(Securities Code: 7226)
June 5, 2024

To Our Shareholders
Awaji-cho 2-5-11, Chuo-ku, Osaka
KYOKUTO KAIHATSU KOGYO CO., LTD.
Tatsuya Nunohara, President

NOTICE OF THE 89th ANNUAL GENERAL MEETING OF
SHAREHOLDERS
Dear Shareholders,
We would like to inform you that the 89th Annual General Meeting of Shareholders will be held as follows.
In convening this General Meeting of Shareholders, we take measures for providing information that
constitutes the content of Reference Documents for the General Meeting of Shareholders, etc. in electronic
format (matters for which the measures for providing information in electronic format are to be taken) and has
posted it on the Company’s website, etc. Please access either of the following websites and review it.
The Company's website
https://www.kyokuto.com/ir/sokai.html
Matters for which the measures for providing information in electronic format are to be taken are also
provided electronically on Tokyo Stock Exchange (TSE) website.
Access the TSE website by using the Internet address shown below, enter “Kyokuto Kaihatsu” in “Issue
name (company name)” or the Company’s securities code “7226” in “Code,” and click “Search.” Then, click“Basic information” and select “Documents for public inspection/PR information.” Under “Filed information
available for public inspection,” click “Click here for access” under “[Notice of General Shareholders
Meeting /Informational Materials for a General Shareholders Meeting].”[Tokyo Stock Exchange website (TSE Listed Company Search)]https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=ShowIn addition, measures for providing information in electronic format are also taken on the following website.

[Website providing materials for the General Meeting of Shareholders]
https://d.sokai.jp/7226/teiji/
If you are unable to attend in person, you may use one of the methods below to exercise your voting rights.
We ask that you exercise your voting rights by 5:30 p.m. on Tuesday, June 25, 2024 (JST), after having
considered the accompanying “Reference Material for the General Meeting of Shareholders.”[Exercising voting rights in writing (by mail)]
Please indicate your approval or disapproval for each of the proposals on the enclosed form for exercising
voting rights and ensure that we receive it no later than the above-mentioned deadline.

-1-[Exercising voting rights over the Internet]
Please access our designated voting website (https://evote.tr.mufg.jp/) from a computer or smartphone anduse the Login ID and Temporary Password printed on the enclosed form for exercising voting rights (in caseof a smartphone, there is no need to input if you read the QR code for login), and follow the onscreen
instructions to enter your approval or disapproval for each of the proposals. In addition, if using the Internet to
exercise your voting rights, we request that you kindly read the “Guide to Exercising your Voting Rights via
the Internet” (pages 4 to 5).
Notice of Meeting
10 a.m. Wednesday, June 26, 2024 (JST)3-3-45 Umeda, Kita-ku, Osaka
Hotel Monterey Osaka, 14th Floor, Roumeikan
3. Objectives of Meeting
1. 89th business period (from April 1, 2023 to March 31, 2024)
Reporting
Report on contents of Business Report, Consolidated Financial Statement, and results of
Audit on Consolidated Financial Statement by accounting auditors and the board ofcorporate auditors
2. 89th business period (from April 1, 2023 to March 31, 2024)
Report on contents of Financial Documents
Agenda<Company Proposals (Proposal 1 to Proposal 2)>
Appropriation of retained earnings
Proposal 1
Election of eight (8) Directors
Proposal 2<Shareholder Proposals (Proposals 3)>
Appropriation of retained earnings
Proposal 3
4. Decisions on (1) If you exercised your voting rights in writing (by mail) and there is no indication of
approval or disapproval of a proposal in the voting form, we will treat it as an indication of
convocation
approval for the Company proposals and an indication of disapproval for the shareholder
proposal.
(2) If you exercised your voting rights multiple times via the Internet, the voting rights
exercised last shall be treated as the valid vote.
(3) If you exercised your voting rights both in writing and via the Internet, the voting rights
exercised via the Internet shall be treated as the valid vote regardless of the day and time ofarrival.
(4) If you wish to exercise your voting rights in a non-uniform manner (voting for and against
the same proposal), please notify the Company of your intention to exercise your voting
rights in a non-uniform manner and the reasons for such intention no later than three days
prior to the General Meeting of Shareholders.
1. Date and Time
2. Venue〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰


If you plan to attend the meeting in person, please submit the enclosed Exercise of Voting Rights form to
the receptionist at the meeting.
Should there be any revisions to matters for which the measures for providing information in electronic
format are to be taken, a notice to that effect as well as the old information and revised information will
be posted on the each of the aforementioned websites shown on page 1.
The documents describing matters for which the measures for providing information in electronic format
are to be taken of this General Meeting of Shareholders have been mailed to all shareholders, regardlessof whether they have requested such delivery. However, the Notes to Consolidated Financial Statements
and the Notes to Non-Consolidated Financial Statements are excluded from the documents, as provided
for by the relevant laws and regulations and Article 16 of the Articles of Incorporation of the Company.
The Consolidated Financial Statements and the Non-Consolidated Financial Statements audited by
Corporate Auditors and the Accounting Auditor are the materials listed in the documents, and the Notes-2-

to Consolidated Financial Statements and the Notes to Non-Consolidated Financial Statements which areposted on the each of the websites shown above.

Guide to Preliminary Questions
The Company is accepting questions from shareholders in advance of the 89th Annual General Meeting of
Shareholders at the following website.
Website for submission of preliminary questions: https://v.sokai.jp/7226/2024/kyokuto/
Deadline: By 5:30 p.m. on Wednesday, June 19, 2024

• When logging in, shareholders will need to enter their ID (your 8-digit shareholder number) and theirpassword (the 7-digit postal code registered by the shareholder).
• Please ensure you have your shareholder number on hand when mailing your Exercise of Voting Rightsform.
We plan to answer questions we have received which we believe will be of interest to shareholders on the dayof the meeting.

-3-

Reference Material for the General Meeting of Shareholders
Proposals and References<Company Proposals (Proposal 1 to Proposal 2)>
Proposal 1

Appropriation of retained earnings

Year-end dividendWith regard to the year-end dividend for the 89th business period, the Company’s policy is tocontinuously enhance shareholder returns in order to increase shareholder satisfaction while improving
capital efficiency and controlling equity capital. In light of this, with the primary objective of achieving
both sustainable growth and increasing corporate value, the Company proposes the following:(1) Type of dividend
Money(2) Allotment of dividend and the total amountYear-end dividend

58 yen per common share of the Company

Total amount of dividend

2,223,462,364 yen

The annual dividend including the interim dividend for this business period will be 87 yen per
share, an increase of 33 yen from the former business period.
(3) Effective date of surplus allotment
June 27, 2024

-4-

Proposal 2

Election of eight (8) Directors

The terms of office of eight (8) Directors — Tatsuya Nunohara, Kazuhiko Harada, Takeo Norimitsu,
Noboru Horimoto, Teruyuki Kizu, Hiroyuki Terakawa, Keiko Kaneko, and Takanobu Tomohiro — will
expire at the close of this Annual General Meeting of Shareholders. Therefore, the Company proposes to electeight (8) Directors.
If this Proposal is approved and adopted as proposed, three (3) of the Directors will be Independent
Executives in accordance with the regulations of Tokyo Stock Exchange, Inc., and at least one-third (1/3) ofthe Directors of the Company will continue to be Independent Executives.
The candidates for Directors are as follows:

Candidatenumber

1

Name

Tatsuya Nunohara

2 Takeo Norimitsu
3 Noboru Horimoto
4 Teruyuki Kizu
5 Tetsuya Ichimura
6 Hiroyuki Terakawa
7 Keiko Kaneko
8 Takanobu Tomohiro
Reappointment
New appointment
OutsideIndependent

Years in
officeGenderCurrent position in the Company

Male

Representative Director, President
Chief Executive Officer
Remuneration Committee Member
Nominating Committee Member

Reappointment

7 years

Male

Director
Senior Managing Executive Officer

Reappointment

7 years

Male

Director
Associate Senior Executive Officer

Reappointment

5 years

Male

Director
Associate Senior Executive Officer

Reappointment

2 years

Male

Executive Officer

New appointment-

Outside Director
Remuneration Committee Member
Nominating Committee Chair

Reappointmen

Male

Outside Director
Remuneration Committee Chair
Nominating Committee Member

Reappointmen

Outside Director
Remuneration Committee Member
Nominating Committee Member

Reappointmen

FemaleMale

OutsideOutside2 years

Independent
OutsideIndependent

Candidates for reappointment as directors
Candidates for new directors
Candidates for outside directors
Candidates for independent executives as stipulated by the Tokyo Stock Exchange-5-2 years

