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

Securities Code: 4540
June 8, 2022
To Our Shareholders:
Terukazu Kato
President, Representative Director and CEO
TSUMURA & CO.
17-11 Akasaka 2-chome, Minato-ku, Tokyo

Notice of the 86th Ordinary General Meeting of Shareholders
We are pleased to announce the 86th Ordinary General Meeting of Shareholders of TSUMURA & CO.
(the “Company”), which will be held as indicated below.
In order to prevent the spread of new coronavirus (COVID-19) infection, we would kindly ask you
to refrain from attending the meeting in person as much as possible, and encourage you to exercise
your voting rights beforehand in writing (and send by post mail) or the Internet.
You may exercise your voting rights either of the following ways. Please review the attached Reference
Documents for General Meeting of Shareholders, and exercise your voting rights by 5:45 p.m. on Tuesday,June 28, 2022 (JST).
Exercise of voting rights in writing
Please indicate your approval or disapproval to each proposal on the enclosed voting card, and return it sothat it will be received by us no later than the above date and time.
Exercise of voting rights via the Internet
Please access the website for exercising voting rights (https://evote.tr.mufg.jp/), follow the directions on
the screen, and indicate your approval or disapproval to each proposal no later than the above date and time.

Notice Regarding COVID-19
In order to prevent the spread of COVID-19 infection, we would kindly ask you to refrain from attending
the meeting in person as much as possible, and encourage you to exercise your voting rights beforehand inwriting (and send by post mail) or the Internet.
Shareholders attending the General Meeting of Shareholders in person are requested to take measures toprevent infection. Moreover, Directors and staff running the meeting at the venue for the General Meetingof Shareholders will be taking measures, such as wearing masks, and we ask for your cooperation with
infection prevention measures for the safety of shareholders, such as measuring body temperature andwearing masks. In addition, as a measure to prevent further spread of infection, our operating staff may ask
those shareholders who appear ill to kindly refrain from entering the venue.

-1-

1. Date and Time:

Wednesday, June 29, 2022, at 10:00 a.m.

2. Venue:“Ho’oh,” 1st floor, THE CAPITOL HOTEL TOKYU
10-3 Nagatacho 2-chome, Chiyoda-ku, Tokyo

3. Purpose of the Meeting
Matters to be reported
1. Business Report and Consolidated Financial Statements for the 86th fiscal year
(from April 1, 2021 to March 31, 2022), and results of audits of the Consolidated
Financial Statements by the Accounting Auditor and the Audit and Supervisory
Committee
2. Non-consolidated Financial Statements for the 86th fiscal year (from April 1,
2021 to March 31, 2022)
Matters to be resolved
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Partial Amendments to the Articles of Incorporation
Proposal No. 3: Election of Six (6) Directors (Excluding Directors Who Are Audit andSupervisory Committee Members)
Proposal No. 4: Revision of Performance-Linked Stock Compensation Plan for Directors(Excluding Directors Who Are Audit and Supervisory Committee Members andNon-executive Directors) and Executive Officers Who Have Entered Into a
Service Agreement With the Company
Other Matters Regarding the Exercise of Voting Rights
 If a voting card is received without giving any indication of approval or disapproval of any or all of the
proposals, it will be counted as a vote for the proposal concerned.
 If you vote multiple times via the Internet indicating different positions on the same proposal in eachvoting exercise, only your most recent vote will count as valid.
 If you exercise your voting rights both in writing and via the Internet, only the vote placed via the Internet
will be treated as valid.
 If you are unable to attend the general meeting of shareholders in person, you may appoint anothershareholder with voting rights in the Company to attend as your proxy. Please note, however, that it isnecessary to submit a document evidencing the authority of proxy.
Internet Disclosure
Pursuant to the relevant laws and regulations and the Company’s Articles of Incorporation, the following
items of information are posted on the Company’s website instead of being included in the Reference
Documents for General Meeting of Shareholders.
i) “Consolidated Statement of Changes in Equity” and “Notes to Consolidated Financial Statements”
sections of Consolidated Financial Statementsii) “Non-consolidated Statement of Changes in Equity” and “Notes to Non-consolidated Financial
Statements” sections of Non-consolidated Financial Statements
https://www.tsumura.co.jp/ir/shareholders/convocation/(in Japanese only)
The Consolidated Financial Statements and the Non-consolidated Financial Statements audited by the
Audit and Supervisory Committee and the Accounting Auditor include the documents attached to thisnotice and the Consolidated Statement of Changes in Equity, the Notes to Consolidated Financial
Statements, the Non-consolidated Statement of Changes in Equity and the Notes to Non-consolidated
Financial Statements posted on the Company’s website.
If any changes are made to the Reference Documents for General Meeting of Shareholders, the Business
Report, the Consolidated Financial Statements or the Non-consolidated Financial Statements, such changes
will be posted on the Company’s website.
https://www.tsumura.co.jp/-2-Reference Documents for General Meeting of Shareholders
Proposal No. 1
Proposal No. 1: Appropriation of Surplus
The Company regards the return of profit to shareholders as its important policy. We will aim to achievesustained growth going forward while maintaining a policy to pay stable dividends, taking into considerationsuch matters as medium- and long-term levels of earnings and cash flows.
The Company will allocate funds from internal reserves for investment in the areas such as capital
expenditure and research and development that are deemed to boost the future corporate value of theCompany.
In line with the aforementioned policy, the Company proposes to pay year-end dividends for the current
fiscal year as follows:Year-end dividends
1)
2)

3)

Type of dividend property
Cash
Allotment of dividend property and their aggregate amountThe Company proposes to pay a dividend of ¥32 per common share of the Company.
The total dividends will be ¥2,448,224,608.
Effective date of payment of dividends of surplus
June 30, 2022

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Proposal No. 2
Proposal No. 2: Partial Amendments to the Articles of Incorporation
1. Reason for proposal(1) Since the revised provisions provided for in the proviso to Article 1 of the Supplementary Provisions of
the Act Partially Amending the Companies Act (Act No. 70 of 2019) are to be enforced on September 1,
2022, the Company proposes to make the following changes to its Articles of Incorporation in preparation
for the introduction of the system for providing informational materials for the general meeting ofshareholders in electronic format.
(i) Article 15, paragraph 1) in “Proposed Changes” below will stipulate that the Company shall takemeasures for providing information that constitutes the content of reference documents for thegeneral meeting of shareholders, etc. in electronic format.
(ii) Article 15, paragraph 2) in “Proposed Changes” below will establish the provision to limit the scopeof the items to be stated in the paper-based documents to be delivered to shareholders who requested
the delivery of paper-based documents.
(iii) Since the provisions for Internet Disclosure and Deemed Provision of Reference Documents for the
General Meeting of Shareholders, Etc. (Article 15 of the current Articles of Incorporation) will nolonger be required, they will be deleted.
(iv) Accompanying the aforementioned establishment and deletion of provisions, supplementaryprovisions regarding the effective date, etc. will be established.
(2) Since the change to the corporate governance system on June 26, 2015, the Company has not elected
Vice Presidents and Directors, Senior Managing Directors, and Managing Directors. From theperspective of clarifying this point and increasing the effectiveness of the Board of Directors, theCompany proposes deleting these positions from the provisions of Article 23 of the current Articles ofIncorporation.
(3) As the Company has not had an Advisor since June 29, 2016, the Company proposes deleting this position
from the provisions of Article 34 of the current Articles of Incorporation.

-4-

2. Details of the proposed amendments
Details of the amendments are as follows:This proposal shall take effect at the conclusion of this General Meeting of Shareholders.
(Changes are underlined)
Current Articles of Incorporation

Proposed Changes(Internet Disclosure and Deemed Provision of Reference
Documents for the General Meeting of Shareholders, Etc.)
Article 15 When the Company convenes a general
meeting of shareholders, if it discloses
information that is to be stated or presented in
the reference documents for the general
meeting of shareholders, business report, nonconsolidated financial statements andconsolidated financial statements through theinternet in accordance with the provisions
prescribed by the Ministry of Justice Order, it
may be deemed that the Company has
provided this information to shareholders.
(Newly established)(Deleted)(Measures, etc. for Providing Information in Electronic
Format)Article 151) When the Company convenes a general
meeting of shareholders, it shall take measuresfor providing information that constitutes thecontent of reference documents for the general
meeting of shareholders, etc. in electronic
format.
2) Among items for which the measures forproviding information in electronic format will
be taken, the Company may exclude all or someof those items designated by the Ministry ofJustice Order from statements in the paperbased documents to be delivered toshareholders who requested the delivery of
paper-based documents by the record date ofvoting rights.

(Election of Directors with Positions)
Article 23 The Board of Directors shall resolve to electone (1) President and Director among
Directors (excluding those who are Audit andSupervisory Committee Members), and mayelect one (1) Chairperson and Director, and a
few Vice Presidents and Directors, Senior
Managing Directors, and Managing Directors.

(Election of Directors with Positions)
Article 23 The Board of Directors shall resolve to elect one(1) President and Director among Directors(excluding those who are Audit and Supervisory
Committee Members), and may elect one (1)Chairperson and Director.

(Advisors and Consultants)
Article 34 The Company may have advisors andconsultants by the resolution of the Board of
Directors.

(Consultants)
Article 34 The Company may have consultants by the
resolution of the Board of Directors.

