This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Securities Code: 6924
June 8, 2022

To Our Shareholders:

1-1-7, Higashi-Nihonbashi, Chuo-ku, Tokyo

IWASAKI ELECTRIC CO., LTD.
Yoshitake Ito,
President and Chief Executive Officer

Notice of the 107th Ordinary General Meeting of Shareholders
The Company would hereby like to inform you that the Company’s 107th Ordinary General Meetingof Shareholders will be held as described below.
Instead of attending the meeting on the date, you may exercise your voting rights by any of themethods listed below. We kindly request that you read the following Reference Document for
the Ordinary General Meeting of Shareholders and exercise your rights.
［Voting by mail (in writing)］
Indicate “Yes (for)” or “No (against)” for each agenda item on the voting form enclosed herewith
and return it no later than 5:20 p.m., Monday, June 27, 2022.
［Voting via the Internet］
Go to the voting website designated by the Company (https://soukai.mizuho-tb.co.jp/) and enter “Yes(for)” or “No (against)” for each agenda item by following on-screen instructions, no later than 5:20
p.m., Monday, June 27, 2022.
To exercise your rights via the Internet, please review P.5 “How to Exercise Voting Rights by Internet
or Other Means.”
Sincerely yours,-1-This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

1.

Date:

10 a.m., June 28, 2022 (Tuesday)

2.

Venue:

2nd Floor, The Green Hall, SUNRISE Bldg.
11-12, Nihonbashi-Tomizawacho, Chuo-ku, Tokyo

3.

Purposes:
Items to be reported:

1.

2.

The business report, the consolidated financial statements
and the results of consolidated financial statement audits by
the Accounting Auditor and the Audit & Supervisory Boardfor the 107th business period (April 1, 2021 to March 31,
2022)
The non-consolidated financial statements for the 107th
business period (April 1, 2021 to March 31, 2022)

Items to be resolved:
Company Proposals (Proposal Nos. 1 to 5)
Appropriation of Retained Earnings
Agenda No. 1:
Partial Amendments to the Articles of Incorporation
Agenda No. 2:
Election of Eight (8) Directors
Agenda No. 3:
Election of One (1) Audit & Supervisory Board Member
Agenda No. 4:
Election of Accounting Auditor
Agenda No. 5:
Shareholder Proposals (Proposal Nos. 6 to 9)
Appropriation of Surplus
Agenda No. 6:
Agenda No. 7:

Amendment to the Articles of Incorporation Concerning CrossShareholdings

Agenda No. 8:

Dismissal of Two (2) Audit & Supervisory Board Members

Dismissal of One (1) Substitute Audit & Supervisory Board
Member
The points of the Shareholder Proposals (Proposal Nos. 6 to 9) are as described in the “Reference
Document for the Ordinary General Meeting of Shareholders” (pp. 18–28) listed below.

Agenda No. 9:

4.

How to exercise voting rights:(1) If a voting right is exercised both by mail (in writing) and via the Internet, only the vote
exercised via the Internet shall be considered valid.
(2) If a voting right is exercised a number of times on the Internet, the final vote shall beconsidered valid.

5.

Disclosure by the Internet:
Of the documents to be provided with this notice, the following matters are not provided in
the documents with this notice because they have been posted on the Company’s website(https://www.iwasaki.co.jp/), pursuant to the provisions of applicable laws and regulations andArticle 14 of the Articles of Incorporation.
(1) “System to ensure the proper execution of business and operations” in the business report(2) “Basic policy on controlling the company” in the business report(3) “Notes to consolidated financial statements” in the consolidated financial statements(4) “Notes to non-consolidated financial statements” in the non-consolidated financial
statements-2-This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

(1) and (2) are included in the business report, which was audited by the Audit & Supervisory
Board Members for preparing the Audit Report.
(3) and (4) are included in the consolidated financial statements and non-consolidated financial
statements, which were audited by the Accounting Auditor and the Audit & Supervisory Board
Members for preparing the Audit Report.

-3-This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

◎

When you attend the meeting, we kindly request that you submit the enclosed voting form to
the receptionist at the venue.
If there are any revisions to the Reference Document for the Ordinary General Meeting of
Shareholders, the business report, and/or the non-consolidated and the consolidated financial
statements, such revisions will be listed on the Company’s website (URL:
https://www.iwasaki.co.jp/).

◎

We will adjust the temperature of air-conditioning at the venue of the meeting to save energy,
while wearing light clothing (Cool Biz, a campaign of the Japanese government). Shareholders
are kindly asked to be lightly dressed as well.

◎

Please understand that the Company decided to abolish the practice of presenting a gift toattendants of the Ordinary General Meeting of Shareholders.

◎

When you attend the meeting on the day, from the viewpoint of preventing the spread of thedisease (COVID-19) caused by the new coronavirus, please bring and wear a mask. We willconduct a body temperature check at the entrance area, and may refuse entry to the venue topersons in ill health.

◎

On the day at the venue, the staff of the Ordinary General Meeting of Shareholders will
undergo a health checkup including a body temperature check, and wear a mask to performtheir duties.

-4-

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Reference Document for the Ordinary General Meeting of Shareholders
Company Proposals (Proposal Nos. 1 to 5)

Agenda No. 1: Appropriation of Retained Earnings
The Company aims for the continuous and stable payment of dividends as the basic principle.
Hence, we determine dividends by considering earnings and the business conditions of the
fiscal year under review, while taking into account the internal reserves needed in preparation
for business development in the future. As a specific indicator, the Company will aim for a
consolidated dividend payout ratio of 30% or higher, focus on returning profits to its
shareholders more than ever, and pay continuous and stable dividends in accordance withearnings.
We propose the year-end dividend for the fiscal year under review as follows.
In addition, since there is a separate proposal concerning dividends of surplus submitted by ashareholder listed below, we propose the following date as the starting date of dividend
payments to conduct the administration of dividend payments smoothly.
Year-end Dividend
1)Type of dividend assets
Cash payment

2)

Allocation of dividends and total amount of dividends
Common shares of the Company
Total amount of dividends

3)

130 yen per common share

964,153,320 yen

Effective date on which dividends are disbursed from retained earnings
June 28, 2022

4)

Starting date of dividend payments
July 19, 2022

-5-

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Agenda No. 2: Partial Amendments to the Articles of Incorporation
1. Reasons for the proposal(1)
Since the revised provisions in the proviso to Article 1 of the Supplementary Provisions
to the Act for Partial Amendment of the Companies Act (Act No. 70 of 2019) are to takeeffect on September 1, 2022, we will amend our Articles of Incorporation as follows inorder to prepare for the introduction of a system to provide informational materials forgeneral meetings of shareholders in electronic format.
・ Article 14, Paragraph 1 of the proposed amendment stipulates to take measures forproviding information on the content of Reference Document for the Ordinary General
Meeting of Shareholders, etc. in electronic format.
・ Article 14, Paragraph 2 of the proposed amendment is to establish provisions forlimiting the scope of items to be listed in documents to be delivered to shareholders
who have requested the delivery of documents.
・ The provisions for Internet disclosure and deemed provision of the Reference
Document for the Ordinary General Meeting of Shareholders, etc. (Article 14 of thecurrent Articles of Incorporation) shall be deleted, as they will be no longer necessary.
・ Due to the establishments and deletion listed above, Supplementary Provisions for theeffective date, etc. shall be established.
(2)
In order to enhance and strengthen the audit system, the number of Audit & Supervisory
Board Members provided for in Article 31 of the current Articles of Incorporation shallbe increased by one, to change from within four to within five.
2. Details of the amendments
Details of the amendments are as follows:(Amendments are underlined)
Current Articles of Incorporation

