Nippon Steel & Sumitomo Metal : Notice Regarding Revisions to the Fair Rules for the Acquisition of Substantial Shareholdings (Takeover Defense Measures for the Protection and Enhancement of Shareholders’ Common Interests)

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April 28, 2016

Company Name: Nippon Steel & Sumitomo Metal Corporation Representative: Kosei Shindo

Representative Director and President (Code Number: 5401)

Notice Regarding Revisions to the Fair Rules for the Acquisition of Substantial Shareholdings (Takeover Defense Measures for the Protection and Enhancement of Shareholders' Common Interests)

Nippon Steel & Sumitomo Metal Corporation ("NSSMC") adopted the Fair Rules for the Acquisition of Substantial Shareholdings (Takeover Defense Measures) (the "Plan") in order to protect and enhance common interests of the shareholders of NSSMC by the resolution of its Board of Directors (the "Board") in March 2006, and until the present day, NSSMC has amended and renewed the Plan several times. In order to reconsider the necessity for the Plan and to further enhance the reliability and legal stability of the Plan in light of the fact that 10 years has passed since the adoption of the Plan, among other reasons, NSSMC resolved at the meeting of the Board held on March 1, 2016 to review, primarily, the three points of (i) requiring shareholder approval to adopt and renew the Plan, (ii) newly establishing the "Independent Committee" and (iii) shortening the term of the Plan (the "Term") from six years to three years. NSSMC also made a public announcement regarding this review on the same day.

NSSMC has determined at the meeting of the Board held today to revise the Plan as set out in Exhibit 1 (the "Revised Plan") subject to shareholder approval1 at the ordinary general meeting of shareholders to be held on June 24, 2016 (the "General Meeting of Shareholders").

1. The Necessity for the Plan ("Basic Policy on the Composition of Persons to Control Decision-Making over the Financial and Business Policies of NSSMC2")

   Under the corporate philosophy that the NSSMC group will pursue world-leading technologies and manufacturing capabilities, and contribute to society by providing excellent products and services, the NSSMC group aims to improve its corporate value, and further the common interests of its shareholders, by enhancing its competitiveness and profitability through the planning and execution of management strategies.

   NSSMC has decided to take necessary action to prepare for the acquisition of substantial shareholdings in NSSMC or other related activities that could disturb such corporate philosophy and

   1 Shareholder approval of a majority of the voting rights of the shareholders present at the General Meeting of Shareholders is required to obtain shareholder approval for the revision of the Plan. One-third (1/3) or more of the total voting rights shall constitute a quorum. In addition, in case shareholder approval cannot be obtained regarding the Revised Plan at the General Meeting of Shareholders, the currently effective Plan will expire at the close of the General Meeting of Shareholders.

   2 NSSMC has also determined at the meeting of the Board held today to partly revise "Basic Policy on the Composition of Persons to Control Decision-Making over the Financial and Business Policies of NSSMC" as set forth in Article 118(3) of the Ordinance for Enforcement of the Companies Act.

   management strategies and cause damage to NSSMC's corporate value by, among other reasons, threatening obstruction of the existence and development of NSSMC, and which could result in harm to the common interests of NSSMC's shareholders.

   NSSMC believes that in the event a third party proposes the acquisition of substantial shareholdings in NSSMC (a "Takeover Proposal"), the ultimate decision as to whether or not to accept the Takeover Proposal should be made by the then shareholders of NSSMC. On the other hand, NSSMC believes that such Takeover Proposals could include those with the potential to cause clear damage to the corporate value of NSSMC or the common interests of the shareholders of NSSMC or those with the potential to practically coerce shareholders into selling their shares of NSSMC.

   Consequently, NSSMC implemented the Plan because NSSMC believes it is the Board's responsibility to put in place clear and transparent rules in order to prepare for such disadvantages to the shareholders of NSSMC in the event a Takeover Proposal is made by a third party, and, for the occasions where a Takeover Proposal is actually made, to create an environment in which the shareholders of NSSMC can make an appropriate informed judgment based on sufficient information and with a reasonable time period to consider the Takeover Proposal.

2. Rationale and Fairness of the Revised Plan

   Due to the following points, NSSMC believes that the Revised Plan supports the common interests of the shareholders of NSSMC, and that it is rational and fair and will not be implemented in an arbitrary manner.

3. A system which reflects the shareholders' will

   In the event a Takeover Proposal is made by a third party, as a general rule, the necessity of issuance of the stock acquisition rights (the "Rights") by way of a gratis allotment (implementation of measures to an Acquiring Person (as defined below) is judged by the then shareholders of NSSMC through a meeting held to confirm the shareholders' will ("Shareholders Will Confirmation Meeting") and other methods. In addition, the Term shall be three years, and adoption and renewal, etc., of the Revised Plan will be made upon approval of the shareholders.

