Securities Code: 5947
June 5, 2024
To the Shareholders of Rinnai Corporation

Hiroyasu Naito
President

2-26, Fukuzumi-cho, Nakagawa-ku, Nagoya-shi,
Aichi 454-0802, Japan

Notice of Convocation of
the 74th Ordinary General Shareholders’ Meeting
to Be Held on June 27, 2024
You are cordially invited to attend the 74th Ordinary General Shareholders’ Meeting of
Rinnai Corporation (the “Corporation”). Details of the meeting are given below.
In convening this General Shareholders’ Meeting, we have taken measures forprovision in electronic format regarding materials for the General Meeting of
Shareholders. This information is posted on the Rinnai Corporation website (see below).

Rinnai Corporation website:
https://www.rinnai.co.jp/en/

Please go to the above website, select “Investor Relations,” then “Stock and bondinformation,” then “General Shareholders’ Meeting.”
In addition to the above website, items related to the matters subject to themeasures for provision in electronic format are posted on the Tokyo Stock Exchange(TSE) website (see below).
Tokyo Stock Exchange Website (TSE-Listed Company Information Service):https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show
Please go to the above website, enter “Rinnai” or “5947” (Rinnai securities code) inthe box under “Listed Company Search,” then select “Basic Information,” then“Documents for public inspection/PR information,” then “Notice of General
Shareholders’ Meeting/Informational Materials for a General Shareholders’ Meeting,”
then “Notice of Convocation of the 74th Ordinary General Shareholders’ Meeting.”
If you don’t plan to attend in person, you can exercise your voting rights digitally (via
the Internet or mobile phone) or in writing (post), as stated on pages 3-4. You must
exercise your voting rights no later than 5:20 p.m. on Wednesday, June 26, 2024.
[Exercise of voting rights digitally (via the Internet or mobile phone)]
Please access the Corporation’s designated website (https://www.web54.net) (Japaneseonly) for exercising voting rights. First use the “Code” and “Password” shown on the
Voting Rights Exercise Form (which will be posted together with the Notice ofConvocation), then follow the instructions on the screen and enter your approval ordisapproval of the proposal by the above deadline for exercise of voting rights.
If exercising your voting rights via the Internet, please refer to the “Guide to
Online Exercising of Voting Rights” (page 3).
[Exercise of voting rights in writing (post)]
Please indicate your approval or disapproval of the proposals on the enclosed Voting
Rights Exercise Form and mail the Form to the Corporation by the above deadline forexercise of voting rights.

11. DATE AND TIME
2. PLACE
3. AGENDA

Thursday, June 27, 2024 at 10:00 a.m.
Grand Banquet Hall “The Grand Court”, 7th floor, ANA CROWNE
PLAZA Hotel Grand Court NAGOYA, 1-1-1, Kanayama-cho, Naka-ku,
NagoyaMatters for Reporting:
1. The Business Report, report on the Consolidated Financial
Statements, and the results of the audit of the Consolidated
Financial Statements by the Accounting Auditor and the Audit &Supervisory Board Member for the 74th Fiscal Year (April 1, 2023–
March 31, 2024).
2. Report on the Nonconsolidated Financial Statements for the 74th
Fiscal Year (April 1, 2023–March 31, 2024).
Matters for Resolution:<Corporation’s Proposals>
Agenda Item 1:
Approval of the proposed appropriation of retained earnings
Agenda Item 2:
Election of nine (9) directors
Agenda Item 3:Election of four (4) Audit & Supervisory Board members
Agenda Item 4:Election of one (1) substitute Audit & Supervisory Board member

4. MATTERS TO

BE DECIDED UPONCONVOCATION OF
THE MEETING(GUIDE TO
EXERCISING OF
VOTING RIGHTS)<Shareholder’s Proposals>
Agenda Item 5:
Implementation of share buyback
The shareholder’s proposals are described in “Shareholder Proposals(Agenda Items 5)" (pages 19-20)” of this document.

(1) If you exercise your voting rights in writing (post) and do not indicate“Approve” or “Disapprove” for any of the proposals on the agenda, wewill treat it as if you had indicated “Approve” for the Corporation’s
Proposals and “Disapprove” for the Shareholder's Proposals.
(2) If you exercise your voting rights multiple times via the Internet, yourfinal vote shall prevail.
(3) If you exercise your voting rights both via the Internet and in writing(post), your final vote shall prevail. If your votes via the Internet and inwriting (post) are arrived on same day, the vote exercised online shallprevail.

END





For those planning to attend the meeting in person, please submit the attached Voting Rights
Exercise Form at the reception desk upon your arrival.
In the event of any modification to the matters subject to the measures for provision in electronic
format, a notice of such modification will be posted on the Rinnai Corporation website and the TSE
website (see above) showing the information before and after modification.
At this Ordinary General Shareholders’ Meeting, the Corporation will uniformly distribute a document
describing items related to the matters subject to the measures for provision in electronic format,
regardless of whether or not a request for delivery of such document has been made. Among items
related to the matters subject to the measures for provision in electronic format, the following are notincluded in the Notice of Convocation, according to applicable laws and the Corporation’s Articles ofIncorporation: System to Ensure Execution of Business and Overview of Its Operational Status,
Consolidated Statements of Changes in Shareholders’ Equity, Notes to Consolidated Financial
Statements, and Nonconsolidated Statements of Changes in Shareholders’ Equity, and Notes toNonconsolidated Financial Statements. Accordingly, Business Reports, Consolidated Financial
Statements, and Nonconsolidated Financial Statements included in “Notice of Convocation of the74th Ordinary General Shareholders’ Meeting: Internet Disclosure Items” are only part of the
documents used by the accounting auditor to prepare the Accounting Auditor’s Report and by Audit& Supervisory Board to prepare their audit report.

2

Institutional investors can use the electronic voting platform for institutional investors
operated by ICJ, Inc.

3

4

Guide to Voting

Agenda and referenced items

The Corporation’s Proposals (Agenda Items 1–4)
Agenda Item 1

Approval of the proposed appropriation of retained earnings
Appropriation of retained earnings shall be applied as follows:
1. Year-End Dividends
The Corporation regards stable return of profits to shareholders as an importantmanagement policy, based on extensive consideration of various factors, including
consolidated business performance and payout ratio. Consequently, management
has decided to reward shareholders for their support by distributing total annual
dividends of ¥60 per share, which includes the interim dividend (¥30 per share).
(1) Type of dividend assets
Cash(2) Allocation of dividend assets and sum total
The Corporation intends to pay ¥30 per share of common stock, resulting in total
dividend payments of ¥4,296,106,440.
(3) Effective date for dividends from retained earnings
June 28, 2024
2. Other matters concerning appropriation of retained earnings
For the purpose of ensuring flexibility in capital policy, the Corporation proposes toreverse a part of a general reserve as follows.
(1) Item and amount of surplus to be decreased
General reserve: ¥10,000,000,000(2) Item and amount of surplus to be increased
Retained earnings carried forward: ¥10,000,000,000

5Agenda Item 2Election of nine (9) directors

The Corporation’s nine (9) directors will conclude their respective terms in office at theend of the Ordinary General Meeting of Shareholders. The Corporation asks
shareholders to elect nine (9) directors to said positions.
The Corporation proposes the following candidates for election.
Candidate
Number

Name

Sex

1

Kenji
HayashiMale

2

Hiroyasu
Naito

Male

3

Tsunenori
NaritaMale

4

Hideyuki
ShirakiMale

5

KazutoInoue

MaleCurrent Title andResponsibility
Representative
Director, andChairman
Representative
Director, President andExecutive President
Representative
Director, andExecutive Vice
President
Director and Senior
Managing Executive
Officer, Chief ofMarketing & Sales
Headquarters
Director and Senior
Managing Executive
Officer, Chief ofProduction
Engineering
Headquarter

Type

Attendanceat Board of
Directors’Meetings

Reappointment

15/15(100%)

Reappointment

15/15(100%)

Reappointment

15/15(100%)

Reappointment

11/11(100%)

Reappointment

11/11(100%)

Reappointment,
Outside director of
Takashi
Outside director,
15/15
Male
6
the Corporation
Kamio
Independent(100%)
director
Reappointment,
Outside director of
Tadashi
Outside director,
10/11
Male
7
the Corporation
Ogura
Independent(91%)
director
Reappointment,
Outside director of
Yoko
Outside director,
11/11
Female8
the Corporation
Dochi
Independent(100%)
directorNew
appointment,
Kumi
Female―Outside director,
9―
Sato
Independent
director
Note: Mr. Shiraki, Mr. Inoue, Mr. Ogura, and Ms. Dochi were newly elected and assumed officeat the 73rd Ordinary General Shareholders’ Meeting held on June 29, 2023. Therefore,
their attendance at Board of Directors’ meetings is different to that of other directors.

6

Skills Matrix of Director Candidates【Areas particularly expected of the relevant directors】*The following table does not represent all of the candidates’ knowledge and experience.
Expertise and Knowledge for Corporate Management

Global management

Technology

Business plans/Marketing

Finance/ Accounting/ Capital policy

Human resources strategy

Governance/ Legal matters/
Risk management

Sustainability

IT/DX(development/ production/ environmental)

Corporate management

Kenji Hayashi

●

●

－

－

●

●

●

－

－

Hiroyasu Naito

●

●

●

－

●

－

－

●

－

Tsunenori Narita

●

－

●

●

－

●

－

－

－

Hideyuki Shiraki

－

－

－

●

－

●

－

－

●

Kazuto Inoue

－

●

●

－

－

－

－

－

●

Takashi Kamio

●

●

－

●

－

－

●

－

－

Tadashi Ogura

●

－

●

－

－

●

●

－

－

Yoko Dochi

－

●

－

－

●

－

●

●

－

Kumi Sato

－

●

－

－

－

●

－

●

●

Name

7

Candidate
Number 1

Kenji Hayashi (Date of Birth: Jun. 27, 1949)

Candidate
Number 2

Hiroyasu Naito (Date of Birth: Apr. 20, 1955)

Reappointment

Career Summary and Current Position and Responsibility in the Corporation:
Apr. 1972 Joined Rinnai Corporation
Jun. 2005 Director, Managing Executive
Sep. 1978 Director
Officer, and General Manager
Feb. 1980 Director, and General Manager ofof Related Business DivisionCorporate Planning OfficeJun. 2006 Representative Director, Vice
Jun. 1983 Managing Director, and General
ChairmanManager of Production Technology
Apr. 2017 Representative Director,
Division
Chairman (current)
Jul. 1992 Managing Director, and General
Manager of Related Business Division
No. of Shares Owned: 7,369,872 shares
Reason to propose the candidate for election as director:
Mr. Hayashi has been involved extensively in the management of the Corporation since hejoined in 1972. He has been a Director from 1978, and General Manager of Corporate
Planning Office (currently, Corporate Management Headquarters), General Manager of
Production Technology Division (currently, Production Engineering Headquarters), andRelated Business Division (currently, Corporate Management Headquarters). He is deeply
familiar with the Corporation’s business and has a proven ability to solve management issues.
It has been concluded, therefore, that Mr. Hayashi is highly qualified to perform his duties as adirector. For this reason, management asks shareholders to reelect him to this position.

Reappointment

Career Summary and Current Position and Responsibility in the Corporation:
Apr. 1983 Joined Rinnai Corporation
Jun. 2003 Managing Director, General
Jun. 1991 Director, Deputy Chief ofManager of Corporate Planning
Technology Research
Division and concurrently General
Headquarters and concurrently
Manager of General Affairs
General Manager of New
Division
Technology Development Division Jun. 2005 Director, Managing Executive
Jul. 1998 Director, Chief of Technology
Officer, General Manager ofResearch Headquarters
Corporate Planning Division andJul. 2001 Director, General Manager ofconcurrently General Manager ofCorporate Planning Division and
Administration Division
concurrently General Manager ofNov. 2005 Representative Director,
General Affairs Division
President and Executive
President (current)
Current Representation in Other Companies:
Outside director at Nagoya Railroad Co., Ltd.
No. of Shares Owned: 1,530,540 shares
Reason to propose the candidate for election as director:
Mr. Naito has been extensively involved in the management of the Corporation since hejoined in 1983. He has been a Director from 1991, and Chief of Research & Development
Headquarters, General Manager of Corporate Planning Division (currently, Corporate
Management Headquarters), and General Affairs Division. He is also deeply familiar with the
Corporation’s business and has a proven ability to solve management issues. It has beenconcluded, therefore, that Mr. Naito is highly qualified to perform his duties as a director. For
this reason, management asks shareholders to reelect him to this position.

8

Candidate
Number 3

Tsunenori Narita (Date of Birth: Jun. 15, 1948)

Reappointment

Career Summary and Current Position and Responsibility in the Corporation:
Apr.1967 Joined Rinnai Corporation
Apr. 2010 Representative Director,
Jun. 1988 Director, Chief of Technology
Executive Vice President;
Research Headquarters andresponsible for Research &concurrently General Manager ofDevelopment Headquarters,
Quality Assurance Division
Production Headquarters,
Jun. 2001 Managing Director, Chief ofOverseas Business Headquarters
Production Headquarters
and Customer Division, and ChiefJun. 2005 Director, Managing Executiveof Marketing & Sales
Officer, and Chief of Production
Headquarters
Headquarters
Oct. 2010 Representative Director,
Nov. 2005 Director, Managing Executive
Executive Vice President;
Officer, in charge of domestic
responsible for Research &business, and concurrently Chief
Development Headquarters,of Marketing & Sales
Production Headquarters,
Headquarters
Overseas Business
Apr. 2006 Director, Senior Executive Officer,
Headquarters, and Chief ofin charge of domestic business,
Marketing & Sales Headquarters
and concurrently Chief ofApr. 2016 Representative Director,
Marketing & Sales Headquarters
Executive Vice President,
President’s Assistant, in charge
Apr. 2009 Director, Executive Vice President;of Production Headquarters andresponsible for Research &Overseas Business Headquarters
Development Headquarters,
Production Headquarters,
Apr. 2018 Representative Director,
Overseas Business Headquarters
Executive Vice President,
and Customer Division, and Chief
President’s Assistant (current)of Marketing & Sales
Headquarters
No. of Shares Owned: 30,157 shares
Reason to propose the candidate for election as director:
Mr. Narita has been extensively involved in the management of the Corporation since hejoined in 1967. He has been a Director and Chief of Technology Research Headquarters(currently, Research & Development Headquarters) from 1988, and Chief of Production
Headquarters and Marketing & Sales Headquarters. He is also deeply familiar with the
Corporation’s business and has a proven ability to solve management issues. It has beenconcluded, therefore, that Mr. Narita is highly qualified to perform his duties as a director. For
this reason, management asks shareholders to reelect him to this position.

