Note: This document has been translated from a part of the Japanese original for reference purposes only. In
the event of any discrepancy between this translated document and the Japanese original, the original shallprevail. The Company assumes no responsibility for this translation or for direct, indirect or any other formsof damages arising from the translation.
(Stock Exchange Code 7952)
June 6, 2016
To Shareholders with Voting Rights:
Hirotaka Kawai
President & CEO
Kawai Musical Instruments
Manufacturing Co., Ltd.
200 Terajima-cho, Naka-ku, Hamamatsu,
Shizuoka

NOTICE OF CONVOCATION OF
THE 89TH ANNUAL GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We would like to express our appreciation for your continued support and patronage.
You are cordially invited to attend the 89th Annual General Meeting of Shareholders of Kawai MusicalInstruments Manufacturing Co., Ltd. (the “Company”). The meeting will be held for the purposes as described
below.
If you are unable to attend the meeting, you may exercise your voting rights in writing or via the Internet.
Please review the attached Reference Documents for the General Meeting of Shareholders and exercise yourvoting rights by 5:00 p.m. on Monday, June 27, 2016, Japan time.
1. Date and Time:

Tuesday, June 28, 2016 at 10:00 a.m. Japan time (the reception desk opens at
9:00 a.m. Japan time)

2. Place:

Building No. 10 at the Company Headquarters located at
200 Terajima-cho, Naka-ku, Hamamatsu, Shizuoka, Japan

3. Meeting Agenda:
Matters to be reported: 1. The Business Report and Consolidated Financial Statements for the 89th
Fiscal Year (from April 1, 2015 to March 31, 2016), and results of audits of
the Consolidated Financial Statements by the Accounting Auditor and the
Audit & Supervisory Board
2. Non-consolidated Financial Statements for the 89th Fiscal Year (from April
1, 2015 to March 31, 2016)
Proposals to be resolved:
Proposal 1:
Distribution of Dividends
Proposal 2:
Election of Ten Directors
Proposal 3:
Election of Two Auditor & Supervisory Board Members
Proposal 4:
Renewal of the Measures against the Large-scale Purchase of the Shares in the
Company (a Takeover Defense Measure)-1-

4. Other matters concerning the General Meeting of Shareholders(1) If you arrange attendance by your proxy, please appoint one shareholder of the Company holding
voting rights. In this case, you are kindly requested to submit a document proving such proxy prior tothe opening of the General Meeting of Shareholders.
(2) If you are diversely exercising your voting rights, please give notice in writing to the Company on
your intention of such diverse exercise and the reasons therefor, no later than three days prior to thedate of the General Meeting of Shareholders.
(3) Of the documents to be included in this notice of convocation, “Systems and policies of theCompany” in the Business Report, Notes to Consolidated Financial Statements and Notes to
Non-consolidated
Financial
Statements
arepostedontheCompany’s
website(http://www.kawai.co.jp/ir/sokai/) (Japanese only) pursuant to the applicable laws and regulations aswell as Article 15 of the Company’s Articles of Incorporation. Therefore, they are not included in the
Attachment of this Notice. The Business Report, Consolidated Financial Statements andNon-consolidated Financial Statements audited by Auditor & Supervisory Board Members and the
Accounting Auditor include the aforementioned documents posted on the Company’s website, in
addition to those presented in the Attachment.
Request to shareholders: When attending the meeting, please submit the enclosed Voting Rights Exercise
Form at the reception desk.
Notice:Any amendment to the Attachment or the Reference Documents for the General
Meeting of Shareholders will be posted on the Company’s website(http://www.kawai.co.jp) (Japanese only).

-2-Please review the attached Reference Documents for the General Meeting of Shareholders (pages 5 through 25) andexercise your voting rights.

You may exercise your voting rights by one of the following three methods.
Exercise of voting rights by attendance to the General Meeting of Shareholders
Please submit the enclosed Voting Rights Exercise Form at the reception desk. Please be sure to bring with you
this Notice of Convocation of the 89th Annual General Meeting of Shareholders.
Date of the General Meeting of Shareholders:

Tuesday, June 28, 2016 at 10:00 a.m. Japan time

Exercise of voting rights in writing
Please indicate approval or disapproval on each proposal on the enclosed Voting Rights Exercise Form andreturn the completed form to the Company by the deadline for the exercise.
Deadline for the exercise of voting rights:

Monday, June 27, 2016 at 5:00 p.m. Japan time

Exercise of voting rights via the Internet (For details, please refer to the following page.)
Please have access to the voting rights exercise website (http://www.web54.net) (Japanese only) designated by
the Company and exercise your voting rights at the website.
Deadline for the exercise of voting rights:

Monday, June 27, 2016 at 5:00 p.m. Japan time-3-

Exercise of Voting Rights via the Internet
In exercising voting rights via the Internet, please note the following.

1

Voting rights exercise website- To exercise voting rights via the Internet, please have access to the voting rights exercise website(http://www.web54.net) (Japanese only) designated by the Company from your PCs or smartphones
and exercise your voting rights at the website.
- You may not exercise voting rights via the Internet due to your Internet environment or otherreasons.

2

Procedures to exercise voting rights- Please enter the “voting rights exercise code” written on the Voting Rights Exercise Form on thevoting rights exercise website and press the “Login” button.
- As you are on the password authentication screen, please enter the “password” written on the Voting
Rights Exercise Form and press the “Next” button. At the time of initial login, you will be transferredto the password change screen.
- As you will find “approval/disapproval input column” and “exercise button,” please use them after
reviewing the Notes.

3

Multiple exercise of voting rights- In the event of multiple exercise of voting rights in writing and via the Internet, the exercise via theInternet will be valid.
- In the event of multiple exercise of voting rights via the Internet, the last exercise of voting rights
will be valid.

4

Other
- Costs involving the use of the Internet (such as provider fees and communication fees) are to beborne by shareholders.

Contact number for theinquiries concerning
exercise of voting
rights via the Internet

Sumitomo Mitsui Trust Bank, Limited
Toll-free telephone number (in Japan only) for the transfer agency’s website
technical support
0120-652-031 (Operating hours: 9:00 a.m. to 9:00 p.m. Japan time) (Japanese
only)

-4-

Proposal 1:

Distribution of Dividends

The Company’s basic principle is to distribute dividends, while ensuring sufficient level of internal reserve forstabilizing the management base, in consideration of the business results of each fiscal year as well as thebusiness environment and business development in the future. Currently, the Company only pays year-end
dividends, in principle.
The Company proposes to pay the year-end dividends as follows for the fiscal year under review, in
response to the constant support by the shareholders.
Matters concerning the year-end dividends(1) Type of the dividend property
Cash(2) Matters concerning the assignment of the dividend property and its amountThe Company proposes ¥48.00 per share of its common stock.
In such case, the total amount of dividends is ¥427,966,752.
(3) Effective date of the distribution of dividends
The distribution of dividends is proposed to be effective on June 29, 2016.

-5-

Proposal 2:

Election of Ten Directors

The terms of office of all ten incumbent Directors will expire at the conclusion of this General Meeting of
Shareholders. Accordingly, the election of ten Directors is proposed.
The candidates for Directors are as follows.
All candidates for Directors have indicated consent to the Measures against the Large-scale Purchase of
the Shares in the Company (a Takeover Defense Measure) scheduled to be renewed subject to the approvalof the Proposal 4 at this General Meeting of Shareholders.
No.