Independent

1 yearCandidate
numberName(Date of Birth)

April 1982

Joined the Company

April 2013

Executive Officer of the Company
Deputy Executive General Manager ofEngineering of the Company

April 2015

Executive General Manager ofEngineering of the Company

April 2017

Executive General Manager of Productionof the Company

June 2017

Director of the Company

Reappointment,

April 2018

SPV Division Director of the Company

MaleJune 2019

Tatsuya
Nunohara(January 21, 1959)
1

Brief personal history and representative positionsin other companies# of shares
held by thecandidate

21,100Specialinterest intheCompany

None

Associate Senior Executive Officer of theCompany
June 2020
Representative Director, President of theCompany (current position)
Chief Executive Officer of the Company(current position)(Representative position in other companies)

Vice-Chairman of Japan Auto-Body Industries Association
Inc.
(Reason for selection as candidate for Director)
He has been in charge of the management of the Company as Representative Director & President since June
2020, after serving in the SPV Development and Production Division for many years. We nominate him as a
candidate for Director in order to continuously strengthen the management of the Company based on his extensive
experience and accomplishments.

-6-

Candidate
numberName(Date of Birth)

Brief personal history and representative positionsin other companies
April 1982
April 20112

# of shares
held by thecandidateSpecialinterest intheCompany

Joined the Company
Executive Officer of the Company
General Manager of Overseas
Promotion of the Company
April 2017
General Manager of Overseas
Operations of the Company
General Manager of Overseas Sales of
the Company
June 2017
Director of the Company (current
position)
April. 2018
Chairman of Kyokuto Special
Automobile Trading (Shanghai) Co.,
Ltd.
Chairman of Kyokuto Kaihatsu
Takeo Norimitsu(Kunshan) Machinery Co., Ltd.
(August 15, 1958)
12,800
None
June
2019
Associate Senior Executive Officer ofReappointment,
the Company (current position)
Male
September 2020
Director of SATRAC ENGINEERINGPRIVATE LIMITED (current position)
April 2022
Executive General Manager of
Administration of the Company (current
position)
General Manager of Corporate Planningof the Company
Related to Overseas Operations Divisionof the Company (current position)
Related to Parking and Other Operations
Division of the Company (current
position)
April 2024
Senior Managing Executive Officer of
the Company (current position)(Reason for selection as candidate for Director)
We nominate him as a candidate for Director in order to continuously strengthen the management of the Company
based on his extensive experience and accomplishments as he served in the Overseas Division and Planning
Division for many years and has been in charge of the management of overseas subsidiaries.

-7-

Candidate
numberName(Date of Birth)

Brief personal history and representative positionsin other companies# of shares
held by thecandidateSpecialinterest intheCompany

April 1988
April 2008

Noboru Horimoto(February 28,
1965)
Reappointment,
3

Male

Joined the Company
General Manager of Environmental
Division, Construction Department of theCompany
April 2010
General Manager of Environmental
Division, Engineering Department of theCompany
April 2011
Executive Officer of the Company
Environmental Division, Deputy Director of
the Company
April 2013
Executive General Manager ofEnvironmental Division, Sales Departmentof the Company
General Manager of Environmental
Division, Service Department of theCompany
October
General Manager of Environmental
2013
Division, Planning Department of theCompany
April 2019
Environmental Division, Director of theCompany (current position)
June 2019
Director of the Company (current position)
Related to affiliate companies,
Environmental Division of the Company(current position)
April 2022
Associate Senior Executive Officer of theCompany (current position)
April 2023
Executive General Manager ofEnvironmental Division, Engineering
Department of the Company (current
position)(Representative position in other companies)

11,700None

Director of Japan Environmental Facilities Manufacturers
Association(Reason for selection as candidate for Director)
We nominate him as a candidate for Director again in order to continuously strengthen the management of theCompany based on his extensive experience and accomplishments as he served in the Environmental Division formany years..