9

Candidate
Number 4

Hideyuki Shiraki (Date of Birth: Jun. 23, 1966)

Candidate
Number 5

Kazuto Inoue (Date of Birth: Nov. 12, 1961)

Reappointment

Career Summary and Current Position and Responsibility in the Corporation:
Apr.1989 Joined Rinnai Corporation
Apr. 2023 Senior Managing Executive
Apr. 2017 Executive Officer, General
Officer, Chief of Marketing &Manager of Kanto Branch Office,Sales Headquarters
Marketing & Sales Headquarters
Jun. 2023 Director, Senior Managing
Apr. 2019 Executive Officer, Deputy Chief of
Executive Officer, Chief ofMarketing & Sales Headquarters,
Marketing & Sales Headquarters
concurrently, General Manager of(current)
Kanto Branch OfficeJun. 2020 Managing Executive Officer,
Chief of Marketing & Sales
Headquarters
No. of Shares Owned: 7,501 shares
Reason to propose the candidate for election as director:
Mr. Shiraki has gained significant experience in the Marketing & Sales Headquarters sincejoining the Corporation in 1989, serving as Executive Officer, General Manager of the Kanto
Branch Office, and Deputy Chief of the Marketing & Sales Headquarters since 2017,Managing Executive Officer since 2020, and Director and Senior Managing Executive Officer
since 2023. He is deeply familiar with the Corporation’s business and has a proven ability tosolve management issues. It has been concluded, therefore, that Mr. Shiraki is properly
qualified to perform his duties as a director. For this reason, management asks shareholders
to reelect him to this position.

Reappointment

Career Summary and Current Position and Responsibility in the Corporation:
Apr.1985 Joined Rinnai Corporation
Apr. 2018 Executive Officer, General
Apr. 2008 Vice President of Rinnai Korea
Manager of Production
Corporation
Engineering DivisionJun. 2012 President of Rinnai Precision Co., Apr. 2021 Managing Executive Officer,
Ltd.
Chief of Production Engineering
Apr. 2016 Executive Officer of the
Headquarters
Corporation, General Manager ofApr. 2023 Senior Managing Executive
Officer, Chief of Production
Production Control Division,
Engineering Headquarters
Production Headquarters
Jun. 2023 Director and Senior Managing
Apr. 2017 Executive Officer, Deputy Chief of
Executive Officer, Chief ofProduction Headquarters
Production Engineering
Headquarters (current)
No. of Shares Owned: 6,624 shares
Reason to propose the candidate for election as director:
Mr. Inoue has gained significant experience in the Production Headquarters since joining the
Corporation in 1985, serving as Vice President (locally based) of Rinnai Korea Co., Ltd.
(subsidiary of the Corporation) since 2008, then as President of Rinnai Precision Co., Ltd. As
Executive Officer, he served as General Manager of Production Control Division, Production
Headquarters, and Deputy Chief of Production Headquarters since 2016. As Managing
Executive Officer since 2021 and Director and Senior Managing Executive Officer since 2023,
he served as Chief of Production Engineering Headquarters. He is deeply familiar with the
Corporation’s business and has a proven ability to solve management issues. It has beenconcluded, therefore, that Mr. Inoue is properly qualified to perform his duties as a director.
For this reason, management asks shareholders to reelect him to this position.

10

Candidate
Number 6

Takashi Kamio (Date of Birth: Nov. 27, 1942)

Reappointment,
Outside,Independent

Career Summary and Current Position and Responsibility in the Corporation:
Apr. 1965 Joined Toyota Motor Co., Ltd.
Jun. 2006 Director at Nakanihon Kogyo(currently, Toyota Motor Corporation)Co., Ltd.
Jun. 1996 Director at Toyota Motor Corporation
May 2010 Advisor at Toyota Motor
Jun. 1999 Managing Director at Toyota Motor
Corporation
Corporation
Jun. 2010 Senior Advisor at Towa Real
Jun. 2001 Senior Managing Director at Toyota
Estate Co., Ltd.
Motor Corporation
Jun. 2011 Audit & Supervisory Board
Jun. 2005 Senior Advisor at Toyota Motor
Member at Central Nippon
Corporation
Expressway Company Limited
President at Towa Real Estate Co.,
Jun. 2016 Outside director, Rinnai
Ltd. (currently, Toyota Fudosan Co.,
Corporation (current)
Ltd.)
Current Representation in Other Companies:
Chairman of Sasaeai, specified nonprofit corporation
No. of Shares Owned: 0 shares
Reason to propose the candidate for election as outside director and expected role:
Mr. Kamio served as a senior managing director at Toyota Motor Corporation and as president
at Towa Real Estate Co., Ltd. (currently, Toyota Fudosan Co., Ltd.), which allowed him to
accumulate extensive experience and wide-ranging knowledge. Management believes thisbackground will enable him to suitably execute his duties as an outside director. For thisreason, management asks shareholders to reelect him to this position. If he is elected, he will
be engaged as a member of the Nomination Advisory Committee and Compensation Advisory
Committee to select candidates of director and executive, and decide directors’ compensationfrom an objective and neutral standpoint.

Candidate
Number 7

Tadashi Ogura (Date of Birth: Jan. 7, 1951)

Reappointment,
Outside,Independent

Career Summary and Current Position and Responsibility in the Corporation:
Apr. 1975 Joined Nippon Toki Co., Ltd.
Apr. 2012 Representative Director & Vice
President, Executive Officer at(currently, NORITAKE CO., LIMITED)NORITAKE CO., LIMITED
Jun. 2005 Director at NORITAKE CO., LIMITED
Jun. 2013 Representative Director &Apr. 2008 Director, & Managing Executive
President, Executive Officer at
Officer at NORITAKE CO., LIMITEDNORITAKE CO., LIMITED
Jun. 2010 Director, & Senior Managing
Jun. 2018 Representative Director &Executive Officer at NORITAKE CO.,
Chairman at NORITAKE CO.,LIMITED
LIMITED
Jun. 2021 Outside director at MeikoJun. 2011 Director & Vice President, Executive
Trans Co., Ltd. (current)
Officer at NORITAKE CO., LIMITED
Jun. 2023 Outside director, Rinnai
Corporation (current)
Current Representation in Other Companies:
Outside director at Meiko Trans Co., Ltd.
No. of Shares Owned: 0 shares
Reason to propose the candidate for election as outside director and expected role:
Mr. Ogura has served as Representative Director and Chairman of NORITAKE CO., LIMITED
and other important positions, which allowed him to accumulate extensive experience andwide-ranging knowledge. Management believes this background will enable him to suitably
execute his duties as an outside director. If he is elected, Mr. Ogura will serve as a member of
the Nomination Advisory Committee and Compensation Advisory Committee to selectcandidates of director and executive, and decide directors’ compensation from an objective
and neutral standpoint.

11

Candidate
Number 8

Yoko Dochi (Date of Birth: Oct. 3, 1964)

Reappointment,
Outside,Independent

Career Summary and Current Position and Responsibility in the Corporation:
Nov. 2018 Joined SoftBank Group Corp.
Apr. 1987 Joined The Bank of Tokyo, Ltd.
Managing Director, in charge of(currently, MUFG Bank, Ltd.)
Finance, General Manager ofSept. 1996 Joined World Bank Group (WBG)
Investor Relations
May 2001 Joined Toyota Motor Europe N.V./
Feb. 2020 Joined SoftBank Group
S.A.
International
Jan. 2015 General Manager of Global
Managing Partner
Treasury and Investor Relations at Jun. 2020 Outside director of Nippo Ltd.
Toyota Motor Europe N.V./ S.A.
(current)Mar. 2018 In charge of Investors Relations
Jun. 2023 Outside director, Rinnaiand Accounting Division, andCorporation (current)
Stock Group at Toyota Motor
Mar. 2024 Outside audit & supervisory board
Corporation
member at Kirin Holdings
Company, Limited (current)
Current Representation in Other Companies:
Outside director of Nippo Ltd.
Trustee of Daiwa Anglo-Japanese Foundation
Outside audit & supervisory board member at Kirin Holdings Company, Limited
No. of Shares Owned: 0 shares
Reason to propose the candidate for election as outside director and expected role:Ms. Dochi has been in charge of investor relations globally at Toyota Motor Corporation and
SoftBank Group Corp. for over 20 years, which allowed her to accumulate extensive
experience and deep insights about investor relations and ESG. She is also well-versed inaccounting and financial matters and has knowledge of international organizational
management. It has been concluded, therefore, that Ms. Dochi is properly qualified to perform
her duties as an outside director. For this reason, management asks shareholders to reelecther to this position.

Candidate
Number 9

Kumi Sato (Date of Birth: Feb. 3, 1954)

New
appointment,
Outside,Independent

Career Summary and Current Position and Responsibility in the Corporation:
1989
Editor-in-chief and publisher of an Apr. 2014 Event director, Aichi International
English-language magazine
Women’s Film Festival (Aichi“AVENUES”
Gender Equality Foundation)
2005
Producer, Friendship Film Festival Apr. 2021 Professor, Faculty of Technology,
International Professionalof the 2005 World Exposition,
University of Technology in
Aichi, Japan
Apr. 2012 Professor, Faculty of Global andNagoya (current)
Media Studies, Kinjo Gakuin
University
Current Representation in Other Companies:
Professor, Faculty of Technology, International Professional University of Technology in
NagoyaNo. of Shares Owned: 0 shares
Reason to propose the candidate for election as outside director and expected role:
Ms. Sato has long served as editor-in-chief and publisher of an English-language magazine
and has also held professorships related to international informatics and multicultural
coexistence at multiple universities. Management believes this background will enable her tosuitably execute her duties as an outside director. For this reason, management asks
shareholders to newly elect her to this position. If Ms. Sato is elected, she will be engaged asa member of the Nomination Advisory Committee and Compensation Advisory Committee toselect candidates of director and executive, and decide directors’ compensation from an
objective and neutral standpoint.
12Notes:1. No candidate has any particular interest in the Corporation.
2. Mr. Kamio, Mr. Ogura, Ms. Dochi and Ms. Sato are candidates for the position of outside
director.
3. Mr. Kamio, Mr. Ogura and Ms. Dochi are currently outside directors of the Corporation. At theend of this year’s Ordinary General Meeting of Shareholders, their terms in office will be as
follows:
Takashi Kamio: Eight (8) years
Tadashi Ogura: One (1) year
Yoko Dochi: One (1) year
4. Mr. Kamio is Chairman of Sasaeai, a specified nonprofit corporation to which the Corporation
makes donations. Since the donations only amount to ¥50,000 per year, however, this isdeemed to have no impact on Mr. Kamio’s impartiality.
5. The Corporation concluded agreements with Mr. Kamio, Mr. Ogura and Ms. Dochi inaccordance with the first paragraph of Article 427 of the Companies Act that limits liability fordamages caused by failure of duties to an amount determined by legal provisions. If they are
reelected and appointed as outside directors, this agreement with them will remain in force. If
the elections of Ms. Sato is approved, the Corporation intends to enter into similar liability
limitation agreements with her.
6. The Corporation concluded liability insurance contracts for officers with an insurance company
in accordance with the first paragraph of Article 430-3 of the Companies Act thatcompensates court costs and damages which the insured bear due to lawsuits related to the
Corporation, third-party proceedings, and shareholder-derived suits. If each candidate iselected and appointed as a director, he/she becomes an insured person under the insurance
contract. The Corporation plans to update the insurance contract with the same content at thenext contract renewal.
7. The Corporation has notified the Tokyo Stock Exchange and the Nagoya Stock Exchangethat Mr. Kamio, Mr. Ogura and Ms. Dochi fulfill the requirements for a position as independent
directors. If they are reelected and appointed as outside directors, the Corporation will
maintain them as independent directors. If the elections of Ms. Sato is approved, theCorporation intends to register her as independent directors with the Tokyo Stock Exchange andthe Nagoya Stock Exchange.
8. If the reelections of Mr. Kamio and Mr. Ogura are approved, they will serve as members of theNomination Advisory Committee and the Compensation Advisory Committee and will be
involved in the selection of executive candidates and the determination of executive
compensation and other matters from an objective and neutral standpoint. And if the electionof Ms. Sato is approved, she will also serve as a member of the Nomination Advisory
Committee and the Compensation Advisory Committee and will be involved in the selection of
executive candidates and the determination of executive compensation and other mattersfrom an objective and neutral standpoint.

13

Agenda Item 3

Election of four (4) Audit & Supervisory Board members
The Corporation’s four (4) Audit & Supervisory Board members will conclude theirrespective terms in office at the end of the Ordinary General Meeting of Shareholders.
Shareholders will therefore be asked to elect four (4) Audit & Supervisory Board
members to said positions.
This item has already been agreed upon by the Audit & Supervisory Board.
Candidates for election as members of the Audit & Supervisory Board are presented
below.

