March 10, 2022

In order to enable the holding of a virtual-only shareholders’ meeting in the future, our Company plans to propose “Proposal No. 1: Partial Amendment to the Articles of Incorporation (Introduction of Shareholders’ Meetings without a Designated Location” (“Proposal”) at the 20th Ordinary General Meeting of Shareholders on March 30, 2022.
In light of changes in society such as the current Covid-19 pandemic and the development of information technology, a virtual-only shareholders’ meeting will be an effective tool to ensure the rights of all shareholders are equally protected and to promote meaningful dialogue with all shareholders.

Therefore, in order to contribute to our shareholders’ understanding, we will explain the merits of a virtual-only shareholders’ meeting and the measures we will take to protect shareholders’ rights to the greatest extent possible.
The content of and reasons for our Proposal are as described in the Reference Documents for the Company's "Notice of the 20th Ordinary General Meeting of Shareholders", but we elaborate further in this document. We appreciate your understanding regarding our Proposal.

1. Advantages of a Virtual-Only Shareholders’ Meeting
As a global company, we are proactively strengthening our corporate governance, and we see the shareholders’ meeting as a valuable opportunity to promote dialogue with our shareholders. From this perspective, we believe virtual-only shareholders’ meetings have the following significant advantages.

(1) Ensuring equal participation opportunities for all shareholders and promoting dialogue utilizing information technology

Currently, we have shareholders throughout Japan as well as the entire world. Under such circumstances, if a shareholders’ meeting is held at a specific physical venue as it has been in the past, the number of shareholders who can attend will be significantly limited due to geographical and time constraints.
A hybrid shareholders' meeting, which combines in-person and online attendance, enables the attendance of shareholders who have difficulty attending at the physical venue. However, because communication at the physical venue and via the online platform are conducted concurrently, as many shareholders are aware, there can be technical difficulties in treating both in-person and online attendee shareholders completely equally, while all shareholders should be given equal opportunities to ask questions etc., regardless of their attendance method.
By making the best use of highly developed information technology and pursuing an effective method for holding a virtual-only shareholders’ meeting, we believe that we will be able to provide an equal opportunity to all shareholders to participate in the shareholders’ meeting, regardless of their whereabouts or time constraints; and this will promote the exercise of shareholders’ voting rights, and dialogue with shareholders, at the shareholders’ meeting more than ever before.

(2) Enabling effective shareholders’ meetings even in the face of disasters or infectious diseases

In the current Covid-19 pandemic environment, holding a shareholders’ meeting at a physical venue not only poses a risk of infection to the shareholders and other attendees, but also a risk of outbreak among venue staff and company officers that, if realized, could hinder the preparation and operation of the shareholders’ meeting. We are currently preparing for the 20th Ordinary General Meeting of Shareholders to be held in a hybrid manner, but we are keenly aware of such risks amid the recent exponential rise of Omicron cases.
Even after the current pandemic has subsided, there will always be a risk of new infectious diseases or large-scale disasters that make it difficult for people to travel. By making it possible to hold a virtual-only shareholders’ meeting and establishing in advance a system that enables effective exchange of opinions with shareholders, we will be able to maintain continuity of holding shareholders’ meetings in a safe, seamless manner and maximize the opportunities for equal participation of shareholders, whatever the external circumstances may be.

2. Measures to ensure maximum protection of shareholders’ rights
Since a virtual-only shareholders’ meeting is different from a traditional, in-person shareholders’ meeting, in the event we hold a virtual-only shareholders’ meeting, we plan to take measures not only to ensure the rights of our shareholders will not be infringed, but also to enhance the protection of our shareholders’ rights even more than in the past.

(1) Clarification of procedures for attendance and exercise of rights

We will clarify the procedures for attending the shareholders’ meeting, raising questions or motions, exercising voting rights, and other necessary matters, and will notify shareholders on the convocation notice, on our website, and by other necessary means.

(2) Thorough establishment of IT infrastructure and support system

In order to ensure the effective and secure operation of a virtual-only shareholders’ meeting, we will ensure the thorough establishment of an IT infrastructure as well as a technical support system for connecting to the online shareholders’ meeting. Through this, we will support shareholders to exercise their rights to the greatest extent possible.

(3) Protecting shareholders’ rights of shareholders regarding motions and questions

We guarantee the rights of shareholders to make motions at virtual-only shareholders’ meetings. In addition, we will respond to questions equally to or better than conventional shareholders’ meetings, and further, will consider disclosing the answers to shareholder questions on our website after the shareholders’ meeting and other measures to increase responsiveness and transparency.

