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

Securities Code: 8098
June 2, 2016
To our shareholders:
Katsutaro Inabata
President

Inabata & Co., Ltd.
1-15-14 Minami-semba, Chuo-ku,
Osaka

Notice of Convocation of
the 155th Ordinary General Meeting of Shareholders
You are cordially invited to attend the 155th Ordinary General Meeting of Shareholders of Inabata &Co., Ltd. (the “Company”), which will be held as indicated below.
If you are unable to attend the meeting in person, you may exercise your voting rights inwriting or via the internet, etc. Please review the attached Reference Materials for the General
Meeting of Shareholders, and exercise your voting rights by 5:10 p.m. on Wednesday, June 22,2016 (JST) following the instructions given below.

Details
1. Date and Time:Thursday, June 23, 2016, at 10:00 a.m.

2. Place:

Conference room, 9th floor of the Company, Sakaisuji Inabata Building
1-15-14 Minami-semba, Chuo-ku, Osaka

3. Objectives
Items to be reported
1. The Business Report and the Consolidated Financial Statements for the155th fiscal year (from April 1, 2015 to March 31, 2016), and the results1

of audits of the Consolidated Financial Statements by the accounting
auditor and the audit & supervisory board
2. The Financial Statements for the 155th fiscal year (from April 1, 2015 toMarch 31, 2016)
Items to be resolved
Proposal 1:

Election of nine (9) directors

Proposal 2:

Election of one (1) audit & supervisory board member

Proposal 3:

Election of one (1) substitute audit & supervisory board member

Proposal 4:

Extension of policy on handling of large-scale purchase of shares ofcompany When you attend the meeting, you are kindly requested to present the enclosed Voting Right Exercise Form at thereception of the meeting.
 The Consolidated Financial Statements and the Financial Statements provided in the attached documents to thisNotice of Convocation form part of the Consolidated Financial Statements and the Financial Statements auditedby the audit & supervisory board members and the accounting auditor. Pursuant to the laws and regulations andarticle 15 of the Company’s articles of incorporation, Notes on the Consolidated Financial Statements and Notes
on the Financial Statements are posted on the Company’s website and are not attached to the attached documents
to this Notice of Convocation.
 If it becomes necessary to make changes to the Reference Materials for the General Meeting of Shareholders, theBusiness Report, the Consolidated Financial Statements and the Financial Statements prior to the day before themeeting, we will notify you of the changes either by postal mail or via the Company’s website.
* The Company’s website: http://www.inabata.co.jp

2Reference Materials for the General Meeting of Shareholders
Proposal 1:

Election of nine (9) directors

The term of office of all the nine (9) directors will expire at the conclusion of this general meetingof shareholders.
Accordingly, we propose the election of nine (9) directors.
The candidates for director are as follows:
No.

Name
(Date of birth)

Katsutaro Inabata(December 3, 1959)

Brief career summary, positions and responsibilities
in the Company
Jan. 1989

Joined the Company

Jun. 1995

Director of the Company

Jun. 1997

Managing Director of the Company

Jun. 2003

Director and Managing Executive Officer of
the Company

Apr. 2005

Director and Senior Managing Executive
Officer of the Company

Dec. 2005

Director and President of the Company(present)

Reappointment
1

No. of Company shares
owned: 59,000

Reason for nomination as a candidate for director:
Mr. Katsutaro Inabata has managed the Company for many
Attendance at meetings
years and possesses abundant experience as a senior executive,of the board of directors:
so the Company considers him suitably qualified as a director
16 of 16 (100%)of the Company and has nominated him once more as a
candidate for director.
Tenure as director: 21 years(at the conclusion of this general meeting of shareholders)3

Significant concurrent
positions at otherorganizations

–

No.

Name
(Date of birth)

Brief career summary, positions and responsibilities
in the Company
Apr. 1974

Joined the Company

Jun. 2000

Director of the Company

Apr. 2003

General Manager, Northeast Asia of theCompany

Jun. 2003

Retired from Director of the Company

Jun. 2003

Executive Officer of the Company

Jun. 2005

Director and Executive Officer of theCompany
Assisting Executive Officer of Display &Imaging Division and Electronics Materials &Equipment Division of the Company

Jun. 2008

Osamu Nishimura(October 25, 1951)
Reappointment2

No. of Company shares
owned: 19,200

Director and Managing Executive Officer of
the Company
In charge of International Affiliate
Management Office of the Company

Apr. 2010

In charge of overseas businesses of theCompany

Apr. 2011

In charge of Plastics Compound Business
Office of the Company

Apr. 2013

In charge of, and General Manager,
International Affiliate Management Office of
the Company

Attendance at meetingsof the board of directors: Jun. 201315 of 16 (93.8%)
Jun. 2014

In charge of Plastics Division I of theCompany
Representative Director and Senior Managing
Executive Officer of the Company (present)
General Manager, Northeast Asia of theCompany (present)

Apr. 2016

In charge of plastics segment and Asia of theCompany (present)

Reason for nomination as a candidate for director:
Mr. Osamu Nishimura has held positions of responsibility in
the Company’s overseas business for many years andpossesses abundant experience within the Company, primarily
in the plastics segment, so the Company considers him suitably
qualified as a director of the Company and has nominated him
once more as a candidate for director.
Tenure as director: 11 years(at the conclusion of this general meeting of shareholders)4

Significant concurrent
positions at otherorganizations
Director, Inabata
Sangyo (H.K.) Ltd.
Director, Shanghai
Inabata Trading Co.,Ltd.
Director, Taiwan
Inabata Sangyo Co.,
Ltd.

No.

Name
(Date of birth)

Brief career summary, positions and responsibilities
in the Company
Apr. 1982
Jun. 2004
Jun. 2005
Jun. 2010

Toyohiro Akao
(December 19, 1959)

No. of Company shares
owned: 14,500

Director, Inabata Fine
TechCo., Ltd.
General Manager, Display & Imaging Divisionof the Company
Director, Taiwan
Executive Officer of the Company
Inabata Sangyo Co.,
Director and Executive Officer of theLtd.
Company

Apr. 2011

General Manager, Electronics Materials &Equipment Division of the Company

Apr. 2012

General Manager, Information & Electronics
Division I, Information & Electronics Division
II and Information & Electronics Division III
of the Company

Apr. 2013

In charge of Information & Electronics
Division I, Information & Electronics Division
II and Information & Electronics Division III
of the Company

Jun. 2013

Director and Managing Executive Officer of
the Company

Reappointment
3

Joined the Company

Jun. 2014
Attendance at meetingsof the board of directors: Jun. 201516 of 16 (100%)
Apr. 2016

Significant concurrent
positions at otherorganizations

In charge of Chemicals Division and Life
Industry Division of the Company
Representative Director and Senior Managing
Executive Officer of the Company (present)
In charge of information & electronics,
chemicals, life Industry segments and theAmericas, Europe of the Company (present)

Reason for nomination as a candidate for director:
Mr. Toyohiro Akao has held positions of responsibility in theinformation & electronics segment, one of the Company’s
main segments, for many years and possesses abundant
experience within the Company, so the Company considers
him suitably qualified as a director of the Company and has
nominated him once more as a candidate for director.
Tenure as Director: six years(at the conclusion of this general meeting of shareholders)

5

No.

Name
(Date of birth)

Brief career summary, positions and responsibilities
in the Company
Jul. 1996

Joined the Company

Jul. 2004

General Manager, Finance and Accounting
Office of the Company

Jun. 2005

Executive Officer of the Company

Jun. 2008

Director and Executive Officer of theCompanySignificant concurrent
positions at otherorganizations

General Manager, Corporate Planning Officeof the Company

Kenichi Yokota(November 3, 1962)

May 2009

In charge of Internal Audit Office of theCompany

Jun. 2009

General Manager, Financial Management
Office of the Company

Apr. 2011

Deputy General Manager, Corporate Planning
Office of the Company

Apr. 2013

In charge of Financial Management Office, and
Deputy General Manager, International
Affiliate Management Office of the Company

Jun. 2013

In charge of Risk Management Office of theCompany

Reappointment
4

No. of Company shares
owned: 10,500
Attendance at meetingsof the board of directors:
16 of 16 (100%)

Jun. 2014

Director and Managing Executive Officer of
the Company (present)
In charge of Business Management Office of
the Company

Apr. 2016

In charge of financial management, investor
relations, risk management, business process
management, international affiliate
management of the Company (present)

Reason for nomination as a candidate for director:
Mr. Kenichi Yokota has primarily held positions ofresponsibility in the Company’s financial management for
many years, as well as been in charge of administrative areas
such as investor relations, risk management, and businessprocess management, and possesses abundant experience
within the Company, so the Company considers him suitably
qualified as a director of the Company and has nominated him
once more as a candidate for director.
Tenure as director: eight years(at the conclusion of this general meeting of shareholders)

6

–

No.

