パルグループホールディングス（2726） – Notice of the 50th Ordinary General Meeting of Shareholders

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. 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: 2726 May 10, 2022 Ryuta Inoue President and Representative Director PAL GROUP Holdings CO., LTD. 3-6-1 Doshomachi, Chuo-ku, Osaka-shi, Osaka, Japan Notice of the 50th Ordinary General Meeting of Shareholders We are pleased to inform you that the 50th Ordinary General Meeting of Shareholders (the “Meeting”) of PAL GROUP Holdings CO., LTD. (the “Company,” together with its subsidiaries, the “Group”) will be held for the purposes below. Instead of attending the Meeting in person, you can exercise your voting rights in writing or via the Internet, etc., so please review the attached Reference Documents for the General Meeting of Shareholders and exercise your voting rights by 6:30 p.m. Japan time, Tuesday, May 24, 2022 (closing of the Company’s business hours). 1. Date and time: 2. Venue: Wednesday, May 25, 2022 at 10 a.m. Japan time (reception opens at 9:15 a.m.) AP Osaka Ekimae, Umeda 1-chome, B2F, Tokyo Tatemono Umeda Building located at 1-12-12 Umeda, Kita-ku, Osaka-shi, Osaka, Japan 3. Purposes of the Meeting: Matters to be reported: 50th fiscal year (March 1, 2021 – February 28, 2022) Business report, consolidated and non-consolidated financial statements and results of audits of the consolidated financial statements by the accounting auditor and the Audit & Supervisory Board Matters to be resolved: Proposal 1: Proposal 2: Proposal 3: Proposal 4: Proposal 5: Distribution of Surplus Partial Amendments to the Articles of Incorporation Election of Six (6) Directors Election of One (1) Audit & Supervisory Board Member Election of One (1) Substitute Audit & Supervisory Board Member In light of the COVID-19 pandemic, the Company asks that shareholders exercise their voting rights in writing or via the Internet, etc. where possible, to ensure the safety of shareholders and prevent the spread of infection. The Company asks shareholders who intend to attend the Meeting in person to consider countermeasures such as wearing a face mask. The Company may at its discretion take measures necessary to ensure the safety of shareholders and prevent the spread of infection at the Meeting venue. We appreciate your cooperation. If you are attending the Meeting, please hand in the enclosed Voting Rights Exercise Form at the reception. The attachments to this Notice of the 50th Ordinary General Meeting of Shareholders are contained in the enclosed Business Report for the 50th Fiscal Year (in Japanese). The “Systems and Policies of the Stock Company” of the business report and notes to the consolidated and non-consolidated financial statements are posted on the Company’s website (URL: http://www.palgroup.holdings/) (in Japanese) in accordance with laws, regulations and Article 15 of the Company’s Articles of Incorporation, and therefore are not contained in the Business Report for the 50th Fiscal Year. 1 Any revisions to the Reference Documents for the General Meeting of Shareholders, the business report, and consolidated and non-consolidated financial statements by the day before the Meeting will be disclosed via postal notification or by posting them on the Company’s website (URL: http://www.palgroup.holdings/) (in Japanese). 2 Reference Documents for the General Meeting of Shareholders Distribution of Surplus Proposal 1: The Company’s basic policy is to distribute dividends commensurate with its business performance. While striving to maintain a stable payment of dividends, the Company determines dividend of surplus taking into account enhancement of internal reserves to further strengthen its corporate standing and prepare for active future business development. The Company proposes the following year-end dividend based on this policy. Year-end dividend (1) Type of dividend property (2) Allotment of dividend property to shareholders and its total amount 50 yen per common share of the Company at a total of 2,196,287,800 yen (3) Effective date of the dividend of surplus (date when the payment of year-end dividend for the 50th Cash fiscal year begins) May 26, 2022 3 Partial Amendments to the Articles of Incorporation Proposal 2: 1. Reasons for the proposal The enforcement date of the system for electronic provision of materials for general meetings of shareholders, stipulated in the proviso to Article 1 of the supplementary provisions of the “Act Partially Amending the Companies Act” (Act No. 70 of 2019), has been set at September 1, 2022. Accordingly, the Company proposes to establish a provision that information contained in the Reference Documents for the General Meeting of Shareholders, etc. shall be provided electronically, and a provision that the scope of matters to be included in the paper copy to be sent to shareholders who have requested it may be limited. In addition, the Company proposes to delete the current provisions related to the internet disclosure and deemed provision of the Reference Documents for the General Meeting of Shareholders, etc. as they will become unnecessary, and to establish supplementary provisions related to the effective date, etc. in line with the above changes. 