日本新薬（4516） – Notice of Convocation Annual General Meeting 2022

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: (Stock Exchange Code: 4516) June 7, 2022 Toru Nakai President Nippon Shinyaku Co., Ltd. 14, Nishinosho-Monguchi-cho, Kisshoin, Minami-ku, Kyoto, Japan THE 159TH ANNUAL GENERAL MEETING OF SHAREHOLDERS NOTICE OF Dear Shareholders: We would like to express our appreciation for your continued support and patronage. You are cordially informed of the 159th Annual General Meeting of Shareholders of Nippon Shinyaku Co., Ltd. (the “Company”). The meeting will be held for the purposes as described below. If you do not attend the meeting, you can exercise your voting rights either by postcard or via the Internet, so please prioritize your own health. Please review the attached Reference Documents for the General Meeting of Shareholders and indicate your vote for or against the proposal on the enclosed Voting Rights Exercise Form and return it by 5:30 p.m. on Tuesday, June 28, 2022, Japan time, or access the website for exercising voting rights (https://evote.tr.mufg.jp/) and input your vote for or against the proposal. 1. Date and Time: 2. Place: Wednesday, June 29, 2022 at 10:00 a.m. Japan time Head office of Nippon Shinyaku Co., Ltd. located at 14, Nishinosho-Monguchi-cho, Kisshoin, Minami-ku, Kyoto, Japan 3. Meeting Agenda: Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s 159th Fiscal Year (April 1, 2021 – March 31, 2022) and results of audits by the Accounting Auditor and the Audit & Supervisory Board of the Consolidated Financial Statements 2. Non-consolidated Financial Statements for the Company’s 159th Fiscal Year (April 1, 2021 – March 31, 2022) Proposals to be resolved: Proposal 1: Proposal 2: Proposal 3: Appropriation of Surplus Partial Amendments to the Articles of Incorporation Election of 12 Directors When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the reception desk. Disclosure via the Internet Should the Business Report, Consolidated Financial Statements, Non-consolidated Financial Statements and the Reference Documents for the General Meeting of Shareholders require revisions, the revised versions will be posted on the Company’s website (https://www.nippon-shinyaku.co.jp/). – 1 – Reference Documents for the General Meeting of Shareholders Proposals and References Proposal 1: Appropriation of Surplus Our policy on returning profits appropriately to shareholders is aiming to increase dividend per share by increasing EPS (basic earnings per share), as well as keeping the consolidated dividend payout ratio to around 35%. Under our basic policy to maximize corporate value, the Company strives to further strengthen its business foundations by bolstering R&D to expand the pipeline for product development, while building an organization framework adapted to the development of global business, and taking balance between retaining earnings to enable it to make investments necessary to maintain a corporate position to withstand increasingly competitive conditions and returning profits. Based on the above policy, the year-end dividend for the fiscal year is proposed as follows: (1) Type of Dividend: Cash (2) Items relating to the allocation of dividend assets to shareholders and its total amount: ¥59 per share of common stock of the Company Total amount: ¥3,973,829,950 Together with the interim dividend of ¥51 per share, the annual dividend will be ¥110 per share. (3) Effective Date of Distribution of Retained Earnings: Thursday, June 30, 2022 – 2 – Proposal 2: Partial Amendments to the Articles of Incorporation 1. Reasons for amendments The amended provisions stipulated in the proviso of Article 1 of the supplementary provisions of the “Act Partially Amending the Companies Act” (Act No. 70 of 2019) will be enforced on September 1, 2022. Accordingly, in order to prepare for the introduction of the system for electronic provision of materials for general meetings of shareholders, the Articles of Incorporation of the Company shall be amended as follows. (1) The proposed Article 16, Paragraph 1 provides that information contained in the reference materials for the general meeting of shareholders, etc. shall be provided electronically. (2) The purpose of the proposed Article 16, Paragraph 2 is to establish a provision to limit the scope of matters to be included in the paper copy to be sent to shareholders who have requested it. (3) The provisions related to the internet disclosure of the reference materials for the general meeting of shareholders, etc. (Article 16 of the current Articles of Incorporation) will become unnecessary and will therefore be deleted. (4) In line with the above establishment and deletion of the provisions, supplementary provisions related to the effective date, etc. shall be established. 