-5-Current Articles of Incorporation

Proposed Changes

Supplementary Provision(Transitional Measures for Limited Liability Agreements of
Outside Audit & Supervisory Board Members)
Regarding the agreement limiting theliability for damages under Article 423,
paragraph 1 of the Companies Act
concerning an act of Outside Audit &Supervisory Board Members before theconclusion of the 81st Ordinary General
Meeting of Shareholders, the provisions ofArticle 44 of the Articles of Incorporation
before the change made by the resolution of
the said Ordinary General Meeting of
Shareholders shall continue to prevail.
(Newly established)

Supplementary Provisions(Transitional Measures for Limited Liability Agreements of
Outside Audit & Supervisory Board Members)
Article 1 Regarding the agreement limiting the liability fordamages under Article 423, paragraph 1 of theCompanies Act concerning an act of Outside
Audit & Supervisory Board Members before theconclusion of the 81st Ordinary General Meetingof Shareholders, the provisions of Article 44 of
the Articles of Incorporation before the change
made by the resolution of the said Ordinary
General Meeting of Shareholders shall continue
to prevail.

-6-(Transitional Measures for Measures, etc. for Providing
Information in Electronic Format)
Article 2
1) The amendment to the Articles of Incorporation
pertaining to Article 15 shall be effective from
September 1, 2022, which is the date ofenforcement of the revised provisions provided
for in the proviso to Article 1 of the
Supplementary Provisions of the Act Partially
Amending the Companies Act (Act No. 70 of2019) (hereinafter referred to as the “Date of
Enforcement”).
2) Notwithstanding the provision of the preceding
paragraph, Article 15 of the Articles ofIncorporation (Internet Disclosure and Deemed
Provision of Reference Documents for the
General Meeting of Shareholders, Etc.) shallremain effective regarding any general meetingof shareholders held on a date within six
months from the Date of Enforcement.
3) These Supplementary Provisions shall bedeleted on the date when six months haveelapsed from the Date of Enforcement or threemonths have elapsed from the date of thegeneral meeting of shareholders in thepreceding paragraph, whichever is later.

Proposal No. 3
Proposal No. 3: Election of Six (6) Directors (Excluding Directors Who Are Audit and Supervisory
Committee Members)
The terms of office of all six (6) Directors (excluding Directors who are Audit and Supervisory Committee
Members) will expire at the conclusion of this general meeting. Accordingly, the Company proposes to electsix (6) Directors (excluding Directors who are Audit and Supervisory Committee Members).
Following discussions by the Audit and Supervisory Committee based on deliberations of theNomination/Remuneration Advisory Committee attended by all of two (2) Outside Directors who are Audit
and Supervisory Committee Members, the Audit and Supervisory Committee believes that the nominatingprocedure was properly followed and all candidates are adequate to serve as Directors of the Company.
The candidates for Directors (excluding Directors who are Audit and Supervisory Committee Members)
are as follows:
Candidate
No.

Name

1

Terukazu Kato

President, Representative
Director and CEO

Reelection

2

Kei Sugii

Co-COONewElection

3

Muneki Handa

Director, CFO

Reelection

4

Kenichi Matsui

Outside Director

Reelection

OutsideIndependent

5

Hiroshi Miyake

Outside Director

Reelection

OutsideIndependent

6

Tadashi Okada

Outside Director

Reelection

OutsideIndependent

Current Position in the Company

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1

Terukazu Kato
Date of Birth(Age 58)

August 26, 1963

Current Position in the Company

President, Representative Director andCEO

Reelection
To our shareholders
The Group launched its new Purpose in April 2022: “Lively Living for Everyone,” and continues topractice management based on its philosophy. At the same time, we formulated a long-term management
vision for the next ten years: TSUMURA VISION “Cho-WA” 2031, and we will aim to be “a company
that realizes a future of harmony between mind and body, and individual and society.” We will continue
striving to propose personalized health care and realize Kampo treatment of pre-symptomatic disease byscientifically defining pre-symptomatic disease.
I would like to thank our shareholders for their support, as we aim to increase corporate value over the
medium to long term by co-creating shared value with society.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1986
Aug. 2001
Jan. 2006
Apr. 2007
Jun. 2011
Jun. 2012
Jun. 2015
Jun. 2019

Joined the Company
President and Representative Director, TSUMURA USA, INC.
Head of Public Relations Department, TSUMURA & CO.
General Manager, Head of Corporate Communications Department, TSUMURA &CO.
Director and Executive Officer, Head of Corporate Communications Department,
TSUMURA & CO.
President and Representative Director, TSUMURA & CO.
President and Representative Director and President and Executive Officer,
TSUMURA & CO.
President, Representative Director and CEO, TSUMURA & CO. (incumbent)

 Number of theCompany’s
Shares Owned
31,700 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Material
relationshipwith theCompanyNone Reasons for the nomination as a candidate for Director
As a chairman of the Board of Directors, Mr. Terukazu Kato has operated the Company’s corporate governance systemand strengthened it in several phases, and worked to structure the Board of Directors to have majority Outside Directors,
establish the Nomination/Remuneration Advisory Committee with an Outside Director as its committee chairman, andimprove the effectiveness of the Board of Directors, while successfully carrying out his responsibilities in making
important management decisions and supervising the execution of business.
In addition, he delegated business execution authority to COO (or Co-COO under to cooperative COO system) andfinalized the group-wide management policy as well as corporate strategy as CEO, established management system, carriedon external negotiations and made efforts in developing management-level human resources. From April 2022, theCompany has implemented the corporate philosophy stated in the newly formulated corporate purpose as well as
formulated the long-term management vision, TSUMURA VISION “Cho-WA” 2031. In order for the Company to pursue
the aim of achieving sustainable growth and enhancing its corporate value through the realization of this vision, the Boardof Directors believes that he is one of the most well-qualified candidates.
If his election as a Director is approved, Mr. Kato will assume the position of President, Representative Director and CEOof the Company.

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2

Kei Sugii
Date of Birth(Age 52)

Current Position in the Company

Co-COO

December 16, 1969

New election
To our shareholders
The Group has made a new start for this fiscal year with its long-term management vision, TSUMURA
VISION “Cho-WA” 2031. In an era where a human-centric society that responds to individual needs isbeing promoted, we will combine Kampo, which is originally an individual-oriented medicine, with newvalue created by DX with the goal of realizing individualized treatment that is more closely tailored toindividuals. Furthermore, through business activities that utilize the gifts of nature, we will pursue thecreation of shared value with a sustainable society in ways that are only possible for the Group. At thesame time, for the present, I will also make a sincere effort to steadily promote the first phase of themedium-term management plan and meet the expectations of our shareholders.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1994
Jan. 2006
May 2009
Apr. 2013
Apr. 2016
Apr. 2017
Apr. 2018
Apr. 2020
Apr. 2022

Joined Mitsubishi Petrochemical Engineering Corporation (currently MITSUBISHICHEMICAL ENGINEERING CORPORATION)
Joined Accenture Japan Ltd
Joined the Company
Head of Logistics Planning Department, TSUMURA & CO.
Head of SCM Planning Department, TSUMURA & CO.
General Manager, TSUMURA & CO.
General Manager, SHENZHEN TSUMURA MEDICINE CO., LTD.
General Manager, TSUMURA & CO.
Chairman and General Manager, SHENZHEN TSUMURA MEDICINE CO., LTD.
Executive Officer, Head of Production Division, TSUMURA & CO.
Co-COO, TSUMURA & CO. (incumbent)

 Number of theCompany’s
Shares Owned
2,000 Shares Status ofattendance to
Board ofDirectors
meeting: – Material
relationshipwith in the
CompanyNone Reasons for the nomination as a candidate for Director
Mr. Kei Sugii has extensive experience and insight accumulated through his work in a general consulting company. He
has served as Chairman and General Manager of the Company’s group company in China, and since April 2020, he has
acquired experience as Executive Officer, Head of Production Division. In addition, from April 2022, as Co-COO, he has
been engaged in group-wide business operation based on management policy and corporate strategy and has been
controlling the overall business execution to achieve the plan. Based on the above reasons, the Board of Directors has fullconfidence in his ability to carry out his responsibilities including making important management decisions at the Boardof Directors meetings and supervising the execution of business. Therefore, the Board of Directors nominates him as a
candidate for Director.
If his election as a Director is approved, Mr. Sugii will assume the position of Director, Co-COO of the Company.

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3

Muneki Handa
Date of Birth(Age 59)

Current Position in the Company

Director, CFO

July 7, 1962

Reelection
To our shareholders
Two years has passed since the spread of COVID-19 infection, and human lifestyles and work styles
have changed. Furthermore, through economic activities, changes in the status of society have broughtchange to the way we do business.
In this situation, the Group has formulated a new corporate purpose and the long-term management
vision, TSUMURA VISION “Cho-WA” 2031, which has started in this fiscal year. Our aim is to become acompany that achieves a future of harmony (“Cho-Wa”) between mind and body, and individual andsociety. At the same time, we formulated the first phase of the medium-term management plan, and I will
be focusing all my strength on achieving it, making every effort to meet the expectations of ourshareholders.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1985
Jun. 2014
Jun. 2015
Jun. 2016
May 2019
Jun. 2019
Apr. 2021

Joined The Mitsubishi Bank, Limited (currently MUFG Bank, Ltd.)
Executive Officer and Managing Director, Head, Retail Credit Division, The Bank ofTokyo-Mitsubishi UFJ, Ltd. (currently MUFG Bank, Ltd.)
Deputy President, Mitsubishi UFJ Capital Co., Ltd.
President, Mitsubishi UFJ Capital Co., Ltd.
Advisor, TSUMURA & CO.
Director, Managing Executive Officer and CFO, TSUMURA & CO.
Director, CFO, TSUMURA & CO. (incumbent)

 Number of theCompany’s
Shares Owned
4,300 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Material
relationshipwith in the
CompanyNone Reasons for the nomination as a candidate for Director
Mr. Muneki Handa has extensive experience and insight through his many years of working at financial institutions, andserved as a representative director and president at a venture capital firm. He has executed business as the Executive
Officer in charge of corporate planning, accounting and finance, IT, and other aspects, and he possesses extensive insightof public relations, IR, and sustainability, etc. In addition, as CFO, he has executed business relating to group-wide
financial strategies, etc. and has formulated management plan based on management policy and corporate strategy.
Based on the above reasons, the Board of Directors has full confidence in his ability to carry out his responsibilities
including making important management decisions at the Board of Directors meetings and supervising the execution ofbusiness. Therefore, the Board of Directors nominates him as a candidate for Director.
If his election as a Director is approved, Mr. Handa will assume the position of Director, CFO of the Company.