Name
(Date of birth)

Reappointment
Hirotaka Kawai(June 27, 1947)
1

2

Career summary, positions, responsibilities
and significant concurrent positions
January 1976
August 1979
August 1983
August 1985
June 1987
October 1989
June 2015
April 2016

Number of sharesof the Company
held

Joined the Company
Director
Managing Director
Senior Chief Executive Officer
Vice President & Chief Executive Officer
President & Chief Executive Officer
President & CEO (to present)
General Manager, Business Division (to present)(Significant concurrent positions)
Director, KAWAI FOUNDATION FOR SOUND TECHNOLOGY & MUSIC
Director, KAWAI SEIMITSU KINZOKU Co., Ltd
Auditor & Supervisory Board Member, Kabushiki Kaisha Kawai Shadan[Reasons for nomination as a Director] Mr. Hirotaka Kawai has served as Chief Executive Officer for
many years and has deep knowledge and achievements concerning the Group’s business management. In
the midst of severe changes in the business environment, he has exerted strong leadership and contributed
to the enhancement of corporate value. We believe that he will continue to exert management leadershipand is qualified to supervise the business execution.
Joined the Company
April 1978
Seconded to Hamanako Institute Corporation
April 1989
General Manager, Secretary’s OfficeFebruary 2009
May
2010
General Manager, Corporate Planning Division (to present)
Reappointment
June 2011
Director
Senior Executive Officer
Kazuhiro Kaneko
April
2013
General Manager, Accounting & Finance Division(November 10, 1953)
June 2013
Managing Executive Officer
June 2014
Senior Managing Executive Officer
June 2015
Executive Vice President (to present)[Reasons for nomination as a Director] Mr. Kazuhiro Kaneko has abundant experience and achievements
in management as a person in charge of the Corporate Planning Division. We believe that he is qualified tocontinuously carry out management strategies and supervise the business execution as a Director.

-6-

116,400

5,600

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions
March 1976
April 2004

Reappointment

3

February 2008
June 2008
February 2009

Masakazu Kusaka
April 2013
(November 12, 1953) June 2013
June 2014
June 2015
April 2016

4

Joined the Company
Deputy General Manager, Kanto (Tokyo and surrounding areas)
Business Division
General Manager, Chubu (central area) Business Division
Executive Officer
General Manager, Kanto (Tokyo and surrounding areas)
Business Division
General Manager, Domestic Business Division
Director
Senior Executive Officer
Managing Executive Officer
Managing Director (to present)
General Manager, Domestic Business Division (to present)[Reasons for nomination as a Director] Mr. Masakazu Kusaka has abundant experience and achievements
in management as a person in charge of the Domestic Business Division. We believe that he is qualified tocontinuously carry out management strategies and supervise the business execution as a Director.
Joined the Company
April 1977
General Manager, Marketing Strategy OfficeFebruary 2005
Manager, Overseas Business Division
February 2006
August 2008
Executive Officer
April 2013
General Manager, Overseas Business Division
Reappointment
June 2013
Director
Senior Executive Officer
Masayuki Nishio
June 2015
Managing Director (to present)(December 24, 1953)
April 2016
General Manager, Overseas Business Division (to present)(Significant concurrent positions)
Director, Kawai America Corporation
Director, Kawai Europa GmbH
[Reasons for nomination as a Director] Mr. Masayuki Nishio has abundant experience and achievementsin the Company’s global development as a person in charge of the Overseas Business Division. We believethat he is qualified to continuously carry out management strategies and supervise the business execution asa Director.

-7-

Number ofshares of theCompany held

3,500

3,700

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions
April 1978
April 2004
October 2008

Reappointment

5

Teruyuki Ito(September 1, 1953)

February 2010
June 2014
April 2015

April 2016

Joined the Company
Manager, Middle Kanto Business Department, Kanto Business
Division
General Manager, Musical Education Department, Domestic
Business Division
Executive Officer
Director (to present)
Senior Executive Officer
Executive Officer (to present)
General Manager, Business Strategy Department, Domestic
Business Division
General Manager, General Affair & Human Resources Division(to present)

Number ofshares of theCompany held

2,500

6

[Reasons for nomination as a Director] Mr. Teruyuki Ito has served as a person in charge of the Musical
Education Department. He is currently working on many issues as a person in charge of the General Affairs& Human Resources Division. We believe that he is qualified to continuously carry out management
strategies and supervise the business execution as a Director.
Joined the Company
October 2007
Deputy General Manager, Accounting & Finance Division
February 2010
Reappointment
Deputy General Manager, Piano Division
August 2011
April 2012
General Manager, Piano Division
Kentaro Kawai
Executive Officer (to present)(June 1, 1977)
June 2015
Director (to present)
April 2016
General Manager, Piano Division (to present)

1,100

7

[Reasons for nomination as a Director] Mr. Kentaro Kawai has well-informed experience in the field andachievements as a person in charge of the Piano Manufacturing Division. He is working on many issues asa person in charge of the Musical Instruments Manufacturing Division from April this year. We believe that
he is qualified to continuously carry out management strategies and supervise the business execution as a
Director.
April 1979
Joined the Company
August 2005
General Manager, Hamamatsu Factory, KAWAI SEIMITSUKINZOKU Co., Ltd
February 2010
General Manager, Matsumoto Factory, KAWAI SEIMITSUKINZOKU Co., Ltd
New appointment
April 2013
General Manager, Metal Division (to present)
June 2013
President & Chief Executive Officer, KAWAI SEIMITSU
Harumitsu Makita
KINZOKU Co., Ltd (to present)(January 18, 1957)
June 2014
Executive Officer (to present)
April 2016
General Manager, Material Processing Division (to present)

1,143(Significant concurrent positions)
President & Chief Executive Officer, KAWAI SEIMITSU KINZOKU Co., Ltd[Reasons for nomination as a Director] Mr. Harumitsu Makita is well-informed in the field and hasabundant experience and achievements as a person in charge of the Metal Processing Division. He is
working on many issues as a person in charge of the Material Processing Division from April this year. We
believe that he is qualified to continuously carry out management strategies and supervise the businessexecution as a Director.

-8-

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions
April 1965
June 2002

Reappointment

8

Yoshio Sano
(December 12, 1949)

August 2004
June 2007
June 2009

June 2011
June 2015

Joined the Company
President & Chief Executive Officer, Kawai Hyper Wood Co.,
Ltd.
General Manager, Coating Division
Executive Officer
Director
Senior Executive Officer
General Manager, General Affair & Human Resources Division
Executive Vice President
Executive Vice Chairman (to present)

Number ofshares of theCompany held

13,500(Significant concurrent positions)
Director, KAWAI SEIMITSU KINZOKU Co., Ltd

9[Reasons for nomination as a Director] Mr. Yoshio Sano has served as a person in charge of the General
Affair & Human Resources Division. He is also well-informed in the material processing business and hasabundant experience and achievements. We believe that he is qualified to continuously carry out
management strategies and supervise the business execution as a Director.
Registered as an attorney
April 1985
Established Ichisei Katagiri Law Office
Reappointment
Substitute Auditor & Supervisory Board Member of theJune 2010
Company
Outside Director (to present)
Ichisei Katagiri
June 2012(July 9, 1947)(Significant concurrent positions)Representative, Ichisei Katagiri Law Office[Reasons for nomination as a Director] Mr. Ichisei Katagiri has abundant knowledge and deep insight as
an attorney and has offered helpful advice and supervision concerning the Company’s management fromhis professional perspective. We expect to continuously receive appropriate guidance from him. Although
he does not have direct experience of corporate business outside of serving as an Outside Director andOutside Auditor & Supervisory Board Member, we believe that he can appropriately carry out duties as an
Outside Director for the reasons stated above.

-9-

600

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions
April 1964
March 1969
March 1983
March 1990
July 1992
March 1993

10

Reappointment

March 1994
February 2003

Shouji Nakamura(January 26, 1942)

January 2006
March 2012
June 2015

Joined Osaka Gas Co., Ltd.
Joined CHUBU GAS CO., LTD.
Director, CHUBU GAS CO., LTD.
Managing Director, CHUBU GAS CO., LTD.
Senior Chief Executive Officer, CHUBU GAS CO., LTD.
Vice President & Chief Executive Officer, CHUBU GAS CO.,LTD.
President & Chief Executive Officer, CHUBU GAS CO., LTD.
Chairman and representative director, SALA Corporation (topresent)
Chairman and Representative Director, SALA HOUSE CO.,LTD. (to present)
Chairman and Representative Director, CHUBU GAS CO.,LTD. (to present)
Outside Director of the Company (to present)

Number ofshares of theCompany held

2,200

(Significant concurrent positions)
Chairman and Representative Director, CHUBU GAS CO., LTD.
Chairman and representative director, SALA Corporation
Chairman and Representative Director, SALA HOUSE CO., LTD.
[Reasons for nomination as a Director] With many years of experience and knowledge throughinvolvement in corporate management, we believe that Mr. Shouji Nakamura can offer valuable advice andsuggestions in ensuring transparency and validity of decision-making for the Company’s management.
(Notes)
1.