   Accordingly, the Revised Plan is to be adopted and renewed upon shareholders' will, and also the Rights are issued by way of a gratis allotment upon shareholders' will (a system in which the Plan is adopted by shareholders and countermeasures are implemented via shareholder approval). As a result, NSSMC believes the Revised Plan should adequately reflect the will of its shareholders.

4. Establishment of the Independent Committee

   NSSMC established the Independent Committee in order to enhance the fairness of the judgements of the Board in connection with the implementation of the Revised Plan. The Board respects the opinion of the Independent Committee as much as possible in the exceptional cases of the implementation of the issuance of the Rights by way of a gratis allotment without taking a vote of shareholders to confirm the

   shareholders' will; such exceptional cases include instances where an Acquiring Person failed to comply with the Revised Plan (the exceptional cases are limited to the cases of (3)(ii) and (3)(iii) in Section 3 below). Consequently, the system prevents the Board from making arbitrary judgements.

5. Compliance with the judicial precedents of the Supreme Court, rules of financial instruments exchanges such as corporate governance codes, etc. and other guidelines, etc.

   The Revised Plan complies with the decision made by the Supreme Court in 2007 and other judicial precedents in Japan, the listing regulations such as corporate governance codes etc., as stipulated by financial instruments exchanges, "Guidelines Regarding Takeover Defense for the Purposes of Protection and Enhancement of Corporate Value and Shareholders' Common Interests" publicized by the Ministry of Economy, Trade and Industry and the Ministry of Justice on May 27, 2005 and "Takeover Defense Measures in Light of Recent Environmental Changes" publicized on June 30, 2008 by the Corporate Value Study Group.

6. No dead-hand or slow-hand takeover defense measures

   The Revised Plan may be abolished by a resolution of a meeting of the Board. Therefore, the Plan is not a dead-hand takeover defense measure (a takeover defense measure in which even if a majority of the members of the board of directors are replaced, the implementation of the measure cannot be stopped). Also, as the term of office for each of the directors of NSSMC is one year and expires at the closing of NSSMC's annual general meeting of shareholders every year, the Revised Plan of NSSMC is not a slow-hand takeover defense measure either (a takeover defense measure in which the implementation takes more time to be stopped due to the fact that the members of the board of directors cannot be replaced all at once).

7. An opinion has been issued by Audit & Supervisory Board Members relating to the Revised Plan

   A consensus opinion of all the Audit & Supervisory Board Members of NSSMC, including outside Audit & Supervisory Board Members, has been issued at the meeting of the Board held today, confirming that the Revised Plan is compliant with "Basic Policy on the Composition of Persons to Control Decision-Making over the Financial and Business Policies of NSSMC" mentioned in Section 1 above, that it is not detrimental to the common interests of shareholders of NSSMC, and that it is not intended to maintain the status held by the directors of NSSMC.

8. The Revised Plan

   The diagram below illustrates the summary of the Revised Plan. For the details, please refer to

   Exhibit 1.

   The flow of procedures of the Revised Plan

   Emergence of a Bidder (who proposes to acquire 15% or more of shares, etc. of NSSMC)

   Required Information submitted by a Bidder to NSSMC

   Board

   Review period: 12 weeks (to 30 weeks

   in maximum)

   ・Review of a T akeover Proposal

   Harmful Bidder (falling under one of the 4 categories),

   or Failure to comply with the Plan

   Ascertain shareholders' will (by Written Ballot or Shareholders Will Confirmation Meeting) Opinion of the Independent Committee

   not approved

   approved

   The Rights may not be issued by way of a gratis allotment

   The Rights may be issued by way of a gratis allotment by the Board

   Judgement by the Board as to whether or not the Rights may be issued by way of a gratis allotment

9. Provision of the Required Information by the Bidder and examinations at a meeting of the Board

When the Board has received all of the information as stipulated in the Revised Plan (the "Required Information") from any person who has an intention to hold 15%3 or more of the voting rights ratio of the shares, etc. of NSSMC ("Bidder"), the Board shall review as to whether or not the Takeover Proposal made by the Bidder is in the best interests of the corporate value and the common interests of shareholders. (The review period, as a general rule, is 12 weeks.4)

3 15% was adopted as a voting rights ratio that may allow a person to potentially exercise control over the management of NSSMC, considering various matters including the size of the investment required for acquisition of 15% or more of the shares, etc. of NSSMC, the shareholder composition of NSSMC, the threshold to be considered for the substantial control standard to decide affiliated companies as provided in the Companies Act of Japan and the Financial Instruments and Exchange Law of Japan, and also precedents etc. from the U.S., the country where rights plans originated.

4 Considering the size, type of operations and regional expansion of NSSMC, a reasonable length of review

period is required in order to have shareholders make an informed judgement which is to take place after the Board's conducting of, and providing adequate explanations to shareholders regarding, its analysis of the Takeover Proposal, seeking advice from outside advisers, pursuing alternative proposals and negotiations for the improvement of the conditions of the Takeover Proposal. In order to secure such a necessary time period, the Revised Plan sets forth