Tokyo Stock Exhange

New Listing Guidebook
2016
for Foreign Companies

Tokyo Stock Exchange
DISCLAIMER: This translation may be used for reference purposes only. This
English version is not an official translation of the original Japanese document. In
cases where any differences occur between the English version and the original
Japanese version, the Japanese version shall prevail. This translation is subject to
change without notice. Tokyo Stock Exchange, Inc., Japan Exchange Regulation,
Japan Exchange Group, Inc., and/or their affiliates shall individually or jointly
accept no responsibility or liability for damage or loss caused by any error,
inaccuracy, misunderstanding, or changes with regard to this translation.
Table of Contents
2016 New Listing Guidebook for Foreign Companies
Table of Contents
Table of Contents ................................................................................................................................... 1
1. Unique Benefits Foreign Companies May Gain by Listing on TSE ........................................... 7
2. Attractive Features of the Japanese Capital Market .................................................................. 9
(1) The Worlds Third Largest Economy ........................................................................................ 9
(2) Top Capital Market in Asia with a Long and Strong Tradition .......................................... 11
(3) High Liquidity.............................................................................................................................. 12
(4) Broad Market for Listed Companies ....................................................................................... 13
(5) Accessibility to Japanese Capital Markets for International Investors.......................... 14
(6) The Largest Institutional Investor in the World ................................................................. 15
(7) The Huge Pool of Financial Assets Held by Japanese Individuals ................................... 16
(8) Retail Investors' Investment Policy and Average Holding Period................................... 17
(9) Market with High Transparency and Reliability .................................................................. 17
3. TSE Market Structure and Market Concept ................................................................................ 18
(1) Selecting a Market Suitable for a Companys Growth Strategy ....................................... 18
(2) Mothers: One of the Worlds Top-Ranked Markets for Emerging Companies with High
Growth Potential ........................................................................................................................ 19
(3) TOKYO PRO Market: Professional-Oriented Market ........................................................... 20
4. Attractive Features of the Japanese IPO Market .................................................................. 23
(1) Trend of Number of IPOs ......................................................................................................... 23
(2) Historical IPO Amount and Big IPO Deals ............................................................................ 24
(3) Successful Small IPOs IPO Deal Size Comparison........................................................... 25
(4) Number of IPOs by Market ...................................................................................................... 26
(5) Market Transfers & Post-listing Trends on Mothers ........................................................... 27
(6) Global Comparison of IPO Cost and IPO Valuation ............................................................ 28
(7) Global Comparison of Liquidity in Major Asian Junior Boards ......................................... 29
(8) High Allocation to Retail Investors through Public Offerings .......................................... 30
(9) Enhanced Corporate Value through Listing Examination.................................................. 31
5. Overview of the Initial Listing and Disclosure Systems .......................................................... 32
(1) Listing Schedule ......................................................................................................................... 32
(2) Roles of Each Party Involved in an IPO ................................................................................ 33
(3) Lead Underwriters ..................................................................................................................... 35
(4) Rules and Regulations on the Disclosure System on the Secondary Market ................ 36
a. Statutory Disclosure ................................................................................................................ 36
b. Timely Disclosure ..................................................................................................................... 36
(5) Commitment to IR ..................................................................................................................... 37
6. Listing Examination by TSE (Primary Listing) ........................................................................... 38
(1) Main Markets (TSE 1st Section and 2nd Section)(Primary Listing) ................................... 38
a. Formal Requirements .............................................................................................................. 38
b. Eligibility Requirements .......................................................................................................... 42
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Table of Contents
c. Documents to be Filed ............................................................................................................. 47

(2) Mothers (Primary Listing) ........................................................................................................ 52
(3) JASDAQ Market (Primary Listing) .......................................................................................... 67
b. Eligibility Requirements (Standard Market) ....................................................................... 70
c. Eligibility Requirements (Growth Market) .......................................................................... 79
d. Documents to be Filed ............................................................................................................. 88
(4) Listing Examination Schedule (Primary Listing) ................................................................. 94
7. Listing Examination by TSE (Multiple Listing) ........................................................................... 95
(1) Main Markets (TSE 1st Section and 2nd Section)(Multiple Listing)................................ 95
b. Eligibility Requirements and Special Exceptions to Multiple Listing of Foreign
Companies ................................................................................................................................. 96
(2) Mothers (Multiple Listing)........................................................................................................ 97
(3) JASDAQ Market (Multiple Listing) .......................................................................................... 98
a. Formal Requirements (Standard and Growth Markets) ................................................... 98
b. Eligibility Requirements (Standard and Growth Markets) .............................................. 98
(4) Listing Examination Schedule (Multiple Listing) ................................................................ 99
8. Listing of JDR.................................................................................................................................. 100
(1) What is JDR? ............................................................................................................................. 100
(2) JDR Issue Scheme ................................................................................................................... 101
(3) Listing of Stock via JDR .......................................................................................................... 102
(4) Handling of DRs under the Formal Requirements ............................................................ 102
9. Finance through Listing (Public Offering and Secondary Offering) .................................... 103
(1) Procedure for Public Offering, etc. for Listing ................................................................... 103
(2) Finance Schedule on Listing (in the case of an Unlisted Company).............................. 104
10. Statutory Disclosure ................................................................................................................... 105
(1) Offering Disclosure .................................................................................................................. 105
a. Securities Registration Statement ...................................................................................... 105
b. Obligation of Preparation and Delivery of Prospectus ................................................... 107
(2) Continuous Disclosure ............................................................................................................ 109
a. Annual Securities Report ...................................................................................................... 109
b. Internal Control Report......................................................................................................... 110
c. Quarterly Securities Report ...................................................................................................111
d. Confirmation Letter................................................................................................................ 112
e. Extraordinary Report ............................................................................................................. 113
(3) Accounting Standards Applied to and Audit Certificate on Financial Documents ...... 114
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a. Accounting Standards ............................................................................................................ 114

b. Audit Certificate ...................................................................................................................... 115
(4) English Language Disclosure System .................................................................................. 117
a. Outline ...................................................................................................................................... 117
b. Documents Eligible for the English-Language Disclosure ............................................. 117
c. Requirements for the English-Language Disclosure ....................................................... 118
d. Supplementary Documents .................................................................................................. 118
e. Attachments ............................................................................................................................ 119
f. Submission Deadline .............................................................................................................. 120
11. Shareholder Services and Book-Entry Transfer Systems for Foreign Stocks, etc. ........ 121
(1) Custody and Book-Entry Transfer Systems for Foreign Stocks, etc. ............................. 121
(2) Dividend Payment .................................................................................................................... 121
(3) Record Date of Shareholders Eligible for Dividend........................................................... 121
(4) Other Rights such as Subscription Warrants ..................................................................... 122
(5) Exercise of Voting Rights at General Shareholders Meetings ........................................ 122
(6) Book-Entry Transfers from JASDEC to Securities Companies ........................................ 123
(7) Handling under TSE Listing Administration Rules ............................................................ 124
a. Selection of Agent and Entity Responsible for Handling Information in Japan ........ 124
b. Setting Up Offices for Handling Exercise, etc................................................................... 124
c. Ensuring Appropriate Shareholder Services and Dividend Payment Services ........... 124
d. Notification and Public Notice of Period or Date for Rights Allotment ....................... 125
e. Notification of Decision Concerning Depositories, etc. Pertaining to Listed Foreign
Stock Depositary Receipts, etc. .......................................................................................... 126
12. Overview of Listed Company Compliance .............................................................................. 127
(1) Overview of Timely Disclosure System ............................................................................... 127
a. Significance of Timely Disclosure........................................................................................ 127
b. Overview of the Rules Concerning Timely Disclosure of Corporate Information ..... 127
c. Notes on Using TDnet ............................................................................................................ 138
d. Overview of Trading Halt System ....................................................................................... 140
e. Outline of System for Issuing Alerts .................................................................................. 142
f. Disclosure to Clarify Content of Unclear Information ..................................................... 144
(2) Practical Guide for Timely Disclosure .................................................................................. 146
a. Matters to Note regarding Need for Disclosure ............................................................... 146
b. Matters to Note regarding the Disclosure Schedule ....................................................... 150
c. Matters to Note regarding Preparation of Disclosure Documents ............................... 153
d. Disclosure regarding Postponement/ Change/ Correction/ Progress of Disclosed
Matters ..................................................................................................................................... 156
e. Others........................................................................................................................................ 156
(3) Practical Handling of Timely Disclosure of Corporate Information for Listed Foreign
Companies.................................................................................................................................. 157
a. Changes in Laws and Regulations, etc. of the Home Country concerning the Company
System ...................................................................................................................................... 159
b. A Fact that Occurs in a Foreign Country that Has Material Impact on the Circulation of
a Listed Stock, etc. or a Foreign Stock Depositary Receipt, etc................................... 159
c. Fact of Decision or Occurrence with Material Impact on Rights, etc. Related to Listed
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Foreign Stock Depositary Receipt, etc., ............................................................................ 160

