DAIKYO INCORPORATED : Announcement Regarding Change in the Number of Shares Constituting One Full Unit of Stock, ...

To whom it may concern

May 15, 2017

Company name: DAIKYO INCORPORATED Representative: Akira Yamaguchi,

Representative Executive Officer, President

Securities code: 8840

Listing: First Section, Tokyo Stock Exchange Contact: Koichi Hinago, General Manager, Group

Corporate Planning Dept.

Announcement Regarding Change in the Number of Shares Constituting One Full Unit of Stock, Share Consolidation and Partial Amendment of the Articles of Incorporation

DAIKYO INCORPORATED ("the Company") hereby announces that, at the meeting of the Board of Directors held on May 15, 2017, a decision was reached to submit proposals to the 93rd Ordinary General Meeting of Shareholders of the Company, to be held on June 22, 2017, with respect to a change in the number of shares constituting one full unit of stock, share consolidation and partial amendment of the Articles of Incorporation. Details are as follows.

The Board decision in the foregoing paragraph includes submission of the same proposals to the general meetings of class shareholders of common stock and of Class 1 preferred stock.

1. Change in the number of shares constituting one full unit of stock

2. Reason for the change

   In support of the initiative undertaken by the Japanese stock exchanges to move toward a single trading unit of 100 shares, as per their "Action Plan for Consolidating Trading Units", the Company has decided to change the number of the Company's shares constituting one full unit of stock from 1,000 shares to 100 shares, effective October 1, 2017.

3. Details of change

   Effective October 1, 2017, the number of shares of common stock and Class 1 preferred stock of the Company constituting one full unit of stock will be changed from 1,000 shares to 100 shares.

4. Conditions for change

   The change will be subject to the approval, at the 93rd Ordinary General Meeting of Shareholders as well as general meetings of class shareholders of common stock and Class 1 preferred stock to be held on June 22, 2017, of the proposals set forth hereunder in "2. Share consolidation" and "3. Partial amendment of the Articles of Incorporation", to take effect on October 1, 2017.

5. Share consolidation

6. Purpose of share consolidation

   In conjunction with the change in the number of shares constituting one full unit of stock from 1,000 shares to 100 shares, as set forth above in item "1. Change in the number of shares constituting one full unit of stock", the Company has decided to undertake a consolidation of the Company's shares, pursuant to which every 10 shares will be consolidated into 1 share (hereafter, "share consolidation"), in order to maintain the level of the investment unit (price per trading unit) of the Company's shares.

7. Details of share consolidation

8. Class of shares to be consolidated Common shares and Class 1 preferred shares

9. Method and ratio of consolidation

   On October 1, 2017, shares held by shareholders who are registered or recorded in the latest Shareholder Registry as of the end of the day on September 30, 2017, will be consolidated at the ratio of 10 shares to 1 share.

10. Decrease in the number of shares resulting from consolidation

    Number of issued shares before share consolidation (as of March 31, 2017)	Common shares	843,542,737
    	Class 1 preferred shares	10,000,000
    Decrease in the number of shares due to share consolidation (Note)	Common shares	759,188,464
    	Class 1 preferred shares	9,000,000
    Total number of issued shares after share consolidation (Note)	Common shares	84,354,273
    	Class 1 preferred shares	1,000,000

    (Note)The figures for "Decrease in the number of shares due to share consolidation" and "Total number of issued shares after share consolidation" are theoretical values calculated based on the total number of issued shares before the share consolidation and the consolidation ratio.

11. Number of issuable shares after share consolidation

    On condition that the share consolidation takes effect, the number of issuable shares of the Company will be changed to 116,240,000 shares (from 1,162,400,000 shares before the share consolidation). Please refer to "3. Partial amendment of the Articles of Incorporation" below for details.

12. Impact, etc., of share consolidation

While the total number of the Company's issued shares will be reduced to one-tenth following the share consolidation, the amount of net assets per share will increase tenfold because the net assets, etc., will not change. The asset value of the shares of the Company therefore will not change except for changes caused by stock market fluctuations or other factors.

13. Treatment of fractional shares

    If any fractional shares should result from the share consolidation, the Company will sell all such fractional shares and distribute the proceeds to shareholders who held the fractional shares, prorated to the fractions of shares held, pursuant to the provisions of Article 235 of the Companies Act.

    Number of Shareholders (% of total)		Number of Shares Held (% of total)
    All shareholders	20,448	(100.0%)	843,542,737	(100.0%)
    Shareholders holding fewer than 10 shares	167	(0.8%)	334	(0.0%)
    Shareholders holding 10 shares or more	20,281	(99.2%)	843,542,403	(99.9%)

14. Decrease in the number of shareholders due to share consolidation The composition of shareholders as of March 31, 2017, is as follows.

