Whilst the Company’s shares are listed on financial instrument exchanges (stock exchanges) and can be freely bought and sold, groups intent on pursuing short-term profits may sometimes propose an acquisition that ultimately endangers the interests of shareholders. The Company believes the right to make decisions on whether to accept or reject proposals to acquire the Company rests with its shareholders. Accordingly, when such proposals arise, it believes that the shareholders must be given adequate and accurate information, as well as sufficient time, to make their decisions. Toward this end—and as a means of demanding that prescribed procedures are taken for the provision of sufficient documents and countering proposed acquisitions that it believes would clearly harm the interests of shareholders in general—the Company included a proposal for the “Continuation of policy concerning large-scale acquisitions of the Company’s shares (takeover defense measures)” among the matters to be resolved at its 96th Ordinary General Meeting of Shareholders held on May 26, 2021. Shareholder approval for this proposal was received.
This Policy is a policy for responding to purchases of the Company’s shares and other securities*3 aiming at 20% or more of the Company’s voting rights*2 by a group of shareholders (tokutei-kabunushi group)*1, or purchases of the Company’s shares and other securities that would result in a group of shareholders (tokutei-kabunushi group) holding 20% or more of the Company’s voting rights (in both cases, with the exception of purchases agreed to in advance by the Board of Directors, and regardless of the specific purchasing method, whether on the open market, public offering or other means. Such purchases are referred to hereinafter as “Large-Scale Share Acquisitions” and a party carrying out or attempting a Large-Scale Acquisition is referred to as a “Large-Scale Share Acquirer”). This Policy is detailed below.
1. Basic policy regarding control of the Company
2. Details of the Rules
3. Policy for responding to a Large-Scale Share Acquisition
4. Measures to secure transparency and fairness
5. Impact etc. on shareholders and investors
6. Commencement of application of the Rules and the effective period thereof
In order to review the response policy regularly, this Policy shall be effective for a period of three years (until the conclusion of the Ordinary General Meeting of Shareholders for the final business year ending within three years of March 1, 2021).
Going forward, based on trends in relevant laws and regulations, including the Companies Act, and judicial rulings in the years ahead, the development of listing regulations stipulated by the Tokyo Stock Exchange and other developments, if any pro forma change to this response policy above is necessitated following revisions of laws and regulations or the like, this Policy shall be reviewed by the Board of Directors as necessary, with a prompt announcement of the details thereof. In the event the Board of Directors deems abolishing this Policy reasonable, the Company shall abolish this Policy by resolution of the Board of Directors, and the abolishing of this Policy and the reasons for doing so shall be disclosed. Changes in this Policy that have a substantive effect on the shareholders of the Company shall, however, be proposed as an agenda item for approval of the shareholders at a General Meeting of Shareholders. The Company’s directors serve terms of one year and are elected or reelected each year at the Ordinary General Meeting of Shareholders.
The existing takeover defense measures shall be abolished as of an affirmative vote on this proposal to approve this Policy at this Ordinary General Meeting of Shareholders. However, if a Large-Scale Share Acquirer has appeared and procedures including the submission of a declaration of intent or the provision of information under the existing takeover defense measures have begun as of that time, then following the approval of this Policy, the procedures shall be continued as per this Policy.
- *1.A group of shareholders (tokutei-kabunushi group) is:
- A holder, including a holder deemed as a holder pursuant to Article 27-23(3) of the Financial Instruments and Exchange Act (the same shall apply hereinafter), and a joint holder (a joint holder prescribed in Article 27-23(5) of the same Act, including a party deemed as a joint holder pursuant to paragraph 6 of the same Article; the same shall apply hereinafter) of the Company’s shares, etc. (share certificates, etc. prescribed in Article 27-23(1) of the same Act), or
- A party that performs purchase, etc. (as prescribed in Article 27-2(1) of the same Act, including those made on a financial instruments exchange market) of the Company’s shares, etc. (share certificates, etc. as prescribed in Article 27-2(1) of the same Act), and a party in special relationship with the party conducting such purchase, etc. (a party in special relationship as prescribed in Article 27-2(7) of the same Act.)
- *2.The percentage of voting rights is:
- In cases where the group of shareholders (tokutei-kabunushi group) is as described in Note 1.*1, the holding ratio of shares, etc. (holding ratio of share certificates, etc. prescribed in Article 27-23(4) of the Financial Instruments and Exchange Act; in this case the number of shares, etc. held by the joint shareholder (number of share certificates, etc. prescribed in the same paragraph), shall be added) of the shareholder, or
- In cases where the group of shareholders (tokutei-kabunushi group) is as described in Note 2.*1, the total of holding ratio of shares, etc. (holding ratio of share certificates, etc. prescribed in Article 27-2(8) of the same Act) of the Large-Scale Share Acquirer and the party in special relationship. In calculating each holding ratio of shares, etc., the total number of voting rights (as prescribed in Article 27-2(8) of the same Act) and the total number of shares issued (as prescribed in Article 27-23(4) of the same Act) may be found in the most recent issue of the Annual Securities Report, Semiannual Securities Report, Quarterly Securities Report, or the Share Buyback Report.
