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 noresponsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

(Securities identification code: 6462)
June 3, 2019

To our shareholders:
Kaoru Itoh
President (CEO & COO)
Riken Corporation
8-1, Sanbancho, Chiyoda-ku,
Tokyo

Notice of the 95th Ordinary General Meeting of Shareholders
You are cordially invited to attend the 95th Ordinary General Meeting of Shareholders of
Riken Corporation (the “Company”), which will be held as described below.
If you are unable to attend the meeting in person, you may exercise your voting rights by postal
mail or via the Internet. Please review the attached Reference Documents for the General Meetingof Shareholders, and exercise your voting rights no later than 5:30 p.m., Thursday, June 20, 2019
(Japan Standard Time).
Meeting Details

1.
2.

Date and time:
Venue:

3.

Purposes of the Meeting:Items to be reported:

Friday, June 21, 2019 at 3:00 p.m. (Japan Standard Time)
4th Floor Golden Room
Hotel Grand Palace
1-1-1, Iidabashi, Chiyoda-ku, Tokyo

1. Business Report and Consolidated Financial Statements for the95th Term (from April 1, 2018 to March 31, 2019), as well as theresults of audit of the Consolidated Financial Statements by the
Accounting Auditor and the Audit and Supervisory Board
2. Non-Consolidated Financial Statements for the 95th Term (from
April 1, 2018 to March 31, 2019)
Items to be resolved:
Proposal 1:
Proposal 2:
Proposal 3:
Proposal 4:
Proposal 5:
Proposal 6:
Proposal 7:
Proposal 8:
Proposal 9:
Proposal 10:

Appropriation of surplus
Partial change to Articles of Incorporation
Election of eight (8) Directors (excluding Directors who are Audit
and Supervisory Committee Members)
Election of three (3) Directors who are Audit and Supervisory
Committee Members
Election of one (1) substitute Director who is an Audit andSupervisory Committee Member
Election of Accounting Auditor
Determination of remuneration of Directors (excluding Directors
who are Audit and Supervisory Committee Members)
Determination of remuneration of Directors who are Audit andSupervisory Committee Members
Determination of remuneration for granting restricted stock to
Directors (excluding Directors who are Audit and Supervisory
Committee Members and Outside Directors)
Continuation of Measures to Respond to a Large-Scale Acquisitionof Our Company’s Stock

－ 1 －

4.

Exercise Voting Rights
If you exercise a voting right on multiple occasions via the Internet, your final vote shall betreated as the effective exercise of the voting right.
If you exercise a voting right by both postal mail and the Internet, the one exercised via theInternet shall be treated as the effective exercise of the voting right.

5.

Internet Disclosure
The referential materials appended to this Convocation Notice do not include the two documents
listed below. These two documents have been posted on the Company’s website(http://www.riken.co.jp/english/) pursuant to legislation and Article 15 of the Company’s Articles
of Incorporation.
(1) Matters Related to Company Stock Acquisition Rights, etc. from business report(2) System to Ensure the Appropriateness of Operations from business report(3) Consolidated Statement of Changes in Equity from consolidated financial statements(4) Notes to the Consolidated Financial Statements(5) Statement of Changes in Equity from non-consolidated financial statements(6) Notes to Non-Consolidated Financial Statements
Therefore, please note that the referential materials do not fully encompass the consolidated
financial statements and non-consolidated financial statements that the Company’s accounting
auditor audited when preparing the Accounting Auditor Report; nor do they fully encompass thebusiness report, consolidated financial statements, and non-consolidated financial statements that
the Audit and Supervisory Board audited when preparing its Audit Report.

－ 2 －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 noresponsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Reference Documents for the General Meeting of Shareholders
Proposals and Notes
Proposal 1:

Appropriation of surplus
The Company aims to deliver stable shareholder returns while considering the Company’s
current performance as well as the future business climate and prospects for businessdevelopment.
According to the policy, the Company proposes as a term-end dividend of 70 yen per
share.
The Company has already paid an interim dividend of 70 yen per share. Accordingly,
the proposed annual dividend for the fiscal year under review amounts to 140 yen per
share.
1. Matters related to year-end dividends(1) Type of dividend property
Cash(2) Allocation of dividend property and total amount thereof
70 yen per common share of the Company
Total amount of dividends: 690,642,050 yen(3) Effective date of distribution of dividends of surplus
June 24, 2019

－ 3 －

Proposal 2:
1.

Partial change to Articles of Incorporation

Reasons for proposal
By making Audit and Supervisory Committee Members who are in charge of supervising theperformance of duties by Directors constituent members of the Board of Directors, the Company hopes
to strengthen the audit and supervisory functions of the Board of Directors and further enhance
corporate governance. The Company, therefore, hopes to transition into a company with an audit andsupervisory committee. In conjunction with this, the Company proposes to make the necessary changes
to the Articles of Incorporation, including changing the provisions on Directors and the Board of
Directors, deleting the provisions on Audit and Supervisory Board Members and the Audit andSupervisory Board, and adding provisions on the Audit and Supervisory Committee.
Changes to the Articles of Incorporation shall take effect as of the conclusion of this General Meetingof Shareholders.

2.

Details of Changes
The details of the changes are as follows:(The underlined parts indicate the changes.)

Current Articles of Incorporation

Proposed Change

Articles 1 to 3 (Omitted)

Articles 1 to 3 (No change)

Article 4 (Organs)
The Company shall have thefollowing organs in addition toGeneral Meetings of Shareholders
and Directors:
1. Board of Directors;
2. Audit and Supervisory Board
Members;
3. Audit and Supervisory Board;and
4. Accounting Auditor

Article 4 (Organs)
The Company shall have thefollowing organs in addition toGeneral Meetings of Shareholders
and Directors:
1. Board of Directors;
2. Audit and Supervisory
Committee; and(Deleted)
3. Accounting Auditor

Articles 5 to 18 (Omitted)

Articles 5 to 18 (No change)

Article 19 (Number of Directors)
The number of Directors of theCompany shall not exceed ten(10).

Article 19 (Number of Directors)
The number of Directors of theCompany (excluding Directors who
are Audit and Supervisory
Committee Members) shall not
exceed ten (10), and the number of
Directors who are Audit andSupervisory Committee Members
shall not exceed five (5).

Article 20 (Method of Election)
Directors shall be elected at theGeneral Meeting of Shareholders.
A resolution for the election under
the preceding paragraph shall be
adopted by a majority of the votesof the shareholders present having
not less than one-thirds (1/3) of

Article 20 (Method of Election)
The election of Directors shall be
implemented at a General Meeting of
Shareholders by distinguishing
Directors who are Audit andSupervisory Committee Members
and the other Directors.
A resolution for the election under－ 4 －Current Articles of Incorporation

Proposed Change

voting rights of all shareholders
entitled to exercise their voting
rights thereat. No cumulative
voting shall be used for theelection of Directors.

the preceding paragraph shall be
adopted by a majority of the votes ofthe shareholders present having notless than one-thirds (1/3) of voting
rights of all shareholders entitled toexercise their voting rights thereat.
No cumulative voting shall be used
for the election of Directors.

Article 21 (Omitted)

Article 21 (No change)

Article 22 (Term of Office)The term of office of Directors
shall expire at the conclusion of
the Ordinary General Meeting of
Shareholders held for the lastbusiness year ending within one(1) year after their election.

Article 22 (Term of Office)
1. The term of office of Directors(excluding those who are Audit andSupervisory Committee Members)
shall expire at the conclusion of theOrdinary General Meeting of
Shareholders held for the lastbusiness year ending within one (1)year after their election.

(New)

2. The term of office of Directors
who are Audit and Supervisory
Committee Members shall expire at
the conclusion of the Ordinary
General Meeting of Shareholders
held for the last business year ending
within two (2) years after theirelection.

(New)

3. The term of office of a Director
who is an Audit and Supervisory
Committee Member that is elected asa substitute for a Director who is an
Audit and Supervisory Committee
Member who resigned prior to the
expiration of his/her term of officeshall expire at the time of expirationof the term of office of the resigned
Director who is an Audit andSupervisory Committee Member.

(New)

4. Resolutions pertaining to theelection of substitute Directors who
are Audit and Supervisory
Committee Members shall be valid
until the start of the Ordinary
General Meeting of Shareholders forthe last fiscal year ending within two(2) years after said resolution.

Article 23 (Omitted)

Article 23 (No change)

Article 24 (Notice of Convocation of Board of
Directors Meetings)
Notice of convocation of a Boardof Directors Meeting shall be
issued to each Director and Audit
and Supervisory Board Member at
least four (4) days prior to such

Article 24 (Notice of Convocation of Board of
Directors Meetings)
Notice of convocation of a Board of
Directors Meeting shall be issued toeach Director and Auditor at least
four (4) days prior to such meeting;provided, however, that this period－ 5 －Current Articles of Incorporation

Proposed Change

meeting; provided, however, that
this period may be shortened incase of emergency.
Article 25 (Omission of Resolution by Board of
Directors)
The Company shall deem that if
all Directors agree on a matter for
resolution in writing or in anelectromagnetic record, theresolution of the Board of
Directors to approve such matterfor resolution has been passed.
However, this shall not apply inthe event that an Audit andSupervisory Board Member voices
an objection.
(New)

may be shortened in case of
emergency.
Article 25 (Omission of Resolution by Board of
Directors)
The Company shall deem that if all
Directors agree on a matter for
resolution in writing or in anelectromagnetic record, theresolution of the Board of Directors
to approve such matter for resolution
has been passed.

Article 26 (Delegation to Directors)
Pursuant to the provisions of Article399-13, paragraph 6 of theCompanies Act, the Company may
delegate all or part of decisions ofexecution of important operations(excluding matters set forth in itemsof paragraph 5 of the same Article)
to Directors by resolution of theBoard of Directors.

Article 26 (Remuneration, etc.)
Remuneration, bonus and otherproprietary benefits (hereinafter“remuneration, etc.”) provided by
the Company as compensation forthe duties of Directors shall be
determined by a resolution ofGeneral Meeting of Shareholders.

Article 27 (Remuneration, etc.)
Remuneration, bonus and otherproprietary benefits provided by theCompany as compensation for theduties of Directors shall be
determined by a resolution ofGeneral Meeting of Shareholders by
distinguishing Directors who are
Audit and Supervisory Committee
Members and the other Directors.

Articles 27 to 29 (Omitted)

Articles 28 to 30 (No change)

Chapter 5. Audit and Supervisory Board
Members and Audit and Supervisory Board

Chapter 5. Audit and Supervisory Committee

Article 30 (Number of Members)
The Company shall have no morethan five (5) Audit andSupervisory Board Members.

