Shin Etsu Chemical : Notice of Convocation of the 144th Ordinary General Meeting of Shareholders（PDF）

This English language translation is prepared for reference only. In the event of any discrepancy between the text of this translation and the text of the original Japanese-language, the Japanese language text will prevail.

(Translation)

(Securities Code 4063) June 7, 2021

To: All Shareholders of Shin-Etsu Chemical Co., Ltd. (the "Company") Notice of Convocation of the 144th

Ordinary General Meeting of Shareholders

Dear Shareholder:

You are hereby notified that the 144th Ordinary General Meeting of Shareholders will be held as described below.

You are entitled to exercise your voting rights in writing or via the Internet. We would appreciate it if you would take the time to review the Reference Documents for the General Meeting of Shareholders attached hereto and exercise your voting rights no later than 5:00 p.m. on Monday, June 28, 2021.

			Description of Meeting
1.	Date and Time	: June 29, 2021 (Tuesday) at 10:00 a.m. (the reception is to start at 9:00 a.m.)
2.	Place		: Conference Center on the 2nd floor of Otemachi Place East Tower at 3-1,
3. Agenda for the Meeting:	Ohtemachi 2-chome,Chiyoda-ku, Tokyo
: 1. Report on the Business Report, the Consolidated Financial Statements,
	Matters to be reported
			and the Audit Reports of the Accounting Auditor and the Audit &
			Supervisory Board on the Consolidated Financial Statements for the
			144th fiscal year (April 1, 2020 through March 31, 2021)
			2. Report on the Financial Statements for the 144th fiscal year (April 1,
	Matters to be resolved:	2020 through March 31, 2021)
	: Distribution of Retained Earnings to Shareholders
	1 s t	Agendum
	2nd	Agendum	: Amendment of Certain Provisions of the Articles of Incorporation
	3rd	Agendum	: Election of Five (5) Directors
	4th	Agendum	: Election of One (1) Audit & Supervisory Board Member
	5th	Agendum	: Revision of Remuneration, Etc. to Directors
	6th	Agendum	: Revision of the Amount, Etc. and the Substance of Stock Options Issued to
	7th	Agendum	Directors
	: Issuance of Stock Acquisition Rights as Stock Options to Employees

Very truly yours,

Yasuhiko Saitoh

Representative Director / President Shin-Etsu Chemical Co., Ltd.

6-1, Ohtemachi 2-chomeChiyoda-ku, Tokyo

• The Notes to Consolidated Financial Statements and the Notes to Non-Consolidated Financial Statements, which are to be attached to this notice of convocation, are published via the Internet on the website of the Company (https://www.shinetsu.co.jp/en/) pursuant to laws and the articles of incorporation of the Company. Therefore, the Consolidated Financial Statements and the Financial Statements attached to this notice of convocation are part of the Consolidated Financial Statements and the Financial Statements which the Audit & Supervisory Board Members and the Accounting Auditor audited in the course of preparing the audit report.
• Any modification that may be required in the Reference Documents for the General Meeting of Shareholders, or in the Business Report, the Consolidated Financial Statements or the Financial Statements, will be published via the Internet on the website of the Company (https://www.shinetsu.co.jp/en/).

Guidance on How to Exercise Voting Rights

If you will be exercising your voting rights in writing or via the Internet By Voting Card

To reach us by: Monday, June 28, 2021 5:00 p.m.

Please indicate your approval or disapproval on the enclosed Voting Card and send it back by postal mail to reach us by the date and time shown above.

Via the Internet

To be exercised by: Monday, June 28, 2021 5:00 p.m.

Please access the voting rights exercise site which we specify below and indicate your approval or disapproval and send it via the internet by the date and time shown above.

Voting rights exercise site: https://evote.tr.mufg.jp/

If you will be attending the Meeting of Shareholders in person

Date: Tuesday, June 29, 2021 10:00 a.m.

(The reception desk will be opened at 9:00 a.m.)

Please hand in the enclosed Voting Card at the reception desk. In the interest of preserving resources, please bring this "Notice of Convocation" with you on the day of the Meeting.

If you exercise your voting rights multiple times

1. If you exercise your voting rights both by Voting Card and via the Internet, the rights exercised via the Internet will be treated as effective.
2. If you exercise your voting rights multiple times via the Internet, the latest exercised voting rights will be treated as effective. In addition, if you exercise your voting rights multiple times from a PC, smartphone or a cell phone, the latest voting rights exercised from whichever devices will be treated as effective.

To Institutional Investors

You may exercise your voting rights using the "Electronic Voting System Platform," operated by ICJ, Inc.

Notice of Convocation of the 144th

Ordinary General Meeting of Shareholders

Table of Contents

Annex

Business Report

I. Matters Concerning the Current State of the Company's Group ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 1

1. Matters Concerning Stock in the Companyꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 10 III. Matters Concerning Stock Acquisition Rights Issued by the Company ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 11 IV. Matters Concerning Directors and Audit & Supervisory Board Members of the Company ꞏꞏꞏꞏ 13 V. Status of Accounting Auditor ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 22 VI. System to Ensure the Properness of Operations and the Progress thereof ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 24

Consolidated Financial Statements

Consolidated Balance Sheet ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 29 Consolidated Statement of Income ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 31 Consolidated Statement of Changes in Net Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 32

Financial Statements (Non-Consolidated)

Balance Sheet (Non-Consolidated)ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 33 Statement of Income (Non-Consolidated) ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 35 Statement of Changes in Net Assets (Non-Consolidated)ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 36

