Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

Securities Code: 6358
June 7, 2022
To our shareholders:
Ichiro Sakai
President and Representing Director

SAKAI HEAVY INDUSTRIES, LTD.
1-4-8 Shibadaimon, Minato-ku, Tokyo

Notice of the 74th Annual General Meeting of Shareholders
We are pleased to announce the 74th Annual General Meeting of Shareholders of SAKAI HEAVY
INDUSTRIES, LTD. (the “Company”), which will be held as indicated below.
In lieu of attending the meeting in person, you may exercise your voting rights in writing (by postal mail) or
via the Internet. Please review the attached Reference Documents for General Meeting of Shareholders, andindicate your approval or disapproval of the proposals in the enclosed voting form, and exercise your voting
rights no later than 5:45 p.m. on Tuesday, June 28, 2022 (JST).
1. Date and Time:

Wednesday, June 29, 2022 at 10:00 a.m. (JST)

2. Venue:

Shiba Park Hotel, 2F, Rose
1-5-10 Shiba Koen, Minato-ku, Tokyo

3. Purposes:
Items to be reported:
1. The Business Report and the Consolidated Financial Statements for the 74th fiscal year (from
April 1, 2021 to March 31, 2022), and the results of audits of the Consolidated Financial
Statements by the Financial Auditor and the Audit and Supervisory Committee
2. The Non-consolidated Financial Statements for the 74th fiscal year (from April 1, 2021 toMarch 31, 2022)
Items to be resolved:
Proposal No. 1 Appropriation of Surplus
Proposal No. 2 Partial Amendments to the Articles of Incorporation
Proposal No. 3 Election of Two Directors (Excluding Directors Who Are Audit and Supervisory
Committee Members)
Proposal No. 4 Election of One Director Who Is Audit and Supervisory Committee Member
Proposal No. 5 Renewal of Policy Regarding Large-quantity Purchases of the Company’s
Shares (Anti-takeover Measures)
4. Instructions for Exercising Voting Rights
Please refer to the “Instructions for Exercising Voting Rights” on page 3.

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5. Matters Disclosed on the Internet
In accordance with laws and regulations and Article 15 of the Company’s Articles of Incorporation, theCompany has posted on the Company’s website, the following items, which are part of the documents
attached to this Notice and the Reference Documents for the General Meeting of Shareholders, andtherefore, those items are not included in the documents attached to this Notice and the Reference
Documents for the General Meeting of Shareholders.
(1) “Resolutions regarding the System to Ensure the Appropriateness of Business Operations,” “Basic
Policy and Progress of System Development for Eliminating Antisocial Forces,” “Overview ofOperation Status to Ensure the Appropriateness of Business Operations,” and “Basic Policy forControl of Stock Company” in the Business Report(2) “Notes to Consolidated Financial Statements” in the Consolidated Financial Statements(3) “Notes to Non-consolidated Financial Statements” in the Non-consolidated Financial Statements
Therefore, the documents attached to this Notice make up a part of the Consolidated Financial Statements
and Non-consolidated Financial Statements audited by the Financial Auditor in preparing its Financial
Auditor’s Reports, and a part of the Business Report, Consolidated Financial Statements and Nonconsolidated Financial Statements audited by the Audit and Supervisory Committee in preparing its Audit
Report.
If you attend the meeting in person, please submit the enclosed voting form at the reception desk.
Any changes to the Reference Documents for the General Meeting of Shareholders, Business Report, Non-consolidated
Financial Statements and Consolidated Financial Statements will be posted on the Company’s website on the Internet.

Company’s website (https://www.sakainet.co.jp/)-2-

Instructions for Exercising Voting Rights
The exercise of voting rights in the General Meeting of Shareholders is the important right of allshareholders.
Please exercise your voting rights after reviewing the Reference Documents for the General Meeting of
Shareholders.
There are three ways to exercise your voting rights as described below.
Attending the General Meeting of Shareholders
Please submit the enclosed voting form at the reception desk.
Date and time: Wednesday, June 29, 2022, at 10:00 a.m. (JST)Exercising Voting Rights in Writing (by Postal Mail)
Please indicate your approval or disapproval of each proposal on the enclosed voting form, and post it
without affixing postage stamps.
Exercise due date: to be received by 5:45 p.m. on Tuesday, June 28, 2022 (JST)Exercising Voting Rights via the Internet
Please indicate your approval or disapproval of each proposal in accordance with the instructions on thefollowing page.
Exercise due date: to be given by 5:45 p.m. on Tuesday, June 28, 2022 (JST)Instructions for Filling Out the Voting Form
Proposals No. 1, No. 2, No. 4 and No. 5
 If you approve, put a circle in the box marked 賛.
 If you disapprove, put a circle in the box marked 否.
Proposal No. 3
 If you approve all candidates, put a circle in the box marked 賛.
 If you disapprove all candidates, put a circle in the box marked 否.
 If you disapprove of some candidates, put a circle in the box marked 賛 and write the candidates’
number of whom you disapprove.
If you exercise your voting rights both in writing (by postal mail) and via the Internet, we will only accept
the exercise of your voting rights via the Internet as effective. If you exercise your voting rights more thanonce via the Internet, only the last vote shall be deemed effective.

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Instructions for Exercising Voting Rights via the Internet, Etc.
How to scan the QR CodeYou can log in to the voting rights exercising website without entering the login ID and temporary
password indicated on the voting form.
1. Scan the QR Code indicated on the voting form.
Note: “QR Code” is a registered trademark of DENSO WAVE INCORPORATED.
2. Indicate your approval or disapproval by following the on-screen instructions.
It is only possible to log in with the QR Code one time.
If you wish to re-exercise your voting rights, or if you wish to exercise your voting rights without using the QR Code,please refer to “How to enter your login ID and temporary password” below.

How to enter your login ID and temporary password
Voting rights exercising website (https://evote.tr.mufg.jp/)
1. Access the voting rights exercising website.
2. Enter the “login ID and temporary password” indicated on the voting form and click “Login.”
3. Register a new password.
4. Indicate your approval or disapproval by following the on-screen instructions.

If you have any difficulties about the use of apersonal computer, smartphone or mobile phone
for exercising your voting rights via the Internet,
please contact:

Securities Agency Division (Help Desk), Mitsubishi UFJ Trust andBanking Corporation

Phone: 0120-173-027(toll-free and available from 9:00 a.m. to 9:00 p.m., only in Japan)-4-Reference Documents for the General Meeting of Shareholders
Proposal No. 1 Appropriation of Surplus
The Company proposes the appropriation of surplus as follows:
Year-end dividends
The Company works to secure a stable management base over the long term, and also places importance on
the continuation of stable dividends, and makes it a basic policy to distribute results that are supported bybusiness performance and a sound financial structure.
The Company has given comprehensive consideration to matters including the business performance of the
fiscal year, and it proposes to pay year-end dividends for the fiscal year as follows:(1) Type of dividend property
To be paid in cash.
(2) Allotment of dividend property and their aggregate amount
105 yen per common share of the Company
Total dividends: 442,069,740 yen
Accordingly, the annual dividend for the fiscal year, including the interim dividend, will be 165
yen per share.
(3) Effective date of dividends of surplus

June 30, 2022

Reference
Dividend trends(Yen)Interim dividend

Year-end dividend

200

165

160
120

100

100

80

50

50

50

50

71st term

72nd term

40
0

80

105

50
30
73rd term-5-

60
74th term（planned）

Proposal No. 2 Partial Amendments to the Articles of Incorporation
1. Reasons for Proposal
As the revised stipulations stipulated in the proviso of Article 1 of the supplementary provisions of the “ActPartially Amending the Companies Act” (Act No. 70 of 2019) will be enforced on September 1, 2022 tointroduce the system for electronic provision of materials for general meetings of shareholders, the Company
proposes the following amendments to the Articles of Incorporation.
(1) Article 15 (Measures for electronic provision, etc.), Paragraph 1 of the proposed amendments shall be
newly established, as the Company will be required to stipulate in its Articles of Incorporation that it willtake measures for electronic provision of information that is the content of reference documents for thegeneral meeting of shareholders, etc.
(2) Article 15 (Measures for electronic provision, etc.), Paragraph 2 of the proposed amendments shall be
newly established to allow the Company to limit the scope of matters to be recorded in physicaldocuments that are provided to shareholders who request provision of physical documents, among thematters for which measures for electronic provision of information that is the content of reference
documents for the general meeting of shareholders, etc. is taken, to the scope specified by the Ordinanceof the Ministry of Justice.
(3) Once the system for electronic provision of materials for general meetings of shareholders is introduced,
the provision of Article 15 of the current Articles of Incorporation (Internet disclosure and deemed
provision of reference documents for general meetings of shareholders) will no longer be necessary.
Accordingly, these shall be deleted.
(4) Supplementary provisions regarding the effect of the provisions to be newly established and deleted
above shall be established. These supplementary provisions shall be deleted after certain date.
2. Contents of the amendments
The contents of the amendments are as follows.
(Underlines indicate amended sections.)
Current Articles of Incorporation

Proposed amendments(Internet disclosure and deemed provision ofreference documents for general meetings ofshareholders)
In the convocation of general meetings of shareholders,the Company may deem that it has provided toshareholders information concerning matters that must be
stated or displayed in the reference documents for general
meetings of shareholders, business report, nonconsolidated financial statements, and consolidated
financial statements via internet disclosure in conformity
with definitions provided in the Ordinance of the Ministryof Justice.