2. Details of amendments The details of the amendments are as follows. Current Articles of Incorporation Proposed Amendments (Amended parts are underlined.) (Deleted) Article 15 (Internet Disclosure of Reference Documents, Etc.) In accordance with the provisions provided in the Ordinance of the Ministry of Justice, the Company may disclose information pertaining to matters to be described or indicated in the Reference Documents for the General Meeting of Shareholders, non-consolidated financial statements, consolidated financial statements and business report through the internet. (Newly established) Article 15 (Measures for Electronic Provision, Etc.) The Company shall, when convening a general meeting of shareholders, provide information contained in the Reference Documents for the General Meeting of Shareholders, etc. electronically. 2. Among the matters to be provided electronically, the Company may choose not to include all or part of the matters stipulated in the Ordinance of the Ministry of Justice in the paper copy to be sent to shareholders who have requested it by the record date for voting rights. 4 Current Articles of Incorporation Proposed Amendments (Newly established) (Supplementary provisions) 1 The deletion of the current Article 15 (Internet Disclosure of Reference Documents, Etc.) and the establishment of the amended Article 15 (Measures for Electronic Provision, Etc.) shall come into effect on September 1, 2022. 2 Notwithstanding the provisions of the preceding paragraph, the current Article 15 (Internet Disclosure of Reference Documents, Etc.) shall remain in force with respect to a general meeting of shareholders to be held on a date prior to February 28, 2023. 3 These supplementary provisions shall be deleted after March 1, 2023 or the lapse of three months from the date of the general meeting of shareholders set forth in the preceding paragraph, whichever is later. 5 Election of Six (6) Directors Proposal 3: The terms of office of all the nine (9) incumbent Directors will expire at the close of this Meeting. Therefore, the Company proposes the election of six (6) Directors. The candidates for Director are as follows: No. Name Position at the Company 1 2 3 4 5 6 Hidetaka Inoue Ryuta Inoue Yasuji Arimitsu Takayo Watanabe Hisayuki Higuchi Kensaku Teranishi Chairman and Representative Director President and Representative Director Vice President, Director and Executive Officer Director Outside Director Outside Director Attendance at the Board of Directors meetings 14/14 (100%) 14/14 (100%) 14/14 (100%) 14/14 (100%) 14/14 (100%) 14/14 (100%) Knowledge, experience and skills particularly expected Corporate management Industry knowledge SDGs, etc. Administration / finance Risk management ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 6 1 2 No. Name (Date of birth) Career summary, positions, responsibilities at the Company and significant concurrent positions Number of the Company’s shares held Hidetaka Inoue (September 13, 1935) October 1973 May 2008 Established the Company, President and Representative Director Chairman and Representative Director of the Company (to present) Significant concurrent positions Chairman and Representative Director of PAL CO., LTD., KURASHIKI STYLE CO., LTD. and LOCUSTco., Ltd. President and Representative Director of Scotch Yofukuten K.K. Chairman and Director of NICE CLAUP Co., LTD. Director of MAG STYLE Co., LTD. and PAL HOLDINGS (SINGAPORE) PTE. LTD. Director of PAL (Shanghai) Trading Co., Ltd. 1,034,072 Reason for candidacy as Director Ever since taking office as the Company’s Representative Director in 1973, Hidetaka Inoue has led the Company’s management for 49 years and has always demonstrated outstanding foresight and strong leadership to achieve the Company motto of “Contributing to society by constantly proposing new fashionable ways of life” and build the PAL Group it is today. The Company nominated him as a candidate for Director expecting that he will further contribute to the sustainable growth and improvement of corporate value of the Group by leading the Group’s overall management in the future. April 1989 May 1995 May 1995 March 2007 May 2008 Joined TEIJIN LIMITED Joined the Company Director Senior Managing Director President and Representative Director (to present) 3,649,336 Ryuta Inoue (June 8, 1965) Significant concurrent positions President and Representative Director of NICE CLAUP Co., LTD., MAG STYLE Co., LTD. and R Scotch Co., Ltd. Director of PAL CO., LTD. and PAL HOLDINGS (SINGAPORE) PTE. LTD. Director of PAL (Shanghai) Trading Co., Ltd. Reason for candidacy as Director Ever since joining the Company in May 1995, Ryuta Inoue accumulated a broad range of operational experience including store operations, product development, e-commerce operations and in the Administrative Division. Also, after taking office as the President in 2008, he has substantially contributed to expanding business performance. The Company nominated him as a candidate for Director expecting that he will further contribute to the sustainable growth and improvement of corporate value of the Group by leading the Group’s overall management in the future. 