Note: This document has been translated from a part of the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original, the original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translation.
(Securities code: 3865)
June 10, 2024
(Commencement date for matters of electronic provision: May 30, 2024)
To Shareholders with Voting Rights:
Sekio Kishimoto
President and CEO
Hokuetsu Corporation
3-5-1 Nishi-Zao, Nagaoka City, Niigata, JapanNOTICE OF CONVOCATION OF
THE 186th ORDINARY GENERAL MEETING OF SHAREHOLDERS
We are pleased to inform you that the 186th Ordinary General Meeting of Shareholders (this “Meeting”) of
Hokuetsu Corporation (the “Company”) will be held for the purposes as described below.
In convening this Meeting, the Company has taken electronic measures. Matters to be provided
electronically are posted on the Company’s website on the Internet. Please access the Company’s website
below and review the information.
The Company’s website
https://www.hokuetsucorp.com/en/ir/notice.html
In addition to the above, the matters to be provided electronically are also available on the Tokyo Stock
Exchange (TSE) website. Please access the following TSE website (Listed Company Search) below, enter theissue name (company name) “Hokuetsu Corporation” or securities code “3865,” and select “Basic
Information” followed by “Documents for public inspection/PR information” to review the information.
Tokyo Stock Exchange website (Listed Company Search)https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show
If you are unable to attend the meeting on the day, you can exercise your voting rights in writing or via theInternet. Please review the Reference Documents for the General Meeting of Shareholders below, and exercise
your voting rights no later than 5:20 p.m. on Wednesday, June 26, 2024 (please refer to pages 4 to 8 for
information on how to exercise your voting rights).
1. Date and Time:Thursday, June 27, 2024 at 10:00 a.m. Japan time (Reception opens at 9:00 a.m.
Japan time)

2. Place:

Hotel New Otani Nagaoka, Banquet Room Hakuchou, 2F
8-35, Dai-machi 2-Chome, Nagaoka City, Niigata, Japan(As the venue differs from the previous year, please refer to the access map to
the venue at the end of this document.)

3. Meeting Agenda:
Matters to be reported: 1. The business report, consolidated financial statements for the Company’s
186th fiscal year (April 1, 2023 - March 31, 2024) and results of audits ofthe consolidated financial statements by the Accounting Auditor and the
Audit & Supervisory Board
2. Non-consolidated financial statements for the Company’s 186th fiscal year
(April 1, 2023 - March 31, 2024)
Proposals to be resolved:-1-

Company Proposals (Proposal 1 to Proposal 4)
Proposal 1:
Appropriation of Surplus
Proposal 2:
Election of Three (3) Audit & Supervisory Board Members
Proposal 3:
Election of Two (2) Substitute Audit & Supervisory Board Members
Proposal 4:
Approval Regarding Implementation of Countermeasures in the Event that Daio
Kaiun et al. Engage in a Large-scale Acquisition without Complying with theCompany’s Response Policy
Shareholder Proposals (Proposal 5 to Proposal 11)
Proposal 5:
Dismissal of One (1) Representative Director
Proposal 6:
Dismissal of Four (4) Outside Directors
Proposal 7:
Election of Five (5) Outside Directors
Proposal 8:
Determination of Basic Remuneration for Each Outside Director
Proposal 9:
Determination of Remuneration for Granting Restricted Stock to Outside
Directors
Proposal 10:
Election of Five (5) Directors
Proposal 11:
Determination of Amount of Fixed Compensation for Each Outside Director
The contents of each proposal are stated in the Reference Documents for the General Meeting of
Shareholders below; however, the Company’s Board of Directors is opposed to all Shareholder Proposals(Proposal 5 to Proposal 11).
4. Matters to be resolved at the Meeting(1) The Company’s Articles of Incorporation stipulate that the number of Directors of the Company shall not
exceed fifteen (15). However, Shareholder Proposal 5 proposes the dismissal of one (1) Representative
Director, Shareholder Proposal 6 proposes the dismissal of four (4) Outside Directors, Shareholder Proposal 7
proposes the election of five (5) Outside Directors, and Shareholder Proposal 10 proposes the election of five(5) Directors. Depending on the results of the election and dismissal for each proposal, it is possible that the
number of Directors could exceed the number stipulated in the Company’s Articles of Incorporation. In suchan event, as a general rule, the candidates for Director who have received a majority of votes, including
through the exercise of voting rights via the Internet and in writing (by mail), are elected. If, however, as aresult of the voting, the number of Directors exceeds fifteen (15), candidates will be elected in the order of
those who received the highest number of voting rights. No upper limit will be placed on the number ofcandidates who may vote in favor of both Proposal 7 and Proposal 10.
(2) If there is no indication of approval or disapproval for each proposal on the Voting Rights Exercise Form, it
will be deemed as approval for company proposals (Proposal 1 to Proposal 4) and disapproval for shareholder
proposals (Proposal 5 to Proposal 11).
(3) If you exercise your voting rights in duplicate in writing and via electromagnetic means, the one exercised via
electromagnetic means (the Internet) will be deemed valid. Moreover, if you exercise your voting rights morethan once via electromagnetic means (the Internet), the last exercise will be deemed valid.
End◎ If you are attending the meeting, please submit the Voting Rights Exercise Form at the reception desk. Please
note that persons other than shareholders, including proxies and companions who are not shareholders, are notpermitted to attend the meeting. (Excluding those persons accompanying shareholders with physicaldisabilities)◎ Among the matters to be provided electronically, the following items are not stated in the documents delivered
to shareholders who have requested written documents in accordance with the provision of law and regulations
and Article 15, Paragraph 2 of the Company’s Articles of Incorporation. The Audit & Supervisory Board andthe Accounting Auditor audit the documents subject to audit, including the following matters:• “Matters Concerning Share Acquisition Rights, etc. of the Company,” “Systems to Ensure
Appropriateness of Business and Overview of Operation of Such Systems,” and “Basic Policy on Controlof the Company” in the business report• “Consolidated Statements of Changes in Net Assets” and “Notes to Consolidated Financial Statements”
in the consolidated financial statements• “Non-consolidated Statements of Changes in Net Assets” and “Notes to Non-consolidated Financial
Statements” in the non-consolidated financial statements◎ Any revisions to the matters to be provided electronically, the Company will post a notice of such revisions andinformation before and after the revisions on the Company and TSE websites listed on page 1.
◎ We are no longer offering souvenirs for shareholders. We appreciate your understanding.

-2-

Guide to the Exercise of Voting Rights
In this General Meeting of Shareholders, although three shareholders made shareholder proposals, theCompany’s Board of Directors is against Proposal 5 to Proposal 11 submitted by the shareholders.
If you agree with the opinions of the Board of Directors, please vote for approval of company proposals(Proposal 1 to Proposal 4) and disapproval of shareholder proposals (Proposal 5 to Proposal 11).
Please refer to the “Reference Documents for the General Meeting of Shareholders” for details of the opinionsof the Board of Directors.
There are three methods to exercise your voting rights.
Exercising voting rights by attending the meeting
Please submit the enclosed Voting Rights Exercise Form at the reception desk.
Date and Time of the General Meeting of Shareholders: Thursday, June 27, 2024 at 10:00 a.m. Japan time
Exercise voting rights in writing
Please indicate your approval or disapproval of the proposals on the enclosed Voting Rights Exercise Formand return it.
Exercise deadline: Received by Wednesday, June 26, 2024 at 5:20 p.m. Japan time
Exercising voting rights via the Internet
Please follow the guidance on page 6 and enter your approval or disapproval.
Exercise deadline: Wednesday, June 26, 2024 at 5:20 p.m. Japan time-3-

Exercising voting rights in writing
Exercise deadline: Received by Wednesday, June 26, 2024 at 5:20 p.m. Japan time
This General Meeting of Shareholders will resolve company proposals (proposals submitted by the
Board of Directors) and shareholder proposals (proposals submitted by three shareholders).
Three shareholders submitted Proposal 5 to Proposal 11. The Company’s Board of Directors is against
all of them. Please refer to the Reference Documents for the General Meeting of Shareholders (Contentsof Proposals) for details.
An example of how to fill out the Voting Rights Exercise Form is shown below.
If you exercise your voting rights via the Internet, please enter your approval or disapproval afterreferring to the example below.
□How to fill out the form
The voting form is an image only

Please indicate your approval or disapproval of each proposal.
In case of approval, draw a circle in the “賛” section
If case of disapproval, draw a circle in the “否” section-4-

Example of filling out the Voting Rights Exercise Form
This example is when you approve all company proposals and disapprove all shareholder proposals.

Proposal 1 to Proposal 4 are proposed by the Company’s Board of Directors.

Proposal 5 to Proposal 11 are proposed by three shareholders.
The Company’s Board of Directors is against each of the shareholder proposals. If you agree with the Boardof Directors, draw a circle in the “否” section of shareholder proposals.
If there is no indication of approval or disapproval for each proposal, it will be deemed as approval forcompany proposals and disapproval for shareholder proposals.

-5-

Exercising voting rights via the Internet
Exercise deadline: Wednesday, June 26, 2024 at 5:20 p.m. Japan time
Voting website: https://soukai.mizuho-tb.co.jp/ (in Japanese)
How to scan a QR code using a smartphone
About “Smart Exercise”
1 Please scan the “Voting Website Login QR Code for Smartphones” on the enclosed Voting Rights
Exercise Form. You can access the website without entering the “Voting Rights Exercise Code” and“Password.”*You may only exercise your voting rights once by the above method.
*The QR Code is a registered trademark of DENSO WAVE INCORPORATED.
2 Please follow the on-screen guidance and enter your approval or disapproval.
How to enter your login ID and temporary password
Access procedures
1 Please access the voting website.
2 Please enter the “Voting Rights Exercise Code” indicated on the Voting Rights Exercise Form.
3 Please enter the “Password” indicated on the Voting Rights Exercise Form.
4 Please follow the on-screen guidance and enter your approval or disapproval.
Inquiries regarding the exercise of voting rights via the Internet
Internet Help Desk of Stock Transfer Agency Department, Mizuho Trust & Banking Co., Ltd.
Telephone: 0120-768-524 (Operating hours: 9:00 a.m. – 9:00 p.m., excluding year-end and new year
holidays)-6-Notes:1) The password is a means of confirming the voter’s identity, and the Company will not ask you for yourpassword.
2) If you mistype the password more than a certain number of times, it will be locked. Please follow the onscreen instructions if you are locked out.
3) Passwords (including those changed by the shareholder) are valid only for this Meeting. A new password
will be issued at the next General Meeting of Shareholders.
4) Although the operation of the voting website has been verified using available Internet access devices, it
may not be available depending on the device you are using.

Your exercise of voting rights leads to the creation of a sustainable society.
A portion of the mailing costs reduced by using Smart Exercise will be donated to a charitable foundation.
Our goal is to realize a sustainable society following our Group Corporate Philosophy “As a people-focusedbusiness group, we work to improve society globally by providing socially and environmentally responsible
products through innovative manufacturing on a global scale.” As part of this effort, we have continued tosupport WWF Japan since 1993, which upholds the ideal of creating a sustainable society. If you exercise yourvoting rights via the Internet or other means, including Smart Exercise, a portion of the mailing costs will be
used to support the activities of WWF Japan.
We hope you will take advantage of Smart Exercise, which will enable shareholders to exercise their voting
rights in a way that will help create a sustainable society.

-7-Reference Documents for the General Meeting of Shareholders(Contents of Proposals)
Company Proposals (Proposal 1 to Proposal 4)
Proposal 1 to Proposal 4 are made by the Company<Company Proposals>
Proposal 1:
Appropriation of Surplus
Year-end dividends
The Company’s basic capital policy is to pay stable and continuous dividends by implementing
capital policies that consider the balance between financial soundness, capital efficiency, andshareholder returns in order to continue to invest in growth for the long-term and stable enhancementof corporate value.
For the 186th fiscal year, based on this policy and after comprehensively taking into account thebusiness performance for the fiscal year under review, performance forecasts for the immediate
future, and dividend stability, the Company proposes the following.
(1) Type of dividend property
Cash(2) Allotment of dividend property to shareholders and its total amount¥9 per share of the Company’s common stock
Total of ¥1,518,584,103
Note: Annual dividends for the fiscal year under review will be ¥18 per share including theinterim dividend of ¥9 per share.
(3) Effective date of the dividends of surplus
June 28, 2024

-8-

<Company Proposals>
Proposal 2:
Election of Three (3) Audit & Supervisory Board Members
The terms of office of Audit & Supervisory Board Members, Manabu Ueno, Jun Itoigawa, and Keiji
Watanabe will expire at the conclusion of this Meeting. The Company proposes the election of three (3)Audit & Supervisory Board Members (including two (2) Outside Audit & Supervisory Board Members).
Candidates for Audit & Supervisory Board Members were determined by the Board of Directors based on
the Company’s Basic Policy on Corporate Governance.
The prior consent of the Audit & Supervisory Board has been obtained for this Proposal.
The candidates for Audit & Supervisory Board Member are as follows:
CandidateNo.

Name
Manabu Ueno

Career summary, positions, and significant concurrent positions[Reelection][Male]

April 1992
February
2015
October 2015

Date of birth
December 20, 1968

April 2017

Years in office as Audit& Supervisory Board
Member:3 years (at conclusionof this Meeting)June 2021

Joined the Company
Group Manager, Jiangmen Group; Group Manager, AlPac Promotion Group
Leave of absence and seconded, Director, Deputy
General Manager, Jiangmen Xinghui Paper Mill Co.,Ltd.
Leave of absence and seconded, Director, Deputy
General Manager (General Manager), Jiangmen Xinghui
Paper Mill Co., Ltd.
Standing Audit & Supervisory Board Member, theCompany (current position)

1
Attendance at Board of
Directors meetings:
15 out of 15 meetings
Attendance at Audit &Supervisory Board
meetings:
14 out of 14 meetings
Number of shares of
the Company held:
8,111[Reason for nomination as candidate for Audit & Supervisory Board Member]
Manabu Ueno has extensive experience and knowledge mainly in the accounting and finance division, and has considerable
knowledge of finance and accounting matters. In addition, since he is familiar with the overall business of the Group, he
conducts accurate audits as an Audit & Supervisory Board Member. The Company believes that he continues to play a
sufficient role in strengthening the functioning of auditing the Company’s overall management and therefore has continued
to nominate him as a candidate for Audit & Supervisory Board Member.

-9-Candidate
No.

Name
Toraki Inoue[New election][Outside][Independent][Male]
Date of birth
September 6, 1956

2

Years in office as
Outside Audit &Supervisory Board
Member:Attendance at Board of
Directors meetings:
Attendance at Audit &Supervisory Board
meetings:-

Career summary, positions, and significant concurrent positions
December 1985
June 1987
October 1995
October 1997
July 1999
July 2008
June 2010
June 2011
September
2011
April 2012
April 2013
March 2016
June 2016
October 2018

NovemberNumber of shares of the 2020
Company held:
0

Registered as a Certified Public Accountant
New York Office, ANDERSEN
National Partner, ANDERSENWorldwide Partner, ANDERSEN
Partner, Asahi & Co. (currently KPMG AZSA LLC)
Toraki Inoue Certified Public Accountant Office (current
position)
Representative Director and President, Accounting
Advisory Co., Ltd. (current position)
Outside Audit & Supervisory Board Member, Pioneer
Corporation
Supervisory Director, GLP J-REIT (current position)
Guest Professor of International Accounting Study
Group, Expert Graduate School, Chuo University
Instructor of Global Business Study Group, Expert
Graduate School, Meiji University
Outside Audit & Supervisory Board Member, Kao
Corporation
Outside Audit & Supervisory Board Member, Aozora
Bank Ltd. (current position)
Standing Corporate Auditor, Kyulux, Inc. (current
position)
Outside Audit & Supervisory Board Member, ETVOS
Co., Ltd. (current position)[Reason for nomination as candidate for Outside Audit & Supervisory Board Member]
Toraki Inoue has extensive experience and specialized knowledge as a certified public accountant, and has considerable
knowledge of finance and accounting matters. In addition, he has extensive experience in Japan and overseas. The Company
believes that he continues to play a sufficient role in strengthening the functioning of auditing the Company’s overallmanagement and therefore has nominated him as a candidate for Outside Audit & Supervisory Board Member.

- 10 -

Candidate
No.

