June 27, 2024
(Translated from the Japanese original)
Listed Company Name:

Rinnai Corporation

Representative:

Hiroyasu Naito, President

Stock Code:5947

Contact:

Takuya Ogawa, Managing Executive Officer,
Chief of Corporate Management
Headquarters

Phone:+81 (52) 361-8211(in Japan, 052-361-8211)

Notice of Disposal of Treasury Shares as Restricted Stock Compensation
At its meeting held today, the Board of Directors of Rinnai Corporation (the “Corporation”) adopted a resolution for thedisposal of treasury shares (the “Disposal of Treasury Shares ” or “Disposal”). Details are given below.
１． Outline of Disposal(1)

Disposal date

(2)

Class and number ofshares to be disposed

(3)
(4)
(5)

Disposal value
Total value of shares tobe disposed.

July 26, 2024
Common shares of the Corporation: 19,604 shares¥3,697 per share¥72,475,988

Planned allottees ofshares, number ofplanned allottees, andnumber of shares to be

Director of the Corporation: 3* (7,653 shares)
Executive officers who do not concurrently serve as director: 8 (11,951 shares)

allotted(6)OtherFor the Disposal of Treasury Shares, we have filed the Securities Registration
Statement under the Financial Instruments and Exchange Law.

* In light of the purpose of performance-linked compensation and its functional effectiveness as an incentive,neither outside directors nor individual directors holding a number of shares exceeding a specified number
are eligible to receive restricted stocks.
2． Purpose of and Reasons for Disposal
At its meeting held on May 12, 2021, the Board of Directors of the Corporation resolved to newly introduce a restricted
stock compensation plan (the “Plan”) for directors other than outside directors (“Eligible Directors”) and executive officers
who do not concurrently serve as director (together with Eligible Directors, “Eligible Directors, etc.”) to provide an
incentive to continuously improve the Corporation’s corporate value and to promote value-sharing with shareholders. Inaddition, at the Corporation’s 71st Ordinary General Shareholders’ Meeting held on June 29, 2021, approval was given to(i) provide monetary compensation (“restricted stock compensation”) of no more than ¥120 million per annum to be used1

to contribute towards the acquisition of restricted stocks and issuance or disposal of the Corporation’s common shares
numbering no more than 20,000 shares per annum (60,000 shares after adjustment due to the 3-for-1 split of theCorporation’s common shares conducted on April 1, 2023) for Eligible Directors under the Plan, and (ii) set a transfer
restriction period for restricted stocks as the period from the day when the Corporation’s common shares are allotted undera restricted stock allotment agreement to be concluded with each of the Eligible Directors to the time immediately after theEligible Director retires his/her position at the Corporation or its subsidiaries determined at a Board of Directors’ meeting.
The outline of the Plan is as follows:[Outline of the Plan]
Eligible Directors, etc. shall make an in-kind contribution of all monetary receivables provided under the Plan, and in turn,
receive common shares that will be issued or disposed of by the Corporation. The amount to be paid in per share shall bedecided by the Board of Directors based on the closing price of the Corporation’s common shares on the Tokyo Stock
Exchange on the business day immediately preceding the day of each resolution by the Board of Directors (or the closing
price on the transaction day immediately prior thereto if no transaction is made on such business day), to the extent that it
will not be especially advantageous for Eligible Directors, etc. subscribing to the common shares.
The issuance or disposal of the Corporation’s common shares under the Plan shall be subject to the conclusionof a restricted stock allotment agreement between the Corporation and each of the Eligible Directors, etc. Under theagreement, (i) Eligible Directors etc. shall not transfer the common shares allotted under the agreement to any third party,
create a security interest on or conduct other dispositions of the shares for a certain period of time, and (ii) gratis acquisitionof the shares by the Corporation shall be conducted if any of these events occurs.
We have decided to provide monetary receivables of ¥72,475,988 in total (the “Monetary Receivables”) and19,604 common shares on this occasion, taking into consideration the purpose of the Plan, the Corporation’s businessconditions, the extent of the duties of each of the Eligible Directors, etc., and other various factors, for the purpose ofproviding additional motivation to Eligible Directors, etc.
For the Disposal of Treasury Shares, 11 Eligible Directors, etc., who are planned allottees, are to make an inkind contribution of all Monetary Receivables to be provided and receive common shares of the Corporation to be disposed(the “Allotted Shares”) under the Plan. A summary of the allotment agreement to be concluded between the Corporationand each of the Eligible Directors, etc. (the “Allotment Agreement”) for the Disposal of Treasury Shares is given in 3.
below.
3. Summary of Allotment Agreement(1) Transfer restriction period
The period from July 26, 2024 (the “Disposal date”), to the time immediately after the Eligible Director, etc. retires
his/her position as director, executive, executive officer who does not concurrently serve as director, Audit &Supervisory Board member, employee, advisor or senior advisor, or other equivalent position at the Corporation or its
subsidiaries.
(2) Conditions to release transfer restrictions
Transfer restrictions for all the Allotted Shares will be lifted at the expiration of the restriction period, under thecondition that the Eligible Director, etc. continues to be in the position as director, executive, executive officer who
does not concurrently serve as director, Audit & Supervisory Board member, employee, advisor or senior advisor, orother equivalent position at the Corporation or its subsidiaries from the date of assuming his/her position to the time
immediately before the conclusion of the first General Shareholders’ Meeting after that date (or from the beginning of
the fiscal year including the Disposal date to the end of that fiscal year for an executive officer who does notconcurrently serve as director of the Corporation) (the “Service Period”).

