Fanuc : Supplementary Materials to the Notice of Convocation of The 54th Ordinary General Meeting of Shareholders

(TRANSLATION)

This document has been translated from 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.

Supplementary Materials to the Notice of Convocation of

The 54th Ordinary General Meeting of Shareholders

1. Matters Related to Business Report
2. Consolidated Statement of Changes in Net Assets
3. Notes to the Consolidated Financial Statements
4. Non-ConsolidatedStatement of Changes in Net Assets
5. Notes to the Non-Consolidated Financial Statements

FANUC CORPORATION

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1. Matters Related to Business Report

(1) Directors of the Company

Overview of the limitation of liability agreements

The Company has entered into agreements with Outside Directors, Kazuo Tsukuda, Naoko Yamazaki, Hiroto Uozumi, Yasuo Imai, Hidetoshi Yokoi and Mieko Tomita, limiting their liability for damages as defined under Article 423, Paragraph 1 of the Companies Act, in accordance with Article 427, Paragraph 1 of the Companies Act. The amount of the limit of liabilities for damages under such agreement shall be the amount of the minimum limit stipulated by laws and regulations.

(2) Accounting Auditor
1) Name of Accounting Auditor Ernst & Young ShinNihon LLC
2) Amount of fees, etc. paid to the Accounting Auditor in the fiscal year under review
(a) Amount of fees, etc. as Accounting Auditor:	45 million yen
(b) Total amount of cash and other proprietary benefits payable by the Company
and its subsidiaries:	45 million yen

Notes 1. The amount of auditing fees is not distinguished under the auditing agreement concluded between the Company and the Accounting Auditor with respect to audits under the Companies Act and the audits under the Financial Instruments and Exchange Act. Therefore, the amount in (a) represents the sum of the fees for such audits.

1. 1. 1. The overseas subsidiaries of the Company are subject to audits by audit firms other than the Accounting Auditor of the Company.
      2. The reason for the approval by the Audit and Supervisory Committee of the amount of fees, etc. paid to the Accounting Auditor
         In addition to obtaining the necessary documents and receiving reports from the Directors, the related internal divisions and the Accounting Auditor, the Audit and Supervisory Committee examined the audit plans and the status of audit execution of the previous fiscal year as well as the basis for calculating the estimated fees, etc. for the fiscal year under review based on the "Practical Guidelines on Cooperation with Accounting Auditors" released by the Japan Audit & Supervisory Board Members Association, and has determined that the fee levels are reasonable and has consented to the amount of fees, etc.
   2. Policy of determining dismissal or non-reappointment of the Accounting Auditor
      The Company shall propose non-reappointment of the Accounting Auditor to the general meeting of shareholders by resolution of the Audit and Supervisory Committee, as a general rule, in cases where it is deemed difficult for the Accounting Auditor to execute audits in an appropriate manner, in addition to dismissal of the Accounting Auditor by the Audit and Supervisory Committee based on the provisions of Article 340 of the Companies Act.
2. System to ensure the appropriateness of business activities (internal control system)
   An overview of the resolution by the Board of Directors of the system to ensure the appropriateness of business activities is as follows.
3. 1. System to ensure that duties of the Company's Directors and employees are performed in compliance with laws and regulations and the Company's Articles of Incorporation :
      Education on laws and regulations and the Articles of Incorporation and other internal rules shall be provided to the Directors and employees and other measures shall be taken to ensure that duties of Directors and employees are performed in compliance with laws and regulations and the Articles of Incorporation.

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2) Rules and other systems concerning management of the Company's exposure to the risk of loss :

The Company has established a Risk Management Committee and has created risk management policies in order to handle potential risks which may obstruct the continuation of the Company's business, increase in the Company's value, or sustainable development of the Company's activities, and shall engage in appropriate risk management under the supervision of the Board of Directors. Furthermore, the Internal Audit Department, which directly reports to the President of the Company, shall conduct internal audits regarding the status of risk management.

3) System to ensure that duties of the Company's Directors are performed efficiently :

The Managing Officer System shall be introduced to ensure that duties of the Directors will be performed efficiently according to the internal rules providing for the organizational structure, division of duties, official authority, etc.

1. System for the storage and management of information concerning the performance of duties of the Company's Directors :
   Information concerning the performance of duties of the Directors shall be recorded and stored in accordance with the internal rules. Directors shall be able to access such information at any time.
2. System to ensure the appropriateness of operations in the corporate group consisting of the Company and its subsidiaries :
   The Company will strive to enhance corporate governance in our corporate group by thoroughly disseminating the group's code of conduct applied to our corporate group. Regarding important matters pertaining to the management of the Company's subsidiaries, prior approval shall be requested or a report shall be submitted to the Company, according to the "FANUC Group Company Regulations." Each subsidiary shall individually endeavor to implement proper and efficient management, but as the parent company, the Company shall provide guidance and supervision through relevant departments including the Internal Audit Department, in order to enforce the effectiveness of the corporate group's risk management and compliance, as deemed necessary.
3. Matters concerning employees who are to assist the Audit and Supervisory Committee in its duties and matters concerning the effectiveness of instructions to such employees :
4. 1. The Secretariat of the Audit and Supervisory Committee shall be established to assist in the duties of the Committee.
   2. The employees belonging to the Secretariat of the Audit and Supervisory Committee shall assist in the duties of the Audit and Supervisory Committee according to the instructions of the Committee. Further, when an employee belonging to the Secretariat of the Audit and Supervisory Committee receives any instruction from the Committee relating to its duties, he/she shall be free from the command and control of any Director or employee other than the Directors who are the Audit and Supervisory Committee Members with respect to such work so instructed.
   3. The employees belonging to the Secretariat of the Audit and Supervisory Committee have a confidentiality obligation regarding the content of instructions given by the Committee or a member of the Committee.
5. Matters concerning the independence of the employees who are to assist the Audit and Supervisory Committee :
6. 1. The Audit and Supervisory Committee (or if the Committee nominates a specific member of the Committee, such member of the Committee) shall be consulted in advance regarding personnel affairs such as recruitment, transfer, performance appraisal, etc., of the employees belonging to the Secretariat of the Audit and Supervisory Committee.
   2. Directors and employees shall pay attention not to impede the independence of the employees belonging to the Secretariat of the Audit and Supervisory Committee.
7. System for reporting to the Audit and Supervisory Committee :
8. 1. Directors and employees shall provide an appropriate report promptly upon any request for reporting on matters relating to the execution of business made by the Audit and Supervisory Committee or any member of the Committee nominated by the Committee.

