This notice has been translated from the original notice in Japanese. In the event ofany discrepancy, the original notice in Japanese shall prevail.
Stock Code: 8150

NOTICE OF THE 70th ORDINARY
GENERAL MEETING OF SHAREHOLDERS

Time and Date of the Meeting:
10:00 a.m. on Friday, June 18, 2021
Reception starts at 9:00 a.m.
Venue:
Conference Room on the 10th floor of the Company’s headquarters,
at 4-12, Shiba 4-chome, Minato-ku, Tokyo
Agenda:Item 1: Payment of Year-End Dividends of Surplus
Item 2: Decrease in Amount of Capital Reserve and Retained Surplus, and Reversal of General Reserve
Item 3: Election of Twelve (12) Directors
Item 4: Election of One (1) Substitute Audit & Supervisory Board Member
From the perspective of halting the spread of the COVID-19 pandemic, shareholders are asked to exercise their voting
rights in advance of the meeting if possible, rather than attend the meeting in person.
Deadline for advance exercise of voting rights:
5:10 p.m. on Thursday, June 17, 2021
The Company Asks for Your Understanding and Cooperation Regarding Measures Against the COVID-19
Pandemic Please take appropriate precautions against infection, such as wearing a mask, while you are at the venue.
 If you are feeling unwell, please refrain from entering the venue. Please understand also that persons who appear
unwell when they arrive at the venue may be refused entry.
 Depending on the degree of crowding at the venue, you may be escorted to a separate venue or be refused entry.
 Depending on the state of the pandemic up to and including the day of the meeting, the details of the Company’s
response may be updated. Please check the Company website at appropriate intervals for the latest information.
(http://www.sanshin.co.jp)
Thank you for your understanding and cooperation.
The distribution of souvenirs to attending shareholders has been cancelled from last year’s event. Furthermore, thepresentation of a management briefing after the meeting has been cancelled for this event.

Sanshin Electronics Co., Ltd.

NOTICE OF THE 70th ORDINARY
GENERAL MEETING OF SHAREHOLDERS
Stock Code: 8150
May 28, 2021
Dear Shareholder:
The 70th Ordinary General Meeting of Shareholders of Sanshin Electronics Co., Ltd. (the “Company”), will be held
at 10:00 a.m. (reception starts at 9:00 a.m.) on Friday, June 18, 2021, in the Conference Room on the 10th floor of
the Company’s headquarters, at 4-12, Shiba 4-chome, Minato-ku, Tokyo.
From the perspective of halting the spread of the COVID-19 pandemic, shareholders are asked to consider refraining
from attending the meeting in person if at all possible, and to exercise their voting rights in advance of the meeting
instead. Advance exercise of voting rights can be conducted in writing or via the Internet. To do so, please review theattached reference materials and send us your vote no later than 5:10 p.m. on Thursday, June 17, 2021, using one of
the methods outlined below.

Sincerely yours,
Mitsumasa Matsunaga
Representative Director, CEO

Sanshin Electronics Co., Ltd.
4-12, Shiba 4-chome, Minato-ku, Tokyo, Japan

How to Exercise Your Voting Rights
If you attend the meeting in person:

If you attend the meeting in person, please present the enclosed proxycard at the reception desk on the day of the meeting.
Note: If at all possible, please refrain from attending the meeting inperson and exercise your voting rights in advance of the meeting
instead.

If you choose to exercise your voting rights
in writing:

Please exercise your voting rights by indicating your approval ordisapproval on the enclosed proxy card, and return it to us so that it
arrives no later than 5:10 p.m. on Thursday, June 17, 2021.

If you choose to exercise your voting rights
via the Internet:

If you choose to exercise your voting rights via the Internet, please voteon the Internet at the designated website no later than 5:10 p.m. on
Thursday, June 17, 2021.

1

Meeting Details
Agenda:Items to be reported
1.

The Business Report, the Consolidated Financial Statements, and the report of the audit of theconsolidated accounts by the Accounting Auditors and Audit & Supervisory Board for the 70th term,from April 1, 2020 to March 31, 2021, will be reported at the meeting.

2.

The Non-Consolidated Financial Statements for the 70th term, from April 1, 2020 to March 31, 2021,
will be reported at the meeting.

Items to be resolved
Item 1:

Payment of Year-End Dividends of Surplus

Item 2:

Decrease in Amount of Capital Reserve and Retained Surplus, and Reversal of General Reserve

Item 3:

Election of Twelve (12) Directors

Item 4:

Election of One (1) Substitute Audit & Supervisory Board Member

Information on How to Exercise Your Voting Rights:(1) If you choose to exercise your voting rights in writing
Please exercise your voting rights by indicating your approval or disapproval on the enclosed proxy card, and returnit to us so that it arrives no later than 5:10 p.m. on Thursday, June 17, 2021.
(2) If you choose to exercise your voting rights via the Internet
If you choose to vote via the Internet, please check the “インターネット等による議決権行使のご案内” on page 4 inthe original notice in Japanese, and vote on the Internet at the designated website no later than 5:10 p.m. on Thursday,June 17, 2021.
(3) If you exercise your voting rights both in writing and via the Internet, the electronic exercise shall be deemed asvalid. Similarly, if you exercise your voting rights multiple times via the Internet, or more than once using a PC, asmartphone and a mobile phone, the latest exercise shall be deemed as valid.
When attending the meeting in person, please present the enclosed proxy card at the reception desk.
The following items are not included in the Attachment of this Notice, because they are posted on the Company
website at http://www.sanshin.co.jp/ir/meeting/ in accordance with the applicable laws and regulations, and theprovision of Article 15 of the Company’s Articles of Incorporation.
1) Notes to Consolidated Financial Statements
2) Notes to Non-consolidated Financial Statements
Please take note that the consolidated and non-consolidated financial statements included in the Attachment of thisNotice are part of the consolidated and non-consolidated financial statements audited by the Accounting Auditors andAudit & Supervisory Board for preparation of the Report of the Audit of the Consolidated Accounts and the Auditor’sReport.
If any amendments are made to reference materials for the General Meeting of Shareholders, the business report, andconsolidated and non-consolidated financial statements, they will be posted on the Company website at
http://www.sanshin.co.jp/ir/meeting/.

2

Reference Materials for the General Meeting of Shareholders
Item 1: Payment of Year-End Dividends of Surplus
The Company considers profit returns to its shareholders as one of the most important management issues. The
Company’s basic policy is to determine dividends by comprehensively considering the need to maintain abalance between rewarding of shareholders, investment to gain opportunities for growth, attainment ofsufficient retained earnings to enable sustainable growth, and improvement in capital efficiency. Under thispolicy, the Company has set a target for its dividend payout ratio of around 50% on a consolidated basis. We
currently plan to pay the year-end dividends for the fiscal year under review as follows.

Type of dividends

Cash

Allocation and total of year-end dividends

We propose to pay a year-end dividend of ¥32 per share, with thetotal payment of ¥618,134,656.
(Combined with the already paid interim dividend, annual dividend
thus becomes ¥40 per share.)Date of commencement of payment ofdividends of surplus

June 21, 2021

3

Item 2: Decrease in Amount of Capital Reserve and Retained Surplus, and Reversal of General Reserve
From June 22, 2021 to July 19, 2021, the Company plans to execute a tender offer (hereinafter, “the Tender
Offer”) for treasury stock with an upper limit of 7,000,000 shares of our ordinary shares and total purchaseamount of ¥15.743 billion. Therefore, in order to expand the source of funds for the Tender Offer and to ensure
flexibility and agility in our future capital policy, the amount of capital reserve and retained surplus will be
reduced as follows. Additionally, after the decrease in the amount of capital reserve, the amount of the decrease
will be transferred to other capital surplus. After the decrease in the amount of the retained surplus, the amountof the decrease will be transferred to retained earnings brought forward. The general reserve will be transferred
to retained earnings brought forward. Please refer to page 14, "[Reference] 'Notice Regarding Planned
Acquisition of Treasury Stock and Tender Offer of Treasury Stock and Reduction of General Reserve, Capital
Reserve, and Retained Surplus' released on May 12, 2021 (excerpt)" for the outline of the Tender Offer.
(Decrease in Capital Reserve)
Pursuant to Article 448, Paragraph 1 of the Companies Act, the Company will decrease capital reserve as
follows, and will transfer the total amount of said decrease to other capital surplus.
Amount of capital reserve decrease

Total capital reserve amount of ¥5,329,906,456

Date on which capital reserve decrease willtake effectJune 30, 2021

(Decrease in Retained Surplus)
Pursuant to Article 448, Paragraph 1 of the Companies Act, the Company will decrease retained surplus asfollows, and will transfer the total amount of said decrease to retained earnings brought forward.
Amount of retained surplus decrease

Total retained surplus amount of ¥670,983,281

Date on which retained surplus decrease
June 30, 2021
will take effect(Decrease in General Reserve)
Pursuant to Article 452 of the Companies Act, the Company will decrease the total general reserve amount of¥18,680,000,000, and will transfer the total amount of said decrease to retained earnings brought forward.

4

Item 3: Appointment of Twelve ( 12 ) Directors
All 12 Directors’ terms of office expire at the closing of this General Meeting of Shareholders. Therefore, theCompany hereby proposes the election of twelve (12) Directors.
The candidates for the position of Director are as follows:
Candidate No.

Name

Current title, etc.

Attribute1

Mitsumasa Matsunaga

Representative Director, CEO

Reappointment

2

Toshiro Suzuki

Representative Director, COO

Reappointment

3

Fumihide Kitamura

Director, Senior Operating Officer

Reappointment

4

Akio Misono

Director, Senior Operating Officer

Reappointment

5

Yuji Mori

Director, Senior Operating Officer

Reappointment

6

Koji Sakamoto

Director, Operating Officer

Reappointment

7

Mitsuhiro Ogawa

Director, Operating Officer

Reappointment

8

Hiroshi Harada

Director, Operating Officer

Reappointment

9

Takeshi Uchimura

Director

10

Minoru Nishino

Director

11

Tatsuo Takeuchi

Director

12

Akihiro Fujioka

Director

Reappointment
Candidate for reappointment as
Director

External
Candidate for External Director

5

Reappointment External
Independent
Reappointment External
Independent
Reappointment External
Independent
Reappointment External
Independent
Independent
Independent Director stipulated by the
Tokyo Stock Exchange

Candidate No. 1

Reappointment

Mitsumasa Matsunaga

Shares owned: 148,640 shares
Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)(born February 7, 1948)[Brief personal history, and title and role in the Company]
Jan. 1980:

Joined Sanshin Electronics Co., Ltd.

Oct. 1980:

Director

Nov. 1983:

Director, Senior Vice President

Apr. 1993:

Director, Executive Vice President

Jun. 1995:

Representative Director, Senior Executive Director

Jun. 1996:

Representative Director, President

Jun. 2014:

Representative Director, Chairman

Aug. 2014:

Representative Director, Chairman/CEO

Jun. 2016:
Representative Director, CEO (current)
Reason for nomination as a Director candidate:
Mitsumasa Matsunaga has been involved in the management of Sanshin Electronics since 1980,
when he was appointed as the Director. Mr. Matsunaga, who has deep knowledge of corporate
management as well as strong leadership, can be expected to strengthen both the decision-making
and supervisory functions of the Board of Directors. Therefore, he is judged as an appropriate
candidate to serve as Director of the Company and is being asked to continue to serve in thatcapacity.

Candidate No. 2

Reappointment

Toshiro Suzuki

Shares owned: 3,048 shares(born December 6, 1957)

Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)[Brief personal history, and title and role in the Company]
Mar. 1982:

Joined Sanshin Electronics Co., Ltd.

Apr. 2003:

General Manager of General Affairs Department

Jun. 2005:

General Manager of Corporate Strategy Department

Jun. 2008:

Director

Jun. 2014:

Representative Director, President

Aug. 2014:

Representative Director, President/COO

Jun. 2016:

Representative Director, COO (current)[Duties]
In charge of Auditing Office
Reason for nomination as a Director candidate:
Backed by an enormous reserve of knowledge regarding corporate management and management
strategy, Toshiro Suzuki has led the Group as President since 2014. Drawing on this wealth ofexperience, Mr. Suzuki can be expected to take a leading role in implementing the policies tostrengthen business capability of the Group. Furthermore, he can be expected to strengthen both
the decision-making and supervisory functions of the Board of Directors. Therefore, he is judged
as an appropriate candidate to serve as Director of the Company and is being asked to continue toserve in that capacity.