(Deleted)

Article 31 (Method of Election)
Audit and Supervisory Board
Members shall be elected at theGeneral Meeting of Shareholders.
A resolution for the election under
the preceding paragraph shall be
adopted by a majority of the votesof the shareholders present having
not less than one-thirds (1/3) ofvoting rights of all shareholders(Deleted)－ 6 －Current Articles of Incorporation

Proposed Change

entitled to exercise their voting
rights thereat.
Article 32 (Substitute Audit and Supervisory
Board Members)
The Company may elect substitute
Audit and Supervisory Board
Members at the General Meetingof Shareholders in preparation forthe case that the number of Audit
and Supervisory Board Members
falls short of statutory
requirements or requirements of
the Articles of Incorporation.
The provisions of Article 31
paragraph 2 shall apply to thequorum for resolutions for election
under the preceding paragraph.
The term of office of substitute
Audit and Supervisory Board
Members who are elected inaccordance with paragraph 1 shallbe the remainder of the term ofoffice of their predecessor.

(Deleted)

Article 33 (Effectiveness of Nominations for
Substitute Audit and Supervisory Board
Members)
Elections of a substitute Audit andSupervisory Board Member shallbe effective until the first Ordinary
General Meeting of Shareholders
is held after his/her election.

(Deleted)

Article 34 (Term of Office)The term of office of Audit andSupervisory Board Members shall
expire at the conclusion of theOrdinary General Meeting of
Shareholders held for the lastbusiness year ending within four(4) years after their election. The
term of office of an Audit andSupervisory Board Member that is
elected as a substitute for an Audit
and Supervisory Board Member
who resigned prior to the
expiration of his/her term of officeshall expire at the time of
expiration of the term of office ofthe resigned Audit andSupervisory Board Member.

(Deleted)

Article 35 (Full-Time Audit and Supervisory
Board Members)
The Audit and Supervisory Board
shall appoint full-time Audit andSupervisory Board Member(s) by
its resolution.

(Deleted)－ 7 －Current Articles of Incorporation

Proposed Change

Article 36 (Notice of Convocation of Audit andSupervisory Board Meetings)
Notice of convocation of an Audit
and Supervisory Board Meetingshall be issued to each Audit andSupervisory Board Member at
least four (4) days prior to suchmeeting; provided, however, that
this period may be shortened incase of emergency.

(Deleted)

Article 37 (Rules of the Audit and Supervisory
Board)
Matters relating to the Audit andSupervisory Board shall begoverned by the Rules of the Audit
and Supervisory Board establishedand determined by the Audit andSupervisory Board in addition toapplicable laws and regulations orthese Articles of Incorporation.

(Deleted)

Article 38 (Remuneration, etc.)
Remuneration, etc. for Audit andSupervisory Board Members shallbe determined by a resolution ofGeneral Meeting of Shareholders.

(Deleted)

Article 39 (Contracts for Limitation of Audit andSupervisory Board Members’ Liability)
Pursuant to the provisions ofArticle 427, paragraph 1 of theCompanies Act, the Company may
enter into an agreement with Audit
and Supervisory Board Members
to limit the maximum amount of
their liabilities under Article 423,
paragraph 1 of the same Act to theminimum liability amountstipulated by law.

(Deleted)(New)

Article 31 (Full-Time Audit and Supervisory
Committee Members)
The Audit and Supervisory
Committee may appoint full-time
Audit and Supervisory Committee
Member(s) by its resolution.

(New)

Article 32 (Notice of Convocation of Audit andSupervisory Committee Meetings)
Notice of convocation of an Audit
and Supervisory Committee Meetingshall be issued to each Audit andSupervisory Committee Member at
least four (4) days prior to suchmeeting; provided, however, that thisperiod may be shortened in case of
emergency.
－ 8 －Current Articles of Incorporation(New)

Articles 40 to 43 (Omitted)

Proposed Change
Article 33 (Rules of the Audit and Supervisory
Committee)
Matters relating to the Audit andSupervisory Committee shall begoverned by the Rules of the Audit
and Supervisory Committee
established and determined by the
Audit and Supervisory Committee in
addition to applicable laws andregulations or these Articles ofIncorporation.
Articles 34 to 37 (No change)(New)

Supplementary Provision(New)

Article 1 (Transitional Measures Concerning
Exemption of Liabilities of Audit and Supervisory
Board Members)
The Company may, by a resolutionof the Board of Directors, exempt
Audit and Supervisory Board
Members (including those who wereAudit and Supervisory Board
Members) from their liabilities fordamages provided for in Article 423,
paragraph 1 of the Companies Act inconnection with the acts conducted
before the conclusion of the 95th
Ordinary General Meeting of
Shareholders to the extent permitted
by laws and regulations.

－ 9 －Proposal 3: Election of eight (8) Directors (excluding Directors who are Audit and Supervisory Committee
Members)
If Proposal 2 (Partial change to Articles of Incorporation) is approved as proposed, theCompany will transition into a company with an audit and supervisory committee.
As such, the Company requests the election of eight (8) Directors (excluding Directors
who are Audit and Supervisory Committee Members). The resolution for this proposal shallbe effective on the condition that the changes to the Articles of Incorporation as set forth in
Proposal 2 take effect.
The candidates for Director are as follows:

No.

1

Name
(Date of birth)

Kaoru Itoh
(April 9, 1953)[Reelection]

Career summary, position and responsibilities, andsignificant concurrent positions outside theCompany
April 1976
Joined the Industrial Bank of Japan,
LimitedApril 2005

Managing Executive Officer ofMizuho Bank, Ltd.

March 2008

President and CEO of Mizuho
Research Institute Ltd.

May 2012

Advisor of the Company

June 2012Managing Director of the Company

June 2013

Senior Managing Director, Chairmanof the Corporate Strategy Committeeof the Company

June 2015

Representative Director, President(COO) of the Company

April 2018

Representative Director, President(CEO & COO) of the Company(present position)

Reasons for nomination as candidate for Director
As CEO and COO, Kaoru Itoh has successfully managed
the Company’s operations. We have nominated him again
for the post of Director, believing his wide-ranging
experience and competence to be invaluable to theCompany’s management.
Attendance at the Board of Directors Meetings during
the fiscal year
18/18 (100%)－ 10 －

Number of theCompany’s
shares owned

6,300

No.

Name
(Date of birth)

Career summary, position and responsibilities, andNumber of thesignificant concurrent positions outside theCompany’s sharesCompany
owned
April 1972

Joined the Company

January 2004 Director, President of Riken
Automobile Parts (Wuhan) Co., Ltd.
June 2009

Director of the Company andDirector, President of Riken
Automobile Parts (Wuhan) Co., Ltd.

October 2009 Director, General Manager of Quality
Assurance Division of the Company
May 20112

June 2013
Kazuyoshi
Takaki
May 2016(April 15, 1953)[Reelection]
April 2019

Director, General Manager of Casting
Components Division of theCompany
Managing Director of the Company
Director, Managing Executive Officerof the Company
Director, Senior Managing Executive
Officer & CTO of the Company(present position)

Reasons for nomination as candidate for Director
Kazuyoshi Takaki founded a Chinese subsidiary, and hehas managed manufacturing and quality assurance, which
has helped our group increase profitability. We havenominated him again for the post of Director, believing his
wide-ranging experience and competence to be invaluable
to the Company’s management.
Attendance at the Board of Directors Meetings during
the fiscal year
18/18 (100%)－ 11 －

4,000

No.

Name
(Date of birth)

Career summary, position and responsibilities, andNumber of thesignificant concurrent positions outside theCompany’s sharesCompany
ownedMarch 1986

Joined the Company

February 2004 General Manager of Nagoya Sales
Division of the Company

3

Yasunori
Maekawa(February 27,
1958)[Reelection]

June 2010

Director, Chairman of Overseas
Committee of the Company

May 2013

Director of the Company

June 2015

Managing Director of the Company

May 2016

Director, Managing Executive Officerof the Company

April 2019

Director, Senior Managing Executive
Officer of the Company (present
position)

Reasons for nomination as candidate for Director
During his long years of service in the Company, Yasunori
Maekawa has engaged in overseas sales, domestic sales
and overseas business, which has helped our group expand
globally. We have nominated him again for the post of
Director, believing his wide-ranging experience andcompetence to be invaluable to the Company’s
management.
Attendance at the Board of Directors Meetings during
the fiscal year
18/18 (100%)－ 12 －

3,200

No.

Name
(Date of birth)

Career summary, position and responsibilities, andNumber of thesignificant concurrent positions outside theCompany’s sharesCompany
ownedJune 1983

Joined Riken Metal Products
Corporation

October 1995 Director, Vice President of Riken of
America Inc.
January 2003 Director, President of Riken of
America Inc.

4

Donald E.
McNulty(October 11,
1952)[Reelection]

June 2011

Director of the Company andDirector, President of Riken of
America Inc.

May 2016

Director, Managing Executive Officerof the Company and Director,
President of Riken of America Inc.

June 2018

Director of the Company (present
position)

June 2018

Chairman of Riken of America Inc.
(present position)

Reasons for nomination as candidate for Director
During his long years of service in the Company, Donald
E. McNulty has achieved business success in theAmerica/Europe region, which has helped our group
expand globally. We have nominated him again for thepost of Director, believing his wide-ranging experienceand competence to be invaluable to the Company’s
management.
Attendance at the Board of Directors Meetings during
the fiscal year
17/18 (94.4%)－ 13 －

400

No.

5

Name
(Date of birth)

Career summary, position and responsibilities, andNumber of thesignificant concurrent positions outside theCompany’s sharesCompany
owned
April 1981

Joined the Company

November
2004

General Manager of Kanagawa Sales
Division of the Company

June 2009

Director, General Manager ofKanagawa Sales Division of theCompany

April 2011

Director, General Manager of Sales
Head Office of the Company

June 2016

Managing Executive Officer of theCompany

Shigemasa
HayasakaJune 2017
Director, Managing Executive Officer(March 10, 1955)of the Company (present position)[Reelection]
Reasons for nomination as candidate for Director
In managing the Company’s sales operations,Shigemasa Hayasaka has helped to strengthen its
marketing power and to expand sales. We havenominated him again for the post of Director,
believing his wide-ranging experience andcompetence to be invaluable to the Company’s
management.

4,800

Attendance at the Board of Directors Meetings during
the fiscal year

17/18 (94.4%)
April 1981

Joined the Company

October 2009 General Manager of Piston Ring
Division of the Company
June 2012

Director, General Manager of Quality
Assurance Division of the Company

October 2014 Director, General Manager of Piston
Ring Division of the Company
June 2016
6

Yutaka Sato
(March 31, 1959)[New election] April 2018

Executive Officer, General Manager
of Piston Ring Division of theCompany
Managing Executive Officer of theCompany (present position)

Reasons for nomination as candidate for Director
During his long years of service in the Company,
Yutaka Sato has managed manufacturing operations
for piston rings, one of the Company’s key products,
which has helped our group increase profitability. We
have nominated him newly for the post of Director,
believing his wide-ranging experience andcompetence to be invaluable to the Company’s
management.