-8-

Candidate
numberName(Date of Birth)

Brief personal history and representative positionsin other companies
November
1992
April 2016
April 2017
April 2018
April 2019

Teruyuki Kizu
(January 7, 1966)
Reappointment,
4

Male# of shares
held by thecandidateSpecialinterest intheCompany

Joined the Company

Miki Plant Manager of the Company
Yokohama Plant Manager of the Company
Executive Officer of the Company
Executive General Manager of Productionof the Company
April 2021
Associate Senior Executive Officer of theCompany (current position)
April 2022
SPV Division, Director of the Company(current position)
Chairman of Kyokuto Special Automobile
Trading (Shanghai) Co., Ltd. (current
position)
Chairman of Kyokuto Kaihatsu (Kunshan)
Machinery Co., Ltd. (current position)
June 2022
Director of the Company (current position)(Representative position in other companies)
Director of Japan Auto-Body Industries Association Inc.

6,200

None

(Reason for selection as candidate for Director)
We nominate him as a candidate for Director again in order to strengthen the management of the Company basedon his extensive experience and accomplishments as he served in the SPV Production Division for many years.
Tetsuya Ichimura(March 3,1972)5

September
2003
April 2019

Joined the Company

General Manager of Finance of theCompany (current position)
6,000
None
New appointment, April 2022
Executive Officer of the Company (current
position)
Male
Auditor of NIPPON TREX Co., Ltd.
(current position)(Reason for selection as candidate for Director)
We nominate him as a candidate for Director in order to strengthen the management of the Company based on his
extensive experience and accomplishments as he served in the Finance Division for many years.

-9-Candidate
numberName(Date of Birth)

Brief personal history and representative positionsin other companies
April 1979
July 2001
July 2005
October2007

Hiroyuki
Terakawa(November 13,
1956)
Reappointment,
Male,
6

Outside,Independent

April 2009
April 2011
April 2013
April 2015
April 2017
December
2017
January 2018
April 2022
June 2022

Joined Hanshin Electric Railway Co., Ltd.
General Manager of Nishi-Umeda
Management Department of Hanshin
Electric Railway Co., Ltd.
General Manager of Umeda Business
Department of Hanshin Electric Railway
Co., Ltd.
Director of Hankyu Hanshin Building
Management Co., Ltd.
Senior Managing Executive Officer ofHankyu Hanshin Building Management
Co., Ltd.
Director of Hanshin Electric Railway Co.,Ltd.
Deputy Executive General Manager of Real
Estate Business Division of Hanshin
Electric Railway Co., Ltd.
Executive Director of Hanshin Electric
Railway Co., Ltd.
Executive General Manager of Real EstateBusiness Division of Hanshin Electric
Railway Co., Ltd.
Senior Executive Director of Hanshin
Electric Railway Co., Ltd.
Representative Director, Chairman ofHankyu Hanshin Building Management
Co., Ltd.
Director of Osaka Building Owners &Managers Association
Director of Japan Life-Style Culture
Association (current position)
Outside Director of the Company (current
position)Independent Executive of the Company(current position)# of shares
held by thecandidate0

Specialinterest intheCompany

None(Reason for selection as candidate for Outside Director and Overview of expected roles)
He has broad knowledge obtained through being involved in management in different types of business andextensive experience and accomplishments in management for many years. Therefore, we nominate him as a
candidate for Outside Director again because we expect he will be able to supervise our management objectively.

- 10 -

Candidate
numberName(Date of Birth)

Brief personal history and representative positionsin other companies
April 1981
April 2007
April 2014

Keiko Kaneko(November 27,
1958)

October2014
June 2016

Reappointment,
Female,Outside,7

November
2016
April 2018

Independent
June 2019

June 2022

Joined Matsushita Electric Industrial Co.,
Ltd. (currently Panasonic Holdings
Corporation)
Director, Corporate Information Security
Division of Matsushita Electric IndustrialCo., Ltd.
Assistant to Director, Senior Counsel for
Personal Information Protection, Legal
Division of Matsushita Electric IndustrialCo., Ltd.
General Manager, Security Compliance
Division of Benesse Holdings, Inc.
General Manager, Information Security
Division of Benesse Holdings, Inc.
Vice President of The Information Network
Law Association
Associate Professor, Department of
Business Law, Faculty of Business
Administration, Osaka University of
Economics
Outside Director of Marudai Food Co., Ltd.
(current position)
Independent Executive of Marudai Food
Co., Ltd. (current position)
Outside Director of the Company (current
position)Independent Executive of the Company(current position)# of shares
held by thecandidate0

Specialinterest intheCompany

None(Reason for selection as candidate for Outside Director and Overview of expected roles)
She has broad knowledge obtained through being involved in management in different types of business andspecialized experience and extensive accomplishments through being involved in the Legal and Information
Security divisions for many years. Therefore, we nominate her as a candidate for Outside Director again because
we expect she will be able to supervise our management objectively.
She has not been involved in management of a company except as Outside Executive Officer. However, we deemthat she will fulfill her duty as Outside Director properly due to the above-mentioned background.