6

Candidate No. 3

Reappointment

Fumihide Kitamura

Shares owned: 3,009 shares
Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)(born September 15, 1957)[Brief personal history, and title and role in the Company]
Jan. 1985:

Joined Sanshin Electronics Co., Ltd.

Oct. 1995:

President (seconded) of SANSHIN ELECTRONICS (HONG KONG) CO., LTD.

Oct. 2007:

General Manager of Business Development Department, International Operations
Division

Oct. 2008:

Deputy Senior General Manager of International Operations Division

Apr. 2011:

Operating Officer, Deputy Senior General Manager of International Operations
Division

Jun. 2014:
Jun. 2016:

Director
Director, Senior Operating Officer (current)[Duties]
Supervisor of Device Business Group/In charge of Business Administration Department and IoTBusiness Unit /General Manager of Business Administration Department
Reason for nomination as a Director candidate:Fumihide Kitamura has served Sanshin Electronics for many years as a manager of overseas
subsidiaries. He was a driving force in the Sanshin Electronics Group’s overseas expansion.
Drawing on this wealth of experience, Mr. Kitamura can be expected to take a leading role instrengthening overseas business and new business, which have become increasingly important in
the device business. Furthermore, he can be expected to strengthen both the decision-making andsupervisory functions of the Board of Directors. Therefore, he is judged as an appropriate candidate
to serve as Director of the Company and is being asked to continue to serve in that capacity.

Candidate No. 4

Reappointment

Akio Misono

Shares owned: 5,185 shares(born June 24, 1959)

Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)[Brief personal history, and title and role in the Company]
Mar. 1982:

Joined Sanshin Electronics Co., Ltd.

Apr. 2003:

General Manager of Accounting Department

Oct. 2008:
General manager of Planning Department
Oct. 2012:
General Manager of Finance Department
Oct. 2013:
Deputy Senior General Manager of Finance & Accounting DivisionJun. 2014:
Director
Jun. 2016:
Director, Operating Officer
Jun. 2019:
Director, Senior Operating Officer (current)[Duties]
Senior General Manager of Finance & Accounting Division
Reason for nomination as a Director candidate:
Akio Misono has not only engaged in the fields of management planning, accounting and finance,
but also taken a leading role in Company’s IR activities over many years. Drawing on this wealthof experience, Mr. Misono can be expected to take a leading role in development of Company’sbusiness strategies and expansion of the portfolio of Company’s IR activities. Furthermore, he canbe expected to strengthen both the decision-making and supervisory functions of the Board of
Directors. Therefore, he is judged as an appropriate candidate to serve as Director of the Company
and is being asked to continue to serve in that capacity.

7

Candidate No. 5

Reappointment

Yuji Mori

Shares owned: 1,189 shares(born May 2, 1957)

Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)[Brief personal history, and title and role in the Company]
Mar. 1982:
Oct. 2002:
Oct. 2014:
Oct. 2015:

Joined Sanshin Electronics Co., Ltd.
General Manager of Video System Sales Department
Deputy Senior General Manager of Solution Marketing & Sales Division
Operating Officer, Deputy Senior General Manager of Solution Marketing &Sales Division
Director, Operating Officer
Director, Senior Operating Officer (current)

Jun. 2016:
Oct. 2019:[Duties]
Senior General Manager of Solution Marketing & Sales Division

Reason for nomination as a Director candidate:
Yuji Mori has extensive experience in imaging operations which are a pillar of the Company’ssolution business. He also has experience in leading the entire solution business since becoming
Deputy Senior General Manager in 2014. Drawing on this wealth of experience, Mr. Mori can be
expected to take a leading role in the development and execution of solution business strategies.
Furthermore, he can be expected to strengthen both the decision-making and supervisory functionsof the Board of Directors. Therefore, he is judged as an appropriate candidate to serve as Directorof the Company and is being asked to continue to serve in that capacity.

Candidate No. 6

Reappointment

Koji Sakamoto

Shares owned: 1,719 shares(born February 3, 1960)

Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)[Brief personal history, and title and role in the Company]
Mar. 1984:

Joined Sanshin Electronics Co., Ltd.

Apr. 2003:

General Manager of Personnel Department

Oct. 2013:

Deputy Senior General Manager of Administration DivisionJun. 2014:

Operating Officer, Senior General Manager of Administration DivisionJun. 2015:

Director

Jun. 2016:

Director, Operating Officer (current)[Duties]
Senior General Manager of Administration Division
Reason for nomination as a Director candidate:
Koji Sakamoto holds knowledge and experience in personnel strategy, corporate governance andinternal controls. Drawing on this wealth of experience, Mr. Sakamoto can be expected to take aleading role in construction of a flexible organizational structure and strengthening of Company’s
human resources. Furthermore, he can be expected to strengthen both the decision-making andsupervisory functions of the Board of Directors. Therefore, he is judged as an appropriate
candidate to serve as Director of the Company and is being asked to continue to serve in thatcapacity.

8

Mitsuhiro Ogawa

Candidate No. 7

Reappointment

Shares owned: 298 shares
Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)(born October 26, 1958)[Brief personal history, and title and role in the Company]
Apr. 1981:
Joined NEC Corporation
Apr. 2000:

Manager of Marketing Group at NEC Semiconductors (Malaysia) Sdn. Bhd.

Apr. 2004:

Manager of 1st Sales Business Department at NEC Electronics Corporation(currently Renesas Electronics Corporation)
Joined Sanshin Electronics Co., Ltd., Deputy Senior General Manager ofEastern Japan Marketing & Sales Division

Oct. 2014:
Jun. 2016:

Operating Officer, Director of 3rd Sales Unit in Device Business Group

Apr. 2017:

Operating Officer, Director of CE Unit in Device Business Group

Jun. 2017:

Director, Operating Officer (current)[Duties]
In charge of CE Unit and Sales Technology Unit in Device Business Group/Director of CE Unit
Reason for nomination as a Director candidate:
In addition to a proven track record at the former position in Renesas Electronics Corporation,
Mitsuhiro Ogawa has engaged in the device business over many years and has extensive working
experience in the vehicle-mounted system field where the Group aims to expand its business.
Drawing on this wealth of experience, Mr. Ogawa can be expected to take a leading role instrengthening Company’s sales activities in the vehicle-mounted system market where growth isprojected. Furthermore, he can be expected to strengthen both the decision-making and supervisory
functions of the Board of Directors. Therefore, he is judged as an appropriate candidate to serve as
Director of the Company and is being asked to continue to serve in that capacity.

Candidate No. 8

Reappointment

Hiroshi Harada

Shares owned: 387 shares(born December 25, 1962)

Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)[Brief personal history, and title and role in the Company]
Apr. 1985:
Joined NEC Corporation
Jul. 2006:
Manager of Manufacturing 3rd Sales Department in Kansai Manufacturing andProcessing Industries Sales Division at Kansai Branch
Apr. 2014:
Manager of Industries 2nd Sales Department at Chugoku Branch
Apr. 2016:
Seconded to the Company, Manager of Osaka Branch in Solution Marketing &Sales Division
Apr. 2017:
Apr. 2019:

Joined Sanshin Electronics Co., Ltd., Manager of Osaka Branch in Solution
Marketing & Sales Division
Operating Officer, Deputy Senior General Manager/Manager of Osaka Branchin Solution Marketing & Sales Division
Director, Operating Officer (Current)

Jun. 2019:[Duties]
Deputy Senior General Manager of Solution Marketing & Sales Division

Reason for nomination as a Director candidate:
Hiroshi Harada has a great deal of experience in the application business, which is a pillar of theGroup’s solution business. This includes experience at his previous employer NEC Corporation.
Drawing on this wealth of experience, Mr. Harada can be expected to take a leading role inexpanding business for the overall application business of the Group. Furthermore, he can be
expected to strengthen both the decision-making and supervisory functions of the Board of
Directors. Therefore, he is judged as an appropriate candidate to serve as Director of the Company
and is being asked to continue to serve in that capacity.

9Takeshi Uchimura

Candidate No. 9

Reappointment

Shares owned: 0 shares
Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)(born August 16, 1949)[Brief personal history, and title and role in the Company]

External

Apr. 1972:

Joined Sumitomo Bakelite Co., Ltd.

Independent

Jun. 2000:

Director

Aug. 2003:

Manager of subsidiaries in Belgium, Spain and the Netherlands

Jun. 2006:

Director & Managing Executive Officer

Jun. 2009:

Director & Executive Operating Officer

Jun. 2010:
Audit & Supervisory Board member (full-time)Jun. 2016:
External Director of the Company (current)
Reason for nomination as an External Director candidate and expected role:Takeshi Uchimura meets the Independence Standards required by the Company for the positionof External Director, and can be expected to provide extensive suggestions concerning all aspectsof the Company’s corporate management, based on his abounding experience in corporate
management as a director for listed companies. Furthermore, Mr. Uchimura can be expected toprovide extensive suggestions mainly regarding growth strategies for business overseas and thedevelopment of a corporate governance system, based on his experience as an Audit &Supervisory Board member, and his expertise in M&A, subsidiary restructuring, and in IR for
foreign institutional investors, as he was in charge of overseas subsidiaries. Therefore, Mr.
Uchimura is judged as an appropriate candidate to serve as an External Director of the Company
and is being asked to continue to serve in that capacity. Furthermore, as a member of theNomination and Remuneration Advisory Committee, by engaging in reports to the Board of
Directors regarding the nomination of candidates for Directors and Audit & Supervisory Board
members and reports regarding decisions related to Director compensation, Mr. Uchimura is
expected to strengthen the independence, objectivity, and accountability of functions of the Boardof Directors.

Candidate No. 10

Reappointment
External
Independent

Minoru Nishino

Shares owned: 0 shares(born August 16, 1950)

Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)[Brief personal history, and title and role in the Company]
Apr. 1974:
Joined The Daiwa Bank, Limited.
Jun. 2003:
Executive Officer of Resona Holdings, Inc.
Jun. 2004:
Director of Haseko Corporation
Apr. 2005:

Director & Managing Executive Officer

Jun. 2007:

Representative Director & Managing Executive Officer

Apr. 2010:

Representative Director & Executive Operating Officer

Jun. 2016:

External Director of the Company (current)[Important concurrent role]
External Director of Mori-Gumi Co., Ltd.
Reason for nomination as an External Director candidate and expected role:
Minoru Nishino meets the Independence Standards required by the Company for the position ofExternal Director, and can be expected to provide extensive suggestions concerning all aspects of
the Company’s corporate management, based on his abounding experience in corporate
management as a director for listed companies. Furthermore, Mr. Nishino can be expected toprovide effective suggestions, mainly in finance, such as effective fund operation reflecting theCompany's management strategy, based on his abounding work experience in a bank, in addition
to his central role in the corporate planning of a construction company. Therefore, Mr. Nishino is
judged as an appropriate candidate to serve as an External Director of the Company and is being
asked to continue to serve in that capacity. Furthermore, as a member of the Nomination andRemuneration Advisory Committee, by engaging in reports to the Board of Directors regarding thenomination of candidates for Directors and Audit & Supervisory Board members and reports
regarding decisions related to Director compensation, Mr. Nishino is expected to strengthen the
independence, objectivity, and accountability of functions of the Board of Directors.