Name
Go Kondo[New election][Outside][Independent][Male]
Date of birthJanuary 1, 1965

3

Years in office as
Outside Audit &Supervisory Board
Member:-

Career summary, positions, and significant concurrent positions
April 1987
April 1997
October
2000
January
2006
June 2013
April 2015
June 2019
April 2020

The Boston Consulting Group
Admitted to the bar, Nagashima & Ohno (currently
Nagashima Ohno & Tsunematsu)
White & Case Law Offices
Credit Suisse Securities Japan
Established Utoku Law Offices (current position)
Standing Auditor, Mu Sigma Japan K.K. (current position)
Outside Audit & Supervisory Board Member, YARUKI
Switch Group Holdings Co., Ltd. (current position)
Visiting Associate Professor, Nagamori Gakuen
Educational Foundation, Kyoto University of Advanced
Science (Cybersecurity Law) (current position)

Attendance at Boardof Directors meetings:
Attendance at Audit &Supervisory Board of
meetings:
Number of shares of
the Company held:
0[Reason for nomination as candidate for Outside Audit & Supervisory Board Member]
Go Kondo has advanced and specialized legal knowledge cultivated as an attorney at law and extensive experience in thearea of international corporate legal affairs. The Company believes he continues to play a sufficient role in strengthening thefunction of auditing the Company's overall management from a neutral position independent from the management team that
executes business operations, and therefore has nominated him as a candidate for Outside Audit & Supervisory Board
Member.
Notes: 1. There are no special interests between each candidate and the Company.
2. Toraki Inoue and Go Kondo are candidates for Outside Audit & Supervisory Board Members.
3. If the election of Toraki Inoue and Go Kondo is approved, the Company plans to designate these two
individuals as independent directors as stipulated by the Tokyo Stock Exchange.
4. The liability limitation agreement with Outside Audit & Supervisory Board Members is as follows:
To enable the Company to attract capable personnel as outside audit & supervisory board members, theCompany’s Articles of Incorporation stipulate that the Company may enter into agreements with Audit &Supervisory Board Members to limit their liability for damages up to the amount specified by laws andregulations. If the election of Toraki Inoue and Go Kondo is approved, the Company plans to enter into
agreements with them pursuant to Article 427, Paragraph 1 of the Companies Act and the Articles ofIncorporation, to limit their liability for damages under Article 423, Paragraph 1 of the Companies Act to theamount specified by laws and regulations, when damage is incurred by the Company due to their negligence
provided they acted in good faith and without gross negligence.
5. The Company has concluded a Directors and Officers Liability Insurance (D&O insurance) contract as
stipulated in Article 430-3 of the Companies Act, insuring Directors, Audit & Supervisory Board Members,
Corporate Officers, and key employees. If each candidate is elected as Audit & Supervisory Board Member of
the Company, they will be insured under the contract.
The Company pays all insurance premiums. The policy shall cover damages incurred by the insured due toclaims for damages arising from the insured’s conduct (including omissions) in their capacity as a director of
the Company during the insurance period. However, the insurance contract will not cover claims arising from
intentional or gross negligence.

- 11 -

<Company Proposals>
Proposal 3:
Election of Two (2) Substitute Audit & Supervisory Board Members
The appointment of Shigeo Aruga and Yoshitaka Hashimoto as substitute Audit & Supervisory Board
Members elected at the 184th Ordinary General Meeting of Shareholders held on June 29, 2022 will expire at
the conclusion of this Meeting, and the Company proposes new appointments.
In preparation for a shortage in the number of Audit & Supervisory Board Members stipulated in laws andregulations, among the candidates for substitute Audit & Supervisory Board Members, it is proposed that
Shigeo Aruga be elected as a candidate for substitute Outside Audit & Supervisory Board Member and that
Shu Mizuguchi be elected as a candidate for substitute Audit & Supervisory Board Member who is not an
Outside Audit & Supervisory Board Member. Both have consented to assume the position of Audit &Supervisory Board Member in the event that an Audit & Supervisory Board Member retires during his or her
term of office and the number of Audit & Supervisory Board Members falls below the number required bylaws and regulations. The validity of the appointments of both persons may be revoked by a resolution of theBoard of Directors with the consent of the Audit & Supervisory Board provided it is before they take office.
The Audit & Supervisory Board has given its prior consent to the submission of this proposal.
The candidates for substitute Audit & Supervisory Board Members are as follows:

Candidate
No.

Name

[Outside][Independent][Male]

April 1969
July 2004
July 2007
July 2009
August 2011

Date of birth
September 24, 1950

May 2012

Shigeo Aruga

1

Career summary, positions, and significant concurrent positions

Years in office as Outside
Audit & Supervisory
Board Member:-June 2015

Joined Kantoshinetsu Regional Taxation Bureau
District Director, Higashi-matsuyama Tax OfficeDistrict Director, Kasukabe Tax OfficeDistrict Director, Urawa Tax Office
Registered as certified public tax accountant
Established Aruga Shigeo Certified Public Tax Accountant
OfficeAudit & Supervisory Board Member, Kashiyama Co., Ltd.
(current position)
Independent Outside Audit & Supervisory Board Member, GTEKT CORPORATION
Outside Auditor, NITTOKU ENGINEERING CO., LTD.
(currently NITTOKU CO., LTD.)

Attendance at Board of
Directors meetings:
Attendance at Audit &Supervisory Board
meetings:
Number of shares of theCompany held:
0[Reason for nomination as candidate for substitute Outside Audit & Supervisory Board Member]
Shigeo Aruga has professional knowledge and abundant experience cultivated as an officer of the National Tax Agency anda certified public tax accountant over many years and considerable knowledge in finance and accounting. Therefore, theCompany has nominated him as a candidate for substitute Outside Audit & Supervisory Board Member in the belief that hecan be expected to play a sufficient role in strengthening the function of auditing the Company’s overall management.

- 12 -

Candidate
No.

Name
Shu Mizuguchi[Male]

2

Career summary, positions, and significant concurrent positions
April 1984
May 2017
April 2022

Date of birthJanuary 1, 1962

April 2023

Years in office as Audit &Supervisory Board
Member:-June 2023

March 2024

Joined former Kishu Paper Co., Ltd.
General Manager, Functional Paper Sales Department,
Corporate Officer; General Manager, Performance Materials
Department, Performance Materials Business DivisionCorporate Officer, General Manager, Performance Materials
Sales Department, Performance Materials Sales Business
Division
Corporate Officer; Deputy Division Manager, Performance
Materials Sales Business Division; General Manager,
Performance Materials Sales Department
Retired from the Company

Attendance at Board of
Directors meetings:
Attendance at Audit &Supervisory Board
meetings:-

Number of shares of theCompany held:
7,400[Reason for nomination as candidate for substitute Outside Audit & Supervisory Board Member]
Shu Mizuguchi has extensive experience and knowledge in the sales division, and is familiar with the overall business of theGroup. The Company has therefore determined that he is capable of appropriately performing the duties of Audit &Supervisory Board member and has nominated him as a candidate for substitute Audit & Supervisory Board Member.
Notes: 1. There are no special interests between each candidate and the Company.
2. If the election of Shigeo Aruga as Outside Audit & Supervisory Board Member is approved, the Company
plans to designate him as an independent auditor as stipulated by the Tokyo Stock Exchange.
3. The liability limitation agreement with substitute Outside Audit & Supervisory Board Members is as follows:
If the election of Shigeo Aruga as Audit & Supervisory Board Member is approved, the Company will enter
into an agreement with him, pursuant to Article 427, Paragraph 1 of the Companies Act and the Articles ofIncorporation, to limit his liability for damages under Article 423, Paragraph 1 of the Companies Act to theamount stipulated by laws and regulations, when damage is incurred by the Company due to his negligence
provided he acted in good faith and without gross negligence.
4. The Company has concluded a Directors and Officers Liability Insurance (D&O insurance) contract as
stipulated in Article 430-3 of the Companies Act, insuring Directors, Audit & Supervisory Board Members,
Corporate Officers, and key employees. If each candidate is elected as Audit & Supervisory Board Member of
the Company, they will be insured under the contract.
The Company pays all insurance premiums. The policy shall cover damages incurred by the insured due toclaims for damages arising from the insured’s conduct (including omissions) in their capacity as an audit &supervisory board member of the Company during the insurance period. However, the insurance contract will
not cover claims arising from intentional or gross negligence.

- 13 -

<Company Proposals>
Proposal 4:
Approval of Implementation of Countermeasures in the Event that Daio Kaiun et al.
Engage in a Large-scale Acquisition Without Complying with the Company’s Response
Policy1. Overview
At the Board of Directors meeting held on December 22, 2023, the Company introduced
countermeasures (hereinafter, “Current Response Policy”) against 1) purchases of Company sharecertificates by DAIO KAIUN CO., LTD. (hereinafter, “Daio Kaiun”), its joint owner, KAWASAKIPAPER TRANSPORT CO., Ltd. (hereinafter, “Kawasaki Paper Transport”), and Misuga Kaiun Co.,
Ltd. (hereinafter, “Misuga Kaiun”) (hereinafter, Daio Kaiun, Kawasaki Paper Transport, and Misuga
Kaiun are referred to collectively as “Daio Kaiun et al.”); and 2) Large-scale Acquisitions (as definedin III 2.(2) of the Company’s press release dated May 22, 2024, “Notice Concerning the Continuation
and Renewal of the Response Policy Regarding Large-scale Acquisitions of Company Share
Certificates, etc., in light of the Large-scale Acquisitions of Company Share Certificates, etc., by Daio
Kaiun et al (only available in Japanese)” (hereinafter, “Response Policy Continuation Press Release”);
hereinafter the same) of the Company’s share certificates, etc., that may be planned under circumstancesin which Large-scale Acquisitions by Daio Kaiun et al., continue to occur. Additionally, at the Board of
Directors meeting held on May 22, 2024, the entire Board of Directors, including all four (4)independent Outside Directors, approved an extension to the effective period of the Current Response
Policy until the end of the first Board of Directors meeting to be held after the Company’s Ordinary
General Meeting of Shareholders to be held in June 2025, to the extent necessary to respond to thepurchase of Company shares by Daio Kaiun et al. (The continuing and renewed Response Policy
hereinafter is referred to as “the Response Policy.” For more details, please refer to the Response Policy
Continuation Press Release.)
As stated in Section 2.(1) below, this proposal proposes consulting with the Company’s
shareholders on whether or not to implement countermeasures based on the Response Policy(hereinafter, “Countermeasures”), if Daio Kaiun et al. are found to have commenced Large-scale
Acquisitions without complying with the procedures set forth in the Response Policy, with theutmost respect for the recommendations of the Independent Committee mentioned in Section 3
below. This is because it is believed that Daio Kaiun et al. specifically will engage in Large-scale
Acquisitions without complying with the procedures set forth the Response Policy in the future,and, moreover, as set forth in Section 2.(2) below, it is believed that if Daio Kaiun et al. engage in
Large-scale Acquisitions, it could cause undeniable harm to the Company’s medium- to longterm corporate value and the common interests of the Company’s shareholders. All Directors(including four (4) independent Outside Directors) unanimously passed a resolution to submit this
proposal.
Furthermore, as stated in Section 2.(1) below, in accordance with the Response Policy, if a Largescale Acquirer does not comply with the Response Policy, the Company will activate theCountermeasures by way of the Board of Directors only, without going through a General
Shareholders’ Meeting for Confirmation of the Shareholders’ Will. However, from the perspective ofrespecting the will of shareholders, this proposal is being made to request the prior approval ofshareholders at this Ordinary General Meeting of Shareholders for the Company’s Board of Directors
to activate the Countermeasures in the event that Daio Kaiun et al. commence a Large-scale
Acquisition without complying with the procedures set forth in the Response Policy (with the utmost
respect for the recommendations of the Independent Committee at that time).
2. Assessment by the Board of Directors of Large-scale Acquisitions by Daio Kaiun et al.
(1)
Probability that Large-scale Acquisitions will be performed without complying with the procedures
set forth in the Response Policy
In accordance with the Response Policy, if a Large-scale Acquirer (as defined in Section III 2.(2) of
the Response Policy Continuation Press Release; hereinafter the same) complies with the procedures
established in the Response Policy, a General Shareholders’ Meeting for Confirmation of the
Shareholders’ Will needs to be held and shareholder’s approval must be obtained for activation of theCountermeasures, if the Company’s Board of Directors opposes the Large-scale Acquisition andbelieves it should activate the Countermeasures (please refer to Section III 2.(3)④ of the Response
Policy Continuation Press Release). However, if a Large-scale Acquirer attempts to perform a Largescale Acquisition without complying with the procedures set forth in the Response Policy, since theCompany would be unable to ensure that shareholders have the time required to consider the advantages- 14 -

and disadvantages of permitting the Large-scale Acquisition based on the information disclosed by theLarge-scale Acquirer, or to secure an opportunity to confirm the will of shareholders, theCountermeasures shall be implemented without going through a General Shareholders’ Meeting for
Confirmation of the Shareholders’ Will unless special circumstances exist (please refer to Section III
2.(3)⑤ of the Response Policy Continuation Press Release).
In this regard, on March 15 and March 18, 2024, immediately after the introduction of theCurrent Response Policy and immediately prior to the record date of this Ordinary General
Meeting of Shareholders, Tokyo Pulp & Paper Corporation (hereinafter, “Tokyo Pulp & Paper”),
which is reasonably suspected of already being in a joint cooperative relationship with Daio Kaiun
et al., (this Relationship as defined in III 2.(2) (Note 4) of the Response Policy Continuation Press
Release; hereinafter, the same), acquired Company shares without complying with the procedures
established in the Current Response Policy. That is to say, on March 15 and March 18, 2024, after
the introduction of the Response Policy, Tokyo Pulp & Paper acquired an additional 50,000 Company
shares(hereinafter, “the Share Purchase”) (Tokyo Pulp & Paper currently holds a total of 150,000 sharesof the Company), and it cannot be denied that Tokyo Pulp & Paper and Daio Kaiun et al. are in a joint
cooperative relationship, considering various facts, including: 1) Daio Kaiun and its group company,
Sankyo Engineering Co., Ltd., are shareholders of Tokyo Pulp & Paper; 2) Sota Igawa, theRepresentative Director and President of Tokyo Pulp & Paper, is the son of Hirotaka Igawa (theformer President of Tokyo Pulp & Paper), who is the immediate younger brother of Toshitaka Igawa,the effective owner of Tokyo Pulp & Paper (hereinafter, “Mr. Igawa” refers to Toshitaka Igawa), and ashareholder of Daio Kaiun; 3) representative of Tokyo Pulp & Paper came to the Company’s 185th
Ordinary General Meeting of Shareholders (hereinafter, “the 2023 Ordinary General Meeting of
Shareholders”) held on June 29, 2023 together with representative of Kawasaki Paper Transport;
4) at the 2023 Ordinary General Meeting of Shareholders, Mr. Sasaki, Senior Managing Director of
Kawasaki Paper Transport, stated that “Kawasaki Paper Transport is a company in the Daio
Kaiun Group.... Please count the votes of us, Kawasaki Paper Transport and four othercompanies: entrance ticket number 13 ●●, entrance ticket number 15, Tokyo Pulp & Paper,
entrance ticket number 14, and entrance ticket number ●●, against the election of director
Sekio Kishimoto, candidate number 1,” indicating that they even knew the entrance ticket
number for Tokyo Pulp & Paper and made a statement that Tokyo Pulp & Paper and Kawasaki
Paper Transport would exercise their voting rights in the same manner; 5) at the 2023 Ordinary
General Meeting of Shareholders, Tokyo Pulp & Paper supported all shareholder proposals from
Proposal 3 to Proposal 5, while opposing the proposal to elect the Company’s President and CEO,Sekio Kishimoto in connection with Proposal 2 “Election of Ten (10) Directors,” as did Daio Kaiun
et al.; and 6) when the Company asked Daio Kaiun about the Share Purchase in a letter dated April 26,
2024, while presenting facts 1) to 5) above, there was no rebuttal or mention in its response of the factthat it reasonably can be inferred based on 1) to 5) above that there is a joint cooperative relationshipbetween Daio Kaiun et al. and Tokyo Pulp & Paper, although the response stated that there was nocommunication with regard to the Share Purchase. In connection with item 4) above, Tokyo Pulp &Paper stated in a letter dated May 7, 2024, “Since we[Company note: Kawasaki Paper Transport andTokyo Pulp & Paper] reached the same conclusions, we asked Kawasaki Paper Transport’s Mr. Sasaki
to speak on our behalf on the floor of the general meeting of shareholders. [Company note: translated
into English by the Company]” However, there is no need to have other shareholders speak on Tokyo
Pulp & Paper’s behalf about the plans to exercise its voting rights at the Ordinary General Meeting of
Shareholders when votes are taken after the Q&A session. In particular, at the 2023 Ordinary General
Meeting of Shareholders, voting on the proposal for the election of Directors was conducted in a mannerthat enabled precise tallying, which means that there was no need to inform the Company of the pros
and cons during the Q&A session. The explanation from Tokyo Pulp & Paper above seems unnatural.
Rather, as admitted by Tokyo Pulp & Paper, given that Tokyo Pulp & Paper and Kawasaki Paper
Transport had a relationship in which Kawasaki Paper Transport spoke on behalf of Tokyo Pulp
& Paper about the exercise of voting rights, it is natural to assume that there was communication
between the two companies regarding that exercise of voting rights.
Furthermore, when Mr. Kishimoto, the Company’s President and CEO Kishimoto, and Mr.
Igawa met on July 3, 2023, Mr. Igawa told Mr. Kishimoto, the Company’s President and CEO
Kishimoto, that “We were in coordination with Oasis. From now on, we will go our separate ways,”revealing that Oasis Management Company Limited or its affiliated company (hereinafter “Oasis”) andDaio Kaiun had engaged in joint cooperative acts, etc. (meaning “joint cooperative acts, etc.” as definedin the Response Policy; hereinafter the same). Therefore, the Company’s situation is such that it cannot
dispel doubts or concerns over when those joint cooperative acts, etc. could occur again in the future.