(4) Code of Corporate Conduct .................................................................................................... 161
a. Overview of Code of Corporate Conduct ........................................................................... 161
b. Handling of Code of Corporate Conduct of Listed Foreign Companies ....................... 161
c. Matters to be Observed ......................................................................................................... 164
d. Matters Desired to Be Observed (Matters to be Addressed) ......................................... 167
e. Measures for enforcing the Code of Corporate Conduct and reporting requirement
................................................................................................................................................... 168
f. Japans Corporate Governance Code................................................................................... 169
(5) Submission of Documents, etc. ............................................................................................. 185
a. Corporate Governance Report ............................................................................................. 185
b. Notice Concerning Submission of Foreign Company Registration Statement, etc. . 185
(6) Mothers Global ......................................................................................................................... 185
(7) Disciplinary Actions against Listed Companies ................................................................. 188
a. Overview................................................................................................................................... 188
b. Examination Related to the Disclosure of Corporate Information .............................. 189
c. Disciplinary Actions or Measures to Ensure Effectiveness ............................................. 190
d. Principle of Equity Finance ................................................................................................... 201
e. Duty of CPAs, etc.to Cooperate with the Exchange, Which Seeks Explanations of CPAs,
etc. ............................................................................................................................................ 203
f. Examination and Inspection of Securities Trading, etc. ................................................. 204
(8) Delisting ..................................................................................................................................... 205
13. Delisting Criteria (Primary Listing) ......................................................................................... 206
(1) Main Markets (TSE 1st Section and 2nd Section)(Primary Listing) .............................. 206
(2) Mothers (Primary Listing) ...................................................................................................... 211
(3) JASDAQ (Standard Market) (Primary Listing) ................................................................... 217
(4) JASDAQ (Growth Market) (Primary Listing) ...................................................................... 222
14. Delisting Criteria (Multiple Listing) ......................................................................................... 227
(1) Main Markets (TSE 1st Section and 2nd Section)(Multiple Listing).............................. 227
(2) Mothers (Multiple Listing)...................................................................................................... 230
(3) JASDAQ (Standard and Growth Markets) (Multiple Listing) .......................................... 233
15. Listing Fees ................................................................................................................................... 234
(1) Fees for Initial Listing on TSE ............................................................................................... 234
(2) Annual Listing Fee (Main Market (First & Second Sections) and Mothers) ................. 235
(3) Annual Listing Fee (JASDAQ) ................................................................................................ 236
(4) Fees for Listing on Tokyo PRO Market ................................................................................ 236
16. Securities Taxation System (Japanese Investors Investing in TSE Listed Foreign Stocks)
............................................................................................................................................................... 237
(1) Taxation for Individual Investors......................................................................................... 237
(2) Taxation on Corporations ....................................................................................................... 238
(3) Taxation on Deemed Dividend .............................................................................................. 239
(4) Consumption Tax ..................................................................................................................... 239
17. Q&A ................................................................................................................................................ 240
(1) Insider Trading Regulations .................................................................................................. 240
(2) Tender Offer Rules (TOB Rules)............................................................................................ 240
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Table of Contents
(3) Large Shareholding Reporting System ................................................................................ 240

(4) Listing on TSE through the Establishment of a Japanese Company ............................. 241
A. Forms of Documents, etc. to be Filed for Initial Listing Application (Foreign Stocks) ... 242
(1) Confirmation Report prior to Initial Listing Application (for Applicant Company) .... 242
(2) Confirmation Report prior to Initial Listing Application (for Trading Participant
Handling Matters) .................................................................................................................... 250
B. Tokyo Stock Exchange Listing by US Companies.................................................................... 255
(1) Overview of Disclosure Requirements for Primary Listing on Tokyo Stock Exchange by
US Companies ........................................................................................................................... 255
a. Offering Disclosure ................................................................................................................ 255
b. Continuous Disclosure .......................................................................................................... 255
(2) Securities Taxation System ................................................................................................... 259
a. Japanese Investors Investing in TSE Listed US Stocks .................................................. 259
b. US Investors Investing in TSE Listed US Stocks .............................................................. 260
Legend
Legend
TSE:
Tokyo Stock Exchange
JPX Regulation: Japan Exchange Regulation
Act:
Financial Instruments and Exchange Act
Rules for the Act: Enforcement Rules for the Financial Instruments and Exchange Act
Ordinance:
Cabinet Office Ordinance on Disclosure of Corporate Affairs, etc.
Regulations:
Securities Listing Regulations
Rules:
Enforcement Rules for Securities Listing Regulations
Guidelines:
Guidelines Concerning Listing Examinations, etc.
Primary Listing: Listing other than Multiple Listing
Multiple Listing: Listing or continuous trading on foreign financial instruments exchange(s), etc., or
equivalent to this. (1) With respect to a foreign stock, a foreign stock depositary
receipt representing a right pertaining to said foreign stock is listed or continuously
traded on a foreign financial instruments exchange, etc.; (2) With respect to a foreign
stock depositary receipt, a foreign stock represented by said foreign stock depositary
receipt is listed or continuously traded on a foreign financial instruments exchange,
etc.; and (3) With respect to a foreign stock trust beneficiary certificate, a foreign
stock that is a trust asset of the foreign stock trust beneficiary certificate or a foreign
stock depositary receipt representing a right pertaining to said foreign stock is listed or
continuously traded on a foreign financial instruments exchange, etc.
JDR:
Japanese Depositary Receipt
(A beneficial interest in trust issuing beneficiary certificates whose trust assets are
foreign stock certificates, etc., as defined in the Trust Act (Act No. 108 of 2006)
provided in Rule 2, paragraph 1, item 14 of the Financial Instruments and Exchange
Act.)
1. Unique Benefits Foreign Companies May Gain by Listing on TSE

Tokyo Stock Exchange (TSE), has a world-long history of the 138 years since it was founded on
June 1, 1878, and has played a vital role in providing access to funds and investment management
opportunities to companies and investors in and outside Japan.
TSE has 3,525 listed companies and is ranked as the third largest exchange in the world and the
largest exchange in Asia with a total market capitalization of more than JPY509 trillion (US$ 4.97
trillion) as of the end of August 2016. The sheer size of this market, combined with wealth from
investment capital, including JPY1,716 trillion (US$14 trillion) as of the end of 2015 in financial
assets from retail investors alone, makes TSE a very attractive venue for companies with diverse
fundraising needs.
TSE is one of the worlds most liquid markets, with an annual trading value of JPY 696 trillion
(US$ 5.75 trillion) and an average daily trading volume of JPY 3.35 trillion (US$ 27.6 billion) in 2015.
TSE leverages this high liquidity to enable any listed company to smoothly meet its fundraising needs
both at the IPO stage and later.
As a measure to enhance liquidity further for foreign-listed companies, foreign stocks are now
eligible for margin trading (effective from April 2007). During 2007 and 2008, TSE developed and
improved the listing system for JDRs (Japanese Depository Receipts) where investors could trade
foreign stocks as the way of domestic securities.
Currently foreign investors, such as major institutional investors in Europe, the U.S. and Asia, are
the largest players on the TSE market. The trading value (total of buying and selling values) of
foreign investors was JPY843 trillion (US$6.961) in 2015, accounting for 61% of the total trading
value. The presence of foreign institutional investors have been continuously growing in the context
of share ownership ratio. On March 1991, the share ownership of foreign institutional investors was
only 4.7% as a percentage of the total share ownership. The percentage reached 29.8% as of
March 31, 2016. Since it is anticipated that a growing number of globally reputable investors from
many countries will participate in the TSE markets, listing on TSE enable a company to access to
international investors.
In addition to foreign institutional investors, Japan is the primary investment focus for the
Government Pension Investment Fund, Japan (GPIF), the largest institutional investor in the world.
GPIF managed investments valued at JPY134 trillion (US$1.2 trillion) as of the end of March, 2016.
GPIFs investments in foreign stocks accounted for 22% of its entire portfolio, an amount valued at
JPY30 trillion (US$296 billion1) at the end of March, 2016. The Japanese markets are also the
primary investment markets for other world top class players besides GPIF, such as the Pension Fund
Association for Local Government Officials, the worlds 12th largest pension management fund.
According to the P&I / TW Top 300 Pension Funds Analysis - Year end 2015, 15 major Japanese
pension funds (out of the worlds top 300) managed 12.0% of the worlds pension assets. This puts
Japan in second place in terms of the asset management value, behind the US.
The Japanese financial markets are most characterized by the wealth of the retail investors.
Financial assets held by Japanese individuals stood at JPY1,716 trillion (US$ 14.3 trillion) as of the
end of 2015. This is comparable to four times as large as the Japan GDP (US$4.1 trillion, 2015). The
Japanese investments in foreign stocks and government and corporate bonds (investments in
foreign securities) are continuously growing, and still higher investments are expected in companies
in countries with high economic growth potential.
7
A company can be fairly valued by listing its stock on TSE, as investors at various levels participate
in the Tokyo market and provide fair and reliable valuation.
Investors in and outside of Japan value and trust the high-quality market infrastructure for the
information-provision, trading, clearing, and settlement procedures underlying the day-to-day
operations of TSE. TSEs listing criteria and disclosure system for corporate profiles and information
has won the confidence of investors all over the world. Any company can leverage a TSE listing to
build a reputation as a global company moving forward.
2. Attractive Features of the Japanese Capital Market

