Notice Regarding Disposal of Treasury Stock through a Third-Party Allotment and a Change in Principal Shareholder

The Board of Directors of Capcom Co., Ltd. (the Company, below) today approved the disposal of treasury stock through a third-party allotment (the Disposal, below). Further, due to the Disposal the Company anticipates a change in a principal shareholder. Details are as follows.

I. Regarding the disposal of treasury stock through a third-party allotment

1. Outline of the Disposal

2. Purpose and Reason for the Disposal

The Board of Directors of the Company today approved the establishment of an ESOP trust as an employee incentive plan for its permanent employees (excludes employees not living in Japan; eligible employees, below). (For an overview, please see the separate announcement made today, “Notice Regarding Establishment of Stock Grant ESOP Trust.”)

Following the establishment of the ESOP Trust, the Disposal will be carried out through a third-party allotment of shares to The Master Trust Bank of Japan, Ltd., a joint-trustee of the Trust Agreement concluded between the Company and Mitsubishi UFJ Trust and Banking Corporation. (For the scheduled allottee, see item 1. (5) above.)

In accordance with stock transfer rules, the number of shares to be disposed will correspond to the estimated number of shares to be awarded to beneficiaries during the trust period, and the scale of dilution will be 1.48% of the 270,892,976 total outstanding shares (rounded to the second decimal place; 1.87% ratio to 2,134,119 voting rights as of March 31, 2022).

The Company shares to be allotted for Disposal shall be provided to eligible employees in accordance with the stock transfer rules, and it is not expected that the shares resulting from the Disposal will flow into the stock market all at once. Therefore, the Company believes that the impact on the stock market will be insignificant and the number of shares to be disposed and the scale of dilution will be reasonable.

Details of the Trust Agreement

3. The basis for calculation of disposal price and details

In view of recent stock price performance and in order to eliminate arbitrariness, the disposal price shall be 3,455 yen, the closing price for the Company’s shares on the Tokyo Stock Exchange (TSE) on May 12, 2022, which is the business day immediately prior to the date of the resolution by the Board of Directors on the Disposal, which conforms to the Japan Securities Dealers Association’s Guidelines for the Handling of the Allocation of New Shares to a Third-Party. As this was the market price immediately prior to the date of the resolution, the Company considers the price to be a highly objective and reasonable basis for calculation.
With respect to the aforementioned disposal price, three Directors who are members of the Audit and Supervisory Committee (two of whom are External Directors) expressed their opinion that the disposal price is legitimate and reasonable as the basis for calculation and did not offer a particular advantage.

4. Procedures in accordance with the Corporate Code of Conduct

The dilution resulting from the Disposal is below 25% and the Disposal does not involve any changes in controlling shareholders. Consequently, the Company is not required to execute procedures to obtain an independent third-party opinion and confirm the intent of shareholders as prescribed in Article 432 of the Securities Listing Regulations of the TSE.

II. Change in Principal Shareholder

1. Background

Following the Disposal outlined above in “I. Regarding the disposal of treasury stock through a third-party allotment,” the Company anticipates that the principal shareholder Crossroad Co., Ltd. will no longer be a principal shareholder.

2. Summary of Change in Shareholder

3. Number of voting rights (shares) held by the shareholder and its percentage of total voting rights outstanding

Notes:

4. Scheduled Date of Change

June 17, 2022

5. Outlook

There are no special matters of note.