2. Details of amendments Current Articles of Incorporation Proposed Amendments Chapter III. General Meetings of Shareholders Chapter III. General Meetings of Shareholders (Internet Disclosure of Reference Materials for the General Meeting of Shareholders, Etc.) Article 16 The Company may, when convening a (Amended parts are underlined.) general meeting of shareholders, disclose information pertaining to matters to be described or indicated in the reference materials for the general meeting of shareholders, business report, non-consolidated financial statements, and consolidated financial statements through the internet in accordance with the provisions provided in the Ordinance of the Ministry of Justice. – 3 – Current Articles of Incorporation Proposed Amendments (Measures for Electronic Provision, Etc.) Article 16 The Company shall, when convening a (Supplementary provisions) 1. The amendment of Article 16 of the Articles of general meeting of shareholders, provide information contained in the reference materials 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. Incorporation shall come into effect effective from September 1, 2022, which is the date of enforcement of the amended provisions stipulated in the proviso of Article 1 of the supplementary provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019). 2. Notwithstanding the provisions of the preceding paragraph, Article 16 (Internet Disclosure of Reference Materials for the General Meeting of Shareholders, Etc.) of the Articles of Incorporation shall remain in force with respect to a general meeting of shareholders to be held by the end of February, 2023. 3. These supplementary provisions shall be deleted as of March 1, 2023, or three months have elapsed from the date of the general meeting of shareholders set forth in the preceding paragraph, whichever is later. – 4 – Proposal 3: Election of 12 Directors The candidates are as follows: No. Name The terms of office of all 12 Directors, including 4 External Directors, will expire at the conclusion of this year’s Annual General Meeting of Shareholders. Accordingly, the election of 12 Directors, including 4 External Directors, is proposed. Current positions and responsibilities at the Company Tenure of office Attendance at Board of Directors meetings Significant concurrent positions 1 Reappointment Shigenobu Maekawa Chairman 17 2 Reappointment Toru Nakai President 3 Reappointment Shouzou Sano Managing Director, General Manager, Sales and Marketing Director, General Manager, Personnel, General Affairs, Risk Management, Compliance & Digital Transformation Director, General Manager, Business Management, & Sustainability Director, General Manager, Research & Development Director, General Manager, Functional Food Director, General Manager, Resource Procurement, Production & Assurance 4 Reappointment Takashi Takaya 5 Reappointment Takanori Edamitsu Reappointment Kazuchika Takagaki Reappointment Hitoshi Ishizawa 8 Reappointment Hitomi Kimura 6 7 9 Reappointment External Independent 10 Reappointment External Independent 11 Reappointment External Independent 12 Reappointment External Independent Yukio Sugiura External Director Miyuki Sakurai External Director Yoshinao Wada External Director Yukari Kobayashi External Director 3 7 4 4 1 1 1 9 5 3 1 100% (13/13) 100% (13/13) 100% (13/13) 100% (13/13) 100% (13/13) 100% (11/11) 100% (11/11) 100% (11/11) 100% (13/13) 100% (13/13) 100% (13/13) 100% (11/11) Joint Owner, Hanamizuki Law Office Member of the Board, NIPPON SHOKUBAI CO., LTD. Part-time physician, Department of Maternal Medicine, Osaka Women’s and Children’s Hospital Representative Partner, Amanda Life Consulting LLC. Outside Director, Panasonic Connect Co., Ltd. – 5 – (Reference) The composition of the Audit & Supervisory Board Name Current positions at the Company Tenure of office Attendance at Board of Directors meetings Attendance at Audit & Supervisory Board meetings Significant concurrent positions Morio Matsuura Standing Audit & Supervisory Board Member 100% (13/13) 100% (15/15) Kenji Kuwabara Standing Audit & Supervisory Board Member 100% (13/13) 100% (15/15) 3 2 Outside Independent Tsuyoshi Kondo Outside Audit & Supervisory Board Member 6 100% (13/13) 100% (15/15) Outside Independent Sumitaka Maruyama Outside Audit & Supervisory Board Member 3 100% (13/13) 100% (15/15) President, Kondo Law