(1) The Worlds Third Largest Economy
Companies can significantly benefit from listing its stock on TSE, as it enables them to raise
sufficient funds, and it offers TSE-listed companies optimal opportunities to expand their business by
accessing to the Japanese economy ranked third in the world in terms of GDP of JPY412 trillion
(US$ 4.1trillion 1) .
As the company improves its visibility and presence in the Japanese market by listing its stock on
TSE, it can discover and explore new business opportunities and enter into financial and
technological partnerships with Japanese corporations. And given Japans important role in the
global economy, an established reputation in Japan improves a companys reputation in the global
marketplace.
In May 2007, Japan also began permitting triangular mergers, enabling foreign companies to
effect mergers and acquisitions of Japanese companies using their treasury stock. If a foreign
company which effects an M&A of a Japanese company by applying the scheme is listed on TSE, the
triangular merger will be accepted more favorably because TSE listing associated with the triangular
mergers enhances the convenience to the shareholders of merged companies who become new
shareholders as it provides a stable trading market for such company, enhances information
disclosure, and institutes smoother procedures for exercising voting rights and other rights granted
to shareholders. Thus, a stock listing on TSE has a significant meaning in that such foreign
companies can expand the companys business opportunities through the mergers and acquisitions
of Japanese companies.
The strong advantages of listing on TSE arising from the perspective of expanded business
opportunities can be more strongly appreciated by foreign companies who already operate in Japan
with business relationships, or expect to do so. Japanese investors are more likely to accept such
foreign companies as a good investment choice by virtue of its strong business relationships in
Japan.
US$ = JPY 100

9
GDP and per capita GDP of major economies in the world (2015)
Source: World Bank, 2015

Note: The data was as of August 10, 2016. The sizes of the circles represent GDP.
10
(2) Top Capital Market in Asia with a Long and Strong Tradition
On June 1, 1878, Tokyo Stock Exchange (TSE) was established and is now one of the oldest stock
exchange in the world with the history of 138 years. TSE has played a vital role in providing access to
funds and investment management opportunities to companies and investors in and outside Japan.
TSE has 3,525 listed companies and is ranked as the third largest exchange in the world and the
largest exchange in Asia with a total market capitalization of more than JPY509 trillion (US$ 4.97
trillion) as of the end of August 2016. The sheer size of this market, combined with wealth from
investment capital, including JPY1,716 trillion (US$14 trillion) as of the end of 2015 in financial
assets from retail investors alone, makes TSE a very attractive venue for companies with diverse
fundraising needs.
Market Capitalization of the Worlds Major Stock Exchanges
Source:
Note:
WFE
Domestic market capitalization as of the end of August 2016.
Number of Listed Companies of the Worlds Major Stock Exchanges
Source:
Note:
WFE
As of the end of August 2016.
11
(3) High Liquidity

TSE is one of the worlds most liquid markets, with the total annual trading value and average daily
trading value over JPY696 trillion (US$ 5.75 trillion) and JPY 3.35 trillion (US$27.6 billion),
respectively, in 2015. The size is 2.6 times as large as Hong Kong Stock Exchange in terms of the
annual trading value. TSE leverages this high liquidity to enable any listed company to smoothly
meet its fundraising needs both at the IPO stage and subsequently.
As a measure to enhance liquidity further for foreign-listed companies, foreign stocks are now
eligible for margin trading (effective from April 2007). During 2007 and 2008, TSE developed and
improved the listing system for JDRs (Japanese Depository Receipts) where investors could trade
foreign stocks as the way of domestic securities.
Value of Share Trading on the Worlds Major Stock Exchanges
Source: WFE
Note: Value of share trading - Electronic order book trades in 2015
Turnover Velocity on the Worlds Major Stock Exchanges
Source: WFE
Note: Turnover velocity = yearly value of share trading / average of market capitalization in 2015
12
(4) Broad Market for Listed Companies

TSE is home to a long list of world-renowned corporations. The market capitalization and trading
value represented by a few of specific large TSE-listed companies weigh relatively little against the
totals on TSE. This weighting demonstrates the vast size of TSE and the tremendous liquidity made
available to TSE-listed companies in a broad market.
Share of Top 10 Listed Companies of Total Trading Value on Major World Exchanges
Source: WFE 2013 ANNUAL REPORT & STATISTICS

Note: Market concentration - 10 most traded domestic companies in 2013
13
(5) Accessibility to Japanese Capital Markets for International Investors

Foreign investors, such as major institutional investors in Europe and the U.S., are the largest
players in Japan. The increase of investments by foreign investors can be evidenced by their trading
value, which reached JPY843 trillion (US$6.96 trillion) in 2015, accounting for 61% of trading value
on the TSE First Section Market. The presence of foreign institutional investors have been
continuously growing in the context of share ownership ratio. On March 1991, the share ownership
of foreign institutional investors was only 4.7% as a percentage of the total share ownership. The
percentage reached 29.8% as of March 31, 2016. Since it is anticipated that a growing number of
globally reputable investors from many countries will participate in the TSE markets, listing on TSE
enable a company to access to international investors.
Trading value by investor type
for TSE First Section, 2015 2
Source: Tokyo Stock Exchange
Distribution % of market value owned by type of shareholder
Source: Tokyo Stock Exchange 2015 Shareownership Survey 3
Share of trading value by foreigners

Changes in net trading value by foreigners by region1
by region, 20151
Total of purchases and sales. Figures are derived from trading participants with capital of 3
billion yen or more. Only includes domestic common stocks, excluding preferred stocks, etc.
Includes ToSTNeT trades.
3 Trust Banks are included in that of City & Regional Banks before 1985 Survey.
2
14
(6) The Largest Institutional Investor in the World

Japan is the primary investment focus for the Government Pension Investment Fund, Japan (GPIF),
the largest institutional investor in the world. GPIF managed investments valued at JPY134 trillion
(US$1.2 trillion) as of the end of March, 2016. GPIFs investments in foreign stocks accounted for
22% of its entire portfolio, an amount valued at JPY30 trillion (US$296 billion) at the end of March,
2016.
The Japanese markets are also the primary investment markets for other huge players besides
GPIF, such as the Pension Fund Association for Local Government Officials, the worlds 12th largest
pension management fund. According to the P&I / TW Top 300 Pension Funds Analysis - Year end
2015, 15 major Japanese pension funds (out of the worlds top 300) managed 12.0% of the worlds
pension assets. This puts Japan in second place in terms of the asset management value, behind the
US.
Top 12 Worlds Largest Pension Funds
Source: Pensions & Investments / Willis Towers Watson 300 Analysis - Year end 2015
Percentage of total value of fund assets by country
Source: Pensions & Investments / Willis Towers Watson 300 analysis - Year end 2015
15
(7) The Huge Pool of Financial Assets Held by Japanese Individuals