Name
(Date of birth)

Tomohiko Sato
(June 22, 1955)

Brief career summary, positions and responsibilities
in the Company
Apr. 1978

Joined the Company

Jun. 2010

General Manager, Housing & Eco Materials
Division of the Company (present)

Jun. 2012

Executive Officer of the Company

Jun. 2013

Director and Executive Officer of theCompany

Jun. 2015

Director and Managing Executive Officer of
the Company (present)
In charge of Plastics Division II and Housing& Eco Materials Division

Reappointment
5

No. of Company shares
owned: 15,700

Significant concurrent
positions at otherorganizations

Apr. 2016

In charge of housing & eco materials segment,
assisting Managing Executive Officer ofplastics segment of the Company (present)

Attendance at meetings Reason for nomination as a candidate for director:of the board of directors: Mr. Tomohiko Sato has held positions of responsibility in the
16 of 16 (100%)Company’s housing & eco materials segment for many years
and possesses abundant experience within the Company, so theCompany considers him suitably qualified as a director of theCompany and has nominated him once more as a candidate fordirector.
Tenure as director: three years(at the conclusion of this general meeting of shareholders)

7

–

No.

Name
(Date of birth)

Masahiro Sugiyama(June 15, 1958)
6

New candidate
No. of Company shares
owned: 6,300

Mitsunori Takahagi(December 3, 1940)

7

Brief career summary, positions and responsibilities
in the Company
Jul. 2002

Joined the Company

Jun. 2010

Executive Officer of the Company (present)
General Manager, Plastics Division II

Apr. 2014

General Manager, Information & Electronics
Division I of the Company (present)

Reason for nomination as a candidate for director:
Mr. Masahiro Sugiyama has held positions of responsibility inthe plastics segment and the information & electronics
segment, both of which are major segments for the Company,
and possesses abundant experience within the Company, so theCompany considers him suitably qualified as a director of theCompany and has nominated him as a candidate for director.
Apr. 1964

Joined Nippon Mining Co., Ltd.

Jun. 1994

Director, Japan Energy Corp.

Jun. 1998

Managing Director, Japan Energy Corp.

Jun. 1999

Director, Executive Corporate Officer, Japan
Energy Corp.

Jun. 2001

CFO & Senior Executive Corporate Officer,
Japan Energy Corp.

Apr. 2002

President and CEO, Japan Energy Corp.

Reappointment

Sep. 2002

Director, Nippon Mining Holdings, Inc.

Candidate foroutside director

Jun. 2006

President & CEO, Nippon Mining Holdings,
Inc.

Independent officer

Apr. 2010

No. of Company shares
owned: 0

Representative Director, President, JX
Holdings, Inc.

Jun. 2012

Senior Executive Advisor, JX Holdings, Inc.
(present)

Director of the Company (present)
Attendance at meetings Jun. 2013of the board of directors: Reason for nomination as a candidate for outside director:
16 of 16 (100%)
Mr. Mitsunori Takahagi possesses abundant experience as asenior executive in a leading company in the energy, resources,
and materials industry, so the Company considers him suitably
qualified as an outside director of the Company and has
nominated him once more as a candidate for outside director.
Tenure as outside director: three years(at the conclusion of this general meeting of shareholders)8

Significant concurrent
positions at otherorganizations–

Honorary Executive
Consultant, JX
Holdings, Inc.

No.

Name
(Date of birth)

Yoshimasa Takao(March 11, 1951)
Reappointment
Candidate foroutside director
8No. of Company shares
owned: 0

Brief career summary, positions and responsibilities
in the Company
Apr. 1973

Joined Sumitomo Chemical Co., Ltd.

Jun. 2003

Executive Officer, Sumitomo Chemical Co.,
Ltd.

Jun. 2006

Managing Executive Officer, Sumitomo
Chemical Co., Ltd.

Jun. 2008

Director and Managing Executive Officer,
Sumitomo Chemical Co., Ltd.

Apr. 2009

Representative Director and Senior Managing
Executive Officer, Sumitomo Chemical Co.,Ltd.

Apr. 2012

Representative Director and Executive Vice
President, Sumitomo Chemical Co., Ltd.

Apr. 2015

Director and Executive Deputy Chairman,
Sumitomo Chemical Co., Ltd.

Jun. 2015

Executive Deputy Chairman, Sumitomo
Chemical Co., Ltd.

Jun. 2015

Director of the Company (present)

Jun. 2015
Attendance at meetingsof the board of directors:
Apr. 201612 of 13 (92.3%)

Outside Director, Fuji Oil Company, Ltd.
(present)
Advisor, Sumitomo Chemical Co., Ltd.
(present)

Reason for nomination as a candidate for outside director:
Mr. Yoshimasa Takao possesses abundant experience as asenior executive of a general chemicals manufacturer andholds extensive knowledge of the chemicals industry, so theCompany considers him suitably qualified as an outside
director of the Company and has nominated him once more asa candidate for outside director.
Tenure as outside director: one year
(at the conclusion of this general meeting of shareholders)9Significant concurrent
positions at otherorganizations
Advisor, Sumitomo
Chemical Co., Ltd.
Outside Director, Fuji
Oil Company, Ltd.

No.

Name
(Date of birth)

Katsumi Nakamura(June 23, 1953)

9

Brief career summary, positions and responsibilities
in the Company
Apr. 1978

Joined Nissan Motor Co., Ltd.

Jan. 2000

Program Director, Program Management
Office, Nissan Motor Co., Ltd.

Apr. 2001

Corporate Vice President, Nissan Motor Co.,
Ltd.

Jul. 2003

President, Dongfeng Motor Co., Ltd. (China)

Reappointment

May 2008

Candidate foroutside director

Executive Vice President, Renault S.A.S.
(France)Jun. 2009

Director, Nissan Motor Co., Ltd.

Independent officer

Jun. 2013

Chairman of the Board, Calsonic Kansei Corp.
(present)

No. of Company shares
owned: 0

Jun. 2015

Director of the Company (present)

Significant concurrent
positions at otherorganizations
Chairman of the Board,
Calsonic Kansei Corp.

Reason for nomination as a candidate for outside director:
Attendance at meetings Mr. Katsumi Nakamura has abundant experience as a seniorof the board of directors: executive of large global corporations, so the Company
considers him suitably qualified as an outside director of the
12 of 13 (92.3%)
Company and has nominated him once more as a candidate foroutside director.
Tenure as outside director: one year
(at the conclusion of this general meeting of shareholders)(Notes) 1. There are no special interests between the candidates and the Company.
2. Mr. Masahiro Sugiyama is a candidate for a new director.
3. Messrs. Mitsunori Takahagi, Yoshimasa Takao and Katsumi Nakamura are candidates for outside
directors.
4. Within the past five years, Mr. Yoshimasa Takao has served as an executive in Sumitomo Chemical Co.,
Ltd., which is a specified affiliated business operator for the Company. The relevant past positions areincluded in the brief career summary provided above.
5. The Company designates Messrs. Mitsunori Takahagi and Katsumi Nakamura as independent officers
under the provisions of the Tokyo Stock Exchange, Inc., and submits as such accordingly. When theirreelection is approved, they are scheduled to be independent officers continuously. Both of them meet theindependence criteria set out in the Company’s “criteria for independence of outside officers” (thesecriteria are provided on page 13).
6. Messrs. Mitsunori Takahagi, Yoshimasa Takao and Katsumi Nakamura are currently outside directors of
the Company, and the Company has entered into an agreement with each of them to limit their liability
for damages under article 423, paragraph 1 of the Companies Act. If their reelection is approved, theCompany plans to renew the respective agreement with each of them. Pursuant to this agreement, theCompany shall set the defined maximum amount of liability for damages, if he has acted in good faith10and without gross negligence in performing his duties, at the minimum liability amount provided forunder article 425, paragraph 1 of the Companies Act.
7. “No. of Company shares owned” is current as of March 31, 2016.

11

Proposal 2:

Election of one (1) audit & supervisory board member

The term of office of audit & supervisory board member, Yasuji Matsuyama will expire at theconclusion of this general meeting of shareholders
Therefore, the Company proposes to elect one (1) audit & supervisory board member.
Prior consent to this proposal has been obtained from the audit & supervisory board.
The candidate for audit & supervisory board member is as follows:
Name(Date of birth)

Shinji Morimoto(June 27, 1952)

Brief career summary
Nov. 1975

Joined Price Waterhouse & Co. (present
PricewaterhouseCoopers Aarata)

May 1980

Registered as Certified Public Accountant

May 1987

Joined Aoki International Co., Ltd. (present
Aoki Holdings Inc.)