    The 167 shareholders who each hold fewer than 10 shares (holding, collectively, 334 shares as of March 31, 2017) will lose their status as shareholders after the share consolidation. However, procedures are available to the shareholders holding fractional shares to be taken before the share consolidation takes effect, to request that the Company sell the amount of shares necessary to constitute one full unit of stock (in accordance with Article 194, Paragraph 1 of the Companies Act and the provisions of Article 9 of the Articles of Incorporation of the Company), and procedures to be taken to request that the Company purchase shares constituting less than one full unit of stock (pursuant to the provisions of Article 192, Paragraph 1 of the Companies Act). For details, please contact your securities company or the Company's administrator of shareholder registry.

15. Conditions for share consolidation

The share consolidation is subject to the approval, at the Ordinary General Meeting of Shareholders, the general meetings of class shareholders of common stock and of Class 1 preferred stock to be held on June 22, 2017, of the proposal concerning share consolidation, and approval also of the proposal set forth below in "3. Partial amendment of the Articles of Incorporation", and will take effect on October 1, 2017.

16. Partial amendment of the Articles of Incorporation

1. Purpose of the amendment of the Articles of Incorporation

   As explained in "1. Change in the number of shares constituting one full unit of stock" above, in support of the initiatives undertaken by the Japanese securities exchanges as presented in their "Action Plan for Consolidating Trading Units", the number of shares constituting one full unit of stock will be changed to 100 shares for all classes of the Company's stock as stipulated in Article 7 of the Articles of Incorporation. Additionally, in consideration of the decrease in the total number of issued shares resulting from the share consolidation as described in "2. Share consolidation" above, changes will also be made to the number of issuable shares stipulated in Article 6 as well as to provisions relating to Class 1 preferred stock dividends and allocations of residual assets stipulated in Article 12 of the Articles of Incorporation.

2. Details of the amendment of the Articles of Incorporation Details of the amendments are as follows.

(Underlines reflect the amendments.)

Article 6. Number of Issuable Shares The Company is authorized to issue 1,162,400,000 shares, of which 1,152,400,000 are shares of common stock and 10,000,000 are shares of class 1 preferred stock. Article 7. Number of Shares Constituting One Full Unit of Stock One unit of common stock and one unit of class 1 preferred stock of the Company shall be 1,000 shares each. Article 12. Class 1 Preferred Stock The details of class 1 preferred stock that the Company issues are as follows. 1. Dividends of Surplus Where the Company pays dividends of surplus (in this chapter, hereinafter, "Year-End Dividends") as of the annual record date of March 31, determined in Article 38, it shall pay shareholders holding class 1 preferred stock (hereinafter, "Class 1 Preferred Stock Shareholders") or registered pledgees of such stock (hereinafter, "Registered Pledgees of Class 1 Preferred Stock") up to 40 yen per share of class 1 preferred stock per year before paying those holding shares of common stock (hereinafter, "Regular Shareholders") or registered pledgees of such stock (hereinafter, "Registered Pledgees of Common Stock"), the amount for such dividends of surplus being determined through a resolution of the Board of Directors when issuing class 1 preferred stock (hereinafter, "Class 1 Preferred Stock Dividends"). If the Year-End Dividends to Class 1 Preferred Stock Shareholders or Registered Pledgees of Class 1 Preferred Stock do not reach the Class 1 Preferred Stock Dividends amounts in a

Article 6. Number of Issuable Shares The Company is authorized to issue 116,240,000 shares, of which 115,240,000 are shares of common stock and 1,000,000 are shares of class 1 preferred stock. Article 7. Number of Shares Constituting One Full Unit of Stock One unit of common stock and one unit of class 1 preferred stock of the Company shall be 100 shares each. Article 12. Class 1 Preferred Stock The details of class 1 preferred stock that the Company issues are as follows. 1. Dividends of Surplus Where the Company pays dividends of surplus (in this chapter, hereinafter, "Year-End Dividends") as of the annual record date of March 31, determined in Article 38, it shall pay shareholders holding class 1 preferred stock (hereinafter, "Class 1 Preferred Stock Shareholders") or registered pledgees of such stock (hereinafter, "Registered Pledgees of Class 1 Preferred Stock") up to 40 yen per share of class 1 preferred stock per year before paying those holding shares of common stock (hereinafter, "Regular Shareholders") or registered pledgees of such stock (hereinafter, "Registered Pledgees of Common Stock"), the amount for such dividends of surplus being determined through a resolution of the Board of Directors when issuing class 1 preferred stock (hereinafter, "Class 1 Preferred Stock Dividends"). If the Year-End Dividends to Class 1 Preferred Stock Shareholders or Registered Pledgees of Class 1 Preferred Stock do not reach the Class 1 Preferred Stock Dividends amounts in a