Office Outside Director, Senshu Electric Co., Ltd. President, Sumitaka Maruyama Accounting Office Outside Auditor UNITIKA LTD. – 6 – Skills Matrix of Directors and Audit & Supervisory Board Members Skills and experience Category Name Corporate management/ Management strategy Global business Finance/ Accounting Legal affairs/ Risk management Research & Development Sales/ Marketing Production/ Quality Personnel/ HR development ESG/ Social contribution IT/ Information management ● ● ● ● ● Shigenobu Maekawa Toru Nakai Shouzou Sano Takashi Takaya Takanori Edamitsu Kazuchika Takagaki Hitoshi Ishizawa Hitomi Kimura Yukio Sugiura Miyuki Sakurai Yoshinao Wada Yukari Kobayashi Morio Matsuura Kenji Kuwabara Tsuyoshi Kondo Sumitaka Maruyama Director (Inside) Director (External) Corporate Auditor (Inside) Corporate Auditor (Outside) ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● – 7 -(Note) The above list does not represent all of the expertise and experience Directors and Audit & Supervisory Board Members have. Corporate Governance System – 8 – No. Name (Date of birth) Past experience, positions and responsibilities at the Company and significant concurrent positions Number of shares of the Company held 1 2 Reappointment Shigenobu Maekawa (January 18, 1953) Tenure of office: 17 years Attendance at Board of Directors meetings: 100% (13/13) Reappointment Toru Nakai (December 23, 1971) Tenure of office: 3 years Attendance at Board of Directors meetings: 100% (13/13) April 1976 March 1992 April 2002 April 2004 June 2005 June 2005 June 2006 April 2007 Joined the Company Transfer to Japan Federation of Employers’ Associations Department Manager, Corporate Planning Department, Corporate Strategy Office Corporate Officer Director Corporate Planning, Finance & Accounting, and Information system, and Department Manager, Corporate Planning Department Managing Director General Manager, Corporate Planning, Finance & Accounting, and Information system President Chairman (current position) June 2007 June 2021 [Reasons for the nomination for Director] After joining the Company in 1976, Mr. Shigenobu Maekawa assumed positions including Department Manager, Corporate Planning Department from 2002, Director in charge of Corporate Planning, Finance & Accounting, and Information System from 2005, Managing Director from 2006, President from 2007, and Chairman (current position) from 2021. The Company nominates him for Director as he has a wealth of experience and broad insight as a business manager and he appropriately manages the Board of Directors by chairing meetings as a Representative Director. April 1995 April 2016 April 2018 April 2019 Joined the Company Department Manager, Business Planning Department Acting General Manager, Corporate Planning (NS Pharma, Inc.) General Manager, Global Business Division, Attached to Global Business Division (NS Pharma, Inc.) Director General Manager, Global Business; Head of Global Business Division President (current position) June 2021 [Reasons for the nomination for Director] After joining the Company in 1995, Mr. Toru Nakai assumed positions including Department Manager, Business Planning Department from 2016. Further, in 2018, he was transferred to U.S. subsidiary NS Pharma, Inc. (General Director, Corporate Planning of U.S. branch). In 2019, he was General Manager, Global Business Division and later became Director in charge of Global Business. He assumed the position of President (current position) from 2021. The Company nominates him for Director as he has a wealth of experience in global business and broad insight into such field and he has been fully demonstrating leadership as a member of the management team of the Company. June 2019 June 2019 52,900 10,100 – 9 – No. Name (Date of birth) Past experience, positions and responsibilities at the Company and significant concurrent positions Number of shares of the Company held 3 4 Reappointment Shouzou Sano (July 14, 1960) Tenure of office: 7 years Attendance at Board of Directors meetings: 100% (13/13) Reappointment Takashi Takaya (November 13, 1960) Tenure of office: 4 years Attendance at Board of Directors meetings: 100% (13/13) April 1984 April 2008 April 2010 April 2013 April 2015 June 2015 June 2015 Joined the Company Department Manager, Saitama Branch Office, Sales and Marketing Corporate Officer; Department Manager, Osaka Branch Office, Sales Promotion Division, Sales and Marketing Corporate Officer; Head of Tokyo Area Division, Sales and Marketing Corporate Officer; Head of Sales and Marketing Director General Manager, Sales and Marketing; Head