Jun. 1989

Managing Director in charge of Management
Planning, Aoki International Co., Ltd.

Jul. 1998

Joined PwC Consulting Service Co., Ltd.
(present GBS Division, IBM Japan, Ltd.)
Director in charge of Consumer Goods andRetail Industry

Apr. 2006

Joined Shinnihon Audit Corp. (present Ernst &Young ShinNihon LLC)

Jul. 2007

Senior Partner, Shinnihon Audit Corp.

Jan. 2015

Established Office Business Inspire,
Representative (present)

Dec. 2015

Outside Director, Lockon Co., Ltd. (present)

New candidate
Candidate for outside
audit & supervisory board
memberIndependent officer
No. of Company shares
owned: 0

Significant concurrent
positions at otherorganizations
Outside Director, Lockon
Co., Ltd.

Reason for nomination as a candidate for outside audit &supervisory board member:
Mr. Shinji Morimoto is a certified public accountant, so theCompany has determined that he will carry out objective,
proactive, and fair audits from an expert standpoint and has
nominated him as a candidate for outside audit & supervisoryboard member.
(Notes) 1. There are no special interests between the candidate and the Company.
2. Mr. Shinji Morimoto is a new candidate for outside audit & supervisory board member of the Company.
3. The Company designates Mr. Shinji Morimoto as an independent officer under the provisions of theTokyo Stock Exchange, Inc., and submits as such accordingly. When his election is approved, he isscheduled to be an independent officer. He meets the independence criteria set out in the Company’s“criteria for independence of outside officers” (these criteria are provided on page 15-16).

12

4. If the election of Mr. Shinji Morimoto is approved, the Company plans to enter into an agreement with
him to limit his liability for damages under article 423, paragraph 1 of the Companies Act. Pursuant tothis agreement, the Company shall set the defined maximum amount of liability for damages, if he has
acted in good faith and without gross negligence in performing his duties, at the minimum liability
amount provided for under article 425, paragraph 1 of the Companies Act.

5. “No. of Company shares owned” is current as of March 31, 2016.

13

Proposal 3:

Election of one (1) substitute audit & supervisory board member

The Company proposes to elect the following candidate as substitute for audit & supervisoryboard member to be ready to fill a vacant position should the number of audit & supervisory board
members fall below the number required by laws and regulations and the articles of incorporation.
Prior consent to this proposal has been obtained from the audit & supervisory board.
The candidate for substitute audit & supervisory board member is as follows:
Name(Date of birth)

Brief career summary
Apr. 1995

Registered as Attorney

Nov. 2007

Partner, Daiichi Law Office, P.C. (present)

May 2014

Audit & Supervisory Board Member, Furuno
Electric Co., Ltd. (present)

No. of Company shares
owned: 0

Audit & Supervisory
Board Member, Furuno
Electric Co., Ltd.

Outside Audit &Supervisory Board
Member, Suzuken Co.,
Reason for nomination as a candidate for substitute outside audit Ltd. (present)& supervisory board member and reason for determining that thecandidate would appropriately carry out these duties:
Mr. Toru Muranaka, though never having been directly involvedin corporate management in any form other than as outside
officer, is a qualified attorney, so the Company has determinedthat his wide-ranging knowledge and insight would enable him
to carry out objective, proactive, and fair audits and has
nominated him as a candidate for substitute outside audit &supervisory board member.
Jun. 2015

Toru Muranaka(June 3, 1965)

Significant concurrent
positions at otherorganizations

Outside Audit & Supervisory Board Member,
Suzuken Co., Ltd. (present)(Notes) 1. There are no special interests between the candidate and the Company.
2. Mr. Toru Muranaka is a candidate for substitute outside audit & supervisory board member of theCompany.
3. If Mr. Toru Muranaka assumes the office of outside audit & supervisory board member because thenumber of audit & supervisory board members fell below the minimum provided for by laws andregulations and the articles of incorporation, the Company plans to enter into an agreement with him to
limit his liability for damages under article 423, paragraph 1 of the Companies Act. Pursuant to thisagreement, the Company shall set the defined maximum amount of liability for damages, if he has acted
in good faith and without gross negligence in performing his duties, at the minimum liability amountprovided for under article 425, paragraph 1 of the Companies Act.
4. Mr. Toru Muranaka meets the independence criteria set out in the Company’s “criteria for independenceof outside officers” (these criteria are provided on page 15-16) and the requirements for independent
officers stipulated by the Tokyo Stock Exchange, Inc.

5. “No. of Company shares owned” is current as of March 31, 2016.
14

<For Reference>
1. Policy and procedure for the appointment of candidates for directors and audit & supervisoryboard members
When the Company’s board of directors elects executives and appoints candidates for directors
and audit & supervisory board members, the “nominating and remuneration committee” whichmainly consists of independent outside directors, take measures, for instance, such as interviewing
candidates, to examine credentials and aptitude which would contribute to the improvement ofcorporate value in the medium and long term and to ensure the objectivity and fairness of any
decision the board of directors makes.
The Company has the “criteria for independence of outside officers,” which are set out insection 2 below, independently in place for the election of outside directors and outside audit &supervisory board members and elects them in accordance with these criteria.
2. Criteria for independence of outside officers
The Company has established criteria concerning the independence of outside directors andoutside audit & supervisory board members of the Company (hereinafter collectively called“outside officers”) as follows, and outside officers who do not meet any of the following
conditions are considered independent.
1. An executive (*1) of the Company or a subsidiary currently or within the past 10 years
2. A person who has met any of the following conditions (1) through (7) over the last threeyears(1) A party whose major client or supplier is the Company (*2) or an executive thereof(2) A major client or supplier of the Company (*3) or an executive thereof(3) A consultant, accountant or legal professional who receives a large amount of monetaryconsideration or other property from the Company in addition to compensation as adirector/audit & supervisory board member (*4) (In case it is an organization such as acorporation or an association that receives monetary consideration or property, a party
which belongs to the said organization.)(4) A major shareholder (*5) of the Company or an executive thereof(5) A major lender (*6) of the Company or an executive thereof(6) A party that receives a donation over a certain amount (*7) from the Company or a party
affiliated with an organization that receives a donation from the Company(7) An executive of a company for which an executive of the Company serves concurrently
as outside officer of the said company
3. A spouse or relative within the second degree of kinship of the person in 1. or 2. above
4. A person who has served as outside officer of the Company for over eight years
15(*1) “executive” is an executive director, an executive officer or an employee.
(*2) “A party whose major client or supplier is the Company” is one which has received apayment from the Company equivalent to over 2% of its consolidated annual grosssales.
(*3) “Major client or supplier of the Company” is one which has paid to the Company anamount equivalent to over 2% of the Company’s consolidated annual gross sales.
(*4) “Receives a large amount of monetary consideration or other property from theCompany in addition to compensation as a director/audit & supervisory board
member” means receiving from the Company monetary consideration or property
which exceeds the higher of either 2% of sales or total revenue of such party inaddition to compensation as a director/audit & supervisory board member or 10
million yen.
(*5) “Major shareholder” is one whose ownership ratio of voting rights is 10% or higher.
(*6) “Major lender” is one which has lent the Company an amount equivalent to over 2% of
the Company’s consolidated total assets.
(*7) “A donation over a certain amount” is one over 10 million yen.

