Note: This document has been translated from 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. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation. To Shareholders with Voting Rights, Securities code: 8079 January 13, 2022 Ichiro Honda President and Representative Director 5-7 Akihabara, Taito-ku, Tokyo, Japan SHOEI FOODS CORPORATION Notice of the 74th Annual General Meeting of Shareholders You are cordially invited to attend the 74th Annual General Meeting of Shareholders (the “Meeting”) of SHOEI FOODS CORPORATION (the “Company”). The Meeting will be held as described below. If you are unable to attend the Meeting in person, you may exercise your voting rights by postal voting or via the Internet, etc. Please review the attached Reference Documents for the General Meeting of Shareholders and exercise your voting rights by no later than 5:20 p.m. Japan time, Thursday, January 27, 2022, following the instructions on the “Guidance on Exercise of Voting Rights” on page 2 (in Japanese). 1. Date and time: 2. Place: Friday, January 28, 2022, at 10 a.m. Japan time Banquet room “Hisho,” 4th Floor, Asakusa View Hotel 3-17-1 Nishiasakusa, Taito-ku, Tokyo, Japan (Please see the map of the venue at the end of this document) (in Japanese) 3. Objectives of the Meeting Matters to be reported: 1. The business report and the consolidated financial statements for Term 74 (from November 1, 2020 to October 31, 2021) and the results of audits of the consolidated financial statements by the Accounting Auditor and the Audit & Supervisory Board 2. The non-consolidated financial statements for Term 74 (from November 1, 2020 to October 31, 2021) Matters to be resolved: Proposal 1: Appropriation of Surplus Proposal 2: Election of Twelve (12) Directors * If attending the meeting in person, please present the enclosed Voting Card at the reception desk. * “Systems to ensure the proper execution of business, and overview of the operation status of such systems” in the Business Report, Consolidated Statement of Changes in Equity, and Notes to the Consolidated Financial Statements in the Consolidated Financial Statements, and Non-consolidated Statement of Changes in Equity and Notes to the Non-consolidated Financial Statements in the Non-consolidated Financial Statements are posted in the Company’s website (https://www.shoeifoods.co.jp) (in Japanese) pursuant to laws and regulations and the Company’s Articles of Incorporation and therefore are not included in the attachments to this Notice. Accordingly, the Consolidated Financial Statements and the Non-consolidated Financial Statements included in the attachments to this Notice comprise a part of the Consolidated Financial Statements and the Non-consolidated Financial Statements audited by the Accounting Auditor and the Audit & Supervisory Board Members in preparing their respective audit reports. * Any amendments to the Reference Documents for the General Meeting of Shareholders, the Business Report, the Consolidated Financial Statements and the Non-consolidated Financial Statements will be posted on the Company’s website (https://www.shoeifoods.co.jp) (in Japanese). – 1 – Reference Documents for the General Meeting of Shareholders Proposals and References Proposal 1: Appropriation of Surplus The Company proposes the appropriation of surplus as follows. Matters regarding year-end dividends The Company proposes year-end dividends for Term 74 as below. The Company recognizes the return of profit to shareholders as an important management priority, and its basic policy on dividends is to maintain stable dividends in consideration of such factors as business investments to realize medium- to long-term growth and the level of internal reserves. (1) Type of dividend assets (2) (3) Allocation of dividend assets and their total dividend amount Effective date of appropriation of surplus Cash 24.00 yen per share of common stock Total 403,954,512 yen January 31, 2022 – 2 – Proposal 2: Election of Twelve (12) Directors The term of office of all fourteen (14) Directors currently in office will expire at the conclusion of this Meeting. With the aim of strengthening the supervisory function of the Board of Directors by improving its effectiveness and contributing to the enhancement of the corporate value over the medium- to long- term, we propose the election of twelve (12) Directors, by reducing the number of Directors by two (2) in total with the reduction of three (3) internal Directors and an increase of one (1) Outside Director. If this proposal is approved as originally proposed, one-third of the Company’s Directors will be Outside Directors. The candidates for Directors are as follows: No. Name Current position in the Company Reappointment Ichiro Honda President and Representative Director Reappointment Hidemitsu Honda Vice President and Representative Director Reappointment Toyomi Nakajima Senior Managing Director Reappointment Hirokane Fujio Senior Managing Director Reappointment Kazunori Kano Reappointment Yasuhiro Maeda Reappointment Takeshi Sakaguchi New appointment Yasutaka Honda Reappointment Takashi Kai Outside Director Independent Officer Director Outside Director Independent Officer Director 10 Reappointment Hiroyoshi Inoue 11 New appointment Takeshi Hashizume Outside Director Independent Officer 12 New appointment Naoko Tanouchi Outside Director Independent Officer Director Director Director – – – – 3 – 1 2 3 4 5 6 7 8 9 No. Name (Date of birth) Ichiro Honda (May 15, 1950) Reappointment Career summary, positions, responsibilities, and significant concurrent positions February 1975 Joined the Company January 1988 Director and General Manager, Kansai Branch Office of the Company January 1990 Managing Director of the Company January 1994 Senior Managing Director and Division Head, Business Management Division of the Company January 1998 President and Representative Director of the Company (current position) 1 Number of the Company’s shares held 486,383 shares Reasons for nomination as a candidate for Director Mr. Ichiro Honda was appointed as Director of the Company in 1988, and has served as Representative Director since January 1998, demonstrating strong leadership in improving the corporate value of the Group. He has a wealth of experience in the food industry and extensive knowledge of corporate management. Therefore, the Company renominates him as a candidate for Director. March 1983 Joined the Company Hidemitsu Honda (September 6, 1959) Reappointment November 1999 General Manager, Products & Merchandise Dept. of the Company January 2000 Director and General Manager, Products & Merchandise Dept. of the Company November 2002 Director and Deputy Division Head, Sales & Marketing Division of the Company 2 Number of the Company’s shares held 620,624 shares January 2004 Managing Director and Deputy Division Head, Sales & Marketing Division of the Company January 2010 Senior Managing Director of the Company January 2016 Vice President and Representative Director of the Company (current position) Reasons for nomination as a candidate for Director Mr. Hidemitsu Honda was appointed as Director of the Company in 2000, and has served as Vice President and Representative Director of the Company since January 2016, assisting the President and contributing to the growth and development of the Group. He has a wealth of experience in overseas businesses and extensive knowledge about production areas around the world. Therefore, the Company renominates him as a candidate for Director. – 4 – No. Name (Date of birth) Career summary, positions, responsibilities, and significant concurrent