Chapter 3

Proposed amendment

General Meeting of Shareholders

Chapter 3

General Meeting of Shareholders(Internet Disclosure of Reference Document for the Ordinary
General Meeting of Shareholders, Etc.)
Article 14 The Company may deem disclosure using theInternet for information concerning the items to
be listed or presented in the Reference Document
for the Ordinary General Meeting of
Shareholders, Business Report, Non-consolidated
Financial Statements and Consolidated Financial
Statements to be provision to shareholders inaccordance with the provisions of the Ministry ofJustice Order.

-6-<Deleted>

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.
Current Articles of Incorporation

Proposed amendment(Measures for Provision in Electronic Format, Etc.)
Article 14
When convening general meetings ofshareholders, the Company shall take measuresfor providing information on the content ofReference Document for the Ordinary General
Meeting of Shareholders, etc. in electronic format.

<Newly established>2.

Of the items for provision in electronic format,
the Company may choose not to include all orpart of those provided for in the Ministry ofJustice Order in the documents to be delivered toshareholders who requested the delivery of such
documents by the record date.

Chapter 5Audit & Supervisory Board Members and Audit &Supervisory Board(Number of Audit & Supervisory Board Members)
Article 31 The number of Audit & Supervisory Board
Members of the Company shall not exceed
four.

<Newly established>

Chapter 5

Audit & Supervisory Board Members andAudit & Supervisory Board(Number of Audit & Supervisory Board Members)
Article 31 The number of Audit & Supervisory Board
Members of the Company shall not exceed
five.
(Supplementary Provisions)1.
The amendments to Article 14 of the Articles ofIncorporation shall be effective on September 1,
2022 hereinafter referred to as the “EffectiveDate”), which is the effective date of revised
provisions provided for in the proviso to Article 1of the Supplementary Provisions to the Act for
Partial Amendment of the Companies Act (Act No.
70 of 2019).
2.
Regardless of the provision in the preceding
paragraph, Article 14 of the Articles ofIncorporation (Internet Disclosure of Reference
Document for the Ordinary General Meeting of
Shareholders, Etc.) shall remain effective forgeneral meetings of shareholders to be held within
six months of the Effective Date.
3.
These Supplementary Provisions shall be deleted
after the elapse of six (6) months from the
Effective Date or three (3) months from the general
meeting of shareholders in the preceding
paragraph, whichever is later.

-7-

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Agenda No. 3: Election of Eight (8) Directors
The terms of all eight (8) Directors will expire at the close of this Ordinary General Meetingof Shareholders. Therefore, the Company proposes the election of eight (8) Directors, threeof whom are Outside Directors.
The candidates for Directors are as follows.

Candidate
No.

Category

Name

1(Reappointment)

Yoshitake Ito2(Reappointment)

Masanori Kato

3

(Reappointment)

Sumio Uehara

4(Reappointment)

Seiji Aoyama

5

6

7

(Reappointment)(Outside)(Independent)(Reappointment)(Outside)(Independent)(Reappointment)(Outside)(Independent)

Current position

Attendance atBoard ofDirectors
meetings for the107th businessperiodPresident and Chief Executive
Officer
Director, Senior Executive Officer,
General Manager of Intellectual
Property & Legal Division
Director, Senior Executive Officer,
General Manager of Applied Optics
and Environment Business Unit
Director, Senior Executive Officer,
General Manager of Lighting
Business Promotion Division

100.0%(13/13 meetings)

Kenji Oya

Outside Director

100.0%(13/13 meetings)

Tsuneo Tanai

Outside Director

100.0%(13/13 meetings)

Junko Sunaga

Outside Director

100.0%(10/10 meetings)

100.0%(13/13 meetings)
100.0%(13/13 meetings)
100.0%(13/13 meetings)

Senior Executive Officer, General
Manager of Corporate Planning
Division
Notes: Since Ms. Junko Sunaga was elected and appointed at the 106th Ordinary General Meetingof Shareholders, the number of the Board of Directors meetings after the appointment islisted.
8(New
appointment)

Kenji Ikeda-8-This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 1

Yoshitake Ito

Reappointment
Date of birth
May 11, 1958
Number of the Company’s
shares owned
13,500Attendance at Board of
Directors meetings
13 times out of 13 meetings(100.0%)Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
April 1983
Joined the Company
April 2006
General Manager of Sales Management
Department, Domestic Sales Business
Division
July 2007
General Manager of Corporate Planning
Department, Administration Division
June 2012
Executive Officer and General Manager
of Administration Division
October 2012
Executive Officer and General Manager
of Administration Division and General
Affairs Division
April 2013
Executive Officer and General Manager
of Applied Optics Business Division
April 2015
Senior Executive Officer and General
Manager of Applied Optics Business
Division
June 2015
Director, Senior Executive Officer, andGeneral Manager of Applied Optics
Business Division
April 2016
President and Chief Executive Officer
April 2019
President and Chief Executive Officer
and General Manager of Lighting
Business Unit
July 2020
President and Chief Executive Officer(current position)
Reason for selecting him as a candidate for Director
He assumed the position of President andChief Executive Officer in April 2016, after working in theSales Division, the management divisions including the
Corporate Planning Division and the Applied Optics Business
Division. We have judged
that, by utilizing his experience and knowledge, he would becapable of contributing to management of the Company.