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4

Kenichi Matsui
Date of Birth(Age 72)

Current Position in the Company

Outside Director

July 5, 1949

Reelection Outside Independent
To our shareholders
The situation remains uncertain and unstable; however, Tsumura has started work on the new 2031
vision. To help as many people as possible enjoy each day in good health, we will expand and growprescription Kampo formulations while also providing Kampo services in the new areas of presymptomatic disease and cures, aiming to make a leap forward in the Kampo health business, which is
uniquely possible for the Tsumura.
By supporting the Company’s previous vision, we have built a foundation for standardizing Kampo
medicines, and by working to strengthen governance and human resource development, I believe we havestabilized management. All Company employees are ready and fired up to achieve the new targets. As an
Outside Director, I respond calmly to changes in the management environment, while striving to support
risk taking and working to expand corporate value.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1972
Jun. 2001
Apr. 2003

Joined Idemitsu Kosan Co., Ltd.
General Manager of Accounting Department, Idemitsu Kosan Co., Ltd.
Executive Officer, General Manager of Accounting Department, Idemitsu Kosan
Co., Ltd.
Jun. 2004
Managing Executive Officer, General Manager of Accounting Department,
Idemitsu Kosan Co., Ltd.
Jun. 2005
Managing Director, Idemitsu Kosan Co., Ltd.
Jun. 2010
Executive Vice President, Representative Director, Idemitsu Kosan Co., Ltd.
Jun. 2014
Outside Director, The Mie Bank, Ltd. (currently San ju San Bank, Ltd.)
Jun. 2015
Outside Director, TSUMURA & CO. (incumbent)
Apr. 2018
Outside Director (Audit and Supervisory Committee Member), The Mie Bank, Ltd.
(currently San ju San Bank, Ltd.)May 2021
Outside Director (Audit and Supervisory Committee Member), San ju San Bank,
Ltd. (incumbent) (scheduled to retire in June 2022)
Jun. 2022
Outside Director (Audit and Supervisory Committee Member), San ju San Financial
Group,Inc. (scheduled to assume the position)
 Tenure as an Outside Director
At the conclusion of this general meeting, Mr. Matsui will have served in the position for seven (7)years.

 Number of theCompany’s
Shares Owned
4,800 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Material
relationshipwith in the
CompanyNone Reasons for the nomination as a candidate for Outside Director and overview of expected role
Mr. Kenichi Matsui has extensive experience and insight as a corporate manager developed over many years. He served
as an executive vice president and representative director at a petroleum-related company. In addition, at the Company,
he has fully performed his role, including making important management decisions and supervising the execution ofbusiness. As committee chairman of the Nomination/Remuneration Advisory Committee, he has led active discussions
on nomination and remuneration from an objective and neutral standpoint. Moreover, he leads the management of theOutside Directors’ Meeting as its chairman. Based on the above reasons, the Board of Directors has nominated him as a
candidate for Outside Director and expects that he will continue to fulfill the above role after being elected. It is alsoplanned to appoint him as committee chairman of the Nomination/Remuneration Advisory Committee again after hiselection.

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5

Hiroshi Miyake
Date of Birth(Age 72)

Current Position in the Company

Outside Director

August 4, 1949

Reelection Outside Independent
To our shareholders
This fiscal year is the first year of the new long-term management vision 2031. I am keen to carry out
my duties as an Outside Director with fresh determination. The Company’s environment requires
management to take factors into account such as an unstable social and economic environment due togeopolitical issues, as well as the response to a highly networked society that has been accelerated by the
spread of COVID-19 infection, while the Board of Directors has been required to conduct managementtaking into consideration not only increasing shareholder value, but also factors such as climate change
and diversity. In this situation, to ensure the steady achievement of first phase of the medium-term
management plan, which is the first step in the long-term management vision, I intend to provide
supervision and leadership, as well as to actively offer proposals.
I ask all of our shareholders for their understanding.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1973
Oct. 2000

Joined Mitsubishi Corporation
General Manager, Paper & Packaging Raw Materials Division, Mitsubishi
Corporation
Apr. 2001
Deputy Division COO, General Merchandise Division, Mitsubishi Corporation
Apr. 2003
Deputy General Manager, Kansai Branch, Mitsubishi Corporation
Apr. 2005
Senior Vice President, Mitsubishi Corporation
President, Mitsubishi International GmbH, and Deputy Regional CEO for Europe
May 2009
Advisor, Tokai Pulp & Paper Co., Ltd.
Jun. 2009Managing Executive Officer, Tokushu Tokai Holdings Co., Ltd.
Jun. 2010
Senior Managing Executive Officer, Tokushu Tokai Paper Co., Ltd.
Jun. 2014
Director, Executive Vice President, Tokushu Tokai Paper Co., Ltd.
Jun. 2015
Representative Director, Executive Vice President, Tokushu Tokai Paper Co., Ltd.
Jun. 2016
Advisor, Tokushu Tokai Paper Co., Ltd.
Oct. 2016
Advisor, Nippon Tokai Industrial Paper Supply Co., Ltd.
Jun. 2018
Outside Director, TSUMURA & CO. (incumbent) Tenure as an Outside Director
At the conclusion of this general meeting, Mr. Miyake will have served in the position for four (4)years.

 Number of theCompany’s
Shares Owned
2,000 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Material
relationshipwith in the
CompanyNone Reasons for the nomination as a candidate for Outside Director and overview of expected role
Mr. Hiroshi Miyake has extensive experience and insight as a corporate manager developed over many years andbusiness experience in and outside Japan. He served as a president of the local subsidiary of a general trading company
in Germany. In addition, at the Company, he has fully performed his role, including making important management
decisions and supervising the execution of business. At the Board of Directors and Nomination/Remuneration Advisory
Committee, he proactively makes statements and deepens discussions contributing to sound corporate management.
Based on the above reasons, the Board of Directors has nominated him as a candidate for Outside Director and expects
that he will continue to fulfill the above role after being elected. It is also planned to appoint him as a member of theNomination/Remuneration Advisory Committee again after his election.

- 12 -

6

Tadashi Okada
Date of Birth(Age 66)

Current Position in the Company

Outside Director

May 1, 1956

Reelection Outside Independent
To our shareholders
With the protracted impacts of COVID-19 and soaring resource prices, the Company’s businessenvironment has become disconnected from the trends of the past and difficult to predict. In this situation,
the Company has established the long-term vision and formulated a new medium-term plan. Aiming forcontinuous growth and increase in corporate value of the medium to long term, the Company will engage
in various measures based on the medium-term plan, including proactive investment. I will draw on myexperience and knowledge to date to contribute to activities aimed at solving these issues. I will also
continue working to strengthen the supervision function of the Board of Directors.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr.
Apr.
Apr.
Apr.
Apr.

1979
2000
2003
2006
2007

Joined Komatsu Ltd.
General Manager of Business Development Department, Komatsu Ltd.
Vice President of Komatsu (China) Ltd.
General Manager of Corporate Communications Department, Komatsu Ltd.
Executive Officer, General Manager of Corporate Communications Department,
Komatsu Ltd.
Apr. 2008
Executive Officer, General Manager of Corporate Planning Division, Komatsu Ltd.
Feb. 2009
Executive Officer, Vice President of Industrial Machinery General Headquarters,
Komatsu Ltd.
Apr. 2011
Senior Executive Officer, President of Industrial Machinery Division, Komatsu Ltd.
Apr. 2014
Senior Executive Officer, Supervising Corporate Communications, CSR, General
Affairs, and Compliance, Komatsu Ltd.
Jun. 2017
Representative Director and Chairman of QUALICA Inc.
Jun. 2020
Outside Director, TSUMURA & CO. (incumbent) Tenure as an Outside Director
At the conclusion of this general meeting, Mr. Okada will have served in the position for two (2)years.

 Number of theCompany’s
Shares Owned
200 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Material
relationshipwith in the
CompanyNone Reasons for the nomination as a candidate for Outside Director and overview of expected role
Mr. Tadashi Okada has extensive experience and insight as a corporate manager developed over many years and businessexperience in and outside Japan. In China, he served as a vice president of the China business headquarters of aconstruction machinery company. In addition, at the Company, he has fully performed his role, including making
important management decisions and supervising the execution of business. At the Board of Directors andNomination/Remuneration Advisory Committee, he proactively makes statements and deepens discussions contributing
to the sustainable enhancement of corporate value. Based on the above reasons, the Board of Directors has nominatedhim as a candidate for Outside Director and expects that he will continue to fulfill the above role after being elected. It isalso planned to appoint him as a member of the Nomination/Remuneration Advisory Committee again after his election.
(Note 1)
(Note 2)
(Note 3)

The respective ages stated for each candidate are current as of June 29, 2022.
The status of attendance to the Board of Directors meeting stated for each candidate is based on data for fiscal
2021 (from April 1, 2021 to March 31, 2022).
For other notes regarding candidates, please refer to the next page.