－ 14 －

2,800

No.

Name
(Date of birth)

Career summary, position and responsibilities, andNumber of thesignificant concurrent positions outside theCompany’s sharesCompany
owned
April 1973

Joined Bank of JapanMay 1999

Director-General of International
Department of Bank of Japan

June 2002

Executive Director of Bank of Japan

June 2006

Director, Vice President of Toyota
Financial Services Corporation

May 2015
May 2015

7

Director, Representative Statutory
Executive Officer of MetLife, Inc.

June 2015

Outside Director of the Company(present position)

June 2016

Outside Director of NTT DATA
Corporation (present position)

Eiji Hirano
September
Director, Vice Chairman of MetLife,(September 15, 2017
Inc. (present position)
1950)[Reelection] October 2017 Chairperson of the Board of Governorsof Government Pension Investment[Outside]
Fund (present position)[Independent]
Reasons for nomination as candidate for Outside
Director
Eiji Hirano held a top post in the Bank of Japan andsubsequently held executive posts in a number ofcompanies. We have nominated him again for thepost of Outside Director because we believe that theCompany’s management will benefit from his indepth and global expertise and extensive experience.
He will have served as Outside Director for four (4)years at the conclusion of this General Meeting of
Shareholders.
Attendance at the Board of Directors Meetings during
the fiscal year

17/18 (94.4%)－ 15 －

0

No.

Name
(Date of birth)

Career summary, position and responsibilities, andNumber of thesignificant concurrent positions outside theCompany’s sharesCompany
owned
April 1975

Joined the Ministry of International
Trade and Industry (currently the
Ministry of Economy, Trade andIndustry)

July 2002

Director-General of Research andStatistics Department of the
Ministry of Economy, Trade andIndustry

April 2005

Professor of Graduate School of
Innovation Management of Tokyo
Institute of Technology

February 2012 Director of the Japan Asia Group
Limited (present position)

8

Koji Tanabe April 2017
(February 1,
1952)[New election][Outside][Independent]

Professor Emeritus of Tokyo
Institute of Technology
Specially-Appointed Professor of
School of Environment and Societyof Tokyo Institute of Technology(present position)

0

Corporate Auditor of Shimazaki
Denki Corporation (present position)
Reasons for nomination as candidate for Outside
Director
While Koji Tanabe has not been involved in corporate
management aside from serving as an outside officer,
he worked as a professor at the Tokyo Institute ofTechnology after serving at the Ministry of Economy,
Trade and Industry for many years. We havenominated him for the post of the new Outside
Director because we believe that the Company’s
management will benefit from the in-depth expertiseand extensive experience he has cultivated,particularly in innovation management.
(Notes)1. There is no special interest between any of the candidates and the Company.
2. Eiji Hirano and Koji Tanabe are candidates for Outside Director.
3. The Company has designated Eiji Hirano as an independent officer according to the rules of theTokyo Stock Exchange, Inc., and has registered him with the said exchange. If he is reelected, hewill be registered again as an independent officer. If Koji Tanabe is elected, he will be registered as
an independent officer.
4. The Company has entered into an agreements with Eiji Hirano limiting his liability for damages tothe extent stipulated in legislation. The Company intends to continue this agreement if his reelection
is approved.
5. If Koji Tanabe’s election is approved, the Company will enter into an agreement with him limiting
his liability for damages to the extent stipulated in legislation.

－ 16 －

Proposal 4: Election of three (3) Directors who are Audit and Supervisory Committee Members
If Proposal 2 (Partial change to Articles of Incorporation) is approved as proposed, theCompany will transition into a company with an audit and supervisory committee.
As such, the Company requests the election of three (3) Directors who are Audit andSupervisory Committee Members.
The resolution for this proposal shall be effective on the condition that the changes to
the Articles of Incorporation as set forth in Proposal 2 take effect.
The Audit and Supervisory Board has given its consent to this proposal.
The candidates for Directors who are Audit and Supervisory Committee Members are
as follows:－ 17 －

No.

1

Name
(Date of birth)

Career summary, position and responsibilities, and Number of thesignificant concurrent positions outside theCompany’s sharesCompany
owned
April 1979

Joined the Industrial Bank ofJapan, Limited

April 2007

Executive Officer, General
Manager of Group Strategy ofMizuho Financial Group, Inc.

April 2009

Corporate Auditor of Mizuho
Corporate Bank, Ltd.

June 2012

Director, President of Mizuho
Human Service Co., Ltd.

June 2013

Corporate Auditor of IBJ Leasing
Company, Limited

June 2015

Director, President of IBJLTOSHIBA Leasing Company,
LimitedHidemi Hiroi April 2017
(November 16,
1954)
June 2017[New election][Outside][Independent]

Advisor of IBJL-TOSHIBA
Leasing Company, Limited
Outside Audit and Supervisory
Board Member of the Company(present position)

Reasons for nomination as candidate for Outside
Director who is Audit and Supervisory Committee
MemberWe have nominated Hidemi Hiroi for the post of Outside
Director who is an Audit and Supervisory Committee
Member because we believe that the Company’s audits
will benefit from his extensive experience and in-depth
specialist knowledge of financial matters based on his
many years of experience at financial institutions as wellas his experience in management and as an auditor atother companies.
Attendance at the Audit and Supervisory Board
Meetings during the fiscal year
13/13 (100%)
Attendance at the Board of Directors Meetings during
the fiscal year
18/18 (100%)－ 18 －

0

No.

2

Number of the
Name
Career summary, position and responsibilities, andCompany’s shares(Date of birth) significant concurrent positions outside the Company
ownedApril 1980

Joined the Company

June 2007

Director of the Company andDirector, President of Allied Ring
Corporation

October 2009

Director, General Manager of Ring
Products Technological
Development Division of theCompany

October 2010

Director, General Manager ofTechnologies Management Divisionof the Company

June 2016

Executive Officer, Chairman ofTechnologies Committee andGeneral Manager of Technologies
Management Division of theCompany

Akira Kunimoto(October 17,
1955)[New election] April 2019

Advisor to the Company (present
position)

Reasons for nomination as candidate for Director
who is Audit and Supervisory Committee Member
Akira Kunimoto has led the Company’s technologies
management division for many years and contributed
to management of the Company’s research anddevelopment/capital investments and building of astructure for technical development. He also has
experience in management of overseas groupcompanies. We have nominated him for the post of
Director who is an Audit and Supervisory Committee
Member because we believe that the Company’s audits
will benefit from his in-depth specialist knowledge andexperience.

－ 19 －

2,900

No.

Name
(Date of birth)

Career summary, position and responsibilities, and Number of thesignificant concurrent positions outside theCompany’s sharesCompany
owned
April 1976

Appointed as public prosecutor

June 2010

Superintending Prosecutor, Sendai
High Public Prosecutors Office

August 2011

Superintending Prosecutor,
Nagoya High Public Prosecutors
OfficeJuly 2012

Resigned from office

October 2012

Registered as Attorney-at-Law
Advisor of Nagashima Ohno &Tsunematsu (present position)

3

June 2013

Outside Audit and Supervisory
Board Member of the Company(present position)

March 2015

Outside Auditor of CANONELECTRONICS INC. (present
position)

June 2015

Outside Corporate Auditor of
Hokkaido Bank, Ltd. (present
position)

Shuji Iwamura(September 16,
1949)
October 2017
[New election][Outside][Independent]
June 2018

Governor and Auditor of theBoard of Governors ofGovernment Pension Investment
Fund (present position)
Outside Director of Hayashikane
Sangyo Co., Ltd. (present position)

Reasons for nomination as candidate for Outside
Director who is Audit and Supervisory Committee
Member
While Shuji Iwamura has not been involved in corporate
management aside from serving as an outside officer, wehave nominated him for the post of Outside Director who
is an Audit and Supervisory Committee Member because
we believe that the Company’s audits will benefit fromhis knowledge and experience as a prosecutor andattorney and his experience as an auditor at othercompanies.
Attendance at the Audit and Supervisory Board
Meetings during the fiscal year
13/13 (100%)
Attendance at the Board of Directors Meetings during
the fiscal year
17/18 (94.4%)－ 20 －

0(Notes)
1. There is no special interest between each of the candidates and the Company.
2. Hidemi Hiroi and Shuji Iwamura are new candidates for Outside Director.
3. (1) Hidemi Hiroi currently serves as Outside Audit and Supervisory Board Member, and he will have served in thiscapacity for two (2) years at the conclusion of this Ordinary General Meeting of Shareholders.
(2) Shuji Iwamura currently serves as Outside Audit and Supervisory Board Member, and he will have served in thiscapacity for six (6) years at the conclusion of this Ordinary General Meeting of Shareholders.
4. The Company has designated Shuji Iwamura as an independent officer according to the rules of the Tokyo Stock Exchange,
Inc., and has registered him with the said exchange. If he is elected, he will be registered again as an independent officer. If
Hidemi Hiroi is elected, he will be registered as an independent officer.
5. The Company has entered into agreements with Hidemi Hiroi and Shuji Iwamura limiting their liability for damages to theextent stipulated in legislation. If their elections are approved, the Company will enter into agreements with them again as
Directors who are Audit and Supervisory Committee Members limiting their liability for damages to the extent stipulated
in legislation.
6. If Akira Kunimoto’s election is approved, the Company will enter into an agreement with him limiting his liability fordamages to the extent stipulated in legislation.

－ 21 －

Proposal 5: Election of one (1) substitute Director who is an Audit and Supervisory Committee
MemberIf Proposal 2 (Partial change to Articles of Incorporation) is approved as proposed, theCompany will transition into a company with an audit and supervisory committee.
As such, the Company requests election of one (1) substitute Director who is an Audit
and Supervisory Committee Member in preparation for the case that the number of
Directors who are Audit and Supervisory Committee Members falls short of the number
stipulated by laws and regulations.
The resolution for this proposal shall be effective on the condition that the changes to
the Articles of Incorporation as set forth in Proposal 2 take effect.
The substitute Director who is an Audit and Supervisory Committee Member willassume office to fill a vacancy in the Audit and Supervisory Committee that would
otherwise cause the board to fall short of its legally mandated quorum. The substitute
Director who is an Audit and Supervisory Committee Member’s term of office will be forthe remainder of the term of office of the previous member whom he/she substitutes.
The Audit and Supervisory Board has given its consent to this proposal.
The candidate for substitute Director who is an Audit and Supervisory Committee
Member is as follows:

Name(Date of birth)

Career summary, position and responsibilities, andsignificant concurrent positions outside the Company
April 1969

Joined Hitachi, Ltd.

