(Translated from the Japanese original)

August 7, 2024
Company Name: Rinnai Corporation
Representative: Hiroyasu Naito, President
Stock Code:5947
Listings:
Tokyo Stock Exchange, Prime Market,
Nagoya Stock Exchange, Premier Market
Contact:
Takuya Ogawa, Managing Executive Officer,
Chief of Corporate Management Headquarters+81 (52) 361-8211
Phone:(in Japan, 052-361-8211)

Notice Regarding Disposal of Treasury Stock as Restricted Stock Incentive
for Employee Shareholding Association
As announced in the news release “Notice Regarding Treasury Stock Disposal as Restricted
Stock Incentive for Employee Shareholding Association” dated May 9, 2024, Rinnai (hereafter,“Rinnai” or the “Corporation”) hereby announces that the Board of Directors adopted aresolution at its meeting today for the disposal of treasury stock (hereafter, the “Disposal ofTreasury Stock” or the “Disposal”) as restricted stock for Rinnai Employee Shareholding
Association (hereafter, the “Shareholding Association”) under a restricted stock incentive plan(hereafter the “Plan”). Details are provided below.
1. Outline of Disposal of Treasury Stock(1)
Date of disposal
October 16, 2024
(2)Class and number of
231,000 shares of common stockshares to be disposed of(3)
Disposal price¥3,328 per share(4)
Total disposal value¥768,768,000 (Note)(5)
Disposal method
The number of shares requested, as decided by(Planned allottee)
Shareholding Association within the range of number ofshares for disposal under (2) above, will be granted by
Rinnai through a third-party allotment of shares, on thecondition that request for subscription comes from theShareholding Association. (The allotted number will be
the number of shares disposed of.)
Rinnai Employee Shareholding Association: 231,000shares
Rinnai will not accept requests from Eligible Employees(as defined below) for partial subscription of shares to begranted.

1(6)

Note

OtherRegarding the Disposition of Treasury Stock, anExtraordinary Report in accordance with the Financial
Instruments and Exchange Act has been filed.

Amounts for “number of shares to be disposed of” and “total disposal value” assume an employee
pool of 3,850 people—the maximum number of people eligible under the Plan—with each employee
granted 60 restricted common shares. The actual number of shares disposed of and actual total
disposal value will be determined according to the number of Rinnai employees (maximum: 3,850)
who commit to the Plan (hereafter, “Eligible Employees”), which will be known once the Corporationwraps up a membership drive targeting employees who qualify but have yet to join the Shareholding
Association and once the Corporation obtains approval from membership. That is to say, as describedin (5) above, the number of shares to be disposed of will be the number of requested shares decided by
the Shareholding Association, and total disposal value will be this number times the disposal price pershare. Rinnai will pay monetary claims of ¥199,680 uniformly to all Eligible Employees and will allot
60 shares uniformly to all Eligible Employees through the Association.

2. Purpose and reason for Disposal
The Board of Directors resolved at its meeting held on February 8, 2023 that Rinnai would
introduce the Plan to encourage employees to take a more vested interest in improving corporate
performance from a shareholder’s perspective and also to provide employees with enhanced
employee benefits.
An overview of the Plan is presented below.
Overview of the Plan
Under the Plan, Rinnai provides Eligible Employees with a special financial incentive in theform of monetary claims used to grant 60 shares per person as restricted stock (hereafter,“Special Financial Incentive”), and Eligible Employees then allocate their Special Financial
Incentive to the Shareholding Association. The Shareholding Association pays Rinnai, using theSpecial Financial Incentive given by each Eligible Employee, and receives common sharesissued or disposed of by Rinnai as restricted stock.
Based on the Plan, the amount to be paid per share of common stock in the event Rinnai
newly issues or disposes of common stock will be determined by the Board of Directors to theextent that the amount is not particularly advantageous to the Shareholding Association—and byextension, Eligible Employees—based on the closing price of Rinnai’s common stock on theTokyo Stock Exchange on the business day immediately preceding the date of resolution by theBoard of Directors pertaining to said issue or disposal (or the closing price on the trading day
immediately prior thereto if no trading is made on that day).
In issuing or disposing of Rinnai common stock based on the Plan, the Corporation and theShareholding Association will sign a restricted stock allotment agreement (hereafter, the“Agreement”), which includes such points as (1) the Shareholding Association being prohibitedfrom transferring, establishing security interest on, or otherwise disposing of the allotted shares
during a certain period (hereafter, “Transfer Restrictions”); and (2) Rinnai acquiring allottedshares without compensation should certain events occur. In addition, provision of the Special
Financial Incentive to Eligible Employees will be conditioned upon the signing of the Agreement
between the Corporation and the Shareholding Association.
Furthermore, in regard to individual members’ equity interest on restricted stock acquiredby the Shareholding Association through issuance or disposal (hereafter, “Restricted Stock2