-9-This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 2

Masanori Kato

Reappointment

Date of birth
October 19, 1959
Number of the Company’s
shares owned
5,700
Attendance at Board of
Directors meetings
13 times out of 13 meetings(100.0%)Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
April 1983
Joined The Dai-Ichi Kangyo Bank, Ltd.
April 2009
General Manager of International Credit
Division of Mizuho Corporate Bank,
Ltd. (current Mizuho Bank, Ltd.)
June 2011
General Manager of International Sales
Department of the Company
April 2012
General Manager of Finance &Accounting Department
June 2013
Director and General Manager of
Administration Division
April 2017
Director, Senior Executive Officer incharge of Corporate Management
Division, Information System Division,and Finance & Accounting Division
April 2018
Director, Senior Executive Officer,
General Manager of Lighting Solutions
Business Unit and in charge of Finance& Accounting Division
April 2019
Director, Senior Executive Officer, incharge of Intellectual Property & Legal
Division, Customer Support Center, andFinance & Accounting Division
April 2021
Director, Senior Executive Officer, incharge of Intellectual Property & Legal
Division, Customer Support Center,
Public Relations Department, General
Affairs Division and Investor Relations
October 2021
Director, Senior Executive Officer,
General Manager of Intellectual
Property & Legal Division, in charge ofCustomer Support Center, Public
Relations Department, Human
Resources & General Affairs Division
and Investor Relations
April 2022
Director, Senior Executive Officer,
General Manager of Intellectual
Property & Legal Division, in charge ofCustomer Support Center, Public
Relations Department, Global Sales &Marketing Department, Human
Resources & General Affairs Division
and Investor Relations (current position)
Reason for selecting him as a candidate for Director
Since he joined the company following his career in banking,he has worked in the international business and the Financeand Corporate Management divisions. He is well versed in new
channel development in private sectors including those foroverseas businesses and operations of business organizations,where he is responsible for development, manufacturing andsales. Also, he served as the person in charge of the Finance
Division. He has been appropriately performing his functions- 10 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

and duties as an officer in charge of the Intellectual Property &Legal, CS, Global Sales & Marketing, Investor Relations andHuman Resources & General Affairs divisions.
We have judged that, by utilizing his abundant experience andknowledge, he would be capable of continuing to makecontributions to management of the Company.

- 11 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 3

Sumio Uehara

Reappointment
Date of birth
May 15, 1960
Number of the Company’s
shares owned
1,400
Attendance at Board of
Directors meetings
13 times out of 13 meetings(100.0%)Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
April 1983
Joined the Company
April 2006
General Manager of Motion PictureLight Source Division, Light Source
Department
April 2010
General Manager of Production
Engineering Division
April 2012
General Manager of Motion PictureLight Source Division, Applied Optics
Business Division
April 2014
Executive Officer and Deputy General
Manager of Applied Optics Business
Division
April 2016
Executive Officer and General Manager
of Applied Optics and Environment
Business Unit
April 2017
Senior Executive Officer, General
Manager of Saitama Plant, and General
Manager of Applied Optics andEnvironment Business Unit
April 2019
Senior Executive Officer and General
Manager of Applied Optics andEnvironment Business Unit
June 2019
Director, Senior Executive Officer andGeneral Manager of Applied Optics andEnvironment Business Unit
May 2021
Director, Senior Executive Officer,
General Manager of Saitama Plant,
General Manager of Applied Optics, andEnvironment Business Unit, and in
charge of Production Engineering
Division (current position)
Reason for selecting him as a candidate for Director
He is well versed in business, with extensive businessexperience, including many years of service in the Applied
Optics Division and Production Engineering Division and as
General Manager of the manufacturing plant. We have judged
that, by utilizing such experience and knowledge, he would becapable of contributing to management of the Company.

- 12 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 4

Seiji Aoyama

Reappointment
July 16, 1968
Number of the Company’s
shares owned
1,600
Attendance at Board of
Directors meetings
13 times out of 13 meetings(100.0%)Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
April 1991
Joined the Company
April 2012Manager of Fukuoka Sales Office, Sales& Marketing Business Unit
April 2018
Executive Officer, Business Unit;
Deputy General Manager of Domestic
Business Unit and General Manager ofDomestic Business Promotion Division
April 2019
Executive Officer, Business Unit;
Deputy General Manager of Lighting
Business Unit and General Manager ofLighting Business Promotion Division
April 2020
Senior Executive Officer, Business Unit;
Deputy General Manager of Lighting
Business Unit and General Manager ofLighting Business Promotion Division
June 2020
Director, Senior Executive Officer,
Business Unit; Deputy General Manager
of Lighting Business Unit and General
Manager of Lighting Business
Promotion Division
July 2020
Director, Senior Executive Officer,
Business Unit; General Manager ofLighting Business Unit and General
Manager of Lighting Business
Promotion Division
April 2022
Director, Senior Executive Officer,
General Manager of Lighting Business
Promotion Division and in charge ofEnergy Service Business Promotion
Division (current position)
Reason for selecting him as a candidate for Director
He has obtained abundant business experience through many
years of engagement in the Sales Division and is well versed inbusiness as the person in charge of the lighting business. We
have judged that, by utilizing such experience and knowledge,
he would be capable of contributing to management of theCompany.

- 13 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 5

Kenji Oya

Reappointment
OutsideIndependent
Date of birth
November 4, 1949
Number of the Company’s
shares owned
1,300
Attendance at Board of
Directors meetings
13 times out of 13 meetings(100.0%)Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
April 1972
Joined Nihon Denso Corporation(current DENSO CORPORATION)
January 1997
General Manager of New Businesses
and Sales Department
June 2000
Director
June 2004
Executive Director
June 2007
Senior Executive Director
June 2009
Executive Vice President
June 2010
President and CEO of ASMO CO., LTD
June 2014
AdvisorJune 2016Retired as Advisor
June 2018
Director of the Company (current
position)
Reason for selecting him as a candidate for Outside Director
He has experience in serving as Director of DENSOCORPORATION. We have judged that he would be capable ofcontributing to management of the Company by reflecting his
experience as a manager and wide-range of knowledge inmanagement of the Company from the position of an Outside
Director, while strengthening corporate governance from his
position which is independent of the Company. We expect that
he will continue to fulfill these roles as Outside Director.

- 14 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 6

Tsuneo Tanai

Reappointment
OutsideIndependent
Date of birthJanuary 24, 1957
Number of the Company’s
shares owned
900
Attendance at Board of
Directors meetings
13 times out of 13 meetings(100.0%)Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
June 2004
Managing Director of Honda R&D Co.,Ltd.
April 2006
Vice President and Director of Honda ofAmerica Mfg., Inc.
June 2006
Operating Officer of Honda Motor Co.,Ltd.
April 2008
President and Director of Honda ofAmerica Mfg., Inc.
April 2009
Chief Officer, Automobile Operations of
Honda Motor Co., Ltd.
June 2009
Director
June 2011
President and CEO, Keihin Corporation(current Hitachi Astemo, Ltd.)
June 2016
Resigned as President and CEO
June 2016
Company friend, Honda Motor Co., Ltd.
June 2019
Director of the Company
June 2021
Director of the Company, and Outside
Director of METAWATER, Co., Ltd.
(current position)(Significant concurrent positions)
Outside Director of METAWATER, Co., Ltd.
Reason for selecting him as a candidate for Outside Director
He has experience in serving as Director of Honda Motor Co.,
Ltd. We have judged that he would be capable of contributing
to management of the Company by reflecting his experienceand abundant knowledge in business and management
strategies etc. in management of the Company from theposition of an Outside Director, while he is expected toprovide advice on general management from his position
which is independent of the Company. We expect that he willcontinue to fulfill these roles as Outside Director.