of Sales and Marketing Division (current position) Managing Director (current position) June 2019 [Reasons for the nomination for Director] After joining the Company in 1984, Mr. Shouzou Sano assumed positions including Department Manager of Saitama Branch Office from 2008, Department Manager of Osaka Branch Office from 2010, Head of Tokyo Area Division from 2013, Director in charge of Sales and Marketing (current position) from 2015, and Managing Director (current position) from 2019. The Company nominates him for Director as he has a wealth of business experience in sales division of medical products and broad insight into such field. April 1984 April 2005 April 2009 April 2010 April 2011 April 2012 June 2018 June 2018 April 2022 Joined the Company Department Manager, Marketing Department, Sales and Marketing Department Manager, Marketing Department, Sales and Marketing Planning Division, Sales and Marketing Department Manager, Marketing and Planning Department, Sales and Marketing Planning Division, Sales and Marketing Head of Sales and Marketing Planning Division, Sales and Marketing Corporate Officer; Head of Sales and Marketing Planning Division, Sales and Marketing Director (current position) General Manager, Administration General Manager, Personnel, General Affairs, Risk Management, Compliance & Digital Transformation (current position) [Reasons for the nomination for Director] After joining the Company in 1984, Mr. Takashi Takaya assumed positions including Manager, Business Planning Section, Tokyo Branch Office from 1999, Section Manager, Corporate Strategy Department from 2001, Manager, Planning Section, Marketing and Planning Department from 2003, Department Manager, Marketing Department from 2005, Department Manager, Marketing and Planning Department from 2010, Head of Sales and Marketing Planning Division from 2011, and Director in charge of Administration from 2018. He assumed the new position of Director in charge of Personnel, General Affairs, Risk Management, Compliance & Digital Transformation (current position) from 2022. The Company nominates him for Director as he has a wealth of business experience and broad insight into such field. 6,700 4,600 – 10 – 5 6 No. Name (Date of birth) Past experience, positions and responsibilities at the Company and significant concurrent positions Number of shares of the Company held Reappointment Takanori Edamitsu (August 8, 1963) Tenure of office: 4 years Attendance at Board of Directors meetings: 100% (13/13) Reappointment Kazuchika Takagaki (November 15, 1961) Tenure of office: 1 year Attendance at Board of Directors meetings: 100% (11/11) April 1989 August 2011 April 2013 June 2018 June 2018 April 2022 Joined the Company Department Manager, Corporate Planning Department Corporate Officer; Department Manager, Corporate Planning Department Director (current position) General Manager, Business Management General Manager, Business Management & Sustainability (current position) [Reasons for the nomination for Director] After joining the Company in 1989, Mr. Takanori Edamitsu assumed positions including Manager, Corporate Planning Section, Corporate Planning Department from 2005, Department Manager, Corporate Planning Department from 2011, and Director in charge of Business Management from 2018. He assumed the new position of Director in charge of Business Management & Sustainability (current position) from 2022. The Company nominates him for Director as he has a wealth of experience in corporate planning and broad insight into such field. April 1986 June 2014 Joined the Company Department Manager, Discovery Research Laboratories in Tsukuba, Discovery Research Labs., Research & Development Department Manager, Discovery Research Labs., Research & Development Corporate Officer; Department Manager, Discovery Research Labs., Research & Development Director (current position) General Manager, Research & Development; Head of Research & Development Division (current position) June 2016 April 2017 June 2021 June 2021 [Reasons for the nomination for Director] After joining the Company in 1986, Mr. Kazuchika Takagaki assumed positions including Department Manager, Discovery Research Laboratories in Tsukuba from 2014, Department Manager, Discovery Research Labs. from 2016, and Director in charge of Research & Development (current position) from 2021. The Company nominates him for Director as he has a wealth of business experience in research and development and broad insight into such field. 