annual General Meeting of
Shareholders. Accordingly, the Company proposes adding one External Director to enhance the function ofmanagement oversight and electing 7 Directors.
The candidates are as follows:
No.

Name
(Date of birth)

Past experience, positions, responsibilities,
and significant concurrent positions

Number ofshares of theCompany held

Joined the Company
Deputy General Manager, the 1st Civil Engineering Sales
Department, Civil Engineering Division
General Manager, the 1st Civil Engineering Sales Department,
October 2001
Civil Engineering Division
Deputy General Manager, Nagoya Branch
March 2003
General Manager, the 1st Civil Engineering Sales Department,
July 2004
Civil Engineering Division
Director; General Manager, the 1st Civil Engineering Sales
June 2005
Department, Civil Engineering Division
Director; Executive Officer; Deputy General Manager, Civil
April 2006
Fumio Tada
Engineering Division; General Manager, the 1st Civil(November 23, 1953)
Engineering Sales Department
18,175
Director; Executive Officer; General Manager, Tokyo Branch;
January 2007
Deputy General Manager, Civil Engineering Division<Reappointment>
Director; Managing Executive Officer, General Manager, Tokyo
June 2007
Branch; Deputy General Manager, Civil Engineering Division
Director; Managing Executive Officer; General Manager, Civil
June 2008
Engineering Division
Representative Director; Senior Managing Executive Officer;
June 2009
General Manager, Civil Engineering Division
Representative Director; Operating Vice President; General
April 2011
Manager, Civil Engineering Division
Representative Director; Operating Vice President; General
April 2012Manager, Construction Division
Representative Director; Operating Vice President (to present)
April 2014
[Reasons for nomination as candidate for Director]
Mr. Fumio Tada has held key positions in the civil engineering and construction divisions of the Company and has abundant
experience and general management knowledge. He has been fulfilling sufficient duties as Representative Director, currently
being in charge of safety and environment, overseas matters, and engineering divisions. The Company, therefore, nominates him
as a candidate for Director again.
April 1977
October 2000

-4-

No.

Name
(Date of birth)

Past experience, positions, responsibilities,
and significant concurrent positions
April 1977
August 1999

Number ofshares of theCompany held

Joined the Company
Manager, Legal Affairs Section, General Affairs Department,
Administration Division
March 2004
Manager, General Affairs Section, General Affairs Department,
Administration Division
January 2008
General Manager, General Affairs Department, Administration
Masanobu Nakasugi
Division(October 3, 1953)
February 2009
Executive Officer; General Manager, Administration Division
2
3,393
June 2009
Director; Executive Officer; General Manager, Administration
Division<Reappointment>
June 2010
Director; Managing Executive Officer; General Manager,
Administration Division
April 2013
Director; Senior Managing Executive Officer; General Manager,
Administration Division
April 2019
Director; Operating Vice President; General Manager,
Administration Division (to present)[Reasons for nomination as candidate for Director]
Mr. Masanobu Nakasugi has held key positions in the administrative division of the Company and has abundant experience andgeneral management knowledge. He has been fulfilling sufficient duties as Director, contributing to management of the Company
in all aspects of administrative operations. The Company, therefore, nominates him as a candidate for Director again.
April 1979
Joined the Company
October 2003
Acting General Manager, Sales Department, Hiroshima Branch
April 2005
General Manager, Sales Department, Hiroshima Branch
June 2008
General Manager, Hiroshima Branch
April 2009
General Manager, Civil Engineering Technology Department,
Kakue Morishita
Osaka Branch(April 23, 1956)
April 2010
General Manager, Civil Engineering Sales Department, Osaka
3738
BranchGeneral Manager, Kyushu Branch<New Appointment> April 2013
April 2014
Executive Officer; General Manager, Kyushu Branch
April 2017
Executive Officer; General Manager, Nagoya Branch
April 2018
Managing Executive Officer; General Manager, Nagoya Branch
April 2019
Senior Managing Executive Officer; General Manager, Civil
Engineering Division (to present)[Reasons for nomination as candidate for Director]
Mr. Kakue Morishita has held key positions such as General Manager of Nagoya Branch and has abundant experience andachievements. The Company determined that he will continue to contribute to management of the Company, including the civilengineering business, and will fulfill his duties as Director. The Company, therefore, nominates him as a candidate for Director.

-5-

No.