2.

3.
4.

Mr. Hirotaka Kawai, a candidate for Director, is concurrently serving as Director of KAWAI FOUNDATION FOR
SOUND TECHNOLOGY & MUSIC. The Company has business relationship including donation of money andleasing of buildings with KAWAI FOUNDATION FOR SOUND TECHNOLOGY & MUSIC.
Mr. Shouji Nakamura, a candidate for Director, is concurrently serving as Chairman and Representative Director of
CHUBU GAS CO., LTD. The Company has entered into a gas supply contract to receive the gas supply from CHUBUGAS CO., LTD. However, the transaction amount is insignificant compared with the consolidated transaction amountsof both CHUBU GAS CO., LTD. and the Company.
Other than the above 1. and 2., there is no special interest between each candidate for Director and the Company.
Matters concerning Outside Directors are as follows:
1) Candidates for Directors, Messrs. Ichisei Katagiri and Shouji Nakamura, are the candidates for Outside Directors.
The Company has designated them as independent directors defined under the provisions of the Tokyo Stock
Exchange, Inc. and registered them as such therewith.
2) Candidates for Directors, Messrs. Ichisei Katagiri and Shouji Nakamura, are currently serving as Outside Directorsof the Company, and they will have served four years and one year, respectively, at the conclusion of this General
Meeting of Shareholders.
3) The Company has entered into an agreement for the limitation of liability with Messrs. Ichisei Katagiri and Shouji
Nakamura pursuant to Article 427, Paragraph 1 of the Companies Act, limiting their liability for damagesprescribed under Article 423, Paragraph 1 of the said Act. The limit of liability for damages based on theagreement is the minimum liability prescribed by laws and regulations, while the limitation of liability is allowed
only when the Directors are carrying out their duties in good faith without involving gross negligence. Upon
approval of their reappointment, the Company will continue the agreement for the limitation of liability with them.

- 10 -

Proposal 3:

Election of Two Auditor & Supervisory Board Members

The terms of office of Messrs. Katsuo Ogura and Yoshifumi Nakano of the four Auditor & Supervisory
Board Members will expire at the conclusion of this General Meeting of Shareholders. Accordingly, theelection of two Auditor & Supervisory Board Members is proposed.
The consent of the Audit & Supervisory Board has been obtained with respect to this Proposal.
The candidates for Auditor & Supervisory Board Members are as follows.
No.

Name
(Date of birth)

Career summary, positions
and significant concurrent positions
April 1978
April 2004
April 20111

New appointment

June 2011

Jiro Murakami(May 26, 1949)

June 2012
April 2013
June 2013
June 2015

Joined the Company
General Manager, Electronic Musical Instruments Division
President & Chief Executive Officer, Marchen MusicalInstruments Co., Ltd.
Director
Senior Executive Officer
Managing Executive Officer
General Manager, Musical Instruments Manufacturing Division
Senior Managing Executive Officer
Senior Managing Director (to present)

Number ofshares of theCompany held

4,600

(Significant concurrent positions)Auditor, PT. Kawai Indonesia

2[Reasons for nomination as an Auditor & Supervisory Board Member] Mr. Jiro Murakami has served as
Senior Managing Director and a person in charge of the Musical Instruments Manufacturing Division. We
believe that he can carry out effective audits on the Company’s management based on his abundant
knowledge.
Graduated from Nagoya Training Institute, National Tax College
March 1967
District Director, Hamamatsuhigashi Tax Office
July 2002
First Deputy Commissioner, Second Taxation Department,
July 2006
Reappointment
Nagoya Regional Taxation Bureau
July 2007
District Director, Shizuoka Tax Office
Yoshifumi Nakano August 2008
Started to practice as a tax accountant(May 10, 1948)
June 2015
Outside Auditor & Supervisory Board Member (to present)(Significant concurrent positions)Representative, Yoshifumi Nakano Tax Accountant Office[Reasons for nomination as an Auditor & Supervisory Board Member] Mr. Yoshifumi Nakano has served
as a District Director in various regions and has abundant knowledge and deep insight concerning taxes andaccounting as a tax accountant. We expect him to contribute to strengthening the Company’s audit structure
based on his abilities. We believe that he can appropriately carry out duties as an Outside Auditor &Supervisory Board Member.

300(Notes)
1.
2.
3.

4.

5.

There is no special interest between each candidate for Auditor & Supervisory Board Member and the Company.
Mr. Jiro Murakami is currently serving as a Director of the Company, but he is scheduled to retire at the conclusion ofthis General Meeting of Shareholders.
Mr. Yoshifumi Nakano is a candidate for Outside Auditor & Supervisory Board Member. The Company has
designated him as independent Auditor & Supervisory Board Member defined under the provisions of the Tokyo
Stock Exchange, Inc. and registered him as such therewith.
Mr. Yoshifumi Nakano, a candidate for Outside Auditor & Supervisory Board Member, is currently serving as an
Outside Auditor & Supervisory Board Member of the Company, and he will have served one year at the conclusionof this General Meeting of Shareholders.
The Company has entered into an agreement for the limitation of liability with Mr. Yoshifumi Nakano pursuant to
Article 427, Paragraph 1 of the Companies Act, limiting his liability for damages prescribed under Article 423,
Paragraph 1 of the said Act. The limit of liability for damages based on the agreement is the minimum liability
prescribed by laws and regulations, while the limitation of liability is allowed only when the Auditor & Supervisory
Board Member is carrying out his duties in good faith without involving gross negligence. Upon approval of his
reappointment, the Company will continue the agreement for the limitation of liability with him.

- 11 -

Proposal 4:

Renewal of the Measures against the Large-scale Purchase of the Shares in the Company (aTakeover Defense Measure)

Effective period of the Measures against the Large-scale Purchases of the Shares in the Company(hereinafter the “Old Plan”) currently in force after the renewal based on the resolution at the 86th Annual
General Meeting of Shareholders held on June 27, 2013, is set to expire at the conclusion of this General
Meeting.
The Company, in the face of the expiry of the effective period of the Old Plan, resolved at the Board of
Directors’ meeting held on May 24, 2016 that the Old Plan be renewed basically succeeding the contents
thereof described as follows, becoming effective subject to the approval at this General Meeting (themeasures after the renewal shall hereinafter be referred to as the “Plan”).
Accordingly, shareholders are kindly requested to approve the Plan.
1. Objectives of the Plan
(1) A measure for ensuring and enhancing the Company’s corporate value and the common interest of its
shareholders
1) Management philosophy
The Company aims to become “a creative and well-liked corporation” with the following
management philosophy.
(i) Creating comfortable and fulfilling living environment(ii) Providing products and services focused on customer satisfaction(iii) Promoting corporate activities for a new era(iv) Aiming to become a pleasant company that values its employees
The Company is striving to ensure and enhance the Company’s corporate value and the common
interest of its shareholders by continuously creating new values truly sought by society andproviding such values to customers on a timely basis.
2) Source of the Company’s corporate value and the common interest of its shareholders
The Company, as a business engaged in manufacturing and sales of musical instruments, hasbeen striving for accumulating expertise, experience and know-how aiming to realize our founder’s
dream of “making the world’s finest piano.” Based on the recognition that piano manufacturing is abusiness to be run with a century-long perspective, the Company is striving for further enhancementof quality and technology innovation in order to achieve the aforementioned dream.
In addition, the Company has been hitherto supported by the growth of peripheral businesses
derived from the traditional core business of manufacturing and sales of musical instruments,
namely music school business operating around 4,500 directly managed music schools throughout
Japan, physical education business involving physical education schools targeting children andhealth schools for adults and seniors, which is attracting growing attention in recent years, metalbusiness utilizing the high precision rolling technologies derived from the research on the process ofmanufacturing sounding body of musical instruments, and coating business capitalizing on the woodcoating technique derived from the piano coating. Interactions among these businesses areenhancing the Company’s brand image, thus creating corporate value.
Sales of musical instruments and music school business in Japan, in particular, have developed
our unique business model based on the direct selling system. Customers learn how to play the
piano in our music schools and buy Kawai pianos, for which we provide after-sales services such as
tuning. In recent years, the Company is developing this business model not only in Japan but also inoverseas markets, primarily Asian countries, in an effort to promote our business activities based oncontinuous trustful relationships with customers through pianos, products involving years of use.
Furthermore, since 1963, the Company has been inviting many famous musicians to Japanthrough Kawai Music Foundation, contributing to the advancement of the Japanese music culture,
while holding more than 2,200 times of Kawai Concerts, thereby creating opportunities to enjoy
quality music in rural areas. We recognize that these music promotion activities are conducted not
only by providing musical instruments as a manufacturer, but also by gaining the understanding andempathy of all stakeholders surrounding the Company based on consistent favorable relationships
with musicians and performers in various genres.
We believe it is such promotion of the Group’s business activities in hardware as well assoftware that derives the Company’s corporate value and the common interest of its shareholders.