positions Toyomi Nakajima (November 3, 1955) Reappointment Number of the Company’s shares held 4,374 shares 3 March 1978 Joined the Company June 1998 General Manager, Kansai Branch Office of the Company January 2002 Corporate Officer and General Manager, Retail Foods Dept. of the Company January 2004 Director and Deputy Division Head, Sales & Marketing Division and General Manager, Retail Foods Dept. of the Company January 2010 Managing Director and Deputy Division Head, Sales & Marketing Division of the Company January 2012 Managing Director and Division Head, Sales & Marketing Division of the Company January 2016 Senior Managing Director and Division Head, Sales & Marketing Division of the Company April 2018 Senior Managing Director and Division Head, Production Division of the Company (current position) Reasons for nomination as a candidate for Director Since joining the Company, Mr. Toyomi Nakajima has been broadly responsible for the sales divisions, including those related to confectionery ingredients and retail products. He was appointed Director in January 2004 and currently serves as Senior Managing Director in charge of the Production Division, as well as President and Representative Director of ShoEi Delicy Corporation, a consolidated subsidiary of the Company, in charge of the Group’s confectionery business. He has a wealth of experience in the Company’s business and extensive knowledge of corporate management. Therefore, the Company renominates him as a candidate for Director. [Significant concurrent positions] President and Representative Director, ShoEi Delicy Corporation Hirokane Fujio (July 26, 1954) Reappointment Number of the Company’s shares held 5,660 shares 4 March 1978 Joined the Company January 2004 Corporate Officer and General Manager, Finance & Accounting Dept. of the Company January 2006 Director and General Manager, Finance & Accounting Dept. of the Company November 2008 Director and General Manager, Finance & Accounting Dept. and General Manager, Affiliated Business Dept. of the Company January 2010 Managing Director and Division Head, Administration Division, General Manager, General Affairs & Human Relations Dept. and General Manager, Finance & Accounting Dept. of the Company August 2010 Managing Director and Division Head, Administration Division and General Manager, General Affairs & Human Relations Dept. of the Company January 2016 Senior Managing Director and Division Head, Administration Division and General Manager, General Affairs & Human Relations Dept. of the Company (current position) Reasons for nomination as a candidate for Director Since joining the Company, Mr. Hirokane Fujio has been mainly in charge of finance & accounting and management planning divisions. He was appointed Director in January 2006 and currently serves as Senior Managing Director in charge of the Administration Division which consists of the Management Planning Dept., the General Affairs & Human Relations Dept., and the Finance & Accounting Dept. He has a wealth of experience in the Company’s business and extensive knowledge of corporate management. Therefore, the Company renominates him as a candidate for Director. – 5 – No. Name (Date of birth) Kazunori Kano (July 29, 1961) Reappointment Number of the Company’s shares held 1,143 shares 5 Career summary, positions, responsibilities, and significant concurrent positions April 1984 Joined The Bank of Tokyo, Ltd. (currently MUFG Bank, Ltd.) July 2004 Deputy General Manager, Los Angeles Branch in the U.S. of The Bank of Tokyo-Mitsubishi, Ltd. (currently MUFG Bank, Ltd.) November 2009 Chief Representative, Istanbul Representative Office in Turkey of The Bank, Tokyo-Mitsubishi UFJ, Ltd. (currently MUFG Bank, Ltd.) April 2014 Advisor of the Company July 2014 General Manager, Overseas Accounting Group, Finance & Accounting Dept. of the Company February 2016 General Manager, Planning and Promotion Office, Management Planning Office of the Company January 2017 Director and General Manager, Management Planning Office of the Company November 2020 Director and General Manager, Management Planning Dept. of the Company (current position) Reasons for nomination as a candidate for Director Mr. Kazunori Kano has many years of extensive experience at a financial institution. After joining the Company, he was in charge of overseas accounting and planning divisions before being appointed Director in January 2017. Currently, as Director and General Manager of the Management Planning Dept., he is responsible for overall corporate planning operations, including the formulation of corporate management plans and institutional investor relations. The Company expects that he will continue to contribute to the enhancement of the Company’s management, and therefore renominates him as a candidate for Director. March 1983 Joined the Company Yasuhiro Maeda (June 4, 1958) Reappointment November 2003 Assistant General Manager, Dried Fruits Group, Fruits & Nuts Dept. of the Company March 2006 General Manager, Nagoya Branch Office of the Company April 2012 General Manager, Dairy Products･Oils & Fats Dept. of the Company Number of the Company’s shares held 4,971 shares 6 January 2016 Corporate Officer and General Manager, Dairy Products･Oils & Fats Dept. of the Company June 2016 Senior Managing Director of Tsukuba Dairy Products Co., Ltd. January 2018 Director and Division Head Products & Merchandise Division of the Company (current position) Reasons for nomination as a candidate for Director Since joining the Company, Mr. Yasuhiro Maeda has experienced a wide range of sales divisions and had been in charge of the dairy product business as Senior Managing Director of Tsukuba Dairy Products Co., Ltd., a consolidated subsidiary, before being appointed Director in January 2018. He currently serves as Director and Division Head of the Products & Merchandise Division of the Company, with overall responsibility for products and merchandise divisions. He has a wealth of experience in the Company’s business and extensive knowledge of corporate management. Therefore, the Company renominates him as a candidate for Director. – 6 – No. Name (Date of birth) Career summary, positions, responsibilities, and significant concurrent positions March 1986 Joined the Company Takeshi Sakaguchi (November 8, 1961) Reappointment November 2011 Assistant General Manager, Kyushu Branch Office of the Company January 2014 General Manager, Confectionery Materials Dept. of the Company January 2017 Corporate Officer and General Manager, Confectionery Materials Dept. of the Company Number of the Company’s shares held 2,371 shares 7 January 2018 Director and General Manager, Confectionery Materials Dept. of the Company April 2018 Director and Deputy Division Head, Sales & Marketing Division, and General Manager, Confectionery Materials Dept. of the Company April 2021 Director and Deputy Division Head, Sales & Marketing Division of the Company (current position) Reasons for nomination as a candidate for Director Since joining the Company, Mr. Takeshi Sakaguchi has experienced a wide range of management and sales divisions. After serving as the head of a sales division responsible for major food manufacturers, he was appointed Director of the Company in January 2018. He currently assists the Division Head of the Sales & Marketing Division as Director and Deputy Division Head, the Sales & Marketing Division. Since he has a wealth of experience in the Company’s business, the Company expects that he will continue to contribute to the enhancement of the Company’s management, and renominates him as a candidate