- 15 -

Considering these circumstances, Daio Kaiun et al. already might have conducted a Large-scale
Acquisition without complying with the procedures set forth in the Response Policy. Furthermore, sincethese circumstances have occurred, it specifically is assumed that in the future Daio Kaiun et al. or aparty in a joint cooperative relationship with Daio Kaiun et al. may engage in a Large-scale Acquisition
without complying with the procedures set forth in the Response Policy.
(2)

Damage to the Company’s medium- to long-term corporate value and the common interests of its
shareholders due to Large-scale Acquisitions by Daio Kaiun et al.
As described in (1) above, if a Large-scale Acquirer attempts to conduct a Large-scale Acquisition
without complying with the procedures set forth in the Response Policy, the Response Policy states that
Countermeasures shall be activated without going through a General Shareholders’ Meeting for
Confirmation of the Shareholders’ Will unless special circumstances exist. The Countermeasures are to
be implemented in order to maximize the Company’s medium- to long-term corporate value and thecommon interests of its shareholders (please refer to III 1. of the Response Policy Continuation Press
Release). Therefore, “special circumstances” means circumstances in which it is clear that the Largescale Acquisition the Large-scale Acquirer intends to conduct will not harm the maximization of theCompany’s medium- to long-term corporate value and the common interests of its shareholders.
In this regard, as stated in the Company’s press release dated December 22, 2023, titled “NoticeConcerning the Introduction of a Policy Regarding Large-scale Acquisitions of Company Share
Certificates, etc., in light of Large-scale Acquisitions of Company Share Certificates, etc., by Daio
Kaiun et Al., (only available in Japanese)” Daio Kaiun et al. started acquiring Company shares around
July 2012, immediately after the Company acquired shares of Daio Paper Corporation (hereinafter,“Daio Paper”) from some members of the founding family of Daio Paper (hereinafter, “Founding
Family A”) in June 2012. Thereafter, Daio Kaiun repeatedly requested that the Company sell the DaioPaper shares held by the Company (hereinafter, the “Daio Paper Shares”), without making the reasonsfor doing so clear. In addition, year after year at the Company’s Ordinary General Meeting of
Shareholders, Daio Kaiun engaged in actions that hindered the smooth progress of the meeting andthorough deliberations, including asking questions unrelated to the agenda and expressing lengthy
opinions opposing the proposal for the election of the President as a Director, while ignoring the
Chairman’s warnings.
In addition, in the meeting held between the Company and Mr. Igawa on July 27, 2023, Mr.
Igawa proposed to the Company that in exchange for Daio Kaiun et al. transferring their sharesof the Company to the Company, he wanted the Company to transfer the Daio Paper Shares to
Daio Kaiun. When the Company refused the proposal, Daio Kaiun et al. immediately borrowed
10.0 billion yen newly from The Nomura Trust and Banking Co., Ltd., and started to acquire alarge number of shares of the Company, mainly in the market, starting September 25, 2023, evenwhen the share price had skyrocketed. As a result, Daio Kaiun et al., together with its joint owner,
Misuga Kaiun, increased its ownership ratio of share certificates, etc., in the Company from10.01% to 18.56% (during this period, the Company’s share price skyrocketed from 1,072 yen (as of
September 25, 2023) to 1,558 yen (as of December 18, 2023). Until the time of Statement of Changes
No. 12 Statement of Large Volume Holdings submitted on December 15, 2023, Daio Kaiun et al.
claimed the purpose of holding the Company shares was simply as a “strategic investment” (at thattime, Daio Kaiun’s holding ratio of share certificates, etc., in the Company was 17.68%), but as of thedate of Statement of Changes No. 13, submitted on December 25, 2023 (the most recent Statement of
Changes as of this time), the submission of important proposals suddenly was added as a purpose ofholding the shares, indicating that the company had been considering making shareholder proposals at
the Ordinary General Meeting of Shareholders since this time.
Moreover, although Daio Kaiun and its joint owner, Misuga Kaiun, stated in a press release disclosedon Daio Kaiun’s website on February 1, 2021 that net sales for the fiscal year ended March 31, 2023
would be 30.6 billion yen and 41.1 billion yen, respectively, for at least the past ten years, there is noevidence that the companies have made their financial statements public, which is a requirement under
the Companies Act, suggesting deficiencies in their compliance and internal control systems.
As stated above, 1) the commencement of acquisition of Company shares by Daio Kaiun et al.
and its persistent actions at the Company’s general meeting of shareholders originated from theCompany’s acquisition of Daio Paper shares; 2) the rapid and large-scale acquisitions ofCompany shares, both on and off the market, by Daio Kaiun et al. was triggered by theCompany’s refusal to transfer the Daio Paper Shares to Daio Kaiun, and other than that there
was no particular reason for Daio Kaiun et al. to borrow 10.0 billion yen newly from The Nomura
Trust and Banking Co., Ltd. to purchase large quantities of Company shares, mainly in the- 16 -

market, even though the share price skyrocketed; in addition to 3) shares of Daio Paper have poor
liquidity, making it difficult to purchase large quantities of Daio Paper shares, whereas shares of
the Company have relatively high liquidity, making it relatively easy to purchase them in large
quantities both on and off the market; and 4) Daio Kaiun holds 5.62% of the shares of Daio Paper,in terms of ownership ratio of share certificates, etc.; moreover, a person associated with Mr.
Igawa, the effective owner of Daio Paper, has told the Company that Daio Kaiun controls 20% of
the shares of Daio Paper. In light of this, if Daio Kaiun succeeds in acquiring 24.60% of the sharesof Daio Paper, which the Company owns with joint holders, Daio Kaiun’s total shareholding ratio
would be approximately 45%, effectively enabling Daio Kaiun to take control of the managementof Daio Paper. Taking these and other factors into account, it is clear that the true purpose of Daio
Kaiun et al. acquiring large quantities of Company shares is not to improve the Company’s
medium- to long-term corporate value and the common interests of its shareholders, but rather,by acquiring large quantities of Company shares, to apply strong pressure on the Company totransfer the Daio Paper Shares to Daio Kaiun (furthermore, Daio Kaiun’s acquisition and holdingof large quantities of Daio Paper shares would mean that Mr. Igawa and part of the Daio Paper
founding family to which Mr. Igawa belongs, separately from Founding Family A, would seize
management control over Daio Paper).
In addition, if Daio Kaiun acquires large quantities of Company shares, the influence of Daio Kaiun
et al. over the Company’s management will increase significantly. As a result, pressure from Daio Kaiun
et al., which is planning to seize control of the management rights to Daio Paper, may force theCompany to relinquish all of its shares of Daio Paper, or the business alliance may be operated in amanner unilaterally advantageous to Daio Paper, creating a situation in which the Company may beforced into a position in which it is unable to fully enjoy the synergic benefits mentioned above, basedon this business alliance with Daio Paper. As mentioned, Daio Kaiun has a serious conflict of interest
with the majority of the Company’s general shareholders who do not own shares of Daio Paper(excluding Oasis) with regard to a management integration issue between the Company and DaioPaper. If Daio Kaiun acquires large quantities of Company shares, it could harm the interests of
the Company’s general shareholders, and lead to an outcome that is contrary to the common
interests of the Company shareholders.
Furthermore, Daio Kaiun is proposing the “Election of Five (5) Directors” as a shareholder proposal
at this Ordinary General Meeting of Shareholders. However, none of the candidates has expressed any
particular opinions on the Company’s management policies, and it does not appear that they have aclear view of the Company’s management. As such, it is highly unlikely that Daio Kaiun or the
candidates proposed by that shareholder are prepared to tackle the management of the Company
seriously, and it is obvious that Daio Kaiun has no opinions about the Company’s management
policies. Therefore, if Daio Kaiun conducts Large-scale Acquisitions of Company shares, the influenceof Daio Kaiun et al. over the Company’s management will increase significantly. There is concern that
this will hinder the sincere management of the Company and could harm the Company’s medium- tolong-term corporate value and the common interests of its shareholders.
Thus, because of the fact that Daio Kaiun et al. have no interest in improving the Company’s
medium- to long-term corporate value and the common interests of its shareholders, and are
acquiring large quantities of Company shares as a means to achieve their own demands, which
are completely unrelated to the interests of the Company’s general shareholders; the fact that
there is a serious conflict of interest between Daio Kaiun and the majority of the Company’s
general shareholders (excluding Oasis) who do not own shares in Daio Paper, with regard to a
management integration issue between the Company and Daio Paper; and the fact that in lightof Daio Kaiun’s shareholder proposal, it is highly unlikely that Daio Kaiun or the candidates
proposed by the shareholder are prepared to tackle the management of the Company seriously,
and that Daio Kaiun has no opinions about the Company’s management policy, if Daio Kaiun etal. conduct Large-scale Acquisitions without following the procedures established in the Response
Policy, it undeniably could harm the Company’s medium- to long-term corporate value and thecommon interests of its shareholders. Therefore, if Daio Kaiun et al. attempt to conduct a Large-scale
Acquisition without complying with the procedures set forth in the Response Policy, “special
circumstances” will not exist, and, in accordance with the Response Policy, it therefore will become
necessary to implement the Countermeasures in order to prevent harm to the Company’s medium- tolong-term corporate value and the common interests of its shareholders.
3. Consultation with and Recommendations by the Independent Committee
As stated in Section 2 above, the Company’s Board of Directors repeatedly assessed and considered the- 17 -

impact of Large-scale Acquisitions by Daio Kaiun et al. on the Company’s corporate value and thecommon interests of its shareholders. The Company also repeatedly assessed and considered theadvantages and disadvantages of implementing the Countermeasures in the event that Daio Kaiun et al.
commence Large-scale Acquisitions.
Given these circumstances, the Company’s Board of Directors consulted the Independent
Committee (for details about the Committee, please refer to the Company’s press release dated
December 22, 2023, titled “Notice Concerning the Establishment of an Independent Committee andthe Appointment of Independent Committee Members” (only available in Japanese)), which iscomprised of four (4) independent Outside Directors who maintain independence from the Company’s
management team that is engaged in the execution of business, in order to ensure the fairness of its
decisions and to eliminate arbitrary judgements by the Company’s Board of Directors, on the impactof the Large-scale Acquisitions by Daio Kaiun et al. on the Company’s medium- to long-term corporate
value and the common interests of its shareholders, as well as the advantages and disadvantages ofactivating the Countermeasures.
On May 22, 2024, subject to the approval of this proposal, the Company received a recommendationfrom the Independent Committee stating that in the event that in the future Daio Kaiun et al. commence
Large-scale Acquisitions, without complying with the procedures set forth in the Response Policy,
assuming the unanimous consent of members of the Independent Committee, it will be appropriate for
the Board of Directors to implement the Countermeasures with the utmost respect for therecommendations of the Independent Committee at that time.
4. Submission of this proposal
In light of the fact that, as stated in Section 2.(1) above, there are specific assumptions that Daio
Kaiun et al. will engage in Large-scale Acquisitions without complying with the procedures set
forth in the Response Policy after this Ordinary General Meeting of Shareholders; as stated in
Section 2.(2) above, if Daio Kaiun conducts a Large-scale Acquisition, it is undeniable that theCompany’s medium- to long-term corporate value and the common interests of its shareholders
could be damaged; and based on the receipt of the recommendation from the Independent Committee
described in Section 3 above, from the perspective of respecting the will of the shareholders, theCompany requests that the shareholders at this Ordinary General Meeting of Shareholders giveprior approval for the Board of Directors to implement the Countermeasures (with the utmost
respect for the recommendations of the Independent Committee at that time) in the event that
Daio Kaiun et al. are deemed to have commenced Large-scale Acquisitions without complying
with the procedures set forth in the Response Policy.
The number of shares to be allotted per share acquisition right in accordance with theCountermeasures shall be one (1). For other details about the Countermeasures, please refer to Section
III.3 of the Response Policy Continuation Press Release.

- 18 -

Shareholder Proposals (Proposal 5 to Proposal 9)
These shareholder proposals were submitted by Oasis Japan Strategic Fund Ltd. And Oasis Investments II
Master Fund Ltd. The name of each proposal, an outline of the proposal, and the reasons for the proposal
are set forth in their original form, except for the addition of the candidate numbers in Proposal 6.

<Shareholder Proposals>
Proposal 5:
Dismissal of One (1) Representative Director(1) Summary of the proposal
Dismiss representative director Mr. Sekio Kishimoto.
(2) Reason for Proposal
Mr. Kishimoto has reigned as the sole representative director of the Company and has ruled with a
dictatorial management style while failing to nurture successors, resulting in the board of directors’
weakening and miscalculating of the long-term challenges, thus failing to present shareholders withprospects for growth. Last year’s turmoil, when the Company withdrew its decision to enter thehousehold paper business immediately after it was made, is an example.
The strategic business alliance with Daio Paper, due to the restrictions of the Competition Law
and conflicting interests between the two companies, is also unlikely to yield a return that iscommensurate with the cost. This is merely an attempt to justify the holding of Daio Paper shares bypretending that returns can be expected.
Furthermore, Mr. Kishimoto is clinging to self-preservation that ignores the interests ofshareholders, such as by hastily reinstating the takeover defense measures and introducing them to
Daio Kaiun, which has no intention of acquiring management control.
To overcome many challenges requiring medium- to long-term solutions, such as the shrinkingof the paper product market, decarbonization, and logistics reform, and to achieve sustainable growth,a new management team is necessary. Dismissing Mr. Kishimoto, eliminating his influence, andlaying the groundwork for the new management team to tackle the challenges together will be thefirst step to that end.

- 19 -

[Opinion of the Company’s Board of Directors]
The Board of Directors opposes this proposal based on the recommendations of the Nomination andCompensation Committee.
(i)

The Company’s Board of Directors, under the direction of Sekio Kishimoto, President and CEO(hereinafter, “Mr. Kishimoto” or “President and CEO Kishimoto”), formulated the Long-Term
Management Vision, “Vision 2020” in April 2011. Having achieved the goal of becoming a
global company in 2020, on May 22, 2020, the Company announced a new Long-Term
Management Vision, “Vision 2030,” with the goal of further, continuous growth as a global
business group. All of the consolidated management targets in the Medium-Term
Management Plan 2023, which was announced on May 15, 2020 as the core Medium-Term
Management Plan for Vision 2030, were achieved during the plan period. Additionally, on
May 26, 2023, we announced the Medium-Term Management Plan 2026, which sets
consolidated management targets that exceed those of the Medium-Term Management Plan
2023, and aims to achieve these consolidated management targets through further growthin net sales and operating income.

(ii)

In fact, during the period when Mr. Kishimoto was serving as President and CEO of theCompany, the Company’s sales growth ratio, operating profit margin growth ratio, net
profit margin growth ratio, and ROE growth ratio all exceeded the averages of ourcompetitors. In addition, the Company’s Total Shareholder Returns (TSR) were higher
than both the Tokyo Stock Price Index (TOPIX) and the averages of our competitors,
demonstrating that the Company’s management status is progressing favorably, from theperspective of key financial indicators. In FY2021, the Company recorded its highest operating
profit, ordinary profit, and net profit since its foundation, and in FY2022, consolidated sales
exceeded 300 billion yen for the first time since the company’s founding. Accordingly, thecriticism set forth in the Reason for Proposal 5, submitted by Oasis Japan Strategic Fund Ltd.
And Oasis Investments II Master Fund Ltd. (hereinafter, “Oasis Fund”), that “Mr. Kishimoto hasreigned as the sole representative director of the Company and has ruled with a dictatorial
management style …., thus failing to present shareholders with prospects for growth.” Iscompletely contrary to the facts.
In addition, the reason that the Company suspended plans to construct household paper
production facilities at the Niigata Mill in November 2022 was an appropriate and rational
management decision, based on changes in the business environment that occurred during
the same period, such as the expansion of production facilities by our competitors and arise in the prices of raw materials and fuel. Due to the expansion of our competitors’
production facilities, overall supply capacity in the industry is expected to increase by more than
10%. However, although domestic demand for sanitary paper will start to decline in 2023
(January to December), contrary to expectations, the volume of imported paper has notdecreased, and this increase in supply capacity is likely to lead to an oversupply for an extended
period of time. Our competitors in the household paper business are facing a difficult businessenvironment, as evidenced by the reporting of significant operating losses and the announcementof partial business pullouts. In light of these facts, we believe that there were no problems withthe management decision by the Company’s Board of Directors at the time of suspension of thehousehold paper business.