Candidate
NumberName

1

Masanori
Shimizu

Male

2

Atsuo
KashimaMale

3

MasaakiMatsuoka

4

Ippei
Watanabe

Sex

Current Title

Standing Audit &Supervisory Board
Member of
the Corporation
Assistant to Chief ofCorporate
Management
Headquarters

Male

Outside Audit &Supervisory Board
Member of
the Corporation

Male

Outside Audit &Supervisory Board
Member of
the Corporation

Type

Attendanceat Board of
Directors’Meetings

Attendanceat Audit &Supervisory
Board
MemberMeeting

Reappointment

11/11(100%)

11/11(100%)

New
appointment

―

―

15/15
(100%)

16/16(100%)

15/15(100%)

16/16(100%)

Reappointment,
Outsidemember,Independent
officer
Reappointment,
Outsidemember,Independent
officer

Note: Mr. Shimizu was newly elected and assumed office at the 73rd Ordinary General
Shareholders’ Meeting held on June 29, 2023. Therefore, his attendance at Board of
Directors’ meetings and Audit & Supervisory Board Member Meetings is different to that ofother members.

14

Candidate Masanori Shimizu
Number 1 (Date of Birth: Dec. 20, 1961)

Reappointment

Candidate Atsuo Kashima
Number 2 (Date of Birth: Jan. 22, 1964)

New
appointment

Career Summary and Current Position in the Corporation:
Apr. 1984 Joined Rinnai Corporation
Apr. 2022 Senior Executive Officer, Chief ofApr. 2016 Executive Officer, General
Quality Assurance Headquarters
Manager of Technology
Jun. 2023 Standing audit & supervisory
Development Division, Research &board member of the Corporation
Development Headquarters(current)
Apr. 2021 Executive Officer, Deputy Chief ofQuality Assurance Headquarters,
concurrently General Manager of
Quality Assurance Division
No. of Shares Owned: 3,341 shares
Reason to propose the candidate for election as Audit & Supervisory Board member:
Mr. Shimizu has gained significant experience in the Research & Development Headquarters
since joining the Corporation in 1984. As an Executive Officer, he has served as General
Manager of the Technology Development Division of the Research & Development
Headquarters since 2016, and Deputy Chief of the Quality Assurance Headquarters since2021. And as a Senior Executive Officer, he has served as Chief of Quality Assurance
Headquarters since 2022. He also has practical experience and knowledge not only in
product development work but also in technology development and quality assurance. For
this reason, management asks shareholders to reelect him as an Audit & Supervisory Board
member.

Career Summary and Current Position in the Corporation:
Apr. 1986 Joined Rinnai Corporation
Apr. 2024 Assistant to Chief of Corporate
Apr. 2018 General Manager of Accounting
Management Headquarters
Division(current)
Apr. 2021 Executive Officer, General
Manager of Accounting Division
No. of Shares Owned: 6,719 shares
Reason to propose the candidate for election as Audit & Supervisory Board member:
Mr. Kashima has gained experience in the Accounting Division since joining the Corporationin 1986 and has served as Executive Officer and General Manager of the Accounting Division
since 2021. He is familiar with the Group’s business, knowledgeable about finance andaccounting, and has practical experience in auditing the Corporation’s subsidiaries in Japanand overseas. The Corporation is confident that he will monitor overall management andprovide effective advice. For this reason, management asks shareholders to newly elect him
as an Audit & Supervisory Board member.

15

Candidate Masaaki Matsuoka
Number 3 (Date of Birth: Jun. 25, 1949)

Reappointment,
Outside,Independent

Career Summary and Current Position in the Corporation:
Sep. 1976 Registration of a certified
Jun. 2014 Retired from Deloitte Touche
public accountant
Tohmatsu LLC
Jul. 1988 Partner at Deloitte Tohmatsu
Jul. 2014 Established Masaaki Matsuoka CPA
LLC (Now, Deloitte Touche
office (current)
Tohmatsu LLC)
Jun. 2016 Outside audit & supervisory board
member of the Corporation (current)
Current Representation in other companies
President of Masaaki Matsuoka CPA officeOutside director at Kanemi Co., Ltd. (audit & supervisory board member)
Outside director at Mitachi Co., Ltd. (audit & supervisory board member)
No. of Shares Owned: 0 shares
Reason to propose the candidate for election as Audit & Supervisory Board member:
Mr. Matsuoka has not been involved in the management of a company except as an outside
director and an outside auditor, but he has ample knowledge of corporate management basedon experience and insights gained as a certified public accountant. Management believes thisbackground will enable him to suitably execute his duties as an outside member of the Audit &Supervisory Board. For this reason, we ask shareholders to reelect him to this position.

Candidate
Number 4

Ippei Watanabe (Date of Birth: Dec. 7, 1949)

Reappointment,
Outside,Independent

Career Summary and Current Position in the Corporation:
Apr. 1978 Registration of attorneys
Jun. 1991 Established Ohta & Watanabe Law
Joined Saji & Ohta Law firm
firm (currently, TRUTH & TRUSTLaw Office) (current)
Jun. 2016 Outside audit & supervisory board
member of the Corporation (current)
Current Representation in other companies
President of TRUTH & TRUST Law OfficeOutside director at Howa Machinery, Ltd. (Audit and supervisory committee member)
No. of Shares Owned: 0 shares
Reason to propose the candidate for election as Audit & Supervisory Board member:
Mr. Watanabe has not been involved in the management of a company except as an outside
director and an outside auditor, but he has acquired specialized knowledge and extensive
experience as a lawyer. Management believes this background will enable him to suitably
execute his duties as an outside member of the Audit & Supervisory Board. For this reason,
management asks shareholders to reelect him to this position.

Notes:
1. No candidate has any particular interest in the Corporation.
2. Mr. Matsuoka and Mr. Watanabe are candidates for outside members of the Audit &Supervisory Board.
3. Mr. Matsuoka and Mr. Watanabe are currently outside members of the Audit & Supervisory
Board. At the end of this year’s Ordinary General Meeting of Shareholders, their terms in officewill be as follows:
Masaaki Matsuoka: Eight (8) years
Ippei Watanabe: Eight (8) years

164. The Corporation concluded agreements with Mr. Matsuoka and Mr. Watanabe in accordancewith the first paragraph of Article 427 of the Corporate Law that limits liability for damages
caused by failure of duties to an amount determined by legal provisions. If they are reelected
and appointed as outside members, this agreement with them will remain in force.
5. The Corporation concluded liability insurance contracts for officers with an insurance company
in accordance with the first paragraph of Article 430-3 of the Companies Act that compensatescourt costs and damages which the insured bear due to lawsuits related to the Corporation,
third-party proceedings, and shareholder-derived suits. If each candidate is elected andappointed as an Audit & Supervisory Board member, they become insured persons under the
insurance contract. The Corporation plans to update the insurance contract with the samecontent at the next contract renewal.
6. The Corporation has notified the Tokyo Stock Exchange and the Nagoya Stock Exchange that
Mr. Matsuoka and Mr. Watanabe fulfill the requirements for a position as an independent
officer. If they are reelected and appointed as outside members; the Corporation will maintainthem as independent officers.

17Agenda Item 4Election of one (1) substitute Audit & Supervisory Board member
In case of a vacancy on the Audit & Supervisory Board, which is required by law tomaintain a specific number of members, the Corporation will ask shareholders to electone (1) substitute Audit & Supervisory Board member.
This item has already been agreed upon by members of the Audit & Supervisory
Board. The Corporation proposes the following candidate for election as the substitute
Audit & Supervisory Board member.
Reappointment,
Outside,
Yoshirou Ishikawa (Date of Birth: Mar. 22, 1951)
Independent
Career Summary and Current Position in the Corporation:
Jul. 2001 Commissioner's Secretariat atJul. 2009 District Director at Gifu-minami
National Tax Agency, Internal
Tax OfficeInspector at Nagoya Regional
Aug. 2011 President, Yoshirou Ishikawa
Taxation Bureau
certified tax accountant office(current)
Jul. 2005 Special Examiner, Large
Oct. 2011 Executive director, General
Enterprise Examination
incorporated association
Department at Nagoya Regional
Nakagawa houjinkai
Taxation Bureau
Jul. 2008 Appeals Judge at Nagoya
National Tax Tribunal
Current Representation in Other Companies:

President, Yoshirou Ishikawa certified tax accountant office

No. of Shares Owned: 0 shares
Reason to propose the candidate for election as substitute outside Audit &Supervisory Board member:
Mr. Ishikawa has not been involved in the management of a company, but he has vast
experience and has acquired significant knowledge as a tax accountant. Management
believes this background will enable him to suitably execute his duties as an outside memberof the Audit & Supervisory Board, and management asks shareholders to elect him to
substitute for this position.
Notes:
1. Mr. Ishikawa has no particular interest in the Corporation.
2. Mr. Ishikawa is a candidate for the position of substitute outside member of the Audit &Supervisory Board.
3. If Mr. Ishikawa is elected and appointed as an outside member of the Audit & Supervisory
Board, the Corporation will conclude an agreement with him in accordance with the Paragraph
1 of Article 427 of the Companies Act that limits liability for damages caused by failure of duties
to an amount determined by legal provisions.
4. The Corporation concluded liability insurance contracts for officers with an insurance company
in accordance with the first paragraph of Article 430-3 of the Companies Act that compensatescourt costs and damages which the insured, the Corporation’s directors, bear due to lawsuits
related to the Corporation, third-party proceedings, and shareholder-derived suits. If Mr.
Ishikawa is elected and appointed as a member of the Audit & Supervisory Board, he becomesan insured person under the insurance contract.
5. If Mr. Ishikawa assumes the position of outside member of the Audit & Supervisory Board, theCorporation plans to notify the Tokyo Stock Exchange and the Nagoya Stock Exchange that hesatisfies the conditions for independent auditor.

18

Shareholder’s Proposals (Agenda Item 5)
Proposals described in Agenda Items 5 was made by one shareholder. The Board of
Directors opposes this proposals. Outlines of proposals and the reasons for proposal
have been provided in their original form as submitted by the proposing shareholder.

Agenda Item 5
Implementation of share buyback(1) Outline of proposal
1. Share Buyback: The Company shall, in accordance with Article 156, Paragraph 1 of
the Companies Act, acquire its own common shares through the delivery of monies,
with a limit on total number of shares of 15,000,000 and a total acquisition price of¥50,000,000,000 within one year from the conclusion of the AGM.
2. Other Retained Earnings: The Company shall withdraw ¥50,000,000,000 from generalreserve and transfer the same amount to retained earnings brought forward.
(2) Reasons for proposal
We believe that the management's lack of awareness of the cost of capital is one of thereasons for the weak share price performance in recent years.
As of December 31, 2023, the Company held 179.5 billion yen in financial assets(132.5 billion yen in cash and deposits, 5.0 billion yen in marketable securities, and 42.0
billion yen in investments in securities such as cross-shareholdings). In addition, theCompany is investing 25.8 billion yen in real estate to build a showroom in Minami-Aoyama,
Tokyo. While we agree on an investment to strengthen contact with consumers, we believe
that, in this case, it is far from justifiable from a cost of capital perspective, given the sizeof the investment. Although, the Company’s Return on Invested Capital has averaged highteens over the past decade, its Return on Equity has remained at around half that level,
as a result of a capital policy that allocates a majority of shareholders' equity to financial
assets and real estate investments.
We believe that it is in the best interest of all shareholders for the Company to improve
capital efficiency and equity value per share by selling assets that do not meet its cost ofcapital, such as cross-shareholdings and real estate investments, and conducting share
repurchases.
Opinions of the Corporation’s Board of Directors on Agenda Item 5(1) Opinion of the Board of Directors
The Board of Directors opposes this Shareholder Proposal.
(2) Reasons for opposition
We have formulated a medium-term business plan, New ERA 2025 (hereinafter, “Plan”),
which covers the period from fiscal 2022 to 2026 (April 1, 2021–March 31, 2026). Under
the Plan, we are making steady progress toward “Advancement in addressing social
challenges” through “Expansion of business scale,” and “Revolution of corporate
structure.”
In the Plan, we have positioned improvement of capital profitability as one of our mostimportant management issues. Accordingly, we will steadily grow profits by promoting
our high-value-added product strategy and implementing rigorous cost reductions tofurther strengthen our earning power, and improve capital efficiency through flexible
share buybacks. Through these measures, we aim to achieve ROE of 8% in fiscal 2026,
ending March 31, 2026 (the final year of the Plan) and 10% or higher during the periodof the next medium-term business plan (scheduled to cover fiscal 2027–2031).
19

In addition, the Corporation intends to make investments in growth during the period of
the Plan that far exceed investments made over the past five years. We have beensteadily investing to expand local production capacity in the United States and China,
our key strategic markets, while in Japan we are investing in the Kasugai Logistics
Center. To address changes in the business environment, we have sought continuously
to ensure our business survival and competitiveness from a long-term perspective by
responding to calls for carbon neutrality, digital transformation (DX), changing consumer
lifestyles, and so forth. As a result, cumulative capital investments have reached ¥87.5
billion in the first three years of the Plan (ended March 2024), and we plan to makecapital investments of a further ¥20.9 billion in the current fiscal year (ending March
2025). We will continue aggressively making necessary investments with a view toimproving corporate value over the medium and long terms.
Under these circumstances, our basic policy is to pay stable dividends and increase
dividends in line with the Corporation’s profit growth from a medium- to long-term
perspective. With regard to surplus funds remaining at the end of the Plan due tochanges in investment plans or deferral to the next medium-term plan, our policy is toreturn such funds to shareholders, based on our investment plans for the next mediumterm plan. In accordance with this policy, we paid annual dividends of ¥140.00 per sharein the fiscal year ended March 2022, up ¥15.00 year on year, ¥160.00 per share in theyear ended March 2023, and ¥60.00 per share in the fiscal year ended March 2024,
after the stock split (¥180.00 on a pre-stock split basis). In addition, we conducted sharebuybacks worth ¥37.4 billion over the three-year period from fiscal 2022 to 2024 (April
2021 to March 2024), and today (May 9, 2024) we decided to buy back shares worth¥10 billion (maximum). As a result, total shareholder returns have significantly exceeded
the initial targets of the Plan (total shareholder return of above ¥60 billion and five-year
average total return ratio of above 40%). Specifically, total shareholder returns fromfiscal 2022, ended March 31, 2022 (first year of the Plan) to fiscal 2024, ended March
31, 2024, plus the estimated return for fiscal 2025, ending March 31, 2025, will be ¥82.0
billion on a cumulative basis, with a total average total return ratio of 78.2%.
On the other hand, the Shareholder Proposal calls for us to buy back a large numberof shares—equivalent to double our net income in a single year—and does not give
sufficient consideration to the Corporation’s need for growth investments and the like.
The share buyback proposed in the Shareholder Proposal will increase ROE in the shortterm. However, this alone will not result in medium- to long-term improvements incorporate value and may distort our financial base and constrain investment activities
aimed at sustainable growth. We believe maintaining steady profit growth—by further
strengthening our earning power—while providing shareholders returns in line with suchgrowth is in the best interest of the Corporation and its shareholders. Accordingly, rather
than conducting a share buyback at the time or in the amount stipulated in the
Shareholder Proposal, we believe it is appropriate, under our Plan and capital policy, toconduct share buybacks in the manner that takes into account overall conditions
surrounding the Corporation, including business performance, business investments,
financial position, and share price.
Therefore, the Board of Directors opposes this Shareholder Proposal.
END.