7 3 4 No. Name (Date of birth) Career summary, positions, responsibilities at the Company and significant concurrent positions Number of the Company’s shares held Yasuji Arimitsu (April 23, 1934) 73,968 April 1953 August 1972 December 1986 December 1994 March 1998 April 1998 March 2007 May 2011 May 2013 Joined TEIJIN LIMITED Seconded to TEIJIN WINKLE Limited Director, General Manager, Administrative Unit Seconded to Teijin WOW Limited Director, General Manager, Administrative Unit Joined Teijin Central Kosan Co., Ltd. Joined the Company Director Managing Director Vice President and Director Vice President, Director and Executive Officer (General Manager, Administrative Division and General Manager, Internal Audit Office) (to present) Significant concurrent positions Vice President, Director and Executive Officer of PAL CO., LTD. Reason for candidacy as Director Yasuji Arimitsu has abundant experience mainly in administrative operations at the Company. He also has extensive experience and insight in management, serving as the Company’s Vice President, Director and Executive Officer. The Company nominated him as a candidate for Director expecting that he will further contribute to the sustainable growth and improvement of corporate value of the Group supporting the Group’s overall management in the future. Takayo Watanabe (February 9, 1962) 352,480 April 1984 April 1987 February 2003 January 2011 July 2014 Joined Daido Sanso K.K. (currently AIR WATER INC.) Left Daido Sanso K.K. Audit & Supervisory Board Member, Scotch Yofukuten K.K. Director (to present) Representative Director, T Scotch Co., Ltd. (to present) Director, PAL CO., LTD. (to present) Director of the Company (to present) May 2018 May 2019 Significant concurrent positions Representative Director of T Scotch Co., Ltd. Director of PAL CO., LTD. and Scotch Yofukuten K.K. Reason for candidacy as Director As the eldest daughter of founder Hidetaka Inoue, Takayo Watanabe has a profound understanding of the essence of the Company’s management philosophy and corporate culture. The Company nominated her as a candidate for Director expecting her to keep on fulfilling her duties as a Director to improve corporate value from a long-term perspective in the future. 8 No. Name (Date of birth) Career summary, positions, responsibilities at the Company and significant concurrent positions Number of the Company’s shares held April 1958 April 1990 August 1994 April 1995 March 1996 May 2000 June 2004 May 2008 July 2010 June 2014 Joined The Sumitomo Bank, Limited (currently Sumitomo Mitsui Banking Corporation) General Manager, Umeda Branch Retired from Sumitomo Mitsui Banking Corporation Senior Managing Director, REX INDUSTRIES CO., LTD. CEO, REX INTERNATIONAL U.S.A., INC. Chairman, SUZHOU REX ELECTRO MACHINERY CO., LTD. Outside Audit & Supervisory Board Member of the Company Chairman and Representative Director, REX INDUSTRIES CO., LTD. Outside Director of the Company (to present) Director and Advisor, REX INDUSTRIES CO., LTD. Retired from REX INDUSTRIES CO., LTD. – Hisayuki Higuchi (August 18, 1939) 5 Significant concurrent positions Director of PAL CO., LTD. Reason for candidacy as Outside Director and overview of expected roles After serving at a financial institution, Hisayuki Higuchi has long been engaged in the management of a company operating in Japan and globally. He has deep insight in finance and corporate management and is giving input and guidance based on his experience as an incumbent Outside Director. The Company nominated him as a candidate for Outside Director because it expects him to contribute to improving corporate value by providing advice on the Group’s overall management based on his insight and knowledge, and fulfill a supervisory function from a neutral and objective standpoint. 