10Candidate No. 11

Reappointment

Tatsuo Takeuchi

Shares owned: 0 shares(born October 23, 1950)

Rate of attendance at the Board of Directors meetings
during the current term: 18 times / 18 meetings (100%)[Brief personal history, and title and role in the Company]

External

Apr. 1974:

Joined Pioneer Corporation

Independent

Apr. 1998:
Dec. 2004:
Jun. 2006:

President of Pioneer High Fidelity Taiwan Co., Ltd.
President of Pioneer Electronics Asiacentre Pte. Ltd.
Executive Officer of Pioneer Corporation

Oct. 2008:

Managing Executive Officer

Jun. 2009:

Director, Senior Vice President

Jun. 2012:

Senior Managing Executive Officer

Jun. 2016:
External Director of the Company (current)
Reason for nomination as an External Director candidate and expected role:
Tatsuo Takeuchi meets the Independence Standards required by the Company for the position ofExternal Director, and can be expected to provide extensive suggestions concerning all aspects of
the Company’s corporate management, based on his abounding experience in corporate
management as a director for listed companies. Furthermore, Mr. Takeuchi can be expected toprovide suggestions mainly regarding growth strategies for the Group’s business overseas, basedon his experience as the president of a local subsidiary and his engagement for an electronics
manufacturer in sales overseas, such as in Europe, the United States or Asia. Therefore, Mr.
Takeuchi is judged as an appropriate candidate to serve as an External Director of the Company
and is being asked to continue to serve in that capacity. Furthermore, as a member of theNomination and Remuneration Advisory Committee, by engaging in reports to the Board of
Directors regarding the nomination of candidates for Directors and Audit & Supervisory Board
members and reports regarding decisions related to Director compensation, Mr. Takeuchi is
expected to strengthen the independence, objectivity, and accountability of functions of the Boardof Directors.

Candidate No. 12

Reappointment

Akihiro Fujioka

Shares owned: 0 shares(born January 20, 1957)

Rate of attendance at the Board of Directors meetings
during the current term: 14 times / 14 meetings (100%)[Brief personal history, and title and role in the Company]

External

Apr. 1979:

Independent

Apr. 2003:
Apr. 2008:
Jun. 2013:

Joined Mitsui Mutual Life Insurance Company (currently Taiju Life
Insurance Company Limited)
President of Sansei Capital Investment Co., Ltd.
Operating Officer of Mitsui Life Insurance Company Limited (currently Taiju
Life Insurance Company Limited)
Director & Senior Operating Officer

Jun. 2014:

Director & Vice President of Sumitomo Mitsui Asset Management
Company, Limited (currently Sumitomo Mitsui DS Asset Management
Company, Limited)
Jun. 2020:
External Director of the Company (current)
Reason for nomination as an External Director candidate and expected role:
In addition to satisfying the Independence Standards required by the Company for the position ofExternal Director, Akihiro Fujioka has abundant experience participating as a director in the
management of a member company of a major financial group. Accordingly, he can be expected
to provide valuable advice to the Company on a wide variety of management topics. Moreover,he brings to the table a wealth of experience in the financial field, and can particularly be
expected to advise the Company on investment risk management. Therefore, Mr. Fujioka is
judged as an appropriate candidate to serve as an External Director of the Company and is being
asked to serve in that capacity. Furthermore, as a member of the Nomination and Remuneration
Advisory Committee, by engaging in reports to the Board of Directors regarding the nominationof candidates for Directors and Audit & Supervisory Board members and reports regarding
decisions related to Director compensation, Mr. Fujioka is expected to strengthen the
independence, objectivity, and accountability of functions of the Board of Directors.
11Notes: 1. The candidates are decided by the Board of Directors based on reports received from the Nomination andRemuneration Advisory Committee. Key members of this Committee are Independent Directors and Audit &Supervisory Board members reported by the Company to the Tokyo Stock Exchange.
2. None of the above candidates have special vested interests with the Company.
3. Takeshi Uchimura, Minoru Nishino, Tatsuo Takeuchi and Akihiro Fujioka are candidates for External Director.
4. Currently, Takeshi Uchimura, Minoru Nishino, Tatsuo Takeuchi, and Akihiro Fujioka are Company’s External
Directors. The term of office for Takeshi Uchimura, Minoru Nishino, and Tatsuo Takeuchi shall be five (5) years
at the conclusion of this General Meeting of Shareholders. The term of office for Akihiro Fujioka shall be one(1) year at the conclusion of this General Meeting of Shareholders.
5. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company entered into an agreement respectively
with Takeshi Uchimura, Minoru Nishino, Tatsuo Takeuchi, and Akihiro Fujioka that limits their liability fordamages prescribed in Article 423, Paragraph 1 of the same Act. If the reappointment of them is approved as
proposed at this General Meeting of Shareholders, the Company will continue the said agreement with them. In
each case the limit on their liability for damages under the agreement coincides with the legally stipulated
amounts.
6. The Company designated Takeshi Uchimura, Minoru Nishino, Tatsuo Takeuchi, and Akihiro Fujioka as
Independent Directors as per the provisions of the Tokyo Stock Exchange, and gave notice to this effect to theTokyo Stock Exchange. If the reappointment of them is approved as proposed at this General Meeting of
Shareholders, the Company will designate them as Independent Directors as per the provisions of the Tokyo
Stock Exchange again, and will give notice to this effect to the Tokyo Stock Exchange. The Company has engaged
in sales transactions with Pioneer Corporation, the former place of employment for Tatsuo Takeuchi. However,
the transaction amount was an insignificant amount that was less than 1% of the Group’s consolidated net sales.
Therefore, we have judged that independence from management of the Company has been secured.
7. Pursuant to Article 430, Paragraph 3, Item 1 of the Companies Act, the Company has entered into a liability
insurance contract for officers, etc., with insurance companies. An overview of the insurance contract is listed on
page 14 of the Business Report “IV. Directors and Audit & Supervisory Board Members (3) Overview of Liability
Insurance Contract for Officers, etc.” Each candidate will become insured under the insurance contract upon
being nominated and appointed as a Director.
Furthermore, we plan to renew the insurance contract with the same contents at the next renewal period.

12Item 4: Appointment of One ( 1 ) Substitute Audit & Supervisory Board Member
Katsuya Sato was elected as a substitute Audit & Supervisory Board member at the 69th Ordinary General
Meeting of Shareholders held on June 26, 2020, and his term of office as a substitute Audit & Supervisory Board
member expires at the closing of this General Meeting of Shareholders. To prepare for a contingency in which
the Company does not have the number of Audit & Supervisory Board members required by laws andregulations, the Company hereby proposes the election of one (1) substitute Audit & Supervisory Board
member.
Approval for this proposal has been obtained from the Audit & Supervisory Board.
The candidate for the position of substitute Audit & Supervisory Board member is as follows:

Katsuya Sato (born April 24, 1957)
Reappointment
External

Shares owned: 0 shares[Brief personal history and title]
Apr. 1990:

Registered as an attorney-at-law

Apr. 1995:

Permanent member of Tokyo Bar Association
Established Takagi & Sato Law Office
Review committee member of the Japan Legal Support Center, Tokyo
BranchExternal Audit & Supervisory Board member of the Company

Apr. 2006:
Jun. 2007:

Jun. 2015:
Retired from External Audit & Supervisory Board member of the Company[Important concurrent role]
Lawyer of Takagi & Sato Law Office
Reason for nomination as a Substitute External Audit & Supervisory Board member candidate:
Katsuya Sato satisfies the Independence Standards required by the Company for the position ofExternal Audit & Supervisory Board member. Furthermore, his high-level specialized expertiseand extensive knowledge/experience as a lawyer will contribute to strengthening the Company’s
auditing system. He can be expected to objectively supervise management of the Company, and toprovide accurate advice and recommendations. Therefore, Mr. Sato is judged as an appropriate
candidate to serve as a substitute External Audit & Supervisory Board member of the Company
and is being asked to continue to serve in that capacity.
Notes: 1. The candidate is decided by the Board of Directors based on reports received from the Nomination andRemuneration Advisory Committee. Key members of this Committee are Independent Directors and Audit &Supervisory Board members reported by the Company to the Tokyo Stock Exchange.
2. The above candidate has no special vested interests with the Company.
3. The candidate is a candidate for the substitute External Audit & Supervisory Board member. If the candidate
assumes the office of the External Audit & Supervisory Board member, the Company will designate the candidate
as an Independent Audit & Supervisory Board member as per the provisions of the Tokyo Stock Exchange, andwill give notice to this effect to the Tokyo Stock Exchange.
4. Although the candidate does not have past experience in corporate management other than having served as anexternal Audit & Supervisory Board member, the Company judges that, as described in the reasons forappointment, the candidate will be able to implement the duties as the External Audit & Supervisory Board
member appropriately.
5. If the candidate assumes the office of the External Audit & Supervisory Board member, pursuant to Article 427,
Paragraph 1 of the Companies Act, the Company will enter into an agreement with the candidate that limits his
liability for damages prescribed in Article 423, Paragraph 1 of the same Act. However, the limit on his liability
for damages under this agreement coincides with the legally stipulated amounts.
6. Pursuant to Article 430, Paragraph 3, Item 1 of the Companies Act, the Company has entered into a liability
insurance contract for officers, etc., with insurance companies. An overview of the insurance contract is listed on
page 14 of the Business Report “IV. Directors and Audit & Supervisory Board Members (3) Overview of Liability
Insurance Contract for Officers, etc.” The candidate will become insured under the insurance contract upon being
nominated and appointed as an External Audit & Supervisory Board member.

13

[Reference Material]'Notice Regarding Planned Acquisition of Treasury Stock and Tender Offer of Treasury Stock andReduction of General Reserve, Capital Reserve, and Retained Surplus'
released on May 12, 2021 (excerpt)
1. Objectives of the Tender Offer
The Company has developed two types of business, i.e., its device business and solution business. With respect
to its device business, in addition to sales of semiconductors (such as system LSIs, microcomputers, liquid-crystal
display driver ICs, and memory) and electronic components (such as connectors, capacitors, and circuit boards)
mainly to electronics manufacturers, the Company has provided technical support for software development,
module development, etc. With respect to its solution business, the Company has provided optimal ICT
infrastructures to each of its customers by combining network devices, security products, enterprise systems, thecloud, and data centers. Further, the Company handles innovative technology, such as AI/IoT, and technology
which continues to evolve by cloud native computing, and deals with everything from designing and building tooperation and maintenance. In the V70 Medium-term Management Plan, a five-year plan with the fiscal year
ending March 31, 2021 as the final year, the outline of which was announced in the “Reference Materials for
Investor Meeting for the Year ended March 2016” dated May 18, 2016 (the “V70”), the Company aimed at early
realization of a 5% ROE and an ordinary profit ratio of 2%, and the Company planned to improve profitability
through transformation of its business portfolio with respect to the device business and to establish a higher
revenue base by enhancing its existing business and creating a business which deals with new technology, such as
the cloud, with respect to the solution business.
However, in the fiscal year ending March 31, 2017, which is the first year of V70, the device business was affectedby rapid exchange fluctuations, decreases in the product range caused by changes in the product strategy ofRenesas Electronics Corporation (“Renesas Electronics”) which is a major supplier, and other events. As a result,as shown by the fact that consolidated ordinary losses of 952 million yen and net losses attributable to shareholdersof the parent company of 1,575 million yen were recorded, consolidated business performance was stagnant
compared to the fiscal year ending March 31, 2016, which is the previous fiscal year (consolidated ordinary profits
of 1,500 million yen and net profits attributable to shareholders of the parent company of 977 million yen), andalso fell below the forecasts for consolidated business performance for the fiscal year ending March 31, 2017
(ordinary profits of 1,350 million yen and net profits and/or[loss attributable to shareholders of the parent companyof 980 million yen) announced in the “Summary of Financial Results for Fiscal Year Ended March 31, 2016 [Japan
Standards] (Consolidated)” dated May 13, 2016. Because it was expected that the business environment
surrounding the Company would remain harsh, in the “Notice Regarding Medium-Term Management Plan (V70)”
dated May 15, 2017, the Company announced that 1) the Company had revised part of the quantitative targets forthe fiscal year ending March 31, 2021, which is the final year of V70, and aimed at consolidated ordinary profits of
3 billion yen as its new quantitative target, and 2) in order to ensure the achievement of a 5% ROE, which was thetarget for the final year, the Company would take measures to enhance its capital efficiency through increasing its
consolidated payout ratio to approximately 100% during the three periods from the fiscal year ending March 31,2018 to the fiscal year ending March 31, 2020, and also through acquiring treasury stock while setting the
maximum acquisition cost at 20 billion yen for a total of the three periods.
Under these circumstances, the Company began verifying the progress and outlook for the achievement of V70
from the middle of January 2018. We were able to confirm positive performance transitions in terms of businessprofit, but we recognized that enhancement of capital efficiency in order to achieve a 5% ROE (the aforementioned
quantitative target) was an urgent task. Consequently, the Company began considering the acquisition of its
14