- 20 -

When these types of changes occur in the business environment, the response should beflexible and adroit, rather than adhering to previous management decisions. To criticize acompany as being in a state of “turmoil” simply because it changed a previous
management decision, can only be described as overlooking the assumptions underlyingthat management decision. Furthermore, of course the decision to suspend the plan for
construction of household paper production facilities was made after deliberation andconsideration, not only by President and CEO Kishimoto but also by the entire Board of
Directors, including the independent Outside Directors, and the Company decided on this action
because it decided that it was a means to protect the Company’s corporate value and the common
interests of its shareholders. Citing this as an example of a “dictatorial management style” isinappropriate. First, all of the Company’s independent Outside Directors have a high level of
independence, and exercise their supervisory functions through active discussions at Board of
Directors meetings. To ignore this point and label the Company as being subject to “ a dictatorial
management style,” without any particular basis for doing so, does not appear to be either
constructive or sincere.
(iii) In addition, Oasis Fund also claims that the strategic business alliance between the Company andDaio Paper is merely an attempt to justify the holding of shares of Daio Paper by pretending that
returns can be expected. However, as the Company announced in its “Notice Concerning theConclusion of a Basic Strategic Business Alliance Agreement between Daio Paper
Corporation and Hokuetsu Corporation” dated May 15, 2024 (hereinafter, this press
release shall be referred to as the “Business Alliance Press Release” and the businessalliance between Daio Paper and the Company shall be referred to as the “Business
Alliance”), the Company, acting with the approval of the Company’s Board of Directors,
executed a basic strategic business alliance agreement with Daio Paper, effective May 15,2024. This strategic Business Alliance aims to enhance medium- and long-term corporate
value by addressing the management issues of strengthening competitiveness andtransforming business portfolios through structural reforms, leveraging each company’s
strengths and complementing one another. We will launch our efforts in the fields ofproduction technology, raw materials purchasing, and product logistics, and three years
from now, in FY2026, we expect to see increases in operating profit of approximately 2.0
billion yen for Daio Paper and approximately 3.0 billion yen for the Company, for a
combined total of approximately 5.0 billion yen. In addition, the returns of the shares of DaioPaper held by the Company have exceeded the average capital cost for a long time, and theaforementioned increase in operating income resulting from the Business Alliance will improve
the return on assets further.
Implementation of the Business Alliance itself is based on the decision that Daio Paper and theCompany entering into a contractual business alliance will enhance the corporate value of bothcompanies more effectively than Daio Paper and the Company taking the step of entering into amerger or other form of business integration. After acquiring shares of Daio Paper, weconsidered all options for industry restructuring, including selling the shares of Daio Paper, andcame to the conclusion that a strategic business alliance with Daio Paper would be the mosteffective way of enhancing our corporate value. When making this decision, the Company set
up a Restructuring Review Committee, comprised only of the Company’s independent
Outside Directors, in order to deliberate the form of the alliance between Daio Paper andthe Company from a perspective independent of the Company’s management team, and to
conduct comparative studies on the advantages and disadvantages of management
integration and a business alliance, from multiple perspectives, taking into accountquantitative data. As a result, it was concluded that in order to obtain greater synergic benefits,
it would be appropriate for Daio Paper and the Company to work together as independent
management entities, while deepening the business alliance and pursuing synergic benefits. This
formed the basis for the decision above. Please see the Business Alliance Press Release fordetails about the Business Alliance.
From the perspective of providing information to shareholders as early as possible, the Company
announced that it was considering a strategic business alliance with Daio Paper, with the aim of
executing an agreement, in May this year in the “Notice of the Commencement of Discussions
for a Strategic Business Alliance between Daio Paper Corporation and Hokuetsu Corporation”(hereinafter “Press Release on Commencement of Discussions”) disclosed on February 13, 2024.

- 21 -Despite strategic business alliances with other companies, which require careful consideration,labeling the strategic business alliance between the Company and Daio Paper as an attempt tojustify actions by pretending that returns can be expected, only about two months after disclosureof the Press Release on Commencement of Discussions, can be described only as a hasty andarbitrary judgement. The aforementioned claims by Oasis Fund are not sincere claims based on
the Company’s corporate value and the common interests of its shareholders, but rather are
aimed solely at criticizing the Company. In the letter dated May 2, 2024 sent by Oasis
Management Company Limited (hereinafter, Oasis Management Company Limited shall bereferred to as “Oasis” and this letter from Oasis shall be referred to as the “May 2 Oasis Letter”)
in response to the letter sent by the Company to Oasis dated April 25, 2024 (hereinafter, the“April 25 Company Letter”), Oasis stated, “First, it will be impossible to form a consensus even
within your company [Company note: the Company] without spending an enormous amount oftime considering an extremely wide range of issues and challenges, including the necessity for
integration, the advantages and disadvantages of integration, the methods of integration, such asa merger or holding company, and the timeline for integration, in order to determine thepossibility of integration, forming a team to consider the issue, and how the business andorganization would look following this integration, [Company note: translated into English by
the Company]” thereby admitting that it takes an immense amount of time to consider
integration. Comparing this response with the fact that Oasis determined the strategic businessalliance between the Company and Daio Paper was merely an attempt at justification bypretending that returns can be expected in the reasons for this proposal only around two months
after the disclosure of the Press Release on Commencement of Discussions, it is clear that Oasis’claims are nothing more than inconsistent “criticism for the sake of criticism.”
In addition, with regard to the relationship between the Company and Daio Paper, Oasis(1) clearly stated in a letter dated February 10, 2023 that “We initially proposed selling theshares of Daio [Company note: Daio Paper; hereinafter the same in this paragraph] but …. given
the current circumstances, rather than sell the shares at this share price level .... we propose .... toachieve a merger with Daio in order to realize synergies with Daio,[Company note: translated
into English by the Company]” thereby clearly indicating it had changed its previous policy ofrequesting the sale of Daio Paper shares to a policy of requesting a merger with DaioPaper; (2) in the campaign materials published on May 22 of the same year, “Hold
Accountability Now: For the Improvement of Hokuetsu,[Company note: translated into
English by the Company]” (https://www.hokuetsucorpgov.com/why-accountability-now-j),
Oasis made a complete U-turn, and made claims calling for the sale of Daio Paper shares,
stating, “Hokuetsu’s refusal to sell its shares of Daio has caused a loss of 40.0 billion yen to
Hokuetsu and its stakeholders[Company note: translated into English by the Company],” and“the recommendation to sell cross-shareholdings is a well-known fact of corporate
governance.[Company note: translated into English by the Company]” (3) However, in a letter
dated March 19, 2024, after the announcement of the Press Release on Commencement of
Discussions, Oasis overturned that claim and requested the integration, stating, “It would bereasonable for your company [Company note: the Company] to pay a reasonable premium toacquire shares of Daio Paper and integrate management...,[Company note: translated into
English by the Company]” and “We also support the transaction above [Company note: theintegration between the Company and Daio Paper].[Company note: translated into English by theCompany]” (4) In a letter from the Company to Oasis dated April 25, 2024, the Company
pointed out that, as described in (vii) below, Oasis has a serious conflict of interest with the
majority of the Company’s general shareholders (excluding Daio Kaiun et al. (defined in (iv)
below)) who do not own shares of Daio Paper, with regard to the management integration
between the Company and Daio Paper proposed by Oasis. In response, in Oasis’ letter of May
2, as stated above, Oasis once again contradicted its argument, stating, “the advantages anddisadvantages of the integration are not an issue at the upcoming general meeting ofshareholders .... first, it will be impossible to form a consensus even within your company
without considering .... the necessity of the integration,[Company note: translated into English by
the Company]” as if Oasis never had argued a need for integration in the past.
The fact that Oasis has changed its claims in this way in an ad hoc matter is evidence it
has no opinions on management policies for the Company, and that its sole purpose is topursue its own selfish interests by exploiting its position as a shareholder of the Company
and the ninth largest shareholder of Daio Paper, as described in (vii) below.

- 22 -

Furthermore, as the relationship between the two companies has reached a new stage with theexecution of the basic strategic business alliance agreement, the Company will consider apartial reduction of its shareholding in Daio Paper to the extent necessary, based on therecommendations of a Restructuring Review Committee and in consultation with Daio Paper,taking into account the Company’s capital policy, various investment measures andshareholder returns, and using the gain on sale of the shares of Daio Paper as measures torealize the Medium-Term Management Plan 2026.
(iv) Oasis also claims “Furthermore, Mr. Kishimoto is clinging to self-preservation…. such as byhastily reinstating the takeover defense measures and introducing them to Daio Kaiun” However,with regard to the Company’s “Policy for Responding to the Large-Scale Acquisition of theCompany’s Share Certificates, etc., based on the Large-Scale Acquisition of the Company’s
Share Certificates by Daio Kaiun Co., Ltd.” (hereinafter, “Response Policy”)” which theCompany introduced on December 22, 2023, Toshitaka Igawa (hereinafter, “Mr. Igawa”), theeffective owner of Daio Kaiun, proposed to the Company that, in exchange for Daio Kaiun,
KAWASAKI PAPER TRANSPORT CO., Ltd., and Misuga Kaiun Co., Ltd. (hereinafter,
collectively, “Daio Kaiun et al.”) transferring the shares they held in the Company to theCompany, the Company would transfer the shares it holds in Daio Paper to Daio Kaiun.
Immediately after the Company refused the proposal, Daio Kaiun et al. made rapid, largescale acquisitions of Company shares on and off the market (hereinafter, the Large-scale
Acquisitions of the Company’s Shares by Daio Kaiun et al. shall be referred to as “the Share
Purchase”), and the Company was left with no choice but to introduce the Response Policy.
In other words, the company recognized that the purpose of the Share Purchase basicallywas for Daio Kaiun et al. to seize control over the management of Daio Paper, and was not
aimed at enhancing the Company’s corporate value, based on the history and manner of
rapid, large-scale acquisitions of shares of the Company by Daio Kaiun et al., as well as othercircumstances. Then, based on the belief that there was an undeniable risk that the outcomeof the Share Purchase could hinder maximization of the Company’s corporate value andthe common interests of our shareholders, the Response Policy was introduced with theintention of ensuring that the Company’s shareholders had sufficient information and time
to make appropriate decisions regarding the impact of the Share Purchase on the
Company’s corporate value, and the source of that value, and was not in any way designed
for the self-preservation of the Company’s management team, including President and
CEO Kishimoto. Furthermore, Daio Kaiun holds 5.62% of Daio Paper shares in terms ofownership ratio of share certificates, etc.; moreover, a person associated with Mr. Igawa,the effective owner of Daio Kaiun, has told the Company that Daio Kaiun controls 20% of
Daio Paper shares. In light of this, if Daio Kaiun succeeds in acquiring the 24.60% of DaioPaper shares owned by the Company, its total shareholding ratio would reachapproximately 45%, effectively enabling Daio Kaiun to take control of Daio Paper’s
management. In addition, when President and CEO Kishimoto and Mr. Igawa met on July
3, 2023, Mr. Igawa told President and CEO Kishimoto that “We were working together
with Oasis. From now on, we will go our separate ways.” Immediately prior to theintroduction of the Response Policy, Oasis Fund, or Oasis, which is understood to be an affiliateof the Oasis Fund (hereinafter Oasis Fund and Oasis shall be referred to collectively as “theOasis Group”), and Daio Kaiun engaged in joint cooperative acts (meaning “joint cooperative
acts, etc.” as defined in the Response Policy). The Company’s situation was such that it could
not dispel doubts and concerns over when those joint cooperative acts would occur again in the
future.
In fact, Tokyo Pulp & Paper Corporation (hereinafter, “Tokyo Pulp & Paper”) which issuspected of being in a joint cooperative relationship with Daio Kaiun et al. in light ofAttachment 2 “Certification Criteria for Joint Cooperative Acts, etc.” of the Response
Policy (meaning “a relationship in which the parties act jointly or cooperatively” as definedin the Response Policy; hereinafter, the same shall apply), conducted large-scaleacquisitions of shares of the Company on March 15, 2024 and March 18, 2024, immediately
after introduction of the Response Policy, without following the procedures set forth in the
Response Policy. Based on these facts, we believe that the introduction of the Response
Policy is reasonable and was not done for self-preservation by the Company’s management
team. For details of the foregoing, please refer to “Continuation of the Response Policy- 23 -

Regarding Large-scale Acquisitions of the Company’s Share Certificates, etc., by Daio Kaiun
Co., Ltd. et al. in Light of Large-scale Acquisitions of the Company’s Share Certificates, etc.”
dated May 22, 2024, and Proposal 4.
(v)

Oasis Fund claims “To overcome many challenges requiring medium- to long-term solutions….
and to achieve sustainable growth, a new management team is necessary.” In terms of the rights
to control the management of the Company, of the shareholder proposals submitted by Oasis
Fund, if Proposals 5 to 7 (hereinafter, collectively “the Director-Related Shareholder Proposals”)
are approved, because the term of office of the Company’s incumbent Directors will expire at theconclusion of the Company’s Ordinary General Meeting of Shareholders scheduled to be held in
June 2025, the Company’s Board of Directors will be comprised of ten (10) members: the five(5) incumbent internal Directors and the five (5) Outside Directors proposed by Oasis Fund(hereinafter, “Oasis-Proposed Directors”).
Since resolutions by the Company’s Board of Directors are made by a majority of the Directors
in attendance (Article 28, Paragraph 1 of the Company’s Articles of Incorporation), if all of the
Director-Related Shareholder Proposals are approved, the Oasis Group will have vetorights at the Company’s Board of Directors meetings, through the Oasis-Proposed
Directors. In addition, the Nomination and Compensation Committee, which deliberates onmatters such as the selection of Director candidates, the Director compensation system, and theprocess of selecting successors, is chaired by an Outside Director and comprised of two (2)Outside Directors and one (1) internal Director, who is the Representative Director. The
Corporate Governance Code requires that a majority of the Nomination and Compensation
Committee, which is a committee voluntarily established by the Company, be comprised ofindependent Outside Directors. Therefore, if all of the Director-Related Shareholder
Proposals are approved, the two (2) Outside Directors who comprise the majority of theNomination and Compensation Committee are expected to be Oasis-Proposed Directors,
and the Oasis Group therefore will be able to influence decisions relating to theNomination and Compensation Committee’s selection of Director candidates, etc., for theCompany through those Oasis-Proposed Directors.
Considering these points, if all of the Director-Related Shareholder Proposals are approved,
the Oasis Group ultimately will have substantive decision-making authority over Director
candidates, including internal Directors of the Company, and in effect will take control of
the Company’s management.
In connection with this, Oasis Japan Strategic Fund Ltd. submitted a proposal at an
Extraordinary General Meeting of Shareholders of FUJITEC CO., LTD. (hereinafter,“FUJITEC”) held on February 24, 2023 for the dismissal of six (6) incumbent Outside Directors
and the election of six (6) Outside Directors. As a result, after four (4) out of FUJITEC’s nine (9)Directors became Directors proposed by Oasis Japan Strategic Fund, all of the previous internal
Directors, including the Representative Director, President, and CEO, resigned at the conclusionof FUJITEC’s Ordinary General Meeting of Shareholders held on June 21, 2023.

(vi) Therefore, based on the fact that the “Guidelines for Corporate Takeovers – Enhancing
Corporate Value and Securing Shareholders’ Interest – “ announced by the Ministry of
Economy, Trade and Industry on August 31, 2023 (hereinafter, “the Guidelines”) state that“there is another issue regarding transparency in cases of corporate control acquisition,
where a shareholder proposing an election or dismissal of directors acquires a significant
amount of shares in concert with other shareholders, without disclosing its intention toacquire corporate control, and subsequently requests a convocation of the shareholders’meeting to resolve its proposal to replace the directors with those whom it can influence.
Such a situation involves the possibility that a specific party may acquire corporate control
without the shareholders deciding on the pros and cons of the acquisition (as a result of thedispersion of shareholdings among multiple parties, there also may be a risk of violating or
circumventing large-shareholding reporting regulations). ...... when making a request toconvene a shareholders meeting to replace a number of directors for the purpose of
acquiring corporate control, it is advisable for the acquirer requesting for the meeting tofurnish shareholders with a summary of the purpose of the request, the person requesting
the meeting (and the persons, if any, who have agreed with the person requesting for the
meeting on the acquisition or disposal of shares, or the exercise of rights as shareholders),- 24 -

the basic management strategy after the proposal is approved, and other appropriate
information at least to the same extent as that contained in the tender offer registration
statement,” [underlined by the Company for emphasis] the Company sent a letter to Oasis dated
April 25, 2024, stating the foregoing facts to Oasis and inquiring as to its basic management
policy with regard to the Company (including but not limited to management policy, businessplans, capital policy, and dividend policy) if all Director-Related Shareholder Proposals areapproved. In response, in the May 2 Oasis Letter, Oasis criticized the Company, responding that,“These Outside Directors [Company note: Oasis-Proposed Directors] bear responsibility forfulfilling their duties in the interests of your Company and, by extension, all shareholders. They
are not acting in the interests of our company, and the premise that their election will result in ourcompany taking control of your company’s management is, in itself, a major error[Company note:translated into English by the Company].” With regard to the Company’s management policy
following the approval of all the important Director-Related Shareholder Proposals, Oasis merely
responded that, “In order for your company [Company note: the Company] to overcome
numerous challenges that require medium to long-term solutions, including the shrinking paper
products market, decarbonization, and logistics reform, and to achieve sustainable growth, we aim
to eliminate Mr. Kishimoto’s influence and lay the groundwork for all executives and employees
to work together to address the issues under a new management team,” further adding, “In orderto overcome this impasse by replacing the Outside Directors and maximize synergies with DaioPaper, we aim not only to achieve integration but also to lay the groundwork for considering andcomparing all options and working on the best solution [Company note: translated into English by
the Company],” without providing any specific management policy.
These responses are abstract; they hardly can be described as sincere answers from a party
that actually has a plan to manage the Company, and can only be said to be contrary to therequirements in the Guidelines above. Furthermore, as described in footnote 15 to the Guidelines,
Directors dispatched from a controlling shareholder are on the list of persons who may have aconflict of interest with general shareholders; therefore although it is generally accepted that
Directors dispatched from a specific shareholder will act in the interests of that dispatching
shareholder at the company to which they have been dispatched, the aforementioned
criticism by Oasis ignores this fact and is irrational, and appears to simply be sophistry
designed to avoid giving concrete responses to questions regarding management policy. It
therefore is inconceivable that the Oasis Group is taking a serious approach to the
management of the Company. Furthermore, with regard to the shrinking paper products market,
decarbonization, and logistics reform mentioned by Oasis in its aforementioned response and in
the Oasis Fund’s shareholder proposal document as challenges facing the Company, we alreadyformulated measures to address these issues in our Medium-Term Management Plan 2026.
(vii) In addition to the above, the Oasis Group, like Daio Kaiun et al., currently owns a significant
number of shares of Daio Paper and, with regard to a business integration between the
Company and Daio Paper proposed by Oasis, has a serious conflict of interest with the
majority of the Company’s general shareholders (excluding Daio Kaiun et al.) who do not
own shares of Daio Paper. The Oasis Group previously proposed a management integration
between the Company and Daio Paper (hereinafter, the “Management Integration Proposal”) in
which the Company would pay a premium to acquire shares of Daio Paper. From thestandpoint of being a major shareholder in Daio Paper, aiming to approve the DirectorRelated Shareholder Proposals, which would lead to the Company’s management control
rights effectively being taken over, while making the Management Integration Proposal,
could harm the interests of the majority of the Company’s general shareholders (excluding
Daio Kaiun et al.) who do not own shares of Daio Paper, and result in a conflict with thecommon interests of our shareholders. In addition, with regard to this point, in the May 2
Oasis Letter, Oasis claims that the assertion that there is a structural conflict of interest is“unfounded” for the same reason as the aforementioned criticism. As mentioned above, however,such a claim overlooks the obvious premise of footnote 15 of the Guidelines, that Directors
dispatched from a controlling shareholder are on the list of persons who may have conflicts ofinterest with general shareholders, and that the dispatch of Directors could result in a structural
conflict of interest between the dispatching shareholder and the other general shareholders (asDirectors dispatched from a certain shareholder may sacrifice the interests of generalshareholders in favor of the interests of that shareholder), and is a completely unpersuasive- 25 -

argument.
For the reasons presented above, the Board of Directors of the Company opposes theshareholder proposal.
Furthermore, as part of the successor selection process, the Nomination and Compensation
Committee, which is an advisory body to the Board of Directors, continuously considers andreviews succession plans and evaluates an expanding pool of candidates, including candidates solicitedfrom outside the Company, or recommended young persons, based on “the management requirements ofa Representative Director (the ability to have a clear vision and execute it, portfolio management ability,and global governance ability as an international company, etc.)” from multiple perspectives. As a result,as you already may be aware, last year we commenced a dual senior manager system with one
technical person and one sales person and established a succession system.