(Deleted)(Newly established)

Article 15 (Measures for electronic provision, etc.)
1. In the convocation of general meetings of shareholders,the Company shall take measures for electronic
provision of information that is the content of reference
documents for the general meeting of shareholders, etc.

Article 15

2. Of the matters to which measures for electronic
provision measures apply, the Company shall not be
required to state all or part of matters stipulated in the
Ordinance of the Ministry of Justice in the physicaldocuments provided to shareholders who maderequests for provision of physical documents by therecord date for voting rights.

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Current Articles of Incorporation(Newly established)

Proposed amendments(Supplementary provisions)
Article 2(Transitional measures on electronic provisionof materials for general meetings ofshareholders)
1. The deletion of Article 15 (Internet disclosure anddeemed provision of reference documents for general
meetings of shareholders) of the Articles ofIncorporation and new establishment of Article 15(Measures for electronic provision, etc.) of the Articles
of Incorporation shall take effect from September 1,
2022.
2. Notwithstanding the provisions of the previous
paragraph, Article 15 (Internet disclosure and deemed
provision of reference documents for general meetingsof shareholders) shall remain valid for general meetingsof shareholders held on a day that is within six months
from September 1, 2022.
3. This Article shall be deleted on the day after which six
months have elapsed from September 1, 2022 or the
day after which three months have elapsed since theday of the general meeting of shareholders in theprevious paragraph, whichever is later.

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Proposal No. 3 Election of Two Directors (Excluding Directors Who Are Audit andSupervisory Committee Members)
The terms of office of two Directors, excluding Directors who are Audit and Supervisory Committee
Members, will expire at the conclusion of this meeting. Therefore, the Company proposes the election of two
Directors, excluding Directors who are Audit and Supervisory Committee Members.
Candidates for the role of Director (excluding Director who is an Audit and Supervisory Committee Member)are as follows:
Candidate No.

1

Date of birth
December 4, 1961

Ichiro Sakai

Reelection

Career summary, and position and responsibility in the Company (Significant concurrent
positions outside the Company)
July 1990
Joined the Company
June 1991

Director and Deputy General Manager of Corporate Planning Office

July 1993

Managing Director and General Manager of Business Promotion Office

Mar. 1995
Number of theApr. 1995
Company’s shares
owned: 133,464 shares Jan. 2000
Tenure:30 years Dec. 2008
June 2019

President and Representing Director (current position)
Director and Chairman of SAKAI AMERICA, INC.
Director and Chairman of SAKAI AMERICA MANUFACTURING, INC.
Director and Chairman of SAKAI AMERICA, INC.
Outside Director of PRONEXUS INC. (current position)

Attendance atBoard of Directors
Reasons for nomination as candidate for Director
meetings:
18/18 Ichiro Sakai assumed the office as Director in June 1991, and has served as President andRepresenting Director of the Company since March 1995, and has abundant experience andadvanced knowledge as a manager. The Company has nominated him as a candidate for Director
because he is considered to be suitable for the medium-term development of the Group and thestrengthening of corporate governance.

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Candidate No.

2

Kenichi Mizuuchi

Date of birth
February 23, 1955

New election

Career summary, and position and responsibility in the Company (Significant concurrent
positions outside the Company)
Aug. 1982
Joined the Company
Apr. 1995

Head of Shikoku Sales Office, Domestic Sales Department, Sales Division

Apr. 2006

General Manager of Extensive Sales Department, Domestic Business Division

Apr. 2014

General Manager of Domestic Business Division and General Manager ofDomestic Sales Department

Number of theCompany’s shares
owned: 13,100 shares June 2014
Tenure:– years

June 2016
Attendance atBoard of Directors
July 2017
meetings:–/–

Director, General Manager of Domestic Business Division, General Manager ofDomestic Sales Department
Director, General Manager of Domestic Business Division and General Manager
of Domestic Sales Department
Managing Director, General Manager of Domestic Business Division and General
Manager of Domestic Sales Department

June 2019

Managing Executive Officer, General Manager of Domestic Business Division andGeneral Manager of Domestic Sales Department

Apr. 2020

Senior Managing Executive Officer, General Manager of Domestic Business
Division and General Manager of Domestic Sales Department

Apr. 2022

Senior Managing Executive Officer and General Manager of Domestic
Business Division (current position)

Reasons for nomination as candidate for Director
Kenichi Mizuuchi assumed the Office as Director in June 2014, and has been engaged in the sales
activities of the Company’s products in the domestic market as General Manager of Domestic
Business Division. The Company has nominated him as a candidate for Director because he hasabundant sales and marketing experience in road machinery and is considered to be suitable fordeveloping the Company’s global niche strategy.
Notes: 1.
2.

There is no special interest between each of the candidates and the Company.
The Company has entered into a directors and officers liability insurance policy with an insurance company as
stipulated in Article 430-3, paragraph (1) of the Companies Act of Japan, and the policy covers damages andlitigation expenses incurred by the insured, including the Company’s Directors. (However, there are certain
exemptions, such as damages not being covered for acts committed by the insured with the knowledge that they
were in violation of laws and regulations). In the event that each candidate is elected and assumes the office as a
Director, they will be the insured under the policy. In addition, the Company plans to renew the policy with thesame terms at the next renewal.

-9-Proposal No. 4 Election of One Director Who Is Audit and Supervisory Committee
MemberTo strengthen the audit system, the Company proposes to increase the number of Director who is an Audit
and Supervisory Committee Member by one, and proposes to elect one Director who is an Audit andSupervisory Committee Member.
In addition, the consent of the Audit and Supervisory Committee has been obtained for this proposal.
Candidate for the role of Director who is an Audit and Supervisory Committee Member is as follows:
Date of birth
November 19, 1971

Kaori Sato

New election

Career summary, and position and responsibility in the Company (Significant concurrent
positions outside the Company)
Jan. 1993
Joined SATO Co., ltd.
Jan. 2007

Senior Managing Director of SATO Co., ltd.

Nov. 2012

Representative Director of SATO Co., ltd. (current position)

Reasons for nomination as candidate for outside Director and outline of expected roles
Number of the
Kaori Sato is a female manager who has served as Representative Director of SATO Co., ltd. sinceCompany’s shares
owned:– shares November 2012 and has extensive experience in management of construction equipment rental andoverseas business. She also has extensive insight on the Company’s road machinery business, andTenure:– years the Company believes she is suitable to serve as an outside Director Who is an Audit and Supervisory
Committee Member.
Attendance atBoard of Directors
meetings:–/–
Attendance at
Audit and Supervisory
Committee
meetings:–/–
Notes: 1.
2.
3.

4.

5.

There is no special interest between the candidate and the Company.
Kaori Sato is a candidate for outside Director of the Company.
Pursuant to Article 427, paragraph (1) of the Companies Act of Japan, if the election of Kaori Sato is approved,
the Company will enter into an agreement with her to limit her liability for damages under Article 423, paragraph(1) of the same Act. The maximum amount of liability for damages based on such agreement shall be the minimum
liability amount stipulated in Article 425, paragraph (1) of the same Act.
The Company has entered into a directors and officers liability insurance policy with an insurance company as
stipulated in Article 430-3, paragraph (1) of the Companies Act of Japan, and the policy covers damages andlitigation expenses incurred by the insured, including the Company’s Directors. (However, there are certain
exemptions, such as damages not being covered for acts committed by the insured with the knowledge that they
were in violation of laws and regulations). In the event that the candidate assumes the office as a Director, she willbe the insured under the policy.
The transactions between SATO Co., ltd., for which Kaori Sato currently serves as Representative Director, andthe Company are minimal, accounting for less than 0.1% of the Company’s consolidated net sales for the fiscal
year under review. Therefore, there is no business relationship that should be noted as having an impact on theperformance of her duties as an outside Director.