20

Business Report (April 1, 2023, to March 31, 2024)
1. Consolidated Business Overview(1) Consolidated Business Results
In the fiscal year under review (April 1, 2023–March 31, 2024), the global economy
continued facing difficult conditions, including worsening business confidence due torising prices and tight monetary policies worldwide, as well as a stagnant Chinese
economy suffering from real estate issues and other problems and prolonged situationsin the Middle East and Ukraine. The Japanese economy also faced unpredictableconditions due to the ongoing impact of COVID-19 on the supply–demand balance, as
well as continuing price increases on the back of soaring raw material and energy costs
and uncertain foreign exchange fluctuations.
In the domestic housing-related industry, new housing starts remained weak,
especially for owner-occupied dwellings, which continued declining slowly. However, thehousehold appliance sector showed signs of recovery in demand related to renovation.
Under these circumstances, the Rinnai Group pursued three key strategies under
its medium-term business plan, New ERA 2025: “Advancement in addressing social
challenges,” “Expansion of business scale,” and “Revolution of corporate structure.” We
are now at a turning in that five-year plan. During the past three years, we have been
exposed to various disruptive events that have affected the supply–demand balance,
supply chain, and logistics due to the worldwide pandemic. Nevertheless, we will strive
to achieve the targets of New ERA 2025 based on the assumption that businessconditions will return to normal in the remaining two years.
To address social issues set forth in our medium-term plan, we are working tobecome carbon neutral as a priority initiative. In the United States, where storage-typewater heaters are the norm, the spread of tankless water heaters with higher energysaving performance is helping reduce CO2 emissions. In Australia, there is a rapidly
growing shift from fossil fuels to renewable energy as part of efforts to realize adecarbonized society, and we are responding by expanding our electricity-powered
product lineup.
In Japan, we are expanding sales of our ECO ONE hybrid water heaters withheating systems which meet the needs of the times for higher energy-saving
performance. We are taking advantage of a subsidy program offered by Japan’s Ministryof Economy, Trade and Industry for ECO ONE, and promoting sales activities centeredon the ECO ONE X5, featuring improved compactness and ease of installation.
Furthermore, sales of dishwashers and gas clothes dryers, which meet the growing needfor time-saving housework due to the increase in dual-income households, remained
strong. In these ways, we made steady progress in fulfilling our promise to ourcustomers (“Creating a healthier way of living”) and achieving sustainable and solid longterm growth.
With respect to revenue, we faced weak consumer confidence due to rising
global prices and high interest rates in some regions, while in-house and distribution
inventories remained at high levels. However, these factors began to dissipate in thesecond half, resulting in a year-on-year increase in net sales. We also posted asignificant recovery in earnings due to return of production to previous-year levels
through optimization of inventory levels, and the entrenched effects of price revisions.
However, these factors failed to compensate for our negative performance in the first
half, resulting in a year-on-year decline in operating income.
As a result, consolidated net sales for the period amounted to ¥430,186 million,
up 1.2% from the previous year. Operating income declined 5.0%, to ¥39,362 million,
and ordinary income rose 3.4%, to ¥46,071 million. Net income attributable to owners of
the parent company increased 2.2%, to ¥26,667 million.

21

Net sales
Operating income
Ordinary income
Net income
attributable toowners of theparent company

73rd fiscal year
(Year ended
March 31, 2023)
Millions of yen
425,229
41,41844,56526,09674th fiscal year
(Year ended
March 31, 2024)
Millions of yen
430,186
39,362
46,071

YOY change
Millions of yen
4,957-2,056
1,506

%
1.2%
-5.0%
3.4%

570

2.2%

26,667

Our consolidated results by geographical segment were as follows:Japan
Net sales¥192,354
million(YOY change:-2.3%)

UnitedStates
Net sales¥57,875
million(YOY change:+3.8%)In Japan, distribution inventories
reached optimal levels in the second
half of the year, and production, which
we had adjusted since April, thebeginning of the fiscal year, returned
to normal levels in the third quarter.
Sales of key products were alsostrong, evidenced by growth in salesof our ECO ONE hybrid water heaters
with heating systems, which benefited
from government subsidies. However,these factors failed to compensate forour negative performance in the first
half. As a result, sales in Japandeclined 2.3%, to ¥192,354 million,
and operating income fell 23.9%, to¥17,965 million.
In the United States, new housing
starts showed signs of picking up,
while consumer sentiment remainedsluggish on the back of high interest
rates. Due to foreign exchange
factors, however sales in the UnitedStates increased 3.8%, to ¥57,875
million. On the earnings side, weposted an increase in fixed costburden due to adjustments for
production cutbacks made since thebeginning of the fiscal year, resulting
in a significant operating loss in thefirst half of the year. In the second
half, however, profitability improved
thanks to a decrease in storage costs
stemming from inventory reductions,as well as containment of labor costs.
These efforts helped reduce theoperating loss posted in the first half.
As a result, the operating loss for theyear was ¥1,197 million.

22

Australia
Net sales¥30,338
million(YOY change:+9.7%)China
Net sales¥71,886
million(YOY change:+8.7%)SouthKorea
Net sales¥31,874
million(YOY change:-0.7%)

Amid weakness in the housing market
and a rapid shift toward electrification,
sales of electrical products, such asheat pump water heaters and electric
tank-based water heaters, remained
strong. As a result, sales in Australiarose 9.7%, to ¥30,338 million, andoperating income climbed 5.6%, to¥1,245 million.

Amid ongoing weakness in the realestate market and a continued decline
in consumer sentiment, we benefited
from strong e-commerce sales andexpanded the sales territory of bricksand-mortar stores owned by ecommerce platforms. Accordingly,
sales in China grew 8.7%, to ¥71,886
million, and operating income rose
14.9%, to ¥12,146 million.

Although housing starts showed signsof bottoming out toward the end of theperiod, intense price competition
resulted in weak sales of mainstay
boilers. As a result, sales in South
Korea decreased 0.7%, to ¥31,874
million. On the earnings side, we
worked rigorously to reduce fixed
costs under difficult conditions,
resulting in operating income of ¥16
million, down 97.7%.

23

Indonesia
Net sales¥14,913
million(YOY change:-8.0%)

Although sales remained sluggish due
to continued weak personal
consumption accompanying rising
prices, we revised our sales prices,
benefited from lower raw materials
prices, and reduced costs.
Consequently, sales in Indonesia
declined 8.0%, to ¥14,913 million, andoperating income increased 14.4%, to¥2,745 million.

Consolidated net sales and operating income by reporting segment(Millions of yen)
73rd fiscal year
(previous fiscal year)(April 1, 2022,
to March 31, 2023)

196,838
55,75027,655
66,15032,094
16,20330,537—

Operatingincome23,597313
1,180
10,569
705
2,400
4,875
(2,223)425,229

41,418Net salesJapan
United States
Australia
China
South Korea
Indonesia
OthersAdjustments
Net sales on the
consolidated
statements ofincome74th fiscal year
(current fiscal year)(April 1, 2023,
to March 31, 2024)

YOY change

192,354
57,87530,33871,88631,874
14,91330,943—Operatingincome17,965(1,197)
1,245
12,146
16
2,745
4,361
2,078

Net
sales
-2.3%
3.8
9.7
8.7
-0.7
-8.0
1.3
—

Operatingincome-23.9%
—
5.6
14.9
-97.7
14.4
-10.5
—

430,186

39,362

1.2-5.0

Net sales

Notes: 1. “United States” includes sales from subsidiaries in Canada and Mexico, which conduct integrate
business activities based on comprehensive sales strategies.
2. “Australia” includes sales from a subsidiary in Malaysia, which complements the production
system, and conducts integrate business activities.
3. “Others” include sales from subsidiaries in Taiwan, Thailand, Vietnam, New Zealand, Brazil andother regions.
4. “Net sales” are sales to external customers, and “Adjustments” under “Operating income” are theintersegment transactions to eliminate.

24

A breakdown by product shows that sales in the water heaters segment totaled¥263,839 million, up 2.0% year-on-year; kitchen appliances, ¥90,495 million, down
1.4%; air conditioning appliances, ¥21,746 million, down 0.9%; commercial-use
equipment, ¥11,212 million, up 5.1%; other products, ¥42,891 million, up 1.7%.
Net sales by product(Millions of yen)
73rd fiscal year
(previous fiscal year)(April 1, 2022,
to March 31, 2023)

Water heaters
Kitchenappliances
Air conditioning
appliances
Commercial-use
equipment
OthersTotal

74th fiscal year
(current fiscal year)(April 1, 2023,
to March 31, 2024)

YOYchangeAmount258,658% of total
60.8

Amount263,839% of total
61.3

(%)
2.0

91,78021.6

90,49521.0-1.4

21,941

5.2

21,7465.1-0.9

10,6692.5

11,212

2.6

5.1

42,179425,2299.9
100.0

42,891
430,186

10.0
100.0

1.7
1.2

(2) Consolidated Capital Expenditures
In the period under review, the Group’s total capital expenditures amounted to ¥41,114
million. Funds were applied primarily to investments in buildings to expand production
facilities in Japan and overseas; tools and fixtures, including molds for new products;
and renewal and rationalization of machinery and equipment aimed at cost reduction
and quality improvement.
(3) Consolidated Fund Procurement
There was no significant new fund procurement during the period under review.

25

(4) Issues Requiring Our Attention
Looking ahead, we expect the operating environment to be highly uncertain, reflected bydeteriorating business confidence stemming from rising prices and interest rates
globally, as well as an unstable financial system and the protracted situation in the
Middle East and Ukraine. Under these conditions, we expect the costs of procuring raw
materials, components, and energy to remain high, while the market shifts from fossil
fuels to renewable energy. Accordingly, we predict that business conditions will remainchallenging.
In response, the Rinnai Group, committed to creating healthy and comfortable
lifestyles, will provide a variety of products and services with the themes of “improving
quality of life” and “addressing global environmental issues” under its medium-termbusiness plan, New ERA 2025. At the same time, we are promoting compliance with the
Rinnai Carbon Neutral Declaration, RIM2050, aimed at realizing a carbon neutral
society. In Japan, we will expand sales of gas clothes dryers and dishwashers, which
help improve people’s quality of life. We will also contribute to the fight against global
warming by promoting spread of our ECO ONE hybrid water heaters with heating
systems, which meet the needs of the times for higher energy-saving performance. In
addition, we will work to further strengthen our supply chain to ensure a more stablesupply of our products, which are daily necessities.
In the United States, we will help reduce CO2 emissions by expanding sales oftankless water heaters, which are more energy-efficient than the storage-type water
heaters widely used in that key market. In China, we will strengthen Internet sales, which
are expected to grow, and expand the capacity of local production plants to broaden ourrange of offerings. At the same time, we will continue expanding our business into
emerging countries and untapped regions. We will also flexibly review our businessportfolio with a view to realizing a decarbonized society in the future by introducing
electric products in countries and regions where efforts to shift from fossil fuels to
renewable energies are progressing.
Our consolidated forecasts for the year ending March 2025 are as follows: Net
sales of ¥450.0 billion (up 4.6% year on year), operating income of ¥45.0 billion (up14.3%), ordinary income of ¥48.0 billion (up 4.2%), and net income attributable toowners of the parent company of ¥28.3 billion (up 6.1%).

26

(5) Changes in Performance and Assets
71st fiscal year
(Year ended
March 31, 2021)

Net sales
Ordinary income
Net income
attributable toowners of theparent company
Net income pershare (yen)Total assets
Net assets
Net assets per
share (yen)(Millions of yen / except where noted)

72nd fiscal year
(Year ended
March 31, 2022)

73rd fiscal year 74th fiscal year
(Year ended(Year ended
March 31, 2023) March 31, 2024)(current fiscal
year)425,229
430,186
44,56546,071

344,364
42,400366,185
39,06027,581

23,74826,096

26,667178.87156.80176.92184.75497,291
371,318

512,867
378,856

547,114407,199

577,088
437,438

2,220.13

2,296.59

2,487.60

2,707.86

Notes: 1. Net income per share is calculated using the average number of shares
outstanding during the fiscal year, and net assets per share is calculated using
the number of shares outstanding at fiscal year-end. Number of outstanding
shares excludes treasury stock.
2. On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares ofcommon stock. The above figures for “Net income per share” and “Net assets
per share” are calculated on the assumption that the stock split was conductedat the beginning of the fiscal year ended March 31, 2021.

27

(6) Significant Subsidiaries (As of March 31, 2024)
Name

CapitalYanagisawa ManufacturingCo., Ltd.