4,100 3,200 – 11 – 7 8 No. Name (Date of birth) Past experience, positions and responsibilities at the Company and significant concurrent positions Number of shares of the Company held Reappointment Hitoshi Ishizawa (September 18, 1961) Tenure of office: 1 year Attendance at Board of Directors meetings: 100% (11/11) Reappointment Hitomi Kimura (September 2, 1961) Tenure of office: 1 year Attendance at Board of Directors meetings: 100% (11/11) April 1985 April 2013 April 2014 April 2015 April 2017 April 2018 April 2021 June 2021 June 2021 Joined the Company Department Manager, Kita-Kanto Branch Office, Northern Japan Division, Sales and Marketing Department Manager, Chugoku Branch Office, Western Japan Division, Sales and Marketing Department Manager, Tokyo Branch Office, Eastern Japan Division, Sales and Marketing Department Manager, Osaka Branch Office, Sales and Marketing Corporate Officer; Department Manager, Osaka Branch Office, Sales and Marketing Corporate Officer; Department Manager, Kansai Branch Office, Sales and Marketing Director (current position) General Manager, Functional Food; Head of Functional Food Division (current position) [Reasons for the nomination for Director] After joining the Company in 1985, Mr. Hitoshi Ishizawa assumed positions including Department Manager of Kita-Kanto Branch Office from 2013, Department Manager of Chugoku Branch Office from 2014, Department Manager of Tokyo Branch Office from 2015, and Department Manager of Osaka Branch Office from 2017. In 2021, he was Department Manager of Kansai Branch Office and later became Director in charge of Functional Food (current position). The Company nominates him for Director based on a belief that he can effectively utilize his wealth of business experience in sales division of medical products and broad insight into functional food division. April 1984 April 2015 Joined the Company Department Manager, Regulatory Affairs Department, Regulatory Affairs, Safety Management and Quality Assurance Division Head of Regulatory Affairs, Safety Management and Quality Assurance Division (Marketing Supervisor-General) Corporate Officer; Head of Regulatory Affairs, Safety Management and Quality Assurance Division (Marketing Supervisor-General) Director (current position) General Manager, Resource Procurement, Production & Assurance (current position) April 2020 April 2021 June 2021 June 2021 [Reasons for the nomination for Director] After joining the Company in 1984, Ms. Hitomi Kimura assumed positions including Department Manager, Regulatory Affairs Department from 2015 and Head of Regulatory Affairs, Safety Management and Quality Assurance Division (Marketing Supervisor-General) from 2020, and Director in charge of Resource Procurement, Production & Assurance (current position) from 2021. The Company nominates her for Director as she has a wealth of business experience in supply chain and safety quality assurance and broad insight into such field. 4,500 1,500 – 12 – Name (Date of birth) Past experience, positions and responsibilities at the Company and significant concurrent positions Number of shares of the Company held No. 9 Reappointment External Independent Yukio Sugiura (February 3, 1942) Tenure of office: 9 years Attendance at Board of Directors meetings: 100% (13/13) 10 Reappointment External Independent Miyuki Sakurai (December 15, 1964) Tenure of office: 5 years Attendance at Board of Directors meetings: 100% (13/13) January 1988 March 1998 April 1998 April 2005 April 2005 April 2007 Professor, Institute for Chemical Research, Kyoto University Guest professor, Pharmaceutical Department, The University of Manchester Director, Institute for Chemical Research, Kyoto University Emeritus professor, Kyoto University (current position) President, The Pharmaceutical Society of Japan Specially appointed professor, Faculty of Pharmaceutical Sciences, Doshisha Women’s College of Liberal Arts Director, the Company (current position) June 2013 [Service period as External Director of the Company] He will have served as External Director for 9 years at the conclusion of this General Meeting of Shareholders. [Significant concurrent position] None [Reasons for the nomination for External Director and outline of expected roles] The Company nominates Dr. Yukio Sugiura for External Director as he is offering advice to the management of the Company from a practical perspective based on his expertise and insight from an independent standpoint as a pharmacologist. April 1992 April 1992 April 1992 May 2003 March 2015 April 2016 June 2017 June 2020 Completed training program at Legal Training and Research Institute of Japan Registered with Osaka Bar