- 11 -

Candidate
numberName(Date of Birth)

Brief personal history and representative positionsin other companies
April 1991
April 1994

Takanobu
Tomohiro(October 29, 1958)
Reappointment,
Male,

April 2004
April 2016

April 2020
April 2020

Outside,8

Independent
April 2021
June 2023

Registration as Lawyer
Joined Kogoshi-Takizawa Law Office(currently Kobe-Kaito Law Office)Partner of Kobe-Kaito Law Office (current
position)
Deputy President of Hyogo Bar Association
External Audit & Supervisory Board
Member of Sawai Pharmaceutical Co., Ltd.
(currently Sawai Group Holdings Co., Ltd.)(current position)
President of Hyogo Bar Association
Managing Director of Japan Federation of
Bar Associations
Managing Director of Kinki Federation of
Bar Associations
Chairman, Full-time member of Hyogo Bar
Association
Outside Director of the Company (current
position)Independent Executive of the Company(current position)# of shares
held by thecandidate0

Specialinterest intheCompany

None(Reason for selection as candidate for Outside Director and Overview of expected roles)
He is a lawyer and has broad knowledge and abundant experience in corporate law and legal affairs, with an
involvement in management as an outside auditor in other industries. Therefore, we nominate him as a candidate
for Outside Director because we expect him to supervise our management objectively.
He has not been involved in management of a company except as Outside Executive Officer. However, we deemthat he will fulfill his duty as Outside Director properly due to the above-mentioned background.

- 12 -

Notes: 1. Hiroyuki Terakawa, Keiko Kaneko, and Takanobu Tomohiro are candidates for Outside Directors.
2. Hiroyuki Terakawa, Keiko Kaneko, and Takanobu Tomohiro are Outside Directors of the Company. Hiroyuki
Terakawa and Keiko Kaneko will have been in office for two (2) years and Takanobu Tomohiro will have been in
office for one (1) year as Directors at the conclusion of this Annual General Meeting of Shareholders.
3. We have reported Hiroyuki Terakawa, Keiko Kaneko, and Takanobu Tomohiro as Independent Executives of theCompany in accordance with the regulations of Tokyo Stock Exchange, Inc. In the event that their reappointment isapproved, they will be designated as Independent Executives again.
4. The Company has entered into the limited liability contract prescribed in Article 427, Paragraph 1 of the Companies
Act with Hiroyuki Terakawa, Keiko Kaneko, and Takanobu Tomohiro in accordance with the Articles of Incorporationof the Company. The limit of liability for damages pursuant to such limited liability contract is the minimum liability
amount prescribed in Article 425, Paragraph 1 of the Companies Act. In the event that their reappointment is approved,
the Company plans to continue such limited liability contract with them.
5. The Company has entered into a directors and officers liability insurance policy prescribed in Article 430-3, Paragraph
1 of the Companies Act with an insurance company. The policy provides coverage for compensation for damages andlitigation expenses that the insured would legally be responsible for paying as a result of claims made against themduring the insurance period due to the execution of duties as a corporate officer. In the event that their appointment isapproved, the candidates shall be included as the insured of the relevant insurance policy.
6. The Board of Directors consulted with the Company’s Nominating Committee and carefully assessed each candidate’s
career background, competence, character, expertise, etc. in accordance with the Committee’s counsel andrecommendations before submitting this proposal.
The Committee was established in February 2020 as a voluntary advisory body under the Board of Directors, is chairedby an Outside Director, and is comprised of the Representative Director & President, the Senior Managing Director, andthree Outside Directors (including the chair).
7. To secure the transparency in determining remuneration for directors (and other officers), the Remuneration Committee
was established as a voluntary advisory body under the Board of Directors in March 2019. The Committee is chaired byan Outside Director, and is comprised of the Representative Director & President, the Senior Managing Director, andthree Outside Directors (including the chair).