June 2003

Executive Officer of Hitachi, Ltd.

January 2007

Representative Executive Officer,
Executive Vice President andExecutive Officer of Hitachi, Ltd.

June 2010

Chairman of the Board, Outside
Director of Hitachi Capital
Corporation

June 2013

Chairman of the Board, Outside
Board Director of Hitachi HighTechnologies Corporation

Kazuhiro Mori
(October 7, 1946)
June 2014[Outside]
June 2018

Outside Director of Isuzu Motors
LimitedOutside Director of Ricoh Company
Ltd. (present position)

Reasons for nomination as candidate for substitute
Director who is an Audit and Supervisory Committee
MemberWe have nominated Kazuhiro Mori for the post of substituteOutside Director who is an Audit and Supervisory Committee
Member because we believe that the Company’s audits will
benefit from his extensive experience and wide-ranging
knowledge acquired from working at global companies.

－ 22 －

Number oftheCompany’s
sharesowned0(Notes)
1. There is no special interest between the candidate and the Company.
2. Kazuhiro Mori is a candidate for substitute Outside Director who is an Audit and Supervisory Committee Member. The
Company elected him as substitute Outside Audit and Supervisory Board Member at the 92nd Ordinary General Meetingof Shareholders held on June 24, 2016.
3. Kazuhiro Mori served Hitachi, Ltd. in an executive role until March 2013 and was an Outside Director of Isuzu Motors
Limited until June 2018. He currently serves as Outside Director of Ricoh Company Ltd. While the Company does engage
in business transactions with Hitachi, Ltd., Isuzu Motors Limited, and Ricoh Company Ltd. (e.g., product sales), we
believe that Mori’s independence as Outside Director who is an Audit and Supervisory Committee Member will not beaffected given that these transactions account for less than 1% of the consolidated net sales of each companies.
4. If Kazuhiro Mori’s election as a Director who is an Audit and Supervisory Committee Member is approved, the Company
will enter into an agreement with him limiting his liability for damages to the extent stipulated in legislation.

－ 23 －

Proposal 6:

Election of Accounting Auditor
Ernst & Young ShinNihon LLC, the Company’s Accounting Auditor, will step down at
the conclusion of this Ordinary General Meeting of Shareholders after completing its
term, so the Company requests the election of a new Accounting Auditor.
This proposal is based on the decision of the Audit and Supervisory Board.
Deloitte Touche Tohmatsu LLC has been selected as a candidate for Accounting
Auditor based on the Board’s determination that retaining them will provide a newperspective in our audits and that they are capable of conducting efficient audit
operations while maintaining high quality, considering their quality control structure,
independence, expertise, and understanding of the business fields the Company engages
in on a global basis.
The candidate for Accounting Auditor is as follows:(As of February 28, 2019)
Name
Deloitte Touche Tohmatsu LLC
Main Office

Marunouchi Nijubashi Bldg., 3-2-3, Marunouchi, Chiyoda-ku, Tokyo Japan

Corporate
history

May 1968
May 1975

Overview

CapitalPersonnel

Proposal 7:

Tohmatsu Awoki & Co. is established
Joins Touche Ross International (now Deloitte Touche
Tohmatsu Limited)
February 1990 Changes name to Tohmatsu & Co.
July 2009
Changes name to Deloitte Touche Tohmatsu LLC in
conjunction with transition to limited liability company
1,007 million yen
Partners (certified public accountants): 532
Specified partners: 54
Employees/Certified public accountants: 2,797
Persons who have passed CPA exam(including junior accountants): 1,143
Other professionals: 2,125
Clerical staff: 166
Total: 6,817
Client firms (As of May 31, 2018): 3,339

Determination of remuneration of Directors (excluding Directors who are Audit andSupervisory Committee Members)
If Proposal 2 (Partial change to Articles of Incorporation) is approved as proposed, theCompany will transition into a company with an audit and supervisory committee.
At the 90th Ordinary General Meeting of Shareholders held on June 25, 2014, theshareholders approved Director remuneration of a maximum of 400 million yen per year(including executive bonuses).
In conjunction with the transition into a company with an audit and supervisorycommittee, the above shall be abolished, and remuneration for Directors other than
Audit and Supervisory Committee Members shall be determined anew. The Company
proposes that the amount be a maximum of 400 million yen per year (including
executive bonuses) taking into account as same as the amount of Director remuneration.
As has previously been the case, Director remuneration (excluding Directors who are
Audit and Supervisory Committee Members) does not include the employee portion of－ 24 －

pay for Directors who are also employees.
There are currently nine (9) Directors (two [2] of which are Outside Directors), but
the number will drop to eight (8) Directors (two [2] of which will be Outside Directors;
excluding those who are Audit and Supervisory Committee Members) if Proposals 2
and 3 are approved.
The resolution for this proposal shall be effective on the condition that the changes to
the Articles of Incorporation as set forth in Proposal 2 take effect.

Proposal 8:

Determination of remuneration of Directors who are Audit and Supervisory Committee
Members
If Proposal 2 (Partial change to Articles of Incorporation) is approved as proposed, theCompany will transition into a company with an audit and supervisory committee.
In conjunction with this, the Company proposes that remuneration for Directors who
are Audit and Supervisory Committee Members be a maximum of 60 million yen peryear, the same as the remuneration for Audit and Supervisory Board Members up tonow, taking into account their duties and responsibilities.
The number of Directors who are Audit and Supervisory Committee Members will bethree (3) if Proposals 2 and 4 are approved.
This proposal shall be effective on the condition that the changes to the Articles ofIncorporation as set forth in Proposal 2 take effect.

Proposal 9:

Determination of remuneration for granting restricted stock to Directors (excluding
Directors who are Audit and Supervisory Committee Members and Outside Directors)
At the 94th Ordinary General Meeting of Shareholders held on June 22, 2018, theshareholders approved a maximum amount of 100 million yen to be paid per year to
Directors (excluding Outside Directors) in the form of restricted stock apart from theirregular remuneration (maximum of 400 million yen per year; including executive
bonuses but excluding the employee portion of pay for Directors who are also
employees), but if Proposal 2 (Partial change to Articles of Incorporation) is approved
as proposed, the Company will transition into a company with an audit and supervisorycommittee.
As such, the total amount paid in granting restricted stock to Directors (excluding
Directors who are Audit and Supervisory Committee Members and Outside Directors;
hereinafter “eligible Directors” ; the same applies to this proposal) after transitioning
into a company with an audit and supervisory committee will be a maximum of 100
million yen per year apart from the regular remuneration of Directors (excluding
Directors who are Audit and Supervisory Committee Members; maximum of 400
million yen per year including executive bonuses but excluding the employee portion of
pay for Directors who are also employees) for which approval was requested in Proposal
7 (Determination of remuneration of Directors [excluding Directors who are Audit andSupervisory Committee Members]), the same as the amount that has been paid to
Directors in the form of restricted stock up to now. The Company further proposes thatit allot, within the scope of said monetary claims, two types of restricted stock—eachtype with a different transfer restriction period (both types are referred to herein as“restricted stock”). The Company has concluded that this plan is reasonable in light of
the Directors’ contribution.
－ 25 －

If Proposal 2 (Partial change to Articles of Incorporation) and Proposal 3 (Election ofeight [8] Directors) are approved as proposed, the number of Directors (excluding
Directors who are Audit and Supervisory Committee Members) will be eight (8; two [2]of which are Outside Directors).
This proposal shall be effective on the condition that the changes to the Articles ofIncorporation as set forth in Proposal 2 take effect.
The matter of the restricted stock allotted to eligible Directors is as was approved at
the 94th Ordinary General Meeting of Shareholders held on June 22, 2018, and thedetails are provided below.

－ 26 －

Particulars Concerning the Restricted Stock (including the maximum amount)
1. Allotment and amount to be paid in
The Board of Directors has resolved that the Company will provide eligible Directors with
monetary claims for restricted stock within the scope of the maximum annual limit mentioned
above, and that the eligible Directors will receive their allotted restricted stock by redeeming thesemonetary claims in their entirety, as an in-kind contribution.
The Board of Directors will determine the amount to pay in for the restricted stock. This amountwill be within a range that gives no significant advantage to the eligible Directors subscribing forthe restricted stock. In determining the amount, the Board of Directors will refer to the closing priceof the Company’s common shares on the Tokyo Stock Exchange as of the business day preceding
the resolution date (or if no trading is reported on that day, the day preceding such).
To receive their monetary claims, eligible Directors must agree to make the said in-kind
contribution and to conclude a restricted stock allotment agreement stipulating the matters in 3
below.
2. Number of restricted stock
The maximum amount of restricted stock the Company will allot in each business year will be
50,000.
However, the Company may subsequently adjust this amount to reasonably accommodate any
stock split of common shares in the Company (or share allotment without contribution), shareconsolidation, or any other corporate action warranting such adjustment.
3. Restricted stock allotment agreement
The Board of Directors has resolved that the Company will conclude restricted stock allotment
agreements with eligible Directors before issuing any of the restricted stock, and that these
agreements will include the following stipulations.
(1) Transfer restrictions
During the transfer-restriction period (either of the two periods listed below), eligible Directors
must not cede, pledge, hypothecate, provide as an inter vivo gift, bequeath, or otherwisetransfer to a third party any of the restricted stock allotted to them.
(i) Type I Restricted Shares: A period determined by the Board of Directors between two (2)and five (5) years(ii) Type II Restricted Shares: 30 years(2) Circumstances in which the Company may acquire the restricted stock without contribution
If an eligible Director resigns as a Director or Executive Officer between the day the transferrestriction period began and the day before the nearest Ordinary General Meeting of
Shareholders, the Company will acquire without contribution the restricted stock it allotted tothat eligible Director (“allotted-shares”) as a matter of course, unless the Board of Directors
deems there to be legitimate grounds for not doing so.
When the transfer-restriction period stipulated in (1) above ends, the Company will acquire
all or part of the allotted-shares without contribution and as a matter of course if it determinesthat the circumstances for lifting the transfer restriction as stipulated in (3) below are notpresent.