- 13 -

■ The candidate for Director
1. Independent officer
The Company has deemed that the candidate for Outside Director has a high degree of independence because he/shesatisfies the Company’s Standards for Determination of Independence of Outside Directors.
The Company has submitted notification to Tokyo Stock Exchange, Inc. that the candidate has been appointed as anindependent officer as provided for in Article 436-2 of the Securities Listing Regulations of the aforementioned exchange.
2. Entering into a limited liability agreement
Pursuant to Article 427, paragraph 1 of the Companies Act and the Company’s Articles of Incorporation, the Company hasentered into an agreement with the candidate for Outside Director to limit his/her liability for damages arising fromneglecting his/her duties under Article 423, paragraph 1 of the Companies Act. The limit under the agreement is the amountprovided for by the applicable laws and regulations. If the candidate for Outside Director is reelected, the Company plansto renew the aforementioned limited liability agreement.
3. Entering into a directors and officers liability insurance policy
Pursuant to Article 430-3, paragraph 1 of the Companies Act, the Company has entered into a directors and officers liability
insurance policy with an insurance company. The policy covers losses, such as amount of indemnification and court costs,
incurred in cases where an insured receives claims for damages from shareholders, the Company, employees or third
parties during the insurance period arising from the performance of the Company’s duties of the insured. The insureds inthe policy are Directors, Executive Officers, and Officers, etc. of Group companies who has been seconded or dispatchedfrom the Company. The Company plans to renew the policy with each candidate on July 1, 2022, which is during theirterms of office.

- 14 -

(Reference)
Standards for Determination of Independence of Outside Directors
Of the Company’s Outside Directors, outside officers who do not fall under any of the following items shallbe determined to have independence.
1. Person who is or was in the past ten (10) years an Executive Director, Executive Officer (Shikkoyaku),
Executive Officer (Shikkoyakuin), Manager, General Manager, employee, etc. (hereinafter referred toas “executives”) of the Company or its consolidated subsidiaries
2. Person or executives of a legal entity holding, whether directly or indirectly, 10% or more of the total
number of voting rights of the Company
3. Party for whom the Company or its consolidated subsidiaries (*1) is a major business partner or
executives of such party*1. Party is defined as a “party for whom the Company or its consolidated subsidiaries is a major
business partner” if payment from the Company or its consolidated subsidiaries which such party
receives is 2% or more of its annual transaction value (non-consolidated) in the most recent fiscal
year, or if monetary finance from the Company or its consolidated subsidiaries which such party
is receiving is 2% or more of its consolidated total assets in the most recent fiscal year.
4. Major business partner of the Company or its consolidated subsidiaries (*2) or the executives of suchbusiness partner*2. Business partner is defined as a “major business partner of the Company or its consolidated
subsidiaries” if payment from such business partner which the Company or its consolidated
subsidiaries receives is 2% or more of its annual consolidated transaction value in the most recent
fiscal year, or if monetary finance from such business partner which the Company or its
consolidated subsidiaries is receiving is 2% or more of the Company’s consolidated total assets inthe most recent fiscal year.
5. Audit corporation that serves as Accounting Auditor of the Company or its consolidated subsidiaries,
or partners and others of the audit corporation
6. Consultant, attorney, certified public accountant and others who provide professional services andobtain monetary and other financial benefits exceeding a cumulative amount of ¥10 million in themost recent fiscal year from the Company, excluding officer compensation (if such financial benefits
are obtained by an organization including a legal entity and a partnership, etc. this shall apply to theperson belonging to such organization.)
7. Person or executives of a legal entity receiving donations, grants and others in the amount exceeding¥10 million from the Company or its consolidated subsidiaries in the most recent fiscal year
8. Person to whom items 2 through 7 apply during the past three (3) years
9. Person who is or was recently a spouse or within a second degree of consanguinity of executives in an
important position of the Company or its consolidated subsidiaries (hereinafter referred to as “close
relative”)
10. Close relative of a person to whom any of the items 2 through 7 apply (excluding people who are notin an important position)- 15 -

(Reference)
Approach to Diversity of Directors
The Tsumura Group formulates its long-term management visions and medium-term management plans in
response to social demand and changes in the operating environment, and initiates various measures toachieve them. Along with our value creation cycle, we have, in particular, pursued and evolved a system forconstantly making appropriate and prompt decisions regarding corporate governance, the foundation ofmanagement.
At present, Outside Directors account for a majority of the Directors. We have built highly effective
governance systems to make decisions on important matters from diverse perspectives, such as those ofpeople with corporate management experience, attorneys at law, and certified public accountants, and toensure that decisions are not made based solely on the knowledge of inside directors.
We will continue to strengthen corporate governance in order to achieve sustainable growth.

- 16 -

(Reference) Skill Matrix of the Company’s Board of Directors
We have selected the following skills that the Board of Directors needs in order to carry out the decisionmaking and management supervisory function for achieving the long-term management vision, TSUMURA
VISION “Cho-WA” 2031. If Proposal No. 3 is approved as originally proposed at this Ordinary General
Meeting of Shareholders, the composition of the Board of Directors and the skills possessed by each Directorand Audit and Supervisory Committee Member will be as follows:
Name

Terukazu
Kato
Kei
Sugii

Directors

Muneki
Handa
KenichiMatsui
HiroshiMiyakeTadashi

Directors who are Audit and Supervisory
Committee Members

Okada
Kimikazu
Okochi

GenderAge

OutsideCorporate

Independent

Management

Global

58

●

●

52

●

●

59

●

SDGs

marketing

ESG

●

●

●

●

●

●

●

●

72

〇

●

72

〇

●

●

66

〇

●

●

63

Sales /

IT

●

●

●

Financial

Legal risk

accounting

management●(attorney at

51

〇

●

●

●

●

●

●

●

●

●

●

●

68

〇

●

law)
Akemi
Mochizuki(certified●

publicaccountant)- 17 -

management●

Mitsutoshi
Matsushita

Human
resources●

Proposal No. 4
Proposal No. 4: Revision of Performance-Linked Stock Compensation Plan for Directors (Excluding
Directors Who Are Audit and Supervisory Committee Members and Non-executive
Directors) and Executive Officers Who Have Entered Into a Service Agreement With theCompany
1. Reason for Proposal and Reason the Compensation is Appropriate
In the 83rd Ordinary General Meeting of Shareholders held on June 27, 2019, the Company was given
approval of the partial revision of the performance-linked stock compensation plan (hereinafter referred
to as the “Plan”) for Directors (excluding Directors who are Audit and Supervisory Committee Members
and non-executive Directors) and Executive Officers (Shikkoyakuin) who have entered into a service
agreement with the Company (hereinafter collectively referred to as “Directors, etc.”), and the Plan has
remained the same to this day.
The Company has newly established the Sustainability Vision and the long-term management vision:
TSUMURA VISION “Cho-WA” 2031 (hereinafter collectively referred to as “long-term vision”) by
taking a backcasting approach from the Corporate Purpose, which is Lively Living for Everyone, under
the philosophy- and vision-based management that set out the Corporate Purpose. The Company has
established the medium-term management plan as a milestone for the realization of the long-term vision,and aims to create new markets and improve people’s well-being with an eye to the long-term future.
As part of these efforts, under the basic concept of “pay for purpose” the Company will revise thestructure of the Plan into two categories by newly introducing Long Term Incentive (LTI)-II, which is
aimed at realizing the long-term vision, in addition to LTI-I, which is aimed at realizing the medium-term
management plan, with the objectives of further clarifying the link between compensation for Directors,
etc. and the Company’s corporate value, encouraging them to take on the challenge of realizing the longterm vision, and further raising their awareness about contributing to sustainable growth andenhancement of corporate value. In addition, in conjunction with the revision of the Plan, a trust-type
stock compensation plan for Directors, etc. (hereinafter referred to as the “Trust”) will be introduced toreplace the Performance Share Units. Subject to the adoption of this Proposal as originally proposed, thePerformance Share Units will be discontinued, and no further shares will be granted from the
Performance Share Units after the granting of shares corresponding to the period from the fiscal year
ended March 31, 2020 to the fiscal year ended March 31, 2022.
In addition, although non-residents of Japan will be included in the scope of the Plan, if it is difficult
to include them in the scope of the Plan due to the legal system of their country of residence or otherreasons, the Company may pay them cash equivalent to the delivery of the Company’s shares, etc. in lieu
of the Plan.
The Company seeks approval from shareholders for the amount and details of compensation, etc.
under the Plan.
If Proposal No. 3: “Election of Six (6) Directors (Excluding Directors Who Are Audit and Supervisory
Committee Members)” is adopted as originally proposed at this General Meeting of Shareholders, thenumber of Directors, etc. who are eligible for the Plan will be a total of 14, comprising three (3) Directors(excluding Directors who are Audit and Supervisory Committee Members and non-executive Directors)
and 11 Executive Officers (Shikkoyakuin); provided, however, the number of eligible persons for the Plan
may vary depending on their appointment and retirement from office as Directors, etc. during the Plan
period.
In addition, with regards to the details of this Proposal, the revision of the Plan is intended to further
clarify the link between compensation for Directors, etc. and the Company’s corporate value, further
raise their awareness about contributing to sustainable growth and enhancement of corporate value, andpromote sharing of interests with shareholders. The Company has determined that the compensation
framework is necessary and reasonable in light of the standards for calculating the amount ofcompensation and the number of Directors, etc. eligible to be granted compensation set forth in the
Company’s policy for determining the details of compensation, etc. for individual Directors (subject tothe adoption of this Proposal as originally proposed, it is planned to change the details thereof as- 18 -