- 13 -

[Reference]
Skill matrix for each Director after the conclusion of this Annual General Meeting of Shareholders* denotes an Outside
Director

Skill matrix (knowledge, experiences, abilities, etc. of each Director)

Skills possessed by Directors

Name

Note

Tatsuya
Takeo
NoboruNunohara Norimitsu Horimoto

Corporate
management/busines
s strategy〇

Production/technolog
y development〇〇

Sales/marketing
Overseas strategy
Finance/accounting/c
apital policy

Teruyuki
Kizu

TetsuyaIchimura

〇

〇

〇

〇

〇

〇

〇

〇

〇
〇
〇

IT･DX

〇

〇

1.
2.

〇

〇

*
Takanobu
Tomohiro

〇
〇

Human
resources/diversity〇

Keiko
Kaneko〇〇Sustainability*

Hiroyuki
Terakawa〇〇

Law/governance

*

〇

〇

〇

〇

〇
〇

In order to achieve the Medium-term Management Plan and Long-term Management Vision, the Company created the skill matrix
to clarify the extensive experience and high-level insight of each Director and ensure the diversity of the Board of Directors.
The skills possessed by each Director are based on their experience according to their career history and positions, as well as theirhigh level of expertise in their current position and do not represent all of their knowledge.

- 14 -

<Shareholder Proposal (Proposals 3)>
The details of the proposals and the reasons for the proposals are stated in the original text.
Proposal 3

Appropriation of retained earnings

1. Details of the proposal(1) Type of dividend
Money(2) Allocation of dividend and the total amountThe larger of the amounts calculated in (a) and (b) below shall be distributed in addition to the amountof dividend per common share (hereinafter referred to as the “Company’s Proposed Dividend Amount”)
based on a proposal related to the appropriation of retained earnings proposed by the Board of Directorsof the Company that was approved at the 89th Annual General Meeting of Shareholders (hereinafterreferred to as the “Company’s Proposed Appropriation of Retained Earnings”).
(a) Amount obtained by deducting the Company's Proposed Dividend Amount and the interim dividend
amount of 29 yen per common share for the 89th business period from the amount of net income pershare for the 89th business period (rounded down to the nearest yen)(b) Amount obtained by deducting the Company's Proposed Dividend Amount and the interim dividend
amount of 29 yen per common share for the 89th business period from the amount of net assets per
share at the end of the 89th business period (an amount calculated using the number of issued sharesdeducted by the number of treasury shares, in accordance with “ASBJ Guidance No. 4 Guidance on
Accounting Standard for Earnings Per Share,” rounded down to the nearest yen; the same applies
hereafter) multiplied by 0.06
The total amount of dividends shall be the amount obtained by multiplying the larger of the amounts
calculated in (a) and (b) by the number of shares subject to dividends as of the record date for the voting
rights for the 89th Annual General Meeting of Shareholders of the Company.
(3) Effective date of surplus allotment
The day following the date of the 89th Annual General Meeting of Shareholders of the Company
In the event that the proposal for the Company’s Proposed Appropriation of Retained Earnings is
proposed at the 89th Annual General Meeting of Shareholders, this Proposal is additionally proposed as
an independent and compatible proposal with the said proposal.
2. Reasons for the proposal
The proposal is intended to make the larger of all net income or 6% of equity capital a dividend (hereinafterreferred to as “this capital policy”).
As of the end of March 2023, the Company’s capital adequacy ratio was approximately 70%, which is avery high figure compared with that of ShinMaywa Industries, Ltd., an SPV manufacturer with a similar
company size, and which had a ratio of 43%. As a result of its overly high capital adequacy ratio, theCompany’s ROE has been sluggish with the stock price at a level of PBR less than 1 for nearly 20 years.