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Proposal No. 5 Renewal of policy regarding large-quantity purchases of theCompany’s shares (anti-takeover measures)
After the conclusion of the first Board of Directors Meeting to take place after this General Meeting, the term
for the policy regarding large-quantity purchases of the Company’s shares will expire. Therefore, in order toensure and improve the Company’s corporate value and the common interest of shareholders, we propose to
the shareholders renewal of anti-takeover measures for three years. The details of the contents of the proposal
are as follows.
(About views regarding the Company’s anti-takeover measures)
The Company has a history of over 100 years as a specialized manufacturer of road construction machinery,a niche field even within the construction machinery industry. The Company intends to grow further throughthe global market by specializing and continuing to improve in this road construction machinery business.
The business is an accumulation of know-how supported by extensive experience in the manufacture andsales of road construction machinery, starting with rollers. Although the construction machinery business isthe type of business that rides on boom and bust cycles due to fluctuation in public investment, a highly
specialized global niche business such as the Company’s has the opposite of short-sighted management
positions, which largely change technological development investments and development plans due to shortterm achievements.
Furthermore, from a legal aspect, under current Japanese laws, even in the event of a large-quantity purchaseof shares that violates the Company’s corporate value and the common interest of shareholders, the fact isthere is danger of not having enough time to consider the contents and obtain reasonable time and informationin order to suggest an alternative.
The Company, taking into consideration the aforementioned points, has passed a resolution at the Board of
Directors Meeting aimed at continuing the anti-takeover measures for another three years, as described below.
By presenting the proposal at the Company’s 74th Annual General Meeting of Shareholders planned to beheld on June 29, 2022, the plan is to receive approval from the shareholders.
Needless to say, the Company plans to strengthen the corporate governance system and plans to strengthen
highly objective supervisory functions by reorganizing the Board of Directors, and would like yourunderstanding regarding the renewal of these anti-takeover measures.
(Please see “Changes to the fundamental concept regarding corporate governance and the introduction of the
Executive Officer System” published on April 17, 2019)(About renewal of anti-takeover measures)
The Company, at the Board of Directors Meeting held on May 15, 2013, together with determining basic
policy regarding persons who control the Company’s decisions on financial matters and business policies,(Prescribed in Article 118, Item 3 of the Regulations for Enforcement of the Companies Act; the “Basic
Policy”) as framework to prevent decisions on the Company’s financial matters and business policies to becontrolled by persons not appropriate according to the Basic Policy (Article 118, Item 3, b (2) of theRegulations for Enforcement of the Companies Act), measures (the “Plan”) regarding acts of acquisition(Prescribed in (Note 1) below; the “Special Acquisitions Act.”) of 20% or more of the Company’s shareswere decided to be introduced. At the Company’s 65th Annual General Meeting of Shareholders held on June27, 2013, the shareholders approved to continue.
Furthermore, as of June 26, 2015, the Company has transitioned to a company with an Audit and Supervisory
Committee, and necessary changes to the Plan have been made (Please see the notice related to the partial
revision of the policy regarding large-quantity purchases of the Company’s shares (anti-takeover measures),dated June 26, 2015).
Recently, the Plan’s term of validity was until the end of the Board of Directors Meeting to be held upon theend of the 74th Annual General Meeting of Shareholders (the “Annual General Meeting of Shareholders”)
planned to be held on June 29, 2022. It was decided at the Board of Directors Meeting held on May 20, 2022,with approval at the Annual General Meeting of Shareholders as a requirement, to renew the Plan. From this,- 11 -

the Plan, in the event of obtaining approval from the shareholders at the Annual General Meeting of
Shareholders, will come into effect on the same day after resolution at the Board of Directors Meeting to beheld upon the end of the Annual General Meeting of Shareholders.
Regarding renewal of the Plan, as for the aforementioned Board of Directors Meeting, approval with thesupport of all Directors including two outside Directors who are Audit and Supervisory Committee Members
have been obtained, as well as approval from the Audit and Supervisory Committee. Furthermore, regarding
the contents, there are no substantial changes to the contents disclosed on June 26, 2015.
Furthermore, as of today at this time, there are no concrete proposals of large-quantity purchases of theCompany’s shares.
(Note 1) “Special acquisitions act” is an act applicable to either of the following 1) or 2).
1)

The Board of Directors will determine purchases or acts corresponding to purchases of the Company’s sharecertificates, etc. (Article 27-23, Paragraph 1 of the Financial Instruments and Exchange Act), with an ownership
ratio of share certificates, etc. (Article 27-23, Paragraph 4 of the Financial Instruments and Exchange Act), of 20%
or more.*⁎The contents of the resolution, “The Board of Directors will determine purchases or acts corresponding topurchases of the Company’s share certificates, etc., with an ownership ratio of share certificates, etc., of 20%
or more” made today by the Board of Directors is as follows.
Acts applicable to one of the following (a) through (d). Furthermore, regardless of the following (a) through(d), share certificates, etc. (Article 27-23, Paragraph 1 of the Financial Instruments and Exchange Act. Unlessotherwise specified, the below is the same.), which the Company issues, or sales of share certificates, etc.
(including mergers, share exchange, share transfer, and company splits by the Company), which are held by
the Company, are not included in the Company’s acquisition of share certificates, etc.
(a) Act pursuant to Article 27-2, Paragraph 1 of the Financial Instruments and Exchange Act, “purchases,
etc.,” (Acts pursuant to enforcement orders of Article 6, Paragraph 3 of the Financial Instruments andExchange Act that transfers by purchases or other compensation and similar acts of share certificates, etc.
(Article 27-2, Paragraph 1 of the Financial Instruments and Exchange Act.).) that allows a person’sownership ratio of share certificates, etc., to be 20% or more of the Company’s share certificates, etc.
(b) Act with the condition other than the above (a) pursuant to Article 27-23, Paragraph 1 and Paragraph 3of the Financial Instruments and Exchange Act where a “holder’s” ownership ratio of share certificates,
etc., becomes 20% or more of the Company’s share certificates, etc.
(c) Act whereby the ownership ratio of share certificates, etc., of a joint holder of a holder of the Company’s
share certificates, etc. (Article 27-23, Paragraph 5 of the Financial Instruments and Exchange Act),
becomes 20% or more of the Company’s share certificates, etc.
(d) Act whereby the ownership ratio of share certificates, etc., of the Company’s share certificates, etc.,
becomes 20% or more by having a relationship with a holder of the Company’s share certificates, etc.,
pursuant to Article 27-23, Paragraph 6 of the Financial Instruments and Exchange Act.

2)

Act starting tender offer (“ownership ratio of share certificates, etc., after purchasing” is decided based on what islisted in the tender offer registration form for the tender offer, and the business day after the day of tender offer
notice is given is when the “special acquisitions act” occurs.) whereby the ownership ratio of share certificates,etc. (Article 27-2, Paragraph 8 of the Financial Instruments and Exchange Act; provided, however, that it is thetotal ownership ratio of share certificates, etc. of the tender offeror (Article 27-3, Paragraph 2 of the Financial
Instruments and Exchange Act) and its specially related parties (Article 27-2, Paragraph 7 of the Financial
Instruments and Exchange Act)), after purchasing becomes 20% or more of the Company’s share certificates, etc.
(Article 27-2, Paragraph 1 of the Financial Instruments and Exchange Act)

I. Basic policy regarding persons who control decisions on the Company’s financial and business
policies
The Company’s view is the persons who control decisions on the Company’s financial and business
policies need to sufficiently understand the Company’s corporate values and management philosophy,
source of corporate value of the Company, and relationship of trust with the Company’s stakeholders,such as customer corporations, to ensure and improve the Company’s corporate value and the common
interest of shareholders.
On the other hand, the Company, as a party whose shares are listed on a financial instruments exchange,
respects the free trading of shares of the Company in the market and does not unconditionally deny alarge-scale purchase of shares of the Company by a particular party involved with transferring the- 12 -

company’s right to control as long as it contributes to ensuring and improving the Company’s corporate
value and the common interest of shareholders. Furthermore, in regard to whether to accept a proposal
concerning a large-scale purchase, etc., of the Company’s shares, we believe the decision should
ultimately be entrusted to the shareholders.
However, within proposals concerning a large-scale purchase, etc., of the Company’s shares, there arethose that do not sufficiently reflect the Company’s corporate value, those where the purpose obviously
violates corporate value and the common interest of shareholders, those where the sale of shares iseffectively coerced from shareholders, and those where the Company shareholders and Board of
Directors consider the contents of a purchase or acquisition proposal but are not given the reasonably
necessary time or information for the Company’s Board of Directors to suggest an alternative.
The Company, in addition to the aforementioned examples, views persons who violate corporate value
and the common interest of shareholders by large-scale purchase, etc., of the Company’s shares
unsuitable as persons who control the Company’s financial and business policies. In regard to these
persons who purchase the Company’s shares, necessary and appropriate countermeasures will be adopted,
and along with ensuring information and time for the shareholders to consider whether to accept a largescale purchase, we feel the need to protect the Company’s corporate value and the common interest ofshareholders.
II. Initiatives contributing to the implementation of the basic policy
1. About the management philosophy as well as the basic management policy
The Company, through the road construction machinery business, contributes to social work via
national land development as the basic policy of management. The Company feels its existence andduty are to provide manufactured goods and services that users everywhere can trust, to attempt toconstantly deepen skills as a road construction machinery specialist, to create beneficial skills todevelop the road business, and to make use of expertise cultivated by road construction machinery
for businesses in nearby fields.
Based on this basic policy, with capital provided by shareholder investment as well as company
management that brings forth the maximum ability of employees, we do our best to meet the
expectations of shareholders with achievement.
2. Initiatives to improve corporate value
Recently, there has been a sudden change in the Japanese construction machinery industry due to a
reduction in domestic construction investment and intensification of global competition, and at thepresent time, it is entering a significant turning point. As for the Company, our policy is to proceedwith strengthening reform of business structure by specializing further in our strength, the road
construction machinery business, and moving toward internationalization of the company. To thisend, we aim for the position as the leading manufacturer in the international market by (1) stabilizing
domestic businesses, (2) expanding overseas businesses, (3) deciding on new product developmentwith merit as a medium-term management subject, and improving international competitiveness andestablishing a stable earnings structure for domestic and international businesses.
3. About corporate governance
The Company has chosen to adopt the “Company with an Audit and Supervisory Committee System”
as its corporate governance structure, and to strengthen the supervisory function, the composition of
the Board of Directors shall be such that more than one-third of all Directors are independent outside
Directors.
As for the operation of the Board of Directors, in order to ensure the separation of the supervisoryand business execution functions of the Board of Directors and to secure cooperation between
Directors and Executive Officers, the Board of Directors is divided into the Monitoring Board (allDirectors), which focuses on the supervisory function, and the Management Board (all Directors andall Executive Officers), which focuses on the business execution function.