Financial assets held by Japanese individuals stood at JPY1,716 trillion (US$ 14.3 trillion, as of the
end of 2015). This is comparable to four times the Japan GDP (US$4.1 trillion, 2015). The Japanese
are also investing more in foreign stocks and government and corporate bonds, and still higher
investments are expected in companies in the world with high economic growth potential.
Changes in external securities investments by individual investors
Source: The Bank of Japan

Note: US$ = JPY 100
16
(8) Retail Investors' Investment Policy and Average Holding Period

Japanese retail investors behave in a way significantly different from institutional investors. The
Japan Securities Dealers Association indicated in its Survey on securities investment of individual
investors that the investment held by retail investors for the purpose of short-term trading (focus on
gains from price increase by trading on a short term basis) was only 8% as a percentage of total
investments, while long term holding was 50% (mostly holding on a long-term basis, with possible
sales at the time of price appreciation) and holding for dividend payment or loyalty program specific
to investors was 24%. 51% of retail investors hold investments for the average period over 5 years
while 32% hold them for the average period of 10 years or more. They have risk propensities
clearly different from those of institutional investors in Europe and the US.
Retail Investors' Average Holding Period of Stocks
Retail Investors' Investment Policy for Stocks
Source: Survey on securities investment of individual investors published by Japan Securities Dealers
Association in October, 2015
(9) Market with High Transparency and Reliability

Investors in and outside of Japan value and trust the high-quality market infrastructure for the
information-provision, trading, clearing, and settlement procedures underlying the day-to-day
operations of TSE. TSEs listing criteria and disclosure system for corporate profiles and information
has won the confidence of investors all over the world. Any company can leverage a TSE listing to
build a reputation as a global company moving forward.
17
3. TSE Market Structure and Market Concept

In general, listing on a stock exchange provides the following benefits: (1) enhanced corporate
profile and credibility, (2) various options for fundraising and superior financial strength, (3) stricter
internal management system, (4) increased motivation for employees and management, and (5)
shareholder diversification.
The above features of the TSE market represent strong advantages from which listed companies
can benefit, directly or indirectly. In this context, TSE continues to design and implement sufficient
functions as a market where companies gain access to sufficient funds.
(1) Selecting a Market Suitable for a Companys Growth Strategy

Tokyo Stock Exchange operates five equity markets: the First and Second Sections, Mothers,
JASDAQ, and TOKYO PRO Market. The First Section represents the mainboard where stocks of
globally renowned companies are traded with high liquidity. The Second Section is for second tier
and medium-sized companies with established profiles and business bases. Mothers (Market of the
high-growth and emerging stocks) lists emerging companies with high growth potential. JASDAQ,
which was initially launched as an OTC market, is home to a wide range of established and growing
companies. Meanwhile, TOKYO PRO Market was established based on the professional-oriented
market scheme under the amended Financial Instruments and Exchange Act.
While new listings on the main board are generally assigned to the Second Section, some
companies with outstanding liquidity prospects may be directly assigned to the First Section.
Mothers companies may apply for the reassignment to the First Section or Second Section as they
grow and develop. 103 companies listed on Mothers, or 23% of all companies, 452 companies, that
have gone public in that market, have been successfully reassigned to the First Section at the end of
June, 2016.
The TSE markets offer multiple and flexible options suitable for different company strategies and
for companies at different stages of growth. TSE offers a so-called One-Stop Listing Solution and
satisfies the various financing needs of TSE-listed companies on a global basis.
18
TSE Market Structure
Note: As of June 30, 2016.
(2) Mothers: One of the Worlds Top-Ranked Markets for Emerging Companies with High
Growth Potential
Sixteen years have passed since the launch of Mothers, a market for emerging companies with
high growth potential. Mothers has grown to become one of the worlds highest ranked markets in
terms of both fundraising and liquidity. Mothers accepts listing applications from any company with
high growth potential and unique and excellent proprietary technologies or know-how in any
industry or sector. A total of 452 companies were listed on Mothers since the launch of Mothers at
the end of June, 2016.
19
(3) TOKYO PRO Market: Professional-Oriented Market

In June 2009, the TOKYO AIM Market was established as a joint venture between TSE and the
London Stock Exchange in conjunction with the professional-oriented market scheme contemplated
in the amended Financial Instruments and Exchange Act in 2008. The Tokyo AIM Market was
subsequently incorporated into TSE, which restarted the market as the newly branded TOKYO PRO
Market, effective from July 1, 2012.
The TOKYO PRO Market limits its participation to professionals (Specified Investors). This allows
it to apply less restrictive standards in terms of disclosure language, disclosure documents,
accounting standards, and so on, compared to traditional markets.
TOKYO PRO Market has adopted The J-Advisers system. J-Advisers are designated by TSE and
comprise of legal advisers and professional accountants. J-Advisers will perform the examination of
eligibility for listing on TOKYO PRO Market, as no listing examination will be performed by JPX
Regulation.
TOKYO PRO Market has adopted some practical expedient whereby TOKYO PRO Market
companies can disclose their quarterly reports and internal control reports at their discretion. This
certainly results in the reduction of costs and efforts of companies in the growth stage.
TOKYO PRO Market Homepage: http://www.jpx.co.jp/english/equities/products/tpm/index.html
Overview of TOKYO PRO Market
20
Overview of Listing Requirements

TSE 1st and 2nd Sections,
TOKYO PRO Market
Mothers and JASDAQ

Disclosure
Language
Japanese
Japan
Accounting
Standards
GAAP,
Japanese and/or English

IFRS,
Other
standards *
Japan GAAP, IFRS, US GAAP, Other standards
* please refer to section 10 (3) a to
approved by J-Adviser or accountant
see details
Minimum shareholders, free

Listing Criteria
float,
profit,
market
capitalization, etc.
JASDAQ2 months 4
Application Period
Mothers2 months
Internal Control
Reports
Quarterly
Reports
Investors
Criteria judged by J-Adviser

Minimum 10 business days*
(J-Adviser to express intent before listing
Main market3 months

Auditors Report
No set requirements
application)
2 most recent fiscal years
Last fiscal year only
Required
Not required
Required
Not required
No restrictions
Professional investors and non-residents
Standard listing examination period for domestic companies

21
What is the J-Adviser System?

A Company listed on the TOKYO PRO Market must retain a J-Adviser for as long as it
is listed.
The J-Adviser must evaluate the company and declare to TSE that it is suitable for
Role
listing.
The J-Adviser will continue to support and evaluate the company for as long as it is
listed on the TOKYO PRO Market
Requirement
J-Advisers are firms with proven track records in corporate finance/IPO and staff
with expertise in respective areas (most J-Advisers are security firms).
Daiwa Securities Co., Ltd., Leading Securities Co.,Ltd., Mitsubishi UFJ Morgan Stanley
J-Adviser
Securities Co., Ltd., Mizuho Securities Co., Ltd., Nomura Securities Co., Ltd., OKINAWA
J-Adviser Co., Ltd., Phillip Securities Co., Ltd., SMBC Nikko Securities Inc.,
Who are the professional investors?

Qualified institutional investors, listed companies, private companies with
Specified Investors
at least JPY500 million capital

Government agencies, Bank of Japan, regional public authorities
Approved Specified
Investors
* those who apply
and receive approval
Companies outside the regulations stipulated above

Individuals with at least JPY300 million in net assets and with at least one
year of financial investment experience
from securities firms

Non-residents
As of June 30, 2016

22
4. Attractive Features of the Japanese IPO Market

The Japanese IPO market has been facilitated by the wealth of retail investors backed by the
financial assets of US$ 14.3 trillion (JPY1,716 trillion, as of the end of 2015) held by Japanese
households, which are three times as large as the Japanese GDP of US$ 4.1 trillion1 (JPY412 trillion),
and supported by the public trust and confidence in the IPO system, including the listing
examination implemented by JPX-Regulation. It has been functioning as one of the most successful
IPO markets in the world.
(1) Trend of Number of IPOs
Since 2009, the IPO market in Japan has expanded on a growing trend basis, with the number of
IPOs increasing for six (6) consecutive years up to 2015. While, the IPO markets in the world have
been sluggish, the IPO market in Japan has grown steadily. The number of IPOs achieved in the first
half of 2016 has maintained the similar level in the first half of 2015.
Note
The number includes Tokyo Pro Market, REITs and Infrastructure Fund.
Ranking of Number of IPOs by County in 2016 1H
Source: EY Global Trends 2016 2Q

Note: The data is based on priced IPOs as of 18 June and expected IPOs by end of June. Based on
the listed company domicile nation.
23
(2) Historical IPO Amount and Big IPO Deals

On November 4, 2015, three Japan Post Group companies successfully listed their stocks on TSE
at the same time, with the total offering amounts over JPY1,4 trillion (US$ 12 billion). It was
historically the largest IPO deal. Some were concerned with the imbalance between demand and
supply in the market. However, there was no significant impact on the market, which demonstrated
that the wealth of investors in Japan could sufficiently address a big IPO deal over JPY1 trillion or
more.