- 12 -

3) New Medium-term Management Plan “Resonate 2018”
The Company launched on April 1, 2016, the new Medium-term Management Plan, “Resonate
2018,” that covers the three-year period ending March 2019. The vision under this new
Medium-term Management Plan is “to expand the Kawai fans through providing practical user
experience in pursuit of reliance and innovation, while aiming to become the top piano brand thatwill remain the brand of choice for the next hundred years through continuous promotion of music
culture” under the slogan of “Resonate 2018 – towards the 100th Anniversary – to remain as the top
brand.” The basic principle is to drive the enhancement of corporate value as a 100-year brand,
aiming to achieve long-term stable growth. In the meantime, we will be taking on the key strategies
while building up the infrastructure for their implementation, in order to enhance earning powerwith a view to attaining the target indicator of 5% or higher operating income margin.
Specific measures under the new Medium-term Management Plan are described in (4) Issues tobe addressed, 1. Matters related to the current state of the Group in the Business Report for the 89th
term as presented in the Attachment to the Notice of Convocation of this General Meeting.
We believe that the steady implementation of main measures under the Plan should contribute to
the increase in the Company’s corporate value and the enhancement of the common interest of its
shareholders.
4) Vital framework for ensuring and enhancing the Company’s corporate value and the common
interest of its shareholders
The Company has been upholding and addressing a priority issue of enhancing corporate
governance as a framework vital for ensuring and enhancing the Company’s corporate value and thecommon interest of its shareholders.
For the purpose of acceleration of decision-making and clarification of management
responsibilities, the Company has adopted the Executive Officer System as a measure for achieving
separation of business execution from management supervision. The term of office of Directors is
set to be one year.
In addition, the Company has appointed an independent Auditor & Supervisory Board Members
to be responsible for audits on business execution by Directors. Furthermore, the Company elected
two Outside Directors in June 2015, while establishing the Corporate Governance Committee
comprising four outside officers and three internal Directors in December 2015, in an effort toensure further reinforcement of corporate governance.
The Company will work on ensuring and enhancing the Company’s corporate value and thecommon interest of its shareholders by further promoting various measures to enhance corporate
governance. At the same time, the Company will strive for developing stable and trustfulrelationships with shareholders on a long-term basis through initiatives such as holding briefings for
institutional investors and security analysts and promoting investor relations activities for individual
investors.
(2) Necessity of the Plan
The Company will promote the aforementioned corporate activities as the Group, and will aim toensure and enhance the Company’s corporate value and the common interest of its shareholders. In
order to achieve this, we believe it is essential to maintain our expertise, experience and know-how
accumulated over the years since the foundation of the Company, along with the trustful relationships
with all stakeholders both in Japan and overseas, including customers, business partners, local
communities and employees.
Core businesses of the Company are the fields such as music and education, which are not limited tojust providing hardware and software, but are profoundly related to culture. Our consistent music
promotion activities as a social contribution are also considered to be an important component of ourbusiness. Education for young children, in particular, is believed to have a significant impact on thosepromising children on their emotional as well as physical health. Thus, we believe that the operation ofthese special businesses requires well-balanced management attitude based on the considerations ofcultural aspects, in addition to economic factors.
Meanwhile, in the Japanese capital market, there are quite a few cases involving a large-volume
purchase of share certificates, etc. of a company without prior approval of its management in an attempt
to gain its control.
The Company has no intention to reject an attempt to purchase share certificates, etc. in alarge-volume (hereinafter the “Large-volume Purchase of Share Certificates, etc.”), insofar as thePurchase may contribute to ensuring and enhancing the Company’s corporate value and the common
interest of its shareholders, and believes that whether or not to accept the Large-volume Purchase of
Share Certificates, etc. should ultimately be entrusted to the decision of shareholders.
- 13 -

However, we also believe that shareholders, in deciding whether or not to accept the Large-volume
Purchase of Share Certificates, etc., are required to adequately understand the potential impact of theLarge-volume Purchase of Share Certificates, etc. on the stakeholders of the Company and the Group
companies, including customers, business partners, local communities and employees, as well as togive due consideration to the cultural aspects of the Company’s business. For that reason, the party
intending to conduct the Large-volume Purchase of Share Certificates, etc. is desired to provide
shareholders the information regarding the Purchase in advance, allowing sufficient time forshareholders to consider whether or not to accept the Large-volume Purchase of Share Certificates, etc.
In addition, it is also believed that the Board of Directors of the Company needs to provide
shareholders the information regarding various factors that constitute the Group’s corporate value,
while evaluating the Large-volume Purchase of Share Certificates, etc. and presenting its opinion
thereon.
The Board of Directors of the Company believes, based on the aforementioned philosophy, that it iscritical for the Board of Directors of the Company, in the event of a Large-volume Purchase of Share
Certificates, etc. of the Company, to provide information necessary for shareholders to decide whether
or not to accept the Large-volume Purchase of Share Certificates, etc., while ensuring sufficient timeand information necessary for the Board of Directors of the Company to present an alternative
proposition as appropriate, and ensuring sufficient time for the Board of Directors of the Company tonegotiate with the party that intends to implement the Large-volume Purchase of Share Certificates, etc.
Therefore, the Company has determined that it is necessary to renew the Plan.
The Board of Directors of the Company has decided to renew the Plan by continuously setting up
implementation rules (hereinafter the “Large-scale Purchase Rules”) especially for the Large-scale
Purchase (as defined in 2. hereunder; hereinafter the same) among all types of the Large-volume
Purchase of Share Certificates, etc.
Major shareholders of the Company as of March 31, 2016 are as stated in Appendix 1. There is no
actual circumstance at this moment, in which the Company has received any notice of the Large-scale
Purchase or proposal for acquisition from a specific third party.
2. Purchase of the Company’s shares subject to the Plan
Purchase of the Company’s shares subject to the Plan is defined as the purchase of the Company’s
share certificates, etc. (Note 3) which, whether by intention or not, results in an increase of the voting
rights ratio (Note 2) of a specific shareholder group (Note 1) to 20% or higher (using whateverpurchase method including market trading and tender offer, but excluding any purchase based on theprior agreement of the Board of Directors of the Company; Such purchase shall hereinafter be referred
to as the “Large-scale Purchase,” and the party engaging in such purchase is referred to as the“Large-scale Purchaser”).
3. Detail of the Large-scale Purchase Rules
The Large-scale Purchase Rules stipulate that the Large-scale Purchaser shall provide the Board of
Directors of the Company necessary and sufficient information in advance so that the Board has a time
period to assess and consider the Large-scale Purchase based on the information disclosed, and that theLarge-scale Purchase shall commence after the expiry of such time period.
In this process, the following specific procedures shall be followed.
(1) Request for information from the Large-scale Purchaser
The Large-scale Purchaser shall provide the Board of Directors of the Company necessary andsufficient information in Japanese for shareholders to make a decision as well as for the Board toengage in an assessment and consideration prior to the Large-scale Purchase.
The scope and contents of the information to be provided will differ depending on the manner anddetails of the Large-scale Purchase.
The Large-scale Purchaser shall prepare and submit to the Board of Directors of the Company adocument in Japanese containing a declaration to conduct the Large-scale Purchase according to theLarge-scale Purchase Rules (hereinafter the “Purchase Statement”) before engaging in the Large-scale
Purchase.
The Purchase Statement shall include the following.
(i)Name of the Large-scale Purchaser (corporate name, if the Large-scale Purchaser is a body
corporate or organization such as a union)(ii) Address of the Large-scale Purchaser (address of head office or principal office, if the Large-scale- 14 -

