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 shall prevail. To our shareholders: Securities Code: 8350 June 2, 2020 Takayuki Fujisawa President THE MICHINOKU BANK, LTD. 1-3-1, Katta, Aomori City, Aomori, Japan Notice of the 48th Annual General Meeting of Shareholders We are pleased to announce the 48th Annual General Meeting of Shareholders of THE MICHINOKU BANK, LTD. (the “Bank”), which will be held as indicated below. When you exercise your voting rights in writing or through electronic means (via the Internet), please review the attached Reference Documents for General Meeting of Shareholders, and exercise your voting rights by 5:00 p.m. on Tuesday, June 23, 2020 (JST). There are concerns about the spread of infections with the novel coronavirus (COVID-19). In order to prevent the spread of infections, the Bank requests that shareholders consider exercising their voting rights in writing (by postal mail) or via the Internet and refrain from attending on the day of the General Meeting of Shareholders. Shall there be any major change in the way the General Meeting of Shareholders will be run, shareholders will be informed via the Bank’s website (URL: https://www.michinokubank.co.jp/ ). 1. Date and Time:   Wednesday, June 24, 2020, at 10:00 a.m. (JST) 2. Venue: 8th floor Large Conference Room, THE MICHINOKU BANK, LTD. Head Office 1-3-1, Katta, Aomori City, Aomori, Japan 3. Purpose of the Meeting Matters to be reported: 1. The Business Report and Non-consolidated Financial Statements for the 48th fiscal year (from April 1, 2019 to March 31, 2020) 2. The Consolidated Financial Statements for the 48th fiscal year (from April 1, 2019 to March 31, 2020) and the results of audits of the Consolidated Financial Statements by the Financial Auditor and the Audit & Supervisory Committee Matters to be resolved: Proposal No. 1 Appropriation of Surplus Election of Five Directors (Excluding Directors Who Are Audit & Supervisory Proposal No. 2 Committee Members) Proposal No. 3 Election of Four Directors Who Are Audit & Supervisory Committee Members Information on Exercise of Voting Rights You may exercise your voting rights by the following three methods. Attending the General Meeting of Shareholders Please present the enclosed voting form at the reception desk upon your arrival. In addition, please bring this notice as reference materials for the proceedings. Date and time: Wednesday, June 24, 2020, at 10:00 a.m. Exercising voting rights in writing (by mail) Please indicate your approval or disapproval of each proposal in the enclosed voting form and return the form to the Bank by postal mail so that your vote is received by the deadline. Deadline: Tuesday, June 23, 2020, at 5:00 p.m. (JST) Exercising voting rights via the Internet Deadline: Tuesday, June 23, 2020, at 5:00 p.m. (JST) <Handling of multiple exercises> If you exercise your voting rights both in writing and via the Internet, the vote exercised via the Internet will be deemed valid. If you exercise your voting rights more than once via the Internet, only the last vote will be deemed valid. Among the documents to be provided to this Notice, the items below are posted on the Bank's Internet website pursuant to laws and regulations, as well as Article 20 of the Articles of Incorporation; therefore, they are not included in this Notice. Therefore, the Non-consolidated Financial Statements and Consolidated Financial Statements included in the attached documents of this Notice were among the documents audited when the Financial Auditor and Audit & Supervisory Committee created the accounting audit report and audit report. l) Notes to the Non-consolidated Financial Statements Notes to the Consolidated Financial Statements 2) In case there are any required changes to the Reference Documents for General Meeting of Shareholders, Business Report, Non- consolidated Financial Statements or Consolidated Financial Statements, these revisions will be posted on the Bank’s website. MICHINOKU BANK website: https://www.michinokubank.co.jp/
Proposals and Reference Materials
Proposal No. 1 Appropriation of Surplus The Bank proposes to appropriate surplus as follows: Year-end dividends The Bank has given consideration to the continuation of stable dividends payments and the business performance of the fiscal year, and it proposes to pay year-end dividends for the fiscal year as follows: (1) (2) (3) Type of dividend property To be paid in cash. Allotment of dividend property, and the aggregate amount thereof The Bank proposes to pay a dividend of ¥20 per common share and ¥27.15 per Class A preferred share. In this event, the total dividends will be ¥468,495,380. (Common shares: ¥359,895,380; Class A preferred shares: ¥108,600,000) Accordingly, the dividend for the fiscal year will be ¥20 per common share, and will be ¥54.30 per share of Class A preferred share, which includes the interim dividend. Effective date of dividends of surplus The effective date of dividends will be Thursday, June 25, 2020. Proposal No. 2 Election of Five Directors (Excluding Directors Who Are Audit & Supervisory Committee Members) The terms of office for all five Directors (excluding Directors who are Audit & Supervisory Committee Members; applicable to the rest of this proposal) will expire at t he conclusion of this annual general meeting of shareholders. Therefore, the Bank proposes the election of f ve Directors. Each candidate for Director is highly versed in bank operations and can utilize his or her knowledge and experience to precisely, fairly, and effectively execute the management of the Bank. The Bank chose the candidates because each one can be expected to strengthen the supervisory and decision-making functions of the Board of Directors. Furthermore, the Audit & Supervisory Committee has determined that the candidates for Director have been selected through a fair process based on the policies for selection of Directors at the Meeting for Nomination and Remuneration (a majority of the members of this meeting are made up of outside experts and outside Directors). To ensure the effectiveness of the Board of Directors, each candidate’s experience and ability have been carefully examined before determining that each candidate is appropriate for the position of Director of the Bank. The Audit &  Supervisory Committee has also determined that the design of remuneration system and the calculation of remuneration amount for Directors are being conducted appropriately.