Equity Interest” or “RS Equity Interest”), Eligible Employees will not be allowed to withdraw
restricted stock corresponding to Restricted Stock Equity Interest until Transfer Restrictions
associated with such restricted stock are lifted, in accordance with Shareholding Association
Rules, Shareholding Association Detailed Operation Rules and other rules pertaining to theShareholding Association (hereafter, collectively, “Rules”).
In the Disposal of Treasury Stock, common shares of Rinnai stock will be disposed of to
the Shareholding Association, with the Shareholding Association, as the planned allottee, using
all of the Special Financial Incentives received from Eligible Employees as contributed assets,based on the Plan, for payment (hereafter, “Allotted Shares” as the allotted shares in the Plan). In
the Disposal of Treasury Stock, the outline of the Agreement signed by Rinnai and theShareholding Association is as described in 3. Outline of Allotment Agreement below. The
number of shares disposed of in the Disposal of Treasury Stock will be determined at a later date,as described in Note of 1. Outline of Disposal above, but Rinnai expects potential disposal of
231,000 shares if all 3,850 employees of Rinnai—the maximum number that could be eligible
for the Plan—join the Shareholding Association and if they all commit to the Plan. The scale ofdilution due to the Disposal of Treasury Stock is, assuming the aforementioned number of sharesdisposed of, 0.16% (rounded to two decimal places, hereafter, the same in percentage
calculations) on the total number of outstanding shares, at 146,677,171 as of March 31, 2024,
and 0.16% on the total number of voting rights, at 1,431,254 as of March 31, 2024.

Note that implementation of the Disposal of Treasury Stock will be conditioned upon theRules being valid on the day preceding the date for disposal pertaining to the Disposal ofTreasury Stock.
3. Outline of Allotment Agreement(1) Transfer restriction period: From October 16, 2024 to May 31, 2027
(2) Condition for lifting Transfer Restrictions
Transfer Restrictions will be lifted as of the expiration of the transfer restriction period for all
Allotted Shares in a number corresponding to the Restricted Stock Equity Interest held by anEligible Employee, conditioned upon the Eligible Employee being a member of the Shareholding
Association on a continuous basis during the transfer restriction period.
(3) Treatment upon withdrawal from Shareholding Association
In the event an Eligible Employee withdraws from the Shareholding Association, as aconsequence of retirement from a position serving the Corporation that qualifies the employee
for membership in the Shareholding Association (refers to situations where the employee loses
membership qualification or applies to terminate membership, and includes end of membershipdue to death; hereafter, the same) during the transfer restriction period because the employee hasreached retirement age or is promoted to the position of director, member of Audit &Supervisory Board or executive officer, or for any other justifiable reason (does not include
voluntary retirement), Rinnai will lift Transfer Restrictions on all Allotted Shares in a number3