- 15 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 7

Junko Sunaga

Reappointment
OutsideIndependent
Date of birth
September 25, 1960
Number of the Company’s
shares owned
0
Attendance at Board of
Directors meetings
10 times out of 10 meetings(100.0%)Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
April 1983
Joined NEC Corporation
January 1993
Loaned/seconded to NEC Electronics(USA)
April 1997
Joined QUALCOMM Japan Inc.(current
QUALCOMM Japan G.K.)
April 1998
Senior Manager of Product Marketing
November 2008
Senior Director
June 2016
Vice President
April 2018
President of QUALCOMM Japan and
Representative Director and President of
QUALCOMM CDMA Technologies,
Y.K.
June 2021
Director of the Company, President of
QUALCOMM Japan G.K. and President
of QUALCOMM CDMA Technologies,
Y.K. (current position)(Significant concurrent positions)
President of QUALCOMM Japan G.K.
President of QUALCOMM CDMA Technologies, Y.K.
Reason for selecting her as a candidate for Outside Director
Based on her global insights into business management andrelevant industries, which have been developed through many
years of experience in the mobile phone semiconductorbusiness and from the viewpoint of promoting diversity, we
can expect her to enhance the functions of the Board of
Directors of the Company by exercising supervisory andchecking functions over the Company’s general management;
we believe that she will contribute to the Company’s
management. We expect that she will continue to fulfill theseroles as Outside Director.

- 16 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Candidate No. 8

Kenji Ikeda

New appointment
Date of birth
March 6, 1968
Number of the Company’s
shares owned
400

Brief profile, position and responsibility at the Company(significant concurrent positions outside the Company)
April 1991
Joined the Company
April 2018
General Manager of Corporate Planning
Department
April 2020
Executive Officer and General Manager
of Corporate Planning Department
October 2021
Executive Officer and General Manager
of Corporate Planning Division
April 2022
Senior Executive Officer and General
Manager of Corporate Planning
Division (current position)
Reason for selecting him as a candidate for Director
He has obtained abundant business experience throughengagement in the Corporate Planning Division after the Sales,
Lighting Business, and Product Planning Divisions, and is wellversed in business as the Executive Officer in charge of the
Corporate Planning Division. We have judged that, by utilizing
such experience and knowledge, he would be capable ofcontributing to management of the Company.

- 17 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Notes:

1.
2.
3.
4.
5.

6.

7.

There are no special conflicts of interests between each candidate and the Company.
The candidates for Directors, Mr. Kenji Oya, Mr. Tsuneo Tanai and Ms. Junko Sunaga, are candidates
for Outside Directors.
The candidates for Directors, Mr. Kenji Oya, Mr. Tsuneo Tanai and Ms. Junko Sunaga, will have served
four years, three years and one year, respectively, as Outside Director, at the close of this Ordinary
General Meeting of Shareholders.
The Company has notified Tokyo Stock Exchange, Inc. (TSE) that Mr. Kenji Oya, Mr. Tsuneo Tanai and
Ms. Junko Sunaga are independent directors in accordance with its rules.
The Company has concluded an agreement with Mr. Kenji Oya, Mr. Tsuneo Tanai and Ms. Junko Sunaga
pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act and the Articles ofIncorporation of the Company to limit the amount of their liability to damages as provided for in Article
423, Paragraph 1 of the Companies Act. Pursuant to the agreement, the amount of liability for damages
shall be the minimum amount provided for by Article 425, Paragraph 1 of the Companies Act. If theelection of Mr. Kenji Oya, Mr. Tsuneo Tanai and Ms. Junko Sunaga is approved, the Company shallcontinue the said agreement.
The Company has arranged a directors and officers liability insurance contract with an insurance company
to the following effect, and the plan is to renew it in July 2022. All the candidates to be reappointed and
Mr. Kenji Ikeda who is a candidate for a new Director in accordance with this agenda item have alreadybeen insured and will remain covered under the contract upon approval of their election.
〔Summary of the insurance contract〕(1) Percentage of insurance premiums to be borne by the insured
Insurance premiums including those for riders are all paid by the Company, with substantially no
premiums to be borne by the insured.
(2) Insured events covered by the contract
Any loss or damage resulting from a claim against an act of the insured in executing their duties will
be covered. However, certain exemptions are provided such as an act of the insured that is carriedout with knowledge that it is in violation of laws and regulations.
Attendance at Board of Directors meetings for the fiscal year under review is the attendance at those held
during the 107th business period. Since Ms. Junko Sunaga was newly elected and appointed at the 106th
Ordinary General Meeting of Shareholders, the number of the Board of Directors meetings after theappointment is listed under the attendance at the Board of Directors meetings for the fiscal year underreview.

- 18 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Agenda No. 4: Election of One (1) Audit & Supervisory Board Member
In order to enhance and strengthen the audit system, the Company proposes to increase the numberof Audit & Supervisory Board Members by one, subject to the approval and adoption of “Agenda
No. 2 Partial Amendments to the Articles of Incorporation.”With regard to this agenda item, the consent of the Audit & Supervisory Board has been obtained.
The candidate for Audit & Supervisory Board Member is as follows.

Masayuki Kobayashi

New appointment
OutsideIndependent
Date of birthAugust 13, 1959
Number of the Company’s
shares owned
0

Notes:
1.
2.
3.

4.
5.

Brief profile (significant concurrent positions outside theCompany)
April 1984
Joined TOKYU CONSTRUCTION
CO., LTD.
June 2002
General Manager of Finance
Department of Pacific Management
Corporation
September 2005
Executive Officer
March 2008
Director and General Manager ofManagement Control Division
June 2010
General Manager of ComplianceDepartment of Kenedix Inc.
March 2017
Audit & Supervisory Board Member
June 2021
Auditor of Kenedix Inc. and Audit &Supervisory Board Member of Kintetsu
World Express, Inc.
(Significant concurrent positions)Auditor of Kenedix Inc.
Audit & Supervisory Board Member of Kintetsu World
Express, Inc.
Reason for selecting him as a candidate for Outside Audit &Supervisory Board Member
With a wealth of knowledge and extensive experience frombeing engaged in a real estate investment business and a wealthof knowledge as an audit & supervisory board member of othercompanies, we believe that his auditing activities from aneutral and objective standpoint as Outside Audit &Supervisory Board Member will contribute to maintaining andimproving the transparency of the Company’s management
and its auditing and supervisory functions.

There are no special conflicts of interests between the candidate for Audit & Supervisory Board Member,
Mr. Masayuki Kobayashi and the Company.
The candidate for Audit & Supervisory Board Member, Mr. Masayuki Kobayashi, is a candidate for an
Outside Audit & Supervisory Board Member.
If the election of the candidate for Audit & Supervisory Board Member, Mr. Masayuki Kobayashi, isapproved, the Company will conclude an agreement with him pursuant to the provisions of Article 427,
Paragraph 1 of the Companies Act and the Articles of Incorporation of the Company to limit the amountof his liability for damages as provided for in Article 423, Paragraph 1 of the Companies Act. Pursuant
to the agreement, the amount of liability for damages shall be the minimum amount provided for by
Article 425, Paragraph 1 of the Companies Act.
The Company will notify Tokyo Stock Exchange, Inc. (TSE) that Mr. Masayuki Kobayashi is anindependent director in accordance with its rules.
The Company has arranged a directors and officers liability insurance contract with an insurance company,
and the plan is to renew it in July 2022. Mr. Masayuki Kobayashi will be insured upon approval of hiselection. A summary of the contract is given on p. 14.