treasury stock because enhancement of capital efficiency, such as earnings per share (EPS) and ROE, and returnsof profits to our shareholders, could be expected by acquiring a certain amount of the Company’s treasury stock ina relatively short period of time. On May 14, 2018, the Company announced the tender offer of its treasury stock
totaling approximately 19.7 billion yen for which the tender offer period was from May 15, 2018 to June 11, 2018(the “Previous Tender Offer”) and made the Previous Tender Offer as a result of taking into consideration the factthat its financial situation and prior and existing dividend policy would not be significantly affected, and also
taking into consideration the most recent price transition of the Company’s stock.
Subsequently, the Company made efforts to achieve the quantitative targets for the final year (fiscal year ending
March 31, 2021) of V70 (i.e., a 5% ROE and consolidated ordinary profits of 3 billion yen). However, during
and after the fourth quarter of the fiscal year ending March 31, 2020, the COVID-19 pandemic resulted in thecontinuous stagnation of many business operations, not only of the Group but also of our customers and suppliers.
Furthermore, it is unclear when the COVID-19 pandemic will end. Additionally, the cancellation of thedealership agreement with Renesas Electronics as of the end of June 2020 resulted in an unavoidable impact on theachievement of V70 quantitative targets. Thus, the Company disclosed the “Notice Regarding the Withdrawal of
the V70 Medium-Term Management Plan Quantitative Targets” on May 27, 2020. In the notice, the Company
stated that, because it judged that it would be difficult to achieve the quantitative targets (i.e., a “5% ROE ” and“consolidated ordinary profits of 3 billion yen”) in the fiscal year ending March 31, 2021, which is the final year of
V70, it withdrew these quantitative targets. Moreover, in regard to the future medium-term management plan,
while formulating a medium-term management plan with new quantitative targets is expected to require asubstantial amount of time due to the extreme uncertainty of the management environment, because ROE andordinary profits will continue to be the Group’s important management indices, the Company also disclosed its
policy that the Company, for the time being, will focus on enhancing the required business infrastructure with theaim of improving these two indices. Further, in parallel with these efforts, from late August 2020, the Company
began considering and formulating a new medium-term management plan with the fiscal year ending March 31,
2022 as the first year and the fiscal year ending March 31, 2024 as the final year (the “New Medium-termManagement Plan”). In considering and formulating the New Medium-term Management Plan, at theCompany’s Board of Directors meeting held on February 3, 2021, the Company recognized that the enhancementof its capital efficiency with the aim of optimizing its capital structure by allocating capital surplus generated fromthe following situations to the purchase of its treasury stock could be an effective option which would contribute to
the maintenance or improvement of the Company’s medium- and long-term corporate value given, among otherthings, the following situations: 1) while the business was downsized as shown by the consolidated sales for the
fiscal year ending March 31, 2021 (112.791 billion yen) which decreased by approximately 35 billion yen from theconsolidated sales for the fiscal year ending March 31, 2019 (147.879 billion yen) due to the fact that, in thevolume business specialized in a finance function (the Company fills the temporal gap between the period fromcollection from customers to payment to suppliers), the Company had withdrawn from unprofitable businessduring the fiscal year ending March 31, 2020, the fact that the dealership agreement with Renesas Electronics forthe device business had been terminated as of the end of June 2020, and other facts, the borrowings necessary forthe finance function decreased due partly to the withdrawal from the unprofitable business and there was room forcapital optimization to a certain degree; 2) through promoting business structural reforms for a higher rate of returnby enhancing additional services (i.e., charged services) using the enhancement of AI/IoT solution business as wellas individual sales and final product sales of the semiconductors and electronic components to growth areas (suchas the industrial robot market) as beachheads, it would be expected that the ratio of service-type business, forwhich the purchase amount would be low relative to the sales and accounts receivable terms would be shorter incomparison with individual sales of the semiconductors and electronic components, would increase, and that theincrease in the capital requirement would be restrained; and 3) no large-scale M&A with other companies, etc, wasplanned for the time being. Subsequently, in the “Notice Regarding the New Medium-Term Management Plan”
15dated February 3, 2021, the Company announced these consideration processes as the outline of the New Mediumterm Management Plan and stated that the details thereof would be announced at the time of the announcement of
the settlement of accounts for the fiscal year ending March 31, 2021. The details of the outline of the New
Medium-term Management Plan are mainly as follows: 1) the Company recognizes a ROE and ordinary profits asimportant management indices, and aims to achieve a 5% ROE at an early stage; 2) with regard to the device
business, the Company rebuilds profits by concentrating on growth markets, and improves its profit structure byincreasing the efficiency of existing business and streamlining the existing business; 3) with regard to the solution
business, the Company strengthens its cloud business based on the Sanshin Data Center, and seeks to expand its
business domain through technological capability and collaboration with partners; and 4) with regard to capitalefficiency, the Company aims to reduce assets (such as through liquidation of receivables, reduction ofstrategically-held shares), and considers optimizing capital in conjunction with improving profitability throughbusiness structural reforms, and considers then carrying out a dividend increase as well as the acquisition andcancellation of treasury stock within the period of the New Medium-term Management Plan, while maintaining its
financial soundness.
On the other hand, as of June 22, 2015, Mr. Yoshiaki Murakami (“Mr. Murakami”), who is considered to be ashareholder of ATRA K.K. (“ATRA”), a parent company of City Index Eleventh Co., Ltd (“City Index Eleventh”),
the largest shareholder of the Company, held 1,490,400 shares of the Company’s stocks, together with those heldby companies related to Mr. Murakami and persons related to Mr. Murakami (Note 1), (holding rate as of the endof March 2015 (Note 2) of 5.29%) according to the Statement of Large-Volume Holdings submitted by
Mr. Murakami on June 29, 2015. Subsequently, according to the Statement of Changes to the Statement ofLarge-Volume Holdings No. 10 submitted by Mr. Murakami on December 4, 2015, Mr. Murakami transferred allof his stocks in the Company to C&I Holdings Co., Ltd. (“C&I Holdings”), one of the companies related to
Mr. Murakami, on November 27, 2015, and since that time, he has not directly held the Company’s stocks.
However, according to the Statement of Changes to the Statement of Large-Volume Holdings No. 34 submitted by
C&I Holdings on June 18, 2018, the companies related to Mr. Murakami and the persons related to Mr. Murakami
held 11,397,500 shares of the Company’s stocks in total (holding rate as of the end of March 2018 (Note 3) of
40.25%) as of June 11, 2018. In addition, the companies related to Mr. Murakami and the persons related to
Mr. Murakami transferred the Company’s stocks to the Company through the application for the Previous Tender
Offer, and according to the Statement of Changes to the Statement of Large-Volume Holdings No. 35 submitted by
C&I Holdings on July 10, 2018 after the Previous Tender Offer, the total number of the Company’s stocks held by
the companies related to Mr. Murakami and the persons related to Mr. Murakami was 4,070,900 shares (holding
rate (Note 4) of 21.07%) as of July 3, 2018. Afterwards, the companies related to Mr. Murakami and the persons
related to Mr. Murakami acquired the Company’s stocks through on-market trading, and transfer, etc., of theCompany’s stocks has been carried out between the companies related to Mr. Murakami and the persons related to
Mr. Murakami. According to the Statement of Changes to the Statement of Large-Volume Holdings No. 47
dated November 11, 2020, which is the most recent published material, as of November 4, 2020, City Index
Eleventh held 6,590,300 shares of the Company’s ordinary stocks (holding rate of 34.12%), and S-Grant. Co., Ltd.
(“ S-Grant. Co., Ltd.”; together with City Index Eleventh, “City Index Eleventh, etc.”), the joint holder of theCompany’s stocks, held 118,800 shares of the Company’s ordinary stocks (holding rate of 0.62%). As of
November 4, 2020, except for City Index Eleventh, etc., the Company is not aware of any companies related to
Mr. Murakami or persons related to Mr. Murakami holding the Company’s stocks.
(Note 1)
“Companies related to Mr. Murakami” refers to companies shown as submitters or joint holders in
the Statement of Large-Volume Holdings submitted by Mr. Murakami on June 29, 2015 and theStatements of Changes to the Statement of Large-Volume Holdings submitted subsequently (City
Index Eleventh, S-Grant. Co., Ltd., C&I Holdings, ATRA, Minami-aoyama Real Estate K.K., ReBuild K.K., Office Support K.K., Reno Co., Ltd , City Index Third, Co., Ltd., and ATRA Holdings
16

(Note 2)(Note 3)(Note 4)K.K.), and “persons related to Mr. Murakami” refers to individuals shown as joint holders in theStatements of Changes to the Statement of Large-Volume Holdings (Ms. Aya Nomura,
Mr. Hironao Fukushima, and Mr. Fuminori Nakashima.
“Holding rate as of the end of March 2015” means the rate in relation to the number of stocks(28,179,257 shares) obtained by subtracting the number of treasury stocks held by the Company
as of March 31, 2015 (1,102,116 shares) from the total number of the Company’s shares
outstanding as of the same date (29,281,373 shares) shown in the Summary of Financial Resultsfor Fiscal Year Ended March 31, 2015 announced by the Company on May 13, 2015 (rounded off
to two decimal places).
“Holding rate as of the end of March 2018” means the rate in relation to the number of stocks(28,317,577 shares) obtained by subtracting the number of treasury stocks held by the Company
as of March 31, 2018 (963,796 shares) from the total number of the Company’s shares
outstanding as of the same date (29,281,373 shares) shown in the Summary of Financial Resultsfor Fiscal Year Ended March 31, 2018 announced by the Company on May 14, 2018 (rounded off
to two decimal places).
“Holding rate” means the rate in relation to the number of stocks (19,316,708 shares) obtained bysubtracting the number of treasury stocks held by the Company as of March 31, 2021
(4,964,665 shares) from the total number of the Company’s shares outstanding as of the same date(24,281,373 shares) shown in the Summary of Financial Results for Fiscal Year Ended March 31,
2021 announced by the Company on May 12, 2021 (rounded off to two decimal places;
hereinafter the same applies to the calculation of the holding rate). Hereinafter the same applies.

From late April 2015, which was when Mr. Murakami acquired the Company’s stocks at the latest, the Company
continued dialogue with Mr. Murakami with regard to the Company’s management strategy and capital policy.
The Company seriously considered Mr. Murakami’s opinion to the effect that business integration with asemiconductor trading company should be carried out with the aim of industrial reorganization, and although there
was a candidate with whom the Company discussed directly, no project which was expected to generate synergy
could actually be found. Based on this, the Company decided to aim to improve its corporate value through its
own structural reform. As a result, since early November 2019, a difference in opinion arose between the
Company and Mr. Murakami. Although the Company continued dialogue with Mr. Murakami with regard to theCompany’s management strategy and capital policy afterwards, the difference in opinion was not resolved.
Comprehensively taking into account the status of consideration of the New Medium-term Management Plan
above, including the Company’s capital policy, as well as the status of dialogue with Mr. Murakami, theCompany’s business environment, the Company’s business outlook, the stock market condition in the COVID-19
related confusion, at the meeting of the Company’s Board of Directors held on September 16, 2020, the Company
resolved to start to consider acquisition of the treasury stocks and to consider carrying out such acquisition througha tender offer of the treasury stocks as the specific acquisition method of treasury stock given that 1) it is notrealistic to acquire the treasury stock at a large scale through purchase from the market in light of the liquidity of
the Company’s ordinary stocks and 2) the tender offer method, which enables an opportunity to be secured for ourshareholders to consider the application while taking into consideration the trend of the market stock prices, isconsidered to be appropriate from the perspective of equality between shareholders and transparency of thetransaction. One of the purposes of such resolution is to stabilize the management through, among other things,
facilitation of business implementation, by means of acquiring the Company’s stocks from City Index Eleventh,which (according to the Statement of Changes to the Statement of Large-Volume Holdings No. 46 submitted by
the same company on August 14, 2020) held 6,463,400 shares of the Company’s ordinary stocks (holding rate of
33.46%) as of August 6, 2020, and lowering the ratio of the Company’s stocks held by City Index Eleventh by17