- 26 -

<Shareholder Proposals>
Proposal 6:
Dismissal of Four (4) Outside Directors(1) Summary of the proposal
Dismiss outside directors Messrs. Mitsuyasu Iwata, Kazuo Nakase and Hiromitsu Kuramoto and Ms.
Hiroko Nihei.
(2) Reason for Proposal
These four outside directors have allowed Mr. Kishimoto’s autocratic behavior and pandered to him,lack independence from the management team and monitoring functions, thus rendering them
unsuitable to serve as independent outside directors. This is clearly evidenced by the instance inwhich the board of directors hastily reinstated the takeover defense measures and adopted themagainst Daio Kaiun. In this instance, none of them restrained Mr. Kishimoto, but rather served as
members of the independent committee and facilitated the re-introduction of the takeover defense
measures. The takeover defense measures were originally intended to be introduced against largescale purchasers aiming to gain control of the Company’s management. However, Daio Kaiun had nosuch intention of acquiring control of the Company. Nevertheless, the board of directors adopted
them against Daio Kaiun without a resolution at the shareholders' meeting. This is an attempt at selfpreservation by Mr. Kishimoto of his vested interests, disregarding the interests of the shareholders.
The responsibility of the four outside directors, as members of the independent committee, forassisting Mr. Kishimoto’s personal self-preservation attempt is grave. For the improvement of thegovernance structure of the Company, it is imperative to dismiss these four individuals and replacethem with truly independent outside directors who can fulfill their monitoring functions.

- 27 -

[Opinion of the Company’s Board of Directors]
The Board of Directors opposes this proposal based on the recommendations of the Nomination andCompensation Committee.
As stated in section (iii) of the [Opinion of the Company’s Board of Directors] on Proposal 5 above, theResponse Policy was introduced with the intention of ensuring that the Company’s shareholders
have information and time to make appropriate decisions regarding the impact of the Share
Purchase on the Company’s corporate value, and the source of that value, and is not in any way
for the self-preservation of the Company’s management team, including President and CEO
Kishimoto. In addition, Tokyo Pulp & Paper, which is suspected of being in a joint and cooperative
relationship with Daio Kaiun et al. in light of Attachment 2 “Certification Criteria for Joint
Cooperative Acts, etc.” of the Response Policy, conducted large-scale acquisitions of shares of theCompany on March 15, 2024 and March 18, 2024, immediately after the introduction of the
Response Policy. Based on these facts, we believe that the introduction of the Response Policy isreasonable and is not for the self-preservation of the Company’s management team. Consequently,
the criticism that the incumbent Outside Directors of the Company cooperated with Mr. Kishimoto’s
attempts at self-preservation by introducing the Response Policy is completely inaccurate. Each
independent Outside Director of the Company exercises good judgment ,without accommodating
President and CEO Kishimoto, with regard to each management decision of the Company inorder to fulfill his or her duty of care as a prudent manager, based on the directors’ respective
insights, from the perspective of maximizing the Company’s medium- and long-term corporate
value and the common interests of its shareholders.
Specifically, since Mitsuyasu Iwata has extensive experience holding several important positions at
the Ministry of Economy, Trade and Industry (formerly the Ministry of International Trade andIndustry) and has deep insight as an electric power company manager, he actively fulfills his role on the
Company’s Board of Directors, supervising the execution of business operations and providing
management advice.
In addition, Kazuo Nakase has extensive experience in the paper manufacturing industry and deep
insight as an experienced corporate manager. Based also on his experience actively fulfilling his role instrengthening the auditing function of the Company’s management as Outside Audit & Supervisory
Member on the Board of Directors, he has fulfilled the role of Outside Director, supervising theexecution of business operations and providing management advice, since June 2017. Furthermore,
although he resigned from his position as President; Chief Executive Officer of Mitsubishi Paper Sales
Co., Ltd. (currently Mitsubishi Oji Paper Sales Co., Ltd.) in June 2015, and the Company has
transactional relationships, including sales, with that company, the amount of those transactions
constitutes less than 1% of the Company's consolidated net sales, hence, there is no risk of conflicts ofinterest with general shareholders.
Hiromitsu Kuramoto has extensive international experience and deep insight as an experienced
corporate manager. He fulfills his role in bringing a global perspective to the Company’s Board of
Directors and supervising business execution and providing advice on management through thatperspective. Furthermore, although he resigned from his post as President and Representative Director of
Nippon Yusen Kabushiki Kaisha (NYK Line) in April 2010, and the Company has transactional
relationships, including sales, with that company, the amount of those transactions constitutes less than
0.2% of the Company's consolidated net sales, hence, there is no risk of conflicts of interest with generalshareholders.
Also, Hiroko Nihei has advanced, specialized legal knowledge, cultivated as an attorney at law, andhas extensive legal experience, mainly in international commercial law. She fulfills her role ofsupervising business execution and providing management advice, including from the perspective ofgender and diversity, on the Company’s Board of Directors.
The Company has designated all Outside Directors as independent officers, as required by the Tokyo
Stock Exchange.
In addition, all of the Outside Directors have a high level of independence, and considering theircareer backgrounds and skills, are able to exercise their supervisory function over businessexecution from an independent and objective standpoint without being influenced by the
inclinations of President and CEO Kishimoto. The Outside Directors proactively and effectively
supervise the Company’s executive team, including President and CEO Kishimoto. In fact, there have- 28 -

been situations in which policies regarding the implementation, withdrawal, or downsizing of newlarge-scale investment projects, etc., have been revised due to strict advice and opinions from
Outside Directors. The Company’s management decisions thus are based on the frank opinions
and advice of Outside Directors, who are independent from the executive team.
In light of the combination of skills and diversity of their gender and backgrounds, we believethat these four independent Outside Directors are indispensable in order for the current Board of
Directors to maximize its supervisory function.
In addition, if the Director-Related Shareholder Proposals, including this shareholder proposal, areapproved, although the Oasis Group effectively would take control of the Company’s management, thefact that it is inconceivable that the Oasis Group is taking a serious approach to the management of
the Company, and that fact that from the standpoint of its being a major shareholder in Daio Paper,
aiming to approve the Director-Related Shareholder Proposals, which would lead to theCompany’s management control rights effectively being taken over, while making theManagement Integration Proposal, could harm the interests of the majority of the Company’s
general shareholders (excluding Daio Kaiun et al.) who do not own shares of Daio Paper, andcould result in a conflict with the common interests of our shareholders, are as set forth in sections(iv) and (v) of the [Opinion of the Company’s Board of Directors] on Proposal 5 above.
For the foregoing reasons, the Board of Directors of the Company opposes the shareholder
proposal.

- 29 -

<Shareholder Proposals>
Proposal 7:
Election of Five (5) Outside Directors(1) Summary of the Proposal
Appoint Ms. Wendy Shiba and Messrs. Kenneth Nyssen, Yuuichiro Nakajima, Michael Baisley andOsamu Watanabe as outside directors.
(2) Reason for Proposal
The profiles and reasons for proposing each of the five candidates as outside director candidates are
as follows:

No.

1

2

Name
(Date of Birth)
Number of Company Shares
held by the Candidate

Wendy Shiba(November 15, 1950)
Number of Company
Shares held by the
Candidate: 0

Kenneth Nysten(September 7, 1958）
Number of Company
Shares held by the
Candidate: 0

Past experience, positions, and significant concurrent positions.
6/19799/19806/1985
1/1992
6/1993
7/1993
5/1997
7/1998
11/2001
12/2001
5/20069/2007
10/2007
4/2014
11/2021
1983
1987
1990
1995
1996
1997
1999
2002
2007
2008
2011
2012
2012
2017
2018

Supreme Court of California1, Law Clerk
O’Melveny & Myers LLP
Temple University School of Law, Assistant Professor of Law
City of Philadelphia Law Department, Corporate Chair
Bowater Incorporated, Assistant General Counsel
Bowater Incorporated, Secretary
Bowater Incorporated, Vice President
Bowater Canada Inc., Board of Directors
PolyOne Corporation, Chief Legal Officer
PolyOne Corporation, Vice President and Secretary
PolyOne Corporation, Senior Vice President
KB Home, General Counsel
KB Home, Executive Vice President and Secretary
C.T. Hagberg & Associates, Independent Contractor(Incumbent)
The Red Bee Group, Principal (Incumbent)
Madden Board Ltd., Sales Manager
Finnboard Singapore Ltd., Managing Director
Finnboard & Finnpap HK Ltd., Managing Director
Skärgårds Kompaniet AB, Finland, Chairman
Metsä-Serla Ltd., Managing Director
Stora Hong Kong Ltd, Managing Director
Stora Enso China Sales / Stora Enso Greater China Ltd.,
President
Stora Enso Suzhou Paper Company Ltd., Director
Kemira Oy, Vice President of Sales and Marketing – EMEA
Kemira Oy, Senior Vice President, Printing & Writing
Kemira Oy, Regional Head – APAC
Kemira Oy, Senior Vice President, Pulp & Paper – EMEA
Kemira Chemicals Oy / Kemira Kemi AB, Chairman
Algol Oy, Finland, Member of the Supervisory Board(Incumbent)
Iggesund AB, Senior Vice President, Global Sales & Marketing- 30 -

4/1982 Overseas Economic Co-operation Fund (Japanese ODA
execution agency)
9/1987
9/1997
9/19999/2001
10/20034/20073

Yuuichiro Nakajima（February 4, 1960）
Number of Company
Shares held by the
Candidate: 0

10/2009
8/20124/20149/2017
12/2019
1/20244Michael Baisley（November 16, 1969）
Number of Company
Shares held by the
Candidate: 0

1/2024
9/1992
10/19972/200910/20105/2013

S.G.Warburg/SBC Warburg, Director
Crosby Corporate Advisory, Director and Head of Execution
PwC United Kingdom
PwC, Managing Director
Crimson Phoenix (Japan), Founder and Managing Director(Incumbent)
Business Development Asia, Managing Director / Representative
Director for Japan
Japan Football Association, Member of President’s Advisory
Board
Crimson Phoenix Limited (United Kingdom), Managing Director(Incumbent)
JPMorgan Japan Small Cap Growth & Income plc, Nonexecutive Director and Member of Audit and Nominations
Committees
FIFA (Fédération Internationale de Football Association),
Member of Audit and Compliance Committee
Japan H.L. Limited, Independent Non-executive Director
and Chairman (Incumbent)Montanaro UK Smaller Companies Investment Trust plc,
Independent Non-executive Director (Incumbent)
ICEED UK, Trustee (Incumbent)
PwC, Senior Consultant
Knox & Co., Managing Director
Truenorth Capital Partners LLC, Managing Director
SMBC Nikko Securities America, Inc., Co-Head of M&A
SMBC Nikko Securities America, Inc., Managing Director, Headof M&A

1/20164/20198/202010/2021
12/2022

Kao Corp
OMM Law OfficeOsamu Watanabe
Shinju Law Office (Incumbent)（March 29, 1987）
Waver Energy KK, Independent Director (Incumbent)
5
Number of Company
Y.S. FOOD CO., LTD., Independent Director (Incumbent),
Shares held by theVice Chairperson of Compliance Committee
Candidate: 0
10/2023 ImageONE Co., Ltd., Third-Party Committee
2/2024 MBK Co.,Ltd., Third Party Committee (Incumbent)
1 There is no conflict of interest between each outside director candidate and the Company.
2 If Ms. Wendy Shiba and Messrs. Kenneth Nysten, Yuuichiro Nakajima, Michael Baisley and Osamu
Watanabe are appointed as independent outside directors, a limited liability agreement will be enteredinto with each of them. The liability cap based on this agreement will be set at the minimum liability limit
prescribed by law.

(1) Ms. Wendy Shiba
Ms. Shiba is an experienced lawyer and a former C-level executive officer of three NYSE-listedcompanies including former Bowater Inc., a major Canadian paper company now known as Resolute
Forest Products, operating in the pulp and paper industry. With extensive industry experience andpractical insights, she is expected to contribute to establishing the Company’s corporate governancepractices to meet global standards. Additionally, she has experience in industry restructuring, having
been involved in the organizational restructuring when Bowater Inc. merged to become Resolute Forest
Products. Her expertise and insights are invaluable to lay a foundation necessary to overcome numerous
challenges that require medium to long-term solutions, including the shrinking paper products market,
decarbonization, and logistics reform, and to achieve sustainable growth in the global market.
- 31 -

(2) Mr. Kenneth Nysten
Mr. Nysten has extensive executive management experience in the European pulp and paper industry,and notably served as Senior Vice President of Global Sales at Iggesund AB in Sweden and at the Paperand Pulp Division of Kemira Oy in Finland. With over 30 years of sales expertise in the paper industry
spanning Asia, Europe, and North America, he brings a wealth of knowledge to the table. Notably, at
Kemira, he successfully revitalized underperforming businesses across Europe and Africa. With suchextensive industry experience and expertise, he is expected to contribute to the expansion of theCompany’s global business. Additionally, he has been involved in various restructuring efforts within
the paper industry. Such experience and knowledge are invaluable to lay a foundation necessary to
overcome numerous challenges that require medium to long-term solutions, including the shrinking
paper products market, decarbonization, and logistics reform, and to achieve sustainable growth in the
global market.
(3) Mr. Yuuichiro Nakajima
Mr. Nakajima brings over 30 years of experience as a strategic corporate finance and M&A advisor. He
has also served as a member of the Audit and Compliance Committee of FIFA (Fédération
Internationale de Football Association). Additionally, he has served as an outside director at various
investment firms, providing him with deep insights into corporate valuation methodologies and investor
engagement strategies. With his extensive experience and knowledge in capital markets and M&A, he isexpected to contribute to facilitating dialogue with the investors of the Company, promoting investment
for growth, and enhancing corporate governance. His expertise in strategic corporate finance and market
engagement is invaluable to lay a foundation necessary to overcome numerous challenges that require
medium to long-term solutions, including the shrinking paper products market, decarbonization, andlogistics reform, and to achieve sustainable growth in the global market.
(4) Mr. Michael Baisley
Mr. Baisley is a certified public accountant in the United States and has previously served as the head of
the M&A department at SMBC Nikko Securities America Inc., with an extensive track record of
supporting the global expansion of numerous Japanese companies, including companies from thedomestic and international paper industry. With his extensive 25-year experience in M&A andspecialized understanding of global corporate governance standards, he is expected to contribute not
only to evaluating synergies in future M&A investments, but also to global business expansion andoverseas M&A endeavors. His experience and insights in M&A transactions involving Japanesecompanies are invaluable to lay a foundation necessary to overcome numerous challenges that require
medium to long-term solutions, including the shrinking paper products market, decarbonization, andlogistics reform, and to achieve sustainable growth in the global market.
(5) Mr. Osamu Watanabe
Mr. Watanabe has extensive expertise in corporate law, including antitrust law, as a lawyer in Japan andholds qualifications as a Certified Fraud Examiner. With his knowledge and expertise in corporate law
and compliance, he can contribute to establishing, verifying, and educating on compliance measures
within the Company, including those pertaining to antitrust law. Additionally, he is expected tocontribute to improving the Company’s internal reporting / whistle blowing system into an effective
mechanism and to establish the system as a means for management to attentively listen to employee
feedback. Additionally, based on his experience serving as an outside director for publicly listedcompanies, he is expected to contribute to fostering genuine dialogue between the Company and its
shareholders and the capital market.