described in the Reference Document for the General Meeting of Shareholders on pages 23-29 (forreference).
This Proposal is submitted based on the results of deliberations by the Nomination/Remuneration
Advisory Committee and the content of a resolution of the Board of Directors.
2. Amount and other details of the compensation, etc. of the Plan
(1) Outline of the Plan
The Plan is a stock compensation plan under which the Company’s share will be acquired through atrust funded by money contributed by the Company, and the Company’s shares and cash equivalent tothe amount from the conversion into money of the Company’s shares (hereinafter referred to as the“Company’s Shares, etc.”) are delivered to and paid to the Directors, etc. through the Trust (hereinafterreferred to as “Delivery, etc.”). The Plan is composed of LTI-I, which implements Delivery, etc. of theCompany’s Shares, etc. linked with the achievement ratio etc. of performance targets in the mediumterm management plan based on roles, duties, etc., and LTI-II, which implements Delivery, etc. of theCompany’s Shares, etc. linked with the ratio of realization of the long-term vision based on roles, duties,
etc. (The details are as described in (2) below and thereafter.)(i) Persons eligible for Delivery,  Directors (excluding Directors who are Audit and Supervisoryetc. of the Company’s Shares, Committee Members and non-executive Directors) and Executive
etc. subject to the Proposal

Officers (Shikkoyakuin) who have entered into a service agreementwith the Company(ii) Effect of the Company’s shares subject to the Proposal on the total number of issued sharesThe maximum amount per fiscal year is ¥290 million multiplied by the
number of years corresponding to the Plan period, with a maximum of ¥870
million for the three fiscal years from the initial Plan period from the fiscal
year ending on March 31, 2023 to the fiscal year ending on March 31, 2025.

Maximum limit on the number of 
the Company’s Shares, etc. for
Delivery, etc. to Directors, etc. andthe method of acquisition of theCompany’s shares (as described in(2) and (3) below)

The maximum number of points to be granted to Directors, etc. per fiscal
year is 100,000 points, and the maximum number of points to be granted to
Directors, etc. for the three fiscal years which are the initial Plan period is
300,000 points (the Delivery etc. will be made to the Directors, etc. on thebasis of one of the Company’s Shares, etc. for each point).
The ratio of the number of the Company’s shares equivalent to the points per
fiscal year to the number of issued shares (as of March 31, 2022, after
deduction of treasury shares) is approximately 0.1%.
No dilution will occur because the Company’s shares will be acquired fromthe stock market.

Maximum limit of money to becontributed by the Company (asdescribed in (2) below)(iii) Details of performanceachievement conditions (asdescribed in (3) below)

LTI-I(Composition
50%)

LTI-II(Composition
50%)

The performance-linked coefficient (LTI-I) will vary in
the range of 15% to 150% depending on the achievement
ratio ratio, etc. of the performance targets in the medium-term
management plan. The indicators for evaluating theachievement ratio, etc. of performance targets will include
consolidated net sales, consolidated operating profit,
consolidated ROE (average for the Plan period), and theachievement ratio, etc. of business targets to be set foreach individual.
The performance-linked coefficient (LTI-II) will vary in
the range of 0% to 150% (0% to 100% for the period until
ratio March 31, 2028) depending on the achievement ratio, etc.
of the progress targets for realizing the long-term vision
set for each Plan period. The indicators for evaluating theachievement ratio, etc. of progress targets will be nonfinancial indicators including corporate value (relative
TSR(*1)), sustainability, corporate governance, andbusiness value (percentage of overseas business sales).

- 19 -

(iv) Timing of Delivery, etc. of
the Company’s Shares, etc. to
Directors, etc. (as describedin (4) below)

LTI-I

After the end of the Plan period (*2)

LTI-II

After retirement (*2)(*1) TSR: Total Shareholder Returns(*2) However, Directors, etc. shall continue to hold the Company’s shares delivered through the Plan
until one year has elapsed since their retirement.
(2) Maximum Limit of Money to be Contributed by the Company
The period covered by the Plan shall be the fiscal years covered by the Company’s medium-term
management plan (hereinafter referred to as the “Plan Period”). The initial Plan Period of the Plan shallbe the three fiscal years from the fiscal year ending March 31, 2023 to the fiscal year ending March 31,
2025.
The Company will contribute funds in trust in the amount of ¥290 million multiplied by the numberof years in the relevant Plan Period (¥870 million for the three fiscal years that are the initial Plan
Period), and establish a trust for a period equivalent to the Plan Period with Directors, etc., who satisfy
the requirements of beneficiaries, as the beneficiaries. The Trust will acquire the Company’s sharesfrom the stock market all together using the money entrusted to it as the source of funds, in accordancewith the instructions of the trust manager. During the Plan Period, the Company will grant points to
Directors, etc. as set forth in (3) below, and the Trust will implement Delivery, etc. of the Company’s
Shares, etc. corresponding to the number of points.
At the expiration of the trust period of the Trust, instead of newly establishing the Trust, the Trust
may be continued by amending the trust agreement and making an additional trust. In this case, thenumber of years corresponding to the medium-term management plan the Company has established atthat time will become the new Plan Period, and the trust period will be extended for the same period as
the new Plan Period. The Company will make an additional contribution within the amount of ¥290
million multiplied by the number of years in the new Plan Period for each extended Plan Period, andwill continue the grant of points and Delivery, etc. of the Company’s shares, etc. to Directors, etc. foreach extended Plan Period.
However, in the case of such an additional contribution, when the Company’s shares (excluding theCompany’s shares corresponding to the points granted to Directors, etc., which have not yet been
implemented Delivery, etc.) and cash remain in the trust assets on the last day of the trust period before
extension (hereinafter referred to as “Remaining Shares, etc.”), the total amount of the Remaining
Shares, etc. and the additional funds in trust to be contributed shall be within the range of ¥290 million
multiplied by the number of years of the relevant new Plan Period.
In addition, if no amendment is made to the trust agreement and an additional trust is not made at the
expiration of the trust period of the Trust, points shall not be granted to Directors, etc. thereafter.
However, if, at the expiration of the trust period, Directors, etc. who may satisfy the requirements forbeneficiaries are still in office, the Trust may be extended for up to ten years until such Directors, etc.
retire and the Delivery, etc. of the Company’s Shares, etc. is completed, instead of terminating the Trust
immediately.
(3) Method of Calculation and Maximum Limit of the Number of the Company’s Shares, etc. to be
Acquired by Directors, etc.
Delivery, etc. of the Company’s Shares, etc. to the Directors, etc. will be made after the end of thePlan Period for LTI-I and after their retirement for LTI-II as set forth in (4) below.
Directors, etc. shall be granted share delivery points (LTI-I and LTI-II) as set forth in 1) and 2) below
as a prerequisite for the Delivery, etc. of the Company’s Shares, etc., and Delivery etc. will be made on
the basis of one share for each point (LTI-I and LTI-II), and any fraction less than one point shall be
rounded down.

- 20 -

1)

Share Delivery Points (LTI-I)

The share delivery points (LTI-I) for Directors, etc. will be calculated by accumulating the total of
the basic points (*1) granted in each fiscal year during the Plan Period and multiplying the accumulated
total by the performance-linked coefficient (LTI-I) (*2) after the end of the Plan Period.
2)

Share Delivery Points (LTI-II)

The share delivery points (LTI-II) for Directors, etc. are the total performance-linked points
calculated by accumulating the total of the basic points (*1) granted in each fiscal year during the Plan
Period and multiplying the accumulated total by the performance-linked coefficient (LTI-II) (*3) after
the end of the Plan Period.
(*1) The amount determined in accordance with the compensation standards based on the roles, duties,
etc. of Directors, etc., is divided by the reference share price (the average closing price of ordinarytransactions (rounded down to the nearest whole number) of the Company’s common shares on
the Tokyo Stock Exchange in March immediately preceding the start of the Plan Period).
(*2) The performance-linked coefficient (LTI-I) will be set in the range of 15% to 150% depending on
the achievement ratio, etc. of the performance targets in the medium-term management plan. The
indicators for evaluating the achievement ratio, etc. of performance targets shall be consolidated
net sales, consolidated operating profit, consolidated ROE (average for the Plan Period), and theachievement ratio, etc. of business targets to be set for each individual.
(*3) The performance-linked coefficient (LTI-II) will be set in the range of 0% to 150% (0% to 100%for the period until March 31, 2028) depending on the achievement ratio, etc. of the progresstargets for realizing the long-term vision set for each Plan Period. The indicators for evaluating
the achievement ratio, etc. of progress targets will be non-financial indicators including corporate
value (relative TSR), sustainability, corporate governance, and business value (percentage ofoverseas business sales).
The maximum number of points to be granted to Directors, etc. for the Plan Period of the Trust shallbe up to 100,000 points per fiscal year multiplied by the number of years of the Plan Period (hereinafterreferred to as the “Maximum Number of Points Granted”). Therefore, the Maximum Number of Points
Granted corresponding to the initial Plan Period covering three fiscal years will be 300,000 points. If
the Trust is continued in accordance with (2) above, the Maximum Number of Points Granted for theextended Plan Period shall be 100,000 points multiplied by the number of years of the new Plan Period.
This maximum total number of points has been set based on the maximum amount of funds in trustin (2) above, with reference to the most recent share price and other factors.
In the event of a stock split or reverse stock split of the Company’s shares during the trust period, theCompany will adjust the number of points and the Maximum Number of Points Granted to Directors,
etc. in accordance with the split ratio, reverse stock split ratio, etc.
(4) Method and Timing of Delivery, etc. of the Company’s Shares, etc. to Directors, etc.
1)