Kunihiro Takada had served as President since 2013 and has served as Chairman since 2018, and has properly fulfilled his responsibility and duties. He has thorough knowledge about the overall operations, along with his involvement in management planning, systems, and audit. He has the ability to execute management properly, fairly, and efficiently. The Bank has nominated him as a candidate for Director because the Bank expects that the decision-making and
2 Takayuki Fujisawa has demonstrated strong leadership as President since 2018 and properly fulfilled his responsibility and duties. He has thorough knowledge about the overall operations, along with his involvement in corporate planning, personnel, and sales promotion. He has the ability to execute management properly, fairly, and efficiently. The Bank has nominated him as a candidate for Director because the Bank expects that the decision-making and supervisory functions of the Board of Directors will be further enhanced with the aim of achieving sustainable growth and the enhancement of the corporate value of the Bank.
duties. She has been involved in the development of new businesses of companies in other industries while engaging in the customer service field, etc., and has a wealth of experience and broad knowledge, and has provided advice and suggestions to the Bank’s management from an independent and objective standpoint. The Bank has nominated her as a candidate for outside Director because the Bank expects that she will further strengthen corporate governance and services, as well as accelerate to enhance the effectiveness of the Board of Directors' decision-making and supervisory functions with the aim of achieving sustainable growth and the enhancement of the corporate value of the Bank.
Notes: card company until 2016. The Bank has nominated him as a candidate for outside Director because the Bank expects that he will utilize his wealth of experience and broad insight to provide advice and suggestions to the Bank’s management from an independent and objective standpoint, and further strengthen corporate governance and services, as well as accelerate to enhance the effectiveness of the Board of Directors' decision-making and supervisory functions with the aim of achieving sustainable growth and the enhancement of the corporate value of the Bank. There is no special interest between the candidates for Director and the Bank. l. 2. Yumiko Kamada and Kazunari Higuchi are candidates for outside Director. Yumiko Kamada is currently outside Director of the Bank. At t the conclusion of this general meeting, her tenure will 3. have been five years. 4. Limited liability agreements with candidates for Director The Bank has signed an agreement with the candidate for outside Director Yumiko Kamada to limit her damage liabilities to the Bank. A summary of the details of the agreement are as follows: In cases where outside Directors are liable for any damages arising from his or her negligence to the Bank, they shall - compensate for such damages only to the total of the amounts stipulated in each item of Article 425, paragraph 1 of the Companies Act. -  The limitation of the liability above shall apply only when the outside Director acted in good faith and without gross negligence in performing the duties giving rise to said liabilities. This agreement will continue to be in effect when the reelection of Yumiko Kamada is approved. If the election of Kazunari Higuchi is approved, the Bank will enter into a limited liability agreement under the same terms and conditions with him. 5. Candidates for outside Director Yumiko Kamada and Kazunari Higuchi are free of any conflicts of interest with shareholders and thus fulfill the requirements for independent officers as defined by the Tokyo Stock Exchange. If their elections are approved, the Bank plans to designate Yumiko Kamada as an independent officer once again and designate Kazunari Higuchi as a new independent officer.
Proposal No. 3
Election of Four Directors Who Are Audit & Supervisory Committee Members
The terms of office of all four Directors who are Audit & Supervisory Committee Members will expire at the conclusion of this annual general meeting of shareholders. Therefore, the Bank proposes the election of four Directors who are Audit & Supervisory Committee Members. In addition, the consent of the Audit & Supervisory Committee has been obtained for this proposal.