- 32 -

[Opinion of the Company’s Board of Directors]
The Board of Directors opposes this proposal based on the recommendations of the Nomination andCompensation Committee.
As set forth in section (iv) of the [Opinion of the Company’s Board of Directors] on Proposal 5 above,
the Company has established a Nomination and Compensation Committee, the majority of the membersof which, and the chairperson of which are independent Outside Directors, as a advisory body to theBoard of Directors, with the aim of ensuring transparency and objectivity in the decision-making process
for Director candidates and Director compensation. In terms of candidates selected for the office of
Director, the Nomination and Compensation Committee prepared nomination proposals based on theevaluation of factors such as the possession of qualities that are useful for realizing effective corporate
governance and enhancing corporate value in a stable manner over the long term, and the Board of
Directors then selected the candidates based on those proposals. With regard to the selection ofcandidates for the Company’s current Board of Directors, the Nomination and Compensation Committee
followed a careful decision-making process, including meeting a total of seven times over a period of
approximately one year, from April 2022 to March 2023, and repeatedly considered the composition andhuman resources needed for the Company’s Board of Directors. In particular, given that the Company
currently faces the need to make specific management decisions regarding the restructuring of theindustry, including the nature of its alliance with Daio Paper, in addition to promoting globalization andnew businesses, it is necessary to have a Board of Directors that includes Outside Director(s) who fully
understand the current state of the industry, in order to manage the Company with appropriate advice
from and supervision by Outside Directors. As shown in the Skill Matrix published in the Notice ofConvocation of the 185th Ordinary General Meeting of Shareholders of the Company, theCompany’s incumbent Directors who were selected in this manner have close familiarity with theCompany’s business, and each of them has skills and expertise in areas that include corporate
management, an international mindset, industry knowledge, ESG/sustainability,
finance/accounting, technology/IT (production/R&D), sales/marketing, humanresources/labor/legal affairs, and purchasing/procurement. The Company’s current Board of
Directors, which is comprised of these incumbent Directors, is considered to be an optimal teamoverall, from the perspective of the balance of scale, skill sets, diversity, and other factors. The
status of the Company’s management is progressing favorably from the perspective of key
financial indicators under the management of the Company’s current Board of Directors, as
described in section (i) of the [Opinion of the Company’s Board of Directors] on Proposal 5 above, andthis fact is considered to be an indication that the Company’s current Board of Directors is
performing its supervisory function appropriately as a team.
In response, Oasis has proposed the election of five (5) Oasis-Proposed Directors. However, as statedin section (iv) of the [Opinion of the Company’s Board of Directors] on Proposal 5 above, if the
Director-Related Shareholder Proposals, including this shareholder proposal, are approved, although the
Oasis Group effectively would take control of the Company’s management, Oasis provided only an
abstract response, without mentioning any specifics about the basic policy for management of theCompany following the approval of the Director-Related Shareholder Proposals, contrary to theintention of the Guidelines. Therefore, it is inconceivable that the Oasis Group is taking a serious
approach to the management of the Company. Moreover, Oasis, which is a major shareholder ofDaio Paper, is aiming to approve its Director-Related Shareholder Proposals, which could result
in control of the Company effectively being taken over, while making the Management Integration
Proposal. This could harm the interests of the majority of the Company’s general shareholders(excluding Daio Kaiun et al.) who do not own shares of Daio Paper, and result in a conflict withthe common interests of our shareholders. In addition, it is important to note that since Oasis has not
specifically indicated its management policy for the Company after approval of the Director-Related
Shareholder Proposals, it is difficult even to consider whether the candidates in this shareholder proposal
have skills that are appropriate for the Company’s Board of Directors.
In addition, the Company’s Nomination and Compensation Committee sent a letter of inquiry,
through Oasis, to each candidate in this shareholder proposal, dated April 26, 2024, inquiring about their
management policy, etc., for the Company upon assuming office as an Outside Director of theCompany. In response, each candidate stated that 1) they were approached by Oasis aboutbecoming a candidate for Outside Director of the Company in February or March 2024; 2) with- 33 -

the exception of Osamu Watanabe, they all indicated that they had no experience whatsoever as an
Outside Director of a listed company in Japan; and all of the candidates responded only by sayingthat 3) they do not have any firm ideas about the management policy for the Company at thispoint but will consider it in the future. Thus, it does not appear that any of the candidates in thisshareholder proposal is prepared to seriously tackle the management of the Company seriously,
and it is highly unlikely that they have any opinions on the Company’s management. In addition,
among the candidates in this shareholder proposal, the only one with experience as an Outside Director
at a listed company in Japan is Osamu Watanabe, who was nominated as a Director candidate proposedby the shareholder along with a request to hold an extraordinary general meeting of shareholders for
Y.S. Food Co., Ltd. (listed on the TSE Standard Market), which operates a ramen restaurant franchise.
Furthermore, none of the candidates is familiar with Japan’s paper industry. Domestic manufacturers
account for the majority market share in Japan, and knowledge of Japan’s unique business environment,with its high waste paper recovery rate, high-quality paper products, and logistics systems, is essential.
This enables appropriate management decisions and supervision by the Board of Directors, and thecandidates in this shareholder proposal can only be described as lacking these elements.
Moreover, among the candidates in this shareholder proposal, Osamu Watanabe, who is the only
person with experience as an Outside Director at a listed company in Japan, 1) represented the Oasis
Group in submitting a Statement of Large-Volume Holdings related to numerous companies atthe law firm where he is a representative, and has a career background at OMM Law Office, which isrepresented by attorney Kazumasa Otsuka, who has close ties to the Oasis Group, including
involvement in the campaign against Alpine Co., Ltd. and supporting an attorney affiliated withthe law office as a Director candidate in the Oasis Group’s shareholder proposal; 2) together withattorney Hideaki Numai, formerly of Nijubashi Law Office (currently Iwaida Partners; the office is thesubmission agent and administrative contact for the Statement of Large-Volume Holdings pertaining to
the shares of the Company submitted by Oasis Fund) where that same attorney, Kazumasa Otsuka, was a
representative, he not only served as a member of the Third-Party Committee of Merchant Bankers Co.,
Ltd.; but also 3) he serves as the Third-Party Committee Investigation Assistant for ImageONE Co., Ltd.
which announced through OMM Law Office, on its company website, that it successfully fought a proxyfight on behalf of the Oasis Group, and it appears that he has a close relationship with attorney
Kazumasa Otsuka and his associates, which raises doubts over his independence from the Oasis
Group.
Since Wendy Shiba has no experience as an officer at a domestic listed company, we cannot
expect her to contribute to our corporate governance to an extent that she could replace ourexisting Outside Directors. In addition, as set forth in our Medium-term Management Plan 2026, weplan to expand our business globally, mainly in Asia, but as Ms. Shiba has worked only in North
America, her global knowledge is unlikely to be beneficial to the Company. Furthermore, when
examining Ms. Shiba's skills, other than global-mindedness, which her career summary suggests, there isconsiderable overlap with the skills of other Directors in the skill matrix of the current Board of
Directors. Therefore, we cannot expect her to contribute enough to replace our current Outside Directors
and see no reason to appoint her as an Outside Director of the Company.
Since Kenneth Nysten has no experience as an officer at a domestic listed company, we cannot
expect him to contribute to our corporate governance to the extent that he could replace ourexisting Outside Directors. In addition, according to the shareholder proposal, he has experience in thepulp and paper industry in Europe and elsewhere. However, as mentioned above, knowledge of Japan’s
unique business environment is essential in the Japanese pulp and paper industry, and Mr. Nysten lacks
this knowledge, which should be a basic premise. Therefore, we cannot expect him to contribute enoughto replace our current Outside Directors and see no reason to appoint him as an Outside Director of theCompany.
Yuuichiro Nakajima already serves as an officer at five companies, and if he becomes an Outside
Director of the Company, he will serve concurrently as an officer of six companies. Supplementary
Principle 4-11 (2) of the Corporate Governance Code states that concurrently serving as an officer atmultiple companies should be done only within a reasonable scope, to allow for the allocation of theproper time and effort required to fulfill the roles and responsibilities of a Director or Auditor. However,
if he holds the position of officer at as many as six companies, we are concerned that he may not be able
to devote sufficient resources to his role as Outside Director of the Company. In addition, based on his
career summary, Mr. Nakajima does not appear to have knowledge or skills related to Japan’s pulp andpaper industry. His expertise in finance overlaps with the skills of other Directors in the skill matrix ofthe current Board of Directors; therefore, we see no reason to appoint him as an Outside Director of the- 34 -

Company.
Since Michael Baisley has no experience as an officer at a domestic listed company, we cannot
expect him to contribute to our corporate governance to the extent that he could replace our existingOutside Directors. In addition, although the shareholder proposal documents state that he has experiencein M&A, given that he was involved in M&A projects in the United States based on his qualifications as
a certified public accountant, we believe that his experience and knowledge are likely to be biased
toward the perspective of U.S. law. The Company's Outside Directors already include Hiroko Nihei,
who works at the office of an international law firm based in the United States, based on her
qualifications as a Japanese attorney at law, and who provides the Board of Directors with her
knowledge and experience in both Japanese and U.S. law. Therefore, we see no reason to appoint
Mr. Baisley, whose knowledge of Japanese law is inferior to that of our existing Outside Directors,
as Outside Director of the Company.
For the reasons presented above, the Board of Directors of the Company opposes the shareholder
proposal.

- 35 -

<Shareholder Proposals>
Proposal 8:
Determination of Basic Remuneration for Each Outside Director(1) Summary of the Proposal
The amount of basic remuneration for each external director shall be 15,000,000 yen per fiscal year.
(2) Reason for Proposal
This proposal proposes that the amount of basic remuneration for each outside director of theCompany be determined. The total amount of remuneration for directors was decided at the 178thOrdinary General Meeting of Shareholders held on June 28, 2016, in which a resolution on theaggregate amount of remuneration for all directors was approved. This proposal proposes approval of
the amount of remuneration for each outside director, increasing predictability in remuneration andenabling the Company to bring in competent personnel who can exercise supervision over the
management team. In addition, clearly determining at the general meeting of shareholders the amountto be received by an individual in advance, rather than leaving it to the deliberation of the Nomination
and Compensation Committee and mutual consultation with the board of directors, will ensure thetransparency of the amount determination process and guarantee the independence of outside
directors.
By increasing the current level, the annual amount shall be set at 15,000,000 yen (with a total
amount of 75,000,000 yen when there are 5 outside directors) to allow outside directors withexceptional experience and insight to dedicate sufficient time to developing management strategies
and advising the management team to enhance the Company's corporate value.

- 36 -

[Opinion of the Company’s Board of Directors]
The Board of Directors opposes this proposal based on the recommendations of the Nomination andCompensation Committee.
This shareholder proposal is for the benefit of the Oasis-Proposed Directors, and the Company’s Boardof Directors does not consider it appropriate.
Oasis Fund proposes Proposal 6: Dismissal of Four Outside Directors, and Proposal 7: Election ofFive Outside Directors, with the aim of essentially replacing the Company’s Outside Directors with the
Oasis-Proposed Directors. Then, it is understood that the purpose of this shareholder proposal, whileaiming to replace the Outside Directors, is to guarantee that if the replacement of Outside
Directors is successful, the basic compensation for Oasis-Proposed Directors will be 15 million yen.
Therefore, it is clear that this shareholder proposal is for the benefit of the Oasis-Proposed
Directors and will not contribute to improving the Company’s governance.
As mentioned in section (v) of the [Opinion of the Company’s Board of Directors] on Proposal 5
above, with respect to FUJITEC, the Oasis Group had acquired the actual decision-making authority for
Director candidates, including internal Directors, through the replacement of Outside Directors based on
the shareholder proposals, and it was assumed that Oasis Group effectively forced all previous internal
Directors who were not proposed by the Oasis Group to resign at the conclusion of the next Ordinary
General Meeting of Shareholders. At FUJITEC’s Extraordinary General Meeting of Shareholders
held on February 24, 2023, at which FUJITEC’s Outside Directors were replaced, the Oasis
Group proposed the replacement of Outside Directors and also submitted a shareholder proposal
relating to decisions on the amount of basic compensation for Outside Directors similar to thisshareholder proposal, although the amounts were different from that in this shareholder proposal.
In addition, at the 61st Ordinary General Meeting of Shareholders of TSURUHA HOLDINGS INC.
held on August 10, 2023, the Oasis Group proposed the replacement of Outside Directors,
including Directors who are Members of the Audit & Supervisory Committee. It also submitted asimilar proposal relating to decisions on the amount of basic compensation for Outside Directors,
although the amounts were different from that in this shareholder proposal. Furthermore, at the25th Ordinary General Meeting of Shareholders of KUSURI NO AOKI HOLDINGS CO., LTD.
held on August 17, 2023, Oasis submitted a shareholder proposal concerning decisions on theamount of basic compensation which was similar to this shareholder proposal, although theamounts were different, together with a proposal to amend the Articles of Incorporation toestablish a Nomination and Compensation Committee with a majority of Outside Directors and a
proposal to elect Outside Directors, which we believe were aimed at interfering with thenomination Directors. In this way, Oasis frequently seeks to elect its proposed Outside Directors, alongwith motivating Outside Directors to follow Oasis’s will through guaranteed compensation if theOutside Directors are elected successfully.
In addition, even if the points above are not taken into account, this shareholder proposal proposesthat the amount of compensation for each Outside Director be set at a uniform amount (15 million yen)in advance. However, 1) according to a report in the electronic version of Nihon Keizai Shimbun dated
October 27, 2022, the median annual level of compensation for Outside Directors in 2022 for companies
listed on the TSE Prime Market was 8.4 million yen. The level of compensation for Outside Directors inthis shareholder proposal is significantly higher than these levels, even in terms of basic compensation.
2) compensation for Directors should be set according to the knowledge, experience, and role of the
Director, and setting the amount of basic compensation at a uniform level makes it difficult to set
compensation in a flexible manner, taking into account changes in the external environment andthe market environment, and we believe that flexibility in accordance with the roles andresponsibilities required of Outside Directors may be hindered, and the inability to establish
appropriate compensation may make it difficult to attract useful human resources.
Furthermore, 3) compensation for Directors should be set according to the knowledge, experience,and role of the Director, and if basic compensation is fixed at a uniform level, even if the transparency ofthe process for determining the amount is ensured, we believe there is a risk that the basis for payment
may become unclear. The Practical Guidelines for Corporate Governance Systems (CGS Guidelines)
published by the Ministry of Economy, Trade and Industry on July 19, 2022 also emphasize theimportance of setting compensation at appropriate levels, in accordance with the burdens andresponsibilities of Outside Directors. The Board of Directors believes that there should be a system in- 37 -

which compensation for Outside Directors is determined on an individual basis, taking into accountthe differing roles that each one plays.
The current amount of basic compensation for Outside Directors of the Company is determined basedon a report from the Nomination and Compensation Committee, the majority of the members of which
and the chairperson of which are Outside Directors.
For the reasons presented above, the Board of Directors of the Company opposes the shareholder
proposal.

The Oasis Group has stated in its reason for the shareholder proposal regarding the election of Outside
Directors that it “proposes....the replacement of all Outside Directors.”- 38 -