Audit Reports

Audit Report of Accounting Auditor on the Consolidated Financial Statements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 38 Audit Report of Accounting Auditor on the Financial Statements (Non-Consolidated) ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 41 Audit Report of Audit & Supervisory Boardꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 44

Reference Documents for Exercising Voting Rights Agenda and Reference Materials

1st Agendum: Distribution of Retained Earnings to Shareholdersꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 46

2nd Agendum: Amendment of Certain Provisions of the Articles of Incorporation ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 47

3rd Agendum: Election of Five (5) Directorsꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 48

4th Agendum: Election of One (1) Audit & Supervisory Board Memberꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 53

5th Agendum: Revision of Remuneration, Etc. to Directors ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 55

6th Agendum: Revision of the Amount, Etc. and the Substance of Stock Options Issued to Directors ꞏꞏꞏꞏꞏ 56

7th Agendum: Issuance of Stock Acquisition Rights as Stock Options to Employees ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 59

ANNEX

BUSINESS REPORT

(April 1, 2020 through March 31, 2021)

1. Matters Concerning the Current State of the Company's Group

1. Business Operations

During the fiscal year ended March 31, 2021 (April 1, 2020 to March 31, 2021), demand recovered to varying degrees depending on the region and industry, after a downturn caused by worldwide restrictions on economic activities in the April to June quarter. Demand and market conditions recovered in our major business fields in the October to December quarter. Since then, demand and market conditions have generally improved. In March 2021, the U.S. government enacted the Covid 19 Economic Stimulus Package amounting to US$ 1.9 trillion and the U.S. Federal Reserve confirmed that it would continue monetary easing toward full employment. Meanwhile, the Chinese government decided to renew its five-year plan and take flexible measures for economic growth.

The Shin-Etsu Group focused on business requirements such as maintaining high operating rates, ensuring a stable product supply, and preserving receivables, while giving top priority to the health and safety of our employees. Communicating closely with our customers, we promoted the development of products that are of value to our customers, and provided a stable supply of products of unwavering quality. In addition, we carried out the capital investment projects as scheduled.

As a result, the net sales for the Company's group for this consolidated fiscal year decreased by 3.0% (46,619 million yen) compared with the previous fiscal year to 1,496,906 million yen. Compared to the performance of the previous fiscal year, operating income decreased by 3.4% (13,828 million yen) to 392,213 million yen, ordinary income decreased by 3.1% (13,141 million yen) to 405,101 million yen, and profit attributable to owners of parent decreased by 6.5% (20,295 million yen) to 293,732 million yen.

The business operations of each division were as follows:

PVC/Chlor-Alkali

Although this division's total sales decreased by 3.0% (14,559 million yen) from the previous fiscal year to 469,763 million yen, operating income increased by 5.3% (4,864 million yen) to 97,051 million yen.

With regard to the PVC/Chlor-Alkali business, SHINTECH INC. in the U.S. continued to operate its plant at full capacity to maintain high shipment levels of both PVC and caustic soda. In April and May, it was influenced by market conditions caused by the restriction on economic activities. But, after that, the supply and demand tightened worldwide and the prices were raised. We endeavored to maintain the sales volumes at the European and Japanese bases as well, and benefitted from improved market conditions.

Silicones

This division's total sales decreased by 8.2% (18,548 million yen) from the previous fiscal year to 208,324 million yen, and operating income decreased 26.6% (16,378 million yen) to 45,112 million yen.

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With regard to the silicones business, it was affected by the price decline of general-purpose products and the sluggish demand for products for cosmetic and automotive applications. Customer demand began to recover from the beginning of autumn.

Specialty Chemicals

This division's total sales decreased by 1.9% (2,164 million yen) from the previous fiscal year to 112,632 million yen, and operating income decreased by 21.3% (5,891 million yen) to 21,826 million yen.

With regard to the cellulose derivatives business, the products for pharmaceutical applications continued to hold steady although the sales of products for building and construction applications were weak. Shipments of the pheromone products and the POVAL products were sluggish.

Semiconductor Silicon

Although this division's total sales decreased by 3.5% (13,534 million yen) from the previous fiscal year to 374,097 million yen, operating income increased by 0.6% (802 million yen) to 144,100 million yen.

With regard to the semiconductor silicon business, demand increased due to the resumption of economic activities.

Electronics & Functional Materials

This division's total sales increased by 4.3% (9,772 million yen) from the previous fiscal year to 234,883 million yen, and operating income increased by 2.6% (1,758 million yen) to 70,298 million yen.

With regard to the rare earth magnets business, the operations at our overseas plants were temporarily affected by the restriction on economic activities in the first quarter, but automotive applications showed a strong recovery and the shipments of products for hard disk drives were favorable in the second half. With regard to the photoresist products business, the ArF photoresists and EUV photoresists continued to perform well. The photomask blanks business also performed well for both high-end and general-purpose products. The optical fiber preform business experienced harsh conditions due to the impact of the deteriorating market. The photomask substrates business for large panel applications was affected by slowing demand.

Processing, Trading & Specialized Services Business

This division's total sales decreased by 7.2% (7,587 million yen) from the previous fiscal year to 97,204 million yen, and operating income decreased by 3.1% (465 million yen) to 14,359 million yen.

The shipments of Shin-Etsu Polymer Co., Ltd.'s semiconductor wafer containers were steady, but the input devices for automobiles were affected by the deteriorating automobile market.

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