Note: Excluding REITs. Shaded pink deals exceeded US$ 500 million. 1 US$ = 100 JPY
IPOs on OSE including JASDAQ has included since July 16, 2013 when the equity market of TSE
and OSE.
IPO Amount Ranking by Exchanges in 2015
Source: Renaissance Capital 2015 Global IPO Review

Note: The data includes IPOs with a deal size of at least US$100 million and exclude closed-end funds
and SPACs. Data as of Dec. 31, 2015.
24
(3) Successful Small IPOs IPO Deal Size Comparison

While Japan realized the largest IPO deal in the world, it offers opportunities for small-sized
companies to achieve an IPO. The Japanese IPO market could be characterized by the fact that the
size of offering at the time of IPO is relatively small compared to the IPO deals in foreign markets.
That is, the number of listing of companies with small market capitalization is relatively large.
Classified by the size of IPO offering in 2015, the offering with the value of less than JPY3 billion
accounted for 79% of the total IPO deals. The comparison with the percentage in the US (NYUSE
and NASDAQ) which is 12% indicates that companies with small sized offering have successfully
achieved IPOs in Japan.
Comparison of Number of IPOs by Offering Amount in 2015 (Japan, US, Hong Kong, Singapore)
SourceTokyo Stock Exchange, NASDAQ website, Hong Kong Exchanges and Clearing Limited website,
Singapore Exchange website
Note: The data includes new listings of foreign companies in the country, excludes listings without
public offerings or selling and REIT. It includes new listings on NASDAQ and NYSE in the United
States. Exchange rates as of the listing date.
25
IPO Companies Size in 2015

Note: 1 Excluding Tokyo Pro Market and REITs. US$ = 100JPY.
2 Total of offering and sales.
(4) Number of IPOs by Market
Analysis of the details of IPOs by market in 2015 showed that the main markets (first and second
sections) counted 17 IPOs, the Mothers counted 61 and JASDAQ counted 11. The majority of IPO
deals selected the Mothers as their IPO markets.
Note:
1 The data includes Tokyo Pro Market, REITs and Infrastructure Fund.
26
(5) Market Transfers & Post-listing Trends on Mothers

The number of companies allowed to be transferred to other markets following IPO on the
Mothers or JASDAQ junior markets has been growing along with the boom in the IPO markets.
During 2015, the 47 companies were allowed to be assigned to the first section from the second
section while the numbers of companies listed on Mothers and JASDAQ which were allowed to be
reassigned to the first or second section was 44 and 44, respectively. Especially the number of the
companies reassigned to the first section from the Mothers increased for six (6) consecutive years,
and 2015 achieved the record high following 2014. These conditions have clearly demonstrated
that junior markets sufficiently function as the step-up market leading to the first section.
Recent trend is that a growing number of companies aim to achieve the reassignment to the main
markets or receive the designation for the first section promptly after the success of IPO with a view
to smooth financing through the secondary offering subsequent to the IPO or enhancing the liquidity
of equity or external visibility or presence.
During the period from the launch of Mothers in 1999 to the end of December 2015, 94 companies
or 22% of companies effecting IPOs on Mother have achieved the step up to the first section.
Note: As of the end of December 2015
27
(6) Global Comparison of IPO Cost and IPO Valuation

IPO costs and valuations could not be simply and automatically compared due to some differences
in accounting standards. However, when the prospectuses or annual reports are examined and
assessed by defining the listing costs as the difference between the amount paid in by investors and
the proceeds received by the company at the time of IPO, the listing costs in Japan would be proved
to be smaller relative to those of listing in Singapore or Hong Kong. Furthermore, IPO valuations on
a PER basis in terms of both offering prices and initial prices at the listing would prove to be relatively
high compared to those in Hong Kong or Singapore.
Even smaller sized companies could benefit from the IPO on the TSE market on the back of
smaller listing costs and higher IPO valuations. This means that the TSE market has been
functioning as the market which enables even smaller sized companies to effect the IPO.
Source:
Note:
Prospectus and annual reports of each companies, Bloomberg.

1
Listing expenses is defined as the difference between gross proceeds and net proceeds.
2
Currency exchange rates are as of the listing date.
28
(7) Global Comparison of Liquidity in Major Asian Junior Boards

When the comparison of junior markets of Japan, Hong Kong and Singapore is made by assessing
TSE Mothers, Hong Kong GEM and Singapore Calalist in terms of the number of listed companies,
market capitalization of listed companies, annual trading value and turnover velocity, it may show
the three markets have similar size in the context of the number of listed companies. However,
closely looking at the trading value, TSE Mothers has overwhelmingly high liquidity compared to the
other two markets. Though the market capitalization of each market is different, TSE Mothers is
considered to have overwhelmingly high liquidity based on the turnover velocity, discounted by the
difference in sizes.
When assessing the equity trading value by TSE investment category, 70% of the investments in
TSE Mothers have been made by retail investors. This means that the wealth of retail investors
have facilitated and supported the TSE junior markets.
TSE leverages this high liquidity to enable any company listed on TSE junior markets to smoothly
meet its fundraising needs both at the listing stage and later.
Source: Tokyo Stock Exchange, Hong Kong Exchanges and Clearing Limited, Singapore Exchange
Note:
1 Converted into USD as at the end of Dec 2015
2 Turnover Velocity = Annual Trading Value / Market Capitalization as at the end of Dec. 2015
29
Stock Trading Value by Investor Category on Junior Boards (2015)
(8) High Allocation to Retail Investors through Public Offerings

One of the major characteristics of the IPO market in Japan relates to the higher ratio of allocation
to retail investors with risk propensities different from those of institutional investors. Status of
Retail Investors in Trading by Investor Type published by the Japan Securities Dealers Association
notes in that 80 to 90% of stocks are allocated to retail investors for the offering at IPO. This
significantly differs from the circumstances in the markets in foreign countries where most are
allocated to institutional investors. Generally institutional investors are reluctant to invest in
companies with small market capitalization. On the contrary, IPO markets in Japan have been
facilitated and supported by retail investors, which enable small sized companies with small sized
offering to successfully effect their IPOs.
Source: Japan Securities Dealers Association
30
(9) Enhanced Corporate Value through Listing Examination

Relevant laws and regulations in Japan grant stock exchanges the right to authorize their own
listings. The listing examinations for TSE are performed by a TSE-designated organization called JPX
Regulation. JPX Regulation has designed and implemented a prescribed listing examination to assess
whether a listing applicant meets all of the necessary quantitative thresholds and has the necessary
internal system and capabilities to appropriately disclose corporate information. The listing
examination takes about three months to complete, from listing application to listing approval. A
successful examination sets the foundation for investor confidence, a key component of corporate
value, after listing.
TSE has developed a unique step to help applicants prepare for listing. To ensure that the listing
process runs as smoothly as possible, applicant companies may perform preliminary consultation
with JPX Regulation by engaging securities companies qualified as underwriters. By consulting
beforehand, applicant companies can identify and resolve potential requirements or roadblocks
before filing the formal listing application while achieving smooth communication with TSE.
31
5. Overview of the Initial Listing and Disclosure Systems