for Director. Yasutaka Honda (July 26, 1982) New appointment 8 Number of the Company’s shares held 16,835 shares April 2005 Joined Mitsui & Co., Ltd. April 2008 Joined the Company April 2018 General Manager, Kyushu Branch Office of the Company April 2021 General Manager, Confectionery Materials Dept. of the Company (current position) Reasons for nomination as a candidate for Director Since joining the Company, Mr. Yasutaka Honda has experienced a wide range of sales divisions and product divisions, and also worked for a U.S. subsidiary of the Company. After serving as a general manager of a large branch office, he currently serves as the head of a head office sales division responsible for confectionery manufacturers and convenience store venders. Since he has extensive knowledge of the Company’s business as a whole, the Company expects that he will continue to contribute to the enhancement of the Company’s management, and proposes that he be newly elected as Director. – 7 – Name (Date of birth) Takashi Kai (March 5, 1952) Reappointment No. Career summary, positions, responsibilities, and significant concurrent positions April 1974 Joined Mitsui & Co., Ltd. March 2004 General Manager, Kyushu Food Department, Food Business Unit of the above March 2007 Internal Auditor, Internal Auditing Div. of the above Number of the Company’s shares held – shares 9 June 2012 Corporate Auditor of Mitsui & Co. Steel Ltd. January 2017 Director of the Company (current position) Reasons for nomination as a candidate for Outside Director Mr. Takashi Kai has a wealth of experience working in Japan and overseas at the food division of a major general trading company. He has been involved in corporate management by serving as an inspector of an internal auditing div. and as Corporate Auditor of a group company, and has deep insight in a wide range of areas. The Company expects that his advice from the perspective of corporate ethics and supervision of the Company’s management from an independent standpoint will contribute to the sustainable enhancement of the Company’s corporate value. Therefore, the Company renominates him as a candidate for Outside Director. His term of office as Outside Director will be five (5) years at the conclusion of this General Meeting of Shareholders. Hiroyoshi Inoue (November 9, 1961) Reappointment Number of the Company’s shares held – shares 10 April 1989 April 1995 Teaching/Research Associate of Yamaguchi University Faculty of Medicine and Health Sciences Chief Researcher, Innovative Research Laboratories of Yoshitomi Pharmaceutical Industries, Ltd. (currently Mitsubishi Tanabe Pharma Corporation) August 1998 Assistant Professor of Kurume University School of Medicine February 2004 Associate Professor of Kurume University School of Medicine June 2006 Director of Up Well Co. Ltd. October 2006 Professor of Kurume University School of Medicine April 2008 Professor of Keio University School of Medicine (current position) January 2020 Director of the Company (current position) Reasons for nomination as a candidate for Outside Director Mr. Hiroyoshi Inoue is a university professor on the forefront of medical radiation, a long-time researcher of ethical drugs and functional foods, and a leading authority in the study of oils, especially nut-derived oils. Although he has not been directly involved in corporate management, he has given advice on product development to a major food manufacturer and has lectured at corporate seminars. The Company expects that he will provide advice from his specific area of expertise and supervise the Company’s management from an independent standpoint based on his experience, and therefore renominates him as a candidate for Outside Director. His term of office as Outside Director will be two (2) years at the conclusion of this General Meeting of Shareholders. – 8 – No. Name (Date of birth) Takeshi Hashizume (August 11, 1959) New appointment Number of the Company’s shares held – shares 11 Career summary, positions, responsibilities, and significant concurrent positions April 1983 Joined the Industrial Bank of Japan, Limited (currently Mizuho Bank, Ltd.) October 2000 General Manager, Business Development Department of Mizuho Securities Co., Ltd. April 2010 Group Manager, Investment Banking & Products Group (“IBPG”) of the above April 2011 Executive Officer and Group Manager, IBPG of the above July 2012 Assistant to President and General Manager, Corporate Strategy Office of YOKOHAMA TOHO Hospital March 2016 Head of Local Area Venue, The Tokyo Organising Committee of the Olympic and Paralympic Games October 2021 Director and General Manager, Corporate Strategy Dept. (CFO) of Lincstech Co., Ltd. (current position) Reasons for nomination as a candidate for Outside Director Mr. Takeshi Hashizume has a wide range of experience in the financial industry, including involvement in corporate management, having served as Executive Officer of a major securities company. He also has deep knowledge regarding the management and coordination of large-scale organizations through his experience as Deputy Manager of Operations Bureau of the Tokyo Organising Committee of the Olympic and Paralympic Games. He currently participates in the management of another company as Director and Chief Financial Officer. The Company expects that he will provide advice on overall management and supervise the Company’s management from an independent standpoint based on his experience, and therefore proposes that he be newly elected as Outside Director. Naoko Tanouchi (May 19, 1965) New appointment Number of the Company’s shares held – shares 12 April 1989 Joined Ajinomoto Co., Inc. September 1999 Joined McKinsey & Company January 2002 Joined Ajinomoto Co., Inc. July 2009 July 2011 Associate General Manager, AminoScience Business Development Dept. of the above Associate General Manager, Corporate Planning Dept. of the above July 2016 Associate General Manager, Internal Auditing Dept. of the above June 2019 Corporate Auditor of Ajinomoto Animal Nutrition Group, Inc. April 2021 Visiting Professor of Kobe University Graduate School (current position) Reasons for nomination as a candidate for Outside Director Ms. Naoko Tanouchi has experienced a wide range of areas, including sales and business strategy planning at a major food manufacturer, as well as M&A and mid-term management planning at the corporate planning divisions. She also has deep insight into internal control and corporate management, having overseen internal audit operations and served as Corporate Auditor at a group company. The Company expects that she will provide advice and supervise the Company from an independent standpoint based on her experience in the areas of group management and business strategy, and therefore proposes that she be newly elected as Outside Director. Notes: 1. There are no special relationships of interest between each candidate and the Company. 2. Mr. Takashi Kai, Mr. Hiroyoshi Inoue, Mr. Takeshi Hashizume, and Ms. Naoko Tanouchi are candidates for Outside Director. 