Corporation
Holdings

Primary Business

Manufacture and sale ofgas appliances
Manufacture and sale of
Rinnai Technica Co., Ltd.
¥200 million
100.0%
gas appliances
Manufacture and sale of
RB Controls Co., Ltd.
¥150 million
100.0%
electronic control units
Manufacture and sale of
Rinnai Precision Co., Ltd.
¥128 million
100.0%
gas appliancecomponents
Manufacture and sale of
Gastar Co., Ltd.
¥2,450 million
90.0%
gas appliances
Rinnai Net Co., Ltd.
¥300 million
100.0%
Sale of gas appliances
Manufacture and sale of
Rinnai Australia Pty., Ltd.
A$20 million*100.0%gas appliances
Manufacture and sale of
Rinnai America Corporation
US$81 million
100.0%
gas appliances
Manufacture and sale of
Rinnai Korea Corporation
15,107 million won*100.0%gas appliances
Manufacture and sale of
Shanghai Rinnai Co., Ltd.
74 million yuan
50.0%
gas appliances
Manufacture and sale ofP.T. Rinnai Indonesia
3,085 million rupiah
52.0%
gas appliances* Percentage of shares includes shares held indirectly by subsidiaries.
¥150 million

100.0%(7) Principal Business (As of March 31, 2024)
The Group is primarily engaged in the manufacture and sale of gas appliances andrelated businesses. Principal products by division are as follows:
Division

Water heaters
Kitchen appliances
Air conditioning
appliances

Principal Products
Water heaters, water heaters with bath-filling system, water heaters
with heating system, and hybrid water heaters with heating system
Tabletop cookers, built-in hobs (stovetops), ovens, dishwashers,
range hoods, and rice cookers
Fan heaters, fanned flue heaters, and infrared heaters

Commercial-use
equipment

Commercial-use ceramics griller, commercial-use ranges, andCommercial-use rice cookers

OthersClothes dryers, infrared burners, and components(8) Major Offices and Production Facilities (As of March 31, 2024)(a) Rinnai Corporation

Head office andrelated centers

Factories

Sales branch
offices

Name
Head office
Technology Development Center
Production Technology Center
Kasugai Logistics Center
Atsugi Logistics Center
Oguchi Factory
Seto Factory
Akatsuki Factory
Tohoku branch office
Kanto branch office
Chubu branch officeKansai branch office
Kyushu branch office

Address
Nakagawa-ku, Nagoya-shi, Aichi
Oguchi-cho, Niwa-gun, Aichi
Komaki-shi, Aichi
Kasugai-shi, Aichi
Atsugi-shi, Kanagawa
Oguchi-cho, Niwa-gun, Aichi
Seto-shi, Aichi
Seto-shi, Aichi
Wakabayashi-ku, Sendai-shi, Miyagi
Shinagawa-ku, Tokyo
Nakagawa-ku, Nagoya-shi, Aichi
Yodogawa-ku, Osaka-shi, Osaka
Hakata-ku, Fukuoka-shi, Fukuoka

28

(b) Subsidiaries

Name
Yanagisawa Manufacturing Co., Ltd.
Rinnai Technica Co., Ltd.
RB Controls Co., Ltd.
Rinnai Precision Co., Ltd.
Gastar Co., Ltd.
Rinnai Net Co., Ltd.
Rinnai Australia Pty., Ltd.
Rinnai America Corporation
Rinnai Korea Corporation
Shanghai Rinnai Co., Ltd.
P.T. Rinnai Indonesia

Address
Kadoma-shi, Osaka
Minato-ku, Tokyo
Kanazawa-shi, Ishikawa
Komaki-shi, Aichi
Yamato-shi, Kanagawa
Nakagawa-ku, Nagoya-shi, Aichi
Melbourne, Victoria, Australia
Peachtree City, Georgia, United States
Incheon, South Korea
Shanghai, People’s Republic of China
Jakarta, Indonesia(9) Number of Consolidated Employees (As of March 31, 2024)
Number of employees
10,837

Increase (decrease)from previous fiscal year-end-313

Notes: The above figures do not include temporary employees.
The average number of temporary employees during the fiscal year was 1,357.

29

2. Stock Information (As of March 31, 2024)(a) Number of authorized shares: 600,000,000(b) Number of issued shares:
143,203,548(Excluding 3,473,623 shares of treasury stock)(c) Number of shareholders:

7,251

Notes:
1. Pursuant to Article 184, Paragraph 2, of the Companies
Act, the Corporation on April 1, 2023, amended Article 6
of its Articles of Incorporation, thus increasing the total
number of authorized shares by 400,000,000, to
600,000,000 shares.
2. On April 1, 2023, the Corporation executed a 3-for-1
stock split of shares of common stock. As a result, thetotal number of issued shares increased 100,042,114.
3. The Corporation executed cancellation of treasury stock
on December 14, 2023, and the total number of issued
shares decreased 3,386,000.

(d) Major shareholders (top 10)
Name of shareholders
Naito Co., Ltd.
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
Kenji Hayashi
Rinnai Scholarship Foundation
STATE STREET BANK AND TRUST COMPANY
505103
Tokyo Gas Co., Ltd.
STATE STREET BANK AND TRUST COMPANY
505224
National Mutual Insurance Federation of Agricultural
Cooperatives
SSBTC CLIENT OMNIBUS ACCOUNT

Number ofshares(thousand)Shareholding
ratio (%)

18,647

13.02

16,821

11.74

10,117
7,369
4,200

7.06
5.14
2.93

2,895

2.02

2,352

1.64

2,342

1.63

2,077

1.45

1,887

1.31

Notes:
1. Treasury stocks (3,473,623 shares) held by the Corporation are excluded from theabove figures.
2. Shareholding ratios are calculated by number of shares excluding treasury stock.
3. According to the Report of Large Volume Holding (Change Report) dated August 22,
2023 (which is available for public inspection), Fidelity Investment Trust Co., Ltd.
held 5,329,200 shares of Rinnai Corporation as of August 15, 2023 (shareholding
ratio: 3.55%). However, the Corporation has not been able to confirm the number ofshares actually held by Fidelity Investment Trust as of March 31, 2024, and therefore
Fidelity Investment Trust is not included in the major shareholders listed above.

30

4. According to the Report of Large Volume Holding (Change Report) dated December
5, 2023 (which is available for public inspection), Nomura International PLC and
Nomura Asset Management Co., Ltd. held the number of shares shown below as ofNovember 30, 2023. However, the Corporation has not been able to confirm thenumber of shares actually held by Nomura Asset Management as of March 31, 2024,
and therefore Nomura International and Nomura Asset Management are not includedin the major shareholders listed above.
Name of shareholders

Nomura International PLC
Nomura Asset Management Co., Ltd.
Total

Number ofshares held

Shareholding
ratio (%)

378,898
9,611,000
9,989,898

0.25
6.40
6.66

5. According to the Report of Large Volume Holding (Change Report) dated February 8,2024 (which is available for public inspection), NIPPON ACTIVE VALUE FUND PLC
and Dalton Investments, Inc. held the number of shares shown below as of February
1, 2024. However, the Corporation has not been able to confirm the number ofshares actually held by Dalton Investments as of March 31, 2024, and therefore
NIPPON ACTIVE VALUE FUND and Dalton Investments are not included in the
major shareholders listed above.
Name of shareholders

NIPPON ACTIVE VALUE FUND PLC
Dalton Investments, Inc.
Total

Number ofshares held

Shareholding
ratio (%)

1,000,000
8,260,300
9,260,300

0.68
5.63
6.31

(e) Status of stocks delivered to Directors and Audit & Supervisory Boad members ascompensation for the execution of their duties during the fiscal year
Number ofsharesDirectors (excluding outside directors and directors
who hold more than a certain number of stocks)

5,269

Person to bedelivered3

Note: Please refer to page 34 “(4) Remuneration for Directors and Audit & Supervisory
Board Members” regarding the Corporation’s stock compensation.

31

(f) Other significant matters related to stocks
1. At its meeting held on February 8, 2023, the Board of Directors of the Corporation
resolved a matter relatd to treasury stock disposal as restricted stock incentive for
empoyee shareholding association, and disposed 191,220 shares of common stockfrom treasury stocks on April 24, 2023. As of March 31, 2024, the Corporation acquired
3,360 shares of treasury stock by free acquisition due to retirement and others.
2. The Corporation disposed 15,771 shares of common stock from treasury stocks on
July 28, 2023, to grant restricted stock for directors (excluding outside directors anddirectors who hold more than a certain number of stocks) and executive officers who
do not concurrently serve as directors.
3. At its meeting held on May 10, 2023, the Board of Directors of the Corporation
resolved a matter related to a share buyback, pursuant to Article 156 of the Companies
Act of Japan as applied to Article 165 (Paragraph 3) of the same Act and implemented
a share buyback as follows.
(1) Type of shares acquired(2) Total number of shares acquired(3) Total value of shares acquired(4) Acquisition period

Common stock of the Corporation
3,386,000 shares¥9,999,744,616
May 11–August 24, 2023

4. At its meeting held on May 10, 2023, the Board of Directors of the Corporation
resolved a matter related to the cancellation of treasury stock, pursuant to Article 178 of
the Companies Act of Japan and implemented the cancellation as follows.
(1) Type of shares cancelled(2) Total number of shares cancelled(3) Total value of shares cancelled(4) Cancellation dateCommon stock of the Corporation
3,386,000 shares¥10,665,069,622
December 14, 2023

3. Stock Acquisition Rights
There is no applicable information.

32

4. Officers of Rinnai Corporation(1) Names of Directors and Audit & Supervisory Board Members(As of March 31, 2024)
Position

Name

Representative Director, andChairman
Representative Director,
President and Executive President
Representative Directorand Executive Vice President
Director and Senior Managing
Executive Officer
Director and Senior Managing
Executive Officer

Kenji
Hayashi
Hiroyasu
Naito
Tsunenori
NaritaHideyuki
ShirakiKazutoInoue

Director

NobuyukiMatsui

Director
Director

TakashiKamio
TadashiOgura

Director

Yoko
Dochi

Standing Audit & Supervisory
Board Member
Standing Audit & Supervisory
Board Member

Kinji
Mori
Masanori
Shimizu

Position at Other Institutions or
Major Profession

Outside director at Nagoya Railroad Co.,
Ltd.
Assistant to the President
Chief of Marketing & Sales Headquarters
Chief of Production Engineering
Headquarter
Outside director at Aichi Tokei Denki Co.,Ltd.
President at International Professional
University of Technology in Nagoya
Chairman of Sasaeai, specified nonprofit
corporation
Outside director at Meiko Trans Co., Ltd.
Outside director of Nippo Ltd.
Trustee of Daiwa Anglo-JapaneseFoundation
Outside audit and supervisory board
member at Kirin Holdings Company,
LimitedPresident of Masaaki Matsuoka CPA
officeOutside director at Kanemi Co., Ltd.
Audit & Supervisory Board
Masaaki(audit & supervisory board member)
MemberMatsuoka
Outside director at Mitachi Co., Ltd.
(audit & supervisory board member)President of TRUTH & TRUST Law Office
Audit & Supervisory Board
Ippei
Outsided audit & supervisory Board
MemberWatanabemember at Howa Machinery, Ltd.
Notes: 1. Mr. Matsui, Mr. Kamio, Mr. Ogura, and Ms. Dochi are outside directors.
2. Mr. Matsuoka and Mr. Watanabe (audit & supervisory board members) serve as
outside auditors.
3. Mr. Matsuoka is a certified public accountant and has considerable knowledge aboutaccounting and finance.
4. Mr. Watanabe is a licensed attorney at law and has considerable knowledge ofcorporate and legal affairs.
5. The Corporation has notified the Tokyo Stock Exchange and the Nagoya Stock
Exchange that Mr. Matsui, Mr. Kamio, Mr. Ogura and Ms. Dochi (directors), and Mr.
Matsuoka and Mr. Watanabe (Audit & Supervisory Board members) satisfy theconditions for being independent directors/auditors.
6. Mr. Ishikawa, audit & supervisory board member, retired due to his resignation atcompletion of the 73rd Ordinary General Shareholders’ Meeting held on June 29,2023.
7. Mr. Shimizu was newly elected to his current position at the 73rd Ordinary General
Shareholders’ Meeting held on June 29, 2023.

33

(2) Summary of liability-limiting agreements
In accordance with the provisions of Article 427, Paragraph 1, of the Companies Act, four
outside directors and two outside members of the Audit & Supervisory Board havesigned agreements that limit liability for damages as provided for in Article 423,
Paragraph 1, of the same law. The limit of liability for damages, based on these
agreements, is an amount prescribed by law.
(3) Summary of liability insurance contract for officers
The Corporation concluded liability insurance contract for officers with an insurancecompany in accordance with the first paragraph of Article 430-3 of the Companies Act for
all of the Corporation’s directors, Audit & Supervisory Board members, executive
officers, and important employees. The insurance contracts compensate court costs anddamages which the insured bear due to lawsuits related to the Corporation, third-party
proceedings, and shareholder-derived suits. As a measure that does not impair theappropriateness of the insured person’s job execution, damage caused by an insured
person’s crime are excluded from compensation. The Corporation pays all insurance
premiums of the contracts.
(4) Remuneration for Directors and Audit & Supervisory Board Members
a. Total amount of remuneration for fiscal 2024, ended March 31, 2024
Total
Remuneration(Millions ofyen)

Total Remuneration by Item
(Millions of yen)
Basic
AnnualRestrictedcomponent
bonus
stock

Recipients(persons)

Directors
350
261
72
16
9
(including outside
(27)
(27)
(-)
(-)
(4)
directors)
Audit & Supervisory
Board members
45
45
5(including outside
(13)
(13)
(-)
(-)
(2)
members)
Total
396
307
72
16
14
(including outside
(41)
(41)
(-)
(-)
(6)
members)
Notes: 1. Compensation for directors does not include the employee portion in the case of
directors who serve concurrently as employees.
2. Per resolution of the 71th Ordinary General Shareholders’ Meeting held on June29, 2021, basic component shall not exceed ¥370 million per year (including ¥50
million for outside directors), annual bonuses shall not exceed ¥220 million per year,
restricted-stock compensation shall not exceed ¥120 million per year, and the
maximum number of shares allotted to directors shall not exceed 20,000 shares per
year (outside directors are not eligible for this compensation). (After adjustment for a3-for-1 stock split of the Corporation’s common stock, effective April 1, 2023, themaximum was increased to 60,000 shares per year.) At the end of the 74th Ordinary
General Shareholders’ Meeting, the Corporation had five (5) directors (including two(2) outside directors).
3. The amount of performance-linked compensation (annual bonus) is determinedbased on the degree of achievement of targets for consolidated operating income
and non-consolidated operating income, which are key performance indicators. The
Corporation’s financial results for the fiscal year under review are shown in the“Consolidated Statements of Income” on page 45 and the “Statements of Income” onpage 47.
4. Non-monetary compensation consists of shares of the Corporation’s stock. Terms
and conditions for allotment of such compensation are as described in “b. Policies
regarding officers’ compensation” as follows. The delivery status of suchcompensation in the fiscal year under review is shown in “e. Status of stocks
delivered to Directors and Audit & Supervisory Boar members as compensation for
the execution of their duties during the fiscal year” on page 31.
5. Per resolution of the 58th Ordinary General Shareholders’ Meeting held on June27, 2008, the combined compensation for Audit & Supervisory Board members islimited to ¥5 million per month. At the end of the 74th Ordinary General
34