TSE and JPX Regulation, the organization entrusted by TSE to perform listing examination, assess
whether applicants satisfy quantitative criteria and numerical thresholds required by the Regulations
based on the listing application filed by the applicant. In performing the listing examination, JPX
Regulation focuses on the applicants abilities to contribute to fair price formation, the appropriate
distribution of shares of stock in the market, the public interest, and investor protection. When a
listing is determined to be appropriate based on comprehensive examination and evaluation, TSE will
authorize the applicant to list its stock on TSE.
As noted above, an applicant can identify and address potential roadblocks in a listing examination
by engaging a consultant before the listing application is filed. When examining a listing application
from a foreign company, TSE closely considers the legal system and conventions in practice in the
applicants home country. As such, TSE will address the listing application filed by foreign companies
more flexibly than Japanese applicants.
Foreign companies can also list on TSE via depository receipts (JDRs, ADRs, or GDRs). (Please see
section 8 for details.)
(1) Listing Schedule
When a foreign company files an application for listing on TSE, the listing examination will require
about three months 6. After listing approval by TSE, about one month will be required for public
offering procedures (the IPO). An applicant therefore needs four months, as a rule, from the listing
application date to the first day of listing. For details on the listing examination performed by JPX
Regulation, please see sections 6 and 7.
The period for preparing the listing application and period for the underwriting examination may
vary, depending on the internal systems and underwriting policies of the underwriting securities firm.
Listing schedule for foreign companies may vary depending on legal basis for foundation, applicable
accounting standards, and so on.
32
Listing Schedule
(2) Roles of Each Party Involved in an IPO

The following are the key parties in Japan and the home country who support the listing of a
foreign company on TSE. These participants work together closely during the preliminary listing
process to support preparations for a listing.
33
Lead Underwriter
(TSE trading
participant)
A lead underwriter is comprehensively involved in the procedures and

preparations for listing overall. It provides underwriting business by
entering into a lead underwriting agreement with an issuer and provides
advice and consultation on the listing and listing schedule. At the time of
listing, the lead underwriter submits a Sponsors Letter of Recommendation
to TSE.
Legal Firm
A legal firm checks and reviews listing-related matters from a legal

perspective and prepares a legal opinion. It also helps the applicant
prepare disclosure documents. After listing, it discloses corporate
information as a legal representative of the listed foreign company.
Audit Firm 7
(foreign audit firm,
etc.)
An audit firm provides advice on the design and implementation of the

accounting organization and financial statements and also audits the
financial statements (expression of an audit opinion).
TSE
TSE explains its listing system to companies, IPO-related parties, and so

on, and provides preliminary or prior consultation on the listing.
Trust and Banking

company
A trust and banking company acts as a shareholder services agent for

Japanese shareholders after the listing and may act as a dividend payment
bank to provide services related to dividend payment. If a foreign company
lists through JDRs, the trust and banking company will be responsible for
the issuance of the JDRs. Please see section 8 for details on listing through
JDRs.
Please see section 10 (3) for details on accounting standards and audit certificate.
34
(3) Lead Underwriters

The securities companies that assist the applicant with the various tasks for listing are called
underwriters. The main underwriter is called the lead underwriter (lead trading participant). The
lead underwriter is required to file a Sponsors Letter of Recommendation with TSE for the
applicants listing on TSE.
The following securities companies have sufficient experience as lead underwriters and
established systems that have been duly evaluated and approved.
Reference: List of possible lead underwriters8
- Daiwa Securities Co.Ltd.
- Goldman Sachs Japan Co., Ltd.
- H.S. SECURITIES CO., LTD.
- Ichiyoshi Securities Co., Ltd.
- Japan Asia Securities Co.,Ltd.
- JPMorgan Securities Japan Co., Ltd.
- Merrill Lynch Japan Securities Co., Ltd.
- Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
- Mizuho Securities Co., Ltd.
- Monex, Inc.
- Nomura Securities Co., Ltd.
- OKASAN SECURITIES CO., LTD.
- SBI SECURITIES Co., Ltd.
- SMBC Friend Securities Co., Ltd.
- SMBC Nikko Securities Inc.
- Tokai Tokyo Securities Co., Ltd.
- TOYO SECURITIES CO., LTD.
- UBS Securities Japan Co., Ltd.
As of March 31, 2016 (alphabetical order). This list should not be construed as a recommendation for
applicants to enter into transactions with specific companies. TSE will give no guarantees on the
involvement or decisions of securities companies or the performance of securities companies with respect
to the preparation or success of an initial listing.
35
(4) Rules and Regulations on the Disclosure System on the Secondary Market
Information used for decisions on the value of securities must be accurate, fair, and disclosed in a
timely manner to ensure that investors can invest in securities based on reasonable judgment. For
this purpose, the Financial Instruments and Exchange Act prescribes requirements for information
disclosure in the corporate profiles of issuers (statutory disclosure) and TSE prescribes requirements
on timely disclosure by listed companies in the Regulations (timely disclosure).
a. Statutory Disclosure
Companies listed on TSE are required to electronically submit securities reports, quarterly reports,
etc. outlining their financial position, and business lines and performance to the Japanese Prime
Minister (in practice, to the local Finance Bureau.) The submitted securities reports, etc. are then
entered into EDINET (Electronic Disclosure for Investors NETwork) for public inspection and made
available to investors via the Internet. Please see the details in section 10.
b. Timely Disclosure
In addition to statutory disclosure, companies listed on TSE are obliged to promptly disclose
decisions and events that may greatly affect investor decisions, in accordance with the Regulations
and other relevant rules. Please see the details in section 12 (1).
Such information will then be released to the media and investors via the Internet and TSEs online
disclosure system, TDnet (Timely Disclosure Network).
36
(5) Commitment to IR
In addition to statutory and timely disclosures, TSE encourages all listed companies to engage in
IR activities that enable them to communicate with investors about their corporate status. The
Regulations require, for example, that Mothers listed companies hold meetings with investors to
explain their company profiles and affairs twice a year. Many TSE-listed companies have
implemented individual IR activities that go considerably further.
Active IR activities are a secure way to enhance corporate brand value and companies can strongly
benefit from a listing on TSE.
37
6. Listing Examination by TSE (Primary Listing)

There are two types of requirements by which the company will be examined to list its stock
encompassed by the so called Listing Requirements: Formal Requirements and Eligibility
Requirements. TSE examines the company, which meets Formal Requirements and conducts an
examination on in under Eligibility Requirements.
In application of the rules and regulations of the Exchange to a foreign country or a foreign
corporation where the foreign country or the foreign corporation is an issuer, etc. of a listed security,
the Exchange shall take into account legal systems, practices and customs, etc. in such foreign
country or the country, etc. of the foreign corporation.
[Rule 7 of the Regulations]
(1) Main Markets (TSE 1st Section and 2nd Section)(Primary Listing)
a. Formal Requirements
Requirements
Item
st
1 Section
1. Number of shareholders 2,200 shareholders or more

(expected at listing)
2nd Section
800 shareholders or more
[Rule 206, Paragraph 1, Item 1 of

the Regulations]
[Rule 205, Item 1 of the
Regulations]
the Regulations]
The following a. through c. must The following a. through c. must be

satisfied:
be satisfied:
2. Number of tradable
shares
the Regulations]
Regulations]
the Regulations]
a. The number of tradable

a. The number of tradable shares:
shares : 20,000 units or more;
4,000 units or more;
b. The market capitalization of
b. The market capitalization of the
the tradable shares: 1 billion
tradable shares: 1 billion yen or
yen or more; and
more; and
(in principle, the value derived
(in principle, the value derived
by the expected price at the
by the expected price at the
time of public offering for the
time of public offering for the
purpose of listing by the
purpose of listing by the
number of tradable shares
number of tradable shares
expected at the time of listing)
expected at the time of listing)
38
c. The number of tradable shares c. The number of tradable shares

(as a percentage of the total
(as a percentage of the total
number of issued shares
number of issued shares
outstanding): 35% or more
outstanding): 30% or more
3. Market capitalization
the Regulations]
Regulations]
25 billion yen or more

(The market capitalization is, in
principle, determined by
multiplying the number of listed
shares expected at the time of
listing by the prospective prices
for public offering or secondary
offering)

(The market capitalization is, in
principle, determined by
multiplying the number of listed
shares expected at the time of
listing by the prospective prices for
public offering or secondary
offering)
the Regulations]
4. Number of consecutive The business activities have been continuously carried out by setting
years of conducting
up a board of directors (meaning an institution corresponding to this in
business
cases of a foreign company) since a day before the day which is three
(3) years prior to the end of a business year immediately prior to the
[Rule 206, Paragraph 1, Item 1 of business year containing the initial listing application day
the Regulations]
Regulations]
5. Amount of net assets

