June 5, 2024
To Our Shareholders and Investors
Company name: Zeon Corporation
Representative: Kimiaki Tanaka, Chairman(Securities code: 4205; TSE Prime)
Company’s Opinion Regarding Proxy Advisor ISS’s Recommendation “Against”
Item 2 to Be Proposed at the 99th Annual General Meeting of Shareholders
The following is an explanation of the Company’s opinion regarding a report issued byproxy advisory firm Institutional Shareholder Services Inc. (“ISS”) recommending a vote
“Against” candidates for director Kimiaki Tanaka and Tetsuya Toyoshima as per Proposal
No. 2 to be proposed at the 99th Annual General Meeting of Shareholders, scheduled tobe held on June 27, 2024.
We ask that shareholders and investors confirm the content of this explanation andunderstand the Company’s proposal.
(1) Details of ISS’s recommendation
ISS has set a criterion to the effect of recommending votes “Against” nominees fordirector, a top executive, when the amount of cross-shareholdings held by a company is
20% or more of the company’s consolidated net assets.
With regard to shares held by the Company as cross-shareholdings, as shown on page
15 of the convocation notice, the Company has been reducing its cross-shareholdings
and reduced the percentage from 23.7% as of the end of fiscal 2022 to 19.0% as of theend of fiscal 2023.
Notice of the 99th Annual General Meeting of Shareholders
https://www.zeon.co.jp/en/ir/stock/meeting/pdf/240530.pdf
Nevertheless, ISS is recommending a vote “Against” the proposed nominees for
director, a top executive, on the basis of the ratio as of the end of fiscal 2022.
(2) Company’s opinion
According to the 2024 edition of ISS’s Proxy Voting Guidelines and Benchmark Policy
Recommendations for Japan, the determination of the status of holdings in crossshareholdings is in principle made using the information on cross-shareholdings
included in the Company’s annual securities report (yukashoken hokokusho). We
therefore surmise that ISS’s recommendation was made based on the report for fiscal
2022, submitted in June 2023. Under these guidelines, the specific criterion for a
recommendation “Against” is whether the total balance sheet amount of investment
security shares held for purposes other than pure investment and other shareholdings
deemed to be cross-shareholdings is equivalent to 20% or more of consolidated net
assets. However, as shown in the table below, the Company is not in violation of thiscriterion as of the end of fiscal 2023.

Status of cross-shareholdings
FY2022
Total value
No. ofshown onissuersbalance sheet(issuers)(million yen)
31
635

FY2023
Total value
No. ofshown onissuersbalance sheet(issuers)(million yen)30534

Non-listed shares
Shares other than non-listed
48
79,66049
68,605
sharesTotal
7980,295
79
69,139Consolidated net assets—
339,308—
363,729
Cross-shareholdings as apercentage of consolidated—
23.7%
—
19.0%
net assets
Note: There are no other items deemed to be shareholdings in fiscal 2022 or fiscal 2023.
The reduction in the number of issuers of “non-listed shares” and the increase in
the number of issuers of “shares other than non-listed shares” were the result of
the listing of Aidemy Inc. No new holdings were acquired as cross-shareholdings
during fiscal 2023.
One of the Companywide strategies included in the “STAGE30 Phase 2” Mid-Term
Management Plan being implemented from fiscal 2023 is “Refining the ManagementBase,” with a financial strategy target for fiscal 2026 of “a ratio of cross-shareholdings toconsolidated net assets of less than 15%.” We are reducing cross-shareholdings to meetthat target.
The total value of cross-shareholdings sold during fiscal 2023 was 33,511 million yen.
As a result, as noted above, cross-shareholdings as a percentage of consolidated net assets
stood at 19.0% as of the end of March 2024. We plan to continue to reduce this amountfurther, with the aforementioned target for fiscal 2026 as a minimum target.
On the basis of the fact that we have reduced the outstanding amount of crossshareholdings to 19.0% of consolidated net assets as of the end of fiscal 2023, and that
we have clearly stated our intention to continue this reduction, we ask that shareholders
and investors have a correct understanding of the proposal before you exercise yourvoting rights.
End of document