16

Proposal No. 4:

Extension of policy on handling of large-scale purchase of shares of company

The Company, taking into consideration the changes in circumstances, has been
continuously examining the status of the policy on the handling of large-scale purchases (hereinafter,
the “Current Policy”) (valid until the conclusion of the first meeting of the board of directors of theCompany to be held by July 31, 2016, following the completion of the 155th Ordinary General
Meeting of Shareholders scheduled to be held in June 2016), which was approved by theshareholders at the 152nd Ordinary General Meeting of Shareholders held on June 25, 2013 andextended by the resolution of the board of directors of the Company on the same day, from theperspective of enhancing corporate value and shareholder value, including whether or not to extend
the Current Policy.
As a result of such examination, at the meeting of the board of directors of the Company
held on May 10, 2016, a decision was made to extend the policy on the handling of large-scalepurchases (hereinafter, the “Policy on Handling of Large-Scale Purchases”), subject to approval at
the ordinary general meeting of shareholders. Accordingly, in view of the importance of the Policy
on Handling of Large-Scale Purchases, and in order to widely reflect the opinions of ourshareholders, we ask our shareholders to approve the proposal with a majority affirmative vote of theshareholders in attendance at the ordinary general meeting of shareholders. Although some parts of
the Current Policy, such as the constitution and the members of the Independent Committee, havebeen changed, the content of the Policy on Handling of Large-Scale Purchases is basically the sameas that of the Current Policy.
If this proposal is approved, the Policy on Handling of Large-Scale Purchases shallbecome effective upon a decision to be made to extend the policy at the meeting of the board of
directors of the Company to be held by July 31, 2016, and will be valid until the conclusion of thefirst meeting of the board of directors of the Company to be held by July 31, 2019, following the158th Ordinary General Meeting of Shareholders scheduled to be held in June 2019.
Please be advised that the Company is not currently exposed to a hostile takeover bid.
Please refer to the following for (i) measures to prevent control by inappropriate parties
over decisions on financial and business policies of the Company in light of the basic policy oncontrol over the Company and (ii) the content of the Policy on Handling of Large-Scale Purchases.

I. Basic policy on party that controls decisions on financial and business policies of theCompany
When a specific party tries to make a large-scale purchase whose purpose is to acquire
shares of the Company that give such buyer the power to influence decisions on financial andbusiness policies of the Company, the Company believes the decision of whether to sell sharesshould be left to the judgment of the shareholders of the Company.
However, the Company as a group has 55 subsidiaries and 13 associates at home andabroad across Japan, Southeast Asia, Northeast Asia, the Americas and Europe, operating a wide17

variety of businesses, mainly consisting of manufacturing and sale of products in areas such as IT &Electronics, Chemicals, Life Industry, Plastics, Housing & Eco Materials and others. For the
management of the Company, extensive know-how, abundant experience and a sufficientunderstanding of relations built with customers/employees and business partners (stakeholders) at
home and abroad are essential. If a party that controls decisions on financial and business policiesof the Company lacks sufficient understanding of these matters, shareholder value that can berealized in the future may be undermined.
When a large-scale purchase is suddenly made, it is essential that both the buyer and theboard of directors of the Company provide adequate and sufficient information so that shareholders
can make a proper decision within a short time on whether the proposed purchase price of theCompany’s shares proposed by the buyer is reasonable. Furthermore, even for shareholders who
consider continuing to hold the Company’s shares, details of the management policy and businessplans such buyer considers when participating in the management of the Company (effect of suchlarge-scale purchase on the Company, policy on relations with stakeholders of the Company, such as
employees, affiliates, customers and business partners) are important information in making adecision on whether to keep such shares. Similarly, the Company believes the opinion of the boardof directors on such large-scale purchases is also important information for shareholders of theCompany for making a decision.
Accordingly, for a large-scale purchase where the acquisition of the Company’s shares thatgive a buyer the power to influence decisions on financial and business policies of the Company isintended, the Company believes such buyer should, to support the judgment of shareholders, provide
necessary and sufficient information on such purchase to the board of directors of the Company inadvance and commence such purchase only after a certain evaluation period in accordance withcertain rules established and disclosed in advance by the Company (Please refer to III 1. below for
more details; hereinafter called the “Rules for Large-Scale Purchases”).
Of large-scale purchases, there may be one whose obvious purpose is misuse and thatwould consequently cause irreparable harm to the Company and thus significantly undermine theinterests of all shareholders of the Company. The Company believes it is necessary for theprotection of the interests of all shareholders of the Company that the board of directors takes
appropriate measures against such purchase in accordance with the Rules for Large-Scale Purchases.

II. Measures to improve corporate value
The Company has implemented measures to enhance the Company’s corporate value in themedium and long term such as the mid-term business plan described below. Although theCompany believes that efforts made by the Company’s management (i) to strengthen the corporate
governance system for the sustainable growth of the Company, and (ii) to implement other measureswhile continuing to aim for the achievement of the mid-term business plan, will lead to theimprovement of the Company’s corporate value, the Company also believes that making preparationof the Rules for Large-Scale Purchases in advance will be effective for enhancing the efficiency ofthese efforts against large-scale purchases of shares of the Company and thus contribute to thecommon interests of shareholders of the Company.
18

1. Strategies to achieve the goals in the mid-term business plan “New Challenge 2016”
The Company is making efforts to implement the six key strategies listed below to achieve
the goals in the three-year mid-term business plan “New Challenge 2016,” whose final year is the
fiscal year ending March 31, 2017. The Company will further strengthen the revenue base andcontinuously enhance the Company’s corporate value by securing implementation of these measures.
■
1.
2.
3.
4.
5.
6.

Key strategies
Further broadening and deepening of overseas business
Focusing on markets and untapped fields with potential for growth
Laying and enhancing the infrastructure for global management
Investing for future growth
Further improving capital / asset efficiency and enhancing financial standing
Continued fostering of global human resources

2. Measures to enhance corporate governance
The Company, in order to clearly define the management responsibilities towards theshareholders of the Company and assure the management’s capability to swiftly and appropriately
respond to changes in the management environment, shortened the term of office of the directors
from two years to one year at the 145th Ordinary General Meeting of Shareholders held on June 29,
2006.
Moreover, in order to ensure transparency and fairness of management and to enhance thefunction of supervision of the board of directors, the Company, subject to approval at each ordinary
general meeting of shareholders, will continue to appoint multiple numbers of outside directors whoare highly independent. Furthermore, in October 2015, the Company conducted an evaluation of
the board of directors (self-evaluation) for the purpose of enhancing the effectiveness andtransparency of the board of directors and to increase the Company’s corporate value. The
Company will make efforts to increase the Company's corporate value sustainably by acting upon
the issues that were recognized from the results of this analysis/evaluation. The Company discloses
information concerning the implementation of the board of directors evaluation (self-evaluation) and
its future plans in response to the self-evaluation on the following website: http://www.inabata.co.jp.

19

20

3. Shareholder return policy
Shareholder return is one of the highest priorities among the Company’s policies. Effective
the fiscal year ending March 31, 2015, the Company’s policy on dividends has been changed with aview to placing an even greater emphasis on returning profits to shareholders and carrying out
shareholder returns with more clarity.
Specifically, the policy is now based on a total amount of shareholder returns consisting of
the amount of dividends combined with the amount of treasury shares acquired. The company will
target a total return ratio (*) that is mainly in the range of approximately 30% to 35%, and determine
it based on comprehensive judgments that take into account such considerations as medium- andlong-term investment for future enhancement of corporate value.
(*) Total return ratio = (amount of dividends + amount of treasury shares acquired) ÷ consolidated
net income x 100
Status of shareholder return in the most recent fiscal years
Fiscal year ended
March 31, 2015
Dividends per share (JPY)33
Amount of treasury shares acquired
604(JPY in millions)
Total return ratio
31.1%
Dividend payout ratio (reference)
24.1%

Fiscal year ended
March 31, 2016
36
707
31.1%
23.7%

We will continue to make efforts to improve the return of profits to our shareholders.

III. Measures to prevent control by inappropriate parties of decisions on financial and business
policies of Company in light of basic policy regarding control of Company
As a measure, in accordance with the basic policy described in I above, to prevent control
by inappropriate parties of decisions on financial and business policies of the Company, theCompany established certain rules (the Rules for Large-Scale Purchases), as described below, thatmust be followed, when making a purchase of share certificates, etc.iii, of the Company for the
purpose of making the ratio of voting rightsii of a certain shareholder groupi 20% or higher, or apurchase of share certificates, etc., of the Company that results in the ratio of voting rights of acertain shareholder group being 20% or higher (in either case, excluding a purchase that the board of
directors of the Company approves in advance, regardless of specific methods of purchase, including
market trades and tender offers; such purchases are hereinafter referred to as a “Large-Scale
Purchases”, while such buyers are called a “Large-Scale Buyers”), and stipulates a policy on how tohandle cases with which a Large-Scale Buyer must comply with the rules and the measures to betaken in the case where a Large-Scale Buyer does not comply (the policy on the handling of LargeScale Purchases of shares certificates, etc., of the Company described in this section III is hereinafterreferred to as the “Policy on Handling of Large-Scale Purchases”).