Shareholders’ Meeting, the Corporation had four (4) members of Audit & Supervisory
Board.
6. As of March 31, 2024, the Corporation had nine (9) directors, including four (4)outside directors, and four (4) Audit & Supervisory Board members, including two (2)from outside.

b. Policies regarding officers’ compensation
At its meeting held on May 12, 2021, the Corporation’s Board of Directors resolved toadopt policies on determining compensation for individual directors and rules for officer
compensation. The Corporation’s policy for determining the content of compensation of
directors shall be decided by resolution of the Board of Directors after objective
deliberation by the Compensation Advisory Committee, the majority of whom are outside
officers. Individual director compensation for the fiscal year under review wasdetermined by deliberation at the meeting of Compensation Advisory Committee, which
was delegated the authority based on the resolution made by the Board of Directors at
its meeting held on June 29, 2023, in accordance with the aforementioned policies ondetermining officers’ compensation and rules for officer compensation.
Since the amount of compensation for each individual director is determined throughprocedures based on such objective deliberations, the Board of Directors has
determined that the content of compensation is in line with the Corporation’s
determination policies.
A summary of the Corporation’s policies on determining compensation for individual
directors is given below.
1. Basic principles on determining compensation for directors(1) Promoting solid corporate value creation over the medium to long term
 The level and composition of compensation are set so that directors will bestrongly motivated to realize increased corporate value and attain goals throughthe concerted efforts of the entire Corporation.
 Directors will be motivated to routinely attain performance targets every fiscal
year and create corporate value over the medium to long term by exercising
appropriate quantitative evaluation on the basis of financial performanceindicators and assessment of medium- to- long-term efforts on compensation.
 Steady improvement of corporate value is sought through directors holding the
Corporation’s shares for the medium to long term, thus having common interests
with shareholders.
(2) Securing objectivity and transparency to underline our accountability to a broad
range of stakeholders, including shareholders
 Policies on determining compensation are deliberated by the Compensation
Advisory Committee, mainly composed of outside directors, and then ratified by
the Board of Directors based on the Committee's recommendations.
 The level and composition ratio of compensation are continuously validated byan objective comparison with those of comparable companies.
2. Structure of compensation
Compensation for directors consists of a basic component (fixed compensation) anda performance-linked component in a ratio of approximately 70:30 for the purpose ofproviding a sound motivation for increased corporate value and target achievement.
Performance-linked compensation consists of an annual bonus, designed to promotesteady attainment of performance targets every fiscal year, and a restricted stockcompensation, designed to seek steady improvement of corporate value throughsharing interests with shareholders by holding the Corporation’s shares for the
medium to long term.
Compensation for outside directors is limited to a basic component (fixedcompensation) only, in order to promote proper conduct of their duties to supervise
and give advice to management from a position independent of executive
management.
35

The composition of compensation and summary of each component are as
follows:
Composition of compensation■Basic component■Annual bonus■Restricted stock
Summary of each component
Type ofcompensation

Summary

Basiccompensation

Cash compensation paid monthly in a fixed amount based on
position and duties

Annual bonus

Cash compensation designed to promote steady attainment of
performance targets every fiscal year and corporate value creation
over the medium to long term
Consisting of a corporate performance-linked component (80%)
and an individual performance-evaluation component (20%)
 The corporate performance-linked component will range from
0% to 150% of the standard amount, depending on the degreeof attainment of targeted consolidated operating income andnon-consolidated operating income, which are key
performance indicators of the Corporation
 The individual performance component will range from 0% to150% of the standard amount, depending on major indicatorsof each director’s area of responsibility and an evaluation ofefforts towards medium- to long-term growth and ESG, etc.
 Determined amounts will be paid as a lump-sum cash payment
after the end of each fiscal year

Restricted
stock

Stock-based compensation designed to contribute to steady
improvement of corporate value through shared interests withshareholders by holding the Corporation’s shares for the medium
to long term Basically, restricted stocks are granted every fiscal year, andtransfer restrictions will be lifted in the event of a director’s
resignation

If any individual director holds a number of shares exceeding a specified number overthe medium to long term, the director may not be eligible to receive the restricted stockand receive only an annual bonus as a performance-linked compensation incentive
given the purposes of performance-linked compensation and effectiveness as
incentive. Directors eligible to receive restricted stocks are identified at a meeting of theCompensation Advisory Committee, and then ratified by the Board of Directors.
3. Level of compensation
The level of compensation for directors (excluding outside directors) is set so that
directors are strongly motivated to realize increased corporate value and attaingoals through the concerted efforts of the entire Corporation. It is determined on thebasis of position and duties and by using objective data on executive compensation
36

gathered through a survey conducted by an outside expert agency (Willis Towers
Watson’s Executive Compensation Data) and using those of selected comparable
companies as a benchmark.
4. Process of determining compensation
Policies on determining compensation for directors are deliberated objectively at a
meeting of the Compensation Advisory Committee, composed of a majority outside
directors, and ratified by resolution of the Board of Directors based on theCommittee's recommendations. The amount of each director’s compensation,
including an assessment of an individual performance-evaluation component ofannual bonus, is determined by deliberation of the Compensation Advisory
Committee to which the Board of Directors has resolved to delegate authority,
ensuring more objectivity and transparency in the process of determining
compensation.
Deliberations of the Compensation Advisory Committee are conducted from an
objective viewpoint and by referring to expertise about compensation systems.
Accordingly, information is obtained from an outside expert agency (Willis Towers
Watson in fiscal 2024) when necessary.
The following are the members of the Compensation Advisory Committee who
deliberated policies for the 74th fiscal year and their activities during the fiscal year.
(Members)- Nobuyuki Matsui, Outside Director (Chairman of the Committee)- Takashi Kamio, Outside Director- Tadashi Ogura, Outside Director- Hiroyasu Naito, President and Representative Director(Activities)
May 23, 2023: Decision of annual bonus for the 73rd fiscal year, and deliberationon compensation policies for the 74th fiscal year
June 29, 2023: Deliberation on selection of Compensation Advisory Committee
Chairman and individual amounts of compensation for officers(directors) for the 74th fiscal year

37

Revision of policy for determining details of compensation for directors in75th fiscal year

At a meeting of the Board of Directors held on April 25, 2024, the Corporation resolved
to revise its policy for determining details of compensation for directors in the 75th fiscal
year. This resolution is subject to objective deliberation by the Compensation Advisory
Committee, consisting of a majority of outside directors. The revised policy for
determining compensation is summarized in 1. through 5. below.
1. Basic principles on determining compensation for directors)(1) Promoting solid corporate value creation over the medium to long term
 The level and composition of compensation are set so that directors will bestrongly motivated to realize increased corporate value and attain goals throughthe concerted efforts of the entire Corporation.
 Directors will be motivated to routinely attain performance targets every fiscal
year and create corporate value over the medium to long term by exercising
appropriate quantitative evaluation on the basis of financial performanceindicators and assessment of medium- to- long-term efforts on compensation.
 Steady improvement of corporate value is sought through directors holding the
Corporation’s shares for the medium to long term, thus having common interests
with shareholders.
(2) Securing objectivity and transparency to underline our accountability to a broad
range of stakeholders, including shareholders
 Policies on determining compensation are deliberated by the Compensation
Advisory Committee, mainly composed of outside directors, and then ratified by
the Board of Directors based on the Committee's recommendations.
 The level and composition ratio of compensation are continuously validated byan objective comparison with those of comparable companies.
2. Structure of compensation
Compensation for directors consists of a basic component (fixed compensation) anda performance-linked component in a ratio of approximately 60:40 for the purpose ofproviding a sound motivation for increased corporate value and target achievement.
Performance-linked compensation consists of an annual bonus, designed topromote steady attainment of performance targets every fiscal year, and a restricted
stock compensation, designed to seek steady improvement of corporate value
through sharing interests with shareholders by holding the Corporation’s shares forthe medium to long term.
Compensation for outside directors is limited to a basic component (fixedcompensation) only, in order to promote proper conduct of their duties to supervise
and give advice to management from a position independent of executive
management.
The composition of compensation and summary of each component are as
follows:
Composition of compensation

About 60%

About

20%

About

20%

■Basic component■Annual bonus■Restricted stock38

Summary of each component
Type ofcompensation

Summary

Basiccompensation

Cash compensation paid monthly in a fixed amount based on
position and duties

Annual bonus

Cash compensation designed to promote steady attainment of
performance targets every fiscal year and corporate value creation
over the medium to long term
Consisting of a financial evaluation portion (80%) and a nonfinancial evaluation portion (20%)
 The financial evaluation portion varies between 0 and 200% of
the standard amount, depending on the degree to which key
performance indicators (consolidated operating income andROE) have been achieved.
 The non-financial evaluation portion varies between 0 and
200% of the standard amount, depending on the degree of
improvement in employee engagement and qualitativeevaluations of medium- to long-term initiatives based on eachdirector's area of responsibility.
 - Determined amounts will be paid as a lump-sum cash
payment after the end of each fiscal year

Restricted
stock

Stock-based compensation designed to contribute to steady
improvement of corporate value through shared interests withshareholders by holding the Corporation’s shares for the medium
to long term
 In principle, a certain number of shares with transfer restrictions
are issued each fiscal year in accordance with the director’s
position and responsibilities, and the restrictions on transfer are
lifted when the director retires.
 - Corporate value enhancement levels are evaluated using total
shareholder return and other indicators. After deliberation by
the Compensation Advisory Committee, the number of shares
to be delivered may be added within the maximum
remuneration amount and the maximum number of sharesdecided by the Ordinary General Shareholders’ Meeting.

If any individual director holds a number of shares exceeding a specified number overthe medium to long term, the director may not be eligible to receive the restricted stockand receive only an annual bonus as a performance-linked compensation incentive
given the purposes of performance-linked compensation and effectiveness as
incentive. Directors eligible to receive restricted stocks are identified at a meeting of theCompensation Advisory Committee, and then ratified by the Board of Directors.
3. Level of compensation
The level of compensation for directors (excluding outside directors) is set so that
directors are strongly motivated to realize increased corporate value and attaingoals through the concerted efforts of the entire Corporation. It is determined on thebasis of position and duties and by using objective data on executive compensation
gathered through a survey conducted by an outside expert agency (Willis Towers
Watson’s Executive Compensation Data) and using those of selected comparable
companies as a benchmark.

39

4. Stock ownership guidelines
Effective the 75th fiscal year (ending March 31, 2025), the Corporation will establish thefollowing guidelines for the number of shares of its stock to be held by directors during
their terms of office, with the aim of steadily increasing corporate value and further
promoting common interests between directors and shareholders.
- President and representative directors: Shares equivalent to 1.5 times the amount ofbase compensation by the end of three years after assuming office- Other directors (excluding outside directors): Shares equivalent to one time the amountof base compensation by the end of three years after assuming office
5. Process of determining compensation
Policies on determining compensation for directors are deliberated objectively at a
meeting of the Compensation Advisory Committee, composed of a majority outside
directors, and ratified by resolution of the Board of Directors based on the Committee's
recommendations. The amount of each director’s compensation, including anassessment of a non-financial evaluation portion of annual bonuses and additionaldelivery of restricted stock based on corporate value evaluation, is determined bydeliberation of the Compensation Advisory Committee to which the Board of Directors
has resolved to delegate authority.
Deliberations of the Compensation Advisory Committee are conducted from an
objective viewpoint and by referring to expertise about compensation systems.
Accordingly, information is obtained from an outside expert agency (Willis Towers
Watson in fiscal 2024) when necessary.
The following are the members of the Compensation Advisory Committee who
deliberated policies for the 75th fiscal year and their activities during the fiscal year.
(Members)- Nobuyuki Matsui, Outside Director (Chairman of the Committee)- Takashi Kamio, Outside Director- Tadashi Ogura, Outside Director- Hiroyasu Naito, President and Representative Director(Activities)
February 29, 2024: Deliberation on revision of policy for determining details ofcompensation for directors

40

(5) Items Related to Outside Executives
a. Status of important concurrent positions at other entities, and relationships
with Corporation and those entities
Title

Name

Main concurrent position

Director

NobuyukiMatsui- Outside director at Aichi
Tokei Denki Co., Ltd.
- President at International
Professional University ofTechnology in Nagoya

Director

TakashiKamio- Chairman of Sasaeai, aspecified nonprofit
corporation

Director

TadashiOgura- Outside director at MeikoTrans Co., Ltd.

Director

Yoko
Dochi

Audit &
Supervisory
Board member

MasaakiMatsuoka

Audit &
Supervisory
Board member

Ippei
Watanabe- Outside Director of Nippo
Ltd.
- Trustee of Daiwa AngloJapanese Foundation- Outside audit andsupervisory board member
at Kirin Holdings Company,
Limited- President of Masaaki
Matsuoka CPA office- Outside director at Kanemi
Co., Ltd. (audit &supervisory board member)- Outside director at MitachiCo., Ltd. (audit &supervisory board member)- President of TRUTH &TRUST Law Office- Outside director at Howa
Machinery, Ltd. (Audit andsupervisory committee
member)b. Main activities in fiscal year
Title

Director

Name

NobuyukiMatsui

Attendanceat Board of
Directors’
meetings

15/15(100%)

Attendanceat Audit &Supervisory
Board
meetings—

Relationship with the Corporation

The Corporation has no
special relationships with Aichi
Tokei Denki Co., Ltd. orInternational Professional
University of Technology in
NagoyaThe Corporation makes
donations to Sasaeai, but theamounts are only ¥50,000 per
year
The Corporation has tradeand shipping-relatedtransactions with Meiko Trans
Co., Ltd., but thosetransactions do not affect the
Corporation’s independence.
The Corporation has parts
purchasing transactions with
Nippo Ltd., but thosetransactions do not affect the
Corporation’s independence.