Association Joined Nishimura Law and Accounting Office Joint Owner, Hanamizuki Law Office (current position) Auditor, Nissay Life Foundation (current position) Auditor, Osaka University (current position) Director, the Company (current position) Member of the Board, NIPPON SHOKUBAI CO., LTD. (current position) [Service period as External Director of the Company] She will have served as External Director for 5 years at the conclusion of this General Meeting of Shareholders. [Significant concurrent positions] Joint Owner, Hanamizuki Law Office Member of the Board, NIPPON SHOKUBAI CO., LTD. [Reasons for the nomination for External Director and outline of expected roles] The Company nominates Ms. Miyuki Sakurai for External Director, as she is offering advice to the management of the Company from a practical perspective based on her expertise and insight from an independent standpoint as a lawyer. 2,000 400 – 13 – No. Name (Date of birth) Past experience, positions and responsibilities at the Company and significant concurrent positions Number of shares of the Company held July 1975 November 1981 Department of Maternal Medicine, Osaka Medical Center for Joined Osaka University Hospital 11 Reappointment External Independent Yoshinao Wada (December 25, 1950) Tenure of office: 3 years Attendance at Board of Directors meetings: 100% (13/13) October 1989 April 1991 April 1998 April 2011 April 2014 April 2016 April 2017 Maternal and Child Health Obtained the degree of Doctor of Medicine (Osaka University) Department Manager, Department of Molecular Medicine, Research Institute, Osaka Medical Center for Maternal and Child Health Director, Research Institute, Osaka Medical Center for Maternal and Child Health Department Manager, Department of Maternal Medicine; Director, Research Institute; Osaka Medical Center for Maternal and Child Health Chief Department Manager, Department of Maternal Medicine; Director, Research Institute; Osaka Medical Center for Maternal and Child Health Part-time physician, Department of Maternal Medicine, Osaka Medical Center for Maternal and Child Health Part-time physician, Department of Maternal Medicine, Osaka Women’s and Children’s Hospital (current position) Visiting Professor, Yokohama City University Director, the Company (current position) April 2018 June 2019 [Service period as External Director of the Company] He will have served as External Director for 3 years at the conclusion of this General Meeting of Shareholders. [Significant concurrent positions] Part-time physician, Department of Maternal Medicine, Osaka Women’s and Children’s Hospital [Reasons for the nomination for External Director and outline of expected roles] The Company nominates Dr. Yoshinao Wada for External Director, as he is offering advice to the management of the Company from a practical perspective based on his expertise and insight from an independent standpoint as a physician. 100 – 14 – No. Name (Date of birth) Past experience, positions and responsibilities at the Company and significant concurrent positions Number of shares of the Company held 12 Reappointment External Independent Yukari Kobayashi (April 17, 1963) Tenure of office: 1 year Attendance at Board of Directors meetings: 100% (11/11) June 1987 July 2002 January 2007 January 2007 March 2016 March 2016 Joined IBM Japan, Ltd. General Manager, Overall Management, IBM Japan, Ltd. Executive Director, IBM Japan, Ltd. Executive Officer, IBM Business Consulting Services KK Joined Mercer Japan Ltd. In charge of Growth Strategy; General Manager, President’s Office, Mercer Japan Ltd. Director, Mercer Investment Solutions Ltd. COO, Mercer Japan Ltd. Joined Microsoft Japan Co., Ltd. January 2018 February 2018 July 2018 September 2018 Corporate Officer; General Manager, Corporate Strategy March 2020 June 2021 January 2022 Management Division; General Manager, President’s Office, Microsoft Japan Co., Ltd. Representative Partner, Amanda Life Consulting LLC. (current position) Director, the Company (current position) Executive Advisor, Panasonic Corporation, Connected Solutions Company (currently Panasonic Connect Co., Ltd.) Outside Director, Panasonic Connect Co., Ltd. (current position) April 2022 [Service period as External Director of the Company] She will have served as External Director for 1 year at the conclusion of this General Meeting of Shareholders. [Significant concurrent positions] Representative Partner, Amanda Life Consulting LLC. Outside Director, Panasonic Connect Co., Ltd. [Reasons for the nomination for External Director and outline of expected roles] The Company nominates Ms. Yukari Kobayashi for External Director as she is expected to offer advice to the management of the Company from a practical perspective based on her wealth of experience and broad insight from an independent standpoint as a corporate management. 