Name
(Date of birth)

Past experience, positions, responsibilities,
and significant concurrent positions
April 1982
May 2011

Number ofshares of theCompany held

Joined the Company
Deputy General Manager, Construction Department, Osaka
BranchSeptember 2011 General Manager, Construction Department, Osaka Branch
November 2011 General Manager, Construction Department, Osaka Branch;
General Manager, Estimation Department, Osaka Branch
April 2014
General Manager, Construction Department, Construction
Division; General Manager, the 1st Construction Sales
Shuichi Nagata
Department, Construction Division(May 22, 1958)
4
April 2015
Executive Officer; Deputy General Manager, Construction
2,225
Division; General Manager, Construction Department; General<New Appointment>
Manager, the 1st Construction Sales Department
April 2018
Managing Executive Officer; Deputy General Manager,
Construction Division; General Manager, Construction
Department; General Manager, the 2nd Construction Sales
Department
April 2019
Managing Executive Officer; General Manager, Construction
Division; General Manager, Construction Department (topresent)[Reasons for nomination as candidate for Director]
Mr. Shuichi Nagata has held key positions in the construction division and has abundant experience and advanced knowledge. The
Company determined that he will continue to contribute to management of the Company, including the construction business, andwill fulfill his duties as Director. The Company, therefore, nominates him as a candidate for Director.
December 2005 Senior Regional Coordinator, Middle Eastern and African
Affairs Bureau, Ministry of Foreign Affairs of Japan
Tetsuro Kawaguchi
March 2006
Senior Coordinator, Management and Coordination Division,(October 31, 1948)
50Minister’s Secretariat
January 2008
Ambassador in charge of Madagascar and Comoros<Reappointment>
December 2012 Retired
June 2017
External Director of the Company (to present)[Reasons for nomination as candidate for External Director]
Mr. Tetsuro Kawaguchi has held key positions in government offices for many years. He has been contributing to enhancing thefunction of management oversight over the Company by providing various suggestions based on his extensive experience andknowledge, and fulfilling his duties as External Director. The Company, therefore, nominates him as a candidate for External
Director again.
April 1982
Appointed as a public prosecutor at the Tokyo District Public
Prosecutors Office
Kimiyoshi Kakitsuba
Registered as an attorney-at-law (Daiichi Tokyo BAR(October 25, 1954) April 1986
60
Association); Joined Kakitsuba Law Office
April 2005
Established Tokyo Will Law Office<Reappointment>
June 2017
External Director of the Company (to present)[Reasons for nomination as candidate for External Director]
Mr. Kimiyoshi Kakitsuba has been contributing to enhancing the function of management oversight over the Company byproviding various advice based on his specialized knowledge and experience as an attorney-at-law, and fulfilling his duties as
External Director. The Company, therefore, nominates him as a candidate for External Director again.

-6-

No.

7

Name
(Date of birth)
Shizu Machino(January 31, 1982)(name in the family
register: Shizu
Shiono)Past experience, positions, responsibilities,
and significant concurrent positions
December 2007

August 2015
November 2016
January 2019

Registered as an attorney-at-law (Daiichi Tokyo BAR
Association)
Joined Kitahama Partners
Special Counsel, Masuda, Funai, Eifert & Mitchell, Ltd.
Joined Innoventier LPC
Partner, Innoventier LPC (to present)

Number ofshares of theCompany held

0<New Appointment>[Reasons for nomination as candidate for External Director]
Ms. Shizu Machino has specialized knowledge and experience as an attorney-at-law. She was also a member of the independent
committee set up to investigate fraudulent transactions at the Company’s offices, which was described in the “Notice ofEstablishment of an Independent Committee” released on December 19, 2017, and worked hard for the fact-finding and root cause
investigation. The Company determined that she can provide supervisory and advisory functions from an independent andobjective standpoint, and is valuable in strengthening the Company’s corporate governance. The Company, therefore, nominates
her as a candidate for External Director.
Considering that she served as a member of the independent committee and that the commission fees that the Company paid to her
was less than ¥4 million, the Company determined that there is no risk of conflict of interest between her and general shareholdersof the Company, and that that she has sufficient independence.
(Notes)
1.
2.
3.

4.

5.
6.