approximately 20%.
In addition, in considering and determining the tender offer of the treasury stocks, the Company resolved toestablish the Capital Policy Review Committee, which consists of the independent external directors andindependent external Audit & Supervisory Board Members of the Company, at the meeting of the Company’s
Board of Directors held on September 16, 2020, in order to verify whether the tender offer will contribute to such
improvement of the Company’s medium- and long-term corporate value and to confirm conditions for contribution
to improvement cautiously. On the same date, the Capital Policy Review Committee was established. The
Capital Policy Review Committee consists of six members, specifically, Takeshi Uchimura, Minoru Nishino,
Tatsuo Takeuchi, and Akihiro Fujioka, all of whom are the independent external directors of the Company, as wellas Shohei Yamamoto and Kuniharu Kezuka, both of whom are the independent external Audit & Supervisory
Board Members of the Company. Each member satisfies the requirements of independence and externality
relating to the independent external directors or independent external Audit & Supervisory Board Members of theCompany and does not have any transaction relationship, personnel relationship, or other interests making theindependence of such member doubtful with respect to Mr. Murakami, who is considered to be a shareholder of
ATRA, a parent company of City Index Eleventh, or his relatives or any entity that is controlled by him or onwhich he has material impacts.
After that, the Company held meetings of the Capital Policy Review Committee four times during the period from
September 2020 to November 2020, and in the meetings, the rationality of the tender offer of the treasury stocks,
the soundness of the Company’s finances after the tender offer, the impact on the Company’s management of theexistence of the major shareholder, City Index Eleventh, and other issues were discussed. Based on these
discussions, the Company determined to start considering implementation of the tender offer of the treasury stocks
at the meeting of the Company’s Board of Directors held on November 18, 2020, and on December 22, 2020, theCompany explained the status of consideration by the Company to City Index Eleventh, etc. and confirmed theintentions of City Index Eleventh, etc., towards implementation of the tender offer of the treasury stocks.
Specifically, on the same date, upon the formulation of the New Medium-term Management Plan, the Company
explained that the enhancement of its capital efficiency with the aim of the capital optimization in conjunction withimprovement of profitability through its own business structural reforms would contribute to the maintenance or
improvement of the Company’s medium- and long-term corporate value and that the Company was considering
the tender offer of the treasury stock as a method for the capital optimization. In response to this, on
December 25, 2020, the Company confirmed that the intention of City Index Eleventh, etc., is that they may agree
to sell their stocks in the Company if the Company makes the tender offer of the treasury stock. Based on theconfirmation of the intentions of City Index Eleventh, etc., the Company further considered the New Medium-termManagement Plan including financial soundness and announced the consideration processes as the outline of the
New Medium-term Management Plan in the “Notice Regarding the New Medium-Term Management Plan” dated
February 3, 2021.
Based on the above circumstances, on March 2, 2021, the Company reported to the Company’s Capital Policy
Review Committee the progress of consideration of the New Medium-term Management Plan above, an outline of
the tender offer of the treasury stocks, and the intention of the Company’s major shareholder, City Index Eleventh.
Furthermore, with respect to implementation of the tender offer of the treasury stocks by the Company, theCompany consulted with the Capital Policy Review Committee concerning the rationality of the purposes andtransaction conditions thereof, the fairness of the procedures, the conditions to be satisfied for the tender offer of
the treasury stocks contributing to improvement of the Company’s medium- and long-term corporate value, andthe appropriateness of the commencement of negotiation with the Company’s major shareholder, City Index
Eleventh, relating to implementation of the Tender Offer. Specifically, as the report to the Capital Policy Review
18

Committee, the Company has explained that, through promoting business structural reforms for a higher rate of
return in the New Medium-term Management Plan by enhancing additional services (i.e., charged services) using
the enhancement of AI/IoT solution business as well as individual sales and final product sales of thesemiconductors and electronic components to growth areas (such as the industrial robotics market) as beachheads,
the increase in the capital requirement will be restrained in connection with an increase in the ratio of service-typebusiness, for which the purchase amount will be low relative to the sales and accounts receivable terms will be
shorter in comparison with individual sales of the semiconductors and electronic components, and explained that
the Company’s policy is that the Company aims to improve its corporate value by improving capital efficiency
through returning to shareholders the surplus expected to be generated from the restraining of the increase in thecapital requirement, and then reported that 1) it is expected to achieve a 5% ROE during the period of the New
Medium-term Management Plan by carrying out a tender offer of treasury stock at a scale in which the number ofshares to be acquired is up to approximately 7 million shares, and the purchase price is up to approximately 15.7
billion yen and 2) an increase of a distributable amount is necessary for the acquisition of the treasury stock at thescale and, in order to increase the distributable amount, it is necessary to reduce the general reserve, capitalreserve, and retained surplus (and in order to do so, it is necessary to obtain approval for the agenda regarding the
reduction thereof at the Ordinary General Meeting of Shareholders of the Company which is scheduled to be heldin June 2021). In addition to these, the Company has also reported about the status of its dialogue with City
Index Eleventh, who is a major shareholder, and reported that the same company has an intention to agree to sell
its ordinary stocks in the Company.
The Company’s Capital Policy Review Committee carefully discussed the matters above three times, on March 2,
March 11, and March 15, 2021 taking into account the circumstances above and, on March 17, 2021, submitted to
the Company’s Board of Directors the report to the effect that, on the following preconditions, the Tender Offer
contributes to maintenance or improvement of the Company’s medium- and long-term corporate value and that it
is appropriate for the Company to commence negotiation with City Index Eleventh regarding implementation of
the Tender Offer: 1) prior to the implementation of the Tender Offer, the Company executes with City Index
Eleventh a tender offer application agreement in which the parties agree that City Index Eleventh applies for theTender Offer; and 2) Mr. Murakami and his related persons including City Index Eleventh agree with the Company
that they will not acquire the stocks in the Company after the Tender Offer (the “Report Dated March 17”). In thereport, the Capital Policy Review Committee pointed out that application by major shareholders is essential andprior negotiation with major shareholders to a certain degree is unavoidable in order to achieve a 5% ROE, which
is its quantitative target, at an early stage and to succeed in the tender offer of the treasury stocks at this scale, andthat it is appropriate to consider that the purposes include the facilitation of implementation of the Company’sbusiness and stabilization of management through giving major shareholders the opportunity of withdrawal frominvestment in the Company’s stocks because the committee determined that it is best for the improvement of theCompany’s corporate value to aim to achieve the New Medium-term Management Plan while maintaining theindependence of the Company. Furthermore, comprehensively considering the factors above as well, the Capital
Policy Review Committee stated that the Tender Offer does not aim for self-protection of the Company’s
management, or interests of major shareholders or any other particular third party only, and that the purposes
thereof were found to be reasonable.
Based on the details of the discussions at the Capital Policy Review Committee and the content of the Report
Dated March 17, the Company formulated the New Medium-term Management Plan with the fiscal year ending
March 31, 2024 as the final year more concretely. In addition, under such medium-term management plan, theCompany proceeded with considering internally in the direction of achieving a 5% ROE, which is its quantitative
target, at an early stage, by carrying out the acquisition of treasury stock in order to promote business structuralreforms for a higher rate of return and for the capital optimization in conjunction with improvement of profitability
through business structural reforms. On the basis of such consideration, on March 17, 2021, the Company
19

determined that, in order to achieve a 5% ROE at an early stage, the tender offer of treasury stock at a scale ofwhich the number of shares to be acquired is up to approximately 7 million shares, and the purchase price is up to
approximately 15.7 billion yen in total, should be carried out. Moreover, application by City Index Eleventh isessential in order to succeed in the tender offer of treasury stock at this scale, and therefore, the Company decided
that it should acquire treasury stock from City Index Eleventh. For that purpose, prior negotiation with City
Index Eleventh to a certain degree is unavoidable. Accordingly, on April 23, 2021, the Company started
discussions with City Index Eleventh on the terms and conditions, including the purchase price, etc., for
implementing the tender offer of treasury stock.
The Company held discussions with City Index Eleventh regarding the tender offer of treasury stock twice, on
April 23, 2021, and April 27, 2021. In those discussions, the Company was told by City Index Eleventh that suchtender offer will contribute to the improvement of the shareholder value for all of the Company shareholders aslong as the tender offer is implemented as part of measures to practice ROE management (improvement of capitalefficiency) and improve shareholder value, and that if the Company carries out the Tender Offer, City Index
Eleventh and S-Grant. Co., Ltd., the joint holder of the Company stock, will apply all the Company ordinary stockthey hold (Note 5) for the Tender Offer. As of May 7, 2021, the Company has received a document stating theabove intention from City Index Eleventh.
(Note 5)
According to the Statement of Changes to a Statement of Large-Volume Holdings No. 47 submitted
by City Index Eleventh, etc., to the Director-General of the Kanto Finance Bureau on November 11,
2020, as of November 4, 2020, the Company ordinary stock held by City Index Eleven is6,590,300 shares (holding rate of 34.12%), the Company ordinary stock held by S-Grant. Co., Ltd. is118,800 shares (holding rate of 0.62%), and the total of shares held by City Index Eleven, etc., is6,709,100 shares (holding rate of 34.73%).
After being informed of the above negotiation details, the Capital Policy Review Committee continued theirconsideration and held discussions on April 28 and May 11, 2021. In particular, it was reported in those
discussions that, as of April 28, 2021, the Company is expecting to receive a document from City Index Eleventh
stating that it intends to apply for the Tender Offer, and that, as of May 11, 2021, the Company has received theaforementioned document from City Index Eleventh, and the status of discussions concerning the terms andconditions including the purchase price was reported as well. Further, the Capital Policy Review Committee
deliberately discussed the fairness of the Tender Offer procedures and the transaction conditions of the Tender
Offer including the purchase price. Consequently, they submitted a report (“Reported Dated May 12”) to theCompany’s Board of Directors, stating that the Tender Offer implementation, with the purpose of achieving a 5%
ROE, which is its quantitative target, at an early stage, by carrying out the large-scale return to shareholders, whichaims for capital optimization due to business structural reforms under the New Medium-term Management Plan,and including the facilitation of implementation of the Company’s business and stabilization of management as
part of such purposes, will contribute to the maintenance or improvement of the Company’s medium- and longterm corporate value; that the transaction conditions of the Tender Offer are rational; that the considerations anddiscussions with City Index Eleventh concerning the Tender Offer are conducted after establishing the Capital
Policy Review Committee, which consists of the independent external directors and independent external Audit &Supervisory Board Members of the Company, and therefore, the fairness of procedures is secured; and that, inlight of the terms and conditions of the Tender Offer at present, there are no additional conditions in particular thatneed to be satisfied to ensure that the Tender Offer will contribute to the improvement of the Company’s mediumand long-term corporate value.
After receiving the Report Dated May 12, the Company announced today its V73 New Medium-term Management
Plan, which is a three-year plan with the fiscal year ending March 31, 2024 as the final year. In that plan, the20Company set its target to achieve a 5% ROE at an early stage, and stated that, as part of specific realization
measures, in the device business, it will (a) focus on improving its profitability by an increase in sales through the
expansion of the product lineup for products of overseas manufacturers and cost reduction through the review ofsales operations, and (b) promote portfolio reform by developing new businesses with a higher rate of return, suchas through sales of AI/IoT solutions mainly targeting the manufacturing/infrastructure market, and the expansionof services to provide relevant services in the robotics market using final product sales of parts/modules as abeachhead; for the solution business, it will (a) expand its application services using cloud infrastructure andendeavor to establish a subscription business model, (b) focus on enhancement of the latest digital technologicalcapability such as AI/IoT, 5G, and virtualization, so that it will be able to seize business opportunities associatedwith the development of DX, and (c) endeavor to increase its customers by proposing solutions through providing
consultations with thorough knowledge of the customers’ practices and through consistent ICT technology fromsystem design, system construction, to the operation and maintenance thereof, and by co-creation throughcooperating with partners. The Company also stated in the same plan that it will proceed with business structuralreforms and endeavor to expand its business in the growth market with an eye toward medium- and long-term
continuous growth of the Company. The New Medium-term Management Plan also refers to the plan that theTender Offer will be implemented in order to achieve a 5% ROE, which is the quantitative target, at an early stage.
For determining the purchase price in the Tender Offer (“Tender Offer Price”), considering the fact that theCompany’s ordinary stock is listed in the First Section of the Tokyo Stock Exchange and that acquisition oftreasury stock by listed companies is often carried out through purchasing shares from the market through financial
instrument exchange, and by placing importance on clarity and objectivity of the standard, we conducted an
examination by using the market price of the Company’s ordinary stock as a basis. Further, although generally,
net assets per share on a consolidated basis is referred to when considering the share value, from the perspective ofrespecting the interests of shareholders who continue to own the Company’s ordinary stock without applying for
the Tender Offer, the Company has decided to take into account that, when considering the Tender Offer Price, thelevel of the price shall not exceed the net assets per share on a consolidated basis. In addition, the Company
discussed the Tender Offer Price with City Index Eleventh twice, on April 23 and April 27, 2021, and confirmedthat City Index Eleventh hope to determine that the net assets per share on a consolidated basis is the Tender Offer
Price as a condition for applying for the Tender Offer. Under the idea that promoting the New Medium-termManagement Plan as well as increasing capital efficiency through, among other means, capital optimization byprofitability improvement through the business structural reform, tender offer of treasury stocks, and a dividend
increase will contribute to the maintenance or improvement of the Company’s medium- and long-term corporate
value, as well as taking into account the fact that implementation of the Tender Offer and application by City Index
Eleventh is essential for the achievement of the target established in the New Medium-term Management Plan, as
well as the increase of profitability and capital efficiency through implementation of the Tender Offer, theCompany gave unofficial consent to City Index Eleventh with regard to setting the Tender Offer Price as2,249 yen, which is equal to the net assets per share on a consolidated basis as of the end of the fiscal year ending
March 31, 2021, on April 27, 2021.
In addition, to secure fairness in the calculation of the Tender Offer Price, the Company requested
calculation of the value of the Company’s ordinary stock to IR Japan, Inc. (“IR Japan”) and Plutus Consulting Co.,Ltd (“Plutus”) as third party calculation institutions which are independent from the Company. The Company
referred to the calculation results (For detailed calculation results, please refer to “3. Tender Offer Outline - (3)Basis for Calculation of Tender Offer Price 1) Basis for Calculation” below.) in the share valuation report obtained from IR Japan as of May 11, 2021 (“IRJapan’s Share Valuation Report”) and the share valuation report obtained from Plutus as of May 11, 2021 (“Plutus’
Share Valuation Report”) in calculating the Tender Offer Price. IR Japan and Plutus are not affiliated parties of21