Tetsutaro Wakatsuki has served as an outside Audit & Supervisory Committee Member since 2019 and properly fulfilled his duties and responsibilities. He has a wealth of practical business experience focused on corporate legal affairs while possessing cutting-edge legal knowledge as an attorney at law and IT knowledge, and has provided advice and suggestions to the Bank's management from an independent and objective standpoint. The Bank has nominated him as a candidate for Audit & Supervisory Committee Member (outside) because the Bank expects that he will be able to maintain and improve the transparency and soundness of the management of the Bank, further strengthen its corporate governance, and accelerate to enhance the decision-making and supervisory functions of the Board of Directors. Notes: 1. There is no special interest between the candidates for Audit & Supervisory Committee Member and the Bank. 2. Seiichi Tsurumi, Toshihiro Nishiya and Tetsutaro Wakatsuki are candidates for outside Audit & Supervisory Committee Member. Seiichi Tsurumi and Toshihiro Nishiya are currently outside Audit & Supervisory Committee Member of the Bank. At 3. the conclusion of this general meeting, Seiichi Tsurumi and Toshihiro Nishiya's tenure as outside Audit & Supervisory Committee Member will have been two years and four years, respectively. Tetsutaro Wakatsuki is currently an Outside Director of the Bank, and at the conclusion of this meeting, his tenure as Outside Director will have been one year. 4. Limited liability agreements with candidates for Audit & Supervisory Committee Member The Bank has signed an agreement with the candidate for Audit & Supervisory Committee Member Kazuhiko Odanaka and the candidates for outside Audit & Supervisory Committee Member Seiichi Tsurumi, Toshihiro Nishiya and Tetsutaro Wakatsuki to limit their damage liabilities to the Bank. A summary of the details of the agreement are as follows: In cases where Directors who are Audit & Supervisory Committee Members are liable for any damages arising from ' his or her negligence to the Bank, they shall compensate for such damages only to the total of the amounts stipulated in each item of Article 425, paragraph 1 of the Companies Act. The limitation of the liability above shall apply only when the Directors who are Audit & Supervisory Committee - Members acted in good faith and without gross negligence in performing the duties giving rise to said liabilities. This agreement will continue to be in effect when the reelection of Kazuhiko Odanaka, Seiichi Tsurumi, Toshihiro Nishiya and Tetsutaro Wakatsuki is approved. 5. Candidates for outside Audit & Supervisory Committee Member Seiichi Tsurumi, Toshihiro Nishiya and Tetsutaro Wakatsuki are free of any conflicts of interest with shareholders and thus fulfill the requirements for independent officers as defined by the Tokyo Stock Exchange. If their elections are approved, the Bank plans to once again designate them as independent officers. Independent officers must, in principle, currently satisfy or have recently satisfied the following independence criteria in addition to the requirements prescribed by the Financial Services Agency: The independent officer is not a person for whom the Bank is a major trading partner nor an executing (1) member of a company for which the Bank is a major trading partner. (2) The independent officer is not a person who is a major trading partner of the Bank nor an executing member of a company which is a major trading partner of the Bank. The independent officer is not a consultant, accounting specialist, or legal specialist who is paid a substantial (3) amount or other property from the Bank apart from the director's remuneration. The independent officer is not a major shareholder of the Bank nor an executing member of a company which (4) is a major shareholder of the Bank. The independent officer is not a person who is receiving more than a certain amount of donation or subsidy, (5) nor an executing member of a company which is receiving more than a certain amount of donation or subsidy. The independent officer is not a second-degree relative of the following (except those who are not in a (6) significant position). A person who is applicable to one of above (1) to (5). A. A person who is a Director, Audit & Supervisory Board Member, Executive Officer, or an important B. employee of the Bank or its subsidiaries.
(Definition of terms)
- "recently" - Within one year from the date when the proposal for the annual general meeting of shareholders to select the person as an outside Director or outside Audit & Supervisory Board Member is determined. - "major trading partner" - An entity that received payment accounting for 2% or more of the amount equivalent to its consolidated net sales for the latest fiscal year (annual consolidated ordinary profit for the Bank's case). - "a substantial amount or other property" - The average over the past three years is ¥10 million or more. - "major shareholder" - A shareholder with at least 10% of the voting rights. - "more than a certain amount of donation or subsidy" - The average over the past three years is ¥10 million or 30% of the given party's annual costs, whichever is greater. - "not in a significant position" - A person with a "significant" position is a Director of a company, General Manager of a division, or equivalent.