- *3.Share certificates, etc., prescribed in Article 27-23(1) of the Financial Instruments and Exchange Act. The same shall apply hereinafter.
- *4.The Company lists its shares on financial instruments exchange markets in Japan and, therefore, has an obligation for timely disclosure to Japanese shareholders and investors. The official versions of lists delivered by the Company, documents containing the Required Information prepared by the Large-Scale Share Acquirer, and the Company’s opinions regarding that information and requests for submitting additional materials should consequently be the written Japanese versions. Written documents include documents transmitted by e-mail or facsimile as well as those printed on paper. The written documents must use A4 or A3 size paper and be printed in characters of at least 10 points (as per JIS Z 8305) in size. The written documents must be prepared in Japanese by the party preparing them in its name, and the Company shall bear no responsibility for translating any written documents into any foreign language. Any characters and symbols not printed on paper for logical reasons, including being cut off on the facsimile paper or failing to appear due to the use of characters or symbols not registered in our system when received by the Company shall be deemed not to have been written. The same shall apply hereinafter.
- *5.The contact address in Japan shown on this document shall be that of the sender of written documents that are sent pursuant to the relevant Rules of the Company.
- *6.Such determination is expected to be made if there is an objective and rational basis for determining that the Large-Scale Share Acquirer would be inappropriate as the Company’ s controlling shareholder from the standpoint of public order and morals, specifically in cases where 1) a Large-Scale Share Acquirer purchases the Company’ s shares simply to force parties affiliated with the Company to buy them back at a higher price, for example, although those concerned do not intend to actually participate in the Company’ s management, 2) the Large-Scale Share Acquirer purchases the Company’ s shares for purposes of so-called “scorched-earth” management, by temporarily taking control of the Company in order to gain intellectual assets essential to the Company’ s management, experience, confidential corporate information, vendors, or customers, 3) the Large-Scale Share Acquirer purchases the Company’ s shares with the intention of using the Company’ s assets as collateral for or source of repayment of its own liabilities after taking control of management, 4) the Large-Scale Share Acquirer purchases the Company’ s shares to gain temporary control of management and sell high-value assets or the like such as real estate and securities not immediately related to the Company’ s business, in order to use the profit from the sale to pay a high dividend temporarily, or to use a temporary high dividend as a device to sharply raise the share price and sell its shares at a profit, 5) the purchase method proposed by the Large-Scale Share Acquirer is a two-tiered structure with second-tier purchase conditions that are less favorable than the first-tier conditions, or it is determined that there is a concern that the opportunity and freedom of shareholders to make decisions is restricted, or that they may virtually be forced to sell the Company’ s shares to their disadvantage, 6) the handling scheme and stock acquisition methods regarding the purchase of the Company’ s shares proposed by the Large-Scale Share Acquirer are extremely unreasonable from the standpoint of the common interests of shareholders, such as the price being very disadvantageous to shareholders or option rights carrying high risk, or 7) it is determined that any person of the management or major shareholders of the Large-Scale Share Acquirer has a relationship with antisocial elements, including organized crime groups or their members, as defined in Article 2 of the Act on Prevention of Unjust Acts by Organized Crime Group Members.
- *7.Regardless of whether this Policy is adopted, in cases where a Large-Scale Share Acquisition as described in the preceding Note *6 would cause significant damage to the interests of all shareholders, the Board of Directors, in accordance with its members’ due care and diligence as directors, may implement emergency measures similar to measures taken to avoid clear and present danger to protect the interests of all shareholders of the Company. In order to guarantee objectivity and rationality in such a decision, the Large-Scale Share Acquirer and the specific details of the Large-Scale Share Acquisition (purpose, method, scope, type and amount of consideration for acquisition, etc.), and impact of the Large-Scale Share Acquisition on the interests of all shareholders of the Company shall be examined based on the Required Information, including the Post-Acquisition Management Policies, etc., submitted by the Large-Scale Share Acquirer. This shall be done with the advice of outside specialists or the like, including attorneys at law and certified public accountants, and with consideration given to the opinion of the Independent Committee.
- *8.On the fourth business day prior to the Record Date for allotment of stock acquisition rights, financial instruments markets assume that the rights will be removed (shares subsequently traded will not have stock acquisition rights attached), and the theoretical share price in anticipation of the conversion of stock acquisition rights to shares is therefore expected to fall to, for example, approximately 50%-60% of the immediately preceding price. Nevertheless, if the Company subsequently cancels the triggering of the takeover defense measures in its entirety by acquiring the stock acquisition rights without contribution, the number of shares will return to that of the ex-rights date, and the temporarily depressed stock price will theoretically return to the immediately preceding price. Since this could possibly disrupt the market, the shares shall, in principle, be allotted for the stock acquisition rights after the ex-rights date.