9 No. Name (Date of birth) Career summary, positions, responsibilities at the Company and significant concurrent positions Number of the Company’s shares held Kensaku Teranishi (November 28, 1951) 6 April 1975 May 1997 October 1998 April 2001 April 2004 May 2004 October 2016 Joined The Sumitomo Bank, Limited (currently Sumitomo Mitsui Banking Corporation) General Manager, Tamatsukuri Branch General Manager, Underwriting Department, Osaka Branch, Sumitomo Capital Securities Co., Ltd. General Manager, Assistant to Officer in charge of Osaka Branch, Daiwa Securities SMBC Co., Ltd. Retired from Daiwa Securities SMBC Co., Ltd. Standing Advisor, Konoike Construction Co., Ltd. Representative Director, Vice President November 2017 Retired from Konoike Construction December 2017 Co., Ltd. Senior Advisor, Osaka Branch, Yamada Consulting Group Co., Ltd. Outside Director of the Company May 2019 December 2021 Retired as Senior Advisor, Osaka Branch, Yamada Consulting Group Co., Ltd. Director, Shinwa Holdings, Co., Ltd. January 2022 Significant concurrent positions Director, Shinwa Holdings, Co., Ltd. – Reason for candidacy as Outside Director and overview of expected roles After serving at a financial institution, Kensaku Teranishi has long been engaged in corporate management. He has deep insight in finance and corporate management. The Company nominated him as a candidate for Outside Director because it expects him to contribute to improving corporate value by providing advice on the Group’s overall management based on his insight and knowledge, and fulfill a supervisory function from a neutral and objective standpoint. Notes: 1. There are no special interests between any of the candidates and the Company. 2. Hisayuki Higuchi is a candidate for Outside Director, as well as an independent director as stipulated by the financial instruments exchange (Tokyo Stock Exchange, Inc.). He has served as the Company’s Outside Audit & Supervisory Board Member for eight (8) years since May 2000. He will also have served as the Company’s Outside Director as well since May 2008, for 14 years at the close of this Meeting. Although Hisayuki Higuchi was formerly affiliated with the Company’s main bank, in light of the Company’s current financial status where its deposits significantly exceed its borrowings, and the absence of a transactional relationship with the said financial institution that will affect the Company’s decision-making, as well as the fact that a substantial amount of time has passed since he retired from the said financial institution, the Company deems him to be sufficiently independent. 3. Kensaku Teranishi is a candidate for Outside Director, as well as an independent director as stipulated by the financial instruments exchange (Tokyo Stock Exchange, Inc.). He will have served as the Company’s Outside Director since May 2019, for three (3) years at the close of this Meeting. Although Kensaku Teranishi was formerly affiliated with the Company’s main bank, in light of the 10 Company’s current financial status where its deposits significantly exceed its borrowings, and the absence of a transactional relationship with the said financial institution that will affect the Company’s decision-making, as well as the fact that a substantial amount of time has passed since he retired from the said financial institution, the Company deems him to be sufficiently independent. 4. Summary of the content of the directors and officers liability insurance contract The Company has entered into a directors and officers liability insurance contract with an insurance company to insure its Directors, as stipulated in Article 430-3, Paragraph 1 of the Companies Act. The contract covers damages that may arise due to insured parties assuming liability for their execution of duties, or receiving claims associated with the pursuit of such liability. The Company intends to continue and renew this contract. If the election of each candidate is approved, the candidates will become insured parties under this insurance contract. 11 Election of One (1) Audit & Supervisory Board Member Proposal 4: Audit & Supervisory Board Member Yoshiaki Arai will resign from his post at the close of this Meeting. Therefore, the Company proposes the election of one (1) Audit & Supervisory Board Member. As the candidate for Audit & Supervisory Board Member, Mioko Nakazawa, will be elected as a substitute for Audit & Supervisory Board Member Yoshiaki Arai, the candidate’s term of office shall be until the expiration of the term of office of the retiring Audit & Supervisory Board Member, in accordance with the provisions stipulated in the Articles of Incorporation of the Company. Furthermore, the Audit & Supervisory Board has given its consent to this proposal. The candidate for Audit & Supervisory Board Member is as follows: Name (Date of birth) Career summary, positions at the Company and significant concurrent positions Number of the Company’s shares held Mioko Nakazawa (April 9, 1974) – October 2002 Joined KUBOI & PARTNERS LAW OFFICE Established Aimable Business Law Office April 2017 September 2017 Lecturer on the Food Sanitation Act, Confectionery Course, Faculty of Cookery and Confectionery, Osaka Seikei College March 2019 November 2018 Member of Examination Committee for Approval of Management Restructuring Plan, etc., Osaka Prefectural Government (to present) Lecturer, Small and Medium Enterprise Management Consultant Training Course, Osaka University of Economics (to present) Domestic Relations Conciliation Commissioner, Osaka