21

1. Details of Rules for Large-Scale Purchases(1) Outline of Rules for Large-Scale Purchase
The Rules for Large-Scale Purchases established by the board of directors of the Company(i) require a Large-Scale Buyer to provide the board of directors of the Company with necessary andsufficient information prior to the Large-Scale Purchase, (ii) secure a designated review period forthe board of directors of the Company to review the information, and (iii) allow a Large-Scale
Purchase, if the board of directors of the Company determines that it is necessary and reasonable, orif the board of directors of the Company receives a recommendation from the Independent
Committee, but only after the procedures to confirm the shareholders’ intent are completed.
(2) Provision of information
When a Large-Scale Buyer intends to make a Large-Scale Purchase, to begin with, it must
submit to the representative director of the Company a “declaration of intent” stating that it willobserve the Rules for Large-Scale Purchases, specifying the name, address, law governing theincorporation, name of representative, and contact details in Japan of the Large-Scale Buyer, and an
overview of the contemplated Large-Scale Purchase. Within 10 business days after receipt of thedeclaration of intent, the board of directors of the Company will deliver to the Large-Scale Buyer an
initial list of information to be provided by the Large-Scale Buyer that is necessary and sufficient for
the Company’s shareholders and the board of directors of the Company to form an opinion(hereinafter referred to as the “Necessary Information”).
Details of the Necessary Information provided to the board of directors of the Company by
the Large-Scale Buyer may differ according to the nature of the Large-Scale Buyer and the purposeand details of the Large-Scale Purchase; however, some of the items to be generally included as
Necessary Information are stated below. For each item, the scope of the Necessary Information
will be limited to the extent that is necessary and sufficient for our shareholders to make a decisionand for the board of directors of the Company to form an opinion. If the Large-Scale Buyer does
not provide any part of the Necessary Information, the Company will demand that the Large-Scale
Buyer provide a specific reason; and the fact that the information was not provided, as well as thereason therefor, will be examined by our shareholders and the board of directors of the Company inarriving at a decision and forming our opinion.
(i)

An outline (including information relating to the substance of the business of theLarge-Scale Buyer, capital structure and experience in businesses similar to theCompany’s business) of the Large-Scale Buyer and its group (including joint holders,quasi-joint holders and specially related parties);(ii) The purpose and substance of the Large-Scale Purchase (including, among others,amounts/kind of the consideration of the purchase, timing of the purchase, structureof related transactions, legality of the means of purchase, and feasibility of purchaseand related transactions);(iii) The basis for the calculation of the proposed purchase price for shares of theCompany and financial resources to ensure the purchase (including specific names22

of the financial providers (including ultimate financial providers), financing methods,
and substance of related transactions);(iv) Among others, the candidates for the management team (including information
regarding experience in businesses similar to the business of the Company and theCompany's group), basic management policy, business plan, financial plan, capital
policy, distribution policy, policy of utilization of assets, each as expected after theLarge-Scale Buyer participates in the management of the Company and theCompany group’s business; and(v) A summary of changes, if planned, in the Company’s relationship with theCompany’s and the Company group’s business partners, customers, and employees
after the completion of the Large-Scale Purchase.
If, after close examination of the information initially provided by the Large-Scale Buyer,
the Company finds the information to be insufficient, the board of directors of the Company will
request additional information until the Necessary Information is fully provided. We will disclose,
when the board of directors of the Company considers appropriate, the fact that a Large-Scale
Purchase was proposed and all or a part of the Necessary Information was provided to the board of
directors of the Company, if such information is considered necessary for the shareholders of theCompany to make their decision.
(3) Review period for the board of directors of the Company
Depending on, among other things, the complexity of the assessment, of the Large-Scale
Purchase, the board of directors of the Company expects that, subsequent to full provision of theNecessary Information by the Large-Scale Buyer to the board of directors of the Company, the boardof directors of the Company shall be given a period of 60 days (in the case of a purchase of all theshares of the Company by way of a tender offer for cash only, in yen) or a period of 90 days (in thecase of other Large-Scale Purchases), to review, examine, negotiate, form an opinion, and seek
alternative plans (hereinafter referred to as the “Board Review Period”). Therefore, the LargeScale Purchase may be commenced only after the end of the Board Review Period; provided that, if
the process to confirm the intent of the shareholders described in (5) below is to be followed, thenthe Large-Scale Purchase may only be commenced after the completion of such process.
During the Board Review Period, the board of directors of the Company shall thoroughly
review and examine the Necessary Information it receives, with advice from outside experts, andwill carefully form and disclose its opinion. In addition, the board of directors of the Company
may negotiate with the Large-Scale Buyer in order to improve the terms of the proposed Large-Scale
Purchase or may offer alternative plans to shareholders of the Company, in the capacity of the boardof directors of the Company, as necessary.
(4) Independent Committee
The Company has established an Independent Committee as a third-party institution,
independent from the board of directors of the Company. The Independent Committee keeps watch
over the board of directors of the Company so that the Policy on Handling of Large-Scale Purchases23

is not used for the self-protection of the board of directors, and serves to prevent a purchase that may
undermine or damage the Company’s corporate value.
The Independent Committee consists of three or more members, and the members areelected from the outside directors and outside audit & supervisory board members who havesatisfied the “criteria for independence of outside officers” established by the Company. The
names and brief personal records of the members of the Independent Committee are as listed in
Exhibit 2 hereto. Please refer to Exhibit 3 hereto for an outline of the Independent Committee.
Whether or not any countermeasures should be taken is a decision that is ultimately madeby the board of directors of the Company. When making the decision, the board of directors shallfollow the procedure of consulting the Independent Committee and honor the recommendations fromthe Independent Committee to the extent possible, as the Independent Committee is designed toensure fairness of the board of directors’ decision. In addition, upon making the above decision,
the board of directors must first obtain the approval of the audit & supervisory board of theCompany in order to ensure the fairness of the board of directors’ decision. There are four audit &supervisory board members of the Company, and three of them are outside audit & supervisoryboard members.
(5) Confirmation of intent of shareholders
After expiration of the Board Review Period, the Company, on taking countermeasuresagainst a Large-Scale Purchase, may ask the shareholders of the Company to determine whether or
not any countermeasures should be taken against the relevant Large-Scale Purchase, to honor theintent of our shareholders. In this case, the Large-Scale Buyer must not commence the Large-Scale
Purchase until the procedures for confirmation of shareholders’ intent set forth below have been
completed. The procedures for confirmation of shareholders’ intent shall be carried out if (i) theboard of directors of the Company determines that it is necessary and reasonable to carry out theprocedures after considering, among other things, the details of the Large-Scale Purchase proposedby the Large-Scale Buyer, the Necessary Information provided by the Large-Scale Buyer,
circumstances in which countermeasures would be necessary, and the costs needed to carry out theprocedures, or (ii) the board of directors of the Company receives a recommendation from the
Independent Committee to carry out the procedures.
The intent of the shareholders of the Company shall be confirmed by a resolution of thegeneral meeting of shareholders of the Company under the Companies Act, or by other similar
procedures (hereinafter referred to as the “General Meeting of Shareholders”). If the General
Meeting of Shareholders is held, then the board of directors of the Company shall comply with theresolution of the General Meeting of Shareholders on whether or not any countermeasures should betaken against the relevant Large-Scale Purchase. The board of directors of the Company shallestablish a record date (hereinafter referred to as the “Record Date”) for the purpose of determining
the shareholders of the Company who are entitled to vote at the General Meeting of Shareholders.
The Company shall give public notice in accordance with the method prescribed in the articles ofincorporation of the Company two weeks or more prior to the Record Date.

24

(i)

The shareholders of the Company entitled to vote at the General Meeting of
Shareholders shall be those recorded in the shareholders register as of the end of theRecord Date.

(ii)

If the General Meeting of Shareholders is to be held, the notice of convocation shallbe sent to all the shareholders who are entitled to vote by the close of the day three
weeks prior to the date of the General Meeting of Shareholders.