- 15 -

It can certainly be said that the Company has implemented measures to a certain degree to correct its
excessive financial soundness and improve capital efficiency, having adopted a capital policy with a total
return ratio of 100%. However, the Company’s PBR still languished below 1 as of March 29, 2024.
The proposing shareholder believes that the introduction of this capital policy will quickly restore theCompany's PBR to the level of 1 and lead to an increase in the Company's corporate value over the medium tolong term. We have repeatedly explained to the Company's management that this capital policy will contribute
more to improving the Company's corporate value than the Company's stated policy of 100% total return ratio
from various perspectives, including the cost of capital, liquidity, various subsidies (see Note), and stock
valuation, and they should already understand this.
Above all, the Company’s projected ROE for the fiscal year ended March 31, 2024 is 2.6%, with planned
ROE of 6.0% for the fiscal year ending March 31, 2025 and 10.0% for the fiscal year ending March 31, 2031.
Since this capital policy is to pay a dividend equal to either all net income or 6% of equity capital, whicheveris greater, the Company will pay a dividend equivalent to 6% of equity capital instead of a 100% payout ratio
only in the fiscal year ended March 31, 2024, when the projected ROE is only 2.6%. However, from the fiscal
year ending March 31, 2025, when planned ROE is 6% or more, all net income will become dividends (i.e., apayout ratio of 100%), effectively replacing the Company's stated shareholder return policy of a 100% total
return ratio with a 100% dividend payout ratio. Accordingly, the adoption of this capital policy will not affect
the Company’s financial base in any way.
Despite this, the fact that the Company's management maintains the current shareholder return policy andhas purposely left the PBR below 1 can only be evaluated as a lack of awareness of the problem, as they havebecome accustomed to PBR below 1, which has become the norm.
I urge the Company’s management to take immediate action with a sense of urgency that the PBR is still
below 1.
Note: For example, the Ministry of Economy, Trade and Industry's Industrial Structure Council's “Interim
Report of the Subcommittee on New Direction of Economic and Industrial Policies (June 13, 2022), page 35,
stated that in order to maximize the effects of industrial policy, private companies that are partners inlarge-scale, long-term, and planned support should engage in “value-creating management” with the aim of
becoming “companies that can win in global competition.” In addition, companies with a PBR of less than 1
are required to formulate and announce a concrete and reasonable plan for a certain period of time (e.g., 5years) to exceed 1 (i.e., for their market capitalization to exceed their net assets). In response, the Economic
and Industrial Policy Bureau’s “Global Company Management for Increased Domestic Investment,
Accelerated Innovation, and Higher Income” (January 2023) states on page 5 with regard to the Green
Innovation Fund (hereinafter referred to as the “GI Fund”) that companies implementing GI Fund projects
will first be asked to explain their value-creating management initiatives and targets for key financial
indicators (in particular, whether they are aiming for the expected PBR of 1 or higher in the future) in their
proposal documents. In fact, the GI Fund's public application guidelines call for specific efforts to increase
corporate value, including PBR improvement, as part of “initiatives to increase corporate value.” The scope ofsubsidies classified as “large-scale, long-term, and planned support,” which the government is promoting as- 16 -

the “new direction of economic and industrial policy,” covers not only green transformation, including the 2.7
trillion yen GI Fund, but also digital transformation, reskilling, and other investments in people, among others.
In this context, the emphasis on PBR that has begun with the GI Fund “first” is expected to expand further inthe future, and leaving PBR below 1 may be disadvantageous not only in terms of increasing corporate value,
but also in terms of obtaining various subsidies.
3. Opinion of the Board of Directors
The Board of Directors of the Company objects to this Proposal.
The Company works to continuously enhance shareholder returns in order to increase shareholder
satisfaction while improving capital efficiency and controlling equity capital with the primary objective ofachieving both sustainable growth and increasing corporate value. The Company's basic policy is to flexibly
purchase and retire treasury shares while maintaining a high level of dividends as the basis of its approach toshareholder returns.
The plan for shareholder returns in the Medium-term Management Plan (2022-24) sets a total return ratio of
100% for each fiscal year as well as the implementation of flexible purchase of treasury shares and aminimum annual dividend of 54 yen per share in order to further increase returns for shareholders.
Under the aforementioned basic policy, as proposed in Proposal 1 (Company Proposal) “Appropriation ofretained earnings” at this General Meeting of Shareholders, the Company plans to set the year-end dividend
for the fiscal year ended March 31, 2024, at 58 yen per common share. The annual dividend, including theinterim dividend of 29 yen per share, will be 87 yen per share, an increase of 33 yen from the previous year,
for a payout ratio of approximately 95%, and a total return ratio of approximately 99%, including the purchaseof treasury shares (number of shares purchased: 73,800 shares; total purchase price: 120,718,300 yen) during
the period.
While continuing to provide a high level of shareholder returns to meet the expectations of our shareholders
as described above, we also intend to secure sufficient capacity for investment in future growth with mediumto long-term business continuity and stability in mind.
We believe that this shareholder proposal is not compatible with the Company’s policy on shareholder
returns.
Accordingly, the Board of Directors of the Company objects to this Proposal (Shareholder Proposal).

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