2

(3) Procedures for retirement of Eligible Directors, etc. during the restriction period for any legitimate reason(i) Timing of release of transfer restrictions
When an individual Eligible Director, etc. retires all of his/her positions as director, executive, executive officer who
does not concurrently serve as director, Audit & Supervisory Board member, employee, advisor or senior advisor, orother equivalent position at the Corporation or its subsidiaries for any legitimate reason, transfer restrictions shall belifted immediately after the retirement.
(ii) Number of shares on which transfer restrictions are lifted
The number of shares on which transfer restrictions are lifted shall be the number of the Allotted Shares held at thetime of the retirement provided in (i) above multiplied by the number of months from the month including theDisposal date (or the month including the beginning of the fiscal year the Disposal date belongs to for executive
officers who do not concurrently serve as director) to the month including the retirement date divided by the numberof months of the Service Period (12) (or one if the number exceeds one). (Any resulting fraction less than one share
shall be rounded off.)(4) Gratis acquisition by the Corporation
The Corporation shall acquire without cost the Allotted Shares whose transfer is still restricted at the time of theexpiration of the restriction period or the time when the restriction is lifted as provided in (3) above.
(5) Management of shares
The Allotted Shares shall be managed in a dedicated account opened by each of the Eligible Directors, etc. withNomura Securities Co., Ltd, in order to prevent the transfer, the creation of a security interest on or other dispositionsof the Allotted Shares during the restriction period. The Corporation has concluded a contract related to themanagement of the accounts for the Allotted Shares held by Eligible Directors, etc. with Nomura Securities Co., Ltd.
to secure the effectiveness of the transfer restriction of the Allotted Shares. Eligible Directors, etc. shall consent to thedetails of the management of their accounts.
(6) Procedures for reorganization
If a merger agreement (the Corporation becomes an absorbed company), a share exchange contract or a share transferplan (the Corporation becomes a wholly-owned subsidiary), or any other restructure is approved at the Corporation’s
Shareholders’ Meeting (or at the Corporation’s Board of Directors’ meeting when the restructure does not have to beapproved at the Shareholders’ Meeting) during the restriction period, the Corporation will release the transfer
restriction of the shares, whose number is determined as the number of the Allotted Shares held then multiplied by thenumber of months from the month including the Disposal date (or the month including the beginning of the fiscal
year the Disposal date belongs to for executive officers who do not concurrently serve as director) to the monthincluding the approval date divided by the number of months of the Service Period (12) (or one if the number exceeds
one, any resulting fraction less than one share being rounded off), immediately before the business day prior to theeffective date of the restructure by the resolution of the Corporation’s Board of Directors. In case of the above, theCorporation shall acquire without cost all the Allotted Shares whose transfer is still restricted immediately after thetime of the lifting of the transfer restriction.
4. Calculation Basis and Details of Paid-in AmountThe Disposal of Treasury shares to planned allottees is to be conducted by contribution of monetary receivables provided asrestricted stock compensation for the Corporation’s 75th business year under the Plan. The disposal value is determined at¥3,697 based on the closing price of the Corporation’s common shares on the Prime Market of the Tokyo Stock Exchange
on June 26, 2024(the business day immediately preceding the day of the resolution by the Board of Directors) to eliminate
arbitrariness. The amount is the market price of the shares immediately before the resolution by the Board of Directors,
such that it is considered reasonable and not especially advantageous.
END3