(iii) Resolution at the General Meeting of Shareholders shall be adopted by the majorityof the voting rights of such shareholders present at the same General Meeting of
Shareholders.
In the case where any material changes or the equivalent are made to the information thatwill be used by the shareholders of the Company in making their decision at the General Meeting of
Shareholders, the board of directors of the Company may change the Record Date or postpone orcancel the General Meeting of Shareholders, even after the Record Date for the General Meeting of
Shareholders has been confirmed.
2. Policy on handling when a Large-Scale Purchase has been conducted(1) If a Large-Scale Buyer complies with the Rules for Large-Scale Purchases
If a Large-Scale Buyer complies with the Rules for Large-Scale Purchases, the board of
directors of the Company will, even if it opposes such Large-Scale Purchase, only express its
dissenting opinion or present alternative plans to such purchase proposal, and thereby try to convince
the shareholders, but it will not take any countermeasures against such Large-Scale Purchase, in
principle. Whether or not to accept a purchase proposal by a Large-Scale Buyer is a decision to bemade by the shareholders of the Company after consideration of such purchase proposal, thedissenting opinion expressed by the Company and alternative plans to such purchase proposal andother matters. However, even if the Rules for Large-Scale Purchases have been complied with, theboard of directors of the Company may take measures, as exceptional measures to the policy, that are
deemed to be appropriate in order to preserve the interests of the shareholders of the Company in thecase where it is recognized that such Large-Scale Purchase materially impairs the interests of allshareholders of the Company. For example:
1. The purchase, as determined from, among other things, the purpose of the acquisition, would
clearly impair the corporate value;
2. The structure of such proposal compels the shareholders to accept the purchase;
3. The conditions of purchase are substantially insufficient and inappropriate in light of theCompany’s corporate value;
4. The purchase impairs the corporate value by impairing the interests of stakeholders, such as
employees, customers and business partners.
Here, “1. The purchase, as determined from, among other things, the purpose of theacquisition, would clearly impair the corporate value” is meant to be, for example, cases where:

25

(i)

a Large-Scale Buyer purchases the shares simply to make parties affiliated with theCompany buy them back at a higher price without having any intention to actuallyparticipate in the Company’s management;(ii)

the Large-Scale Buyer purchases the shares for purposes of so-called “scorchedearth” management by temporarily taking control of the Company in order totransfer to such buyer and its group companies intellectual assets essential to theCompany’s management, know-how, confidential corporate information, major
business partners or customers, and other matters;(iii) the Large-Scale Buyer purchases the shares with the intention of using theCompany’s assets as collateral for, or as a source of repayment of, the buyer’s and its
group companies’ liabilities after taking control of management; and(iv) the Large-Scale Buyer purchases the shares to gain temporary control ofmanagement and sell high-value assets or the like, such as real estate and securities
not immediately related to the Company’s business, in order to use the profit fromsuch sale (a) to make the Company temporarily pay a high dividend, or (b) to use atemporarily high dividend as a device to sharply raise the share price and sell its
shares at a profit.
However, the above exceptional measures may not be taken only for the reason that the intention of
the Large-Scale Buyer formally falls under one of these examples, and the above exceptional
measures shall be taken only in extraordinary circumstances.
In addition, “2. The structure of such proposal compels the shareholders to accept thepurchase” is meant to be, for example, the case where the purchase method of the Company’s sharesproposed by the Large-Scale Buyer is by way of a public offering or other means with unfavorable
second-tier purchase conditions or unclear conditions, without offering to purchase all of the sharesin the first-tier purchase (so-called “coercive two-tiered purchase”).
With respect to consideration to, and decision on whether or not such Large-Scale
Purchase materially impairs the interests of all shareholders of, the Company, the board of directorsof the Company shall, in order to be objective and rational, make sure to consult with the
Independent Committee, obtaining advice from external experts on the propriety of the exercise of
exceptional countermeasures based on such Large-Scale Buyer and the detail of the Large-Scale
Purchase (among other things, the purpose, method, target, kind and amount of consideration for
acquisition), or the impact on the interests of all shareholders of the Company from such Large-Scale
Purchase, and the Independent Committee will advise on the matters it is consulted on. Suchadvice will be announced, and the board of directors of the Company will honor such advice to theextent possible. Furthermore, for the details of such exceptional countermeasures on which theboard of directors of the Company must seek consultation, please refer to (2) below.
(2) If a Large-Scale Buyer does not comply with the Rules for Large-Scale Purchase26

In the case where the Rules for Large-Scale Purchases are not complied with by a LargeScale Buyer, regardless of the specific acquisition structure, the board of directors of the Company
may oppose a Large-Scale Purchase by issuing stock acquisition rights or taking othercountermeasures permitted under the Companies Act and other laws as well as the Company’s
articles of incorporation for the purpose of preserving the interests of the Company and allshareholders of the Company. In judging whether or not the Large-Scale Buyer complies with theRules for Large-Scale Purchases, the circumstances on the Large-Scale Buyer side will be
sufficiently considered to a reasonable extent, such as (i) the Large-Scale Buyer does not necessarily
hold detailed information in respect of the Company, or (ii) there are matters that are not expected to
be voluntarily disclosed under the purchase strategy of the Large-Scale Buyer (for example, specificfigures of profits, etc., after the purchase) and other matters, and, the Company will not conclude
that the Large-Scale Buyer is not in compliance with the Rules for Large-Scale Purchases only forthe reason that the Large-Scale Buyer failed to provide the Necessary Information requested by theboard of directors of the Company. As to whether or not a Large-Scale Buyer complies with theRules for Large-Scale Purchases or not, and the possibility of exercise of countermeasures, theCompany will make sure to consult with the Independent Committee and take advice from external
experts into consideration, and the Independent Committee will advise on the matters it is consulted
on. Such advice will be announced, and the board of directors of the Company will honor suchadvice to the extent possible. As to the measures to be finally taken, the board of directors of theCompany will take such measures as it decides most appropriate at that time. The outline of thestock acquisition rights for the case of allotment of stock acquisition rights without contribution as a
specific countermeasure is described in Exhibit 1. However, if such stock acquisition rights are
actually to be issued, the Company may set certain limitations on, among other things, the exercise
period, terms of exercise, conditions of acquisition and terms of acquisition, that make the exerciseof the stock acquisition rights conditional on a party not belonging to a certain shareholder groupwith more than a designated percentage of voting rights, taking the effectiveness of countermeasures
into consideration.
(3) Suspension of exercise of countermeasures
The board of directors of the Company may suspend the execution of, or change, thecountermeasures if the board of directors determines, with thorough respect for the opinion or adviceof the Independent Committee, that it is not appropriate to execute countermeasures in cases wheresuch Large-Scale Buyer has cancelled or changed the Large-Scale Purchase after the decision to
adopt countermeasures was made.
For example, in the case of the allotment of stock acquisition rights without consideration
as a countermeasure, if a Large-Scale Buyer cancels or changes a Large-Scale Purchase after theshareholders who will receive an allotment of such rights are determined, and the board of directors
determines that it is not appropriate to exercise countermeasures, the exercise of countermeasures
may be suspended as follows:(i) Until the effective date of the allotment of the stock acquisition rights without consideration,such allotment will be suspended following the advice of the Independent Committee.

27

(ii) After the allotment of the stock acquisition rights without consideration, and until thecommencement of the exercise period, the Company will acquire such stock acquisitionrights without consideration following the advice of the Independent Committee.
In the case where the execution of countermeasures is suspended as described above,
prompt disclosure will be made together with the announcement of the matters that the Independent
Committee deems necessary.
3. Effects to shareholders and investors(1) Effects of Rules for Large-Scale Purchases on shareholders and investors
The Rules for Large-Scale Purchases are intended to provide (i) the information required
for the shareholders of the Company to decide whether or not to accept a Large-Scale Purchase, and(ii) the opinions of the incumbent board of directors responsible for managing the company, to theshareholders of the Company, as well as to secure opportunities for the shareholders of the Company
to receive a presentation of alternative proposals. We believe this will allow the shareholders of theCompany to make an appropriate decision as to whether or not to accept a Large-Scale Purchase,based on sufficient information, thereby preserving the interests of all shareholders of the Company.
Accordingly, the establishment of the Rules for Large-Scale Purchases will ensure the appropriate
investment decision by the shareholders of the Company and the investors and contributes to theinterests of the shareholders of the Company and the investors.
In addition, as described in 2. above, the response of the Company to a Large-Scale
Purchase would be different depending on whether or not a Large-Scale Buyer complies with theRules for Large-Scale Purchases. Therefore, we would like the shareholders of the Company andthe investors to pay attention to the actions of Large-Scale Buyers.