the Company and City Index Eleventh, etc., and do not have any material interests in the Tender Offer. Further,
the Company did not obtain an evaluation for the fairness of the Tender Offer Price (fairness opinion) either fromIR Japan or Plutus.
Moreover, while referring to the market price of the Company’s ordinary stock, the Company has taken into
account that, amongst others, if the Tender Offer Price is set at 2,249 yen, which is the same amount as the net
assets per ordinary stock of the Company on a consolidated basis as of the end of the fiscal year ending March 31,
2021, such amount is within the range of the stock value per share of the Company’s stock calculated by thediscounted cash flow method (“DCF Method”) in the IR Japan’s Share Valuation Report (i.e., 2,062 yen to2,449 yen), and within the range of the stock value per share of the Company’s stock calculated by the DCF
Method in the Plutus’ Share Valuation Report (i.e., 2,169 yen to 2,357 yen); as a result, the Company has decided
that the Tender Offer Price will be 2,249 yen.
The Company’s business plan (for five years from the fiscal year ending March 31, 2022, to the fiscal year ending
March 31, 2026), which IR Japan and Plutus used as the premise for calculation by the DCF Method, includes
fiscal years in which significant increases and decreases in profits are expected. In particular, in the fiscal year
ending March 31, 2022, a significant decrease of profits compared to the preceding fiscal year is expected due tothe effect of downsizing of business resulting from termination of the dealership agreement between Renesas
Electronics. Further, in the fiscal year ending March 31, 2023 and the fiscal year ending March 31, 2024, a
significant increase in profits compared to the preceding fiscal year is expected due to the expansion of businessconcerning new overseas products. Moreover, since it was difficult to estimate in specific terms the effect of theTender Offer implementation, the aforementioned business plan is not premised on the Tender Offer.
In addition, the Capital Policy Review Committee reported in the Report Dated May 12 that, taking into accountthe calculation results contained in IR Japan’s Share Valuation Report and the Plutus’ Share Valuation report, as
well as the discussions with City Index Eleventh, it is rational to set the Tender Offer Price at 2,249 yen.
Subsequently, based on the discussions between City Index Eleventh mentioned above, unofficial consent wasgiven concerning the Tender Offer Price to be set at the amount of the net assets per share on a consolidated basis,and there will be improvement in profitability and capital efficiency, etc. by implementing the Tender Offer.
Taking this into account, and based on the calculation results contained in IR Japan’s Share Valuation Report andPlutus’ Share Valuation Report as well as the Capital Policy Review Committee’s report, the Company has decided
that the Tender Offer Price will be 2,249 yen.
In response to the results of the discussions with City Index Eleventh, based on the fact as mentioned above that,(i) in order to achieve the quantitative target of a 5% ROE at an early stage by carrying out the acquisition oftreasury stock to promote business structural reforms for a higher rate of return and for the capital optimization in
conjunction with improvement of profitability through business structural reforms under the New Medium-termManagement Plan, it is expected that the Company needs to carry out a tender offer of treasury stock at a scale inwhich the number of shares to be acquired is up to approximately 7 million shares, and the purchase price is up to
approximately 15.7 billion yen, and (ii) application by City Index Eleventh is essential for the tender offer of thetreasury stocks at this scale to be successful, the Company believes that the Group will be able to improve its
medium- and long-term corporate value by acquiring the treasury stock by way of a tender offer and striving forthe achievement of the New Medium-term Management Plan. Further, in order to prevent assets from flowing
outside of the Company from the perspective of respecting the interests of shareholders who continue to own the
Company’s ordinary stock without applying for the Tender Offer, the Company concluded that it would be
preferable to set the purchase price at a price which does not exceed the net assets per share of the Company’s
ordinary stock on a consolidated basis .Due to this, the Company wishes for the shareholders other than City Index
22

Eleventh, etc., to continue to hold the Company’s ordinary stock; however, of course, the Company believes that in
the end, it is up to the shareholders whether or not to apply for the Tender Offer.
On the basis of the above, it was resolved in the Board of the Directors meeting held on May 12, 2021, that, on theprecondition that the agenda regarding the reduction of the general reserve, capital reserve, and retained surplus
will be passed at the Ordinary General Meeting of Shareholders of the Company which is scheduled to be held in
June 2021, and based on Paragraph 1 of Article 156 of the Companies Act which applies mutatis mutandis
pursuant to Paragraph 3 of Article 165 of the same Act and the Company’s Articles of Incorporation, the Company
will carry out the acquisition of treasury stock as stated in “(1) Resolution Details” in “Contents of the Resolutionof the Board of Directors Meeting Regarding Acquisition of Treasury Stock” and implement the Tender Offer as
the specific acquisition method, and that the Tender Offer Price will be 2,249 yen. In addition, it was also
resolved that the number of share certificates planned for purchase in the Tender Offer shall be up to
7,000,000 shares, from the perspective to provide shareholders other than City Index Eleventh, etc., with theopportunity to apply for the Tender Offer and based on factors such as the Company’s liquidity on hand, capital
strategy under the New Medium-term Management Plan, dividend policy, and the soundness of the Company’s
finances after the Tender Offer implementation.
The Company plans to appropriate its own funds for the entire payment of the Tender Offer In this regard, theCompany’s liquidity on hand (cash and deposits) on a consolidated basis as of the end of March 31, 2021, isapproximately 25,544 million yen. Therefore, the Company believes that the Tender Offer will not have amaterial impact on the Company’s financial situation and dividend policy and that the soundness and security of
the Company’s finances will be secured. Because an increase of a distributable amount is necessary to acquire
treasury stock of 7,000,000 shares, the Company will propose an agenda regarding the reduction of the generalreserve, capital reserve, and retained surplus at the Ordinary General Meeting of Shareholders of the Company
which is scheduled to be held in June 2021.
As of today, City Index Eleventh is the largest shareholder and a major shareholder of the Company, and also falls
under the category of other affiliated companies; however, if City Index Eleventh applies for the Tender Offer, it
will no longer be the largest shareholder, major shareholder, or fall under the category of other affiliatedcompanies. Therefore, there may be changes to the largest shareholder, major shareholder, and other affiliatedcompanies. If such a change occurs, the Company will announce the change together with the result of theTender Offer.
The policy for the disposal of the Company’s treasury stock to be acquired in the Tender Offer has not been
decided at this point.
2. Contents of the Resolution of the Board of Directors Meeting Regarding Acquisition of Treasury Stock(1)

Resolution Details
Type of Share CertificatesTotal Number of Shares

Total Purchase Price

Ordinary stock

7,000,100

15,743,224,900 yen(Note 1) Total number of outstanding shares: 24,281,373 shares (as of May 12, 2021)(Note 2) Ratio against total number of outstanding shares: 28.83% (Rounded off to the nearest two decimal places)(Note 3) Acquisition period: June 22, 2021 to August 31, 2021

23

(2)

Listed Share Certificates, etc. Pertaining to Treasury Stock That Were Already Acquired Based on the Said
Resolution

None
3. Tender Offer Outline(1) Schedule, etc.
1)

Resolution Dateof Board of
Directors
Meeting

May 12, 2021 (Wednesday)June 22, 2021 (Tuesday)(to be fixed)
2)

3)

4)

(2)

Publication Date
for Commencing
the Tender Offer

Electronic public notice will be posted, and the posting of the electronic
public notice will be published in Nihon Keizai Shimbun newspaper.
(Internet Address for Electronic Public Notice http://disclosure.edinetfsa.go.jp/）

Submission Date of
the Tender Offer
Statement

June 22, 2021 (Tuesday)(to be fixed)

Tender Offer
PeriodFrom June 22, 2021 (Tuesday) to
July 19, 2021 (Monday)(20 business days)(to be fixed)

Tender Offer Price

2,249 yen per ordinary stock(3) Basis for Calculation of Tender Offer Price
1) Basis for Calculation
In determining the Tender Offer Price to be 2,249 yen, considering the fact that the Company’s ordinary stocks arelisted in the First Section of the Tokyo Stock Exchange and that acquisition of treasury stock by listed companies
is often carried out through purchasing shares from the market through financial instrument exchange, and byplacing importance on clarity and objectivity of the standard, we conducted an examination based on the market
price of the Company’s ordinary stock. Further, although generally, net assets per share on a consolidated basis
is referred to when considering the share value, from the perspective of respecting the interests of shareholders
who continue to own the Company’s ordinary stock without applying for the Tender Offer, the Company has
decided to take into account that, when considering the Tender Offer Price, the level of the price shall not exceed
the net assets per share on a consolidated basis. In addition, the Company discussed the Tender Offer Price with
City Index Eleventh twice, on April 23 and April 27, 2021, and confirmed that City Index Eleventh hope todetermine that the net assets per share on a consolidated basis is the Tender Offer Price as a condition for applying
for the Tender Offer. Moreover, to secure fairness in the calculation of the Tender Offer Price from theperspective of protecting shareholders other then City Index Eleventh, etc., the Company requested calculation of
the value of the Company’s ordinary stock to IR Japan and Plutus as third party calculation institutions which are
independent from the Company. IR Japan and Plutus are not affiliated parties of the Company and City Index
Eleventh, etc., and do not have any material interests in the Tender Offer. The Company referred to thecalculation results stated in IR Japan’s Share Valuation Report obtained from IR Japan as of May 11, 2021, andPlutus’ Share Valuation Report obtained from Plutus as of May 11, 2021. In IR Japan’s Share Valuation Report,
24