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The Board of Directors, as a monitoring board, shall in principle meet once a quarter of the fiscal
year, and shall have the basic roles of dismissing Representative Directors and supervising theexecution of Directors’ duties, as well as supervising management from an objective, medium- tolong-term perspective and deliberating on important matters concerning the direction of management,
including nominations and compensation, with a focus on the auditing functions of management.
The Board of Directors, as a management board, shall consist of Directors plus all Executive Officers
and in principle meets once a month, and shall have the basic roles of making decisions on basic
management policies and the development of systems, as well as reporting and deliberating onimportant matters concerning the execution of business operations.
Each Audit and Supervisory Committee Member participates in the deliberations of the Board of
Directors as a Director and, as an Audit and Supervisory Committee Member, shall have the basicrole of auditing the execution of duties by Directors, preparing audit reports, deciding proposals forthe selection and dismissal of accounting auditors, decision-making regarding selection and dismissalof Directors and Director compensation, as well as auditing appropriateness and legality of theexecution of Directors’ duties.
The accounting auditor, PricewaterhouseCoopers Arata LLC, audits the non-consolidated financial
statements and their supplementary schedules, the extraordinary financial statements, and theconsolidated financial statements, and prepares the accounting audit report, and audits the internal
control and prepares the internal control audit report.
Under this corporate governance system, we ensure the effectiveness of corporate governancethrough highly effective supervision of Directors and fair and prompt decision-making in theexecution of business.
III. Purpose, outline, and contents of the renewal of the Plan
1. Purpose of the renewal of the Plan
The Company, in regard to a special acquisitions act which violates the Company’s corporate value
and the common interest of shareholders, recognizes the necessity to ensure the Company’s corporate
value and the common interest of shareholders by taking appropriate countermeasures quickly andprecisely. Recognizing this, the Company, in the event of a special acquisitions act, has decided torenew the Plan so the shareholders can decide whether the purchase violates the Company’s corporate
value and the common interest of shareholders, and to make it possible for the Board of Directors,
on behalf of the shareholders, to negotiate with the large-scale purchaser to create a framework toensure time to provide necessary information related to the special acquisitions act along withvaluating, considering, negotiating, forming an opinion, and devising an alternative to the contents
in advance.
2. Outline of the Plan
(1) Procedures, etc., for the renewal of the Plan
In order to get the chance to appropriately apply the shareholders’ wishes in regard to the Plan, theshareholders will be consulted at this Annual General Meeting of Shareholders in regard to thePlan. Specifically, the shareholders will be consulted as we would like approval to add a fixed
ancillary condition that corresponds with recognizing the point of view of ensuring and improving
the Company’s corporate value and the common interest of shareholders regarding the allotmentof share acquisition rights without contribution (hereinafter “share acquisition rights”) with
exercise limitations for specified acquirers (Note 2).
Today, the Board of Directors has made resolutions of matters concerned with the Plan’s concrete
contents, including the contents (For details, please reference Appendix 1) of allotment of shareacquisition rights without contribution. The Plan is dated to come into effect today, and regarding
the Plan as of this Annual General Meeting of Shareholders, obtaining the approval (this approvalis hereinafter “General Meeting approval”) of the majority of attending shareholders with voting
rights (However, this includes attendance by voting form. The same for the following.) is a

- 14 -

condition to make it come into effect on the same day as the Board of Directors Meeting to beheld upon the end of this Annual General Meeting of Shareholders, and will be valid until the endof the Board of Directors Meeting to be held upon the end of the Annual General Meeting of
Shareholders to be held in 2025. However, allotment of share acquisition rights without
contribution will be conducted when specified acquirers (Note 2) make an appearance, and at the
point in time of General Meeting approval, share acquisition rights will not actually be issued.
Regarding allotment of share acquisition rights without contribution, on whether to disclose thecontents in advance from the point of view of predictability, which we feel could contribute to the
profits of shareholders and investors, the contents regarding allotment of share acquisition rights
without contribution will be disclosed within the scope of feasibility by resolutions beforehand.
(Note 2)

“Specified acquirers” are (1) specified acquirers along with (2) (regarding specified acquirers who
perform a special acquisitions act as set in the above (Note 1) 1)) joint holders (Article 27-23, Paragraph
5, Paragraph 6 of the Financial Instruments and Exchange Act), (3) (regarding specified acquirers who
do perform a special acquisitions act as set in the above (Note 1) 2)) specially related parties, and (4)persons* determined to be substantially the same by the Board of Directors.
⁎ Today, the Board of Directors has passed a resolution on the following contents of “(4) persons
determined to be substantially the same by the Board of Directors.”
Persons who are reasonably recognized by the Board of Directors as applicable to one of thefollowing.
(a) Persons who, without approval from the Company, received share acquisition rights or inheritedthem from persons applicable to the above (1) through (3).
(b) “Related persons” of persons applicable to the above (1) through (3) or the above (a). “Related
persons” are persons who substantively control or are controlled by or are under the common
control with the other persons, or act in cooperation with the other persons. As for decisions on“related persons” concerned with associations or other funds, substantial identity of fundmanagers and other various reasons will be taken into consideration. Furthermore, concerning
nominal stock lending or borrowing of the Company’s share certificates, etc., or transfer orother special agreements corresponding to the future issues of the Company’s stock certificates,
etc., by exercising or obtaining stock acquisition rights, regarding persons who perform special
acquisitions acts prescribed in the above (Note 1) 1) within the above (1) or persons who
collaborate with persons applicable to the above (2), the Board of Directors is able to consider
persons who perform special acquisitions acts prescribed in the above (Note 1) 1) within said(1) or persons applicable to the above (2) as “related persons.”“Related persons” are persons who perform special acquisitions acts and persons who have not obtained
a confirmation resolution mentioned in (2) below by the time ((Note 1) 1) or 2) above, whichever comes
first.) of performing special acquisitions acts.
However, the following persons are not applicable to “specified acquirers.”(a) The Company, subsidiaries of the Company, the Company’s employee shareholding association, or
persons determined to be substantially the same by the Board of Directors*.
(b) Persons whose ownership ratio of share certificates, etc. is 20% or more (excluding when theownership ratio of share certificates, etc., of the persons increases by 1% or more after acts otherthan said acts) resulting only from the Company canceling or acquiring its own shares, or anotheract that the Board of Directors decides*.
* The Board of Directors, respectively decided “(a) The Board of Directors decides as substantiallythe same persons” as “persons who hold the Company’s shares for the Company’s employee
shareholding association” and “(b) acts the Board of Directors decide” as “acts that decrease thetotal number of shares issued by the Company or total number of voting rights or acts that coerce
acquisition of share acquisition rights allotment and exercise.”(2) Regarding the appearance of an acquisition proponent
The Plan, regarding impacts, etc., caused by special acquisitions acts on the Company’s corporate
value and the common interest of shareholders, aims to ensure and improve corporate value andthe common interest of shareholders by ensuring necessary and sufficient disclosure of
information and suitable time, etc., to consider and consult in advance.
The Board of Directors, related to persons who plan special acquisitions acts (Including groupcompanies or other related persons.), items related to proposals related to special acquisitions acts,
the purpose of acquisition, management policies and business plan of the Company after an- 15 -

