RULES CONCERNING DISTRIBUTION TO CUSTOMERSRELATED TO UNDERWRITING, ETC. OF PUBLIC OFFERING,
ETC. OF SHARE CERTIFICATES, ETC.
(August 8, 1997)

CHAPTER I

GENERAL PROVISIONS(Purpose)
Article 1 The purpose of the Rules Concerning Distribution to Customers related to Underwriting, Etc.
of Public Offering, Etc. of Share Certificates, Etc. (hereinafter referred to as the “Rules”) is tosmoothly sell Share Certificates, etc. (prescribed in Article 2, Item 1 of the “Rules Concerning
Underwriting, Etc. of Securities” (hereinafter referred to as the “Underwriting Rules”); the same shallapply hereinafter) and to properly distribute Share Certificates, etc. to customers when conducting theUnderwriting of Public Offering (excluding those related to the Standby Rights Offering prescribed in
Article 2, Item 25 of the Underwriting Rules; the same shall apply hereinafter) or Secondary
Distribution (limited to those that require the preparation of prospectus or Explanatory Note on
Business Conditions (prescribed in Article 2, Item 3 of the Rules Concerning Over-The-Counter
Securities; the same shall apply hereinafter); the same shall apply hereinafter) of Share Certificates,
handling Public Offering (excluding the Equity-based Crowdfunding Business (meaning theEquity-based Crowdfunding Business prescribed in Article 2, Item 2 of the Rules Concerning
Equity-based Crowdfunding Business) conducted by a Regular Member or Specified Business
Member (meaning Specified Business Member conducting only the business set forth in Article5, Item
2(b) of the Articles of Association); the same shall apply hereinafter), handling Secondary Distribution,or conducting Secondary Distribution (hereinafter referred to as the “Underwriting, etc. of Public
Offering, etc.”).

CHAPTER IIPROPER DISTRIBUTION(Proper Distribution)
Article 2 When an Association Member conducts the Underwriting, etc. of Public Offering, etc., it mustfully consider the market condition and the trend of investment demand, and endeavor to distributeShare Certificates, etc. related to the Underwriting, etc. of the Public Offering, etc. to customers in afair manner and not to concentrate on specific investors without a reasonable cause.
2.

When a Regular Member Underwriter (prescribed in Article 2, Item 8 of the Underwriting Rules; thesame shall apply hereinafter) conducts the Underwriting of Public Offering or Secondary Distributionof Share Certificates, etc., it must not conduct the preferential allotment (“oyabike” that means a saleto a person designated by the issuer and includes substantially the same act such as suggesting to aperson to whom Share Certificates are sold; the same shall apply hereinafter in this Paragraph and thefollowing Paragraph). Provided, however, that this provision does not apply if all the requirements set
forth below are fulfilled:(1) The Regular Member Underwriter judges that even after the preferential allotment is conducted,
the distribution does not breach the provision in the preceding Paragraph;(2) Regarding the preferential allotment, the issuer of the Share Certificates, etc. properly discloses
the condition (meaning a summary of the entity subject to the preferential allotment, relationship1between issuer and such entity, reason why such entity is selected, the number of sharecertificates to be distributed to the entity, policy of holding share certificates in relation to thepreferential allotment, entity’s status of funds to be used for the payment, and the actual status of
the entity) of the entity subject to the preferential allotment (an entity who is expected to be
distributed in the preferential allotment; the same shall apply hereinafter), transfer restriction of
Share Certificates, etc. under the preferential allotment, issuance conditions, major shareholders
after the preferential allotment, whether reverse share split is planned or not and details if
planned, and other reference matters after the submission of the securities registration statement
or the issuance registration document;(3) The Lead Managing Regular Member Underwriter (prescribed in Article 2, Item 9 of theUnderwriting Rules; the same shall apply hereinafter) receives a commitment in writing from theentity subject to the preferential allotment that it would continue holding Share Certificates, etc.
during the period from the last payment date or the last day of the payment period for such
Public Offering, or the delivery date for the Secondary Distribution to the date when 180 days
have passed since any of the above-mentioned dates.
3.