LTI-I

The timing of Delivery, etc. of the Company’s shares, etc. for LTI-I will be after the end of the Plan
Period. Directors, etc. who satisfy the requirements for beneficiaries will receive the Company’s sharescorresponding to 50% of the number of share delivery points (LTI-I) (shares of less than one unit to berounded down). The Company’s shares corresponding to the remaining number of share delivery points(LTI-I) shall be converted into cash within the Trust, and Directors, etc. shall receive a cash payment
equivalent to the amount of the conversion price.
In the event that any of the Directors, etc. dies before the end of the Plan Period, the number of sharedelivery points (LTI-I) shall be calculated in accordance with the degree of progress of the mediumterm management plan at that point in time, and the Company’s shares that correspond to such points
shall be converted into cash within the Trust, and the heirs of such Directors, etc. shall receive a cash
payment equivalent to the amount of the conversion price.
- 21 -

2)

LTI-II

The timing of Delivery, etc. of the Company’s shares, etc. for LTI-II will be after the retirement of
Directors, etc.
Directors, etc. who satisfy the requirements for beneficiaries will receive the Company’s sharescorresponding to 50% of the number of share delivery points (LTI-II) (shares of less than one unit to berounded down) calculated at the time of retirement. The Company’s shares corresponding to theremaining number of share delivery points (LTI-II) shall be converted into cash within the Trust, andthe Directors, etc. shall receive a cash payment equivalent to the amount of the conversion price.
In the event that any of the Directors, etc. dies during the term of office, the number of share delivery
points (LTI-II) shall be calculated in accordance with the degree of progress of the long-term vision atthat point in time, and the Company’s shares that correspond to such points shall be converted into cash
within the Trust, and the heirs of such Directors, etc. shall receive a cash payment equivalent to theamount of the conversion price.
Directors, etc. shall continue to hold the Company’s shares delivered through the Plan until one year
has elapsed since their retirement.
(5) Handling of the Dividends on the Company’s Shares Within the Trust
The dividends for the Company’s shares within the Trust shall be received by the Trust and allocatedto the trust fees and expenses of the Trust.
(6) Voting Rights Related to the Company’s Shares
The voting rights for the Company’s shares within the Trust shall not be exercised during the trust
period in order to ensure management neutrality.
(7) Other Details of the Plan
Other details regarding the Plan will be determined by the Board of Directors on each occasion when
the Trust is established, the trust agreement is amended and additional contributions are made to theTrust.

- 22 -

(Reference)〇 Background of the revision of the compensation planIn pursuit of realizing our corporate philosophy of “The Best of Nature and Science” and corporate missionof “To contribute to the unparalleled medical therapeutic power of the combination of Kampo medicine andWestern medicine,” we have formulated long-term management visions based on the basic principles andmedium-term management plans serving as milestones to achieve such visions; thus, we have been practicing
management that integrates our basic principles, long-term management visions and medium-term
management plans.
This time, we have defined our business commitment of “Lively Living for Everyone,” our Corporate
Purpose we are trying to ultimately achieve, as a social mission that connects the starting point of thecompany with the future 50 and 100 years from now, and formulated a “Sustainability Vision” and “LongTerm Business Vision 2031” (hereinafter collectively referred to as “long-term visions”) by taking a
backcasting approach from the Corporate Purpose.
Our business consists of the “Kampo value chain” that begins with the cultivation of crude drugs, and is
deeply connected with the natural environment. We want to continue to be the company that is most sensitive
to changes and crises in the natural environment by squarely facing the “nature” that forms the basis of ourbusiness and continuously providing traditional pharmaceutical products of natural origin as a shared value
with society by taking a scientific approach. To this end, we are declaring various initiatives such asconservation of the natural environment, diversity and inclusion in our “Sustainability Vision.” In addition,in our “Long-term Management Vision 2031,” we declare the expansion of Kampo standard treatment, theindividualization of Kampo treatment and our initiatives for development in the business area of Chinese
Operations, with the goal of living up to the concept of “Cho-WA: Creating a Future of Harmony.” Both ofthe long-term visions include extremely challenging contents, but we believe that it is necessary to steadily
realize them in order to continuously enhance our corporate value and implement the Corporate Purpose.
Since it is essential for the management team to make united efforts to realize the long-term visions, theNomination/Remuneration Advisory Committee discussed incentives for the management team for one year
and decided to revise the compensation plan and policy for determining the contents of compensation for
Directors (excluding Directors who are Audit and Supervisory Committee Members and non-executive
Directors; the same shall apply hereinafter). The submission of a proposal to this General Meeting of
Shareholders, the premise of this revision, was decided by a resolution of the Board of Directors based on
the results of the report from the Nomination/Remuneration Advisory Committee. If the proposal is approvedin its original form by this General Meeting of Shareholders, the revised compensation plan is to be applied
from fiscal 2022.
The main points of the revised compensation plan for Directors are as follows.
1.

Based on our business management and long-term visions, the concept of Pay-for-Purpose will be thebasis for the compensation plan for Directors.

2.

With the aim of promoting challenges toward the realization of the long-term visions and further raisingawareness of contributions to sustainable growth and enhancement of corporate value, we will introduce
a long-term incentive system that further enhances the link between compensation for Directors andcorporate value.

3.

For the purpose of realizing our long-term visions, we aim to build a business foundation that enables
sustainable growth by adopting not only evaluations based on current financial figures but also those
based on non-financial indicators.

The compensation plan for executive officers will be revised in line with the same contents and policy ofthe compensation plan for Directors.

- 23 -

〇 Outline of our new director compensation system
After continuous deliberation by the Nomination/Remuneration Advisory Committee, we decided to ask
shareholders to approve revision of the Performance-Linked Stock Compensation Plan at the meetings of theBoard of Directors held on May 10, 2022. If approved by shareholders at the 86th Ordinary General Meetingof Shareholders held on June 29, 2022, the outline of the new compensation system will be as follows.
Policy regarding decisions on the contents of compensation for Directors (excluding Directors who
are Audit and Supervisory Committee Members and non-executive Directors)
1. Basic policy
Compensation for the Directors of our Company will be determined based on the following policy according
to the basic concept of Pay-for-Purpose.
1)
2)
3)

2.

It shall reward the realization of the vision based on philosophy-based management upholding the
Corporate Purpose, which forms the basis of Tsumura’s group-wide management.
It shall reward Tsumura’s sustainable growth achieved by gaining the trust of stakeholders through our
initiatives for sustainability and governance as well as by solving social issues.
It shall motivate them to attempt to achieve lofty goals
 Rewarding each executive’s eagerness to achieve lofty goals
 Rewarding an accomplishment by a “management team” that is essential for achieving lofty goals
Compensation system

Compensation for Directors of our Company consists of basic compensation (fixed portion and portion linked
to short-term performance) and performance-linked stock compensation (LTI-I, and LTI-II), in which theportion linked to short-term performance in basic compensation and the performance-linked stock-based
compensation are positioned as incentives (variable compensation). The position and outline of each type ofcompensation is as follows.

Type of compensation

Variable

Basic compensation (monetary)

Fixed

Fixed portion

Purpose/Outline

Fixed compensation according to roles, duties, etc.

Annual incentives to reward the Company’s performance in each fiscal year andefforts for the achievement of business targets set by each individualPortion linked toshort-term
performance The standard amount of compensation to be paid at the time of target achievement
is set at a fixed ratio to the total compensation according to the role, duties, etc.
 The specific amount of payment is determined in the range from 15% to 150% of
the standard amount according to the business target achievement ratio in each fiscalyear.
 It is paid in money monthly together with the fixed portion.

- 24 -

Type of compensation

Purpose/Outline

Performance-linked stock compensation (non-monetary)

LTI-I(linked to mediumterm performance)

Medium-term incentives to reward efforts to realize the medium-term managementplan With basic points assigned according to roles, duties, etc. every year andaccumulated, the Company’s shares will be delivered (50% is paid in money for tax
purposes) to correspond to the number of points obtained after changing such points
according to the achievement ratio of the medium-term management plan and thebusiness targets set by each individual.
 The concrete number of shares to be delivered is determined within the range from
15% to 150% of the accumulated total of basic points.
 As a general rule, they will be delivered in a lump sum around July immediately
after the end of the medium-term management plan.

LTI-II(linked to long-term
vision)Long-term incentives to encourage Directors to take up challenges toward realizing along-term visionWith basic points assigned according to their roles, duties, etc. every year andaccumulated, the Company’s shares will be delivered (50% is paid in money fortax payment purposes) to correspond to the total number of points obtained after
changing such points according to the progress status and target achievement
ratio toward the realization of the long-term vision after the end of the mediumterm management plan period.
 The concrete number of shares to be delivered is determined within the range from
0% to 150% of the accumulated total of basic points.
 As a general rule, they will be delivered in a lump sum after retirement.