Purchaser is a body corporate or organization such as a union)(iii) Governing law of incorporation, if the Large-scale Purchaser is a body corporate or organizationsuch as a union(iv) Name of the representative, if the Large-scale Purchaser is a body corporate or organization suchas a union(v) Name and address of a contact person in Japan(vi) Outline of the Large-scale Purchase intended(vii) Number of share certificates, etc. of the Company currently owned and scheduled to be purchasedby the Large-scale Purchaser(viii)Declaration to comply with the Large-scale Purchase Rules
The Board of Directors of the Company, upon receipt of the Purchase Statement from theLarge-scale Purchaser, immediately presents the fact of such receipt and the contents thereof to the
Independent Committee. In addition, the Board immediately discloses the fact of such receipt andpromptly discloses the outline thereof in a way deemed appropriate.
The Independent Committee discloses through the Board of Directors of the Company the whole orpart of the contents of the Purchase Statement presented by the Board, if and when deemed necessary
and appropriate to disclose specific details in addition to the outline disclosed by the Board for theshareholders to make a decision.
The Board of Directors of the Company will issue a list of information to be submitted from theLarge-scale Purchaser (hereinafter the “Large-scale Purchase Information”) to the Large-scale
Purchaser within five business days counting from the following day of the receipt of the PurchaseStatement.
The Large-scale Purchaser shall prepare a document in Japanese that provides the Large-scale
Purchase Information as requested by the aforementioned list and submit it to the Board of Directors of
the Company within a reasonable period of time.
The Large-scale Purchase Information includes the following items.
(a) General information on the Large-scale Purchaser and its group (such as names, capital structuresand financial conditions)(b) Objectives, methods and details of the Large-scale Purchase (including the price and type of
consideration for the Purchase, timing, legitimacy of the method, structure of the relatedtransactions, likelihood of delisting of the Company’s shares after the Purchase and reasons
therefor)(c) Basis for calculating the Purchase consideration (including the facts and assumptions for the
calculation, calculation method, numerical information used in the calculation, amount of synergy
expected to be derived from the transactions related to the Purchase and the basis of calculation
thereof), as well as the source of the Purchase fund (such as the specific names of the providers of
the fund (including actual providers), funding methods and details of the related transactions)(d) Policies and plans intended after the completion of the Large-scale Purchase for the purpose of
ensuring and enhancing the Company’s corporate value and the common interest of its shareholders,such as management policies, business plans, funding plans, investment plans, capital policies anddividend policies at the Company and the Group(e) Changes scheduled after the completion of the Large-scale Purchase, if any, to the policies fortreating the relationships of the Company and the Group with their stakeholders, including
customers, business partners, local communities and employees, and the details of such change(f) Any other information reasonably considered necessary by the Board of Directors and theIndependent Committee
The Board of Directors of the Company, upon receipt of the Large-scale Purchase Information,
immediately presents the fact of such receipt and details of the information to the Independent
Committee.
The Independent Committee discloses through the Board of Directors of the Company the whole orpart of the Large-scale Purchase Information presented, if and when deemed necessary and appropriate
to disclose the information for the shareholders to make a decision.
The Independent Committee may request through the Board of Directors of the Company additional
information from the Large-scale Purchaser, if the information presented by the Board is consideredinsufficient as the Large-scale Purchase Information based on a review thereof, with the time limit
specified as appropriate (provided, however, that the final time limit shall not exceed 60 days counting
from the date of receipt of the Large-scale Purchase Information, even if the necessary and sufficient- 15 -

information has not been provided).
In such case, the Large-scale Purchaser shall prepare a document in Japanese that provides theinformation requested and submit it to the Board of Directors of the Company by the time limit
specified.
The Independent Committee, if the provision of the Large-scale Purchase Information by theLarge-scale Purchaser is determined to be completed, immediately notifies the fact to the Large-scale
Purchaser through the Board of Directors of the Company (hereinafter the “Notice Regarding theCompletion of the Provision of Information”) and discloses it in a manner deemed appropriate. In
determining whether the provision of the Large-scale Purchase Information has been completed, theIndependent Committee may seek advice from external specialists such as attorneys, certified public
accountants and investment banks (hereinafter the “External Specialists, etc.” ) that are independent
from the Board of Directors of the Company, as appropriate.
(2) Assessment and consideration by the Board of Directors of the Company
The Board of Directors of the Company believes that once the Large-scale Purchaser has completed
the provision of the Large-scale Purchase Information to the Board, reasonable time period
commensurate with the nature and details of the Large-scale Purchase shall be secured for the Board toengage in an assessment and consideration of the Large-scale Purchase and the Large-scale Purchase
Information, negotiate with the Large-scale Purchaser, form opinions as the Board of Directors of theCompany and formulate an alternative proposition, and that the Large-scale Purchase shall commence
only after the expiry of such time period.
Therefore, a time period of (a) or (b) below shall be established as a period for the purpose of
assessment and consideration, formation of opinions and formulation of an alternative proposition by
the Board of Directors of the Company (hereinafter the “Board of Directors’ Assessment Period”).
(a) A period of 60 days counting from the day on which the Notice Regarding the Completion of theProvision of Information is issued in the case of a tender offer of whole of the Company’s sharecertificates, etc. through a tender offer with consideration only in cash (in Japanese yen)(b) A period of 90 days counting from the day on which the Notice Regarding the Completion of theProvision of Information is issued in all other cases of the Large-scale Purchase
However, for the purpose of ensuring and enhancing the Company’s corporate value and the common
interest of its shareholders, the Board of Directors of the Company may extend the Board of Directors’
Assessment Period for up to 30 days insofar as it is necessary for the assessment and consideration of
the Large-scale Purchase based on the Large-scale Purchase Information, negotiation with theLarge-scale Purchaser, formation of opinions as the Board of Directors of the Company and theformulation of an alternative proposition. The Board of Directors of the Company, once the extension
has been decided, shall disclose the reason therefor, the extension period and other matters deemednecessary and appropriate without delay after the resolution of the extension.
The Board of Directors of the Company shall engage in an assessment and consideration of theLarge-scale Purchase, form opinions as the Board of Directors of the Company, and if necessary,develop an alternative proposition and negotiate with the Large-scale Purchaser, based on the
Large-scale Purchase Information provided by the Large-scale Purchaser from the perspective ofensuring and enhancing the Company’s corporate value and the common interest of its shareholders
during the Board of Directors’ Assessment Period. In the process, the Board of Directors of theCompany shall seek advice from the External Specialists, etc., who are independent from the Board of
Directors of the Company, as appropriate and if necessary.
The Board of Directors of the Company, once the Board of Directors’ Assessment Period expires,
immediately notifies the Large-scale Purchaser of the expiration and discloses it in a manner deemed
appropriate.
(3) Consultation with the Independent Committee
The Board of Directors of the Company makes the final decision on whether the Large-scale
Purchaser complied with the Large-scale Purchase Rules and whether the Large-scale Purchase isconsidered to compromise the Company’s corporate value and the common interest of its shareholders
significantly, even if the Large-scale Purchase Rules have been duly complied.
For the purpose of preventing the Board of Directors of the Company from making arbitrary
decisions, the Company stipulates the Independent Committee Regulations (please refer to Appendix 2
for the outline of the Regulations) and establishes the Independent Committee as an organization
independent from the Board, which serves as an advisory body assisting the Board in making various
decisions concerning the Large-scale Purchase Rules.
The Independent Committee shall comprise three members selected from among Outside Auditor &Supervisory Board Members, attorneys, certified public accountants, tax accountants, academics,- 16 -