- 19 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Reference: Skills of Directors and Audit & Supervisory Board Members
after This Ordinary General Meeting of Shareholders
Name

Position after
this Ordinary
GeneralMeeting of
Shareholders

YoshitakeItoPresident and
Chief
Executive
Officer

Masanori
Kato

Director,
SeniorExecutive
Officer

Sumio
UeharaDirector,
SeniorExecutive
Officer〇

Seiji
AoyamaDirector,
SeniorExecutive
Officer〇〇

Kenji Ikeda

Director,
SeniorExecutive
Officer〇〇

Kenji Oya

TsuneoTanai

Junko
SunagaHiroaki
Kato

Haruhiko
HoshinoNaoto
SuzukiTakashiInagaki

Masayuki
Kobayashi

OutsideDirector

OutsideDirector

OutsideDirector

Full-time
Audit &
Supervisory
Board
MemberFull-time
Audit &
Supervisory
Board
MemberOutsideAudit &
Supervisory
Board
MemberOutsideAudit &
Supervisory
Board
MemberOutsideAudit &
Supervisory
Board
MemberCorporate
management

Industry
experience

Sales andmarketing

〇

〇

〇

〇

Skill
Technology
development
Finance
Manufacturing
andOverseasaccounting
business〇〇

Corporate
management

Industry
experience

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

Human
resources
and laboraffairs

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

- 20 -

〇

〇

〇

〇

〇

〇

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Agenda No. 5: Election of Accounting Auditor
At the conclusion of this meeting, the term of office of the Company’s Accounting Auditor,
Ernst & Young ShinNihon LLC, will expire, and it will retire from office. Therefore, theCompany proposes the election of ARK LLC as a new Accounting Auditor based on thedecision of the Audit & Supervisory Board. In addition, the Audit & Supervisory Board has
selected ARK LLC as the candidate for Accounting Auditor because the Board has judgedthat the audit firm is appropriate as the Company’s Accounting Auditor. This is because it is
not only expected to conduct audits from a new perspective when the Company is proceedingwith the Medium-term Management Plan which started from the 107th business period, but it
is also judged to be equipped with a system to conduct financial audits in an appropriatemanner as a result of comprehensively considering its efficiency, independence, expertise andquality management system.
The candidate for Accounting Auditor is as follows:(as of May 1, 2022)
Name
Location of main office
History

Overview

ARK LLC
1-23-3 Nishi-Shinjuku, Shinjuku-ku, Tokyo
April 1975
Established Kinki Daiichi Audit Corporation
Established Hijiribashi Audit Corporation
August 1982
Established Meiji Audit Corporation
March 2004
Established ARK & Co.
January 2016
Meiji Audit Corporation and ARK & Co. were merged into
ARK Meiji Audit & Co.
July 2016
ARK Meiji Audit & Co. and Hijiribashi Audit Corporation
were merged
July 2019
Changed the name to ARK LLC
July 2020
ARK LLC and Kinki Daiichi Audit Corporation were merged
Share capital
50 million yen
Composition
Representative partners
6
Partners
31
Certified Public Accountants
54
Assistant CPAs
41
U.S. CPAs
3
IT and other professionals
3
Audit administrative staff
13
Other
14
Total
165
Client companies
105- 21 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Shareholder Proposals (Proposal Nos. 6 to 9)
Proposals 6, 7, 8 and 9 were proposed by one shareholder.
The points and reasons for the proposals submitted are stated as the original text, including
typographical and factual errors.

Agenda No. 6: Appropriation of Surplus
1.

Points of the proposal
Surplus shall be appropriated as follows.
If the Company’s Board of Directors proposes the appropriation of surplus at this Ordinary
General Meeting of Shareholders, this proposal shall be proposed independent of and in
addition to such proposal.
(a)Type of dividend assets
Cash payment(b)

Dividend per share
Amount calculated by deducting from 209 yen the dividend of surplus per commonshare of the Company proposed by the Company’s Board of Directors at this Ordinary
General Meeting of Shareholders and approved by the Meeting (209 yen if theCompany’s Board of Directors does not propose the appropriation of surplus at thisOrdinary General Meeting of Shareholders)(c)

Allocation of dividends and total amount of dividends
Dividend per share in (b) above for each common share of the Company (total amountof dividends is the amount calculated by multiplying the dividend per share by the
number of outstanding common shares (excluding treasury shares) of the Company asof March 31, 2022)(d)

Effective date on which dividends are disbursed from retained earnings
Date of this Ordinary General Meeting of Shareholders(e)Starting date of dividend payments
Three weeks from the business day following the date of the Ordinary General Meetingof Shareholders- 22 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

2.

Reasons for the proposal
The management members of the Company showed the attitude of disregarding shareholders,
as they lack consideration about return of profits to shareholders by restraining the dividend
yield to less than the market average, while promoting measures to handsomely pay their own
remuneration. This has negatively affected the Company’s stock price, which has been
substantially less than one time of PBR for a long time. In order to improve such disregard of
shareholders by the management, the proponent proposes to increase the dividend per share,
the total amount of dividends and the dividend payout ratio.
Detailed reasons are as follows:
The Company has increased the remuneration of officers, despite paying no dividends toshareholders due to the payment of liabilities for damages arising from the infringement ofpatent rights. In other words, the Company recorded a loss of 2,397 million yen (adeterioration of 3,432 million yen compared with the previous year) for the fiscal year ended
March 2009, of which a loss of 452 million yen was a litigation-related loss in connection
with a problem where the extra-high-voltage mercury lamp manufactured and sold by theCompany was allegedly infringing a patent right owned by Philips N.V.
The Company agreed to pay settlement money of $37.5 million to Philips N.V. in January
2010, and recorded settlement money for patent litigation with Philips N.V. of 4,142 million
yen and a litigation-related loss of 328 million yen among others as extraordinary losses forthe fiscal year ended March 2010, with the total amount of loss for the period amounting to
8,031 million yen (a deterioration of 5,633 million yen compared with the previous year). The
deterioration in the financial figures caused by the payment of the settlement money to Philips
N.V. inflicted a substantial impact on the Company, making it unable to pay dividends forfive consecutive years from the fiscal year ended March 2009.
On the other hand, the remuneration of officers of the Company has been increasing since thefiscal year ended March 2008. Specifically, the average remuneration per person was 13,167
thousand yen in the fiscal year ended March 2008, with 12 directors at the end of the fiscal
year (no Outside Director) and the total amount of remuneration was 158 million yen.
Conversely, it was 26,875 thousand yen in the fiscal year ended March 2009 with eight
directors (no Outside Director) and the total remuneration was 215 million yen. And it was
19,870 thousand yen in the fiscal year ended March 2010 with eight directors (no Outside
Director) and the total remuneration was 159 million yen. In other words, for the fiscal year
ended March 2009 when a substantial loss was recorded, while the Company did not pay
dividends to shareholders, it considerably increased the total amount of remuneration for
officers to 215 million yen from 158 million yen (up 36%), and the average remuneration for
officers per person to 26,875 thousand yen from 13,167 thousand yen (up 204%) And for the
fiscal year ended March 2021, the total amount of remuneration was 159 million yen for six
directors (excluding Outside Directors) at the end of the fiscal year, with the average
remuneration per person being 26,500 thousand yen. It shows the management’s disregard of
shareholders to have decided to increase the remuneration for officers while paying nodividends to shareholders.
Disregard of shareholders was also evident in the dividends per share, the dividend payout
ratio and the total amount of dividends. As stated above, while the Company did not pay
dividends to shareholders for five consecutive years after paying 5 yen per share for the fiscal
year ended March 2008, and paid 40 yen per share for the recent fiscal year ended March 2021,
what we should pay attention to is that the Company consolidated shares at the ratio of ten to
one on October 1, 2017. Theoretically, the stock price should have become ten times higher
since October 1, 2017, with the dividends per share also ten times higher; and considering this,the dividend of 40 yen per share for the fiscal year ended March 2021 was equivalent to 4 yen
per share if translated into the stock value before the consolidation, indicating that theCompany actually decreased the dividend by 10 yen (down 20%), rather than no increase in- 23 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