calculation was conducted by using each of the market share price method and DCF Method. The range of stock
value per share of the Company’s stock calculated in each said method is as follows: In the market share pricemethod, May 11, 2021, which is the business day immediately preceding May 12, 2021, the day on which theTender Offer implementation was announced, is used as a reference date, and based on the closing price of theCompany’s stock at the financial instruments exchange on the reference date which is 2,070 yen, the simple
average closing price for the last one month which is 2,077 yen, the simple average closing price for the last threemonths which is 2,061 yen, and the simple average closing price for the last six months which is 2,061 yen, therange of the Company’s stock value per share is analyzed to be from 2,061 yen to 2,077 yen. In the DCF method,
future cash flow on the basis of the business plan created by the Company is discounted to its current value at a
certain discount rate to analyze corporate value and stock value. As a result of such analysis, the stock value pershare of the Company’s ordinary stock ranged from 2,062 yen to 2,449 yen. The Company did not obtain
evaluation for the fairness of the Tender Offer Price (fairness opinion) from IR Japan.
In Plutus’ Share Valuation Report, calculation was conducted by using each of the market share price method and
DCF Method. The range of stock value per share of the Company’s stock calculated in each said method is asfollows: In the market share price method, May 11, 2021, which is the business day immediately preceding
May 12, 2021, the day on which the Tender Offer implementation was announced, is used as a reference date, andbased on the closing price of the Company’s stock at the financial instruments exchange on the reference date
which is 2,070 yen, the simple average closing price for the last one month which is 2,077 yen, the simple averageclosing price for the last three months which is 2,061 yen, and the simple average closing price for the last six
months which is 2,061 yen, the range of the Company’s stock value per share is analyzed to be from 2,061 yen to
2,077 yen. In the DCF method, future cash flow on the basis of the business plan created by the Company is
discounted to its current value at a certain discount rate to analyze corporate value and stock value. As a result ofsuch analysis, the stock value per share of the Company’s ordinary stock ranged from 2,169 yen to 2,357 yen.
The Company did not obtain evaluation for the fairness of the Tender Offer Price (fairness opinion) from Plutus.
The Company’s business plan (for five years from the fiscal year ending March 31, 2022, to the fiscal year ending
March 31, 2026), which IR Japan and Plutus used as the premise for calculation by the DCF Method, includes
fiscal years in which significant increases and decreases in profits are expected. In particular, in the fiscal year
ending March 31, 2022, a significant decrease of profits compared to the preceding fiscal year is expected due tothe effect of downsizing of business resulting from termination of the dealership agreement between Renesas
Electronics. Further, in the fiscal year ending March 31, 2023 and the fiscal year ending March 31, 2024, a
significant increase in profits compared to the preceding fiscal year is expected due to the expansion of businessconcerning new overseas products. Moreover, since it was difficult to estimate in specific terms the effect of theTender Offer implementation, the aforementioned business plan is not premised on the Tender Offer. Whilereferring to the market price of the Company’s ordinary stock, the Company has taken into account that, amongst
others, if the Tender Offer Price is set at 2,249 yen, which is the same amount as the net assets per ordinary stockof the Company on a consolidated basis as of the end of the fiscal year ending March 31, 2021, such amount iswithin the range of the stock value per share of the Company’s stock calculated by the DCF Method in the IR
Japan’s Share Valuation Report (i.e., 2,062 yen to 2,449 yen), and within the range of the stock value per share of
the Company’s stock calculated by the DCF Method in the Plutus’ Share Valuation Report (i.e., 2,169 yen to2,357 yen); as a result, the Company has decided that the Tender Offer Price will be 2,249 yen. The Tender Offer
Price, 2,249 yen, is a price with a premium of 8.65% (rounded off to two decimal places; the same applies
hereinafter in the calculation of the premium rate) of 2,070 yen, which is the closing price of the Company’s
ordinary stock on May 11, 2021, the business day immediately preceding today, today being the date on which theBoard of Directors resolved the Tender Offer implementation, at a premium of 8.28% of 2,077 yen, which is thesimple average closing price of the Company’s ordinary stock for the last one month up to May 11, 2021, and at a25

premium of 9.12% of 2,061 yen, which is the simple average closing price for of the Company’s ordinary stock forthe last three months up to May 11, 2021.
The difference of 58 yen between the tender offer price at the Previous Tender Offer (i.e., 2,191 yen), the period ofwhich was from May 15, 2018 to June 11, 2018, and the Tender Offer Price (i.e., 2,249 yen) is due to fluctuationof the net assets per share of the Company’s ordinary stock on a consolidated basis that was referred to in
determining the tender offer price. In particular, the net assets per share referred to in the Previous Tender Offer
were 2,191 yen, while the net assets per share referred to in the Tender Offer increased by 58 yen and are
2,249 yen.
2)

Calculation Background

From late August 2020, the Company began considering and formulating the New Medium-term Management
Plan. In considering and formulating the New Medium-term Management Plan, at the Company’s Board of
Directors meeting held on February 3, 2021, the Company recognized that the enhancement of its capitalefficiency with the aim of optimizing its capital structure by allocating capital surplus to the purchase of its
treasury stock could be an effective option which would contribute to the maintenance or improvement of theCompany’s medium- and long-term corporate value. Subsequently, in the “Notice Regarding the New MediumTerm Management Plan” dated February 3, 2021, the Company announced these consideration processes as theoutline of the New Medium-term Management Plan and stated that the details thereof would be announced at thetime of the announcement of the settlement of accounts for the fiscal year ending March 31, 2021.
On the other hand, as of November 11, 2020, City Index Eleventh, the largest shareholder of the Company, held
6,590,300 shares of the Company’s ordinary stocks (holding rate of 34.12%), and as of the same date, S-Grant.
Co., Ltd., the joint holder of the Company shares, held 118,800 shares of the Company’s ordinary stocks (holding
rate of 0.62%). From late April 2015, which was when Mr. Murakami, who is considered to be a shareholder of
ATRA, a parent company of City Index Eleventh, acquired the Company’s stocks at the latest, the Company
continued dialogue with Mr. Murakami with regard to the Company’s management strategy and capital policy.
However, in early November 2019, a difference in opinion arose between the Company and Mr. Murakami, who
insisted on business integration with a semiconductor trading company with the aim of industrial reorganization.
Although the Company continued dialogue with Mr. Murakami afterwards, the difference in opinion was not
resolved. Accordingly, comprehensively taking into account the status of consideration of the New Medium-termManagement Plan above, including the Company’s capital policy, as well as the status of dialogue with
Mr. Murakami, the Company’s business environment, the Company’s business outlook, the stock market conditionin the COVID-19 related confusion, the Company resolved to start to consider acquisition of the treasury stocks
and to consider carrying out such acquisition through a tender offer of the treasury stocks as the specificacquisition method of treasury stock, at the meeting of the Company’s Board of Directors held on September 16,
2020. One of the purposes of such resolution is to stabilize the management through, among other things,
facilitation of business implementation, by means of acquiring the Company’s stocks from City Index Eleventh,which held 6,463,400 shares of the Company’s ordinary stocks (holding rate of 33.46%) as of August 6, 2020, andlowering the ratio of the Company’s stocks held by City Index Eleventh by approximately 20%.
In addition, in considering and determining the tender offer of the treasury stocks, the Company resolved toestablish the Capital Policy Review Committee, which consists of the independent external directors andindependent external Audit & Supervisory Board Members of the Company, at the meeting of the Company’s
Board of Directors held on September 16, 2020, in order to verify whether the tender offer will contribute to such
improvement of the Company’s medium- and long-term corporate value and to confirm conditions for contribution26

to improvement cautiously. On the same date, the Capital Policy Review Committee was established. The
Capital Policy Review Committee consists of six members, specifically, Takeshi Uchimura, Minoru Nishino,
Tatsuo Takeuchi, and Akihiro Fujioka, all of whom are the independent external directors of the Company, as wellas Shohei Yamamoto and Kuniharu Kezuka, both of whom are the independent external Audit & Supervisory
Board Members of the Company. Each member satisfies the requirements of independence and externality
relating to the independent external directors or independent external Audit & Supervisory Board Members of theCompany and does not have any transaction relationship, personnel relationship, or other interests making theindependence of such member doubtful with respect to Mr. Murakami, who is considered to be a shareholder of
ATRA, a parent company of City Index Eleventh, or his relatives or any entity that is controlled by him or onwhich he has material impacts.
After that, the Company held meetings of the Capital Policy Review Committee four times during the period from
September 2020 to November 2020, and in the meetings, the rationality of the tender offer of the treasury stocks,
the soundness of the Company’s finances after the tender offer, the impact on the Company’s management of theexistence of the major shareholder, City Index Eleventh, and other issues were discussed. Based on these
discussions, the Company determined to start considering implementation of the tender offer of the treasury stocks
at the meeting of the Company’s Board of Directors held on November 18, 2020, and on December 22, 2020, theCompany explained the status of consideration by the Company to City Index Eleventh, etc. and confirmed theintentions of City Index Eleventh, etc., towards implementation of the tender offer of the treasury stocks.
Based on the above circumstances, on March 2, 2021, the Company reported to the Company’s Capital Policy
Review Committee the progress of consideration of the New Medium-term Management Plan above, an outline of
the tender offer of the treasury stocks, and the intention of the Company’s major shareholder, City Index Eleventh.
Furthermore, with respect to implementation of the tender offer of the treasury stocks by the Company, theCompany consulted with the Capital Policy Review Committee concerning the rationality of the purposes andtransaction conditions thereof, the fairness of the procedures, the conditions to be satisfied for the tender offer of
the treasury stocks contributing to improvement of the Company’s medium- and long-term corporate value, andthe appropriateness of the commencement of negotiation with the Company’s major shareholder, City Index
Eleventh, relating to implementation of the Tender Offer.
The Company’s Capital Policy Review Committee carefully discussed the matters above three times, on March 2,
March 11, and March 15, 2021 taking into account the circumstances above and submitted the Report Dated March
17 to the Company’s Board of Directors on March 17, 2021. In the report, the Capital Policy Review Committee
pointed out that application by major shareholders is essential and prior negotiation with major shareholders toa certain degree is unavoidable in order to achieve a 5% ROE, which is its quantitative target, at an early stage andto succeed in the tender offer of the treasury stocks at this scale, and that it is appropriate to consider that the
purposes include the facilitation of implementation of the Company’s business and stabilization of management
through giving major shareholders the opportunity of withdrawal from investment in the Company’s stocks
because the committee determined that it is best for the improvement of the Company’s corporate value to aim toachieve the New Medium-term Management Plan while maintaining the independence of the Company.
Furthermore, comprehensively considering the factors above as well, the Capital Policy Review Committee statedthat the Tender Offer does not aim for self-protection of the Company’s management, or interests of major
shareholders or any other particular third party only, and that the purposes thereof were found to be reasonable.
Based on the content of the Report Dated March 17, the Company formulated the New Medium-term Management
Plan with the fiscal year ending March 31, 2024 as the final year more concretely. In addition, under suchmedium-term management plan, the Company has been considering internally in the direction of achieving a 5%
27

ROE, which is its quantitative target, at an early stage, by carrying out the large-scale return to shareholders(tender offer of treasury stocks), which aims for capital optimization due to business structural reforms.
Accordingly, on April 23, 2021, the Company started discussions with City Index Eleventh on the terms andconditions, including the purchase price, etc., for implementing the tender offer of treasury stocks.
The Company held discussions with City Index Eleventh regarding the tender offer of treasury stocks twice, on
April 23, 2021, and April 27, 2021. In those discussions, the Company was told by City Index Eleventh that suchtender offer will contribute to the improvement of the shareholder value for all of the Company shareholders aslong as the tender offer is implemented as part of measures to practice ROE management (improvement of capitalefficiency) and improve shareholder value, and that if the Company carries out the Tender Offer, City Index
Eleventh and S-Grant. Co., Ltd., the joint holder of the Company shares, will apply all the Company ordinary
stock they hold for the Tender Offer. As of May 7, 2021, the Company has received a document stating the above
intention from City Index Eleventh.
After receiving such consultation, the Capital Policy Review Committee held discussions on April 28, 2021 andMay 11, 2021. In particular, it was reported in those discussions that, as of April 28, 2021, the Company is
expecting to receive a document from City Index Eleventh stating that it intends to apply for the Tender Offer, andthat, as of May 11, 2021, the Company has received the aforementioned document from City Index Eleventh, andthe status of discussions concerning the terms and conditions including the purchase price was reported as well.
Further, the Capital Policy Review Committee deliberately discussed the fairness of the Tender Offer procedures
and the transaction conditions of the Tender Offer including the purchase price. Consequently, the Capital Policy
Review Committee submitted the Reported Dated May 12 to the Company’s Board of Directors, stating that theTender Offer implementation, with the purpose of achieving a 5% ROE, which is its quantitative target, at an earlystage, by carrying out the large-scale return to shareholders, which aims for capital optimization due to businessstructural reforms under the New Medium-term Management Plan, and including the facilitation of
implementation of the Company’s business and stabilization of management as part of such purposes, willcontribute to the maintenance or improvement of the Company’s medium- and long-term corporate value; that thetransaction conditions of the Tender Offer are rational; that the considerations and discussions with City Index
Eleventh concerning the Tender Offer are conducted after establishing the Capital Policy Review Committee,
which consists of the independent external directors and independent external Audit & Supervisory Board
Members of the Company, and therefore, the fairness of procedures is secured; and that, in light of the terms andconditions of the Tender Offer at present, there are no additional conditions in particular that need to be satisfied toensure that the Tender Offer will contribute to the improvement of the Company’s medium- and long-term
corporate value
After receiving the Reported Dated May 12, the Company published the New Medium-term Management Plan asof today. The New Medium-term Management Plan also refers to the plan that the Tender Offer will be
implemented in order to achieve a 5% ROE, which is the quantitative target, at an early stage.
For determining the Tender Offer Price, by taking the fact that the Company’s ordinary stock is listed in the First
Section of the Tokyo Stock Exchange and that acquisition of treasury stocks by listed companies is often carriedout through purchasing shares from the market through financial instrument exchange into consideration and byplacing importance on clarity and objectivity of the standard, the Company conducted an examination by using themarket price of the Company’s ordinary stock as a basis. Further, although generally, net assets per share on aconsolidated basis is referred to when considering the share value, from the perspective of respecting the interestsof shareholders who continue to own the Company’s ordinary stock without applying for the Tender Offer, theCompany has decided to take into account that, when considering the Tender Offer Price, the level of the price28