persons familiar with investment banking business and persons outside the Company with experience
as directors or executive officers of other companies. Names and career summaries of the members of
the Independent Committee as of the renewal of the Plan are as described in Appendix 3.
4. Countermeasures by the Board of Directors of the Company(1) In the case where the Large-scale Purchaser is not acting in compliance with the Large-scale Purchase
Rules
In the event the Large-scale Purchaser violates the Large-scale Purchase Rules, the Board of
Directors of the Company may take measures against the Large-scale Purchase authorized under theCompanies Act and other laws and regulations, as well as the Articles of Incorporation of the Company,
including a gratis allotment of stock acquisition rights (hereinafter the “Countermeasures”) for the
purpose of protecting the Company’s corporate value and the common interest of its shareholders.
The overview of stock acquisition rights in the event of a gratis allotment carried out as part of theCountermeasures is as described in Appendix 4. The conditions for exercising stock acquisition rights,
exercise period and acquisition terms may be established in consideration of effectiveness as aCountermeasure.
(2) In the case where the Large-scale Purchaser is acting in compliance with the Large-scale Purchase
Rules
In the case where the Large-scale Purchaser is acting in compliance with the Large-scale Purchase
Rules, the Board of Directors of the Company will not take any Countermeasure to the Large-scale
Purchase, in principle, but endeavor to persuading shareholders by expressing opposition or presenting
an alternative proposition, even if it opposes the Large-scale Purchase. It shall be entrust to the
judgment of shareholders whether or not to accept the proposal made by the Large-scale Purchaser,
based on the consideration of factors, including the Large-scale Purchase Information, the opinion
thereon of the Board of Directors of the Company and its alternative proposition.
However, even in the case where the Large-scale Purchase Rules are complied with, theCountermeasures shall be taken if the Large-scale Purchaser or the Large-scale Purchase falls under anyof the following circumstances, and if it is considered to significantly compromise the Company’s
corporate value and the common interest of its shareholders.
(a) If the Large-scale Purchaser is engaged in or intends to be engaged in the purchase of theCompany’s share certificates, etc., solely for the purpose of artificially inflating the share price andhaving the shares repurchased by the Company or the Group at an inflated price without serious
intention to participate in the management of the Company (so-called green mailer);(b) If the Large-scale Purchaser is considered to have an intention of gaining temporary control over the
management of the Company for the purpose of transferring tangible and intangible assets, major
customers and business partners that have significant importance to the management of theCompany or the Group, to the Large-scale Purchaser or its group companies, etc.;(c) If the Large-scale Purchase is considered to be carried out for the purpose of diverting the assets of
the Company or the Group as collateral for the debts or funds for repayment by the Large-scale
Purchaser or its group companies, etc., after gaining control over the management of the Company;(d) If the Large-scale Purchase is considered to be carried out for the purpose of gaining temporary
control over the management of the Company, in order to force the Company or the Group to
dispose of its expensive assets such as real estate and securities through sales thereof or other means,with the aim of generating temporary high dividends based on the proceeds from the disposal, or
enabling the Large-scale Purchaser to sell the Company’s shares at a high price, taking advantage ofthe soaring share price resulting from the temporary high dividends;(e) If the Large-scale Purchase is considered likely to practically force shareholders to sell the
Company’s share certificates, etc. by restricting the opportunities or discretion for the shareholders
to make judgment, such as the case of a tender offer without offering to purchase all shares at theinitial phase, and declaring that the purchase terms in the second phase will be less attractive(so-called coercive two-phase purchase) (provided, however, that a partial tender offer does not
automatically fall under this category);(f) If the Large-scale Purchase involves inadequate or inappropriate purchase terms, etc. (including theprice and type of consideration offered, timing of the Purchase, legitimacy of the method,probability that the Purchase will be made, as well as management policies, business plans, capital
policies and dividend policies intended after the Purchase) in light of the intrinsic value of theCompany.

- 17 -

(3) Procedures for implementing the Countermeasures
When implementing the Countermeasures, the Board of Directors of the Company shall follow theprocedures described below for the purpose of ensuring reasonableness and fairness of its decision.
The Board of Directors of the Company consults with the Independent Committee about theappropriateness of implementing the Countermeasures prior to the implementation.
The Independent Committee determines whether the Large-scale Purchaser is acting in compliancewith the Large-scale Purchase Rules and whether the Large-scale Purchase is considered tosignificantly compromise the Company’s corporate value and the common interest of its shareholders
based on the consultation, and makes recommendations to the Board of Directors of the Company
regarding the appropriateness of implementing the Countermeasures.
The Board of Directors of the Company determines whether the Large-scale Purchaser is acting incompliance with the Large-scale Purchase Rules and whether the Large-scale Purchase is considered tosignificantly compromise the Company’s corporate value and the common interest of its shareholders
based on the Large-scale Purchase Information provided by the Large-scale Purchaser as well as theadvice from the External Specialists, etc., as appropriate, and makes the final decision whether toimplement the Countermeasures, fully respecting the recommendations from the Independent
Committee.
Even after having implemented the Countermeasures, the Board of Directors of the Company shallpresent the specific circumstances and consult with the Independent Committee on the appropriatenessof maintaining the Countermeasures in force, if the situation falls under any of the following events.
(a) In the event the Large-scale Purchaser terminates or withdraws the Large-scale Purchase;(b) In the event that changes have occurred to the facts that served as the basis of determining whether
or not to implement the Countermeasures, and that it has become questionable whether it isappropriate to maintain the Countermeasures in force from the perspective of ensuring andenhancing the Company’s corporate value and the common interest of its shareholders.
The Independent Committee considers the appropriateness of maintaining the Countermeasures
based on the consultation and makes recommendations to the Board of Directors of the Company.
The Board of Directors of the Company considers whether or not to maintain the Countermeasuresin force, while receiving advice from the External Specialists, etc. The Board shall fully respect therecommendations from the Independent Committee in the process.
The Board of Directors of the Company will terminate or withdraw the Countermeasures in force, if
it comes to the conclusion that it is not appropriate to maintain the Countermeasures from theperspective of ensuring and enhancing the Company’s corporate value and the common interest of its
shareholders.
5. Reasonableness and fairness of the Plan
The Plan satisfies the three principles set out under the “Guidelines Regarding Takeover Defense for
the Purpose of Protection and Enhancement of Corporate Value and Shareholder’s Common Interests”
published by the Ministry of Economy, Trade and Industry and the Ministry of Justice on May 27, 2005,
as well as a report titled “Takeover Defense Measures in Light of Recent Environmental Changes”
published by the Corporate Value Study Group of the Ministry of Economy, Trade and Industry on June30, 2008. It is considered to represent the reasonableness and fairness as required.
(1) Ensuring and enhancing the Company’s corporate value and the common interest of its shareholders
The Plan is intended to enable shareholders to make an appropriate decision regarding whether or
not to accept the proposal by the Large-scale Purchaser, by requesting the Large-scale Purchaser toprovide the Large-scale Purchase Information in advance and to allow sufficient time to determine theappropriateness of the Large-scale Purchase, and it shall be introduced ultimately for the purpose of
ensuring and enhancing the Company’s corporate value and the common interest of its shareholders as
stated in 1. (2) above.
(2) Disclosure in advance
The Company shall disclose the Plan in advance for the purpose of enhancing foreseeability ofshareholders, investors and the Large-scale Purchaser in order to assist these parties in making
appropriate decisions.
(3) Respect for shareholders’ intention
The Plan shall become effective subject to the approval of shareholders at this General Meeting.
If the Plan is kindly approved at this General Meeting, the Company will consult with shareholders
on the appropriateness of renewing the Plan by submitting every three years a proposal for approval on- 18 -