The amount of consolidated net assets: 1 billion yen or more

(in addition, the amount of non-consolidated net assets are not
negative)

the Regulations]
Regulations]
6. Amount of profits and

market capitalization
(Amount of profits
calculated based on the
consolidated income
statement. Market
capitalization is expected
at listing)
The following a. or b. must be satisfied:

a. The total amount of profits in the last two (2) years: 500 million yen
or more; and
b. The market capitalization: 50 billion yen or more
In addition, sales for the last year: 10 billion yen or more

the Regulations]
Regulations]
39
The following a. through c. must be satisfied:

a. No false statement is made in the securities reports, etc. for each
business year or each consolidated accounting year which ended
in the last two (2) years;
7. False statement or
adverse opinion, etc.
the Regulations]
Regulations]
b. The audit report attached to financial statements, etc. for each

business year or each consolidated accounting year which ended
in the last two (2) years (excluding a business year and a
consolidated accounting year which ended in the last year)
contains an "unqualified opinion" or a "qualified opinion with
exceptions" of certified public accountants, etc.; and
c. The audit report attached to financial statements, etc. for the
business year and consolidated accounting year which ended in
the last year contain, as a general rule, an "unqualified opinion" of
certified public accountants, etc.
The merger, etc. shall not fall under the following a. and b.:
a. Where a merger, demerger, making other company a subsidiary or

making a subsidiary a non-subsidiary or transfer of a business to or
from other entity is scheduled to be carried out on or after the
initial listing application day and within two (2) years from the end
8. Expected
of the most recent business year before such day, and, in addition,
implementation of merger,
where TSE deems that an initial listing applicant will cease to be a
etc
substantial surviving company by such an act;
provided, however, that the same shall not apply where the
Enforcement Rules so specify; and
the Regulations]
Regulations]
9. Handling by a
book-entry transfer
institution
b. Where a merger in which an initial listing applicant becomes a

dissolution company, a stock swap or a stock transfer whereby it
becomes a wholly-owned subsidiary of another company is
expected to be carried out within two (2) years from the end of the
business year immediately prior to the business year containing the
initial listing application day (except cases where such acts are
scheduled to be carried out before the listing day).
a. Said issue shall be subject to the custody and book-entry transfer
operation for foreign stocks, etc. or the book-entry transfer
operation of the designated book-entry transfer institution; and
the Regulations]
40
b. Said issue is expected to become so by the time of listing
10. Restriction on transfer

of stocks, etc.
the Regulations]
a. There is no restriction on transfer of a foreign stock, etc. pertaining

to an initial listing application; and
b. It is expected that there will be no restriction by the time of listing;
provided, however, that the same shall not apply to cases where
imposing a restriction on transfer of a foreign stock, etc. is deemed
necessary to receive application of provisions of laws in its home
country or a case equivalent to this and, in addition, where its
details are deemed not to hinder trading in TSE market
Where an initial listing applicant is an applicant for initial listing of a
foreign stock depositary receipt, etc., the deposit agreement, etc.
concerning a foreign stock depositary receipt, etc. and any other
agreement pertaining to an initial listing application shall be those
entered into pursuant following a. or b.:
11. Deposit agreement,

etc.
the Regulations]
a. Foreign stock depositary receipts: Said deposit agreement, etc. is to

be concluded among the initial listing applicant, the depository, etc.
pertaining to said foreign stock depositary receipts, and holders of
said foreign stock depositary receipts; and
[Rule 213, Paragraph 3 of the

Rules]
b. Foreign stock trust beneficiary certificates: Said deposit agreement,

etc. is to be concluded between the depository, etc. pertaining to
said foreign stock trust beneficiary certificates and holders of said
foreign stock trust beneficiary certificates; and the initial listing
applicant has concluded a contract deemed appropriate by TSE
41
b. Eligibility Requirements
Item
Requirements
(1) Profit and loss and income and expenditure in consolidated
financial statements of an initial listing applicant have not
deteriorated.
1. Corporate continuity
and profitability
In this case, even where such profit and loss or income and
expenditure have deteriorated, where they are deemed not to
impair sound continuity of management activities of the corporate
group of the initial listing applicant, it shall be treated as if such
profit and loss or income and expenditure have not deteriorated
(2) Management activities of the corporate group of an initial listing
applicant are in a state enumerated in the following a. and b.:
A business is operated
continuously and a stable
a. There is no material obstacle to the execution of management
revenue base is present
activities of the corporate group; and
the Regulations]
[II, 7 of Guidelines]
b. The structure of the corporate group does not seriously hinder the
continuous execution of business activities
(3) Concerning the matters which are the premises of the main
business activities of the corporate group of an initial listing
applicant, there is no factor which hinders their continuity
(4) There is no factor which seriously hinders the management and
administration of the corporate group of an initial listing applicant.
(1) The corporate group of an initial listing applicant is recognized not

to give or enjoy profit wrongfully through a trading act or any other
management activities with related parties and other specified
2. Soundness of corporate
entities, in light of the matters enumerated in the following a. and
management
b. and other matters:
A business is carried out
fairly and faithfully
the Regulations]
a. Where a transaction has been conducted between the corporate

group of an initial listing applicant and its related parties and/or any
other specified entities, and such transaction has rationality of
continuing being carried out and reasonability of trading terms
including trading prices
b. Benefits of the corporate group of an initial listing applicant are not
lost wrongfully because related parties and any other specified
42
entities of the corporate group of an initial listing applicant give

priority to their own benefits
(2) Where an initial listing applicant has a parent company, etc.,

management activities of the corporate group of an initial listing
applicant are recognized to be independent from such parent
company, etc. in light of the matters enumerated in the following a.
to c. or any other matters:
a. In light of the relationship between the business line of the
corporate group of an initial listing applicant and that of the
corporate group of the parent company, etc., the state of business
adjustment made by the corporate group of the parent company,
etc. and its possibility and any other matters, an initial listing
applicant is not recognized to be substantially a business division of
such parent company, etc.;
b. The corporate group of an initial listing applicant or that of a parent
company, etc. does not coerce or induce a trading act which
becomes disadvantageous to said parent company, etc. or the
corporate group of said initial listing applicant such as transactions
on markedly different terms from those of normal transactions; and
c. The state of receiving seconded persons of the corporate group of
an initial listing applicant is recognized not to heavily depend on the
parent company, etc. and not hinder continuous management
activities
3. Effectiveness of
(1) The system to secure the execution of appropriate work duties of
corporate governance and
officers of the corporate group of an initial listing applicant, and an
internal management
internal management system, etc. to carry out management
system of an enterprise
activities of the corporate group of the initial listing applicant are
recognized to be appropriately developed and operated
Corporate governance and
internal management
(2) The accounting system of the corporate group of an initial listing
system are properly
applicant is recognized as appropriate from the viewpoint of
prepared and functioning
investor protection
the Regulations]
43
(1) The corporate group of an initial listing applicant is recognized to

be able to properly manage corporate information of facts, etc.
which will have a material effect on management, and a system for
making timely and appropriate disclosure to investors and the
preemptive prevention of insider trading is deemed to be
developed and operated appropriately
(2) Documents pertaining to disclosure of corporate information, out

of the initial listing application documents, are deemed to be
prepared in compliance with laws and regulations, and contain the
matters enumerated in the following a. and b. and other matters
4. Appropriateness of
disclosure of corporate
information, etc.
a. The legal system of the home country, etc. of an initial listing

applicant, the financial condition and financial results of an initial
listing applicant and its corporate group, and matters which may
have a material effect on investment decisions of investors, such as
important matters, etc. concerning officers, major shareholders,
related companies, etc.; and
The applicant is in a status