shall not exceed the net assets per share on a consolidated basis. In addition, the Company discussed the Tender
Offer Price with City Index Eleventh twice, on April 23 and April 27, 2021, and confirmed that City Index
Eleventh hope to determine that the net assets per share on a consolidated basis is the Tender Offer Price as acondition for applying for the Tender Offer. Under the idea that promoting the New Medium-term Management
Plan as well as increasing capital efficiency through, among other means, improving profitability through thebusiness structural reform and capital optimization by tender offer of treasury stocks and a dividend increase willcontribute to the maintenance or improvement of the Company’s medium- and long-term corporate value, as well
as taking into account the fact that implementation of the Tender Offer and application by City Index Eleventh isessential for the achievement of the target established in the New Medium-term Management Plan, as well as theincrease of profitability and capital efficiency through implementation of the Tender Offer, the Company gave
unofficial consent to City Index Eleventh with regard to setting the Tender Offer Price as 2,249 yen, which is equal
to the net assets per share on a consolidated basis as of the end of the fiscal year ending March 2021, on April 27,
2021.
In addition, to secure fairness in the calculation of the Tender Offer Price, the Company requested calculation of
the value of the Company’s ordinary stock to IR Japan and Plutus as third party calculation institutions which are
independent from the Company. The Company referred to the calculation results (For detailed calculation results,
please refer to “3. Tender Offer Outline - (3) Basis for Calculation of Tender Offer Price -1) Basis for Calculation”
above.) in the the Plutus’ Share Valuation Report and the IR Japan’s Share Valuation Report in calculating theTender Offer Price. Further, the Company did not obtain an evaluation for the fairness of the Tender Offer Price(fairness opinion) either from IR Japan or Plutus.
Moreover, while referring to the market price of the Company’s ordinary stock, the Company has taken into
account that, amongst others, if the Tender Offer Price is set at 2,249 yen, which is the same amount as the net
assets per ordinary stock of the Company on a consolidated basis as of the end of the fiscal year ending March 31,
2021, such amount is within the range of the stock value per share of the Company’s stock calculated by the DCF
Method in the IR Japan’s Share Valuation Report (i.e., 2,062 yen to 2,449 yen), and within the range of the stock
value per share of the Company’s stock calculated by the DCF Method in the Plutus’ Share Valuation Report (i.e.,
2,169 yen to 2,357 yen); as a result, the Company has decided that the Tender Offer Price will be 2,249 yen.
Through these processes, at the meeting of the Company’s Board of Directors held on May 12, 2021, the Company
resolved that the Tender Offer Price will be 2,249 yen.
(4)

Number of Share Certificates Planned for Purchase
Type of Share
Certificates

Number of Share
Certificates Planned forPurchase

Ordinary stock

7,000,000 (shares)(Note 1)

Number of Planned
Excess Amount of
Shares- (shares)

Total
7,000,000 (shares)

If the total number of tendered share certificates in response to the Tender Offer (hereinafter, referred
to as “Tendered Share Certificates”) does not exceed the number of share certificates planned forpurchase (7,000,000 shares), the Company will purchase all of the Tendered Share Certificates. If
the total number of Tendered Share Certificates exceeds the number of share certificates planned forpurchase (7,000,000 shares), the Company will not purchase all or some of the surplus and theCompany will conduct delivery related to the purchase of share certificates and other settlements
according to the pro rata method stipulated in Paragraph 5 of Article 27-13 of the Financial
Instruments and Exchange Act (Act No. 25 of 1948; including the amendments made lateron; hereinafter referred to as the “Act”.)which is applied mutatis mutandis pursuant to Paragraph29

2 of Article 27-22-2 of the Act and Article 21 of the Cabinet Office Ordinance on Disclosure
Required for Tender Offer for Listed Share Certificates, etc. by Issuer (Ordinance of the
Ministry of Finance No. 95 of 1994; including the amendments made later on).
(Note 2)

(5)

Even if the shares are less than one unit, such shares are also subject to the Tender Offer. If theshareholders execute their right to demand for purchase of the holder of shares less than one unit
pursuant to the Companies Act, the Company may purchase its treasury stock during the tender offer
period relating to the Tender Offer (hereinafter, referred to as “Tender Offer Period”) according to thelegal procedure.

Funds Required for the Tender Offer
15,743,000,000 yen(Note) This amount is the purchase cost when purchasing all of the planned number of share certificatesto be purchased (7,000,000 shares)(6)

Settlement Method

1)

Names and Locations of the Head Office of Financial Instrument Business Operators/Banks That Conduct
Settlement of the Tender Offer(TOB Agent)
Mita Securities Co., Ltd. (to be fixed)
2)3-11, Nihonbashi-kabutocho, Chuo-ku, Tokyo

Settlement Start Date

August 13, 2021 (Friday) (to be fixed)
3)

Settlement Method

When the Tender Offer Period ends, a written notice for purchase through the Tender Offer will be sent to theaddresses of those who agree to apply for the purchase of share certificates concerning the Tender Offer or to those
who apply for sales, etc. (hereinafter, referred to as “Tendering Shareholders”) (standing proxies in the case thatshareholders reside overseas (including corporate shareholders; hereinafter, referred to as “Non-Japanese
Shareholders”) by mail without delay. The purchase will be made in cash. The amount after deducting theapplicable withholding tax (Note) from the purchase amount will be sent to the locations designated by Tendering
Shareholders (standing proxies in the case of Non-Japanese Shareholders) by TOB Agent without delay after thecommencement date of settlement or paid at the account of the Tendering Shareholders of TOB Agents that accept
applications.
(Note) Taxation relations for stocks purchased in the Tender Offer are as follows. (*)
i

In the Case Tendering Shareholders Are Individuals Who Are Japanese Residents or Non-Japanese
Residents Who Own Permanent Establishments in Japan
When the proceeds received through the application for the Tender Offer exceed the amount of the portionof the Company’s capital (or consolidated individual stated capital in the case of a consolidated30

corporation) attributable to the shares that are the basis for the payment, the excess portion shall beconsidered and taxed as income from dividends. For such income from dividends, in principle, the amountequivalent to 20.315% (income tax and the Special Income Tax for Reconstruction 15.315%, andinhabitant tax 5%) will be withheld. However, in the case that Tendering Shareholders correspond to
major shareholders (hereinafter, referred to as “Major Shareholders”) set forth in Paragraph 12 of Article
4-6-2 in the Order for Enforcement of the Act on Special Measures Concerning Taxation (Cabinet OrderNo. 43 of 1957; including the amendments made later on), the amount equivalent to 20.42% (income tax
and Special Income Tax for Reconstruction only) will be withheld.
With respect to the proceeds received other than the above, the difference with acquisition costs, etc. willbe the application of separate self-assessment taxation, in principle, as the income earned from the transferof shares.
ii

In the Case Tendering Shareholders Are Individuals Who Are Non-Japanese Residents Who Do Not Own
Permanent Establishments in JapanFor the amount considered as income from dividends, the amount equivalent to 15.315% (income tax andSpecial Income Tax for Reconstruction only) will be withheld, in principle. In the case that Tendering
Shareholders correspond to Major Shareholders, the amount equivalent to 20.42% (income tax and Special
Income Tax for Reconstruction only) will be withheld.

iii

In the Case Tendering Shareholders Are Corporate Shareholders
When the proceeds received through the application for the Tender Offer exceed the amount of the portionof the Company’s capital (or consolidated individual stated capital in the case of a consolidated
corporation) attributable to the shares that are the basis for the payment, the excess portion shall beconsidered as dividends, and the amount equivalent to 15.315% (income tax and Special Income Tax for
Reconstruction only) will be withheld, in principle.
If Non-Japanese Shareholders wish to request a reduction or exemption of income tax and Special Income
Tax for Reconstruction for such deemed dividends according to applicable tax conventions, theShareholders are asked to submit an Application Form for Income Tax Convention to the TOB Agent by
the last day of the Tender Offer Period.

(*)

For specific questions regarding taxation, please consult with specialists such as certified tax accountants.
Shareholders are requested to make their own decisions.
(hereinafter omitted)

31

[Reference Material]
Independence Standards Required by the Company for the Positions of External Directors andExternal Audit &Supervisory Board Members
The Company judges that the positions of External Directors and External Audit & Supervisory Board members(hereinafter referred to as “External Officers”) shall have independence, in order to guarantee the objectivity andtransparency necessary to proper governance. If the requirements below are not met, the External Officers shallnot be appointed.
1. Officers*1 or employees of the Company and its subsidiaries (hereinafter referred to as “The Group”) shall not
be appointed.
2. Individuals to which one of the following a) to g) apply in the last five years shall not be appointed.
a) Executives*2 working for companies, etc., which are or will be major clients*3 of the Groupb) Executives working for the principal lenders*4 of the Groupc) Individuals who are the major shareholders*5 of the Group (in the event of corporations or organizations suchas unions, their members)d) Executives working for companies, etc., which are the Group’s major shareholders*5e) Specialists such as Consultants, Public Accountants, Tax Accountants, Lawyers, Judicial Scriveners, Patent
Attorneys, who acquired large amounts*6 of money and other assets from the Group (in the event ofcorporations or organizations such as unions, their members)f) Individuals benefiting from donations in the form of large amounts*6 of money and other assets from theGroup (in the event of corporations or organizations such as unions, their members)g) Officers and employees of companies, etc., which have a relationship of mutual assumption of office withindividuals such as officers of the Group
3. The aforementioned items 1 and 2 shall not apply to the spouse and near relatives within the second degree ofkinship of the individuals concerned.
4. The individuals shall not be recognized as having special motivations to lead to a conflict of interests with theGroup.
*1: “Officer” refers to directors, executive officers, audit & supervisory board members, and other corporate directors (excluding
External Officers).
*2: “Executives” refers to any person who falls under Article 2, Paragraph 3 Item 6 of the Enforcement of the Companies Act.
*3: “Major clients” refers to companies, etc., which paid or received an amount of money in any fiscal year of the last five years, as acompensation for business and trade with the Group, this amount being more than 2% of the consolidated net sales of the client ormore than 2% of the consolidated net sales of the Group.
*4: “Principal lenders” refers to financial institutions which lent money to the Group, for which outstanding borrowings of the end of
the fiscal year of any of the last five years exceeded 2% of the consolidated total assets of the Group at the end of such fiscal year.
*5: “Major shareholders” refers to stockholders who own directly or indirectly more than 10% of the total votes.
*6: “Large amounts” refers to amounts exceeding ¥10 million or 2% of the higher amount between net sales or the total income of thisperson, except executive compensation, in the event of a payment such as a remuneration for professional services, or acompensation for business and trade, in any fiscal year of the last five years. In the event of a donation, it refers to an amountexceeding ¥10 million or 2% of the higher amount between net sales or the total income of this person.

32