When parallel allotment of new shares to a third party (i.e. allotment of new shares to a third party(prescribed in Article 19, Paragraph 2, Item 1(xii) of the Cabinet Office Ordinance Concerning theDisclosure of Corporate Business; in that provision, “share certificates, share option certificates, andbonds with share options” shall be read as “Share Certificates, etc.”; the same shall apply hereinafter)by the issuer of the Share Certificates, etc. which is simultaneously conducted with public offering or
secondary distribution of Share Certificates, etc. that is underwritten by the Regular Member
Underwriter; the same shall apply hereinafter) is conducted, the Regular Member Underwriter must
request the issuer to respect the purport of the provisions in the preceding Paragraph (excluding Item 2of the same Paragraph) at the time of conducting a parallel allotment of new shares to a third party.

CHAPTER III.

DISTRIBUTION TO RETAIL CUSTOMERS AT THE INITIAL PUBLIC
OFFERING(Partial Distribution by Drawing at the Initial Public Offering)
Article 3 When an Association Member distributes share certificates or beneficiary certificates offoreign share trust to retail customers at the time of initial public offering (as for the foreign share trust
beneficiary certificates, limited to the cases of issuance where foreign share certificates that become
entrusted securities, prescribed in Article 2-3, Item 3 of the “Enforcement Ordinance of the Financial
Instruments and Exchange Act,” are issued by an issuer who has not listed them in any Foreign
Financial Instruments Market (including the over-the-counter market; the same shall apply
hereinafter); the same shall apply hereinafter), in principle, it shall determine the distributing parties bydrawing for 10% or more of the quantity that is to be distributed by the Association Member to retailcustomers; provided, however, that it may decrease the ratio for drawing, may not adopt the
distribution by drawing, or may cancel the distribution by drawing in any of the following cases:(1) The demand for the book building is not sufficiently accumulating;(2) The number of retail customers’ applications received by an Association Member does not reachthe quantity that is planned for distribution to retail customers by the Association Member;(3) The number of applications for drawing received by an Association Member does not reach thequantity that is planned for distribution by drawing by the Association Member;2(4) The quantity that is planned for distribution by drawing does not reach five units;(5) The Association Member is specialized in the wholesale business;(6) Other rational reasons, if any.
(Prohibition of Centralized Distribution and Unfair Distribution)
Article 4 In the case where an Association Member distributes share certificates or beneficiary
certificates of foreign share trust to retail customers at the initial public offering under a method otherthan drawing, it must not excessively centralize the distribution or conduct an unfair distribution to a
specific customer. The Association Member must pay attention that the distribution to each customer
by means other than drawing should not be excessive compared with the average quantity distributedby drawing to each customer, and must not repeatedly distribute to the same customer.

CHAPTER IV PROVISION OF SHARE DISTRIBUTED ENTITY INFORMATION(Customers Included in the Share Distributed Entity Information)
Article 5 Customers (excluding individuals; the same shall apply hereinafter in this Chapter) included in
the share distributed entity information (prescribed in the next Article; the same shall apply hereinafterin this Article) that is provided pursuant to next Article and Article 7 shall be those who are set forth ineach Item below:(1) The following persons whom it is appropriate to be regarded as the customers included in theshare distributed entity information:(a) Banks;(b) Financial Instruments Business Operators (excluding individuals) who conduct investment
advisory/agent business or investment management business;(c) Investment corporations (prescribed in Article 2, Paragraph 12 of the “Act on Investment
Trust and Investment Corporation”).
(2) Insurance companies;(3) Pension Fund Association;(4) Shinkin Central Bank;(5) The Shinkumi Federation Bank;(6) The Norinchukin Bank;(7) National Mutual Insurance Federation of Agricultural Cooperatives;3

(8) National Mutual Insurance Federation of Fishery Cooperatives;(9) The Rokinren Bank;(10) Shoko Chukin Bank;(11) Non-residents prescribed in Article 6, Paragraph 1, Item 6 of the Foreign Exchange and Foreign
Trade Act (excluding individuals).
2.

A Lead Managing Regular Member Underwriter (or one representative Lead Managing Regular
Member Underwriter if there are two or more Lead Managing Regular Member Underwriters(hereinafter referred to as the “Representative Lead Managing Regular Member Underwriter” in this
Chapter); the same shall apply hereinafter in this Chapter) must designate the customer prescribed in
the preceding Paragraph, Item 1, notify the name of such customer to other Regular Member
Underwriters (prescribed in Article 2, Item 10 of the Underwriting Rules; if there are two or more
Lead Managing Regular Member Underwriters, including the Lead Managing Regular Member
Underwriter who is not a Representative Lead Managing Regular Member Underwriter; the same shallapply hereinafter in this Chapter) without delay after the resolution of the board of directors (or adecision of executive officers, in the case of a Company with Nominating Committee, etc., or adecision of directors, in the case of a Company with Audit and Supervisory Committee) is made in
relation to a public offering or secondary distribution, and report the same to the Association in adesignated form.