the renewal of its term or discontinuation at the Annual General Meeting of Shareholders. Since theCompany sets the term of office of its Directors to be one year, if the Plan is kindly approved at this
General Meeting, each candidate for Director’s intention with respect to the Plan shall be stated in the
proposal concerning the election of Directors of the Company at the Annual General Meeting of
Shareholders each year from 2017. In addition, Directors elected by shareholders shall resolve to renew
or discontinue the Plan at the first Board of Directors’ meeting after the Annual General Meeting of
Shareholders, and promptly disclose the resolution to shareholders and investors. Thus, the Company
ensures to reflect shareholders’ intention regarding the renewal or discontinuation of the Plan each year
through the exercise of voting rights on a proposal concerning the election of Directors.
(4) Establishment of the Independent Committee and acquiring of opinions of the External Specialists, etc.
The Company has established the Independent Committee. The Board of Directors of the Company
shall fully respect the recommendations by the Committee in making the final decision whether or not
to implement the Countermeasures against the Large-scale Purchaser. Meanwhile, the Board of
Directors of the Company may seek advice from the External Specialists, etc., as appropriate. Thesearrangements are intended to prevent the Board of Directors of the Company from making arbitrary
decisions, while ensuring objectivity and reasonableness thereof.
(5) The Plan classified as neither a dead-hand type nor a slow-hand type of takeover defense measures
The Plan is neither a type of takeover defense measures that cannot be discontinued or deactivatedeven after the replacement of a majority of Directors has been resolved at a General Meeting of
Shareholders (so-called a dead-hand type), nor a type of takeover defense measures that takes time tostop its implementation because members of the Board of Directors cannot be replaced at once(so-called a slow-hand type).
6. Impacts on shareholders and investors(1) Impacts on shareholders and investors at the time of introducing the Plan
A gratis allotment of stock acquisition rights shall not be offered at the time of introducing the Plan.
Therefore, the introduction of the Plan will not have any direct and specific impact on the rights andeconomic benefits of shareholders and investors.
(2) Impacts on shareholders and investors at the time of implementing the Countermeasures
The Board of Directors of the Company may adopt the aforementioned Countermeasures for the
purpose of protecting the Company’s corporate value and the common interest of its shareholders. The
appropriate and timely disclosure shall be made in accordance with applicable laws and regulations andfinancial instruments exchange rules, etc., once the Board decided to adopt the specificCountermeasures.
At the time of implementing the Countermeasures, it is not envisaged that shareholders might suffer
any particular loss in terms of their legal rights or economic benefits. However, the Large-scale
Purchaser may end up suffering a loss in terms of their legal rights or economic benefits. The
announcement of the Plan is intended to call attention so that the Large-scale Purchaser would notconduct the Large-scale Purchase in violation of the Large-scale Purchase Rules.
The Company may adopt a resolution for a gratis allotment of stock acquisition rights as part of theCountermeasures. If shareholders who received the allotment of stock acquisition rights decided not toexercise the rights, the ratio of voting rights per share in the Company and the associated economic
value will be diluted as a result of other shareholders’ exercise of their rights.
However, the Company may terminate the gratis allotment of stock acquisition rights in the period
up to the day preceding the effective date of the allotment, or may acquire stock acquisition rights
without compensation in the period from the effective date of the gratis allotment of stock acquisitionrights to the date preceding the commencement date of the exercise period, even after the shareholders
receiving the allotment of stock acquisition rights are determined. In these cases, the value per share in
the Company will not be diluted. Thus, please be aware that shareholders and investors who engaged in
trading in anticipation of diluting the value per share in the Company may suffer an unexpected loss
due to share price fluctuations.
(3) Procedures that shareholders will be required to follow in association with the implementation of theCountermeasures
In the case where the Board of Directors of the Company decides to implement theCountermeasures and conducts a gratis allotment of stock acquisition rights, the allotment will beoffered to shareholders as of a certain record date determined by the Board. Thus, shareholders wishing
to receive the allotment need to be registered on the final shareholder register on the record date.
Furthermore, shareholders exercising stock acquisition rights will be required to make a certain amountof payment within a predetermined period in order to acquire new shares. However, in the case where- 19 -

the Board of Directors of the Company makes a decision to acquire stock acquisition rights, theCompany may acquire the stock acquisition rights on a date set out under such decision and issue theCompany’s common stock as consideration thereof, in accordance with the statutory procedures. In
such instance, shareholders (excluding the Large-scale Purchaser) will receive from the Company its
common stock as consideration for the acquisition of the stock acquisition rights without following thepayment procedure for exercising the stock acquisition rights (provided, however, that shareholders
may be requested to submit a document proving that they do not constitute the Large-scale Purchaser).
Details of these procedures are separately advised in accordance with applicable laws and regulations
and financial instruments exchange rules, when shareholders are actually required to follow them.
7. Other matters
The contents of the Plan were decided by the approval of all Directors including Outside Directors
at the Board of Directors’ meeting of the Company held on May 24, 2016. All Auditor & Supervisory
Board Members including two Outside Auditor & Supervisory Board Members were present at themeeting, and each Auditor & Supervisory Board Member stated an affirmative opinion for the Plan.
The Board of Directors of the Company will remain alert to the external developments, including
the trends in judicial decisions, measures taken by financial instruments exchanges and other public
institutions, amendments to the Companies Act, the Financial Instruments and Exchange Act, or listing
rules of each financial instruments exchange, and amendments and abolitions of other laws andregulations. If it is deemed appropriate to reflect these amendments and abolitions on the Plan, or if it isappropriate to make minor revisions to the wording of the Plan without making amendments to its
contents, the Board of Directors of the Company may make such amendments or revisions to the Plan
based on its resolution subject to the approval of the Independent Committee from the perspective ofensuring and enhancing the Company’s corporate value and the common interest of its shareholders.
Furthermore, the Company will prepare to take whatever measures as appropriate, including the
introduction of an alternative policy replacing the Plan, if necessary.
Note 1: Definition of a specific shareholder group(i)
A specific shareholder group represents a holder (referring to a holder as defined in Article 27-23, Paragraph 1of the Financial Instruments and Exchange Act, including a party recognized to fall into the category of aholder in accordance with Article 27-23, Paragraph 3 of the said Act; hereinafter the same) of the Company’s
share certificate, etc. (referring to share certificates, etc. as defined in Article 27-23, Paragraph 1 of the said
Act), and its joint holder (referring to a joint holder as defined in Article 27-23, Paragraph 5 of the said Act,
including a party deemed to be a joint holder in accordance with Article 27-23, Paragraph 6 of the said Act;
hereinafter the same); and,(ii) A party conducting purchases, etc. (referring to purchases, etc. as defined in Article 27-2, Paragraph 1 of thesaid Act, including purchases conducted in the financial instruments exchange market) of the Company’s
share certificates, etc. (referring to share certificates, etc. as defined in Article 27-2, Paragraph 1 of the said
Act), and its specially related parties (referring to specially related parties as defined in Article 27-2,
Paragraph 7 of the said Act).
Note 2: Definition of voting rights ratio
Depending on the specific purchase method adopted by the specific shareholder group, the voting rights ratio
is defined as follows.
(i)
In the case where the specific shareholder group comprises holders and their joint holders of the Company’s
share certificate, etc. (referring to share certificates, etc. as defined in Article 27-23, Paragraph 1 of the
Financial Instruments and Exchange Act), the voting rights ratio refers to the holding ratio of share certificates,etc. of the holders (referring to the holding ratio of share certificates, etc. as defined in Article 27-23,
Paragraph 4 of the said Act, where the number of share certificates, etc. held by their joint holders (referring to
the number of share certificates, etc. held as defined in the aforementioned Paragraph 4) is also taken into
account for the purpose of calculation); or,(ii) In the case where the specific shareholder group comprises the Large-scale Purchaser of the Company’s sharecertificate, etc. (referring to share certificates, etc. as defined in Article 27-2, Paragraph 1 of the said Act) andits specially related parties, the voting rights ratio refers to the combined total of the ownership ratio of sharecertificates, etc. of the Large-scale Purchaser and that of its specially related parties (referring to theownership ratio of share certificates, etc. as defined in Article 27-2, Paragraph 8 of the said Act).
For the purpose of calculating the holding ratio of share certificates, etc. and ownership ratio of sharecertificates, etc., the total number of voting rights (referring to the number of voting rights as defined in
Article 27-2, Paragraph 8 of the said Act) and the total number of issued shares (referring to the total number- 20 -

of issued shares as defined in Article 27-23, Paragraph 4 of the said Act) may be referred to from the mostrecently submitted securities report, quarterly report or share buyback report.
Note 3: Definition of share certificates, etc.
Share certificates, etc. refer to the share certificates, etc. as defined in Article 27-23, Paragraph 1 of the
Financial Instruments and Exchange Act.