－ 27 －

(3) Lifting the transfer restrictions
When the transfer-restriction period ends, the Company will lift the transfer restriction on theallotted-shares in their entirety on condition that the eligible Director remained incumbent as a
Director or Executive Officer between the day the relevant transfer-restriction period began andthe day of the nearest Ordinary General Meeting of Shareholders.
However, if the eligible Director resigned as Director or Executive Officer before thetransfer-restriction period ended, and if the Board of Directors deems that there are reasonablegrounds for doing so, the Company may reasonably adjust the number of the allotted-shares andthe time when their transfer restriction is to be lifted.
(4) Corporate reorganizationIf, following shareholder approval (or following a resolution of the Board of Directors if
shareholder approval is not required), the Company becomes subject to a corporate
reorganization during the transfer-restriction period (including a merger agreement in which theCompany becomes a non-surviving company, or a share exchange agreement or a share transfer
plan under which the Company becomes a wholly-owned subsidiary of another company), it
will lift restrictions on a certain portion of allotted-shares before the corporate reorganization
takes effect. The Board of Directors will determine the amount of allotted-shares whose
restrictions will be lifted, and this amount will reflect the length of time between the start of thetransfer-restriction period and the day the corporate reorganization was approved.
Immediately after the transfer restrictions are lifted, as a matter of course, the Company will
acquire without contribution those allotted-shares whose transfer restrictions were not lifted.
Reference
If the General Meeting of Shareholders approves the proposal, the Company will introduce a similar
restricted stock plan (involving two types of restricted shares—each type with a different transfer
restriction period) for its Executive Officers.

－ 28 －

Proposal 10:Continuation of Measures to Respond to a Large-Scale Acquisition of Our Company’s
Stock
On June 28, 2007, Measures to Respond to a Large-Scale Acquisition of Our Company's Stock wereadopted by our shareholders at the Company’s 83rd Annual General Meeting of Shareholders and weremost recently reapproved by shareholders at the 92nd Annual General Meeting of Shareholders on June 24,2016 (hereinafter the continued measures are referred to as “the Existing Plan”). The effective term of thePlan lasts until the end of the 95th Annual General Meeting of Shareholders to be held on June 30, 2019
(hereinafter referred to as “the General Meeting of Shareholders”). In light of securing and improving themutual benefit of all shareholders, as well as the value of the Company, we have given ongoing
consideration to the ideal state of the measures to respond to a large-scale acquisition of the Company’s
stock including the succession and termination of the measures.
We would like to inform you that, as a result, assuming the approval of our shareholders is obtained at theGeneral Meeting of Shareholders, the Board of Directors of the Company held today decided to continue
the Existing Plan by changing part of it as “Measures to Respond to a Large-Scale Acquisition of Our
Company's Stock” (hereinafter referred to as “the Plan”).
With regard to the continuation of the Plan, all three of our corporate auditors have expressed their opinions
stating that they are in favor of continuing with the Plan as long as the detailed aspects of the Plan are
executed properly.
The major changes incorporated into the Plan compared with the Existing Plan are as follows:(i)

Regarding the handling of recommendations from the Independent Committee, the Existing Plan
stipulates that the Board of Directors shall make a decision respecting such recommendations.
However, to eliminate the possibility of arbitrary operation by the management, it was changed to
mandate decision-making in accordance with the recommendations. In addition, the criteria whichallow the Board of Directors to establish countermeasures as an exceptional case were made stricter
than before.

(ii)

On the condition that the Annual General Meeting of Shareholders approves the proposal for thepartial amendment to the articles of association, along with the transition to a company with an audit
and supervisory committee, we made some changes to the expression, corrected wording and clarified
the description.

I. Basic Policy Regarding Who Should Oversee Decisions Regarding
the Financial and Business Policies of the Company
As a publicly traded company, we believe that shareholders come to us thanks to a freedom to trade on theshare market. Therefore, we believe that ultimately decisions concerning whether or not to accept proposals
regarding acquisitions accompanying the transfer of control of the Company should be carried out based on
the will of the shareholders.
However, among the large-scale acquisition of shares, etc., there may be some that will damage thecorporate value of the Company or the mutual benefit of shareholders, including those that may practicallyforce shareholders to sell shares judging from the purpose, etc., and those that do not provide the necessary
time or information for the Board of Directors and shareholders of the Company to be able to consider thedetails of such an acquisition. As an exceptional case, the Company believes that a person who is engaged
in such inadequate large-scale acquisition, etc., is inappropriate to have as a person to oversee decisions
regarding the financial and business policies of the Company.

II. Efforts that Contribute to the Realization of the Basic Policy for theControl of the Company
In 1927, RIKEN, the Institute of Physical and Chemical Research, was founded to commercialize themethod of producing the piston ring which is its own innovation. Since then, the Company has been
－ 29 －

operating globally by providing a wide variety of products such as a camshaft and other internalcombustion engine parts, cast iron parts for automobiles and industrial machinery, piping material, products
for thermal engineering and EMC businesses having piston rings as its core.
The Company set the following Group Mission Statement and the Guiding Principles, “Be Customer Driven.
Be Compliant with the Law. Be focused on the Basics. Be Open. Be Proactive. Be Prompt.” In addition, it
developed the Midterm Strategic Plan and Annual Management Plan to cope with customers’ efforts tostrengthen their competitiveness and to develop and sell products that satisfy the high level of the demandfor quality, technology and prices.
<Mission Statement> We will be a leading corporate citizen that always operates with respect for the laws, environment,
safety and the overall well being of the global communities where we conduct our business.
 We will provide superior long-term economic value for our shareholders through effective use of theirinvested capital.
 We will offer products and services that continually exceed our customers' increasing expectations
through constant innovation and continued advancements in knowledge and technology.
 We will continuously renew ourselves by encouraging initiative and entrepreneurism and by being
constantly committed to change.
Based on the policy of the above, to achieve the continuous growth of the Group Companies, the Company
established and has been promoting the Midterm Strategic Plan, PLAN 2020, which is a five-year planrunning from fiscal 2016 through fiscal 2020. PLAN 2020 sets “Advanced Solutions for Tomorrow’s
Challenges” as its main theme. Under the plan, the Company is trying to achieve the basic policy, (1)Growth through Diversification, (2) Advancements in Monozukuri and (3) Pioneering Technologies.
The Company aims for a continuous improvement in corporate value by fulfilling its responsibilities in avariety of areas such as the economy, the environment and society. It positions the establishment ofcorporate governance as a top-priority management issue.
The Company has introduced an executive officer system to separate the business execution function fromthe management decision-making and supervision function.
Furthermore, on the condition that the Annual General Meeting of Shareholders will grant approval, theCompany has a plan to shift to a company with an audit and supervisory committee. By including a memberof the audit and supervisory committee who supervises directors’ execution of duties in the Board of
Directors, it intends to strengthen the audit and supervision functions of the Board of Directors, and enhance
corporate governance further. Moreover, by commissioning directors to make a decision on importantbusiness execution issues at the Board of Directors, the Company will make swift decision-making possible,
and improve the efficiency of management.
Along with the shift, the Company has a plan to have a Board of Directors which consists of eight (8)directors (excluding a member of the audit and supervisory committee, including two (2) outside directors)
and three (3) directors (including two (2) outside directors) who are the members of the audit andsupervisory committee, and expects to improve the effectiveness of the objective supervision of the
management.
Furthermore, in May 2019, the Company voluntarily established the Nomination and Remuneration
Committee, the majority of whose members consist of independent outside officers as an advisory body.
The aim was to reinforce the supervision function of the Board of Directors by assuring the transparency
and objectivity of the procedure related to the nomination and the decision on remuneration of directors, etc.,
and further enhance corporate governance.

III.
Description of the Plan (Measures to prevent the control ofdecision-making regarding the financial and business policies of theCompany by someone inappropriate in light of our Basic Policy.)
1.

Purpose of Continuing the Plan

The Plan, which is the Existing Plan that is continuously implemented, was introduced to prevent decision－ 30 －

making regarding the financial and business policies of the Company being controlled by someone who isinappropriate in light of the Basic Policy for the Control of the Company as described in I. above.
When a large-scale acquisition of the Company’s stock, etc., was conducted, for the shareholders to make aproper decision, the Board of Directors of the Company believes that the assurance of necessary
information and time and a negotiation with a buyer, etc., based on reasonable rules help ensure thecorporate value of the Company and mutual benefit for shareholders. Therefore, it established certain rules
regarding the provision of the submission of information and the assurance of time to consider, etc., at thetime of a large-scale acquisition (hereinafter, referred to as “Rules for a Large-Scale Acquisition”) as statedbelow. In order to deal with cases in which a large-scale acquisition has occurred by an entity that is
inappropriate in light of the Basic Policy, conditional on the approval of the shareholders of the Company at
the Annual General Meeting of Shareholders, the Company decided to continue implementing the Plan.
2.

Acquisition of the Shares of the Company that Are the Subject of The Plan

The acquisition of the shares of the Company that are the subject of the Plan is deemed to be an attempt toacquire the share certificates, etc., of the Company (Note 3) for the purpose of making the voting rights
ratio (Note 2) of a special shareholder group (Note 1) 20% or more, or an attempt to acquire the shares, etc.,of the Company where as a result of such acquisition the voting rights ratio of such special shareholder
group becomes 20% or more (irrespective of the method of acquisition, whether it be a market trade or atakeover bid, acquisitions that have the prior consent of the Board of Directors of the Company are
excluded; such large-scale acquisition is hereafter referred to as “a large-scale acquisition” and the entitythat is engaged in the large-scale acquisition is hereafter referred to as a “large-scale purchaser”).
Note 1: Special Shareholder Group means(i) holders of the Company’s share certificates, etc., (meaning share certificates, etc., as determined in Article
27-23 Section 1 of the Financial Instruments and Exchange Act) (including entities included in the holders
in accordance with Article 27-23 Section 3 of said Act, and hereinafter the same) and their joint-holders(meaning joint-holders as determined in Article 27-23 Section 5 of said Act, including entities regarded as
joint-holders in accordance with Section 6 of the same Article, and hereinafter the same) or(ii) entities engaged in the acquisition, etc., (meaning the acquisition, etc., determined in Article 27-2 Section 1of said Act, including acquisition that is carried out in the financial market of a stock exchange) of the sharecertificates, etc., of the Company (meaning share certificates, etc., as determined in Article 27-2 Section 1of said Act), and special parties involved in such (meaning special parties involved as determined in Article27-2 Section 7 of said Act, and hereinafter the same).
Note 2: Voting Right Ratio means(i) in the case of the special shareholder group mentioned in (i) of Note 1, the total of (1) the ratio of sharecertificates, etc., held by said holders (meaning the ratio of share certificates held as determined in Article
27-23 Section 4 of the Financial Instruments and Exchange Act. In such cases, the number of sharecertificates, etc., held by said holders’ joint-holders (meaning the number of share certificates, etc., held asdetermined in the same Section, and hereinafter the same) shall be included in the calculation); or(ii) in the case of the special shareholder group mentioned in (ii) of Note 1, the total of the ratio of sharecertificates, etc., held by said large-scale purchaser and said special parties involved (meaning the ratio ofshare certificates, etc., held as determined in Article 27-2 Section 8 of said Act).
When calculating each voting rights ratio, in terms of the number of total voting rights (meaning the number as
determined in Article 27-2 Section 8 of said Act) and the total number of issued shares (meaning the total number
as determined in Article 27-23 Section 4 of said Act), reference can be made to the most recently submitted
document from among Annual Securities Reports, Quarterly Securities Reports and Share Buyback Reports.
Note 3: Share certificates, etc., means share certificates, etc., as determined in Article 27-23 Section 1 or Article 27-2
Section 1 of the Financial Instruments and Exchange Act.