acquisition, the basis of calculating compensation and the details thereof, guarantee of acquisition
capital, impacts on the Company’s stakeholders, and other information related to items listed
below in 1) through 7) will list the necessary information reasonably required by the Company.
Said proposal (Hereinafter “acquisition proposal” and persons proposing acquisition, “acquisition
proponent.”) with the necessary information listed is required to be submitted to the Company as
documents in advance to request confirmation resolution, and before execution, the persons
planning special acquisitions acts must request confirmation resolution by submitting theacquisition proposal. Furthermore, the language used for provision of necessary information andother notifications and communication to the Company is limited to Japanese.
“Confirmation resolutions” are resolutions by the Board of Directors that do not allocate shareacquisition rights without compensation after receiving recommendation resolutions mentioned
below from the Independent Committee. The Board of Directors, in the event of recommendation
resolutions from the Independent Committee, will perform confirmation resolutions using thesedecisions with maximum respect to the recommendation resolutions, and in the event ofrecommendation resolutions, they will be disclosed. The Board of Directors, in regard to theacquisition proposal receiving confirmation resolutions, cannot allot share acquisition rights
without compensation.
The consideration and deliberation period of the Board of Directors will be within sixty days (inthe event of an acquisition proposal other than one with a set upper limit of the number of shareacquisitions with compensation only as cash in yen, ninety days) of the day of receipt of theacquisition proposal. Limited to a case of reasonable grounds, it is possible to extend theconsideration and deliberation period by a maximum of thirty days, and in this case, said grounds
and planned extension period will be disclosed.
The Plan strives for suitable application and in order to prevent arbitrary decisions by the Boardof Directors and guarantee security and rationality of the objectivity of decisions, the Board of
Directors will promptly bring up the matter of the received acquisition proposal with the
Independent Committee, and will disclose this in accordance with the required laws andregulations. The Independent Committee will consider the acquisition proposal, and in regard to
said acquisition proposal, will deliberate on whether to recommend resolutions on whether the
Board of Directors should go ahead with a confirmation resolution (hereinafter, “recommendation
resolutions”).
The Independent Committee will consider an acquisition proposal brought up by the Board of
Directors, and from the point of view of whether corporate value and the common interest ofshareholders are ensured and improved, other than deliberating on whether to pass therecommendation resolutions, deliberation on other items brought up by the Board of Directors willtake place, and resolutions will take place in accordance with the majority of all members. The
Independent Committee consists of three or more members, and the members of the Independent
Committee are independent from the senior executives in charge of business execution of theCompany and are elected from among outside Directors (including substitutes) and outside experts(lawyers, certified public accountants, university professors, etc.) by the Board of Directors.
Furthermore, with the condition that the Plan will be approved at the Company’s Annual General
Meeting of Shareholders, elected as Independent Committee Members for the next term are
Ryuichi Tokunaga and Makoto Kikkawa, outside Directors of the Company, and Yasushi Toyama,
outside expert and lawyer. (Please reference Appendix 2 in regard to each person’s careersummary.). Furthermore, the Independent Committee, in the event it is decided as necessary, after
obtaining the consent of the Board of Directors, can request the opinions of independent financial
advisors, certified public accountants, lawyers, and other specialists with the burden of expenseborne by the Company.
Consideration and deliberation concerning confirmation resolutions by the Board of Directors andrecommendation resolutions by the Independent Committee are to be performed sincerely fromthe point of view (including the points of view of 1) through 7) below) of whether corporate value
and the common interest of shareholders are ensured and improved by said acquisition proposal.
Furthermore, regarding an acquisition proposal recognized as satisfying all items listed in 1)
through 7) below, the Board of Directors must perform confirmation resolutions. In addition, the- 16 -

Independent Committee can recommend not performing a confirmation resolution to the Board of
Directors.
1) Not applicable in any way to any of the below(a) Acts buying up shares and demanding a high-priced buyback of said shares to the Company
or persons concerned.
(b) Acts that temporarily control the Company and transfer, etc., the Company’s important
assets, etc., or management that realizes profits to the acquisition proponent or groupcompanies or other related persons by sacrificing the Company.
(c) Acts that misappropriate the Company’s assets as collateral or reimbursement capital forthe acquisition proponent’s or group companies’ or other related persons’ liabilities.
(d) Acts that sacrifice the Company’s continuous growth to temporarily obtain a high profit orother return by temporarily controlling the Company’s management to decrease assets andfunds necessary for future business development, product development, etc., and using thisdisposable profit to provide a temporary high dividend or aim for a sudden rise in shareprice in order to sell at a high price, etc.
(e) In addition, acts which improve the state of profitability of the acquisition proponent orgroup companies or other related persons by unreasonably harming profits of persons
concerned to the Company, including the Company’s shareholders, business partners,
customers, and employees.
2) The structure and contents, etc., of transactions related to said acquisition proposal abide by
the relevant laws and regulations and rules, etc.
3) The structure and contents of transactions related to said acquisition proposal are not coercive
two-tier acquisitions (the method of carrying out an acquisition in two steps where the sale ofall shares, etc., of the Company in the first stage are not solicited while specifying unfavorable
terms and conditions for the purchase in the second stage or not clarifying the terms andconditions for purchase in the second stage) or other acquisitions that coerce the Company’s
shareholders as a matter of fact.
4) Requests, etc., by the Company for information necessary and without misinformation in order
to consider said acquisition proposal are provided timely and other procedures conforming to
the Plan are sincerely handled.
5) Time (within sixty days of the day of receipt of the acquisition proposal (In the event of an
acquisition proposal other than one with a set upper limit of the number of share acquisitions
with compensation only as cash in yen, ninety days. However, in case of reasonable groundsof the number of days which exceed this, said number of days.)) in order for the Company toconsider (Including considering an alternative and suggesting to the Company’s shareholders)said acquisition proposal is ensured.
6) Not an acquisition proposal that is recognized as having the conditions of insufficient or
unsuitable in reference to the Company’s intrinsic value.
7) In addition, reasonably recognized as ensuring and improving corporate value and thecommon interest of shareholders.
(3) Regarding the appearance of a special acquisition proponent
In the event (the presence or absence of the appearance is decided based on the statement of largevolume holdings submitted to the Company, tender offer notification, and other suitable methods)
an acquisition proponent appears, namely the event where a special acquisitions act is performed
without obtaining a confirmation resolution, the Board of Directors, other than disclosing that a
special acquisitions person has appeared, will perform resolutions that decide allotment without
contribution record date, allotment without contribution effective date, and other necessary items
related to allotment of share acquisition rights without contribution, and after officially- 17 -

announcing the decided items, will execute allotment of share acquisition rights without
contribution. However, only in the case where one of the reasons in the following (a) through (c)occurs no later than the day* decided by the Board of Directors and before the day of the allotment
without compensation record date, a resolution which makes the resolution of allotment of shareacquisition rights without compensation not effective by said day can be passed.
(a) In the event the ownership ratio of share certificates, etc. of the specified acquirers falls below
20%, and a statement of large-volume holdings is submitted by the specified acquirers.
(b) In the event a tender offer applicable to a special acquisitions act starts, and in the event said
tender offer ends or is revoked, and as a result a holder of the Company’s share certificates,
etc., with an ownership ratio of share certificates, etc., of 20% or more does not appear.
(c) In the event the Board of Directors reasonably recognizes threats due to said special
acquisitions acts are no longer, other than the above (a)(b).
*Today, the Board of Directors has decided on “day four working days before the allotment
without compensation record date” as the “day the Board of Directors decide is the day before
the allotment without compensation record date.”(4) General Meeting approvals and the Plan’s term of validity, etc.
General Meeting approvals and the Plan’s term of validity are until the end of the Board of
Directors Meeting to be held upon the end of the Annual General Meeting of Shareholders to beheld in 2025. However, even before the Plan’s term of validity expires, the Board of Directors,
through resolutions by the Board of Directors, can discontinue the Plan. In addition, in the event
specified acquirers appear at the end of the General Meeting approvals and the Plan’s term ofvalidity, validity will continue as a measure against said specified acquirers.
Furthermore, confirmation and authorization, etc., of “ownership ratio of share certificates, etc.,”“holder,” “joint holder,” “ownership ratio of share certificates, etc.,” “specially related parties,”“specified acquirers, etc.,” “related persons,” “persons substantially the same,” and othernecessary matters to apply the Plan will be performed by depending on the information reasonably
obtained by the Company at the time when said confirmation and authorization, etc., are necessary.
Regarding the Plan, regarding terminology defined by depending on provisions of the Financial
Instruments and Exchange Act (including revisions after Law 25, April 13, 1948), in the event ofrevisions to the Act, terminology will be revised to provisions corresponding to the Act afterrevisions.
The Board of Directors, even during the term of validity of the Plan, according to the establishment
or revision to laws and regulations, precedents, regulations, etc., of the financial instruments
exchange related to the Plan, including the Financial Instruments and Exchange Act, in the event
revision to the terminology, etc., used in the Plan is necessary, and in the event revisions to thewording concerned with substitutions of the Members of the Independent Committee, changes,
etc., to the business organization, or revisions to wording due to misspelling, omitted characters,
etc., are suitable, there are cases where revisions or changes to the Plan are made after obtaining
approval of the Independent Committee within the necessary scope of General Meeting approvals.
The Board of Directors, in the event of discontinuing, revising, or changing the Plan, will promptly
disclose information regarding facts of said discontinuation, revision, or change, along with (inthe event of revision or change) the contents and other items deemed suitable by the Board of
Directors and the Independent Committee.
(5) Device to enhance the Plan’s reasonableness (special measures, etc., to apply wishes of theshareholders).
Although the Plan was introduced with the aim of ensuring and improving corporate value and thecommon interest of shareholders, applied are special devices such as those below to enhancereasonableness.