- 21 -

(Appendix 1)

Major Shareholders

Major shareholders of the Company as of March 31, 2016 are as follows (the number of shares held less than
one thousand is omitted).

Number of shares
held(thousand shares)

Names

HSBC BROKING SEC. (ASIA)
852
CBHK-KSD-NH
831
Kabushiki Kaisha Kawai Shadan
477
Onkyo Corporation
450
Kawai Employee Shareholding Association
297
Gakken Holdings Co., Ltd.
278
Tokio Marine & Nichido Fire Insurance Co., Ltd.
275
Meiji Yasuda Life Insurance Company
270
Kawai Musical Instruments Business Partners Shareholding
245
Association
The Kyoei Fire and Marine Insurance Company, Limited
225
Total
4,202
* The total number of issued shares excludes 95,586 shares of treasury stock.

- 22 -

Ratio of thenumber of shares
held against the
total number ofissued shares
(%)
9.5
9.3
5.3
5.0
3.3
3.1
3.0
3.0
2.7
2.5
47.1

(Appendix 2)

Outline of the Independent Committee Regulations

1. The Independent Committee shall be established by the resolution of the Board of Directors of theCompany.
2. The Independent Committee shall comprise three members selected by the resolution of the Board of
Directors of the Company for the purpose of making objective and neutral decisions from among Auditor& Supervisory Board Members of the Company who are independent from Directors engaging inbusiness execution of the Company or external experts (such as attorneys, certified public accountants,
tax accountants, academics, persons familiar with investment banking business and persons outside theCompany with experience as directors or executive officers of other companies).
3. The term of office of the Independent Committee members shall expire at the conclusion of the first
Board of Directors’ meeting held after the Annual General Meeting of Shareholders for the last fiscal
year ending within one year after their appointment, provided, however, that their reappointment shall not
be interfered. If the Board of Directors of the Company, etc. resolves to discontinue the Plan, their termof office shall be terminated at the time of the discontinuation of the Plan.
4. When a member of the Independent Committee, who has been an Outside Auditor & Supervisory Board
Member of the Company, ceases to be an Outside Auditor & Supervisory Board Member, or no longer
meets the qualification requirement set out by the Company, his/her term of office as a member of the
Independent Committee shall be terminated at the same time.
5. The Independent Committee shall make recommendations on the matters consulted by the Board of
Directors of the Company, including whether the Large-scale Purchaser complied with the Large-scale
Purchase Rules, whether the Large-scale Purchase is considered to significantly compromise theCompany’s corporate value and the common interest of its shareholders, whether or not to implement theCountermeasures, whether or not to suspend the Countermeasures once implemented, by providing, inprinciple, the contents of the decisions along with their reasons and grounds to the Board of Directors of
the Company. Each member of the Independent Committee is required to make decisions from theperspective of protecting the Company’s corporate value and the common interest of its shareholders, notfor the purpose of personal gains for himself/herself or for Directors of the Company.
6. The Independent Committee may seek advice in making deliberations or resolutions, as appropriate, fromthird parties independent from the Company (including but not limited to specialists such as financial
advisors, certified public accountants, attorneys and consultants) at the expense of the Company.
7. Resolutions of the Independent Committee shall be made with all members of the Committee inattendance and by a majority of those in attendance, provided, however, that if any member of theCommittee is absent due to sickness or other unavoidable circumstance of similar nature, resolution may
be made with a majority of the members in attendance.

- 23 -

(Appendix 3)

Names and Career Summaries of the Members of the Independent Committee

The following three persons are scheduled to be the members of the Independent Committee at the time of therenewal of the Plan (as listed in the order of the Japanese syllabary).

Takahisa Tabata(Date of birth:
August 28, 1956)

Yoshifumi Nakano(Date of birth:
May 10, 1948)

April 1980
October 1987
March 1991
June 1993
June 2006
June 2010
June 2010

Joined Tokyo Kaikan Co., Ltd.
Joined Ota & Showa Audit Corporation
Registered as a certified public accountant
Established Tabata Certified Public Accountant Office
Substitute Auditor & Supervisory Board Member of the Company
Auditor & Supervisory Board Member of the Company (to present)
Independent Committee Member of the Company (to present)

March 1967
July 2002
July 2006

Graduated from Nagoya Training Institute of National Tax College
District Director of Hamamatsuhigashi Tax OfficeFirst Deputy Commissioner, Second Taxation Department of
Nagoya Regional Taxation Bureau
District Director of Shizuoka Tax OfficeStarted to practice as a tax accountant
Substitute Auditor & Supervisory Board Member of the Company
Auditor & Supervisory Board Member of the Company (to present)
Independent Committee Member of the Company (to present)

July 2007
August 2008
June 2012
June 2015
April 1957
June 1986

Shigeo Muraoka(Date of birth:
July 7, 1933)

June 1988
June 1995
June 2004
April 2005
June 2008

Joined the Ministry of International Trade and Industry
Director-General, Trade Policy Bureau of the Ministry ofInternational Trade and Industry
Deputy Director-General for International Trade and Industry of
the Ministry of International Trade and Industry
Chairman and Representative Director of FUJITSU RESEARCHINSTITUTE
Director of Sojitz Corporation
Adviser of The Institute of Energy Economics, Japan (to present)
Independent Committee Member of the Company (to present)* Messrs. Takahisa Tabata and Yoshifumi Nakano are currently the Auditor & Supervisory Board Members
as defined under Article 2, Item 16 of the Companies Act. The Company has entered into agreements tolimit liability for compensation as stipulated under Article 423, Paragraph 1 of the Companies Act withthem. There is no special interest between the Company and the two Auditor & Supervisory Board
Members.

- 24 -

(Appendix 4)

Outline of a Gratis Allotment of Stock Acquisition Rights

1. Shareholders entitled to the allotment of stock acquisition rights and the method for allotment
One stock acquisition right shall be allotted for each share of the common stock held by shareholders(excluding, however, the Company’s shares held by the Company) to the shareholders registered on the
final shareholder register as of the record date as set out by the Board of Directors of the Company.
2. Class and number of shares to be delivered upon the exercise of stock acquisition rights
One share of the Company’s common stock shall be delivered upon the exercise of one stock acquisitionright.
3. Total number of stock acquisition rights to be allotted to shareholders
The total number of stock acquisition rights to be allotted to shareholders shall not exceed the number ofissued shares of the Company as of the record date (excluding, however, the number of the Company’s
shares held by the Company).
4. Type and amount of assets to be contributed upon the exercise of each stock acquisition right
The assets to be contributed upon the exercise of each stock acquisition right shall be cash in the amountno less than ¥1 per share as determined by the Board of Directors of the Company.
5. Restrictions on the transfer of the stock acquisition rights
The transfer of the stock acquisition rights shall require the approval of the Board of Directors of theCompany.
6. Conditions for exercising the stock acquisition rights
The Large-scale Purchaser, its joint holders, its specially related parties and any third party in acommunicative relationship with the Large-scale Purchaser with respect to the Large-scale Purchase(including joint holders and specially related parties of such third party) shall not be able to exercise thestock acquisition rights, while any other conditions for exercising the stock acquisition rights shall bedecided separately by the Board of Directors of the Company.
7. Acquisition terms
On the date set out by the Board of Directors of the Company (hereinafter the “Acquisition Date”), theCompany may acquire all of the stock acquisition rights yet to be exercised as of the day preceding theAcquisition Date (excluding, however, the stock acquisition rights held by a party who cannot exercise
the stock acquisition rights due to the conditions for exercising the stock acquisition rights, exercise
period and other acquisition terms as determined by the Board of Directors), and grant one share of theCompany’s common stock in exchange for each stock acquisition right acquired.
8. Exercise period for the stock acquisition rights
Exercise period for the stock acquisition rights and other matters required to be determined shall bedecided separately by the Board of Directors of the Company.
9. Changeability
This outline may be subject to a change by the authority of the Board of Directors’ meetings held formaking resolutions for the gratis allotment of stock acquisition rights as the implementation of theCountermeasures.

- 25 -