There are no special interests between any of the candidates for Directors and the Company.
Responsibilities, etc. are as posted in the Directors and Corporate Auditors column in the Business Report (available inJapanese only).
Mr. Tetsuro Kawaguchi, Mr. Kimiyoshi Kakitsuba, and Ms. Shizu Machino are candidates for External Directors. The
Company has notified the Tokyo Stock Exchange of the appointment of Mr. Tetsuro Kawaguchi and Mr. Kimiyoshi
Kakitsuba as independent directors as prescribed by the Exchange. The Company will continue to designate them as
independent directors if they are re-elected. Ms. Shizu Machino meets the requirements for independent directors
prescribed by the Tokyo Stock Exchange and the Company plans to notify the Exchange of her appointment as anindependent director.
The Company entered into an agreement with Mr. Tetsuro Kawaguchi and Mr. Kimiyoshi Kakitsuba to limit their
liability under Article 423, Paragraph 1 of the Companies Act in accordance with Article 427, Paragraph 1 of the sameact. The maximum amount of liability pursuant to the agreement is ¥10 million or the minimum amount of liability
stipulated in Article 425, Paragraph 1 of the same act, whichever is higher. The Company will continue with thisagreement if Mr. Tetsuro Kawaguchi and Mr. Kimiyoshi Kakitsuba are re-elected at this General Meeting of
Shareholders. The Company also plans to enter into a similar limited liability agreement with Ms. Shizu Machino if
she is elected at this General Meeting of Shareholders.
Mr. Tetsuro Kawaguchi and Mr. Kimiyoshi Kakitsuba will have served as External Directors for two years at theconclusion of this General Meeting of Shareholders.
The Company discovered that several offices of the Company had made fictitious orders to certain subcontractors andsome improper accounting entries had been performed, while Mr. Tetsuro Kawaguchi and Mr. Kimiyoshi Kakitsuba
were in office of External Director. Although both External Directors were not aware of this until its discovery, they
have been making suggestions regarding the necessity of preventing recurrence and strengthening the internal audit
function in response to a report by the independent committee.

-7-Proposal 3:

Revision to Remuneration Limit for Directors

The 67th Annual General Meeting of Shareholders held on June 29, 2016 approved a proposal to set theupper limit of remuneration for the Company’s Directors at ¥180 million per year (up to ¥10 million ofwhich is for External Directors). The upper limit has remained unchanged since then. However, if Proposal 2
is approved as originally proposed, there will be one more External Director.
Accordingly, the Company proposes keeping the upper limit of remuneration for Directors at ¥180
million per year and revising the upper limit of remuneration for External Directors from ¥10 million peryear to ¥15 million per year.
As in the past, the remuneration limit for Directors does not include their salaries as employees.
The current number of Directors is 7 (2 of which are External Directors). If Proposal 2 is approved asoriginally proposed, the number of Directors will be 8 (3 of which are External Directors).

-8-

Proposal 4:

Determination of the Amount and Details of Share-based Remuneration for Directors

1. Reason for the proposal and reason for concluding that the remuneration system is beneficial
The remuneration of the Company’s Directors consists of base remuneration, bonuses, and share
remuneration-based share options. Under this proposal, the Company requests shareholders to approve theintroduction of a new share-based remuneration system (hereinafter the “System”) for Directors (excluding
External Directors). The Company requests shareholders to allow the Board of Directors to lay out details of
the System at its discretion within the framework described in Section 2 below.
The System aims to facilitate Directors to share the benefits and risks of stock price fluctuations withshareholders and to increase their motivation to contribute to an improvement of medium- to long-term
performance of the Company and an increase in corporate value by clarifying the link between remuneration
for Directors and the Company’s stock value. The Company, therefore, considers that this remuneration
system is beneficial.
Under this proposal, if approved, the Company will provide new share-based remuneration to Directors(excluding External Directors. The same applies hereafter) who will be in office during the three fiscal years
from the fiscal year ending March 31, 2020 to the fiscal year ending March 31, 2022 (hereinafter the“Eligible Period”), apart from the limit of remuneration for Directors (¥180 million per year (¥15 million ofwhich is for External Directors), excluding their salaries as employees), which will be set if Proposal 3“Amendment to Director Remuneration Limit” is approved as originally proposed.
The number of Directors eligible for the System will be 5, if Proposal 2 “Election of 7 Directors” isapproved as originally proposed.
If the introduction of the System is approved at this General Meeting of Shareholders, the Company will
not grant share remuneration-based share options under the current system any more, and will not issue shareacquisition rights as part of share remuneration-based share options going forward.
Furthermore, if this proposal is approved as originally proposed, the Company plans to introduce asimilar share-based remuneration system to Executive Officers who have contracts of mandate with theCompany.
2. Remuneration amount and details under the System(1) Overview of the System
The System is a share-based remuneration system where a trust established by the Company
through money contribution (hereinafter the “Trust”) acquires shares in the Company and delivers thoseshares to each Director. The number of shares to be delivered to each Director correspond to thenumber of points the Company grants to him/her.
In principle, Directors receive the delivery of shares in the Company at their retirement.
Directors of the Company (excluding External1) Eligible persons under the System
Directors)
From the fiscal year ending March 31, 2020 to the2) Eligible period
fiscal year ending March 31, 2022
3) Maximum amount of money contributed by theCompany as a source fund to acquire shares in
the Company to be delivered to eligible persons
described in 1) during the Eligible Period of
three fiscal years described in 2)¥150 million in total

