Yukihiko Shimazu
President
PIOLAX, INC.
June 5, 2024
To our Shareholders and Investors,

Piolax's opinion on the ISS report regarding Proposal No. 3 of the 108th Ordinary General
Meeting of Shareholders
We are informed that Institutional Shareholder Services, Inc. (hereafter referred to as "ISS"), avoting advisory firm, has issued a report (hereafter referred to as "Report") recommending against
the election of Candidate No. 2, Ms. Sakae Komiyama, in Proposal No. 3 Election of three Directors
who are Audit and Supervisory Committee Members (hereinafter referred to as "Proposal") to besubmitted to the 108th Ordinary General Meeting of Shareholders to be held on June 25, 2024.
While our opinion on this Proposal is stated in the convocation notice, we would like to provide
further explanation as follows, and we respectfully request your understanding.
1. Contents of the ISS's recommendation against the Proposal
The Report opposes the election of Candidate No. 2, Ms. Sakae Komiyama, in Proposal No. 3
Election of three Directors who are Audit and Supervisory Committee Members, saying that herelection would violate the ISS’s independence criteria because she worked for Ernst & Young
ShinNihon LLC (hereinafter referred to as "EY"), our company's accounting auditor, until March2014.
2. Our opinion
For the following reasons, we have determined that Ms. Sakae Komiyama does not lackindependence and is qualified to serve as an Outside Director who is an Audit and Supervisory
Committee Member of Piolax.
[Independence](1) Absence of relationship with Piolax while working for EY and passage of a considerable
period of time after leaving EY
Piolax’s accounting auditor is EY, and Ms. Sakae Komiyama has ever worked for its
predecessor, Ota Showa Audit Cooperation. During that time, she was not engaged in ourcompany's accounting audits. More than 10 years have passed since she left the audit firm inMarch 2014, and she has not been involved in any aspect of the audit firm's operations orfinancial policies since then. We believe that a sufficient period of time (cooling-off period) has

passed to resolve any conflict of interest between her and the audit firm, and there is no riskof a conflict of interest between her past work and her duties as Outside Director who is an
Audit and Supervisory Committee Member of our company.
(2) No relationship with the audit firm's auditors in charge of Piolax
While Ms. Sakae Komiyama worked for Ota Showa Audit Cooperation (current EY), she had
never worked in the same department as auditors in charge of Piolax.
(3) No business relationship even after leaving the audit firm
After Ms. Sakae Komiyama left Ota Showa Audit Cooperation (current EY), she has nobusiness relationship with the audit firm as an individual such as undertaking part of auditcertification services and other services performed by it.
(4) Satisfaction of "Independence Criteria for Outside Directors"
When appointing Ms. Sakae Komiyama as a candidate for Director who is an Audit andSupervisory Committee Member, our voluntary Nomination and Compensation Advisory
Committee (which is chaired by an Outside Director and a majority of the members are
Independent Outside Directors) deliberated based on our company's "Independence Criteria
for Outside Directors,” and the Board of Directors resolved it with the consent of the Audit andSupervisory Committee.
She satisfies the requirements for independent directors/auditors pursuant to the rules of theTokyo Stock Exchange and has filed a notification with the Exchange.
[Qualifications]
As described below, Ms. Sakae Komiyama has excellent qualifications as an independent director
and is an indispensable human resource for building our company’s governance system.
(1) Our governance structures
Piolax was originally an owner-affiliated company and was listed on the First Section of theTokyo Stock Exchange in September 2004. Now as a company listed on the Prime Market, wehave been working on appropriate cooperation with shareholders and other stakeholders,aiming to achieve sustainable growth and create medium- to long-term corporate value.
With the transition to a company with the Audit and Supervisory Committee in June 2016, wehave created an environment to decisively take risks for corporate strategies and future growth
based on our fiduciary responsibility and accountability to shareholders. We have alsoestablished a system for receiving objective supervision from Independent Outside Directors
to revitalize the Board of Directors.
In April 2019, we set up a voluntary Nomination and Compensation Advisory Committee toenhance the effectiveness of the Board of Directors' supervisory function. All the Independent

Outside Directors serve as the committee members.
(2) Requirements for Outside Directors who are Audit and Supervisory Committee Members
As responsible for corporate governance, Directors who are Audit and Supervisory Committee
Members are expected to contribute to the sustainable growth of the company and theenhancement of corporate value over the medium to long term with a fair and unbiased attitude.
Given the progress of our globalization through business expansion and the growth of ourmedical device business, there is an increasing expectation for talents who have sufficientknowledge in finance and accounting, as well as gender diversity.
(3) Reasons for appointment of Ms. Sakae Komiyama as candidate⚫

Ms. Sakae Komiyama, a candidate for Director and Audit and Supervisory Committee Member,has served as a member of the Board of Governors and the Audit Committee of theGovernment Pension Investment Fund for nine years. She has experience and knowledge inauditing the management as one of the few female members under the strict governancesystem at the top level in Japan. At a time when strict adherence to corporate governance iseven more important, we believe that her knowledge is essential in building even stronger
corporate governance.

⚫

Ms. Sakae Komiyama has many years of experience as a certified public accountant at
multiple audit firms, having conducted accounting audits of numerous listed companies. We
expect that she will continue to contribute to improving the effectiveness of our corporate
accounting oversight by making the most of her experience, not only in accounting audits but
also in management and accounting guidance.

⚫

When working for the audit firms, Ms. Sakae Komiyama conducted audits of companies inmanufacturing, finance, wholesale, real estate, and other industries and accumulated
knowledge of various businesses. She has provided useful advice for the development of ourmedical device business.

⚫

Our company have plants, branches, and subsidiaries around the world, and the importanceof accounting audits is becoming extremely high due to various risks. In these situations, weexpect that we will continue to receive her expertise and advice on compliance, as she hasexperience in uncovering illegal practices and accounting frauds during audits at the audit firms.

⚫

When working in the accounting department of a general business company, Ms. Sakae
Komiyama was involved in listing the company on the Tokyo Stock Exchange. We are taking
advice from her on establishing and operating business management systems.

We would like to ask our shareholders to exercise their voting rights after careful consideration ofthe above explanation.

[Reference]
Brief profile of Ms. Sakae Komiyama for Proposal No. 3 Election of three Directors who are Auditand Supervisory Committee Members