- 18 -

(a) Confirmation of shareholder wishes regarding renewal of the Plan
To gain the chance to suitably apply the wishes of shareholders, the Company plans to consult
with the shareholders regarding renewals to the Plan at the Annual General Meeting of
Shareholders. In the event of renewing the Plan, complying with the contents of General
Meeting approvals, the Board of Directors will decide on items related to allotment of shareacquisition rights without compensation and necessary items and measures to smoothly
execute the Plan.
The Plan will be invalidated in the event that approval by the majority of attending
shareholders with voting rights regarding the Plan at the Annual General Meeting of
Shareholders is not obtained.
(b) Application of shareholder wishes regarding the Plan
The Plan can be discontinued by resolutions by the Board of Directors of the Company,
consisting of Directors elected at the General Meeting of Shareholders of the Company, andis not a dead-hand type of acquisition defense plan. In addition, the term of office of Directors
who are not Audit and Supervisory Committee Members of the Company is one year, andeven before the Plan’s term of validity expires, it is possible for the shareholders to indicate
their wishes through the election of Directors, and is also not the so-called slow-hand type ofacquisition defense plan. Accordingly, the Plan’s discontinuance and changes are structured
so shareholder wishes are sufficiently applied.
(c) Recommendations by the Independent Committee
In order to secure the neutrality of decisions regarding the Plan, the Independent Committee,
consisting of outside Directors (including substitutes) and outside experts (lawyers, certified
public accountants, university professors, etc.) independent from the senior executives incharge of business execution of the Company, consider contents of an acquisition proposal
and from the point of view of whether they ensure and improve corporate value and thecommon interest of shareholders, sincerely deliberate on whether to recommend resolutions
on whether to confirm resolutions regarding the acquisition proposal.
And so, in the event of recommendation resolutions to confirm resolutions by the Independent
Committee to the Board of Directors, the Board of Directors shall have maximum respect for
said recommendation resolutions by the Independent Committee.
(d) Structure to enhance objectivity
The Board of Directors, regarding an acquisition proposal recognized as having satisfied every
item listed in the above 2. (2) 1) through 7), must confirm resolutions, and so a structure toenhance objectivity is adopted.
(e) Establishment, etc., of the term of validity of General Meeting approvals
General Meeting approvals and the Plan’s term of validity are set at three years from theGeneral Meeting of Shareholders. However, even before the Plan’s term of validity expires,the Board of Directors, through resolutions by the Board of Directors, can discontinue thePlan. At the point in time when three years have elapsed, the Board of Directors, includingreconsideration, etc., of ancillary conditions, will confirm shareholder wishes once again, andplan to have the shareholders decide.
(f) The plan satisfies all requirements of legality and reasonableness of government guidelines.
The Plan satisfies all the requirements of legality (requirements that should, in order to notreceive a prohibition of issuance of share acquisition rights, satisfy) required by the “Guideline
related to acquisition defense plans to ensure and improve corporate value and the common
interest of shareholders” prescribed by the Ministry of Economy, Trade and Industry and theMinistry of Justice on May 27, 2005, and the requirements of reasonableness (requirements
to gain the understanding of persons concerned, such as shareholders and investors). In
addition, we are in agreement with the proposal contents of the report dated June 30, 2008 by
the Corporate Value Research Society of the Ministry of Economy, Trade and Industry,- 19 -

“Current state of acquisition defense plans based on changes to recent changes in theenvironment.”
IV. Impacts, etc., on shareholders and investors
1. Impacts on shareholders and investors
The Plan, as mentioned in the above III 1., aims to ensure and improve the Company’s corporate
value and the common interest of shareholders, and we feel it contributes to the profits ofshareholders and investors. Also, share acquisition rights will not be issued at the time of the Plan’s
introduction, and there will be no impact on the rights of shareholders and investors.
Supposing a specified acquirers does appear in the future, namely in the event of special acquisitions
acts that have not obtained confirmation resolutions, share acquisition rights without compensation
as in the above III 2. (3) will be allotted, and because each shareholder will automatically be allottedshare acquisition rights, there will be no persons with loss of rights due to not applying for anallotment of share acquisition rights. In addition, it is possible for the Company to coerce theacquisition of share acquisition rights simultaneously and issue the Company’s shares for shareacquisition rights that satisfy exercise conditions. Furthermore, interruption of allotment withoutcompensation or obtaining without compensation allotted share acquisition rights mentioned in theabove III 2. (3) after three working days before the allotment without compensation record date is
not planned.
2. Necessary procedures for shareholders and investors
At the time of renewing the Plan, there are no necessary procedures, etc. for shareholders andinvestors.
Supposing a special acquisitions person does appear, as mentioned in the above IV 1., the Board of
Directors will make a resolution and officially announce words to that effect, the allotment of shareacquisition rights without compensation record date, etc. Because share acquisition rights withoutcompensation will be automatically allotted to each shareholder at the time of the allotment of shareacquisition rights without compensation record date, in accordance with the contents of guidance
officially announced as by the above by the Company, we ask that the designated procedures are
performed.
In the event of allotment of share acquisition rights without compensation, the shareholders, together
with submitting the share acquisition rights request form designated by the Company and otherdocuments decided by the Company, by paying 1 yen per share of obtained shares, can exercise shareacquisition rights. However, as mentioned in the above IV 1., in the event of coerced acquisition ofshare acquisition rights, because the Company’s shares will be automatically issued for shareacquisition rights which satisfy exercise conditions, exercise procedures for share acquisition rights
by the shareholders is not necessary. Furthermore, it is planned to decide on reasonable procedures
to confirm that specified acquirers, etc., are not applicable.
V. Other
Limited to the case where approval of the shareholders is obtained regarding the Plan at the General
Meeting of Shareholders, regarding renewal of the Plan by resolutions at the Board of Directors Meeting
to be held at the end of the General Meeting of Shareholders, approval by every Director of the Company
was recognized at the Board of Directors Meeting held on May 20, 2022. In addition, views to approve
the renewal of the Plan were indicated by the Company’s Audit and Supervisory Committee, including
the two outside Directors.

- 20 -

Appendix 1
Contents of allotment of share acquisition rights without contribution(1) The contents of share acquisition rights are as follows.
1. Class of shares that are the subject of share acquisition rights
Common shares of the Company
2. Number of shares that are the subject of share acquisition rights
The number of shares that are the subject of each share acquisition right will be two or less shares, anumber the Board of Directors will decide separately.
3. The value of a property that will be invested when exercising share acquisition rights
Cash is the subject of investments when exercising share acquisition rights, the amount based on thenumber of shares that is the subject of the value of 1 yen per each stock acquisition right.
4. Period to exercise stock acquisition rights
Within a specified period of time decided separately by the Board of Directors starting on a day after
the effective day of allotment without contribution. In the event that the last day of the exercise period
to pay cash in order to exercise is a business holiday for the place to handle the payments thereof,
the last day will be the business day prior.
5. Exercise condition of share acquisition rights(1) Share acquisition rights (including rights held substantially) held by specified acquirers cannot be
exercised.
(2) Share acquisition rights holders, regarding the Company, can only exercise share acquisition rights
by submitting the necessary documents regarding fulfilling the conditions of the above 5(1)(including fulfilling conditions of the above 5(1) by a third party in the event of exercising for said
third party) deemed necessary by documents listing representation and warranty clauses,
compensation clauses, and other clauses determined by the Company, materials indicating theconditions to fulfill requested by the Company within a reasonable scope, and laws and regulations.
(3) Pursuant to the adopted foreign Securities Act and other laws and regulations, in regard to persons
located under the area of jurisdiction of said laws and regulations exercising share acquisitionrights, in the event executing the appointed procedures or fulfilling the appointed conditions isnecessary, the persons located under the area of said jurisdiction can only exercise shareacquisition rights if the Company recognizes said procedures or conditions are completely
executed or fulfilled. Furthermore, even if the persons located under the area of said jurisdiction
are able to exercise share acquisition rights due to the Company executing or fulfilling the above
procedures or conditions, the Company does not bear the responsibility to execute or fulfill them.
(4) Confirmation of fulfillment of conditions of the above 5(3) will be decided by the Board of
Directors by the procedures based on the procedures prescribed by the above 5(2).

