Takeover Defense Measures
1. Basic Policy Regarding Who Should Oversee Decisions Regarding the Financial and Business Policies of the Company
As a publicly traded company, we believe that shareholders come to us thanks to a freedom to trade on the share market. Therefore, we believe that the final decision concerning whether or not to accept proposals regarding acquisitions accompanying the transfer of control of the Company should lie with the shareholders. We do not necessarily deny large-scale share acquisitions, especially when they can contribute to the value of the Company and the common interests of our shareholders.
However, some large-scale share acquisitions can undermine the value of the Company or the common interests of our shareholders, including those that may virtually force shareholders into selling their shares or those that do not provide the Board of Directors and shareholders of the Company with the reasonably needed amount of time and information to consider the details of the acquisition.
As an exception, the Company considers any person who undertakes this kind of inappropriate large-scale acquisitions to be unfit to oversee decisions concerning the financial and business policies of the Company.
2. Overview of the Rules for Large-Scale Acquisitions
To prevent someone who is deemed unfit to control decisions concerning the financial and business policies of the Company in light of the Basic Policy for the Control of the Company from taking control of the Company and undermine the value of the Company or the common interests of our shareholders, the Board of Directors met on May 24 2022, and resolved to continue the "Measures to Respond to a Large-scale Acquisition of Our Company's Stock" (hereinafter referred to as "the Plan"), and on June 24 2022, shareholders approved the continuation of this plan at the 98th Ordinary General Meeting of Shareholders.
The large-scale share acquisition of the Company's shares that is addressed in the Plan refers to an attempt to acquire the Company's share certificates, for the purpose of allowing a group of specific shareholders to hold at least 20% of the voting rights, or an attempt to acquire the Company's share certificates that can cause a group of specific shareholders to hold at least 20% of the voting rights. An entity involved in such acquisitions is referred to as a"large-scale purchaser."
The rules concerning the assurance of enough information and time to allow shareholders to consider the possible consequences of large-scale share acquisitions (hereinafter referred to as "Rules for Large-Scale Acquisitions") is;
- 1) to submit in advance all the information necessary for the Board to evaluate, and
- 2) After providing all necessary information, a large-scale purchaser can start large-scale share acquisitions after a certain period for the Board to evaluate, examine, negotiate, and form opinions about, and propose alternative options for the proposed large-scale share acquisition. This period must be no longer than 60 days when all of the Company's shares are to be acquired through a takeover bid and the bidder is to pay the offer price in cash only (in yen value), or no longer than 90 days for all the other types of large-scale share acquisition.
When the large-scale purchaser observes the Rules for Large-Scale Acquisitions, the Company's Board of Directors will not, in principle, take countermeasures against the large-scale share acquisition in question.
When a large-scale purchaser fails to observe the Rules for Large-Scale Acquisitions, or when the large-scale share acquisition in question is in line with the Rules but can cause irreversible damage to the Company and significantly undermine the value of the Company and the common interests of the shareholders, the Company's Board of Directors may take necessary countermeasures such as the allotment of stock acquisition rights without contribution, against the large-scale share acquisition pursuant to the Companies Act and other relevant laws as well as the Company's Articles of Incorporation.
To ensure rationality and fairness in the Board's decision-making process, The Board of Directors contemplating a countermeasure against a large-scale share acquisition must first consult the Independent Committee, selected from external directors or external experts whom are independent of the management responsible for the execution of the Company's operations.. After careful evaluation and examination of the large-scale share acquisition in question, the Committee advices the Board on whether the implementation of a countermeasure is justifiable under the current circumstances within the Board's evaluation period. The Board will follow the advice of the Committee, as to whether a countermeasure should be implemented against the acquisition.
The Plan will remain effective until the end of the 101th Ordinary General Meeting of Shareholders, which is scheduled to be held in June 2025.
However,
- (1) if a resolution is passed in a General Meeting of Shareholders of the Company regarding the cancellation of the Plan, or
- (2) if such a resolution is passed by the Board of Directors of the Company,
