I. Basic policy on the persons to control decision-making over the financial and business policies of Taiyo Yuden Co., Ltd. (hereinafter the “Company”)
The shares of the Company are in principle freely tradable, and are traded freely and actively on markets by numerous investors. Therefore, the Company believes that the persons to control decision-making over the financial and business policies of the Company should be decided through free trading in the shares of the Company, and that the final decision as to whether to accept a purchase offer for shares in a volume that will enable the purchaser to control decision-making over the financial and business policies of the Company should be made based on the free will of all shareholders.
Meanwhile, the Company believes that persons who control decision-making over the financial and business policies of the Company must be able to maintain trust relationships among the various stakeholders, and protect and enhance the corporate value of the Company and the common interests of the shareholders over the mid-to-long term. Therefore, the Company believes that persons who make inappropriate large-scale purchase offers or perform similar actions that may harm the corporate value of the Company and common interests of the shareholders are not suitable for those who are to control decision-making over the financial and business policies of the Company.

II. Effort to prevent the control of the Company by persons deemed inappropriate in light of the basic policy

The Company determined its Policy on the Large-Scale Purchase of Company Shares (“Anti-Takeover Measures”, hereinafter the “Plan”) at its board of directors (hereinafter “Board of Directors”) meeting held on March 26, 2007.

1. Purpose of introduction of the Plan
The Plan is introduced as an effort to prevent the control of the Company by persons deemed inappropriate in light of the “Basic policy on the persons to control decision-making over the financial and business policies of the Company.”
Additionally, the Company has established certain rules in the Plan pertaining to the provision of information prior to such large-scale share purchase (Note) (hereinafter “Large-Scale Share Purchase Rules”), as it is believed that allowances of sufficient information and sufficient time to enable shareholders to make a proper decision or the Company to negotiate with the would-be purchaser will protect and enhance the corporate value of the Company and the common interests of shareholders.

2. Commencement of the application, effective term, continuation, and repeal of the Plan
The Plan shall come into effect upon approval by the ordinary general meeting of shareholders to be held in June 2007 (hereinafter “Ordinary General Meeting of Shareholders”).
The effective term of the Plan to be proposed to shareholders at the Ordinary General Meeting of Shareholders shall be one (1) year (until the conclusion of the ordinary general meeting of shareholders scheduled to be held in June 2008), and thereafter resolutions on whether to continue the Plan (including continuation after partial amendment) shall be submitted for the approval of the ordinary general meeting of shareholders.
Moreover, even after it is approved at the Ordinary General Meeting of Shareholders, the Plan shall be immediately repealed if (i) the general meeting of shareholders adopts a resolution to the effect that the Plan should be repealed, or (ii) a Board of Directors’ meeting attended by directors elected at the ordinary general meeting of shareholders adopts a resolution to the effect that the Plan should be repealed.

3. Outline of the Large-Scale Share Purchase Rules
The Large-Scale Share Purchase Rules require the large-scale share purchaser to provide necessary and sufficient information to the Board of Directors prior to the transaction and to commence the large-scale share purchase after elapse of a fixed period of assessment by the Board of Directors.
Specifically, a large-scale share purchaser interested in making a large-scale share purchase is to first submit a Statement of Intent containing a pledge of his/her compliance with the Large-Scale Share Purchase Rules and other certain items. Within ten (10) business days from receipt of the aforementioned Statement of Intent, the Company is to deliver to the large-scale share purchaser an information request list that enumerates the information that the large-scale share purchaser will need to provide in order to enable the shareholders and Board of Directors to form opinions regarding the proposal (hereinafter the “Necessary Information”). The large-scale share purchase shall proceed only after the end of the assessment period (the period for assessment by the Board of Directors: sixty (60) days for a prospective large-scale share purchase in which all shares are to be purchased via a cash tender offer (Japanese yen) or ninety (90) days for any prospective large-scale share purchase outside the above scope, starting from the date of completion of the provision of the Necessary Information). During this assessment period, the Board of Directors will conduct a thorough assessment and examination of the Necessary Information it has received, with advice and guidance from independent outside experts, carefully form its opinion on the proposal, and make the opinion public. In addition, the Board of Directors shall negotiate with the large-scale share purchaser with the aim of improving the terms of the large-scale share purchase, and offer shareholders an alternative plan as necessary.