- 21 -

6. Exercise procedures, etc., of share acquisition rights(1) To exercise share acquisition rights, list the required items such as the number of share acquisitionrights to be exercised, the number of intended shares, and an address, and other required items
decided separately by resolutions by the Board of Directors on the share acquisition rights request
form appointed by the Company. With a signature and seal on this form, exercising can be
performed by submitting along with the required documents decided separately by resolutions by
the Board of Directors to the place to handle payments thereof decided separately by resolutions
by the Board of Directors, as well as payment in full of the amount prescribed in the above 3 tothe said place to handle the payments thereof.
(2) The validity of the exercise request of share acquisition rights is in accordance with what isprescribed in the above 6(1), and will come into effect upon arrival of the share acquisition rights
request form concerning exercising as well as attached documents at the place to handle thepayments thereof. The validity to exercise share acquisition rights will come into effect in theevent that the exercise request of share acquisition rights becomes valid, and the amountcorresponding to the full amount of exercise price of shares subject to share acquisition rights
concerning said exercising is paid to the place to handle the payments thereof.
7. Transfer approval
Approval by the Board of Directors (or agency decided by the Board of Directors in accordance withthe proviso to Article 265, Paragraph 1 of the Companies Act) is necessary to obtain share acquisitionrights by transfer.
8. Clause to obtain(1) The Company, on the day decided by the Board of Directors, which is a day after the day allotment
without contribution comes into effect, regarding the (Including share acquisition rights held bypersons applicable to the above 5(3). To be “Share acquisition right eligible for exercise” as of8(2) below.) unexercised share acquisition rights which are able to be exercised in accordance withthe provisions of the above 5(1)(2) (namely held by persons not applicable to specified acquirers,etc.), the acquisition is possible by issuing the number of common shares corresponding to theinteger part of the number multiplied by the number of shares that is the subject of one shareacquisition right for the number of share acquisition rights concerned with the acquisition.
(2) The Company, on the day decided by the Board of Directors, which is a day after the day allotment
without contribution comes into effect, regarding unexercised share acquisition rights other thanshare acquisition rights eligible to be exercised, acquisition is possible by issuing the same numberof share acquisition rights concerned with acquisition as share acquisition rights with affixed limits
to exercising by specified acquirers, etc. Furthermore, cash will not be issued as compensation forsaid acquisitions.
(3) Confirmation of fulfillment of conditions related to coerced acquisition of share acquisition rights
will be decided by the Board of Directors by the procedures based on the procedures prescribedby the above 5(2).
9. Items related to share capital and reserves
Items related to increasing share capital and reserves are in accordance with obtaining, etc., based onclauses to exercise share acquisition rights and acquisitions are decided in accordance with provisionsof laws and regulations.

- 22 -

10. Fractions
Fractional shares issued to persons who exercise share acquisition rights that do not add up to one
share will be rounded down. However, the number of shares issued to said persons with shareacquisition rights can be calculated by the sum total of fractional shares issued due to exercising eachshare acquisition right when exercising multiple share acquisition rights at the same time by said
person with share acquisition rights.
11. Issuing share acquisition rights certificates
Regarding share acquisition rights, share acquisition rights certificates are not issued.
(2) The contents of allocation of share acquisition rights without contribution are as follows.
1. Number of share acquisition rights allotted to shareholders
A ratio of one share acquisition right for one common share of the Company (common shares heldby the Company are excluded) will be allotted, and the total number of allotted share acquisitionrights will be the same number as the final total number of issued shares of the Company (However,common shares held by the Company are excluded.) on the record date of the allotment without
contribution.
2. Shareholders able to be allotted share acquisition rights without contribution
All common share shareholders of the Company (However, excluding the Company.) detailed orrecorded in the Company’s final shareholder register on the record date of the allotment without
contribution.
3. Effective date of the allotment of share acquisition rights without contribution
It will be a day separately decided by the Board of Directors after the record date of the allotment ofshare acquisition rights without contribution- 23 -

Appendix 2
Names and career summaries of Independent Committee Members
The following three persons are planned to be Independent Committee Members following the renewal of
the Plan.
(1) Ryuichi Tokunaga Born January 1946
<Career summary>Mar. 1971

Joined The Japan Society of Industrial Machinery Manufacturers

Apr. 1987

General Manager of Construction Machinery Department

Apr. 1990

Transferred to Japan Construction Equipment Manufacturers Association, General
Manager of Operation Department

June 1990

Transferred to Japan Construction Equipment Manufacturers Association(incorporated association), General Manager of Operation Department

Apr. 2003

Secretary General

Dec. 2005

Managing Director

Oct. 2011

Associate Director of Japan Construction Equipment Manufacturers Association(general incorporated association) (transferred from incorporated association in Sept.
2011)

May 2012

RetiredJune 2012

Audit & Supervisory Board Member of the Company

June 2015

Director who is Audit and Supervisory Committee Member of the Company (current
position)

There is no special interest between Mr. Tokunaga and the Company.

- 24 -

(2) Makoto Kikkawa Born August 1947
<Career summary>
Apr. 1970

Joined The Industrial Bank of Japan, Limited

Apr. 1996

General Manager of Nihonbashi Branch

June 1998

Director and General Manager of Administration Department

Nov. 1998

Director and Deputy President of The Long-Term Credit Bank of Japan, Limited

Mar. 2000

Managing Executive Officer of The Industrial Bank of Japan, Limited

Sept. 2000

Managing Executive Officer of Mizuho Holdings, Inc.

Apr. 2002

Senior Managing Executive Officer of Mizuho Bank, Ltd.

Apr. 2003

Administrative Officer of Mizuho Holdings, Inc.

May 2003

Representative Director and Vice President of Sogo Co., Ltd.

June 2003

Representative Director and Vice President of Millennium Retailing, Inc.

Mar. 2007

Advisor of Kyowa Hakko Kogyo Co., Ltd.

Apr. 2007

Corporate Officer

June 2007

Corporate Officer
Representative Director & President of Kyowa Hakko Chemical Co., Ltd.

Apr. 2012

Representative Director, President & Chief Executive Officer of KH Neochem Co.,Ltd.

June 2014

Outside Director of the Company

Sept. 2014

Director and Chairman of KH Neochem Co., Ltd.

June 2015

Director who is Audit and Supervisory Committee Member of the Company (current
position)

July 2015

Advisor KH Neochem Co., Ltd.

There is no special interest between Mr. Kikkawa and the Company.
19 years have passed since he retired from Mizuho Financial Group, Inc.
(3) Yasushi Toyama

Born May 1965

<Career summary>Mar. 1988

Graduated School of Law, Waseda University

Apr. 1993

Registered attorney (Daini Tokyo Bar Association)

Sept. 2000

Established Toyama Yasushi Law Office (present-day)

Apr. 2006

Committee Member of Tokyo Summary Court Conciliation of Civil Affairs (current
position)

Sept. 2012

Part-time lecturer at School of Cultural and Creative Studies, Aoyama Gakuin
University (current position)

Jan. 2016

Committee Member of Tokyo Summary Court Administration of Justice (current
position)

There is no special interest between Mr. Toyama and the Company.

- 25 -

Appendix 3
Outlook of conditions of the Company’s shares held (as of March 31, 2022)
1. Total number of shares authorized

14,990,000 shares

2. Total number of shares issued

4,366,117 shares (common shares)

3. Major shareholders (Top 10)
Number of shares
held (Thousands)

Shareholding ratio(%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

497

11.81

MUFG Bank, Ltd.

209

4.98

Mizuho Bank, Ltd.

207

4.93

Custody Bank of Japan, Ltd. (Trust Account)

191

4.53

Nippon Life Insurance Company

150

3.57

The Dai-ichi Life Insurance Company, Limited

148

3.52

Ichiro Sakai

133

3.17

JPMorgan Securities Japan Co., Ltd.

88

2.09

NICHIREKI CO., LTD.

81

1.93

Yuken Kogyo Co., Ltd.

67

1.59

Shareholder name(Note) The share-holding ratio is calculated by subtracting Treasury shares (155,929 shares).

- 26 -

Appendix 4

Procedures involved in the Plan
Appearance of persons who plan
special acquisitions act

In the event of requesting a
confirmation resolution

In the event of not requesting a
confirmation resolution

Independent Committee
The Independent Committee advises
the Board of Directors whether to go
ahead with confirmation resolutions

Board of Directors

Board of Directors

In the event the Board of Directors

In the event the Board ofdoes perform a confirmation

Directors does not perform aresolution

confirmation resolution

The Board of Directors will decide onnecessary important items of shareacquisition rights without contribution in
the event of a special acquisitions act

No share acquisition rights without
contribution in the event of a special
acquisitions act

Share acquisition rights without
contribution in the event of a special
acquisitions act* Appendix 4 lists the outline related to procedures involved in the Plan. For details, please reference
the text of Proposal No. 5 of this Reference Documents for General Meeting of Shareholders.