dividends since the fiscal year ended March 2008. To present, the total amount of dividends
has not exceeded 390 million yen for the fiscal year ended March 2008, with 306 million yen
being paid for the fiscal year ended March 2021. In other words, the Company has notincreased either the dividends per share nor the total amount of dividends for 13 years since
the fiscal year ended March 2008.
Regarding the dividend payout ratio, while companies are said to generally decide the amountof dividends with 30–50% as the guideline, the Company decided on 11.47% for the fiscal
year ended March 2020, and 14.87% for the fiscal year ended March 2021. Moreover, looking
at the ratio of dividends to net assets which shows how much is distributed as dividends inrelation to net assets, the Company’s ratio is only 0.97% (for the fiscal year ended March
2021), while the average of all industries in the first section of the Tokyo Stock Exchange
market is 2.59% and the average of the electric equipment industry is 2.69%.
Given the above, it must be said that Directors of the Company are solely concerned about
increasing the remuneration for officers while lacking consideration for shareholders. It isevident that such attitude of the Company’s Directors has lowered shareholder value, giving
a negative impact on the stock price.
In fact, looking at the stock price for the past 15 years, while the highest was 446 yen (during
the fiscal year ended March 2007), translating into 4,460 yen after the consolidation of shares,
the highest price for this fiscal year was 2,400 yen, and the lowest was 1,368 yen (during the
fiscal year ended March 2022). The stock has actually declined by as much as 50%, rather
than having no increase for 15 years. Moreover, the Company’s PBR is just over 0.5 times,
which is only half of its liquidation value. Furthermore, the Company has introduced aperformance-linked share-based remuneration system for the remuneration of its officers sinceAugust 2016, based on which Directors (excluding Outside Directors) shall receive theCompany shares or cash equivalent to shares through a trust at the time of retirement,
according to the number of points granted in each fiscal year. In other words, Directors of theCompany will also receive handsome remuneration at the time of their retirement. According
to the explanation by the Company, this system “aims to clarify the linkage between Directors’
remuneration as officers and the stock value and to enhance their motivation to contribute to
the improvement of medium- to long-term earnings and increase in corporate value,” although
there has been in fact no measure taken to increase the Company’s shareholder value, and theCompany’s payout ratio and ratio of dividends to net assets have remained low since August
2016. It is clear that Directors’ attention has not been directed toward shareholders even after
the introduction of the performance-linked share-based remuneration system. In the end, thissystem can be presumed to be one to handsomely pay remuneration to Directors, with theincrease in corporate value as a purpose in name only.
The disregard of shareholders was also clearly shown in the Medium-term Management Plan
[fiscal year ended March 2022 to fiscal year ending March 2026] (released on November 1,2021). The Plan has numerical targets for the [fiscal year ending March 2026 (plan), in unitsof a million yen] with [net sales of 65,000, operating profit of 5,200, operating profit marginof 8.0% and return on equity of 8.0%]. It is said that “while the actual cost of capital differs
between companies, the first step in receiving recognition from global investors is for acompany to commit to achieving a “minimum” ROE of 8%, while continually seeking to
generate an ROE higher than 8%.” (Report of the Ito Review, Ministry of Economy and Tradeand Industry 2014). Moreover, there is no part in the Plan that refers to an improvement of thedividend payout ratio and the return of profit to shareholders, nor a message to shareholders.
Such targets are effective for formally creating track records as Directors but cannot be
welcomed by shareholders.
Accordingly, the proponent requests the Company to pay dividends at a payout ratio of 70%(expected to be 209 yen per share for the fiscal year under review) or a ratio of dividends to
net assets of 4% (expected to be 173 yen per share for the fiscal year under review), whicheveris higher, during the five years of the Medium-term Management Plan (fiscal year ended- 24 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

March 2022 to fiscal year ending March 2026). This proposal is not intended to pursue shortterm profit by requesting excessive dividends to the Company. It is for the return of profit to
its shareholders within the profit for the fiscal year under review (profit per share of theCompany for the fiscal year ended March 2022 is 292 yen). If the Company insists it does notlack consideration for shareholders, it is well within an acceptable range.
3.