3. Matters that should be reported regarding the candidates for Outside Director are as follows: (1) Independence of the candidates for Outside Director a. If the election of Mr. Takashi Kai is approved, the Company intends to designate him as an independent officer, as prescribed in Article 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange. b. If the election of Mr. Hiroyoshi Inoue is approved, the Company intends to designate him as an independent officer, as prescribed in Article 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange. – 9 – c. If the election of Mr. Takeshi Hashizume is approved, the Company intends to designate him as an independent officer, as prescribed in Article 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange. d. If the election of Ms. Naoko Tanouchi is approved, the Company intends to designate her as an independent officer, as prescribed in Article 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange. (2) Liability limitation agreement with Outside Directors The Company has entered into agreements with both Mr. Takashi Kai and Mr. Hiroyoshi Inoue, candidates for Outside Director, pursuant to Article 427, Paragraph 1 of the Companies Act to limit their liability for damages. The liability for damages based on this agreement is limited to the amount stipulated in laws and regulations. If the elections of both Mr. Takashi Kai and Mr. Hiroyoshi Inoue are approved, the Company intends to continue the agreements with them. If the elections of both Mr. Takeshi Hashizume and Ms. Naoko Tanouchi are approved, the Company intends to enter into the liability limitation agreement with the same content with each of them. 4. The Company has entered into a directors and officers liability insurance contract with an insurance company, pursuant to Article 430-3, Paragraph 1 of the Companies Act. The contract is designed to compensate for damages incurred by the insured in the event that a claim for damages is made against the insured during the insurance period due to an act committed by the insured in their capacity as an officer of the Company. Each candidate for Director will be included as an insured under the insurance contract. – 10 – (Reference) Skills Matrix of the Board of Directors The Board of Directors of the Company strives to create an environment that supports appropriate risk-taking by management, based on the Company’s mission statement and corporate vision and from the perspective of enhancing the Group’s sustainable corporate value. In order to enable effective management oversight, the areas of experience and expertise of candidates for Directors are defined as below, and efforts are made to ensure a well-balanced composition of the Board of Directors as a whole. Name Officer Major areas of professional experience Corporate management Management strategy Legal affairs Internal control Risk management Finance Accounting Global Human resources development HR Technology IT Sustainability Environment CSR 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 Ichiro Honda Hidemitsu Honda Toyomi Nakajima Hirokane Fujio Kazunori Kano Yasuhiro Maeda Takeshi Sakaguchi Yasutaka Honda Takashi Kai Hiroyoshi Inoue Takeshi Hashizume Naoko Tanouchi Keizo Yoshida Shin Tokunaga Kiyoshi Endo Takashi Aikawa Director 〇 〇 Audit & Supervisory Board Member 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 – 11 – Reason for selecting each item in the skills matrix (1) Corporate management/Management strategy The important role of the Board of Directors is to supervise and advise on corporate strategies to achieve sustainable growth of the Company and to make important decisions based on its fiduciary responsibility to shareholders; therefore, we believe that experience and ability in corporate management and management strategies are important. (2) Legal affairs/Internal control/Risk management Since these areas are important elements of corporate management and important responsibilities of the Board of Directors, we believe it is necessary to have a certain number of Directors with such expertise. (3) Finance/Accounting (4) Global Since these areas are essential for corporate management, we believe it is necessary to have a certain number of Directors with such expertise. We aim to create a new food culture by providing domestic and overseas food ingredients, and we also engage in business overseas. Therefore, we believe that global knowledge and experience are necessary. (5) Human resources development/HR We believe that human resources are the foundation of corporate activities and an important factor for sustainable corporate growth. (6) Technology/IT We place importance on digital transformation (DX), and aim to improve the efficiency and sophistication of our operations using IT. (7) Sustainability/Environment/CSR We believe that respect for the environment and human rights is the most important mission of a company. (End) – 12 – [Attachments to the Notice of the Annual General Meeting of Shareholders] Business Report (From November 1, 2020 to October 31, 2021) 1. Current Status of the Corporate Group (1) Business activities and results During the fiscal year under review, the Japanese economy continued to be affected by the unexpectedly prolonged effects of the novel coronavirus (COVID-19) throughout the year and economic trends remained uncertain, despite the progress in vaccination. In the food industry, prices were raised against the backdrop of soaring raw material costs due to climate change and rising logistic costs, in addition to the need to respond to the shift to eating-at-home and increased health awareness caused by the COVID-19 pandemic. Under such circumstances, the SHOEI FOODS CORPORATION and its subsidiaries (the “Group”) realized the operation of the entire production lines at the new nut plant, which had been constructed in the Bando Interchange Industrial Park, Ibaraki Prefecture, as the seventh plant in Japan, focusing on further expanding sales of its own processed products and value-added products by utilizing its production functions. As a result of the above, in terms of sales in the second half of the fiscal year, the Japan segment recorded a year-on-year increase and consolidated net sales also increased year-on-year. For the full fiscal year, while net sales of the Japan segment increased, consolidated net sales for the fiscal year stood at 99,631 million yen (99.1% of the previous fiscal year), due to a significant decrease in sales in overseas operations. In terms of profits, backed by strong domestic sales, gross profit amounted to 16,572 million yen (102.4% of the previous fiscal year) and gross profit margin increased from 16.1% of the previous fiscal year to 16.6% for the current fiscal year, despite a large increase in depreciation due to plant construction. On the other hand, selling, general and administrative expenses increased by 3.4%. Thus, operating profit was 4,182 million yen (99.7% of the previous fiscal year), ordinary profit was 4,279 million yen (99.4% of the previous fiscal year), and profit attributable to owners of parent was 2,789 million yen (99.7% of the previous fiscal year). Business performance by division was as follows: Sales of products from the plants of our subsidiaries and affiliates, such as condensed milk and liquid dairy products as well as domestically-sourced cheese, butter and powdered milk were strong. However, sales of imported dairy products declined as it took time to clear inventories in the domestic dairy product market due to some factors including an increase in domestic raw milk production. As a result, sales of dairy products, oils and fats decreased to 34,267 million yen (98.9% of the previous fiscal year). Sales of chestnut products, mainly chestnut paste, were strong, and processed chocolate, processed baked confectionery, Western-liquor-dipped fruits, domestically-sourced products for convenience stores also performed well. As a result, sales of confectionery ingredients increased to 16,635 million yen (107.6% of the previous fiscal year). Although sales volume increased in Japan, the average selling price declined, reflecting lower