Family Court (to present) Outside Audit & Supervisory Board Member, i-plug, Inc. (to present) April 2019 July 2019 Significant concurrent positions Outside Audit & Supervisory Board Member, i-plug, Inc. Reason for candidacy as Outside Audit & Supervisory Board Member Mioko Nakazawa not only is well versed in corporate legal affairs as an attorney-at-law, but also is familiar with corporate management and possesses expertise in that area. Although she has never been involved in the management of a company in any way other than serving as an outside officer in the past, the Company believes that she will monitor overall management and provide effective advice based on her insight and knowledge and proposes her election as a candidate for Outside Audit & Supervisory Board Member. Notes: 1. Mioko Nakazawa is a candidate for Outside Audit & Supervisory Board Member and also a candidate for an independent auditor as stipulated by the financial instruments exchange (Tokyo Stock Exchange, Inc.). 2. There are no special interests between the candidate and the Company. 3. Summary of the content of the directors and officers liability insurance contract The Company has entered into a directors and officers liability insurance contract with an insurance company to insure its Audit & Supervisory Board Members, as stipulated in Article 430-3, Paragraph 1 of the Companies Act. The contract covers damages that may arise due to insured parties assuming 12 liability for their execution of duties, or receiving claims associated with the pursuit of such liability. The Company intends to continue and renew this contract. If the election of the candidate is approved, the candidate will become an insured party under this insurance contract. 13 Election of One (1) Substitute Audit & Supervisory Board Member Proposal 5: At the start of this Meeting, the effect of election will expire for Mioko Nakazawa, substitute Audit & Supervisory Board Member, elected at the 49th Ordinary General Meeting of Shareholders held on May 26, 2021. Therefore, the Company proposes the election of Norihisa Ogawa as a substitute Audit & Supervisory Board Member to prepare for contingencies where the number of Audit & Supervisory Board Members falls below the statutory requirement. The effective period for the resolution of this proposal is up to the beginning of the next ordinary general meeting of shareholders. The election may be cancelled by resolution of the Board of Directors subject to the consent of the Audit & Supervisory Board provided that it is before the candidate takes office. The Audit & Supervisory Board has given its consent to this proposal. The candidate for substitute Audit & Supervisory Board Member is as follows: Name (Date of birth) April 1979 Career summary and significant concurrent positions Norihisa Ogawa (January 7, 1951) October 1987 December 1994 April 1998 April 2016 Registered as attorney-at-law (Daini Tokyo Bar Association) Joined Kashiwagi & Kiyozuka Law Office Established Ogawa Norihisa Law Office Joined Kioizaka Themis General Law Office, Partner (to present) Corporate Auditor, NICE CLAUP Co., LTD. Retired as Corporate Auditor, NICE CLAUP Co., LTD. Number of the Company’s shares held – Notes: 1. There are no special interests between the candidate and the Company. 2. Norihisa Ogawa is a candidate for substitute Outside Audit & Supervisory Board Member, and fulfills the requirements for an independent auditor as stipulated by the financial instruments exchange (Tokyo Stock Exchange, Inc.). Norihisa Ogawa contributed to the audit of NICE CLAUP Co., LTD., a subsidiary of the Company, for a total of eighteen (18) years from April 1998 to April 2016 as its Outside Corporate Auditor. He also served as an outside corporate auditor of listed companies including Sankyu Inc. (TSE Prime Market) and Saison Information Systems Co., Ltd. (TSE Standard Market) as well as other companies. Although he has never been involved in the management of a company in any way other than serving as an outside officer in the past, the Company believes that he will provide timely and appropriate advice as he has a wealth of experience. 3. Summary of the content of the directors and officers liability insurance contract The Company has entered into a directors and officers liability insurance contract with an insurance company to insure its Audit & Supervisory Board Members, as stipulated in Article 430-3, Paragraph 1 of the Companies Act. The contract covers damages that may arise due to insured parties assuming liability for their execution of duties, or receiving claims associated with the pursuit of such liability. The Company intends to continue and renew this contract. If the election of the candidate as a substitute Audit & Supervisory Board Member is approved, and he subsequently takes office as an Audit & Supervisory Board Member, then he will become an insured party under this insurance contract. 14