(4) No arbitrary use of virtual-only shareholders’ meeting; disclosure of reasons for adoption

As mentioned above, the Company intends to enable the holding of a virtual-only shareholders’ meeting in order to guarantee the rights of shareholders to the maximum extent and promote the exercise of such rights. It will not be used arbitrarily with the purpose of restricting shareholder rights.
For each shareholders’ meeting, we will carefully consider whether to adopt the virtual-only option from the perspective of guaranteeing shareholder rights to the maximum extent, taking into account the circumstances of the Company and our shareholders, the items to be proposed at the meeting, as well as shareholders’ opinions. The decision to hold a virtual-only shareholders’ meeting will then be made by the majority-independent Board of Directors, and we will disclose the outcome of and reasons for the decision.
For example, if there is an increase in shareholder requests for holding the shareholders’ meeting at a physical venue due to shareholder proposals, etc., it is never intended that we will adopt the virtual-only option for the purpose of blocking such requests.

(5) Guaranteeing shareholder rights in accordance with Japanese law and obtaining confirmation by the Japanese government

In Japan, special consideration to securing shareholder rights at a virtual-only shareholders’ meeting is required. As a condition for introducing a virtual-only shareholders’ meeting, Japanese law requires confirmation by the Minister of Economy, Trade and Industry and the Minister of Justice that the introduction of a virtual-only shareholders’ meeting "would contribute to strengthening industrial competitiveness and protection of shareholders’ rights is duly considered", while such governmental verification is not required in the US or other jurisdictions. We have duly received this confirmation.
In addition, the Companies Act firmly guarantees shareholders' rights to submit motions and questions, and any infringement of this can be grounds for revocation of a resolution at a shareholders’ meeting. As mentioned above, we intend to guarantee the rights of our shareholders regarding motions and questions to the maximum extent possible.

For all these reasons and considerations, we are convinced that a virtual-only shareholders’ meeting, which is a new system introduced to reflect recent changes in social conditions, can be a useful tool for protecting the rights of all shareholders and promoting the exercise of such rights. Based on that conviction, we will introduce our Proposal regarding the introduction of a virtual-only shareholders’ meeting on the premise that we will take the utmost measures to guarantee the rights of our shareholders more than ever before.

*Regarding our Proposal, we have received information that Institutional Shareholder Services Inc. (“ISS”), an advisory company for exercising voting rights, has issued a report to the effect that it opposes our Proposal for the following reasons.
(1) Virtual-only shareholders’ meetings may result in the avoidance of management accountability to shareholders and hinder the meaningful exchange of opinions with shareholders, if the shareholders cannot ask questions or get companies to answer them (in the worst case, questions or motions that are inconvenient for management may be handled arbitrarily); and
(2) The proposed amendment does not specify when a virtual-only shareholders’ meeting of shareholders will be held, and even after the current Covid-19 pandemic has subsided, it is possible that a virtual-only shareholders’ meeting could be held without confirming shareholder opinions.

However, with regard to (1) above, the Company aims to introduce virtual-only shareholders' meetings with the intention of guaranteeing shareholder rights, including motions and questions, to the maximum extent possible, and to promote meaningful exchange of opinions. It is clear from Japanese law that arbitrary operations such as those ISS has raised concerns are not permitted, and the Company has received confirmation by the Minister of Economy, Trade and Industry and the Minister of Justice regarding the protection of the rights of shareholders, so these concerns do not apply in any aspect.

In addition, (2) above advocates the necessity of limiting the instances of holding a virtual-only shareholders’ meeting based on a misunderstanding of the Company's policies for holding a virtual-only shareholders’ meeting as described in (1) above, and is therefore an unfounded concern. We plan to decide whether to adopt a virtual-only shareholders’ meeting each time, based on the utmost importance of protecting shareholder rights, by carefully considering the circumstances surrounding the Company and its shareholders, the content of proposals to be submitted at the meeting, and the opinions of shareholders, and disclose the reason for the decision.

Therefore, we believe the ISS’s recommendation to oppose our Proposal does not accurately reflect the content of our Proposal as well as the Japanese legal framework for virtual-only shareholders’ meetings.
We would like to ask our shareholders for understanding of our Proposal based on our policies regarding virtual-only shareholders’ meetings as outlined above.