Opinion of the Company’s Board of Directors on Agenda No. 6

THE BOARD OF DIRECTORS IS OPPOSED TO THE PROPOSAL.
In the “Basic Policy on the Dividend Policy and Revision of Dividend Forecast” disclosed on
May 12, 2022, the Company announced its policy of recognizing the return of profit toshareholders as an important issue, and said it would pay dividends with a target consolidated
dividend payout ratio of no less than 30% according to earnings on a continual and stable basis,in order to enhance the return of profit to shareholders, while striving to stabilize investment
for medium- to long-term growth and the financial base. Based on this policy, the Company
plans to pay a year-end dividend of 130 yen per common share for the fiscal year ended March
2022, with an expected consolidated dividend payout ratio of 41.5% for the fiscal year.
Moreover, the Company made a share repurchase of about 500 million yen during the fiscal
year ended March 2022, with the total payout ratio for the fiscal year ended March 2022,
including the share repurchase, expected to be 63.0%.
In the “Medium-term Management Plan” (plan period: fiscal year ended March 2022 to fiscal
year ending March 2026) published in November 2021, the Company announced its basic
policy of “Growth strategy and structural reform for the second foundation,” aiming to be anadvanced company that would support social and industrial infrastructure by combining
optical device engineering and new technologies.
Since the Group ended production of the mercury lamp which had been supporting its sales
and profit in December 2020, we consider it necessary to continue and develop the Group bypromoting initiatives for new businesses and structural reforms of the Group. In this way, it
can develop a new base for the Company’s profit generating systems in order to grasp changes
in the external environment, expand its business fields and realize new value for society during
the period until the fiscal year ending March 2026.
With more uncertainties over the Company’s business environment expected, including theprolonged spread of COVID-19, higher prices of resources, a global shortage ofsemiconductors and foreign exchange fluctuations, we believe it will contribute to thecontinuation and development of the Group to secure internal reserves at appropriate levels
and use them flexibly in order to implement the above initiatives for new businesses andstructural reforms. Specifically, while maintaining necessary liquidity as working capital, we
have decided on structural reforms, development of the technical base, initiatives for theenvironment, and investments in them (5 billion yen in total, consisting of 1 billion yen forinvestment in DX/IT human resource development, 3 billion yen for research anddevelopment and M&A investment, and 1 billion yen for environment-related investment)
listed in the Medium-term Management Plan as priority measures during the Plan period. And
we consider it essential to steadily implement the above priority investments in order tocontribute to the medium- to long-term growth of the Company and continuously return profits
to shareholders.
Accordingly, we judge that the proposal which requests a dividend of 70% of profit to be notconsistent with the Company’s basic policy on the return of profit to its shareholders and themeasures to use essential funds for medium- to long-term growth, and it is not appropriate todispose of surplus according to this shareholder proposal from the perspective of improving
the Company’s corporate value and shareholder interests. Therefore, the Board of Directorsof the Company is opposed to this shareholder proposal.
- 25 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Agenda No. 7: Amendment to the Articles of Incorporation Concerning CrossShareholdings
1.

Points of the proposal
The following chapter and provision shall be newly established in the current Articles ofIncorporation.
Chapter 8

Cross-Shareholdings(Verification on the Purpose of Cross-Shareholdings and Disclosure of Its Results)
Article 46 Regarding the shares owned by the Company for the purpose of maintaining andstrengthening business relationship (hereinafter referred to as “Shares as CrossHoldings”), the Company shall inform the issuing company of Shares as CrossHoldings of its wish to sell shares at least once every year, in order to verify the purposeof maintaining and strengthening a business relationship is actually fulfilled by owing
Shares as Cross-Holdings.
2.
For each issuing company, the Company shall disclose the content of the reply from theissuing company to the inquiry of sales to the issuing company in the preceding
paragraph in a report on corporate governance that the Company submits to the Tokyo
Stock Exchange.
3.
The Company shall sell Shares as Cross-Holdings that it owns as of the effective dateof the amendment to the Articles of Incorporation which adds this article by the end of
March 2025.
2.

Reasons for the proposal
The proponent believes that Shares as Cross-Holdings should not be owned at all and thatownership of Shares as Cross-Holdings and business relationships have no causal relation.
Proxy advisors such as ISS and Glass Lewis have expressed a negative opinion on crossshareholdings as it leads to lower capital efficiency, by pointing out problems concerning
governance. Due to the above reasons, the proponent requests the Company to strictly verify
whether the purpose of owning Shares as Cross-Holdings disclosed by the Company isactually achieved, disclose its results to shareholders, and promptly sell Shares as CrossHoldings owned by the Company by the end of the fiscal year ending March 2025.

- 26 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

3.

Opinion of the Company’s Board of Directors on Agenda No. 7

THE BOARD OF DIRECTORS IS OPPOSED TO THE PROPOSAL.
While owning shares as cross-shareholdings if it is deemed to contribute to the improvementof corporate value of the Company in the medium- to long-term from the perspective of theimportance under the business strategy, business synergies, etc., the Company makes it its
policy to reduce shares which are not deemed to have the rationality for ownership.
Regarding Shares as Cross-Holdings, the Board of Directors conducts verification on
individual stocks by scrutinizing as to whether their purpose of ownership is appropriate andwhether the benefits and risks associated with ownership correspond to their capital costs.
Specifically, we steadily reduced them, from 37 stocks owned as of the end of March 2015
before the implementation of the Corporate Governance Code to 17 stocks at the end of
March 2021.
Five stocks among the 17 stocks currently owned were partly sold during the period, andtwo stocks were sold during the fiscal year ended March 2022. As a result, they represented
3,283 million yen in market value and 9.82% in the ratio to net assets at the end of March
2022. It is our policy to continue to verify the effect of ownership and gradually reduce
Shares as Cross-Holdings going forward.
The Board of Directors is opposed to this shareholder proposal, judging that this shareholder
proposal is an issue not pertinent to the provisions of the Articles of Incorporation which are
the fundamental rules of the company. And the Board believes it is not appropriate toestablish such provisions as in this shareholder proposal because the reduction of Shares as
Cross-Holdings is an individual issue to be discussed by the Board of Directors, consideringbusiness and transaction relationships with such companies, and as stated above, the Board
has been striving to reduce them and fully verify the appropriateness of ownership.

- 27 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Agenda No. 8: Dismissal of Two (2) Audit & Supervisory Board Members
1.

Points of the proposal
Audit & Supervisory Board Members Naoto Suzuki and Takashi Inagaki shall be dismissed.

2.