3.

Establishment of the Independent Committee

Regardless of whether or not a large-scale purchaser adheres to the rules for a large-scale acquisition, oreven in cases where such rules have been adhered to, the Board of Directors of the Company shall make thefinal decision on whether or not to take countermeasures when it is deemed that said large-scale acquisition
will seriously damage the corporate value of the Company and the mutual benefit of shareholders. To
properly execute the Plan, prevent the Board of Directors of the Company from making arbitrary decisions,and maintain the rationality and fairness of the decision, the Company will establish the Independent
Committee based on the Plan and the Rules for the Independent Committee (please refer to Attachment 1
for an overview). The Independent Committee shall be comprised of three (3) or more people appointed
from among external directors or external experts (Note) who are independent of the management that
executes the business of the Company to enable them to make a fair and neutral judgement. Please refer toAttachment 2 for the profile of three candidates for members of the Independent Committee, Shuji Iwamura,－ 31 －

Hidemi Hiroi and Koji Tanabe.
Prior to the execution of countermeasures, the Board of Directors of the Company shall consult with the
Independent Committee on whether or not the Company shall take countermeasures. The Independent
Committee shall carefully evaluate and consider matters regarding a large-scale acquisition from theperspective of improving the corporate value of the Company and the mutual benefit of shareholders, andmake recommendations regarding whether the Board of Directors is in the state to execute countermeasures
to the Board of Directors of the Company. The Board of Directors of the Company shall make a decision on
the execution of countermeasures based on the recommendations by the Independent Committee (however,excluding the case where it evaluates that it would breach the duty of care if it follows therecommendations). An outline regarding the content of such recommendations of the Independent
Committee shall be announced as required.
To assure that the evaluation of the Independent Committee contributes to the corporate value of theCompany and the mutual benefit of shareholders, the Independent Committee may obtain the advice ofindependent external specialists (financial advisers, certified accountants, attorneys, consultants and otherspecialists) at the cost of the Company as required.
Note: External specialists means experienced corporate managers, persons familiar with investment banking,attorneys, certified accountants, persons with academic experience mainly studying the Companies Act, etc.,
or similar entities.

－ 32 －

4.

Overview of the Large-Scale Acquisition Rules(1) Submission of statement of intention by purchaser making a large-scaleacquisition to the Company
When a prospective large-scale purchaser seeks to carry out a large-scale acquisition, prior to the large-scaleacquisition or proposing the large-scale acquisition, we first request the submission of a letter of intent inJapanese addressed to the Board of Directors of the Company in a format the Company specifies containing
a written covenant stating the intent to adhere to our rules for a large-scale acquisition and the following:(i)Name and address of large-scale purchaser(ii) Governing law for the incorporation(iii) Name of representative(iv) Contact in Japan(v) An outline of the proposed large-scale acquisition(vi) Covenant stating the intent to adhere to our rules for a large-scale acquisition
When the Board of Directors of the Company has received such a letter of intent from a prospective largescale purchaser, the matter, and where necessary the details, shall be promptly announced.

(2) Submission of the information required for evaluation by a prospective largescale purchaser to the Company
Within ten (10) business days of the day following the day on which the letter of intent mentioned all theinformation from (a) to (f) of (1) above was received, the Company shall issue to a prospective large-scalepurchaser a document containing a list of the large-scale acquisition information whose submission to theBoard of Directors of the Company is required. The prospective large-scale purchaser shall submit thelarge-scale acquisition information (hereinafter referred to as the “information required for evaluation”) in
writing based on the description of the document to the Board of Directors of the Company.
General items included in the list of the information required for evaluation are shown below. Although thespecific content will differ according to the attributes of the large-scale purchaser and the purpose andcontent of the large-scale acquisition, in either case, the scope of the list will be restricted to the necessary
and adequate information required for our shareholders to make a decision and form opinions for the Boardof Directors of the Company.
(i)

Outline of the large-scale purchaser and its group (including joint-holders, special parties involved, cooperative members (in the case of a fund), and other constituent members) (including names, businessdetails, background or history, capital composition, and information regarding experience in fields
similar to the business of the Company and the Group companies of the Company)(ii) The purpose, method and details regarding the large-scale acquisition (including price/type of
remuneration for the large-scale acquisition, timing of such large-scale acquisition, transaction
mechanism involved, legality of the method of such large-scale acquisition, feasibility of such largescale acquisition and related transactions).
(iii) The basis of determining the cost of acquiring the shares of the Company in the large-scale acquisition(including the facts on which the cost is determined, the method of calculation, information regarding
figures used in the calculation, and details regarding the synergy that is expected to occur as a result ofa series of transactions in relation to such large-scale acquisition).
(iv) The substantiation of acquisition funds for the large-scale acquisition (the specific name of theprovider of the funds (including the real provider), the method of acquiring the funds and details
regarding related transactions).

－ 33 －

(v) Candidates for the management team that will be installed in the Company and the Group companiesof the Company after the large-scale purchaser joins the management of the Company (including
information regarding experience, etc., in businesses similar to the Company and the Group companiesof the Company), suggested management policies, business plan, financial plan, capital measures,
dividend policy and asset utilization measures, etc.
(vi) The expected stakeholders of the Company and the Group companies of the Company, such as
business partners, customers and employees, after the large-scale purchaser joins the management of
the Company and the Group companies of the Company, as well as whether or not there will be anychanges in the relationship between the aforementioned parties and the Company and the Group
companies of the Company, including details of such changes.
In the interest of ensuring the timely implementation of the large-scale acquisition rules, the Board of
Directors of the Company may, as required, give the large-scale purchaser a time limit for the submission of
information. However, when the large-scale purchaser requests an extension for the submission of theinformation on reasonable grounds, such time limit may be extended.
Furthermore, in cases where as a result of a close examination by the Board of Directors of the Company of
the information required for evaluation that was submitted it is determined to be insufficient, after setting areasonable time frame for receiving a reply (up to 60 days from the day on which the initial information wasreceived) they may request the submission of additional information from the large-scale purchaser until theprovision of such information required for evaluation is complete.
When it is determined by the Board of Directors of the Company that sufficient information required for theevaluation and consideration of the large-scale acquisition has been provided by the large-scale purchaser, it
should issue such notice to the large-scale purchaser, and announce it publicly.
Furthermore, regardless of the fact that the submission of additional information required for evaluation has
been requested by the Board of Directors of the Company, when part of such information is not provided by
the large-scale purchaser, if a reasonable explanation is offered with regard to why such information has notbeen provided, in some cases negotiations with the large-scale purchaser regarding the submission of
information may be terminated even if the information required for evaluation requested by the Board of
Directors of the Company is not complete, and the evaluation and consideration process mentioned in (3)below that is carried out by the Board of Directors of the Company may be commenced.
In addition to submitting the information required for evaluation provided to the Board of Directors of theCompany to the Independent Committee, when it is determined to be necessary for our shareholders in theirdecision-making process, at a time deemed appropriate by the Board of Directors of the Company, all or apart of such information will be announced.

(3) Evaluation and Consideration of the information required for evaluation by the
Board of Directors of the Company
Depending on the degree of difficulty in evaluating, etc., the large-scale acquisition, after the submission of
information required for evaluation to the Board of Directors of the Company by the large-scale purchaser
has been completed, the Board of Directors of the Company shall establish a period for evaluation,
consideration, negotiation and to form opinions and alternate proposals (hereinafter referred to as the“Board of Directors’ evaluation period”), which is a maximum of 60 days in cases where all of the shares of
the Company are acquired through a takeover bid using cash only (Japanese yen) for remuneration, and amaximum of 90 days in cases of any other large-scale acquisition.
During the Board of Directors’ evaluation period, the Board of Directors of the Company shall, whennecessary, with the advice of independent external specialists (financial advisers, certified accountants,
attorneys, consultants and other specialists), thoroughly evaluate and consider the information required forevaluation submitted, based on the recommendations by the Independent Committee, form an opinion as acollective body and announce the outcome (however, excluding the case where it evaluates that it would
breach the duty of care if it follows the recommendations). In some cases as required they may also conduct
negotiations with the large-scale purchaser regarding improving the condition of the large-scale acquisition,or, as the Board of Directors of the Company, they may present alternate proposals to our shareholders.

－ 34 －

5.