<Shareholder Proposals>
Proposal 9:
Determination of Remuneration for Granting Restricted Stock to Outside Directors(1) Summary of the Proposal
The purpose of this proposal is to provide incentives to outside directors of the Company tocontinuously enhance the corporate value of the Company and to promote further sharing of value
between outside directors of the Company and shareholders, by allotting common stock of theCompany which will be subject to the rules such as restriction on transfer for a certain period andacquisition by the Company without consideration, to outside directors of the Company, in addition
to their basic remuneration.
For such purpose, 7,500,000 yen per person shall be set aside from the amount of basic
remuneration as monetary compensation claims for the allotment of restricted stock to each outside
director.
The Company currently has four outside directors, but if such four outside directors are dismissed
and the five outside directors proposed by the proposing shareholder are appointed, the number ofoutside directors subject to compensation under this proposal will be five.
Each outside director who will receive an allotment of restricted stock shall pay all monetarycompensation claims to be granted to them under this proposal as contribution in kind, and receive
allotment of common stock of the Company pursuant to a resolution of the board of directors of theCompany. The total number of common stock of the Company to be issued or disposed by this shallnot exceed 110,000 shares. The amount to be paid per common stock of the Company in this caseshall be the closing price of the common stock of the Company on the Tokyo Stock Exchange on thebusiness day immediately before the date of such board of directors' resolution (if transaction is notconcluded on that date, the closing price on the immediately preceding trading day). In addition, upon
the allotment of common stock of the Company, the Company and each outside director shall enter
into a restricted stock allotment agreement (the "Allotment Agreement") which includes, in summary,the following content. The above monetary compensation claims shall be paid on the condition thateach outside director agrees to the above contribution-in-kind and has executed the Allotment
Agreement.
1) Details of Restrictions on Transfer
Each outside director who has received an allotment of the Company's common stock shall nottransfer, create pledge, nor make any other disposal of the Company's common stock allotted tohim or her under the Allotment Agreement (the "Restricted Stock") to any other person, during
the period commencing from the date of allotment of such common stock until the conclusion of
the ordinary general meeting of shareholders relating to the last fiscal year ending within two
years from the date of receipt of the allotment of such common stock or the period determined by
the board of directors of the Company, whichever is shorter (the "Restricted Period")(the“Transfer Restriction”).
2) Acquisition of the Restricted Stock by the Company without consideration
If each such outside director resigns or retires from any position as a director, executive officer,
executive director or employee of the Company or any of its subsidiaries before the expiration of
the period commencing from the day following the date of this Ordinary General Meeting of
Shareholders (midnight) until the conclusion of the Ordinary General Meeting of Shareholders
relating to the last fiscal year ending within two years (the "Scheduled Service Period"), theCompany shall automatically acquire the Restricted Stock without consideration, except for thecase where the board of directors of the Company determined the existence of the justifiablereason to refrain from doing so.
In addition, the Company shall automatically acquire the Restricted Stock without
consideration which Transfer Restriction has not been removed pursuant to (3) below at the time
when the Restricted Period expires.
3) Removal of the Transfer Restrictions
Notwithstanding the provision of (1) above, the Company shall remove the Transfer Restriction
on all of the Restricted Stock upon expiration of the Restricted Period, on the condition that eachoutside director has continuously remained in the position as director, executive officer, executive- 39 -

director or employee of the Company or any of its subsidiaries throughout the Scheduled Service
Period. However, if the Company does not acquire the Restricted Stock without consideration foran outside director who retires or resigns from any of the positions specified in (2) above before
the expiration of the Scheduled Service period, due to the reason which deemed justifiable by theboard of directors of the Company as specified in (2) above, the number of the Restricted Stockregarding which the Transfer Restrictions will be removed and the timing regarding which theTransfer Restrictions will be removed shall be reasonably determined by resolution of the boardof directors, if necessary.
4) Treatment in case of organizational restructuring, etc.
Notwithstanding the provision of (1) above, if, during the Restricted Period, a merger agreement
under which the Company will be a merged company, a share exchange agreement or sharetransfer plan under which the Company will be a wholly owned subsidiary, or any other mattersrelated to organizational restructuring, etc., is approved at a general meeting of shareholders(however, if such organizational restructuring, etc. does not require approval at a general meetingof shareholders, then the Company's board of directors), the Company will, by a resolution of theboard of directors, remove the Transfer Restriction on all of the Restricted Stock held by theoutside directors as of the time immediately before the business day which falls immediately
before the effective date of such organizational restructuring, etc. In this case, the Company shall
automatically acquire the Restricted Stock regarding which Transfer Restrictions have not yet
been removed as of the time immediately after the removal of the Transfer Restriction inaccordance with the above provisions without consideration.
The compensation for the grant of the Restricted Stock is provided as compensation for the
Scheduled Service Period, and the right to receive such compensation will not be granted
repeatedly each year.
(2) Reason for Proposal
While medium to long-term incentive compensation (stock options as stock-linked compensation) is
currently granted only to inside directors of the Company, the purpose of this proposal is to provide
outside directors of the Company with incentives to improve the corporate value of the Company by
granting the Restricted Stock as a compensation to outside directors of the Company and align theirinterests with those of shareholders. The purpose of setting a Transfer Restriction for a certain period
is to seek their commitment to the Company to further strengthen the sharing of profits withshareholders.
In order to adjust the amount equivalent to compensation for the substantial performance of duties
as an outside director, we propose to set 7,500,000 yen per outside director as a monetarycompensation claim for receipt of the allocation of the Restricted Stock, in addition to the amount ofbasic remuneration.
End.

- 40 -

[Opinion of the Company’s Board of Directors]
The Board of Directors opposes this proposal based on the recommendations of the Nomination andCompensation Committee.
This shareholder proposal is for the benefit of the Oasis-Proposed Directors, and the Company’s Boardof Directors does not consider it appropriate.
Oasis Fund proposes Proposal 6: Dismissal of Four Outside Directors, and Proposal 7: Appointmentof Five Outside Directors, with the aim of essentially replacing the Company’s Outside Directors with
the Oasis-Proposed Directors. Thus, it is understood that the purpose of this shareholder proposal,
while aiming to replace the Outside Directors, is to guarantee that the stock compensation for
Oasis-Proposed Directors will be 7.5 million yen if the replacement of the Outside Directors is
successful. Therefore, it is clear that this shareholder proposal is for the benefit of the OasisProposed Directors and will not contribute to improving the Company’s governance.
As mentioned in section (v) of the [Opinion of the Company’s Board of Directors] on Proposal 5
above, with respect to FUJITEC, the Oasis Group acquired the actual decision-making authority for
Director candidates, including internal Directors, through the replacement of Outside Directors based onshareholder proposals, and it was assumed that Oasis Group effectively forced all previous internal
Directors who were not proposed by the Oasis Group to resign at the conclusion of the next Ordinary
General Meeting of Shareholders. At FUJITEC’s Extraordinary General Meeting of Shareholders
held on February 24, 2023, at which FUJITEC’s Outside Directors were replaced, the Oasis
Group proposed the replacement of Outside Directors and also submitted a shareholder proposal
relating to decisions on the granting of stock compensation for Outside Directors similar to thisshareholder proposal, although the amount is different from that in this shareholder proposal. In
addition, at the 61st Ordinary General Meeting of Shareholders of TSURUHA HOLDINGS INC.
held on August 10, 2023, the Oasis Group proposed the replacement of Outside Directors,
including Directors who are Members of the Audit & Supervisory Committee. It also submitted asimilar proposal relating to restricted stock compensation for Outside Directors, although theamount is different from that in this shareholder proposal. Furthermore, at the 25th Ordinary
General Meeting of Shareholders of KUSURI NO AOKI HOLDINGS CO., LTD. held on August17, 2023, Oasis submitted a shareholder proposal for restricted stock compensation for Outside
Directors which was similar to this shareholder proposal, although the amounts were different,
together with a proposal to amend the Articles of Incorporation to establish a Nomination andCompensation Committee with a majority of Outside Directors and a proposal to elect Outside
Directors, which we believe was aimed at interfering with the nomination Directors. In this way,
Oasis frequently seeks to elect its proposed Outside Directors along with motivating Outside Directors tofollow Oasis’s will through guaranteed compensation if the Outside Director is elected successfully.
Furthermore, even if the points above are not taken into account, 1) in this shareholder proposal, thepurpose of allotting restricted stock compensation to Outside Directors is to provide incentives for theCompany’s Outside Directors to continuously enhance the Company’s corporate value. However,compensation for Outside Directors consists only of a basic salary, as fixed compensation, from theperspective of ensuring a high level of independence, as well as the requirement to strengthen their
management supervisory function. The Board of Directors believes that it is not appropriate to makeOutside Directors eligible for restricted stock compensation, which is linked to business results. In
addition, 2) in principle, the criteria for exercising voting rights among many institutional investors inJapan and elsewhere are opposed to stock compensation for Outside Directors. The Company does notbelieve that it is necessary to introduce a restricted stock compensation plan for individual Outside
Directors. Furthermore, as stated in section 3) of the [Opinion of the Company’s Board of Directors] on
Proposal 8, according to a report in the electronic version of Nihon Keizai Shimbun dated October 27,
2022, the median annual level of compensation for Outside Directors in 2022 for companies listed on the
TSE Prime Market was 8.4 million yen. The level of compensation for Outside Directors in thisshareholder proposal is 22.5 million yen, which includes the basic salary described in Proposal 8
above and the stock compensation described in Proposal 9 above, and it is strongly surmised that the
purpose of this shareholder proposal, while aiming to replace the Outside Directors, is toguarantee that the level of compensation for Oasis-Proposed Directors will be a total of 22.5
million yen, if the replacement of the Outside Directors is successful.

- 41 -

For the reasons presented above, the Board of Directors of the Company opposes the shareholder
proposal.

The Oasis Group has stated in its reason for the shareholder proposal regarding the election of Outside
Directors that it “proposes....the replacement of all Outside Directors.”- 42 -

Shareholder Proposals (Proposal 10 to Proposal 11)
These shareholder proposals were submitted by DAIO KAIUN CO., LTD.
The name of each proposal, the outline for the proposal and reasons for the proposal are stated in their
original form, with the exception of the proposal numbers, which have been adjusted.

<Shareholder Proposals>
Proposal 10:
Election of Five (5) Directors(1) Summary of the Proposal
To elect the five (5) Directors below. All are Outside candidates.
(1) Kazuyuki Tanaka(2) Masahiro Matsuoka(3) Masataka Ueda
(4) Takao Sunami(5) Mizuki Kanno(2) Reason for Proposal
The proposing shareholder (DAIO KAIUN CO., LTD.), whose original business was thetransportation of raw materials for paper manufacturing, holds shares in a paper manufacturing
company with the aim of achieving sustainable development of the paper manufacturing industry.
The proposing shareholder owns approximately 18.9% of the issued shares in Hokuetsu Corporation(hereinafter, the “Company”) jointly with Misuga Kaiun Co., Ltd. and, as a major shareholder, pays
close attention to management issues of the Company.
Although the Company holds approximately 24.8% of the shares issued in Daio Paper Corporation,
the two companies were unable to achieve synergies and instead found themselves in an adversarial
relationship. The market capitalization of Daio Paper Corporation held by the Company remains at
the level of approximately 50 billion yen, which accounts for well over 20% of the Company’s
consolidated net assets. The Company only obtains dividends from its holding of shares in DaioPaper Corporation, which has led to a deterioration in capital efficiency and uncertainty over theCompany’s consolidated financial results.
The proposing shareholder has made attempts to engage in constructive dialogue regarding
management issues for many years, but the Company has never deepened its consideration. In
February 2024, the Company announced it would commence discussions for a strategic businessalliance with Daio Paper Corporation. However, business alliances are usually formed because there
are specific benefits for both parties. Announcing commencement of discussions for a strategic
business alliance when there are many other options available is an “alliance option only for the sakeof formality” and appears to be an attempt to make achievements to deflect criticism fromshareholders. The fact that the Company introduced takeover defense measures in December 2023
also strengthens these suspicions. As a result, the proposing shareholder requested an interview with
the Company’s Outside Directors but was refused, and it has not even had an opportunity for any
dialogue.
The proposing shareholder determined that the Company’s Board of Directors was not fulfilling its
primary duties but was rather pursuing self-preservation of its management team; therefore, it
decided to propose an increase in the number of Outside Directors by five (5). Since the candidates
have experience at the top levels of management or have practical and specialized knowledge in areas
such as corporate restructuring, corporate governance, corporate finance, and corporate law, and thecandidates have no capital or business relationships with either the Company or with DAIO KAIUN
CO., LTD., it is expected that the true independence of the Company’s Board of Directors andimprovement of its effectiveness can be achieved.

- 43 -

(3)Career summaries, etc. of the candidates

Date of birth: April 29, 1953
Kazuyuki Tanaka
Number of shares of the Company held: 0
Career summary, positions, responsibilities and significant concurrent positions
April 1977
Hitachi Chemical Company, Ltd.
April 2005
Executive Officer, Hitachi Chemical Company, Ltd.
April 2006
Senior Executive Director, Hitachi Media Electronics Co., Ltd.
June 2006
Representative Director and President, Hitachi Media Electronics Co., Ltd.
April 2008
Vice President and Executive Officer, Hitachi Chemical Company, Ltd.
Representative Executive Officer, President and Chief Executive Officer, Hitachi Chemical
April 2009
Company, Ltd.
Director, Member of the Nomination Committee and Member of the Compensation Committee,
June 2009
Hitachi Chemical Company, Ltd.
April 2016
Chairman, Hitachi Chemical Company., Ltd.
May 2016
Chairman, Japan Thermosetting Plastics Industry Association
June 2016
Director and Member of the Audit Committee, Hitachi, Ltd.
(Special interests, etc.)
There are no special interests between Kazuyuki Tanaka and the Company or the proposing shareholder.
If the election of Kazuyuki Tanaka as an Outside Director is approved, the Company will enter into a liability limitationagreement with him, the amount of liability for which shall be the minimum amount stipulated by laws and regulations.
Reason for nomination as candidate for Outside Director
Kazuyuki Tanaka has knowledge and experience at the top levels of management as well as experience in corporate
governance practices and promoting the restructuring of Hitachi Chemical Co., Ltd. He has been proposed as a candidate for
Outside Director with the expectation that he will verify the rationality of continuing to hold shares in Daio Paper
Corporation, consider the advantages, disadvantages, and methods of business integration with Daio Paper Corporation, andwill provide advice and supervision from a strategic and broad perspective in order to improve the Company’s corporate
value.

Date of birth: September 20, 1967
Masahiro Matsuoka
Number of shares of the Company held: 0
Career summary, positions, responsibilities and significant concurrent positions
April 1990
Nomura Research Institute, Ltd.
July 1994
Barclays Bank PLC (currently Barclays Securities Japan Limited)
September 1997
SBC Warburg Securities Japan Co., Ltd. (currently UBS Securities Japan Co., Ltd.)
July 2003
Industrial Revitalization Corporation of Japan
June 2004
Outside Director, Kanebo, Ltd.
March 2005
Outside Director, The Daiei, Inc.
January 2007
Representative Director, Frontier Management Inc.
November 2017
Representative Director, FCD Partners Inc.
June 2020
Outside Director, RIZAP GROUP, Inc. (current position)
April 2021
Representative Director and Chairman, ORENO Corporation.
April 2021
Representative Director, Co-President and Executive Officer, Frontier Management Inc.
<Significant concurrent positions>
Outside Director, RIZAP GROUP, Inc.
(Special interests, etc.)
There are no special interests between Masahiro Matsuoka and the Company or the proposing shareholder.
If the election of Masahiro Matsuoka as an Outside Director is approved, the Company will enter into a liability limitationagreement with him, the amount of liability for which shall be the minimum amount stipulated by laws and regulations.
Reason for nomination as candidate for Outside Director
Masahiro Matsuoka has knowledge and experience at the top levels of management as well as practical and specialized
knowledge of corporate finance and experience as an Outside Director at multiple companies. He has been proposed as a
candidate for Outside Director with the expectation that he will verify the rationality of continuing to hold shares in DaioPaper Corporation, consider the advantages, disadvantages, and methods of business integration with Daio Paper
Corporation, and provide advice and supervision from a strategic and broad perspective in order to improve the Company’s
corporate value.

- 44 -

Date of birth: April 5, 1955
Masataka Ueda
Number of shares of the Company held: 0
Career summary, positions, responsibilities and significant concurrent positions
April 1979
The Bank of Mitsubishi, Ltd. (currently MUFG Bank, Ltd.)
August 1983
Japan Branch, American Express International, Inc.
September 2000
Vice Chairman, American Home Assurance Company (AIG Group)
December 2001
Chairman and CEO, American Home Assurance Company
Representative Director, Chairman and CEO, Cecile Co., Ltd.
March 2007
Chairman, Dinos Cecile Co., Ltd
July 2013
Director, The Board Director Training Institute of Japan (BDTI) (current position)
March 2016
Outside Director, McDonald’s Holdings Company (Japan), Ltd. (current position)
June 2018
Outside Director, The Higashi-Nippon Bank, Limited (current position)<Significant concurrent positions>
Director, The Board Director Training Institute of Japan (BDTI)
Outside Director, McDonald’s Holdings Company (Japan), Ltd.
Outside Director, The Higashi-Nippon Bank, Limited(Special interests, etc.)
There are no special interests between Masataka Ueda and the Company or the proposing shareholder.
If the election of Masataka Ueda as an Outside Director is approved, the Company will enter into a liability limitationagreement with him, the amount of liability for which shall be the minimum amount stipulated by laws and regulations.
Reason for nomination as candidate for Outside Director
Masataka Ueda has knowledge and experience at the top levels of management as well as practical and specialized knowledgeof corporate governance and experience as an Outside Director at multiple companies. He has been proposed as a candidate
for Outside Director with the expectation that he will verify the rationality of continuing to hold shares in Daio Paper
Corporation, consider the advantages, disadvantages, and methods of business integration with Daio Paper Corporation, andprovide advice and supervision from a strategic and broad perspective in order to improve the Company’s corporate value.

Date of birth: August 22, 1947
Takao Sunami
Number of shares of the Company held: 0
Career summary, positions, responsibilities and significant concurrent positions
July 1971
MITSUI & CO., LTD
April 2002
Executive Officer, MITSUI & CO., LTD.
Executive Managing Officer and Chief Operating Officer of the Machinery Division, MITSUI &April 2005
CO., LTD.
June 2008
Representative Director and President, JA MITSUI LEASING, LTD.
December 2011
Executive Consultant, Nippon Kaiji Kyokai (ClassNK)
June 2015
Outside Director, KAWASAKI KINKAI KISEN KAISHA, LTD.
(Special interests, etc.)
There are no special interests between Takao Sunami and the Company or the proposing shareholder.
If the election of Takao Sunami as an Outside Director is approved, the Company will enter into a liability limitationagreement with him, the amount of liability for which shall be the minimum amount stipulated by laws and regulations.
Reason for nomination as candidate for Outside Director
Takao Sunami has knowledge and experience at the top levels of management as well as experience serving as the Chairmanof the Special Committee of KAWASAKI KINKAI KISEN during the share exchange between Kawasaki Kisen Kaisha, Ltd.
and KAWASAKI KINKAI KISEN. He has been proposed as a candidate for Outside Director with the expectation that hewill verify the rationality of continuing to hold shares in Daio Paper Corporation, consider the advantages, disadvantages,
and methods of business integration with Daio Paper Corporation, and provide advice and supervision from a strategic andbroad perspective in order to improve the Company’s corporate value.