(2) Effects on the shareholders and investors when countermeasures are executed
In the case where the Company concludes that such Large-Scale Purchase would
materially impair the interests of all shareholders of the Company, even if a Large-Scale Buyer has
complied with the Rules for Large-Scale Purchases, or in the case where a Large-Scale Buyer has
not complied with the Rules for Large-Scale Purchases, the board of directors of the Company may
take countermeasures permitted under the Companies Act and other laws as well as the Company’s
articles of incorporation for the purpose of preserving the interests of all shareholders of theCompany. However, the Company does not, in any event, expect any special losses in legal rights
or economic prospects to be incurred by the shareholders of the Company (excluding a Large-Scale
Buyer violating the Rules for Large-Scale Purchases) by adopting the structure of suchcountermeasures. If the board of directors of the Company has decided to take specificcountermeasures, it will disclose such fact in a timely and appropriate manner in accordance with thelaws and regulations and the rules of the financial instruments exchanges.
Among the possible countermeasures, the procedures for the shareholders of the Company
in connection with the issuance of stock acquisition rights are as follows.
28With regard to the issuance of stock acquisition rights, it is necessary for the shareholders
to pay a certain amount of money within the predetermined period in order to acquire new stock by
exercising stock acquisition rights. The details of such procedure will be separately notified inaccordance with the laws and regulations when stock acquisition rights are actually issued; provided,
however, that the shareholders of the Company must, in order to obtain stock acquisition rights, berecorded in the register of shareholders at the end of the allotment date of the stock acquisition rightsthat is separately determined and published by the board of directors.
The Company may cancel the issuance of the stock acquisition rights, or acquire without
consideration those that have been issued, upon the determination by the board of directors
following the advice from the Independent Committee. However, in such case, no dilution of sharevalue per share will occur, and, therefore, it is possible for the shareholders or the investors who
have bought or sold the Company’s shares on the assumption that a dilution of the Company’s sharevalue would occur, on or after the ex-rights date for the allotment of such stock acquisition rights
without consideration, to incur unexpected losses due to fluctuations of share price.
4. Effective period of the Policy on Handling of Large-Scale Purchase
The effective period of the Policy on Handling of Large-Scale Purchases shall end at theconclusion of the first meeting of the board of directors of the Company to be held by July 31, 2019,
following the completion of the 158th Ordinary General Meeting of Shareholders of the Company to
be held in June 2019. However, if the extension of the Policy on Handling of Large-Scale
Purchases has been resolved at the meeting of the board of directors subject to the approval of theshareholders at the 158th Ordinary General Meeting of Shareholders of the Company to be held in
June 2019, such effective period shall be extended for an additional three years and the same applies
thereafter. Even if the extension of the Policy on Handling of Large-Scale Purchases has been
decided, the board of directors will revise such Policy on Handling of Large-Scale Purchases fromtime to time, in accordance with any amendment to the relevant laws and regulations, including theCompanies Act, in view of enhancing the corporate value and the shareholders’ value. In addition,even during the effective period of the Policy on Handling of Large-Scale Purchases, (i) if theabolishment of the Policy on Handling of Large-Scale Purchases has been resolved at the General
Meeting of Shareholders of the Company, or (ii) the abolishment of the Policy on Handling of LargeScale Purchases has been resolved at the meeting of the board of directors of the Company, the boardof directors of the Company shall abolish the Policy on Handling of Large-Scale Purchases. The
board of directors will immediately provide notice when it has been decided to continue, amend, or
abolish the Policy on Handling of Large-Scale Purchases.
5. Policy on Handling of Large-Scale Purchases is in accord with basic policy on control overCompany, does not undermine common interests of shareholders and does not aim to maintainposition of Company officers and reasons therefor(1) Policy on Handling of Large-Scale Purchases is in accord with basic policy on control overCompany29

The Policy on Handling of Large-Scale Purchases stipulates, among other things, details of
the Rules for Large-Scale Purchases, the policy of how to handle a case of an actual Large-Scale
Purchase, establishment of the Independent Committee and effects on shareholders and investors.
The Policy on Handling of Large-Scale Purchases requires a Large-Scale Buyer to provide
necessary and sufficient information on a Large-Scale Purchase to the board of directors of theCompany in advance and allows the commencement of such purchase only after a certain evaluation
period, and specifies that the board of directors of the Company would take appropriate
countermeasures against a Large-Scale Buyer who fails to comply with these rules.
In addition, the Policy on Handling of Large-Scale Purchases stipulates that when theRules for Large-Scale Purchases are followed but the board of directors of the Company determinesthat a Large-Scale Purchase made by a Large-Scale Buyer significantly undermines the interests ofall shareholders of the Company, the board of directors of the Company may take appropriate
countermeasures against such Large-Scale Buyer in order to protect the interests of all shareholdersof the Company.
As such, the Policy on Handling of Large-Scale Purchases is designed to align with theidea of the basic policy on control over the Company.
(2) Policy on Handling of Large-Scale Purchases does not undermine common interests ofshareholders
As mentioned in I above, the basic policy on control over the Company is based on thepremise that the common interests of shareholders of the Company is respected. The Policy on
Handling of Large-Scale Purchases is designed in line with the idea of such basic policy on control
over the Company and aims to provide information necessary for shareholders of the Company todecide whether to accept a Large-Scale Purchase, offer opinions of the board of directors of theCompany and guarantee an opportunity to receive an alternative proposal. We believe that the
Policy on Handling of Large-Scale Purchases contributes to the common interests of shareholders of
the Company rather than undermining it.
Furthermore, the Policy on Handling of Large-Scale Purchases is valid for three years, andits effectuation and extension require the approval of the shareholders of the Company. The Policy
on Handling of Large-Scale Purchases expires if its extension is not approved at a General Meetingof Shareholders, and a General Meeting of Shareholders of the Company or the board of directors
consisting of directors elected by a General Meeting of Shareholders may abolish the Policy on
Handling of Large-Scale Purchases before its expiration date. The Policy on Handling of LargeScale Purchases is not a dead-hand type of takeover defense measure (i.e., an anti-takeover measurethat cannot be stopped even when a majority of members of the board of directors are replaced) or aslow-hand type of takeover defense measure (i.e., an anti-takeover measure that takes time to stop as
members of the board of directors cannot be replaced simultaneously). These guarantee that the
Policy of Handling of Large-Scale Purchases does not undermine the common interests ofshareholders of the Company.

30

(3) Policy on Handling of Large-Scale Purchases does not aim to maintain position of Company
officers
The Policy on Handling of Large-Scale Purchases is based on the fundamental principlethat whether to accept a Large-Scale Purchase should be left to the decision of shareholders of theCompany, where the board of directors may request compliance with the Rules for Large-Scale
Purchases and invoke countermeasures, in order to protect the interests of all shareholders of theCompany. The Policy on Handling of Large-Scale Purchases requires advance disclosure in detailof a case where the board of directors of the Company invokes countermeasures, and suchcountermeasures are to be executed by the board of directors of the Company in accordance with therules of the Policy on Handling of Large-Scale Purchases.
When the board of directors of the Company assesses, examines and forms its opinions ofa Large-Scale Purchase, submits an alternative proposal, negotiates with a Large-Scale Buyer or
invokes countermeasures, the board of directors shall take advice from independent outside experts,
consult with the Independent Committee consisting of members who are independent of the
management team engaged in the business of the Company, and honor recommendations from such
Independent Committee to the extent possible. In addition, when recommendations are issued by
the Independent Committee in invoking countermeasures against a Large-Scale Purchase, theCompany shall confirm the intention of the Company’s shareholders concerning whether to invoke
such countermeasures. As such, the Policy on Handling of Large-Scale Purchases includes
procedures to ensure proper management by the board of directors of the Company.
Based on the above-mentioned overview, it is clear that the Policy on Handling of LargeScale Purchases does not aim to maintain the position of officers of the Company.

Note i: A certain shareholder group means:(i) a holder (including a party deemed as a holder pursuant to article 27-23, paragraph 3of the Financial Instruments and Exchange Law; the same applies hereinafter) and any
joint holders (provided in article 27-23, paragraph 5 of the Financial Instruments andExchange Law, including a party deemed as a joint holder pursuant to paragraph 6 thereof;
the same shall apply hereinafter) of the share certificates, etc. (provided in article 27-23,
paragraph 1 of the Financial Instruments and Exchange Law) of the Company; or(ii) a party effecting purchases, etc. (provided in article 27-2, paragraph 1 of the
Financial Instruments and exchange Law, including any purchase, etc., made on a financial
instruments exchange market, regardless of whether or not such purchase, etc., is made by
the auction method) of share certificates, etc. (provided in article 27-2, paragraph 1 of the
Financial Instruments and Exchange Law) of the Company, and specially related parties(provided in article 27-2, paragraph 7 of the Financial Instruments and Exchange Law) ofsuch party.
Note ii: Ratio of voting rights means:(i) in the case of Note 1(i) above, the holding ratio of share certificates, etc. (provided inarticle 27-23, paragraph 4 of the Financial Instruments and Exchange Law; in this case, thenumber of shares certificates, etc., held (number of share certificates, etc., held as provided
31

in the same paragraph; the same applies hereinafter) of the joint holders in respect of theholder shall be taken into consideration in the calculation) of the holder of the sharecertificates, etc., of the Company; or(ii) in the case of Note 1(ii) above, the amount of the sum of the ownership ratio of sharecertificates, etc. (provided in article 27-2, paragraph 8 of the Financial Instruments andExchange Law) of such relevant Large-Scale Buyer and its specially related parties.
Further, in calculating the share holding ratio and the ownership ratio, the annual report, thequarterly report or the treasury stock purchase report of the Company, whichever document has been
most recently submitted to the authorities, may be referred to in deciding the total number of issued
shares (provided in article 27-23, paragraph 4 of the Financial Instruments and Exchange Law) or
total number of voting rights (provided in article 27-2, paragraph 8 of the Financial Instruments andExchange Law).
Note iii: Share certificate, etc., means shares and other securities as provided in article 27-23,
paragraph 1 of the Financial Instruments and Exchange Law.