Policy for Handling Large-Scale Acquisition(1) Cases Where a Large-Scale Purchaser Has Not Adhered to the Large-Scale
Acquisition Rules
In cases where a large-scale purchaser has not adhered to the large-scale acquisition rules, regardless of thespecific acquisition method, the Board of Directors of the Company may, in some cases, as permitted by theCompanies Act, other laws and the Articles of Incorporation of the Company, take countermeasures inorder to protect the corporate value of the Company and the mutual benefit of shareholders, including theallotment of stock acquisition rights without contribution. When a large-scale purchaser is assessed to see if
it has adhered to the large-scale acquisition rules or not, the circumstances of a large-scale purchaser shallbe fully considered within a reasonable scope. At least, the Company shall not assess that a large-scalepurchaser has not adhered to the large-scale acquisition rules only because part of the information required
for evaluation was not submitted.
(2) Cases Where a Large-Scale Purchaser Has Adhered to the Large-Scale Acquisition
Rules
When a large-scale purchaser adheres to the rules for a large-scale acquisition, even though it is against
such large-scale acquisition, the Board of Directors of the Company shall, as a rule, not takecountermeasures against such large-scale acquisition, but only give explanations to our shareholders,
including expressing dissenting opinions regarding said acquisition proposal and presenting alternate
proposals. Whether or not to accept the offer by the large-scale purchaser will be left to the discretion ofyou, the shareholders of the Company, to decide after considering said acquisition proposal, the opinions of
the Company regarding such acquisition proposal, and alternate proposals.
However, even in cases where the large-scale acquisition rules were adhered to, when the Board of
Directors of the Company has determined that such large-scale acquisition has clearly abusive purposes, thecorporate value of the Company and the mutual benefit of shareholders will be greatly harmed in cases ofsuch large-scale acquisition as described in (a) to (e) below where it is clearly foreseeable that damage to
the Company that is difficult to reverse may occur as a consequence, the Board of Directors of theCompany may take exceptional countermeasures stated in (1) above within the scope of what is necessary
and reasonable to protect the corporate value of the Company and mutual benefits of our shareholders.
(a) Although it has no intention to participate in the management of the Group companies of theCompany, a buyer intends to acquire the shares of the Company and demand that a concerned partyof the Company purchase such shares at a much higher price (so-called “greenmailing”).
(b) A buyer intends to acquire the shares of the Company for the purpose of so-called “scorchedmanagement”, that is to gain temporary control of the management of the Group companies of theCompany to transfer intellectual property rights, know-how, confidential information, major business
partners and customers required with respect to the business of the Group companies of the Company
to the buyer or its group company.
(c) A buyer intends to acquire the shares of the Company and use the assets of the Group companies of
the Company as surety for the obligations of the purchaser or its group companies, or as a source offunds to make the settlement after gaining the control of the management of the Group companies of
the Company.
(d) A buyer intends to acquire the shares of the Company and take temporary control of the managementof the Group companies of the Company in order to dispose of high-value assets (such as real estateand securities) of the Company that are not directly related to the business of the Group companies of
the Company at the time, and use such proceeds to produce temporarily high dividends, or to sell out
shares after such a temporarily high dividend has caused a steep rise in the share price.
(e) In cases where the Company assesses that a method to acquire the shares of the Company proposedby a large-scale purchaser will in reality force shareholders to sell shares and restrict theopportunities or freedom of the shareholders’ decision, such as a so-called “high-handed, two-stage
buyout” (meaning the execution of a takeover bid after soliciting a partial acquisition of shares whilesetting disadvantageous or unclear conditions for the second-stage acquisition).

－ 35 －

(3) Resolutions of the Board of Directors and the Convocation of a General Meeting of
Shareholders
In the cases described in (1) and (2) above, when a decision has to be made regarding whether or not to takecountermeasures following the recommendations of the Independent Committee (however, excluding thecase where it evaluates that it would breach the duty of care if it follows the recommendations), after giving
adequate consideration to the necessity and appropriateness of the countermeasures, as an organization thatis in charge of making decisions regarding whether or not to take countermeasures as determined under theCompanies Act, the Board of Directors of the Company shall pass a resolution.
With regard to what kind of specific measures will be taken, the Board of Directors of the Company shallselect the method that they deem to be the most appropriate at the time. In terms of specificcountermeasures that can be taken by the Board of Directors of the Company, for example, although anoutline of an allotment of stock acquisition rights without contribution is shown in Attachment 3 as a
general rule, in reality, in cases where such action is taken, in some cases, other conditions such as a period
will be added in light of their effectiveness as an countermeasure, including placing the restriction that one
should not belong to a special shareholder group with over a certain ratio of voting rights to be able toexecute the stock acquisition rights. However, there is no suggestion that money should be offered for thevalue of stock acquisition rights that are held by a large-scale purchaser.
Furthermore, in cases where the Independent Committee has recommended that countermeasures should betaken, and a request has been made to hold a General Meeting of Shareholders to obtain the resolution, theBoard of Directors of the Company shall set a period with a maximum of 60 days as a period during whichshareholders can give adequate consideration to whether or not to take countermeasures under the Plan
(hereinafter, referred to as the “consideration period for shareholders”), and during the consideration period
for shareholders, in some cases a General Meeting of Shareholders may be held.
When the Board of Directors of the Company has passed a resolution regarding the convocation of aGeneral Meeting of Shareholders and the relevant date, the Board of Directors’ evaluation period will end
on such date and the consideration period for shareholders will commence.
Prior to holding said General Meeting of Shareholders, the Board of Directors of the Company will preparea document containing the necessary information provided by the large-scale purchaser, the opinions of theBoard of Directors of the Company concerning such necessary information, alternate proposals presented
by the Board of Directors of the Company, and other matters deemed appropriate by the Board of Directorsof the Company, and send it to our shareholders together with the convocation notice for the General
Meeting of Shareholders, while disclosing such matters in a timely and appropriate manner.
When a resolution is passed at a General Meeting of Shareholders regarding whether or not to executecountermeasures, the Board of Directors of the Company shall comply with such resolution. Therefore, if
the execution of countermeasures is voted down in the General Meeting of Shareholders, the Board of
Directors of the Company will not take countermeasures. Moreover, the consideration period forshareholders will be terminated on the conclusion of such General Meeting of Shareholders and the resultsof such General Meeting of Shareholders shall be disclosed as required in a timely and appropriate manner
after the passing of the resolution.

(4) Standby Period for a Large-Scale Acquisition
The standby period prior to the execution of a large-scale acquisition shall be, in cases where theconsideration period for shareholders is not given, the period up until the end of the Board of Directors’
evaluation period,
while it shall be the combined period of the Board of Directors’ evaluation period and the consideration
period for shareholders in cases where such period for shareholders is given.
Therefore, a large-scale acquisition can only be commenced after the standby period for the large-scaleacquisition has passed.

－ 36 －

(5) Suspension, etc., of Countermeasures
After it has been decided in the meeting of the Board of Directors of the Company, or the General Meetingof Shareholders, that specific countermeasures should be executed in accordance with (3) above, in casessuch as when the large-scale purchaser in question has cancelled or changed the acquisition, or the Board of
Directors of the Company has decided that it is inappropriate to take countermeasures, in some cases,
following the comments or recommendations of the Independent Committee (however, excluding the casewhere it evaluates that it would breach the duty of care if it follows the recommendations), the execution ofcountermeasures may be suspended.
For example, in cases where an allotment of stock acquisition rights without contribution has beenscheduled, or even after it has been executed after a resolution regarding such allotment was passed at a
meeting of the Board of Directors of the Company, when the Board of Directors of the Company has
determined that it is not appropriate to execute the countermeasures due to cancellation or changes in thelarge-scale acquisition, following the recommendations of the Independent Committee (however, excluding
the case where it evaluates that it would breach the duty of care if it follows the recommendations), theBoard of Directors may cancel said allotment up to the day one day prior to the effective date of suchallotted acquisition rights, and after the allotment of such rights, the Board of Directors may suspend thecountermeasure by way of stock acquisition by the Company without contribution prior to the execution of
the rights.
When such suspension is carried out, the decision regarding such will be disclosed as required in a timely
and appropriate manner in accordance with the matters that are considered as necessary by the Independent
Committee, laws, ordinances and the regulations of the stock exchange where the stock of the Company islisted.
6.

Impact on Our Shareholders and Investors(1) Impact of the Large-Scale Acquisition Rules on Our Shareholders and Investors
The purpose of the large-scale acquisition rules is to provide the necessary information to enable
shareholders to make decisions regarding whether or not to accept a large-scale acquisition and to present
the opinions of the Board of Directors of the Company, which is actually in charge of managing theCompany, and to secure an opportunity for our shareholders to be able to be presented with alternate
proposals. We believe that this will enable our shareholders, on the basis of adequate information, to makethe right decisions regarding whether or not to accept such offers, which will lead to the protection of thecorporate value of the Company and the mutual benefit of shareholders. Therefore, the setting of the largescale acquisition rules is a prerequisite for making appropriate decisions for shareholders, and we believe it
will also contribute to your benefit.
However, as stated in 5. above, since there is a difference in terms of the way in which the Company
handles a large-scale acquisition, depending on whether or not the large-scale purchaser adheres to thelarge-scale acquisition rules, etc., we would like to advise our shareholders to please pay close attention to
the movements of large-scale purchasers.

(2) Impact of the Execution of Countermeasures on Our Shareholders and Investors
In cases where a large-scale purchaser did not adhere to the large-scale acquisition rules, or even in cases
where the large-scale acquisition rules were adhered to, when the Board of Directors of the Company has
determined that the corporate value of the Company and the mutual benefit of shareholders will be greatly
harmed by such large-scale acquisition, and it is foreseeable that damage that is difficult to reverse may
occur, the Board of Directors of the Company may take exceptional countermeasures, as permitted by theCompanies Act, other laws and the Articles of Incorporation of the Company, within the scope of what isnecessary and reasonable to protect the corporate value of the Company and mutual benefits of ourshareholders. Due to the mechanism of these countermeasures, we do not envisage a situation where ourshareholders (excluding the large-scale purchaser who does not adhere to the large-scale acquisition rules or
the purchaser who will harm the benefit of all shareholders of the Company causing the damage that isdifficult to reverse) will incur substantial losses in terms of legal rights or financial aspects. In cases where
the Board of Directors of the Company has decided to take specific countermeasures, such decisions will be
disclosed as required in a timely and appropriate manner in accordance with the regulations of the stock
exchange where the stock of the Company is listed.
For example, in cases where the allotment of stock acquisition rights without contribution is to be executed as－ 37 －

part of countermeasures, our shareholders who are listed on the Shareholder Register as of the date of suchallotment will receive stock acquisition rights. Our shareholders will be allotted stock acquisition rights
without them needing to make a request, and when the Company carries out the allotment procedure, theshares of the Company will be issued in exchange for the stock acquisition rights without payment of anamount equivalent to the exercise price, meaning that our shareholders will not need to carry out procedures,such as application requests or payment in association with said stock acquisition rights. However, in suchcases, the Company may request the shareholders who will be allotted stock acquisition rights to submit acovenant to state that they are not a large-scale buyer in the form that is designated by the Company.
Even on the date of the allotment of stock acquisition rights or after the effective date of such allotment, due
to a situation such as the cancellation of the large-scale purchase by a large-scale purchaser, the Company
may cancel the allotment of stock acquisition rights up to the day one day prior to the effective date of suchallotted acquisition right, or obtain stock acquisition rights without contribution without issuing the sharesof the Company in exchange for the stock acquisition rights. In this case, for shareholders who have carriedout sales, etc., with expectation for diluting the value per share of the shares of the Company, due tofluctuations in the share price, there is a possibility that losses which are commensurate with the degree ofthe fluctuations may be incurred by those shareholders.
7.