0 (Notes) 1. There are no special interests between each candidate and the Company. 2. The Company stipulates criteria for judgment of independence for Independent Outside Officers (see the next page). The Company’s website “Corporate Governance Basic Policy” (https://www.nippon-shinyaku.co.jp/file/download.php?file_id=5828). All candidates for External Director in this proposal meet the criteria. Other matters concerning the candidates for External Director are as follows: (1) Concerning the liability prescribed in the Article 423, Paragraph 1 of the Companies Act, the Company has entered, pursuant to Article 427, Paragraph 1 of the same Act, into an agreement with Dr. Yukio Sugiura, Ms. Miyuki Sakurai, Dr. Yoshinao Wada, and Ms. Yukari Kobayashi to limit maximum amount of their liability to be the amount set forth as minimum liability in Article 425, Paragraph 1 of the same Act. (2) The Company has designated Dr. Yukio Sugiura, Ms. Miyuki Sakurai, Dr. Yoshinao Wada, and Ms. Yukari Kobayashi as independent directors stipulated by Tokyo Stock Exchange and reported such designation to the Exchange. If the reelection of all of these candidates is approved and resolved, they will continue to serve as independent directors. 3. The Company has concluded a directors and officers liability insurance agreement provided for in Article 430-3, Paragraph 1 of the Companies Act with an insurance company, in which all Directors serve as the insured. In the event of a claim for damages submitted by a shareholder or a third party arising from any acts or omissions in the course of duties by Directors who are the insured, any damage incurred by the Directors as a result thereof shall be covered by the insurance agreement. However, under the agreement, liability arising from criminal acts or acts committed with the knowledge that they violate laws are exempted from coverage. The insurance premiums for all the insured are fully borne by the Company. If the candidates assume the office of Director, they will be insured under the insurance agreement. The Company plans to renew the agreement by retaining the current contents at the time of renewal. – 15 – Criteria for judgment of independence External Directors and Outside Audit & Supervisory Board Members and other candidates that do not come under any of the following categories shall be considered by the Company to have an adequate degree of independence. (1) Current or past executive officers of the Company (including subsidiaries; likewise hereafter) (2) Major trading partners of the Company, or their executive officers (3) Parties for which the Company is a major transaction partner, or their executive officers (4) Consultants, accountancy specialists or legal experts (in the case of corporations, associations and other groups, those who belong to such groups) who receive large sums of money or other assets from the Company in forms other than executive compensation (5) Major shareholders of the Company or their executive officers (6) Parties who receive significant monetary donations from the Company (in the case of corporations, associations and other groups, executive officers of such groups) (7) Any close relative(s) of those specified in (1) to (6) who is a significant party * Notes (1) – (6) “Executive officers” above refers to executive directors, executive corporate officers or any other individuals or employees with equivalent status (2) “Major trading partners of the Company” refers to any trading partner who has accounted for more than 2% of consolidated sales of the Company by transaction amount over the most recent business year (3) “Parties for which the Company is a major transaction partner” refers to any trading partner for which the Company is deemed important; that is, the Company has accounted for more than 2% of its consolidated sales by transaction amount over the most recent business year (4) and (6) “Large sums” refers to sums in excess of ¥10 million or exceeding 2% of consolidated sales or total revenues of the party in question (5) “Major shareholders of the Company” means shareholders holding at least 10% of the total voting rights (7) “Significant party” means executive officers of general manager grade or higher, and “close relatives” refers to spouse or family members in second degree – 16 –