The Corporation has no
special relationships with
Kanemi Co., Ltd. or MitachiCo., Ltd.

The Corporation has no
special relationships with
Howa Machinery, Ltd.

Main Activities and Job Summary of
Expected Role as Outside Directors

Actively express opinions at Board of
Directors’ meetings from a scholarly
perspective based on his experience asa professor and university president. In
particular, to supervise and provide
advice as an expert in technology andtechnological development to ensure
the adequacy and suitability of decisionmaking. Engaged as Chairman of theNomination Advisory Committee andthe Compensation Advisory Committee
to select director candidates and decidedirectors’ compensation from an
41

Director

Takashi
Kamio

15/15
(100%)—

Director

Tadashi
Ogura

10/11
(91%)

—

Director

Yoko
Dochi

11/11
(100%)—

Audit &
Supervisory
Board
member

MasaakiMatsuoka

15/15(100%)

16/16(100%)

Audit &
Supervisory
Board
member

Ippei
Watanabe

15/15(100%)

16/16(100%)

objective and neutral standpoint.
Actively express opinions at Board of
Directors meetings based on his
extensive experience and wide-ranging
insight as a director of other companies.
In particular, supervise and provide
advice as an expert in company
management to ensure the adequacy
and appropriateness of decisionmaking. Engaged as a member of theNomination Advisory Committee andCompensation Advisory Committee toselect director candidates and decidedirectors’ compensation from an
objective and neutral standpoint.
Actively express opinions at Board of
Directors meetings based on his
extensive experience and wide-ranging
insight as a director of other companies.
In particular, supervise and provide
advice from the perspective ofcorporate management to ensure theadequacy and appropriateness ofdecision-making. Engaged as amember of the Nomination Advisory
Committee and Compensation Advisory
Committee to oversee the selection of
director candidates and determinationof director compensation from an
objective and neutral standpoint.
Actively express opinions at Board of
Directors’ meetings based on her dialog
with investors and extensive experienceand deep insight into ESG-related
matters, as well her knowledge ofinternational organizational
management, at other companies. In
particular, supervise and provide advice
from the perspective of management
strategy to ensure the adequacy andappropriateness of decision-making. In
addition, regularly receive reports on
the status of the Corporation’s IR
activities and play expected role asoutside director by providing usefuladvice on how to improve the corporate
value from an objective and neutral
standpoint.
Provide impartial advice fromaccounting and taxation perspectives toensure the adequacy andappropriateness of decision-making.
Make necessary remarks as
appropriate at the meeting of Audit &Supervisory Board members.
Provide impartial advice from legal
perspective to ensure the adequacy andappropriateness of decision-making.
Make necessary remarks as
appropriate at the meeting of Audit &Supervisory Board members.

42

5. Status of Accounting Auditor(1) Name of accounting auditor
Deloitte Touche Tohmatsu LLC(2) Compensation to accounting auditor in the year under review (Millions of yen)Compensation for services as accounting auditor
65
Total monetary and other financial profits paid by the Corporation74
and its subsidiaries
Notes: 1. Under the agreement between the Corporation and its accounting auditor,
there is no clear distinction between compensation for audits under theCompanies Act and audits under the Financial Instruments and Exchange
Law. For this reason, only the total compensation amounts to theaccounting auditor are listed here.
2. Among major subsidiaries, overseas subsidiaries have different accounting
auditors.
(3) Reason Audit & Supervisory Board agrees to compensation for accounting
auditor
The Audit & Supervisory Board reviewed and discussed such aspects as the content of
the audit plan by the accounting auditor, the execution of duties by the accounting
auditor, and the basis for calculation of compensation estimates, and agreed thatcompensation to the accounting auditor was in line with Article 399, Paragraph 1 of theCompanies Act.
(4) Policy on removal or non-reappointment of accounting auditor
If the Audit & Supervisory Board finds it necessary, due to an obstacle that prevents theaccounting auditor from properly executing their required duties or due to some otherissue of consequence, the Audit & Supervisory Board will prepare the content of anagenda item on the dismissal or non-reappointment of the accounting auditor to be put
before the Ordinary General Meeting of Shareholders.
In addition, the Audit & Supervisory Board will dismiss the accounting auditor
upon the consent of all members of the Audit & Supervisory Board, if the accounting
auditor falls subject to any of the provisions in Article 340, Paragraph 1 of theCompanies Act. In this event, a member of the Audit & Supervisory Board, chosen
among board members, will give a report on the purpose for dismissing the accounting
auditor and associated background at the first Ordinary General Meeting of
Shareholders that convenes after the dismissal.

43Consolidated Balance Sheets(As of March 31, 2024)

ASSETS

Current assets
Cash and deposits
Notes and accounts
receivable, andcontract assets
Electronically recordedmonetary claimsMarketable securities
Products
Raw materials andstoresOther
Less allowance for
doubtful accounts

341,437
147,600
91,694

Fixed assets
Property, plant andequipment
Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixturesLand
Leased assets
Construction in progress
Intangible fixed assets
Investments andadvances
Investments in securities
Net defined benefit
assetsDeferred income taxes
Other
Less allowance for
doubtful accounts

235,650
147,425

Total assets

577,088

12,8798,068
41,69939,953
5,717(6,175)60,632
21,542
4,692
49,306
5,605
5,645
3,642
84,582
40,83433,379
5,325
5,091
(48)

(Millions of yen)
LIABILITIESCurrent liabilities
106,890
Notes and accounts
24,427payableElectronically recorded
28,937monetary claims
Other payables
19,853
Accrued consumption
2,489
taxes
Accrued income taxes
5,244
Accrued employees’
6,159
bonuses
Allowance for product
4,806
guarantee
Other14,972Long-term liabilities
32,759Deferred tax liabilities
16,023
2,255
Allowance forenvironmental measures
8,809
Net defined benefit
liabilities
Other
5,671
Total liabilities
139,650NET ASSETS
Shareholders’ equity
346,470
Common stock
6,484
Capital surplus
8,428
Earned surplus
342,493
Treasury stock(10,936)
Other accumulated
41,304comprehensive income
Unrealized gain on
8,690
marketable securities
Foreign exchange
22,671translation adjustment
Remeasurements of
9,941
defined benefit plans
Non-controlling interests
49,663
Total net assets
437,438
Total liabilities and net
577,088
assets44

Consolidated Statements of Income(Year ended March 31, 2024)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income
Interest income
Dividends received
Foreign exchange income
Other
Other expenses
Interest expenses
Loss on retirement of fixed assets
Share buyback costs
Depreciation
Other
Ordinary income
Extraordinary income:Subsidy income
Extraordinary losses:
Loss on reduction of fixed assets
Impairment loss
Income before income taxes
Income taxes (current)
Income taxes (deferred)
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent
company(Millions of yen)
430,186
292,343
137,842
98,47939,362
2,501
479
2,340
2,303
79
215
156
334
130

204
134
220
10,418
973

7,625

916
46,071
204
355
45,921
11,391
34,5297,862
26,66745

Nonconsolidated Balance Sheets(As of March 31, 2024)

ASSETS

Current assets
Cash and deposits
Notes receivable
Accounts receivable
Electronically recordedmonetary claimsMarketable securities
Products
Raw materials and stores
Other
Less allowance for doubtful
accounts
Fixed assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
Vehicles and delivery equipment
Tools, furniture and fixtures
Land
Leased assets
Construction in progress
Intangible fixed assets
Software
Other
Investments and advances
Investments in securities
Stocks of affiliated companies
Investments in affiliatedcompanies
Prepaid pension expenses
Other
Less allowance for doubtful
accounts

Total assets

117,964
36,5292,459
40,007
11,2096,204
13,621
7,007
932
(9)
169,90974,79426,086
1,964
5,948
85
2,022
35,678
42
2,966
1,441
1,080
360
93,67339,67132,353
1,870
18,7691,026(18)287,873(Millions of yen)
LIABILITIESCurrent liabilities
46,752
Accrued payable
14,368
Electronically recorded
17,664monetary claims
Lease obligations
23
Other payables
4,769
Accrued expenses
735
Accrued income taxes
3,364
Deposits payable
157
Accrued employees’
2,786
bonuses
Allowance for product806
guarantees
Other
2,076
Long-term liabilities
10,065
Lease obligations
23
Accrued employees’
3,572
retirement benefits
Other
6,470
Total liabilities
56,818NET ASSETS
Shareholders’ equity
222,645
Common stock
6,484
Capital surplus
8,743
Capital reserve
8,743
Earned surplus
218,353
Legal reserve
1,614
Other legal reserve:
216,738
General reserve
170,000
Retained earnings
46,738carried forward
Treasury stock(10,936)
Other adjustments
8,409
Unrealized gain on
8,409
marketable securities
Total net assets
231,055
Total liabilities and net
287,873
assets46

Nonconsolidated Statements of Income(Year ended March 31, 2024)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income
Interest income and dividends received
Foreign exchange income
Other
Other expenses
Loss on retirement of fixed assets
Share buyback costs
Depreciation
Other
Ordinary income
Extraordinary income:Subsidy income
Extraordinary losses:
Loss on reduction of fixed assets
Impairment loss
Income before income taxes
Income taxes
Current
Deferred
Net income(Millions of yen)
210,525
160,344
50,18035,073
15,107
7,433
2,186
1,503
166
156
367
22

204
134
220
4,991
546

11,122713
25,516204355
25,366
5,538
19,82847

(Translation: Accounting auditor’s audits of consolidated financial statements)

ACCOUNTING AUDITOR'S REPORTMay 10, 2024
To the Board of Directors of
Rinnai Corporation:
Deloitte Touche Tohmatsu LLC
Nagoya Office
Designated Limited Liability Partner, Engagement Partner,
Certified Public Accountant: Haruhisa Suzuki
Designated Limited Liability Partner, Engagement Partner,
Certified Public Accountant: Kouji Kitaoka
Designated Limited Liability Partner, Engagement Partner,
Certified Public Accountant: Tetsuro Shigemitsu
Auditor’s Opinion
Pursuant to the fourth paragraph of Article 444 of the Companies Act, we, Deloitte Touche
Tohmatsu LLC (“the Auditor”) have audited the consolidated financial statements of
Rinnai Corporation (the “Corporation”) and its consolidated subsidiaries, for the fiscal
year ended March 31, 2024, namely, consolidated balance sheets, consolidated
statements of income, consolidated statements of changes in shareholders’ equity, notes
to the consolidated financial statements, and other notes.
In the Auditor’s opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Corporation and its
consolidated subsidiaries as of March 31, 2024, and the results of their operations forthe year then ended, in conformity with accounting principles generally accepted inJapan.
Basis for Auditor’s Opinion
The Auditor conducts its audit in accordance with auditing standards generally
accepted in Japan. The Auditor’s responsibility with respect to auditing standards is
described in “Auditor's responsibility on auditing consolidated financial statements”.
According to regulations on professional ethics in Japan, the Auditor is independent
from the Corporation and its consolidated subsidiaries, and fulfills its responsibility in an
ethical manner. The Auditor believes the audit it has performed provides an adequate
and reasonable basis for opinion.
Other Information
Other information comprises business report and its attachments. It is the responsibilityof management to prepare and disclose the above information. The Audit &Supervisory Board and Audit & Supervisory Board Members are responsible formonitoring the execution of directors’ duties in preparing and implementing thereporting process.
The Auditor’s opinion on the consolidated financial statements does not cover otherinformation, and the Auditor does not express its opinion on other information.
It is the responsibility of the Auditor to audit consolidated financial statements, andexamine if there are significant differences between other information and consolidated
financial statements or knowledge gained through audit process. In addition, the Auditor
pays attention to other sign of significant mistakes than significant differences.
If the Auditor conclude that there are any significant mistakes in other information
based on the works performed, it is required to report that fact.
The Auditor does not have any matters to report regarding other information.
Responsibility of Management, Audit & Supervisory Board, and Audit & Supervisory
Board Members, for Consolidated Financial Statements
It is the responsibility of management to prepare and properly disclose consolidated
financial statements, in accordance with corporate accounting standards generally
accepted in Japan. This responsibility includes establishment and operation of an48

internal control system that management deems necessary to ensure preparation andproper disclosure of consolidated financial statements without material misstatement
due to fraudulent activity or error.
In preparing consolidated financial statements, management is responsible for
evaluating the appropriateness of such statements based on going concern
assumptions, and for disclosing going concern matters if necessary, in accordance withcorporate accounting standards generally accepted in Japan.
The Audit & Supervisory Board and Audit & Supervisory Board Members are
responsible for monitoring the execution of directors’ duties in preparing andimplementing the financial reporting process.
Auditor’s Responsibility on Auditing Consolidated Financial Statements
It is the responsibility of the Auditor to obtain reasonable assurance about whether theoverall presentation of consolidated financial statements is free of material
misstatement due to fraudulent activity or error, and express an opinion by auditor’sreport on the consolidated financial statements from an independent perspective,
based on its audit. Misstatements can arise from fraudulent activity or error and areconsidered material if, individually or in aggregate, they could reasonably be expected
to influence the decisions of the users of consolidated financial statements.
The Auditor performs audits as follows, using professional judgement andmaintaining professional skepticism throughout the audit, in accordance with auditing
standards generally accepted in Japan.
- The Auditor identifies and evaluates the risk of material misstatement in the
consolidated financial statements due to fraudulent activity or error. The Auditor plansand performs auditing procedures while addressing the risk of material misstatement.
The auditing procedures are selected and applied, based on the Auditor’s judgement.
The Auditor obtains adequate and reasonable audit evidence before making opinions.
- The purpose of an audit is not to express an opinion on the effectiveness of theinternal control system, and when evaluating risk, the Auditor examines the internal
control system pertaining to the audits of consolidated financial statements so that
auditing procedures appropriate to the situation may be designed.
-The Auditor evaluates the appropriateness of the accounting policies used and their
method of application as well as the reasonableness of estimates made bymanagement and the applicability of related financial notes.
- The Auditor makes conclusions with respect to the appropriateness of preparing
consolidated financial statements based on going concern assumptions. The Auditor
also makes conclusions, based on audit evidence at hand, about the risk of material
uncertainty regarding events and/or circumstances that could cause material doubt
about the going concern assumption. If material uncertainty about going concern
assumptions is recognized, the Auditor is required to call attention to notes to theconsolidated financial statements in its Accounting Auditor’s Report. If the notes to theconsolidated financial statements regarding material uncertainty are deemed to beinappropriate, the Auditor is required to modify the opinion about the consolidated
financial statements. The Auditor’s conclusions are based on audit evidence obtainedby the date of its auditor’s report. Depending on future events or circumstances,
however, the Corporation may not be able to survive as a going concern.
- The Auditor evaluates whether or not the presentation of the consolidated financial
statements and notes comply with corporate accounting standards generally
accepted in Japan. The Auditor also evaluates the presentation, composition, andcontents of the consolidated financial statements (including related notes) andassesses whether or not such statements properly reflect underlying transactions andaccounting events.
- In order to express opinions about the consolidated financial statements, the Auditor
is required to obtain adequate and reasonable audit evidence regarding the financial
information of the Corporation and its consolidated subsidiaries. The Auditor is
responsible for instruction, supervision, and implementation of audits of theconsolidated financial statements. The Auditor is solely responsible for its auditing
opinion.