Commencement, Duration and Cancellation of the Plan

On condition that it is approved by our shareholders in the General Meeting of Shareholders, the Plan shallcome into effect on the same day and the effective term shall be until the end of the Annual General
Meeting of Shareholders which is scheduled to be held in June 2022. However, even after the continuationof the Plan was approved in the General Meeting of Shareholders and it has come into effect, (1) if aresolution is passed in a General Meeting of Shareholders of the Company regarding the cancellation of thePlan, or (2) such resolution is passed by the Board of Directors of the Company, when such resolutions are
passed, the Plan shall be cancelled.
Even during the effective term of the Plan, the Board of Directors of the Company may review the Planfrom the prospect of the improvement in the corporate value and the mutual interest of shareholders at any
time and make a revision to the Plan upon the approval at the General Meeting of Shareholders of theCompany. In cases where the Board of Directors makes a decision on the Plan including its continuation,
revision and cancellation, it shall immediately disclose the content.
Furthermore, even during the effective term of the Plan, when the need arises to make adjustments to theclauses determined in the Plan, including making corrections to the wording for reasons such as
typographical errors and omissions, due to the establishment of new rules or the revision or repeal of related
laws and ordinances, or the regulations of the stock exchange, the Board of Directors may correct or change
the Plan after obtaining the approval of the Independent Committee as required as long as such modification
does not cause a disadvantage to our shareholders.

IV.
Rationality of the Plan (the Fact that the Plan Complies with
our Basic Policies and Supports the Corporate Value of the Company
and the Mutual Benefit of Shareholders, but is not Intended to Maintainthe Position of the Board Members of the Company)
1.

Satisfy the Requirements of Policies regarding Takeover Defense Measures

The Plan satisfies the three rules determined in Guidelines regarding Takeover Defense Measures for
Securing and Improving the Corporate Value and Mutual Benefit of Shareholders, which were announced
by the Ministry of Economy, Trade and Industry and Ministry of Justice on May 27, 2005 (the principle ofprotecting and enhancing corporate value and the mutual interests of shareholders; the principle of priordisclosure and respect for the intent of shareholders; and the principle of confirming necessity andlegitimacy).
It also takes into consideration the content of a report presented by the Corporate Value Study Group of the
Ministry of Economy, Trade and Industry on June 30, 2008, titled, “Ideal Takeover Defense Measures inLight of Various Recent Environmental Changes” and “Principle 1-5. So-called Takeover Defense
Measures” in the “Corporate Governance Code,” which was announced by the Tokyo Stock Exchange onJune 1, 2015 and revised on June 1, 2018.
2.

Continue with the Aim of Securing and Improving the Mutual Benefit of Shareholders

As stated in III. 1. Purpose of Continuing the Plan above, the Plan intends to provide the time and necessary－ 38 －

information for our shareholders to consider whether or not to accept a large-scale acquisition of the sharesof the Company when such an attempt is made, or for the Board of Directors to present alternate proposals
or negotiate with buyers on behalf of our shareholders in order to secure and improve the corporate value of
the Company and the mutual benefit of shareholders.
3.

Reflect the Intent of Shareholders

The Plan shall come into effect on the condition that it is approved at the General Meeting of Shareholders.
The intent of our shareholder regarding the Plan is confirmed at the General Meeting of Shareholders.
Therefore, the succession of the Plan reflects the intent of our shareholders.
Even after the continuation of the Plan before the maturity of the effective period, if a resolution is passed in
a General Meeting of Shareholders regarding the cancellation of the Plan, the Plan will be cancelled whensuch resolution is passed, reflecting the intent of our shareholders.
4.

Respect for the Evaluation of Highly Independent External Entities

As stated in III. 5. Policy for Handling Large-Scale Acquisition above, under the Plan, the decision to
execute countermeasures should be made after consulting with the Independent Committee that consists ofmembers who are independent of the management that executes the business of the Company and following
the recommendations of the Committee(however, except the case where it evaluates that it would breach theduty of care if it follows the recommendations). The procedure is ensured for the transparent operation of
the Plan to support the corporate value of the Company and thus the mutual benefit of shareholders.
5.

No Dead-Hand or Slow-Hand Takeover Defense Measures

The Plan can be cancelled by the Board of Directors, which consists of directors who were appointed solely
at the General Meeting of Shareholders of the Company. Therefore, this Plan is not a “dead-hand” measure(in which the execution of takeover defense measures cannot be cancelled even when the majority of board
members are replaced).
And since the Company does not adopt staggered terms, neither is the Plan a “slow-hand” measure (inwhich it is impossible to change board members all at once and it takes a long time to stop the execution ofcountermeasures).

－ 39 －

(Attachment 1)

Outline of the Rules for the Independent Committee• The Independent Committee shall be established by means of a resolution of the Board of Directors.
• The Independent Committee shall be comprised of three (3) or more people appointed by the Board of
Directors of the Company from among external directors or external experts who are independent of the
management that executes the business of the Company to enable them to make a fair and neutral
judgement. External specialists shall be experienced corporate managers, persons familiar withinvestment banking, attorneys, certified accountants, persons with academic experience mainly studying
the Companies Act, etc., or similar entities.
• As a general rule, the Independent Committee shall give recommendations to the Board of Directors of
the Company together with an attached explanation regarding the reasons and basis for such decision in
response to an inquiry from the Board of Directors of the Company. Each member of the Independent
Committee shall make recommendations from the perspective of whether or not the decision in question
will contribute to the corporate value of the Company and the mutual benefit of shareholders.
• The Independent Committee may obtain the advice of independent external specialists (financial
advisers, certified accountants, attorneys, consultants and other specialists) at the cost of the Company as
required.
• A resolution of the Independent Committee shall be passed by means of a majority vote of thecommittee members.

－ 40 －

(Attachment 2)

The profile of candidates for members of the Independent Committee
Shuji Iwamura
April 1976
ProfileJune 2010
August 2011
July 2012
October 2012

June 2013
March 2015
June 2015
October 2017
June 2018

Hidemi Hiroi
ProfileApril 1979
April 2007
April 2009
June 2012
June 2013
June 2015
April 2017
June 2017

Koji Tanabe
ProfileApril 1975
July 2002
April 2005
February
2012
April 2017

Appointed as public prosecutor
Superintending Prosecutor, Sendai High Public Prosecutors Office
Superintending Prosecutor, Nagoya High Public Prosecutors Office
Resigned from office
Registered as Attorney-at-Law
Advisor of Nagashima Ohno & Tsunematsu (present position)
Outside Audit and Supervisory Board Member of the Company(present position)
Outside Auditor of CANON ELECTRONICS INC. (present
position)
Outside Corporate Auditor of Hokkaido Bank, Ltd. (present
position)
Governor and Auditor of the Board of Governors of Government
Pension Investment Fund (present position)
Outside Director of Hayashikane Sangyo Co., Ltd. (present
position)

Joined the Industrial Bank of Japan, Limited
Executive Officer, General Manager of Group Strategy of Mizuho
Financial Group, Inc.
Corporate Auditor of Mizuho Corporate Bank, Ltd.
Director, President of Mizuho Human Service Co., Ltd.
Corporate Auditor of IBJ Leasing Company, Limited
Director, President of IBJL-TOSHIBA Leasing Company, Limited
Advisor of IBJL-TOSHIBA Leasing Company, Limited
Audit and Supervisory Board Member of the Company (present
position)

Joined the Ministry of International Trade and Industry (currently
the Ministry of Economy, Trade and Industry)
Director-General of Research and Statistics Department of the
Ministry of Economy, Trade and Industry
Professor of Graduate School of Innovation Management of Tokyo
Institute of Technology
Director of the Japan Asia Group Limited (present position)
Professor Emeritus of Tokyo Institute of Technology
Specially-Appointed Professor of School of Environment andSociety of Tokyo Institute of Technology (present position)
Corporate Auditor of Shimazaki Denki Corporation (present
position)

There is no special interest between any of candidates and the company.

－ 41 －

The Company appointed Shuji Iwamura as an independent officer, and registered him as such with
the Tokyo Stock Exchange per the regulations of the Exchange. If Mr. Iwamura is re-elected at theGeneral Meeting of Shareholders, the Company will again register him as an independent officer. If
Hidemi Hiroi and Koji Tanabe are elected at the General Meeting of Shareholders, the Company willregister them as new independent officers.

－ 42 －

(Attachment 3)

Outline of Allotment of Stock Acquisition Rights Without Contribution
1.

Shareholders Eligible for an Allotment of Stock Acquisition Rights without Contribution andAllotment Method
Shareholders that are recorded in the final Shareholder Register on the allotment date determined by
the Board of Directors of the Company shall be allotted stock acquisition rights without newcontribution at a ratio of one (1) stock acquisition right for one (1) share of common stock of theCompany held (excluding common stock held by the Company).

2.

Type and Number of Shares to Be Acquired upon Execution of Stock Acquisition Rights
The type of shares to be acquired upon the execution of stock acquisition rights shall be common stockof the Company, and the number of shares to be acquired upon exercise of each of the stockacquisition rights shall be determined elsewhere by the Board of Directors of the Company. However,in cases where a stock split or a reverse stock split is carried out by the Company, the required
adjustment shall be carried out.

3.

Total Number of Stock Acquisition Rights Allotted to the Shareholders
The upper limit for the total number of shares that can be acquired through the exercise of such stockacquisition rights shall be the difference between the total number of authorized shares of theCompany as of the allotment date set by the Board of Directors of the Company and the total number
of issued shares of common stock of the Company (excluding the shares of common stock theCompany that are held by the Company). The Board of Directors of the Company may allot stockacquisition rights multiple times.

4.

Value of Property to be Invested upon Exercise of Stock Acquisition Rights and the Price
The property to be invested upon exercise of each stock acquisition right shall be money, and an
amount of one (1) yen or more as determined by the Board of Directors of the Company. When the
Board of Directors of the Company determines to obtain stock acquisition rights, the Company may
grant new shares to shareholders for the value of stock acquisition rights of the Company without
paying the amount equivalent to the exercise price.

5.

Restrictions on the Transfer of Stock Acquisition Rights
Acquisition of stock acquisition rights by means of transfer of such rights requires the approval of theBoard of Directors of the Company.

6.

Conditions for the Execution of Stock Acquisition Rights
Conditions applying to the execution of stock acquisition rights include that the eligible person should
not belong to a special shareholder group that has 20% or more of voting rights (however, this shallexclude persons that have already obtained the prior approval of the Board of Directors of theCompany).

7.

Stock Acquisition Rights Execution Period
The first day on which stock acquisition rights can be executed, execution period, conditions for an
acquisition and other necessary matters shall be determined by the Board of Directors of the Company
elsewhere. With regard to conditions for acquisition, the Company may set rules, such that theCompany may acquire stock acquisition rights held by persons other than those whose exercise of thestock acquisition rights is not approved based on the conditions described in 6. above, and issue sharesof common stock of the Company at a ratio of a number determined by the Board of Directors of theCompany elsewhere for one (1) unit of stock acquisition rights. However, there is no suggestion thatcash will be issued for the value of stock acquisition rights held by persons whose exercise of stockacquisition rights is not approved.

－ 43 －