- 27 -

Current status of the corporate group(1) Progress and results of operations
The business environment affecting SAKAI HEAVY INDUSTRIES, LTD. and its subsidiaries (the“Group”) during the fiscal year ended March 31, 2022 (April 1, 2021 to March 31, 2022), the businessenvironment surrounding the Group has been undergoing an economic recovery in the post-corona era
amidst a turbulent global situation, with the full-scale implementation of global warming
countermeasures and the intensification of the Cold War structure between the United States and China,
and the fluidization of the international security environment triggered by the outbreak of the Ukraine
crisis, which has resulted in structural price increases in energy and materials, supply chain disruptions
and container freight rate hikes as side effects.
Under such conditions, the Group continued to promote strengthening its pricing and product supply
capabilities, creating a sustainable management structure through ESG and DX, medium- to long-term
growth strategies based on overseas businesses and next-generation businesses.
As a result, net sales for the fiscal year under review were 26,590 million yen, an increase of 23.0% year
on year, owing to demand recovery progressed in both domestic and overseas markets. Operating profit
was 1,380 million yen, an increase of 97.3% year on year as a result of sales price revisions and improved
logistics efficiency in response to a projected cost increase equivalent to about 500 million yen due toraw material and logistics costs. Ordinary profit was 1,400 million yen, an increase of 113.6% year on
year, and profit attributable to owners of parent was 1,420 million yen as a result of the recognition of
380 million yen in deferred tax assets in accordance with accounting standards for tax effect accounting
at a consolidated subsidiary in the United States.
The following presents net sales on a consolidated basis by geographic segment.
Net sales in Japan were 14,290 million yen, an increase of 9.6% year on year, due to continued strong
sales against the backdrop of measures to accelerate national land resilience.
Net sales to overseas were 12,300 million yen, an increase of 43.4% year on year, due to the spread ofmarket recovery in the post-corona era in major markets.
Net sales to North America were 5,030 million yen, an increase of 55.3% year on year, reflecting a strong
demand recovery under favorable construction investment.
Net sales to Asia were 6,490 million yen, an increase of 33.7% year on year, due to a recovery in demandin Indonesia, which had been stagnant, in addition to strong sales in the Indochina Peninsula countries.
Net sales to the Middle East, Russia, and the CIS were 40 million yen, an increase of only 35.3% year
on year, due to the stagnation of sales activities.
Net sales to other markets were 730 million yen, an increase of 62.7% year on year, as sales in Central
and South America, Oceania, and Africa all showed signs of recovery.

- 28 -

73rd term
(Previous fiscal year)

74th term(Fiscal year under review)(From April 1, 2020 toMarch 31, 2021)(From April 1, 2021 toMarch 31, 2022)

Amount(Millions of yen)Amount(Millions of yen)Amount(Millions ofyen)

Increase(Decrease)(%)

21,624

26,599

4,974

23.0

Operating profit

701

1,383

682

97.3

Ordinary profit

659

1,407

748

113.6

4

1,427

1,423

－

Net sales

Profit attributable to owners of parent

Year-on-year change

Net sales in Japan and overseas are as presented in the following table.

Geographic segment

73rd term(Previous fiscal year)

74th term(Fiscal year under review)(From April 1, 2020 toMarch 31, 2021)(From April 1, 2021 toMarch 31, 2022)

Amount(Millions ofyen)

Composition
ratio
(%)

Amount(Millions ofyen)

Composition
ratio
(%)

Year-on-year change
Amount(Millions ofyen)

Increase(Decrease)
(%)

Japan

13,042

60.3

14,292

53.7

1,249

9.6

Overseas

8,582

39.7

12,306

46.3

3,724

43.4

North America

3,245

15.0

5,039

18.9

1,793

55.3

Asia

4,854

22.5

6,492

24.4

1,637

33.7

Middle East, Russia and the CIS

32

0.2

44

0.2

11

35.3

Others

449

2.0

731

2.8

281

62.7

21,624100.0

26,599

100.0

4,974

23.0

Total

Note: Major countries and regions that belong to each overseas geographic segment in the fiscal year under review
North America .............................................................. United States
Asia ............................................................................... Indonesia, China and the various countries surrounding the
Mekong River
Middle East, Russia and the CIS................................... Yemen and Russia
Others ........................................................................... Africa, Oceania and Central and South America(2) Issues to be addressed
In Japan, the government’s 15-trillion-yen, five-year national resilience plan to speed up countermeasuresfor disaster prevention and mitigation, and the United States is planning infrastructure investment totaling
1.2 trillion dollars, and ASEAN and emerging countries are also planning economic stimulus measuresthrough expanded infrastructure investment. Global demand for construction equipment is expected tocontinue on a firm recovery path, despite a series of ups and downs amid the turbulent global situation.
On the other hand, the effects of increasing policies for decarbonization and the global economic bloc
will further increase in the prices of energy and materials and increase pressure to restructure global
supply chains.
Under these circumstances, the Group will reform its profit structure by revising selling prices andreducing costs, strengthen product supply capabilities by reinforcing supply chains, create a sustainable
management structure through ESG and DX, and shift to a two-pronged management approach based on
business growth and capital policy.
In addition, the Group will continue to aim for medium- to long-term business growth and increased
corporate value to strengthen our capability to respond to changing demand, pioneer Asian markets whiledeveloping North American market, expand overseas business domain, develop next-generation
businesses by leveraging new technologies, and cultivating a vibrant corporate culture.

- 29 -

Consolidated Financial Statements
Consolidated Balance Sheet (As of March 31, 2022)
Item
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetaryclaims - operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Non-current assets
Property, plant and equipment
Buildings and structures
Machinery, equipment andvehiclesLand
Leased assets
Other
Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts

AmountItem
Liabilities
Current liabilities
Notes and accounts payable - trade

25,075,675
7,993,405
7,137,752

Electronically recorded obligations operating

1,400,265
2,751,053
1,347,188
3,109,380
1,336,688(59)
12,782,908
6,985,162
2,965,404

13,530,319
2,078,924
3,887,863

Short-term borrowings
Income taxes payable
Provision for product warranties
Other
Non-current liabilities
Long-term borrowings
Lease liabilities
Deferred tax liabilities
Retirement benefit liability
Other

5,688,722
269,304
117,004
1,488,501
1,166,892
17,164
338,534
402,781
173,232
235,179

3,010,196

Total liabilities

14,697,211

227,387
120,164
480,7635,316,982
3,421,772
456,786
1,438,685(261)

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares

21,087,515
3,258,349
6,504,292
11,728,758(403,884)

662,008

Accumulated other comprehensive
incomeValuation difference on available-forsale securities
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Non-controlling interests

Total assets(Thousands of yen)Amount

37,858,583

2,026,029
1,564,136
465,857(3,964)47,826

Total net assets

23,161,371

Total liabilities and net assets

37,858,583

Note: Listed amounts have been rounded down to the nearest thousand yen.

- 30 -

Consolidated Statement of Income (From April 1, 2021 to March 31, 2022)
Item(Thousands of yen)AmountNet sales
Cost of sales

26,599,084
20,191,853

Gross profit
Selling, general and administrative expenses

6,407,231
5,023,927

Operating profit
Non-operating income
Interest income
Dividend income
Surrender value of insurance policies
Foreign exchange gains
Other

1,383,303
9,570
109,070
24,20549,08323,027

Non-operating expenses
Interest expenses
Bank charge
Other

100,404
87,275
2,867

Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities

214,957

190,546
1,407,714

Extraordinary losses
Loss on disposal of non-current assets
Loss on valuation of golf club membership
Profit before income taxes
Income taxes - current
Income taxes - deferred

2,166
61,38063,54743400

443
1,470,818

427,645(386,450)

41,194

ProfitProfit attributable to non-controlling interests

1,429,623
2,289

Profit attributable to owners of parent

1,427,334

Note: Listed amounts have been rounded down to the nearest thousand yen.

- 31 -

Consolidated Statement of Changes in Equity (From April 1, 2021 to March 31, 2022)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCapital surplus

Retained earnings

3,221,868

6,467,811

10,769,680

36,48036,480Treasury shares

Total shareholders’equity(62,626)

20,396,733

Changes during period
Issuance of new shares

72,961Dividends of surplus(468,256)(468,256)

Profit attributable to ownersof parent

1,427,334

1,427,334

Purchase of treasury shares(341,257)(341,257)

Net changes in items otherthan shareholders’ equity
Total changes during period

36,48036,480959,078(341,257)

690,782

Balance at end of period

3,258,349

6,504,292

11,728,758(403,884)

21,087,515

Accumulated other comprehensive income
Total
Valuation
Foreign currency Remeasurements accumulateddifference ontranslationof defined
otheravailable-for-saleadjustment
benefit planscomprehensive
securities
incomeBalance at beginning of
period

1,732,254(124,237)(7,417)1,600,599

Non-controlling
Total net assetsinterests

40,92522,038,259

Changes during period
Issuance of new shares

72,961Dividends of surplus(468,256)

Profit attributable to ownersof parent

1,427,334

Purchase of treasury shares(341,257)

Net changes in items otherthan shareholders’ equity(168,118)

590,094

3,453

Total changes during period(168,118)

590,094

3,453

425,429

6,900

1,123,112

Balance at end of period

1,564,136

465,857(3,964)

2,026,029

47,82623,161,371

Note: Listed amounts have been rounded down to the nearest thousand yen.

- 32 -

425,4296,900

432,330