3. Compensation level
Given the business environment surrounding the Company, the Company makes a comparison ofcompensation levels between the Company and industry peers or other companies of the same size as that of
the Company in an objective manner by utilizing survey data from third-party specialists and considering thesalary levels of the Company’s employees, and sets compensation levels consistent with their roles, duties,etc.
4. Composition of compensation
Regarding the ratio of compensation for the Company’s Directors by type, their compensation is composed
as follows so as to ensure that they contribute to the sustainable growth and enhancement of corporate valueof the Company by referring to the trends of our industry peers, or those of similar size, based on survey data
provided by third-party specialists.
■ When LTI-II is provided
Portion linked to short-term
performance
Short-term incentive[25%]

Fixed portion
[55%]

LTI-I
Mediumterm
incentive[10%]

LTI-II
Long-term
incentive[10%]

Basic compensation (cash)

Performance-linked stock compensation (non-monetary)

Fixed

Variable* The component ratios reflect the standard amounts of compensation for each role and duty, etc.
* This is a model where the target achievement ratio related to performance-linked compensation is 100%.

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■ When LTI-II is not provided
Portion linked to short-term
performance
Short-term incentive[30%]

Fixed portion[60%]

Performanc
e-linkedstockcompensation (nonmonetary)

Basic compensation (cash)

Variable

Fixed

5.

LTI-I
Mediumterm
incentive[10%]

Incentive compensation plan

[Short-term incentive: Portion linked to short-term performance (basic compensation)]
The payment amount of the portion linked to short-term performance in the basic compensation is determinedbased on the achievement ratios of consolidated net sales and consolidated operating profit in each fiscal year,
which are used as indicators for numerical targets in the medium-term management plan, as well as on theachievement ratios with respect to business targets set by each Director as the person responsible for businessexecution.
The allocation ratio and fluctuation range of each evaluation indicator are as follows.
(1) Allocation ratio and fluctuation range of each evaluation indicator
Allocation ratio

Fluctuation rangeof coefficients

Consolidated net sales

25-35%

0-150%

Consolidated operating profit

25-35%

0-150%

Achievement ratios withrespect to business targets set
by each individual

30-50%

50-150%

Total

100%

15-150%Evaluation indicators[Medium-term incentive: LTI-I (Performance-linked stock compensation)]
The number of shares to be delivered as LTI-I is determined based on the achievement ratios of consolidated
net sales, consolidated operating profit, and consolidated ROE (average during the Plan Period), which areestablished as indicators for numerical targets in the medium-term management plan, as well as on theachievement ratios with respect to business targets set by each Director as the person responsible for businessexecution. At the time of share delivery, 50% of the shares to be delivered will be provided after convertingthem into cash for the purpose of allocating them for tax payment funds. Delivery of shares and payment ofmoney to each Director will be carried out through the Director compensation Board Incentive Plan (BIP)
Trust (hereinafter referred to as BIP Trust) of Mitsubishi UFJ Trust and Banking Corporation.
Calculation formula for the number of shares to be delivered and the allocation ratio and fluctuation range ofeach evaluation indicator are as follows.
(1) Calculation formula for stock compensation (linked to medium-term performance)
Basic points= Amount determined according to compensation standards based on the role and duty, etc. of a Director
÷ Reference stock price(*)
Number of shares to be delivered= Cumulative number of basic points during the medium-term management plan period × Performancelinked coefficient(*) Average value of closing prices of regular transactions of the Company’s shares on the Tokyo Stock Exchange inMarch immediately before the start of the medium-term management plan period (decimals rounded down).

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(2) Allocation ratio and fluctuation range of each evaluation indicator
Allocation ratio

Fluctuation rangeof coefficients

Consolidated net sales

30%

0-150%

Consolidated operating profit

20%

0-150%

Consolidated ROE (averageduring the Plan Period)

20%0-150%

Achievement ratios withrespect to business targets set
by each individual30%

50-150%

Total

100%

15-150%Evaluation indicators[Long-term incentive: LTI-II (Performance-linked stock compensation)]
The number of shares to be delivered as LTI-II is determined based on the achievement ratios related tocorporate value, sustainability, corporate governance, and business value during the period corresponding to
the medium-term management plan. At the time of share delivery, 50% of the shares to be delivered will be
provided after converting them into cash for the purpose of allocating them for tax payment funds. Deliveryof shares and payment of money to each Director will be carried out through BIP Trust.
Calculation formula for the number of shares to be delivered and the allocation ratio and fluctuation range ofeach evaluation indicator are as follows.
(1) Calculation formula for stock compensation (linked to long-term vision)
Basic points= Amount determined according to compensation standards based on the role and duty, etc. of a Director
÷ Reference stock price(*)
Performance-linked points= Cumulative number of basic points during the medium-term management plan period × Performancelinked coefficient
Number of shares to be delivered= Total value of performance-linked points up to the time of retirement(*) Average value of closing prices of regular transactions of the Company’s shares on the Tokyo Stock Exchange inMarch immediately before the start of the medium-term management plan period (decimals rounded down).

(2) Purpose and concept for the selection of each evaluation indicator
Evaluation indicators

Concept for indicator selection
 An indicator that measures the realization ratio of along-term vision(Comparison of TOPIX growth rates)  Aiming to share value with shareholders while
increasing their willingness to contribute to therealization of a long-term vision and the enhancementof corporate value

Relative TSR *1
Corporate value

Sustainability

Corporate governance Reduction of GHG emissions
 Development of cultivation of wild
crude drugs, etc.

 An indicator that measures the realization ratio ofsustainability
 Aiming to promote initiatives and raise awareness forthe realization of sustainable business activities such asconservation of the natural environment and thedevelopment of cultivation of crude drugs

 Diversity in management teams,etc.

 An indicator that measures the realization ratio ofsustainability and promotes the realization of a longterm management vision Aiming to promote the formation of a management
team across the entire Tsumura Group, including
overseas bases capable of making timely andappropriate management decisions, that can drive thecreation of medium- to long-term corporate value,
including business structure transformation- 27 -

Evaluation indicators

Concept for indicator selection

Business value*1

Sales ratio of overseas business An indicator that measures the realization ratio of a longterm management vision Aiming to build a foundation for overseas business andincrease willingness to contribute to enhance corporate
value through growth in overseas markets

TSR stands for “total shareholder returns.” The ratio of the Company’s TSR to the TOPIX growth rate will be used.

(3) Allocation ratio and fluctuation range of each evaluation indicator and main target values
Evaluation indicators

Corporate value

Sustainability

Allocation ratio

Relative TSR(Comparison of TOPIX growth rates) Reduction of GHG emissions
 Development of cultivation of wild
crude drugs, etc.

25%

25%

Fluctuation range
Main target valueof coefficients
0-200%(From 0% to100% during theperiod until
March 31, 2028)

0-100%

1.0

50% reduction in
GHG emissions
at the end of
fiscal 2031
(compared tofiscal 2020), etc.
*1

Corporate governanceBusiness value Diversity in management team, etc.

Sales ratio of overseas business

25%

0-100%*125%

0-200%(From 0% to100% during theperiod until
March 31, 2028)

50% at the end of
fiscal 2031 *1

0-150%(From 0% to
Total
100%
100% during theperiod until
March 31, 2028)*1 If the achievement ratio is less than 100% or 80% according to the evaluation indicator, the coefficient will be 0%.

6.

Shareholding rule

Directors shall continue to hold the Company’s shares delivered through performance-linked stockcompensation until one year has elapsed since their retirement.
7.

Process for determining compensation

With the aim of enhancing the objectivity and transparency of the deliberation process, a standard amount ofcompensation for the Directors of the Company, a performance evaluation method and rules for calculating
the determined amount according to the performance evaluation results will be determined by a resolution of
the Board of Directors based on the results of deliberation by the Nomination/Remuneration Advisory
Committee (composed of one internal Director and five independent outside Directors with one of the
independent outside Directors serving as a chairperson), within the range of the total amount resolved at thegeneral meeting of shareholders. Of these, the performance evaluation method and the rules for calculating
the determined amount according to performance evaluation results are to be stipulated in the internal rules;
their revision is determined by a resolution by the Board of Directors based on the deliberation and report by
the Nomination/Remuneration Advisory Committee. Note that the portion linked to short-term performanceof the basic compensation and determination of the achievement ratio with respect to business targets set byeach individual in LTI-I should be delegated to the Nomination/Remuneration Advisory Committee.

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Policy and procedures regarding the determination of compensation for non-executive Directors who
are not Audit and Supervisory Committee Members as well as for Directors who are Audit andSupervisory Committee Members
Compensation for non-executive Directors who are not Audit and Supervisory Committee members andDirectors who are Audit and Supervisory Committee Members shall be limited to basic compensation (fixed
portion/monetary) in view of their role of supervising the management of the Company from an objective
and independent standpoint.

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(Reference)
Corporate Governance of Tsumura
Basic Policy
The basic principles of Tsumura are encapsulated in its corporate philosophy of “The Best of Nature andScience” and in its corporate mission of “To contribute to the unparalleled medical therapeutic power of the
combination of Kampo medicine and Western medicine.” Guided by these principles, we adhere to a policyof implementing continuous improvements to corporate governance in order to realize ongoing growth andmedium-to-long-term increases in corporate value.
In June 2017, Tsumura transitioned from the Company with Company Auditor(s) system described in the
Companies Act of Japan to the Company with Audit and Supervisory Committee system. This move wasaimed at reinforcing the oversight and monitoring functions of the Board of Directors. Under this system,
Tsumura is working to enhance its management supervisory function and innovate its management structureby separating the supervisory function from the executive function and by appointing a majority of Outside
Directors to the Board of Directors. These measures are being implemented to continuously establish thesystems that will enable the Company to ensure the transparency, improve the efficiency, and maintain thesoundness of management.
Overview of Corporate Governance Systems(Note) The above shows the system in place as of the end of fiscal 2021.
The new system was established starting in fiscal 2022 and can be seen on the Company’s website.
Please see our Integrated Report for details of corporate governance.