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1. 1. 1. Directors and employees shall immediately report the details of any matter they discover which may seriously affect the business or financial conditions of the Company or its subsidiaries to the Audit and Supervisory Committee or any member of the Committee nominated by the Committee.
      2. No person who provides a report as under (i) or (ii) above shall be treated disadvantageously due to such reporting.
   2. System to otherwise ensure that auditing by the Audit and Supervisory Committee will be carried out effectively :
   3. 1. The Audit and Supervisory Committee or any member of the Committee nominated by the Committee shall have meetings with the Company's Directors (other than the Audit and Supervisory Committee Members) as appropriate to exchange opinions on the management policy, any issues to be dealt with by the Company, major risks surrounding the Company, enhancement of the environment for auditing by the Audit and Supervisory Committee, important audit issues, etc.
      2. Directors and employees may not reject a request by the Audit and Supervisory Committee or any member of the Committee nominated by the Committee for expenses to consult with attorneys, certified accountants and other external experts or to entrust any investigation, appraisement or other affairs as necessary for them to carry out audits, unless such expenses so requested are deemed unnecessary for the performance of duties of the Audit and Supervisory Committee or the member of the Committee nominated by the Committee.
2. Overview of the operation status of the system to ensure the appropriateness of business activities (internal control system)
3. 1. Compliance system
      The Company recognizes that "a company will last forever and be sound with Strict Preciseness" and "the corruption of an organization and downfall of a company start from a lack of Transparency." Based on these basic principles of "Strict Preciseness and Transparency," the Company has established the FANUC Code of Conduct and by widely communicating this Code of Conduct, it strives to raise the employee's awareness of compliance. The Company has also established a whistle-blowing system where employees, etc., can whistleblow without fear of consequences.
   2. Risk management system
      The Company has established a Risk Management Committee to identify and evaluate risks that could obstruct the continuation of the Company's business, increase in the Company's value, or sustainable development of the Company's activities. By also sharing the contents of discussions of the Risk Management Committee with the Outside Directors and the Audit and Supervisory Committee, the Company strives to ensure the effectiveness of risk management.
   3. Management of group companies
      Regarding important matters pertaining to the management of the group companies, the Company's subsidiaries are required to request for prior approval by the Company or report to the Company, in accordance with the FANUC Group Company Regulations. The Company also strives to raise awareness of compliance among the subsidiaries, by applying the FANUC Code of Conduct to the subsidiaries and widely communicating the content to the employees and executives of the subsidiaries. Additionally, a whistle-blowing system where employees, etc. of the subsidiaries can whistleblow without fear of consequences is introduced to the subsidiaries.
   4. Execution of duties by Directors
      The Company has introduced the Managing Officer System, and Directors efficiently execute their duties based on internal rules that stipulate organizational structure, duties of organizations, duties and authorities of management, and other relevant matters. As a Company with an Audit and Supervisory Committee, the Company is working to further strengthen the supervisory functions of the Board of Directors and speed up management decision-making, such as by developing and refining relevant rules.
   5. Execution of duties by the Audit and Supervisory Committee
      The Audit and Supervisory Committee gathers necessary information as appropriate in collaboration with the Accounting Auditor and the Internal Audit Department to efficiently carry out audit operations.

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2. Consolidated Statement of Changes in Net Assets (From April 1, 2022 to March 31, 2023)

																(Millions of yen)
								Shareholders' equity
	Common stock	Capital surplus		Retained		Treasury stock,		Total
				shareholders'
		earnings				at cost
												equity
Balance at April 1, 2022	69,014		96,082				1,441,559			(105,950)	1,500,705
Changes during the year
Dividends of surplus								(96,484)					(96,484)
Net income attributable to								170,587					170,587
owners of parent
Purchase of treasury stock													(24,439)	(24,439)
Disposal of treasury stock			183									183	366
Net change except																-
shareholders' equity during
the year
Total changes during the year	-	183				74,103			(24,256)	50,030
Balance at March 31, 2023	69,014		96,265				1,515,662			(130,206)	1, 550,735
	Accumulated other comprehensive income
	Valuation		Foreign			Remeasure-		Total			Non-		Total net
					accumulated
						controlling
	difference on		currency			ments of		other				assets
					interests
	available-for-		translation				defined
				comprehen-
	sale securities		adjustment		benefit plans
				sive income
Balance at April 1, 2022	15,204		36,087			(16,187)		35,104			14,070		1,549,879
Changes during the year
Dividends of surplus																(96,484)
Net income attributable to																170,587
owners of parent
Purchase of treasury stock																(24,439)
Disposal of treasury stock																366
Net change except	(1,486)		31,850				(827)		29,537			(1,891)		27,646
shareholders' equity during
the year
Total changes during the year	(1,486)		31,850				(827)		29,537			(1,891)		77,676
Balance at March 31, 2023	13,718		67,937			(17,014)		64,641			12,179		1,627,555

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