(Provision of Share Distributed Entity Information from Other Regular Member Underwriters to
Lead Managing Regular Member Underwriter)
Article 6 If other Regular Member Underwriters allot underwritten Share Certificates, etc. to customers(excluding the preferential allotment ; the same shall apply hereinafter in this Chapter), they shallprovide the Lead Managing Regular Member Underwriter with the name of the customers who falls
under the preceding Article, Paragraph 1 and the number of Share Certificates, etc. allotted to suchcustomers (hereinafter referred to as the “Share Distributed Entity Information”) without delay.
(Provision of Share Distributed Entity Information from Lead Managing Regular Member
Underwriter to Issuer)
Article 7 If a Lead Managing Regular Member Underwriter allots underwritten Share Certificates, etc.
to customers and receives the Share Distributed Entity Information from all other Regular Member
Underwriters pursuant to preceding Article, the Lead Managing Regular Member Underwriter must
provide the Share Distributed Entity Information of customers who fall under Article 5, Paragraph 1
and the Share Distributed Entity Information provided by other Regular Member Underwriters to theissuer of Share Certificates, etc. without delay. If Share Certificates, etc. are real estate investment trust
securities (i.e., real estate investment trust securities set forth in Article 2, Paragraph 1, Item 11 of the
Financial Instruments and Exchange Act (hereinafter referred to as the “FIEA”), the purpose of whichis to invest investors’ money mainly in the real estate; the same shall apply hereinafter), the “issuer of
Share Certificates, etc.” referred to above means an asset management company of the investment
corporation who is the issuer of such real estate investment trust securities (i.e., asset managementcompany prescribed in Article 2, Paragraph 19 of the Act on Investment Trust and Investment
Corporation; the same shall apply hereinafter), and if Share Certificates, etc. are Infrastructure Funds(i.e., investment securities or foreign investment securities set forth in Article 2, Paragraph 1, Item 11of the FIEA, the purpose of which is to invest investors’ money mainly in infrastructure assets; thesame shall apply hereinafter), the “issuer of Share Certificates, etc.” referred to above means an asset

4management company of the investment corporation who is the issuer of such Infrastructure Funds;
the same shall apply in the following Article.)(Management of Share Distributed Entity Information by Issuer)
Article 8 If the issuer receives the Share Distributed Entity Information that is provided pursuant to thepreceding Paragraph, a Lead Managing Regular Member Underwriter must receive a commitment inwriting from the issuer that the issuer would properly manage the Share Distributed Entity Information to
avoid any leakage.

CHAPTER V.

BASIC POLICY AND INTERNAL RULES ON DISTRIBUTION(Preparation and Announcement of Basic Policy on Distribution)
Article 9 When an Association Member conducts Underwriting, etc. of Public Offering, etc. it must
prepare in advance the basic policy on distributing share certificates, etc. to investors (hereinafterreferred to as the “Basic Policy”).
2. The Basic Policy prescribed in the preceding Paragraph shall describe matters set forth in each Item
below concretely and in an easy-to-understandable manner to investors to the extent possible:(1) The ratio of quantity under drawing and the dealing of drawing;(2) Such matters for which the Association Member may decrease the ratio of quantity underdrawing, may not adopt the drawing, or may cancel the drawing;(3) Dealing of distribution by means other than the drawing;(4) Measures taken to prevent excessive centralized distribution and unfair distribution;(5) The relationship with distribution in the case where the book-building method is adopted;(6) Other matters that the Association Member deems necessary for the Investment Decision by
investors.
3.

An Association Member must disseminate the detailed contents of the Basic Policy to investors byappropriate means such as displaying it on its branch offices/sales counters, or uploading it on its web
site, etc.

4.

An Association Member must submit its Basic Policy to the Association if it is requested by the
Association.