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Date of birth: March 29, 1981
Mizuki Kanno
Number of shares of the Company held: 0
Career summary, positions, responsibilities and significant concurrent positions
December 2011
BLAKEMORE & MITSUKI
August 2014
Graduated from University College London (LL.M.)
September 2014
ANDERSON, MŌRI & TOMOTSUNE
November 2016
OH-EBASHI LPC & PARTNERS (Tokyo Office)January 2021
Partner, OH-EBASHI LPC & PARTNERS (current position)<Significant concurrent positions>
Outside Audit & Supervisory Board Member , BJC Co., LTD(Special interests, etc.)
There are no special interests between Mizuki Kanno and the Company or the proposing shareholder.
If the election of Mizuki Kanno as an Outside Director is approved, the Company will enter into a liability limitationagreement with her, the amount of liability for which shall be the minimum amount stipulated by laws and regulations.
Reason for nomination as candidate for Outside Director
Mizuki Kanno has accumulated practical and specialized knowledge and experience of corporate governance as an attorneyat-law specializing in corporate law, with a focus on antitrust law in particular. She has been proposed as a candidate for
Outside Director with the expectation that she will verify the rationality of continuing to hold shares in Daio Paper
Corporation, consider the advantages, disadvantages, and methods of business integration with Daio Paper Corporation, andprovide advice and supervision from a strategic and broad perspective in order to improve the Company’s corporate value.

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[Opinion of the Company’s Board of Directors]
The Board of Directors opposes this proposal based on the recommendations of the Nomination andCompensation Committee.
(i)

As stated in the [Opinion of the Company’s Board of Directors] on Proposal 7 above, the current
Directors of the Company were selected as candidates in accordance with a careful decisionmaking process performed by the Nomination and Compensation Committee, which met for a totalof seven times over the approximately one year from April 2022 to March 2023, and repeatedly
considered the composition and human resources needed for the Company’s Board of Directors,
based on evaluations of factors such as the possession of qualities that are useful to realize effective
corporate governance and enhance corporate value in a stable manner over the long term. Eachcandidate has close familiarity with the Company’s business, and each has skills and expertise inareas that include corporate management, an international mindset, industry knowledge,
ESG/sustainability, finance/accounting, technology/IT (production/R&D), sales/marketing,human resources/labor/legal affairs, and purchasing/procurement. The Company’s current Boardof Directors, which is comprised of these incumbent Directors, is considered to be an optimal team,overall, from the perspective of the balance of scale, skill sets, diversity, etc. The status of theCompany’s management is progressing favorably, from the perspective of key financial
indicators, under the management of the Company’s current Board of Directors, as statedin section (i) in the [Opinion of the Company’s Board of Directors] on Proposal 5 above, andthis fact is considered to be an indication that the Company’s current Board of Directors is
performing its supervisory function appropriately as a team.

(ii)

In addition, Daio Kaiun claims that the Company’s announcement of the commencement of
discussions about a strategic business alliance with Daio Paper appears to be nothing more thanan attempt to deflect criticism from shareholders. However, as stated in section (ii) in the[Opinion of the Company’s Board of Directors] on Proposal 5 above, the Company, with theapproval of the Company’s Board of Directors, has executed a basic strategic business allianceagreement with Daio Paper, effective May 15, 2024. As a result of the alliance, three years fromnow, in FY2026, we expect to see increases in operating income of approximately 2.0 billion yen
for Daio Paper and approximately 3.0 billion yen for the Company, for a combined total of
approximately 5.0 billion yen. Furthermore, from the perspective of providing information toshareholders as early as possible, the Company disclosed on February 13, 2024 that it wasconsidering a strategic business alliance with Daio Paper. Despite strategic business allianceswith other companies requiring careful consideration, the statement that the decision to announce
the commencement of discussions about a strategic business alliance between the Company andDaio Paper was nothing more than an attempt to deflect criticism from shareholders, only around
two months after the disclosure of the Press Release on Commencement of Discussions, can be
described only as hasty and arbitrary. We believe that this is not a sincere claim based on the
Company’s corporate value and the common interests of its shareholders, but rather is aimed
solely at criticizing the Company.

(iii) Furthermore, as stated in section (iii) in the [Opinion of the Company’s Board of Directors] on
Proposal 5 above, Mr. Igawa, the effective owner of Daio Kaiun, made a proposal to theCompany that in exchange for Daio Kaiun et al. transferring their shares of the Company
to the Company, the Company would transfer the shares it holds in Daio Paper to Daio
Kaiun et al. Immediately after the Company refused the proposal, Daio Kaiun et al. maderapid, large-scale acquisitions of shares of the Company on and off the market, and theCompany was left with no choice but to introduce the Response Policy. In other words, theCompany recognized that the purpose of the Share Purchase basically was for Daio Kaiun etal. to seize control over the management of Daio Paper, or to increase their control over
Daio Paper, and that it was not aimed at enhancing the Company’s corporate value, basedon the history and manner of the rapid, large-scale acquisitions of shares of the Company by
Daio Kaiun et al., as well as other circumstances. Then, based on the belief that there was an
undeniable risk that the outcome of the Share Purchase could hinder maximization of the- 47 -

Company’s corporate value and the common interests of our shareholders, the Response
Policy was introduced, with the intention of ensuring that the Company’s shareholders
would have the information and time required to make appropriate decisions regarding theimpact of the Share Purchase on the Company’s corporate value and the source of thatvalue, and this was not in any way for the self-preservation of the Company’s management
team, including President and CEO Kishimoto.
In fact, Tokyo Pulp & Paper, which is suspected of being in a joint and cooperative
relationship with Daio Kaiun et al., in light of Attachment 2 “Certification Criteria for
Joint Cooperative Acts, etc.” to the Response Policy, conducted large-scale acquisitions ofshares of the Company on March 15, 2024 and March 18, 2024, immediately after the
introduction of the Response Policy, without following the procedures set forth in the
Response Policy. Based on these facts, we believe that the introduction of the Response
Policy was reasonable and was not for the self-preservation of the Company's management
team. Adding to this, 1) Daio Kaiun holds 5.62% of the shares of Daio Paper’, in terms ofownership ratio of share certificates, etc.; moreover, a person associated with Mr. Igawa, theeffective owner of Daio Kaiun, has told the Company that Daio Kaiun controls 20% of the sharesof Daio Paper. In light of this, if Daio Kaiun succeeds in acquiring 24.60% of the shares of DaioPaper owned by the Company, its total shareholding would reach approximately 45%,
effectively enabling Daio Kaiun to take control of the management of Daio Paper. In addition, as
set forth in section (iv) in the [Opinion of the Company’s Board of Directors] on Proposal 5
above, 2) when President and CEO Kishimoto and Mr. Igawa met on July 3, 2023, Mr.
Igawa told President and CEO Kishimoto that “We were working together with Oasis.
From now on, we will go our separate ways.” Immediately prior to the introduction of the
Response Policy, the Oasis Fund, or Oasis, which is understood to be an affiliate of the Oasis
Fund, and Daio Kaiun engaged in joint cooperative acts. The situation of the Company was suchthat it could not dispel doubts and concerns over when those joint cooperative acts would occur
again in the future. Furthermore, in addition, in light of the circumstances above, if thisshareholder proposal is approved and the five (5) candidates proposed by Daio Kaiun(hereinafter “Daio Kaiun-Proposed Directors”) are elected as Directors of the Company,
Daio Kaiun et al. will have a significant influence over the management of the Company.
As a result, pressure from Daio Kaiun et al., which is planning to seize control of the
management rights in Daio Paper, may force the Company to relinquish all of its shares of
Daio Paper, or the Business Alliance may be operated unilaterally, in a manner
advantageous to Daio Paper, and then the Company may be forced into a situation inwhich it is unable to enjoy the synergic benefits mentioned above completely, as a result of
this Business Alliance with Daio Paper. Since Daio Kaiun et al. have serious conflicts ofinterest with the majority of the Company’s general shareholders (excluding Oasis Group)
who do not own shares of Daio Paper with regard to business integration issues involving
the Company and Daio Paper, if this shareholder proposal is approved, it could harm theinterests of the majority of the Company’s general shareholders, and result in a conflictwith the common interests of our shareholders.
With regard to the interview, Daio Kaiun requested a meeting with an Outside Director who isa member of the Independent Committee established under the Response Policy, to discuss thealliance between the Company and Daio Paper, and the Company’s holding of shares of DaioPaper. However, management policies, including relationships with other companies, are mattersthat should be considered by executives, under the supervision of the Company’s Board of
Directors, and meetings with shareholders about management policies and similar matters are notrelated to the Response Policy. Therefore, when the Board of Directors contacted Daio Kaiun
stating that we would prefer the interview to be with an executive director rather than an Outside
Director, Daio Kaiun declined our request. Its statement that “we have not even had theopportunity for dialogue” can be seen as an attempt to create an impression that is contrary to thefacts regarding the Company’s attitude toward dialogue with shareholders.
(iv) Furthermore, the Company’s Nomination and Compensation Committee sent a letter of inquiry
through Daio Kaiun, dated April 26, 2024, to each candidate in this shareholder proposal,
inquiring about their management policy, etc., for the Company upon assuming office as an
Outside Director of the Company. In response, instead of receiving individual responses from- 48 -

each candidate, we received a letter from Daio Kaiun, dated May 7, 2024, containing a summaryof the response from each candidate (hereinafter, “May 7 Daio Kaiun Letter”). In the May 7
Daio Kaiun Letter, Daio Kaiun simply replied that each candidate in this shareholder proposal
intends to examine and consider the Company’s situation closely, with regard to the candidate’s
management policy after being elected as an Outside Director. It is highly unlikely thatcandidates have any opinions on the Company’s management. Therefore, it is inconceivablethat Daio Kaiun or any of the candidates in this shareholder proposal is trying to take aserious approach to the management of the Company. Furthermore, it is important to notethat since Daio Kaiun has not specifically indicated its management policy for the Company
following the approval of the Director-Related Shareholder Proposals, it is difficult even to
consider whether the candidates in this shareholder proposal have skills that are appropriate for
the Company’s Board of Directors.
(v)

Moreover, none of the candidates is familiar with Japan’s paper industry. Domestic
manufacturers account for a majority market share in Japan, and knowledge of Japan’s uniquebusiness environment, with its high waste paper recovery rate, high-quality paper products, andlogistics systems, is essential. This enables appropriate management decisions and supervisionby the Board of Directors, and the candidates in this shareholder proposal can only be describedas lacking these elements.
Based on his career summary, Kazuyuki Tanaka does not appear to have knowledge or skills
related to Japan’s pulp and paper industry. In addition, although the shareholder proposal
document lists his skills as experience in corporate governance practices and promoting
restructuring, all of the Company’s current Outside Directors who have knowledge ofJapan’s pulp and paper industry also possess this knowledge. Therefore, we cannot expect
Mr. Tanaka to contribute enough to replace our current Outside Directors and see no reason toappoint him as an Outside Director of the Company.
Based on his career summary, Masahiro Matsuoka does not appear to have knowledge orskills related to Japan’s pulp and paper industry. In addition, his expertise in finance overlaps
with the skills of other Directors in the skill matrix of the current Board of Directors.
Therefore, we see no reason to appoint him as an Outside Director of the Company.
Based on his career summary, Masataka Ueda does not appear to have knowledge or skills
related to Japan’s pulp and paper industry. In addition, the shareholder proposal document only
states that he has knowledge of corporate governance, and does not specify the particularskills he would provide to the Company. Therefore, we cannot expect Mr. Ueda to contributeenough to replace our current Outside Directors and see no reason to appoint him as an Outside
Director of the Company.
The shareholder proposal document states that Takao Sunami has knowledge and experience
at top levels of management, but it has been approximately fifteen years since he served as
Representative Director and President of JA Mitsui Leasing, Ltd. In addition, during the period
during which Mr. Sunami served as an Outside Director of KAWASAKI KINKAI KISEN
KAISHA, LTD., KAWASAKI KINKAI KISEN’s ROE remained at a low level, and we donot believe that his skills relating to achieving an increase in corporate value as an Outside
Director are enough to replace our current Outside Directors. Therefore, we see no reason toappoint him as an Outside Director of the Company.
Mizuki Kanno is described as an attorney at law specializing in corporate law, but based onher career summary, she has no knowledge of Japan’s pulp and paper industry, nor does she
appear to have deep knowledge of the global market. The Company's Outside Directors
already include Hiroko Nihei, who works at the office of an international law firm based in
the United States, based on her qualifications as a Japanese attorney at law, and who
provides the Board of Directors with her knowledge and experience in both Japanese andU.S. law. Ms. Kanno’s expertise in antitrust law overlaps with the skills of other Directors in theskill matrix of our current Board of Directors. Therefore, we see no reason to appoint Ms.
Kanno, who has less global knowledge than our current Outside Directors, as an Outside
Director of the Company.
In addition, Daio Kaiun proposed the compensation agenda item, Proposal 11: Determinationof Amount of Fixed Compensation for Each Outside Director, together with this shareholder
proposal, which equates to a proposal in which Daio Kaiun commits to paying high levels of
fixed compensation to the candidates proposed by Daio Kaiun if they are elected, and essentially- 49 -

motivates the Directors to comply with the will of Daio Kaiun, the proposing shareholder, if they
are elected as Directors of the Company. As a result, the candidates in this shareholder proposal,
which is being proposed together with the compensation agenda item, are persons who are
motivated to follow the will of Daio Kaiun, and therefore are considered to lack independence
from the proposing shareholder.
For the reasons presented above, the Board of Directors of the Company opposes theshareholder proposal.

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<Shareholder Proposals>
Proposal 11:
Determination of Amount of Individual Fixed Compensation for Outside Director(1) Summary of the Proposal
Regarding Proposal 10 made by the proposing shareholder, if the election of at least one (1) candidate
is approved, the newly elected Outside Director (hereinafter, the “Target Outside Director”) shallreceive 12 million yen per annum as individual fixed compensation (in the event that the number of
newly elected Outside Directors is five (5), the total annual amount shall be 60 million yen).
However, if the compensation of other Outside Directors is higher than this proposal, and if similarcompensation is paid to the Target Outside Director, the fixed compensation of 12 million yen perannum may not be paid in addition to the abovementioned payment.
(2) Reason for Proposal
The Outside Directors named in Proposal 10 bear the heavy responsibility of verifying the rationalityof continuing to hold shares in Daio Paper Corporation, considering the advantages, disadvantages,
and methods of business integration with Daio Paper Corporation, and providing advice andsupervision from a strategic and broad perspective in order to improve the Company’s corporate
value and so on. In order for each Director to devote sufficient time and energy to execution of theirduties, it is proposed that each person be paid fixed compensation of 12 million yen per annum,
taking into account the scale of the Company’s business and general levels of compensation.

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[Opinion of the Company’s Board of Directors]
The Board of Directors opposes this proposal based on the recommendations of the Nomination andCompensation Committee.
This shareholder proposal is for the benefit of the Daio Kaiun-Proposed Directors, and theCompany’s Board of Directors does not consider it appropriate.
Daio Kaiun proposes Proposal 10: Election of Five (5) Directors, and this shareholder proposal
states the compensation that will be paid to newly-elected Outside Directors in the event that theelection of at least one (1) candidate in Proposal 10: Election of Five (5) Directors is approved. The
Board of Directors understands that the intent in proposing this shareholder proposal, while also
proposing Proposal 10: Election of Five (5) Directors, is to guarantee that the amount of fixedcompensation for Daio Kaiun-Proposed Directors will be 12 million yen. Consequently, it is clearthat this shareholder proposal is for the benefit of the Daio Kaiun-Proposed Directors and will not
contribute to improving the Company’s governance.
Furthermore, even if the points above are taken into account, 1) this shareholder proposal proposesthat the amount of fixed compensation for each Outside Director elected at this Ordinary General
Meeting of Shareholders be set on a uniform basis (12 million yen) in advance. However, compensation
for Directors should be set according to the knowledge, experience, and role of the Director, and setting
the amount of basic compensation at a uniform level makes it difficult to set compensation in a flexible
manner, taking into account changes in the external environment and the market environment, and webelieve that it may hinder flexibility in accordance with the roles and responsibilities required of Outside
Directors, and that being unable to set appropriate compensation may make it difficult to attract usefulhuman resources, and may hinder incentives for the Directors to invest sufficient time and energy in theexecution of their duties.
Furthermore, 2) compensation for Directors should be set according to the knowledge, experience,and role of the Director, and if basic compensation is fixed at a uniform level, even if the transparency ofthe process for determining the amount is ensured, we believe there is a risk that the basis for payment
may become unclear. The Practical Guidelines for Corporate Governance Systems (CGS Guidelines)
published by the Ministry of Economy, Trade and Industry on July 19, 2022 also emphasize theimportance of setting compensation at appropriate levels, in accordance with the burdens andresponsibilities of Outside Directors. The Board of Directors believes that there should be a system inwhich compensation for Outside Directors is determined on an individual basis, taking into account thediffering roles that each Director plays. In addition, 3) as mentioned in above, according to a report in
the electronic version of Nihon Keizai Shimbun dated October 27, 2022, the median annual level ofcompensation for Outside Directors in 2022 for companies listed on the TSE Prime Market was 8.4
million yen. The level of compensation for Outside Directors in this shareholder proposal (12million yen) is significantly higher than these levels. Moreover, since this shareholder proposal
clearly states that it will apply if at least one (1) candidate in Proposal 10: Election of Five (5)Directors is approved, it is clear that the purpose of this shareholder proposal is to guarantee thatthe level of compensation for Daio Kaiun-Proposed Directors will be 12 million yen per annum.
The current amount of basic compensation for Outside Directors of the Company is determined basedon a report from the Nomination and Compensation Committee, the majority of the members of which
and the chairperson of which are Outside Directors.
For the reasons presented above, the Board of Directors of the Company opposes the shareholder
proposal.

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