raw material prices due to crop conditions. On the other hand, in China, the volume of seeds receipts from China decreased significantly due to the effect of the COVID-19 pandemic. In addition, sales in the U.S. also declined due to lower walnut prices. As a result, sales of dried and canned fruits decreased to 30,143 million yen (95.2% of the previous fiscal year). – 13 – Sales of retail products remained steady as demand from food supermarkets, etc. continued to grow, due to the shift to eating-at-home and increased health awareness caused by the COVID-19 pandemic. On the other hand, confectionery sales decreased due to a rebound from the previous year’s stay-at-home demand caused by the COVID pandemic. As a result, sales of confectionery and retail products decreased to 18,264 million yen (98.5% of the previous fiscal year). Sales by division Business division Term 73 From November 1, 2019 to October 31, 2020 Term 74 From November 1, 2020 to October 31, 2021 Net sales % of total net sales Net sales % of total net sales % % Dairy products, oils and fats Confectionery ingredients Dried and canned fruits Confectionery and retail products Others Subtotal Others Total Food business (2) Status of financing 34,623 15,453 31,663 18,530 299 100,569 2 100,572 Note: The above amounts do not include consumption tax. 34.4 15.4 31.5 18.4 0.3 100.0 0.0 100.0 34,267 16,635 30,143 18,264 314 99,626 5 99,631 (Million yen)Increase (Decrease) % (%) (355) 1,182 (1,519) (265) 14 (943) 2 (941) % (1.0) 7.6 (4.8) (1.4) 4.8 (0.9) 87.7 (0.9) 34.4 16.7 30.3 18.3 0.3 100.0 0.0 100.0 The Group raises its funds from borrowings from financial institutions and its own funds. (3) Status of capital investment During the fiscal year under review, the Group spent 4,053 million yen on capital investments, which mainly consisted of capital investments for the new plant facility at the Bando Plant of Kyo Marron Co., Ltd., and the purchase mainly of machinery and equipment to improve the efficiency of the production equipment and to ensure quality control at production subsidiaries. (4) Business segment transfers, absorption-type splits, and incorporation-type splits (5) Business segments transferred from other companies Not applicable. Not applicable. through absorption-type mergers and splits Not applicable. other companies Not applicable. (6) Succession of rights and responsibilities related to the businesses of other corporations (7) Acquisitions and disposals of equity including shares, or stock acquisition rights, etc., in – 14 – (8) Issues to be addressed The Group aims to be a global corporate group that can contribute to society by providing customers with safe and reliable foods carefully selected from Japan and from around the world and creating a new food culture. To this end, it holds the basic management policy of strengthening its comprehensive functions ranging from raw material procurement, production/processing, to distribution/sales and accurately meeting the changing needs of its customers, and is committed to proactively addressing the following issues: (i) Changing and diversifying needs The COVID-19 pandemic has caused lifestyles to change, and consumption has slowed down due to the aging population, declining birthrate, and consumers’ preference for thrift and low prices. We will focus on strengthening product development in line with changing consumer needs, such as rising health awareness and preference for convenience, along with the needs of these industries. (ii) Increased competition in the food industry The food distribution industry has been shifting its focus to convenience stores and drugstores and corporate reorganizations are taking place accordingly. Considering the intensified competition among food manufacturers, we will make further efforts to improve our comprehensive corporate strengths including capabilities to manage inventory, develop products and make proposals to accommodate the plans of our business partners in a timely manner. (iii) Volatile food ingredient prices Prices of imported raw materials are becoming more volatile due to the effects of climate change and exchange rate fluctuations. We will further promote the reinforcement of stable procurement capabilities by strengthening our raw material procurement system. (iv) Cost increase due to labor shortage, etc. and the progress of digital technology A shift to high value-added products that can cover costs has been necessitated by rising personnel and logistic costs due to labor shortages caused by the decrease in the working population. It has also become important that we build a system that saves manpower through automation in the production divisions. Options for enhancing efficiency have increased as a result of the progress in digital technologies, and we will further strive to improve efficiency by utilizing them, among others. (v) Growing interest in sustainability and ESG management Against the backdrop of climate change’s impacts, businesses are displaying more interest in environmental initiatives. BCP has become important as a response to infectious diseases and natural disasters, and there is growing interest in contributing to a sustainable society and engaging with various stakeholders by advancing human rights, women’s empowerment, and workforce diversity. Further reinforcing corporate governance is essential, and it has also become critical to implement ESG initiatives. We aim to contribute to a sustainable society by advancing these issues. – 15 – Profit attributable to owners of parent 3,373,175 2,651,790 2,797,785 2,789,359 (9) Status of assets and operating results Category Net sales Ordinary profit Basic earnings per share Net assets Total assets Net assets per share during the fiscal year. (Thousand yen) (Thousand yen) (Thousand yen) (Yen) (Thousand yen) (Thousand yen) (Yen) Term 71 (Fiscal year ended October 31, 2018) Term 72 (Fiscal year ended October 31, 2019) Term 73 (Fiscal year ended October 31, 2020) Term 74 (Fiscal year ended October 31, 2021) 106,594,986 105,800,816 100,572,710 99,631,156 4,885,294 4,020,874 4,308,596 4,279,591 198.56 156.45 166.00 165.74 38,700,497 39,931,833 41,152,323 44,352,445 70,681,783 75,626,005 76,582,973 78,470,319 2,238.09 2,310.96 2,399.00 2,585.44 Notes: 1. Basic earnings per share are calculated based on the average number of shares issued (excluding treasury stock) 2. “Partial Amendments to Accounting Standard for Tax effect Accounting” (Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16, 2018) and other standards have been applied from the beginning of Term 72, and the amount of total assets for Term 71 is the amount reflecting the retrospective application of this accounting standard, etc. (10) Status of principal parent and subsidiaries (i) Relationship with the parent Not applicable. (ii) Status of principal subsidiaries Equity ownership % 83.6 Company name Capital Main business activities Tsukuba Dairy Products Co., Ltd. (Thousand yen) 247,500 Kyo Marron Co., Ltd. 35,000 100.0 Robinia Corporation Iwasa Corporation 10,000 100.0 22,000 84.5 ShoEi Delicy Corporation 100,000 100.0 ShoEi Foods (U.S.A.), Inc. ShoEi Foods Qingdao Co., Ltd. 100.0 100.0 Manufacture and sales of dairy products Processing and sales of nuts Manufacture and sales of bottled and canned food Processing and sales of nuts Manufacture and sales of confectionery Purchasing and sales of ingredients for confectionery and baking Purchasing, manufacture, and sales of confectionery Import/export and sales of agricultural produce and orchard operation Processing and sales of fruits Processing and sales