(Establishment of Internal Rules)
Article 10 An Association Member must establish internal rules on the distribution of share certificates,etc. subject to the Underwriting, etc. of Public Offering, etc. (hereinafter referred to as the “Internal
Rules”) and comply with them.
2. The Internal Rules shall prescribe the followings set forth in each Item below in detail and concretely
to the extent possible:(1)

Basic Policy on distribution;

5

(2)
(3)

3.

The ratio of quantity under drawing and the dealing of drawing;
Such matters for which the Association Member may decrease the ratio of quantity underdrawing, may not adopt the drawing, or may cancel the drawing;(4)

Customers, etc. that are not allowed to apply for the distribution;(5)

Dealing of distribution by means other than the drawing;(6)

Measures taken to prevent excessive centralized distribution and unfair distribution;(7)

Compliance with laws and regulations, etc.;(8)

Dealing of distribution related to hot issues;(9)

Dealing of distribution when the equity market environment deteriorates;(10)

The relationship with distribution in the case where the book-building method is adopted;(11)

The relationship with distribution in the case where another method is adopted;(12)

Method of providing the Share Distributed Entity Information;(13)

Internal inspection procedures;(14)

Other matters that the Association Member deems necessary.

An Association Member must submit its Internal Rules to the Association if requested by the
Association.

(Enhancement of Internal Administration System)
Article 11 An Association Member must regularly inspect whether the distribution of share certificates,etc. under the Underwriting, etc. of Public Offering, etc. was properly conducted pursuant to its
Internal Rules under the responsibility of the Internal Administration Supervisor.

CHAPTER VI.

MISCELLANEOUS PROVISIONS(Retention, Etc. of Record)
Article 12 An Association Member must retain the record set forth below for five years so that an
external audit and inspection, etc. are conducted properly:(1) Record concerning distribution of individual issues;(2) Record concerning quantity under drawing (including the reason for decreasing the ratio of
quantity under drawing, not adopting the drawing, or canceling the drawing; if any);(3) Record concerning results of inspection set forth in the preceding Article.
2.

An Association Member shall respond to a request for submission of or undergo an audit of the record
set forth in each Item of the preceding Paragraph, if the Association requests:6

(Announcement of Distribution Condition)
Article 13 A Regular Member must collect the information on distribution of share certificates, etc.
underwritten by itself on a quarterly basis, analyze the information, and report the result of analysis to
the Association using the prescribed form.
2.

An Association Member must summarize the distribution condition of share certificates, etc. or
foreign share trust beneficiary certificates to retail customers at the initial public offering on a monthly
basis, analyze it, and report it to the Association using the prescribed form by the month after the next
month in which the payment due date falls.

3. The Association shall regularly announce to the general public the distribution condition reported by
Association Members pursuant to the preceding two Paragraphs.
(Mutatis Mutandis Application to Public Offering or Secondary Distribution Overseas)
Article 14 In the case that an issuer in Japan conducts Public Offering or Secondary Distribution of
Share Certificates, etc. overseas, if an Association Member introduces its own overseas affiliatedcompany (foreign corporation that is an affiliated company prescribed in Article 177, Paragraph 6 of
the Cabinet Ordinance Concerning Financial Instruments Business, Etc.) for the Underwriting, theAssociation Member shall request such overseas affiliated company to comply with the provision of
Article 2, Paragraph 2 regarding the preferential allotment and the provision of the same Article,
Paragraph 3 regarding the parallel allotment of new shares to a third party respectively, and to provide
the issuer with the Share Distributed Entity Information pursuant to Chapter IV.
(Reporting to the Association)
Article 15 The Association may request Regular Members to submit a report or materials on these Rules
if the Association deems it necessary.
2.

A Regular Member must respond to a request for submitting a report or materials prescribed in thepreceding Paragraph.

(Exemption from Application of Part of Rules)
Article 16 These Rules shall not apply to the handling of public offering or secondary distribution ofreal estate investment trust securities or Infrastructure Funds (limited to the case that it is an allotmentof new shares to a third party other than the parallel allotment of new shares to a third party, and that
the Share Distributed Entity is disclosed).

SUPPLEMENTARY PROVISIONS [Omitted](Notes) These Rules are based on the version in effect as of January 1, 2016.
This translation is solely for the convenience of those interested therein, and accordingly all questions that
may arise with regard to the meaning of the words or expressions herein shall be dealt with in accordancewith the original Japanese text7