Reasons for the proposal
Audit & Supervisory Board Members Naoto Suzuki (hereinafter referred to as “Mr. Suzuki”)
and Takashi Inagaki (hereinafter referred to as “Mr. Inagaki”) are former employees of themain banks that are major shareholders of the Company. At the Company, while persons
related to the Company’s main banks have been maintaining the positions of Outside Audit& Supervisory Board Members for decades, it is difficult under such circumstances tomaintain a “robust independence” and “appropriate judgement from an objective standpoint”
as stated in the Corporate Governance Code. Detailed statements are as follows:
The Corporate Governance Code emphasizes the independence of kansayaku (auditors),
stating that “Kansayaku and the kansayaku board should bear in mind their fiduciary
responsibilities to shareholders and make decisions from an independent and objective
standpoint when executing their roles and responsibilities including the audit of theperformance of directors’ duties, appointment and dismissal of kansayaku and external
auditors, and the determination of auditor remuneration. ” (Principle 4.4).Also, “Given that
not less than half of the kansayaku board must be composed of outside kansayaku and thatat least one full-time kansayaku must be appointed in accordance with the Companies Act,the kansayaku board should, from the perspective of fully executing its roles andresponsibilities, increase its effectiveness through an organizational combination of the
independence of the former and the information-gathering ability of the latter.”(Supplementary Principle 4.4.1) Therefore, if the independence of Outside Audit &Supervisory Board Members is considered, Mr. Suzuki is a former employee of Mizuho
Bank, Ltd., having served as Managing Executive Officer of Mizuho Bank, Ltd. andExecutive Vice President of Mizuho Research Institute Ltd. In addition, Mr. Inagaki is aformer employee of Sumitomo Mitsui Banking Corporation, having served as Executive
Officer, Deputy Head of Wholesale Banking Unit and Deputy Head of Retail Banking Unitof Sumitomo Mitsui Banking Corporation, and President and Representative Director of
SMBC Servicer Co., Ltd. Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation
are major banks of the Company, ranked as the fifth and seventh major shareholders with183 thousand shares and 168 thousand shares, respectively. Moreover, the Company had
outstanding loans from Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation for
1,460 million yen and 1,203 million yen, respectively, at the end of March 2021. And theCompany owns shares of their parent companies: 62,145 shares of Mizuho Financial Group,
Inc. and 22,300 shares of Sumitomo Mitsui Financial Group, Inc. As such, it is clear that theCompany has a close relationship with Mizuho Financial Group, Inc. and Sumitomo Mitsui
Financial Group, Inc. And besides Messrs. Suzuki and Inagaki, the Company has also
elected successive Outside Audit & Supervisory Board Members from Mizuho Financial
Group, Inc. and Sumitomo Mitsui Financial Group, Inc. Those elected as former employeesof Mizuho Financial Group, Inc. are Mr. Masahiro Shimizu (June 2002 – June 2005), Mr.
Ryohei Nakasu (June 2005 – June 2011), Mr. Koei Yamashiro (June 2011 – June 2015), Mr.
Koichi Ikeda (June 2015 – June 2019) and Mr. Suzuki (June 2019 – June 2022, current
position). Those elected as former employees of Sumitomo Mitsui Financial Group, Inc. are
Mr. Hirokazu Hyodo (June 1999 – June 2013), Mr. Masayuki Yamazaki (June 2013 – June2017), Mr. Shozo Watanabe (June 2017 – June 2021), and Mr. Takashi Inagaki (June 2021
– June 2022, current position).
The Company’s annual securities report and the report on corporate governance state thatregarding the Company’s Standards for the Independence of Outside Officers, “they shallnot have been directors, audit & supervisory board members, executive officers or other
employees of the financial institutions that are main lenders for the Company and the Group- 28 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

companies in the past three fiscal years including the most recent one.” And formally, Messrs.
Suzuki and Inagaki do not fall under people who have been directors, audit & supervisoryboard members, executive officers or other employees of Mizuho Bank, Ltd. and Sumitomo
Mitsui Banking Corporation in the past three fiscal years, and thus they meet the standards
for the independence of outside audit & supervisory board members. However, the posts of
the Company’s Outside Audit & Supervisory Board Members have been fixed for successive
former employees of Mizuho Financial Group, Inc. and Sumitomo Mitsui Financial Group,
Inc., while it is clear that the Company has a strong relationship with companies related toMizuho Financial Group, Inc. and Sumitomo Mitsui Financial Group, Inc. Under such
relationship, the independence of Outside Audit & Supervisory Board Members who areformer employees of such entities cannot be expected at all. Audit & Supervisory Board
Members are expected to play an important role of monitoring the execution of duties bydirectors on behalf of shareholders, and moreover, the system of Outside Audit &Supervisory Board Members is one to have been introduced because it is necessary to havepersons, among Audit & Supervisory Board Members, who can express objective opinions
not influenced by directors who execute duties. The proponent considers it may invite
governance failure, as it cannot be expected at all that former employees of both banks will
express opinions on behalf of shareholders by maintaining “robust independence” without
being influenced by directors and based on “appropriate judgement from an objective
standpoint” under such relationship where it can be deemed to promise the positions of
Outside Audit & Supervisory Board Members for a long period of time as stated above.
Due to the above reasons, the proponent proposes the dismissal of both Messrs. Suzuki andInagaki. For Mr. Suzuki, the rate of affirmative votes was 70.8% at the 104th Ordinary
General Meeting of Shareholders held on June 27, 2019, while for Mr. Inagaki it was 59.3%
at the 106th Ordinary General Meeting of Shareholders held on June 25, 2021. Presumably,
this is because many institutional institutions voted against them due to a doubt about their
independence.
3.

Opinion of the Company’s Board of Directors on Agenda No. 8

THE BOARD OF DIRECTORS IS OPPOSED TO THE PROPOSAL.
The election of Audit & Supervisory Board Member Naoto Suzuki was approved andadopted at the 104th Ordinary General Meeting of Shareholders held on June 27, 2019, andthat of Audit & Supervisory Board Member Takashi Inagaki at the 106th Ordinary General
Meeting of Shareholders on June 25, 2021, and they assumed their post as Audit &Supervisory Board Member. They have attended all the meetings of the Board of Directors
and Audit & Supervisory Board since assuming their post, have actively made statementswith their experience and extensive knowledge as managers and business administrators toensure the validity and appropriateness of the decision-making, and thereby have been
sufficiently performing their duties.
Moreover, neither Audit & Supervisory Board Member Suzuki nor Inagaki has committed
a fraudulent act while executing duties or an act in violation of laws, regulations or the
Articles of Incorporation. Therefore, there is no justifiable reason or necessity to dismiss
either Audit & Supervisory Board Member Suzuki or Inagaki.
Moreover, at this Ordinary General Meeting of Shareholders, we propose an increase of thenumber of Audit & Supervisory Board Members by one under “Agenda No. 2: Partial
Amendments to the Articles of Incorporation,” and conditional upon its approval, we
propose Mr. Masayuki Kobayashi as candidate for a new Audit & Supervisory Board
Member under “Agenda No. 4: Election of One (1) Audit & Supervisory Board Member.”
We will further enhance and strengthen the audit system with this measure.

- 29 -

This English translation is made for reference purposes only, and in the event of any discrepancies between the
English version and the Japanese version, the Japanese version prevails.

Agenda No. 9: Dismissal of One (1) Substitute Audit & Supervisory Board Member
1.

Points of the proposal
Substitute Audit & Supervisory Board Member Shozo Watanabe shall be dismissed.

2.

Reasons for the proposal
For the same reason in (3) above (Agenda No. 8), dismissal of Substitute Audit &Supervisory Board Member Shozo Watanabe is proposed.

3.

Opinion of the Company’s Board of Directors on Agenda No. 9

THE BOARD OF DIRECTORS IS OPPOSED TO THE PROPOSAL.
At this Ordinary General Meeting of Shareholders, we propose an increase of the number ofAudit & Supervisory Board Members by one under “Agenda No. 2: Partial Amendments to
the Articles of Incorporation,” and conditional upon its approval, we propose Mr. Masayuki
Kobayashi as candidate for a new Audit & Supervisory Board Member under “Agenda No.
4: Election of One (1) Audit & Supervisory Board Member.”In addition, the effect of the election of Substitute Audit & Supervisory Board Member
Shozo Watanabe will expire at this Ordinary General Meeting of Shareholders.
Since we will have three Outside Audit & Supervisory Board Members with this, no
proposal has been submitted for the election of a Substitute Audit & Supervisory Board
Member.

- 30 -