of agricultural produce Yanji ShoEi Foods Co., Ltd. 100.0 Same as the above 100.0 Purchasing and sales of processed foods 100.0 Same as the above (Thousand US dollars) 23,050 (Thousand US dollars) 14,600 (Thousand US dollars) 8,062 (Thousand US dollars) 6,000 (Thousand HK dollars) 2,000 – 16 – ShoEi International Trading Shanghai Co., Ltd. ShoEi International Trading Hong Kong Co., Ltd. (11) Main business activities The Group is engaged in the import, production, and wholesale of raw ingredient dairy products, oils and fats; confectionery ingredients; dried fruits and nuts; canned foods; and confectionery and retail products. Additionally, it is also engaged in the real estate rental business. The major products of the Group by divisions are as follows: Division Category Dairy products, oils and fats Confectionery ingredients Dried and canned fruits Confectionery and retail products Major products Powdered milk, condensed milk, butter, cheese, mixes for soft-serve ice cream, lactose, casein, various fats used in baking confectionery/ice cream/baking bread, margarine, shortening, etc. Various baking chocolates, processed fruits, processed egg products, chestnut products, other raw materials for Japanese confectionery, foaming agents, liquors for baking, sugar-covered products, emulsifiers, essences, sugars, flours, etc. Various dried fruits and nuts (raisins, prunes, almonds, walnuts, coconuts, etc.), various canned fruits and vegetables (pineapples, mandarin oranges, yellow peaches, corn, bamboo shoots, tomatoes, etc.), food for commercial use, etc. Chocolate confectionery, biscuits, cookies, and dried fruits and nuts in retail bags (prunes, almonds, walnuts, etc.) Food business Others Packaging materials and others Others Real estate rental Buildings for rent, etc. (12) Main offices and plants Head Office of the Company Domestic business offices 5-7, Akihabara, Taito-ku, Tokyo Domestic production bases Overseas bases Head Office (Taito-ku, Tokyo), Kansai Branch Office (Yodogawa-ku, Osaka-shi), Kyushu Branch Office (Higashi-ku, Fukuoka-shi), Sapporo Branch Office (Shiroishi-ku, Sapporo-shi), Sendai Branch Office (Wakabayashi-ku, Sendai-shi), Niigata Branch Office (Chuo-ku, Niigata-shi), Nagoya Branch Office (Naka-ku, Nagoya-shi), Hiroshima Branch Office (Asaminami-ku, Hiroshima-shi), Tsukuba Dairy Products Co., Ltd. (Ishioka-shi, Ibaraki), Tsukuba Dairy Products Co., Ltd. Sales Head Office (Chiyoda-ku, Tokyo), ShoEi Delicy Corporation (Taito-ku, Tokyo), and Iwasa Corporation (Hakata-ku, Fukuoka-shi) Tsukuba Dairy Products Co., Ltd. Ishioka Plant (Ishioka-shi, Ibaraki), Tsukuba Dairy Products Co., Ltd. Tamari Plant (Omitama-shi, Ibaraki), ShoEi Delicy Corporation Chikusei Plant (Chikusei-shi, Ibaraki), Kyo Marron Co., Ltd. Mitsukaido Plant (Joso-shi, Ibaraki), Kyo Marron Co., Ltd. Amakusa Plant (Amakusa-shi, Kumamoto), Kyo Marron Co., Ltd. Bando Plant (Bando-shi, Ibaraki), and Robinia Corporation Sakaki Plant (Hanishina-gun, Nagano) ShoEi Foods (U.S.A.), Inc. (California, US) ShoEi International Trading Shanghai Co., Ltd. (China) ShoEi International Trading Hong Kong Co., Ltd. (China) ShoEi Foods Qingdao Co., Ltd. (China) Yanji ShoEi Foods Co., Ltd. (China) – 17 – (13) Status of employees Number of employees Increase (decrease) from previous fiscal year-end 1,410 [709] Decrease of two Note: The number of employees represents the number of employees working in the Group and the average number of contract-based and temporary workers for the year is stated separately in brackets. Balance of borrowings Thousand yen 5,732,596 4,929,970 4,705,197 Lender (14) Major lenders Mizuho Bank, Ltd. MUFG Bank, Ltd. The Norinchukin Bank No important matters to be stated. 2. Status of the Company’s Shares (1) Total number of authorized shares (2) Total number of shares issued and outstanding (15) Other significant matters regarding the current conditions of the Group 48,585,000 shares 17,100,000 shares (including 268,562 shares of treasury stock) (3) Number of shareholders 22,111 (4) Major shareholders Name of shareholder Number of shares held Equity ownership Honda Kosan Co., Ltd. Shoei Plaza Co., Ltd. The Master Trust Bank of Japan, Ltd. (Trust Account) Shoei Foods Partners Shareholders Association Hidemitsu Honda Mizuho Bank, Ltd. Ichiro Honda MUFG Bank, Ltd. Meiji Co., Ltd. Thousand shares 1,322 1,321 1,032 766 620 545 486 456 428 419 The Dai-ichi Life Insurance Company, Limited Note: Equity ownership is calculated after deducting treasury stock (268,562 shares). – 18 – % 7.8 7.8 6.1 4.5 3.6 3.2 2.8 2.7 2.5 2.4 (5) Status of shares issued to officers of the Company as compensation for the execution of their duties during the fiscal year Position Directors (excluding Outside Directors) Number of shares Number of grantees 6,180 11 Position Name Responsibilities Significant concurrent positions Senior Managing Director Toyomi Nakajima Division Head, Production Division President and Representative Director, ShoEi Delicy Corporation Note: The above is stock-based compensation with transfer restriction. 3. Stock Acquisition Rights (1) Status of stock acquisition rights as of the fiscal year-end Not applicable. Not applicable. (2) Status of stock acquisition rights issued during the fiscal year (3) Other significant matters regarding stock acquisition rights No important matters to be stated. 4. Officers of the Company (as of October 31, 2021) (1) Status of Directors and Audit & Supervisory Board Members President and Representative Director Vice President and Representative Director Ichiro Honda Hidemitsu Honda Senior Managing Director Hirokane Fujio Managing Director Keizo Fujikawa Division Head, Administration Division and General Manager, General Affairs & Human Relations Dept. Division Head, Sales & Marketing Division and General Manager, Baking Materials Dept. General Manager, Finance & Accounting Dept. General Manager, Quality Assurance Dept. General Manager, Management Planning Dept. Division Head, Products & Merchandise Division Deputy Division Head, Sales & Marketing Division Kazuhiko Harada Masami Takei Kazunori Kano Yasuhiro Maeda Takeshi Sakaguchi Director Director Director Director Director Director – 19 – Kazusato Yamaguchi Deputy Division Head, Products & Merchandise Division Chairman, ShoEi Foods Qingdao Co., Ltd. Chairman, Yanji ShoEi Foods Co., Ltd. Chairman, ShoEi International Position Name Responsibilities Significant concurrent positions Trading Shanghai Co., Ltd. Director Director Director Standing Audit & Supervisory Board Member Audit & Supervisory Board Member Audit & Supervisory Board Member Audit & Supervisory Board Member Yoshio Hanihara Takashi Kai Hiroyoshi Inoue Keizo Yoshida Shin Tokunaga Kiyoshi Endo Takashi Aikawa Partner, Sowa Tax Corporation Executive Partner, Shinsoh Audit Corporation Notes: 1. Directors Yoshio Hanihara, Takashi Kai, and Hiroyoshi Inoue are Outside Directors. 2. Audit & Supervisory Board Members Shin Tokunaga, Kiyoshi Endo, and Takashi Aikawa are Outside Audit & Supervisory Board Members. 3. Audit & Supervisory Board Members Keizo Yoshida and Takashi Aikawa were elected newly as Audit & Supervisory Board Members at the 73rd Annual General Meeting of Shareholders held on January 28, 2021, and took offices thereafter. 4. Audit & Supervisory Board Member Ikuhisa Tashiro retired at the conclusion of the 73rd Annual General Meeting of Shareholders held on January 28, 2021, due to the expiry of his term of office. 