corresponding to the Restricted Stock Equity Interest held by the Eligible Employee as of thedate that the application for withdrawal is received by the Shareholding Association.
(4) Treatment if employee becomes non-resident
In the event an internal decision, including overseas assignment, causes an Eligible Employee tobe deemed a non-resident (Income Tax Act (No.33 of 1965 and including later revisions) during
the transfer restriction period, Rinnai will lift Transfer Restrictions on all Allotted Shares in a
number corresponding to the Restricted Stock Equity Interest held by the Eligible Employee asof the date that the overseas assignment was decided on.
(5) Acquisition without compensation by the Corporation
Naturally, Rinnai will acquire without compensation any Allotted Shares for which Transfer
Restrictions have not been lifted at the time the transfer restriction period expires or at the time
Transfer Restrictions described in (3) and (4) above are lifted.
(6) Administration of shares
During the transfer restriction period, Allotted Shares will be maintained in a dedicated accountopened at Nomura Securities Co., Ltd., by the Shareholding Association to prevent it fromtransferring, establishing security interest on, or otherwise disposing of Allotted Shares during
the transfer restriction period. In addition, the Shareholding Association will, in accordance with
provisions such as the Rules, register and administer ordinary equity interest held by Eligible
Employees separately from Restricted Stock Equity Interest.
(7) Treatment in the event of organizational restructuring
In situations when, during the transfer restriction period, a merger agreement that leads to thedisappearance of Rinnai as a corporate entity, a share exchange agreement or share transfer planthat turns Rinnai into a wholly owned subsidiary, or other matters related to organizational
restructuring is approved at a general meeting of shareholders of the Corporation (however,when organizational restructuring does not require approval at a general meeting of shareholders,then, by the Board of Directors), Transfer Restrictions will be lifted by resolution of theCorporation’s Board of Directors on the day immediately before the business day prior to theeffective date of said organizational restructuring for all Allotted Shares corresponding to theRestricted Stock Equity Interest held by Eligible Employees among Allotted Shares held by theShareholding Association on the date of said approval.
4. Basis for calculating disposal price and other specific details
The Disposal of Treasury Stock to the planned allottee, the Shareholding Association, will becarried out by having Eligible Employees give to the Shareholding Association as contributed
assets the Special Financial Incentive they receive from Rinnai to be used for granting Restricted
Stock. Thinking that the most recent price of Rinnai’s common shares should accurately reflect
the Corporation’s stock price, Rinnai will set the disposal price at ¥3,328, the closing price of theCorporation’s common stock on the Prime Market of the Tokyo Stock Exchange on August 6,
2024 (the business day prior to the day of the Board of Directors’ resolution). This is the market
price on the day immediately preceding the day of the Board of Directors’ resolution and is thus
considered to be a reasonable price and one that is not particularly advantageous to theShareholding Association or its members.
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The deviation rate (rounded to two decimal places) of this price from the average closing
price of Rinnai stock on the Tokyo Stock Exchange Prime Market is as follows:Term
One month (July 8, 2024 –August 6, 2024
Three months (May 7, 2024 –August 6, 2024)
Six months (February 7, 2024
– August 6, 2024)

Average closing price(rounded down if less thanone yen)
¥3,623

Deviation rate

¥3,687△9.74%¥3,565△6.65%△8.14%All four members of the Audit & Supervisory Board (including two outside members) whoattended the Board of Directors’ meeting today expressed their opinion that the aforementioned
disposal price is not particularly advantageous to the planned allottee, and that such decision islegitimate, given that the purpose of the Disposal of Treasury Stock is implemented based on thePlan and that the disposal price is the closing price of the Corporation’s common stock on thePrime Market of the Tokyo Stock Exchange on the day before the day of the Board of Directors’resolution.
5. Matters related to procedures based on corporate code of conduct
The Disposal of Treasury Stock does not require Rinnai to obtain the opinion of an independent
third party or to confirm the intention of shareholders as set forth in Rule 432 of the Securities
Listing Regulations established by the Tokyo Stock Exchange because (1) the dilution rate isbelow 25% and (2) there is no change in the controlling shareholder.
(Reference)
Structure of the Plan
(1) Rinnai provides monetary claims to Eligible Employees who commit to the Plan as aSpecial Financial Incentive ultimately used for granting restricted stock.
(2) Eligible Employees who commit to the Plan give the monetary claims noted in (1) above tothe Shareholding Association.
(3) The Shareholding Association collects monetary claims given as per (2) above, and pays
the Corporation.
(4) Rinnai allots Allotted Shares to the Shareholding Association.
(5) Allotted Shares are held in the Shareholding Association’s RS Equity Interest account at
Nomura Securities and cannot be withdrawn during the transfer restriction period.
(6) Once transfer restrictions have been lifted, steps are taken to transfer RS Equity Interest
into ordinary equity interest or securities accounts in the name of each Eligible Employee.

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END6