End of document

32

Exhibit 1

Outline of stock acquisition rights

1. Shareholders who are entitled to receive an allotment of stock acquisition rights and terms andconditions of issuance thereof:
One stock acquisition right shall be allotted to a shareholder for each share of common stock of
the Company held by such shareholder (excluding the shares of the common stock held by the Company)
whose name is recorded in the register of shareholders as of the end of the Record Date to be specified by
the board of directors of the Company, without any consideration.
2. Type and number of shares to be acquired upon exercise of stock acquisition rights:
The type of shares to be acquired upon exercise of stock acquisition rights is shares of common
stock of the Company, and the total number of such shares may be up to the number obtained by deducting
the total number of the issued and outstanding shares (excluding the shares of common stock held by theCompany) from the total number of the shares issuable by the Company as set forth in the articles ofincorporation of the Company. The number of shares to be acquired upon exercise of one stockacquisition right shall be separately determined by the board of directors of the Company; provided,
however, that such number shall be adjusted to the extent necessary if the Company makes a stock split or astock consolidation.
3. Total number of stock acquisition rights to be issued:
The total number of stock acquisition rights to be allotted shall be separately determined by theboard of directors of the Company. The board of directors of the Company may allot stock acquisitionrights in installments.
4. Pay-in amount for stock acquisition rights:
The payment of money shall not be required in exchange for stock acquisition rights.
5. Contents and amount of assets to be contributed upon exercise of each stock acquisition right:
The amount of assets to be contributed upon exercise of each stock acquisition right is theamount to be determined by the board of directors of the Company, which must be at least one yen.
6. Restriction on transfer of stock acquisition rights:
Stock acquisition rights may not be transferred without the approval of the board of directors of
the Company.
7. Conditions of exercise, and provisions regarding call-rights and triggering event of call-rights
regarding stock acquisition rights:- 33 -

Certain conditions of exercise of stock acquisition rights shall be provided, including a condition
that a party belonging to a specific group of shareholders that holds 20% or more of the ratio of voting
rights (excluding Sumitomo Chemical Co., Ltd. and any other with respect to whom the board of directorsof the Company admits that the acquisition or holding of share certificates, etc., of the Company by suchparty is not against the interests of all shareholders of the Company; the same shall apply hereinafter) may
not exercise stock acquisition rights. Details of the conditions shall be separately determined by the boardof directors of the Company.
The Company may set the provisions regarding call-rights with respect to stock acquisition rights
by the Company and triggering event of call-rights, and a party belonging to a certain shareholder groupthat holds 20% or more of the ratio of voting rights and other shareholders may be treated differently, or
stock acquisition rights held by a party belonging to a specific group of shareholders that holds 20% ormore of the ratio of voting rights are not subject to acquisition.
8. Exercise period regarding stock acquisition rights:
The day on which an allotment of stock acquisition rights becomes effective, the exercise period,
conditions of acquisition and other necessary subject matter regarding stock acquisition rights shall beseparately determined by the board of directors of the Company. With respect to the call-rights of theCompany, the Company may set terms and conditions to the effect that the Company may acquire stockacquisition rights held by any party other than those for whom exercise of the stock acquisition rights is not
permitted pursuant to the conditions of exercise as stated in 7. above, and one share may be delivered per
one stock acquisition right.

End of document- 34 -

Exhibit 2

Names and brief career summaries of the members of the Independent Committee
Shuichi Suzuki
Brief
Apr. 1989
careerMay 2005
summary Jun. 2010
Jun. 2011

Date of birth: September 4, 1957
Registered as Attorney
Established Yamada, Goya & Suzuki Law Office (partner) (present)
Outside Audit & Supervisory Board Member of the Company (present)
Outside Audit & Supervisory Board Member, Kawasaki Kinkai Kisen Kaisha,Ltd. (present)

Yoshitaka Takahashi
BriefApr. 1977
careerApr. 1995
summary Jun. 2001

Date of birth: October 14, 1954
Joined Honda Motor Co., Ltd.
Manager, Honda Transmission Manufacturing (U.S.)
Administration Manager, Guangqi Honda Automobile Co., Ltd. (China)
Manager, Business Management Department, Kumamoto Factory, Honda MotorCo., Ltd.
Audit & Supervisory Board Member (Full-time), Yachiyo Industry Co., Ltd.
Advisor, Yachiyo Industry Co., Ltd.
Outside Audit & Supervisory Board Member of the Company (present)

Apr. 2007
Jun. 2009
Jul. 2013
Jun. 2014
Shinji Morimoto
Nov. 1975
Brief
careerMay 1980
summary May 1987
Jun. 1989
Jul. 1998

Apr. 2006
Jul. 2007
Jan. 2015
Dec. 2015

Date of birth: June 27, 1952
Joined Price Waterhouse & Co. (present PricewaterhouseCoopers Aarata)
Registered as Certified Public Accountant
Joined Aoki International Co., Ltd. (present Aoki Holdings, Inc.)
Managing Director in charge of Management Planning, Aoki International Co.,
Ltd.
Joined PwC Consulting Service Co., Ltd. (present GBS Division, IBM Japan,
Ltd.)
Director in charge of Consumer Goods and Retail Industry
Joined Shinnihon Audit Corp. (present Ernst & Young ShinNihon LLC)
Senior Partner, Shinnihon Audit Corp.
Established Office Business Inspire, Representative (present)
Outside Director, Lockon Co., Ltd. (present)

End of document- 35 -

Exhibit 3

Outline of Independent Committee

1. Members
The Independent Committee consists of three (3) or more outside directors or outside audit &supervisory board members who have satisfied the “criteria for independence of outside officers”
established by the Company, appointed by the board of directors of the Company.
2. Term
The term of members of the Independent Committee expires at the conclusion of the first meetingof the board of directors of the Company held by July 31, which is immediately after the completion of theOrdinary General Meeting of Shareholders for the business year that ends within three (3) years after theassumption of office as members; provided, however, that if the extension of the Policy on Handling ofLarge-Scale Purchases is resolved at the said meeting of the board of directors, unless otherwise resolved,
the members be regarded to have been reappointed at the said meeting of the board of directors, and theterm shall be extended for three (3) years.
3. Resolution requirements
In principle, all the incumbent members of the Independent Committee, excluding speciallyinterested parties, must be present, and resolutions of the Independent Committee shall be adopted by anaffirmative vote of a majority of the members present at a meeting of the Independent Committee; provided,
however, that when there is any unavoidable reason, a majority of the members of the Independent
Committee must be present, and resolutions of such Independent Committee shall be adopted by anaffirmative vote of a majority of the members of the Independent Committee present at such meeting of the
Independent Committee.
4. Matters to be resolved and other matters
The Independent Committee shall deliberate on and resolve (i) whether or not a Large-Scale
Purchase is deemed to significantly undermine the interests of all shareholders of the Company, (ii)whether or not a Large-Scale Buyer has complied with the Rules for Large-Scale Purchases, (iii) whether or
not the exercise of countermeasures is necessary and reasonable, or such countermeasures should be
performed, (iv) whether or not the exercise of countermeasures should be suspended, and (v) theprocedures for confirmation of shareholders’ intentions that should be taken and other matters on which theboard of directors has sought consultation, and shall provide advice to the board of directors based on thedetails of such resolution. In the case where the Independent Committee provides advice to the board of
directors, the Independent Committee must provide reasons therefor. Members of the Independent
Committee are required to faithfully carry out their duties solely from a viewpoint of the interests of allshareholders of the Company, and such members may not perform such duties for the purpose of securing
their own interests or those of any third party (including management of the Company).
In order to ensure an appropriate judgment, in conducting the above-mentioned actions, theIndependent Committee shall make efforts to collect necessary and sufficient information, and, to the- 36 -

extent necessary, the Independent Committee may, at the Company’s expense, obtain advice from outside
experts, including financial advisors, certified public accountants, lawyers, consultants and other experts.

End of document- 37 -