5. Standing Audit & Supervisory Board Member Keizo Yoshida has experience in organizational operations, having served as the general manager of the investment and international divisions, etc. of the head office of a major life insurance company, and has considerable insight into the sound and adequate corporate management. Audit & Supervisory Board Member Shin Tokunaga is a certified public accountant and a certified tax accountant and has considerable insight into finance and accounting. Audit & Supervisory Board Member Kiyoshi Endo has considerable insight into corporate legal affairs and corporate accounting as a university professor. Audit & Supervisory Board Member Takashi Aikawa is a certified public accountant and has considerable insight into finance and accounting. Directors Yoshio Hanihara, Takashi Kai, and Hiroyoshi Inoue, and Audit & Supervisory Board Members Shin Tokunaga, Kiyoshi Endo, and Takashi Aikawa have been designated as independent officers and registered as such with the Tokyo Stock Exchange. (2) Overview of the directors and officers liability insurance contract Pursuant to Article 430-3, Paragraph 1 of the Companies Act, the Company has entered into a directors and officers liability insurance contract with an insurance company that insures all Directors and Audit & Supervisory Board Members of the Company and its consolidated subsidiaries. The contract is designed to compensate for damages incurred by the insured in the event that a claim for damages is made against the insured during the insurance period due to an act committed by the insured in their capacity as an officer of the Company. (3) Compensation, etc. to Directors and Audit & Supervisory Board Members (i) Matters concerning the policy for determining the amount of compensation, etc. to each individual Director and the method of calculation thereof With respect to the policy for determining the amount of compensation, etc. to each individual Director, the Company has established the Officer Compensation Rules with the following details, based on the approval of the Board of Directors. The compensation for Directors consists of monthly compensation, officers’ bonuses, and stock-based compensation. For Outside Directors, only the monthly compensation is paid. The compensation for Directors is determined within the limit of compensation resolved at the General Meeting of Shareholders, after deliberation by the Governance Committee, which is a voluntary advisory committee. – 20 – The total amount of individual monthly compensation and officers’ bonuses to be paid to Directors (excluding Outside Directors) is determined by the Board of Directors. The monthly compensation is determined based on the degree of contribution to the enhancement of the Group’s corporate value over the medium- to long- term, taking into consideration the Company’s business performance, management status, economic conditions and other factors. In order to clarify management responsibility and further increase incentives for improving business performance, officers’ bonuses are determined by the President and Representative Director (Ichiro Honda) based on a comprehensive assessment of their responsibilities and achievements, reflecting the Company’s performance including the status of profit plan achievement and the contribution of each individual. We have also introduced the monetary claim compensation plan for granting restricted stock in order to provide Directors (excluding Outside Directors) with incentives to sustainably increase the Company’s corporate value and promote further value sharing with shareholders. The eligible Directors will pay all of such monetary compensation claims as properties contributed in kind for the purpose of granting restricted stock under the plan. The amount to be paid-in per share is determined by the Board of Directors based on the closing price of the Company’s common stock on the Tokyo Stock Exchange on the business day immediately preceding the date of the resolution of each Board of Directors meeting to the extent that the amount is not particularly favorable to the eligible Directors who subscribe for such common stock. The specific timing and distribution of the payment to each eligible Director shall be determined by the Board of Directors, and the transfer restriction period for the restricted stock shall be a period predetermined by the Board of Directors of the Company, within the range of 20 to 30 years. In addition, the transfer restriction shall be cancelled in the event that the eligible Director resigns from the position predetermined by the Board of Directors of the Company before the expiration of the transfer restriction period due to expiration of his or her term of office, death, or other justifiable reasons. On the other hand, if the eligible Director resigns from the position predetermined by the Board of Directors of the Company before the expiration of the transfer with no justifiable reasons, such as expiration of his or her term of office, death, or other reasons, the Company will acquire such shares without compensation. The total amount of compensation to Outside Directors is determined by the Board of Directors, taking into consideration their social status and contribution to the Company. The allocation of compensation to each individual is determined by the President and Representative Director (Ichiro Honda). (ii) Matters concerning the delegation of responsibility for determining the details of individual compensation, etc. to Directors For the purpose of efficient operation of the Board of Directors, the discretionary power to determine the amount of individual monthly compensation and bonuses for directors is given to the President and Representative Director (Ichiro Honda) pursuant to the resolution by the Board of Directors meeting. The authority is re-delegated to the President and Representative Director (Ichiro Honda) because he has a comprehensive understanding of the Group’s management status and the status of execution of responsibilities and contribution of each Director. (iii) Reasons why the Board of Directors determined that details of compensation, etc. to each individual Director are in line with the decision policy The Directors’ compensation system/policy and the amount of compensation are matters to be deliberated by the Governance Committee, which is a voluntary advisory committee consisting of a majority of Outside Directors. By reporting the results of deliberations to the Board of Directors, the objectivity and transparency of the decisions made by the President and Representative Director, who has been re-delegated, are ensured. The Board of Directors believes that the officer compensation system has been operated properly. (iv) Matters concerning the policy for determining the amount of compensation, etc. to Audit & Supervisory Board Members and the method for calculation thereof Regarding the compensation for both full-time and part-time Audit & Supervisory Board Members, only monthly compensation is paid. No officers’ bonuses or stock-based compensation – 21 – is paid because of their role in monitoring and supervising management from an independent standpoint. The total amount of monthly compensation to Audit & Supervisory Board Members is resolved at the General Meeting of Shareholders, and the allocation method is determined through discussions among Audit & Supervisory Board Members in accordance with laws and regulations. (v) Total amount of compensation, etc. to Directors and Audit & Supervisory Board Members Position Directors [of which, Outside Directors] Audit & Supervisory Board Members [of which, Outside Audit & Supervisory Board Members] Total amount of compensation, etc. (Thousand yen) Total amount of compensations, etc. by type (Thousand yen) Basic compensation Non-monetary compensation Fixed compensation Restricted stock Number of Officers subject to the compensation 221,950 [15,600] 29,100 [11,550] 198,000 [15,600] 29,100 [11,550] 23,950 [–] – [–] 14 [3] 5 [3] 19 Total 251,050 227,100 23,950 Notes: 1. At the 70th Annual General Meeting of Shareholders held on January 30, 2018, the maximum amount of compensation to Directors was approved to be 260,000 thousand yen p.a. (including 20,000 thousand yen for Outside Directors). The number of Directors as of the close of this Annual General Meeting of Shareholders was 14 (including three Outside Directors). Additionally, at the 72nd Annual General Meeting of Shareholders held on January 30, 2020, compensation of up to 80,000 thousand yen p.a. was approved for granting restricted stock to Directors (excluding Outside Directors), separately from the amount of compensation, etc., described above. The number of Directors as of the close of this Annual General Meeting of Shareholders was 14 (including three Outside Directors). 