4) Method of acquiring shares in the Company

Disposal of treasury shares or acquisition from thestock exchange market (including off-floor trading)5) Maximum number of points to be granted toeligible persons described in 1)

20,000 points per fiscal year6) Criteria for granting points

Points are granted according to positions and otherfactors7) Delivery date of shares in the Company toeligible persons described in 1)(2)

At retirement in principle

Maximum amount of the Company’s money contribution
The initial trust period of the Trust shall be approximately three years. During the Eligible Period,-9-the Company shall pay up to ¥150 million in total as remuneration for Directors who will be in officeduring the Eligible Period, which will be a source of funds to acquire shares in the Company to bedelivered to Directors under the System, and shall establish the Trust with Directors meeting certain
requirements as its beneficiaries. The Trust shall use the money that the Company entrusts as a sourceof funds to acquire shares in the Company through either the disposal of treasury shares or acquisition
from the stock exchange market (including off-floor trading).
Note: Money that the Company effectively entrusts to the Trust will be the sum of the estimatedamount of necessary expenses such as trust fees and trust administrator fees, as well as theabove-mentioned funds to acquire shares in the Company. In addition, if the Company
introduces a similar share-based remuneration system to Executive Officers as mentioned
above, the funds to acquire shares in the Company to deliver to Executive Officers under thatsystem will be entrusted together.
At each time the Eligible Period expires, it may be extended by a period of three fiscal years or lessby the Board of Directors’ decision, and the trust period of the Trust may also be extended accordingly(this includes a case where the trust period is effectively extended by transferring the trust assets of theTrust to another trust whose purpose is the same as that of the Trust set up by the Company. The same
applies hereafter) to continue the System. In such a case, during the extended Eligible Period, theCompany shall additionally contribute to the Trust up to the amount obtained by multiplying thenumber of fiscal years for the extended Eligible Period by ¥50 million, which will be a source of funds
to additionally acquire shares in the Company to deliver to Directors under the System, and shallcontinue to grant points described in (3) below and deliver shares in the Company.
In addition, even if the Company does not continue the System by not extending the Eligible Period
as described above, when there are Directors who have already been granted points but have not retired
at the expiration of the trust period, the trust period of the Trust may be extended until those Directors
retire and the delivery of the Company’s shares is completed.
(3)

Calculation method and maximum number of shares in the Company to be delivered to Directors
1)
Method of granting points to Directors
In accordance with the share delivery rules specified by the Board of Directors, the Company
shall grant each Director points according to his/her position and other factors on the point-granting
date specified in the share delivery rules during the trust period.
However, the total number of points granted by the Company to Directors shall be up to 20,000
points per fiscal year.
2)
Delivery of shares in the Company according to the number of points granted
Directors shall receive the delivery of shares in the Company according to the number of points
granted in 1) above based on the procedure 3) below.
One point corresponds to one share in the Company. However, if there is an event involving theCompany’s shares which warrants it reasonable to adjust the number of the Company’s shares to bedelivered, such as a stock split and a reverse stock split, the Company shall make a reasonableadjustment depending on the split ratio or reverse split ratio.
3)
Delivery of the Company’s shares to Directors
The delivery of shares in the Company to each Director described in 2) above shall be madefrom the Trust by each Director following the specified beneficiary confirmation procedure
generally at the time of his/her retirement.
However, a certain percentage of those shares in the Company may be sold for cash within the
Trust in order for the Company to collect at source funds for tax payments, such as withholding
income taxes, and they may be delivered in the form of cash instead of shares. In addition, if theCompany’s shares held in the Trust are converted to cash, such that they are settled throughparticipation in a tender offer, cash may be delivered instead of the Company’s shares.

(4)

Exercise of voting rights
The voting rights of shares in the Company held in the Trust shall not be exercised uniformly under
the instructions of the trust administrator, who is independent of the Company and its officers. By using
this method, the Company intends to secure neutrality towards the management of the Company interms of exercising the voting rights of the Company’s shares held in the Trust.

(5)

Handling of dividends
Dividends on shares in the Company held in the Trust shall be received by the Trust and shall be
used to fund the acquisition of the Company’s shares and to pay fees for the trustee of the Trust.

- 10 -

(Reference)
For the main points of the System, please see the “Notice Concerning the Introduction of
Share-based Remuneration System for Directors” dated on May 14, 2019.

- 11 -