49

The Auditor make reports to the Audit & Supervisory Board and Audit & Supervisory
Board Members about the following: scope and timing of planned audits, important
findings (including material deficiencies in internal control recognized during theauditing process), and other items as required under auditing standards.
In its report to the Audit & Supervisory Board and Audit & Supervisory Board
Members, the Auditor confirms that it has complied with regulations on professional
ethics in Japan concerning independence. Its report also includes matters deemed
reasonably to affect the Auditor’s independence, measures being taken to eliminate
impeding factors, and safeguards applied to reduce impeding factors to an acceptablelevel.
Financial Interest
Neither the firm nor its engagement partners have any financial interest in the
Corporation and its consolidated subsidiaries for which disclosure is required under theprovisions of the Certified Public Accountants Law.
The above represents a translation, for convenience only, of the original report issued inJapanese.
END.

50

(Translation: Accounting auditor’s audits of financial statements)

ACCOUNTING AUDITOR'S REPORTMay 10, 2024

To the Board of Directors of
Rinnai Corporation:
Deloitte Touche Tohmatsu LLC
Nagoya Office
Designated Limited Liability Partner, Engagement Partner,
Certified Public Accountant: Haruhisa Suzuki
Designated Limited Liability Partner, Engagement Partner,
Certified Public Accountant: Kouji Kitaoka
Designated Limited Liability Partner, Engagement Partner,
Certified Public Accountant: Tetsuro Shigemitsu

Auditor’s Opinion
Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we,
Deloitte Touche Tohmatsu LLC (“the Auditor”) have audited the financial statements of
Rinnai Corporation (the “Corporation”), for the fiscal year ended March 31, 2024,
namely, nonconsolidated balance sheets, nonconsolidated statements of income,nonconsolidated statements of changes in shareholders’ equity, notes tononconsolidated financial statements, and other notes and attachments.
In the Auditor’s opinion, the financial statements and attachments referred toabove present fairly, in all material respects, the financial position of the Corporation asof March 31, 2024, and the results of their operations for the year then ended, inconformity with accounting principles generally accepted in Japan.
Basis for Auditor’s Opinion
The Auditor conducts its audit in accordance with auditing standards generally
accepted in Japan. The Auditor’s responsibility with respect to auditing standard isdescribed in “Auditor's responsibility on auditing financial statements”. According toregulations on professional ethics in Japan, the Auditor is independent from the
Corporation, and fulfills its ethical manner. The Auditor believes the audit it has
performed provides an adequate and reasonable basis for opinion.
Other Information
Other information comprises business report and its attachments. It is the responsibilityof management to prepare and disclose the above information. The Audit &Supervisory Board and Audit & Supervisory Board Members are responsible formonitoring the execution of directors’ duties in preparing and implementing thereporting process.
The Auditor’s opinion on the financial statements does not cover other information,and the Auditor does not express its opinion on other information.
It is the responsibility of the Auditor to audit financial statements, and examine if
there are any significant differences between other information and financial statements
or knowledge gained through audit process. In addition, the Auditor pays attention toother sign of significant mistakes than significant differences.
If the Auditor conclude that there are any significant mistakes in other information
based on the works performed, it is required to report that fact.
The Auditor does not have any matters to report regarding other information.
Responsibility of Management, Audit & Supervisory Board, and Audit & Supervisory
Board Members, for Financial Statements
It is the responsibility of management to prepare and properly disclose financial
statements, in accordance with corporate accounting standards generally accepted inJapan. This responsibility includes establishment and operation of an internal control
system that management deems necessary to ensure preparation and proper
disclosure of financial statements without material misstatement due to fraudulent

51

activity or error.
In preparing financial statements, management is responsible for evaluating theappropriateness of such statements based on going concern assumptions, and fordisclosing going concern matters if necessary, in accordance with corporate accounting
standards generally accepted in Japan.
The Audit & Supervisory Board and Audit & Supervisory Board Members are
responsible for monitoring the execution of directors’ duties in preparing andimplementing the financial reporting process.
Auditor’s Responsibility on Auditing Financial Statements
It is the responsibility of the Auditor to obtain reasonable assurance about whether theoverall presentation of financial statements is free of material misstatement due tofraudulent activity or error, and express an opinion by auditor’s report on the financial
statements from an independent perspective, based on its audit. Misstatements canarise from fraudulent activity or error and are considered material if, individually or inaggregate, they could reasonably be expected to influence the decisions of the users offinancial statements.
The Auditor performs audits as follows, using professional judgement andmaintaining professional skepticism throughout the audit, in accordance with auditing
standards generally accepted in Japan.
- The Auditor identifies and evaluates the risk of material misstatement in the financial
statements due to fraudulent activity or error. The Auditor plans and performs auditing
procedures while addressing the risk of material misstatement. The auditing
procedures are selected and applied, based on the Auditor’s judgement. The Auditor
obtains adequate and reasonable audit evidence before making opinions.
- The purpose of an audit is not to express an opinion on the effectiveness of theinternal control system, and when evaluating risk, the Auditor examines the internal
control system pertaining to the audits of financial statements so that auditing
procedures appropriate to the situation may be designed.
-The Auditor evaluates the appropriateness of the accounting policies used and their
method of application as well as the reasonableness of estimates made bymanagement and the applicability of related financial notes.
- The Auditor makes conclusions with respect to the appropriateness of preparing
financial statements based on going concern assumptions. The Auditor also makes
conclusions, based on audit evidence at hand, about the risk of material uncertainty
regarding events and/or circumstances that could cause material doubt about thegoing concern assumption. If material uncertainty about going concern assumptions
is recognized, the Auditor is required to call attention to notes to the financial
statements in its Accounting Auditor’s Report. If the notes to the financial statements
regarding material uncertainty are deemed to be inappropriate, the Auditor is required
to modify the opinion about the financial statements. The Auditor’s conclusions are
based on audit evidence obtained by the date of its auditor’s report. Depending on
future events or circumstances, however, the Corporation may not be able to survive
as a going concern.
- The Auditor evaluates whether or not the presentation of the financial statements andnotes comply with corporate accounting standards generally accepted in Japan. The
Auditor also evaluates the presentation, composition, and contents of the financial
statements (including related notes) and assesses whether or not such statements
properly reflect underlying transactions and accounting events.
The Auditor makes reports to the Audit & Supervisory Board and Audit & Supervisory
Board Members about the following: scope and timing of planned audits, important
findings (including material deficiencies in internal control recognized during theauditing process), and other items as required under auditing standards.
In its report to the Audit & Supervisory Board and Audit & Supervisory Board
Members, the Auditor confirms that it has complied with regulations on professional
ethics in Japan concerning independence. Its report also includes matters deemed
reasonably to affect the Auditor’s independence, measures being taken to eliminate
52

impeding factors, and safeguards applied to reduce impeding factors to an acceptablelevel.
Financial Interest
Neither the firm nor its engagement partners have any financial interest in the
Corporation for which disclosure is required under the provisions of the Certified Public
Accountants Law.
The above represents a translation, for convenience only, of the original report issued inJapanese.
END.

53

(Translation)

Report of the Audit & Supervisory Board

The Audit & Supervisory Board reviewed each member’s report regarding the directors’
execution of their duties, obligations and responsibilities for the 74th financial period,
from April 1, 2023, through March 31, 2024. Upon deliberation, we created the auditor’sreport and would like to report as follows:
1. Methods and contents of audits by members of the Audit & Supervisory Board andthe Audit & Supervisory Board(1) The Audit & Supervisory Board determined the policies of audits and duties ofmembers, and received reports on the status of the implementation of audits and theresults from members. In addition, the Audit & Supervisory Board received reports
on execution of duties from directors and accounting auditors, and received
explanations when necessary.
(2) According to the policies of audits and duties of members, determined by the Audit& Supervisory Board, members develop the environment for audits, collecting
information through communication with directors, executive officers, andemployees at the internal auditing division and other divisions, and have audited
procedures as follows.
(a) Members of the Audit & Supervisory Board also attended important meetings
including Board of Directors’ meeting (in person or via web conferencing system)
and constantly received reports on execution of duties from directors, executive
officers, and other employees, and received explanations when necessary. In
addition, members reviewed important documents about closing the books andinvestigated the state of operations and assets of the headquarters and major
offices. For subsidiary companies, members received business reports, sharing
information with directors and members of the audit & supervisory board of
subsidiaries when necessary.
(b) The internal control system of the Corporation, which is based on the content of
resolutions by the Board of Directors and relevant resolutions in accordance with thefirst and third clauses of Article 100 of the Ordinance for Enforcement of theCompanies Act, is necessary for systems to ensure that execution of business bydirectors conforms to legal regulations and the Articles of Incorporation and systems
to ensure appropriateness of the business activities of the Corporation andsubsidiary companies described in this business report. Members reviewed regular
reports about the formulation and effectiveness of the internal control system, andreceived explanation when necessary from directors, executive officers, andemployees, in order to declare its opinion.
(c) Members of the Audit & Supervisory Board monitored and inspected the
independence of accounting auditors and execution of adequate audits, andreceived the report and explanation on execution of duties from accounting auditors
when necessary. We also received notice from accounting auditors that they
conducted their audits in accordance with the “System to secure adequate executionof duties” (Article 131, accounting and computation rule of the Companies Act) andthe “Quality control standard regarding audits” (Business Accounting Council), andreceived explanation when necessary.
Based on measures as stated above, we reviewed the business reports andattachments, nonconsolidated financial statements (nonconsolidated balance
sheets, nonconsolidated statements of income, nonconsolidated statements ofchanges in shareholders’ equity, and notes to nonconsolidated financial statements)
and attachments, and consolidated financial statements (consolidated balance
sheets, consolidated statements of income, consolidated statements of changes inshareholders’ equity and notes to consolidated financial statements), for the fiscal
year ended March 31, 2024.
54

2. Audit results(1) Audit results of business report and attachments
a. The business report and the attachments fairly reflect the state of the
Corporation, in accordance with legal requirements and the Articles ofIncorporation.
b. There are no exceptions to be made, regarding the overlapping of director duties,
and there are no violations of relevant legal requirements or the Articles ofIncorporation.
c. We recognize the appropriateness of resolutions by the Board of Directors’
meetings as regarding the internal control system. As to the description in thisbusiness report and the execution of directors’ duties regarding said internal
control system, there are no exceptions to be made.
(2) Audit results of nonconsolidated financial statements and attachments
In our opinion, the auditing methods applied by Deloitte Touche Tohmatsu LLC,
accounting auditors and their results are appropriate.
(3) Audit results of consolidated financial statements and attachments
In our opinion, the auditing methods applied by Deloitte Touche Tohmatsu LLC,
accounting auditors and their results are appropriate.

May 17, 2024
The Audit & Supervisory Board, Rinnai Corporation.
Kinji Mori, Standing Audit & Supervisory Board Member
Masanori Shimizu, Standing Audit & Supervisory Board Member
Masaaki Matsuoka, Outside Audit & Supervisory Board Member
Ippei Watanabe, Outside Audit & Supervisory Board Member
Note: Masaaki Matsuoka and Ippei Watanabe (Audit & Supervisory Board Members)
serve as outside members of the Audit & Supervisory Board , in accordance withthe 16th item of Article 2 and the third clause of Article 335 of the Companies Act.
The above represents a translation, for convenience only, of the original report issued
in Japanese.
END.

55

Rinnai Corporation

Notice of Convocation of
The 74th Ordinary General Shareholders’ Meeting

PLACE

Grand Banquet Hall “The Grand Court”, 7th floor, ANA CROWNE PLAZA Hotel Grand Court
NAGOYA 1-1-1, Kanayama-cho, Naka-ku, Nagoya

DIRECTIONS One-minute walk from South Gate of Kanayama Station (JR line, Meitetsuline, and subway)
 Five-minute ride from Nagoya Station (JR line or Meitetsu line) to
Kanayama Station
 Ten-minute ride from Sakae Station (subway) to Kanayama Station

This document has been prepared as a guide for non-Japanese investors and contains forwardlooking statements that are based on management’s estimates, assumptions, and projections at
the time of publication. A number of factors could cause actual results to differ materially fromexpectations. This document is a translation of the Japanese-language original.

56