2. At the 46th Annual General Meeting of Shareholders held on January 28, 1994, the maximum amount of compensation to Audit & Supervisory Board Members was approved to be 40,000 thousand yen p.a. The number of Audit & Supervisory Board Members as of the close of this Annual General Meeting of Shareholders was three (including three Outside Audit & Supervisory Board Members). 3. The above amounts do not include the employee salary portion of 77,820 thousand yen paid to Directors serving concurrently as employees. (4) Matters regarding Outside Directors (i) Significant concurrent positions held at other companies and their relationships with the Company Position Name Concurrent position held Shin Tokunaga Audit & Supervisory Board Member Audit & Supervisory Board Member There are no special relationships between the Company and the above companies at which the significant concurrent positions are held. Executive Partner, Shinsoh Audit Corporation Partner, Sowa Tax Corporation Takashi Aikawa (ii) Major activities during the fiscal year under review Position Name Major activities Director Yoshio Hanihara Having attended all 13 Board of Directors meetings held during the fiscal year under review, Yoshio Hanihara has been giving advice and recommendations on and supervising management in general based on his experience as an audit & supervisory board member of a listed company and his extensive experience and knowledge of the securities industry. – 22 – Director Takashi Kai Director Hiroyoshi Inoue Audit & Supervisory Board Member Shin Tokunaga Audit & Supervisory Board Member Kiyoshi Endo Audit & Supervisory Board Member Takashi Aikawa Having attended all 13 Board of Directors meetings held during the fiscal year under review, Takashi Kai has been giving advice and recommendations on and supervising management in general based on his extensive experience and insight acquired at a food division of a major trading company, as well as his experience from having served as an inspector at the internal auditing division and an audit & supervisory board member of a group company of the trading company. Having attended 12 out of 13 Board of Directors meetings held during the fiscal year under review, Hiroyoshi Inoue, as a university professor on the forefront of medical radiation, a long-time researcher of ethical drugs and functional foods, and a leading authority in the study of oils, especially nut-derived oils, has been giving advice on and supervising management from his specific area of expertise. Having attended 12 out of 13 Board of Directors meetings and 13 out of 14 Audit & Supervisory Board meetings held during the fiscal year under review, Shin Tokunaga has been giving adequate advice as necessary, based on his extensive experience and knowledge acquired as a certified public accountant and a certified tax accountant. Having attended all 13 Board of Directors meetings and all 14 Audit & Supervisory Board meetings held during the fiscal year under review, Kiyoshi Endo has been giving adequate advice as necessary, based on his extensive experience and knowledge acquired as a university professor. Having attended all nine Board of Directors meetings and all nine Audit & Supervisory Board meetings held after his appointment as Outside Audit & Supervisory Board Member, Takashi Aikawa has been giving adequate advice as necessary, based on his extensive experience and knowledge acquired as a certified public accountant. (5) Overview of agreements to limit liability The Company has entered into agreements with each of the Outside Directors and Outside Audit & Supervisory Board Members to limit their liability set forth in Article 423, Paragraph 1 of the Companies Act, in accordance with the provisions of Article 427, Paragraph 1 of the Companies Act and the provisions of Articles 32 and 43 of the Company’s Articles of Incorporation. The maximum amount of liability based on these agreements is the amount set forth by laws and regulations. 5. Accounting Auditor (1) Name of Accounting Auditor Deloitte Touche Tohmatsu LLC (2) Amount of compensation, etc. to Accounting Auditor for the fiscal year under review The amount of compensation, etc. paid to the Accounting Auditor during the fiscal year under review and the reason why the Audit & Supervisory Board consented to this amount a. The amount of compensation for audit services in accordance with Article 2, Paragraph 1 of the Certified Public Accountants Act b. Total amount of monies and other assets payable by the Company and its subsidiaries to the Accounting Auditor Thousand yen 46,000 53,500 – 23 – Notes: 1. The audit agreement between the Company and the Accounting Auditor does not distinguish between compensation paid for audit work performed under the Companies Act and that under the Financial Instruments and Exchange Act. Accordingly, the above amount includes the amount of compensation, etc. for audit work performed under the Financial Instruments and Exchange Act. 2. In accordance with the “Practical Guidelines for Cooperation with Accounting Auditors” released by the Japan Audit & Supervisory Board Members Association, the Audit & Supervisory Board has confirmed and deliberated the audit plans of the Accounting Auditor, the status of its audit performance, and the grounds for calculation of compensation estimates. As a result, the Audit & Supervisory Board found them to be appropriate, and gave consent to the amount of compensation paid to the Accounting Auditor in accordance with Article 399, Paragraph 1 of the Companies Act. (3) Non-audit work The Company assigned “advisory services related to revenue recognition standards,” which are non-audit services other than the services stipulated in Article 2, Paragraph 1 of the Certified Public Accountants Act, to the Accounting Auditor and paid fees for such services. (4) Policy regarding decisions to dismiss or not reappoint an Accounting Auditor The Audit & Supervisory Board shall determine a proposal to be presented to the general meeting of shareholders to dismiss or not reappoint the Accounting Auditor as necessary, including cases where there is difficulty for the Accounting Auditor to perform its duties. Additionally, with its unanimous consent, the Audit & Supervisory Board shall dismiss the Accounting Auditor if deemed to fall under the items in Article 340, Paragraph 1 of the Companies Act. In such cases, the Audit & Supervisory Board shall designate an Audit & Supervisory Board Member to report that the Accounting Aud