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Board of Directors
The Board of Directors makes important decisions to ensure sustainable growth and enhance corporate value
over the medium-to-long term. The Company aims to accelerate decision-making by separating businessexecution functions from the Board of Directors. At the same time, we are strengthening the supervisory
function of general management by appointing Outside Directors to comprise the majority of the Board of
Directors and appropriately reflecting their objective views from an independent perspective as experts withextensive experience.

<Main matters during the 86th fiscal year> Checking the progress of the third medium-term management plan; Monitoring and following-up the progress of the Chinese business;
 Checking the progress of large-scale investment deals;
 Formulating plan and reporting on the progress of developing human resources (candidate of nextgeneration management);
 Determining the direction of the new medium-term management plan; and Evaluating the effectiveness of the Board of Directors and establishing priority themes.

 Policy for responding to climate change Discussion on enhancing corporate governance of Group companies
 Enhancement of information disclosure
Nomination / Remuneration Advisory Committee
The Nomination/Remuneration Advisory Committee is a voluntarily established advisory body to the Boardof Directors. The committee is composed of a majority of Outside Directors who have also been designatedas independent directors as stipulated by the Tokyo Stock Exchange (including one Outside Director who isa member of the Audit and Supervisory Committee). These Outside Directors provide advice on mattersrelated to the nomination and remuneration of Directors and Executive Officers based on inquiries by the
Board of Directors and also submit reports to the Board of Directors on these subjects. The committee iscomposed of six (6) members, five (5) of whom, including the committee chairman, are Outside Directors
who have also been designated as the independent directors.

<Main matters during the 86th fiscal year> Proposal of election and dismissal of Directors to be submitted to the General Meeting of Shareholders; Draft proposals of election and dismissal of the Representative Director to be submitted to the Board of
Directors;
 Draft proposals of candidates for Executive Officers to be submitted to the Board of Directors;
 Polices for electing Directors and Executive Officers, election process; Draft proposals for individual remuneration to be paid to Directors and Executive Officers; and Policy including the composition of Directors’ remuneration, procedure for determining remuneration of
Directors, etc.

- 31 -

Audit and Supervisory Committee
The Audit and Supervisory Committee audits legality and adequacy of the execution of duties by Directors
by conducting systematic audits in cooperation with Internal Auditing Department, and the Audit andSupervisory Committee itself holds hearings on the status of business execution with Executive Officers,
attends meetings of the Executive Committee and other important meetings, exchanges information with
Directors and Auditors of the Group companies and monitors and verifies the establishment andimplementation of internal control systems, including those related to financial reporting.

<Main matters during the 86th fiscal year> Audit policy and plan; Reelection and remuneration of audit corporation;
 Details of matters to be submitted to the General Meeting of Shareholders; Preparation of audit report; and Status of the use of hotline, etc.

Outside Directors’ Meeting
The Outside Directors’ Meeting collects and shares the information necessary for management decisionmaking. At the same time, it acts as a venue for the exchange of opinions regarding the necessity of discussions
and other matters with the Board of Directors.

<Main matters during the 86th fiscal year> Advance explanation about matters to be discussed at the Board of Directors;
 Follow-up on the Board effectiveness evaluation;
 Briefing on Executive Committee matters; and Progress report of Chinese business.

(Note)

The above shows the system in place as of the end of fiscal 2021.

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(Reference)
Evaluation of effectiveness of Board of Directors
The Company evaluates and analyzes the effectiveness of the Board of Directors every fiscal year for the
purpose of enhancing the Board of Directors’ effectiveness.
The Company shifted to a company with an Audit and Supervisory Committee in 2017 to strengthen the
supervisory function of the Board of Directors and further enhance the soundness and transparency ofmanagement. We have put in place a system that enables swift and resolute decision-making by separating
the business execution function from the Board of Directors. Therefore, from the perspective of strengthening
the supervisory and monitoring functions of the Board of Directors, we are working to ensure continuous
improvement with respect to the issues identified through the analysis of the results of the evaluation of theeffectiveness of the Board of Directors and are endeavoring to further improve the effectiveness of the Boardof Directors.
Regarding the effectiveness of the Board of Directors in fiscal 2020, a questionnaire evaluation was
conducted for all nine Directors, and the issues identified and specific measures for addressing them werediscussed at the Board of Directors meeting held in May 2021. This year, we believe that we were able toconduct a more objective evaluation and analysis by utilizing an external organization to analyze proposals,
design the questionnaire, analyze the evaluation results, and suggest measures to tackle the issues.
1. Evaluation items (6 categories, 25 items)
The evaluation for fiscal 2020 was conducted from the perspectives of confirming the status of efforts toaddress issues identified in the results of the analysis of the previous year’s effectiveness evaluation,
confirming the themes that require priority supervision in order for the Board of Directors to fulfill its role,and identifying issues and considering measures for addressing them so as to further improve effectivenessin the future.
(1) Priority management themes(2) Composition of the Board of Directors(3) Roles and duties of the Board of Directors(4) Proceedings of the Board of Directors(5) Enhancement of discussions at meetings of the Board of Directors and of provision of information(6) Relationship between the Board of Directors and shareholders and other stakeholders
2 Overview of evaluation result As a result of this year’s analysis and evaluation, it was confirmed that the Board of Directors is fulfilling
its role and function, with active discussions aimed at ensuring substantial supervision and monitoring ofbusiness execution.
 In the effectiveness evaluation questionnaire for each Director, a certain percentage of the respondents
answered “accomplishing sufficiently” or “accomplishing overall” to many of the questions.
 As for the composition of the Board of Directors, the number is appropriate for active discussion andexchange of opinions. In addition, the Board of Directors is composed of diverse members with various
types of experience and expertise, which is required for matters to be properly discussed at the Boardof Directors meetings. Furthermore, the Board of Directors operates in an atmosphere that encourages
the frank, free, and open expression opinions.
 Based on the Group’s basic principles, the Board of Directors assessed the status of the realization of
the long-term management vision for the period from fiscal 2012 to fiscal 2021 and the achievement of
the goals of the third medium-term management plan for the period from fiscal 2019 to fiscal 2021.
After confirming the future long-term management direction and priority issues, it engaged in
discussions toward the formulation of a new vision to be accomplished by fiscal 2031.

- 33 -

 As Chinese operations constitute a strategic challenge with high level of importance for our sustainablegrowth and the enhancement of our corporate value over the medium to long term, the activities ofChinese operations have been regularly reported to the Board of Directors and discussions have been
held concerning policies, plans and strategies for the operations. In fiscal 2020, for example, we
increased the number of opportunities to report on Chinese operations report to the Board of Directors.
 The status of efforts to address the issues identified in the evaluation of the effectiveness of the Board of
Directors in the previous fiscal year (fiscal 2019) is as follows: With regard to the governance of Group companies, we are striving to strengthen the governancesystems of Group companies, by reinforcing their management structures and securing humanresources as the scale of their businesses and their organizations expand particularly in Chinese
operations through, for example, M&A activity.
 As for dialogue with stakeholders, including shareholders, we are taking steps to increase the amountof information we disclose and to improve tools for disclosure. We are also expanding opportunities for
dialogue. For example, we now hold an earnings briefing every quarter.
 Regarding training for Directors, as a supplement to decision-making by the Board of Directors, weregularly invite experts with a high level of expertise to give lectures. These lectures might cover thelatest developments in China or provide a grounding in the essentials of sustainability management. As
such, directors are able to find out about matters such as the business situation in China and operationalrisks, knowledge that is essential for new business development.
 With respect to the digitization of Board of Directors information, we are working to improve remoteinfrastructure, establish a management information website and grant access privileges to it, and sharevarious materials using dedicated tablet PCs. We are also beefing up information security. The purposeof such initiatives is proper operation of the Board of Directors and the prompt sharing of accurate
information.
Issues and Response Measures

Based on the results of this effectiveness evaluation, we will take the following measures to further
improve the effectiveness of the Board of Directors:On the topic of climate change, we recognize it as a risk to the Kampo business and are responding
to it, but as an even more urgent task for the future, all members of the Board of Directors must
share a common understanding of climate change, discuss it from the perspectives of both social
responsibility and issues for corporate management, and consider how we will respond it.

As for the building of governance systems for Group companies, we will establish a governancesystem for Chinese Group companies and strengthen the governance of the entire Group.
Specifically, we will establish a governance system to supervise the execution status of each Group
company, centered on Tsumura China Inc., the company that controls all our operations in China.
We will also strengthen supervision and monitoring by the Board of Directors. (As such, we will beestablishing and implementing governance systems based on the three-lines-of-defense approach.)With respect to the enhancement of information disclosure, we will strengthen our IR function toincrease opportunities for dialogue and foster an environment for information dissemination with awide range of stakeholders, including general consumers, in mind.

In this fiscal year also, we will be focusing on tackling five items as key management issues.
The Company will continue to implement its unique PDCA cycle with the aim of realizing further
improvements in the effectiveness of its Board of Directors.

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