b. Matters enumerated in the following (a) to (d) pertaining to the
where disclosure of the
matters which are the premises of main business activities of the
corporate information, etc.
corporate group of an initial listing applicant:
may be carried out in an
(a) Details of the matters which are the premises of main business
appropriate manner
activities of the corporate group of an initial listing applicant;
(b) Where the validity period of permission, authorization, etc. and
any other time limit are specified by laws and regulations or
the Regulations]
contract, etc., such time limit;
(c) Where cancellation, rescission, and any other event of
permission and authorization, etc. are stipulated by laws and
regulations or contract, etc., such fact and content; and
(d) The fact that there is no factor which hinder their continuity
concerning the matters which are the premises of main business
activities of the corporate group of an initial listing applicant, and
if there is such factor, the fact that it will have a material effect
on business activities;
(3) The corporate group of an initial listing applicant does not provide
distorted information disclosure on the actual state of the
corporate group of the initial listing applicant by conducting a
trading act with its related party or any other specified entity or
adjustment of stock ownership ratios, etc.;
44
(4) Where an initial listing applicant has a parent company, etc., the
following a. or b. shall be met on the premise that disclosure of
such parent company, etc. is valid:
a. A stock, etc. issued by a parent company, etc. of an initial listing
applicant is listed on a domestic financial instruments exchange
(including cases where a stock, etc. issued by such parent
company, etc. is listed or continuously traded on such foreign
financial instruments exchange, etc., and the state of disclosure on
corporate affairs in a country in which such parent company, etc.
or such foreign financial instruments exchange, etc. is located is
not deemed to markedly lack investor protection); and
b. An initial listing applicant can appropriately understand company
information such as facts and information concerning the parent
company, etc. which has a material effect on its management, and
the initial listing applicant pledges in writing that such parent
company, etc. agrees to its disclosure of company information
which has a material effect on its management, out of such
company information concerning the parent company, etc., to
investors in an appropriate manner;
(1) The contents of the rights of shareholders or holders of foreign
stock depositary receipts, etc. and the state of their exercise are
deemed appropriate from the viewpoints of the public interest or
the protection of investors, because of the matters enumerated as
follows and other matters:
a. The contents of the rights of shareholders or holders of foreign
stock depositary receipts, etc., and their exercise are not
5. Other matters deemed
unreasonably restricted; and
necessary by TSE from the
viewpoint of the public
interest or the protection b. Where an initial listing applicant has introduced a takeover defense
of investors
measure, the initial listing applicant complies with the matters
enumerated in the following (a) to (d):
the Regulations]
(a) Sufficient disclosure:

The listed company shall make necessary and sufficient timely
disclosure concerning takeover defense measures;
(b) Transparency:
Conditions of implementation and abolishment of takeover
defense measures shall not depend on arbitrary decisions by the
management;
(c) Effect on the secondary market:
Takeover defense measures shall not include factors which may
45
cause extremely unstable price formation of a stock or any other

factors which may cause unpredictable damage to investors;
and
(d) Respect for shareholders rights:
Takeover defense measures shall give consideration to
shareholders rights and their exercise.
(2) The corporate group of an initial listing applicant does not have a
contention or dispute, etc. which would have a material effect on
management activities and business performance
prepare an internal system to prevent criminal and extremist
elements from being involved in management activities, and
making efforts to prevent such involvement, and their actual state
is recognized as appropriate from the viewpoints of the public
interest or the protection of investors
(4) Other cases deemed appropriate from the viewpoints of the public
46
c. Documents to be Filed
The following highlights the documents required to be filed for the purpose of the initial listing
application. Each of these documents is requested to be filed when the requirements for the filing
thereof are met. The following also includes the documents to be filed only for the purpose of
multiple listing. Please refer to the footnotes at the end of this paragraph with respect to
Documents Required to be Filed only for the Purpose of Multiple Listing and Documents Not
Required to be Filed for the Purpose of Multiple Listing.
(a) Documents to be filed at the time of conducting initial listing application

Number
Documents to be filed
Preliminary application form for initial listing of securities
Application form for initial listing of securities
Written Oath relating to initial listing application
Articles of Incorporation (including by-laws)

Minutes of general shareholders meeting or the meeting of the Board of Directors concerning
the acquisition of shares of treasury stock, the disposal of shares of treasury stock and the
retirement of shares of treasury stock
Statement certifying no ties with anti-social forces
Written Recommendation (by listing approval date)
Sponsors letter of confirmation
9
10
11
Statement of specific considerations and focused matters during the process of instructions on
going public and underwriting examination
Statement concerning the matters which constitute the premise underlying major business
activities
Table of distribution of share ownership
(unnecessary if the company conducts offering) (Note 2)
12
Statement describing matters concerning controlling shareholders
13
Sample of foreign stock certificate and etc. (to be attached stock sample list)
14
Minutes of the meeting of the Board of Directors on initial listing application
15
Securities Report for Initial Listing Application (Part I)
16
A legal opinion
17
A copy of the document proving that the representative is a person with a legitimate authority
18
19
Document certifying the deposit agreement concerning depositary receipts, etc. for the new
listing application (Note 3)
A document certifying that the depository, etc. has agreed to the matters TSE deems necessary
for the new listing application (Note 3)
In case it has not passed at least two (2) years after the merger or the becoming a foreign
20
holding company to the initial listing application date to a day immediately prior to the listing
date, financial statements deemed necessary by TSE for listing examination

21
Table of Change in Number of Shareholders or of Holders of Foreign Stock Depositary Receipts,

etc. (Note 4
47
22
A document certifying that the agent, etc. has been appointed or given informal consent to
accept the appointment
23
Documents describing the plan for the shareholder directed spin-off (Note 5)
24
Materials concerning the value of the stock pertaining to the initial listing application (Note 6)
Corporate Governance Report
25
(only for an initial listing applicant who makes an initial listing application of a domestic stock,
etc. and a foreign stock, etc. for which TSE is a main market)
26
27
Audit reports, interim audit reports or quarterly review reports Excluding Applicants exempted
under the clause in Rule 204, Paragraph 6 of the Rules)
Summary audit eports, summary interim audit reports or summary quarterly review reports
Excluding Applicants exempted under the clause in the Rule 204, Paragraph 6 of the Rules)
28
Preliminary Initial Listing Application Report prepared by the applicant
29
Preliminary Initial Listing Application Report prepared by the managing trading participant
30
Corporate reportmaterials describing the Applicant's business and operation)
31
Materials sent to shareholders and official publications (including the notice of the general
shareholders' meeting) regarding the general shareholders' meetings in the past two (2) years
Documents (such as prospectuses) sent to shareholders regarding rights issues in the past two
32
(2) years or regarding most recent right issue in the past five (5) years where there is none in
the past two (2) years
33
34
35
36
37
A copy of the annual report sent to Shareholders or Holders of Foreign Stock Depositary
Receipts in the past five (5) years
A copy of the interim report and quarterly reports sent to Shareholders or Holders of Foreign
Stock Depositary Receipts in the past two (2) years
A copy of the securities report, annual report, interim report, quarterly reports and
extraordinary reports submitted to the Prime Minister etc. in the past two (2) years (Note 1)
A copy of the securities registration statement (including amendment thereto) submitted to the
Prime Minister etc. in the past two (2) years (Note 1)
News releases and newspaper publications regarding earnings announcements, dividend, stock
split, rights issue, and other material information in the past one (1) year
38
Relevant laws pertaining to the incorporation of the Applicant in the Applicant's jurisdiction
39
List of agenda of the meeting of the Board of Directors in the past two (2) years
40
41
42
A set of documents submitted by the Applicant to relevant authorities in relation to application

of tax refund
The check sheet regarding the legal framework of accounting and audit in the home country
submitted to the Financial Services Agency of Japan
Other matters deemed necessary by TSE for listing examination (Note 7)
(b) Documents to be filed at the time of making initial listing application (When an
applicant has a non-listed parent company, etc.)
Number
43
Written document of the last financial information of non-listed parent company, etc. (Note 8)
44
Written confirmation concerning timely disclosure, etc. of parent company, etc. (Note 8)
48
(c) Documents to be filed at the time of making initial listing application (Where becoming a
subsidiary or merger, etc.)
Number
45
Where merger during the recent one year or after the beginning of the business year in which
the listing application is filed, financial statements deemed necessary by TSE
Where becoming a subsidiary or non-subsidiary company during the recent one year or after
46
the beginning of the business year in which the listing application is filed, financial statements
deemed necessary by TSE
(d) Documents to be filed after making initial listing application where necessary
/applicable
Number
Quarterly reports for Initial Listing Application where: (Note 1) (Note 2)
The listing day falls anytime after three (3) months from the beginning of the business year
containing the initial listing application day, the Quarterly Report for Initial Listing
Application for the first quarter of said business year
47
The listing day falls anytime after six (6) months from the beginning of the business year
Application for the second quarter of said business year
The listing day falls anytime after nine (9) months from the beginning of the business year
Application for the third quarter of said business year
Quarterly balance sheet of the final day of the above period
48
(In cases where a management company is the entity preparing consolidated financial
statements)
Notice of board meeting resolutions or general shareholders' meeting resolutions during the
49
period from the first day of the business year containing the initial listing application day to the
listing day
Reports of corporate information having significant impact on the business of the initial listing
50
applicant during the period from the first day of the business year containing the initial listing
application day to the listing day
A copy of the following documents submitted to the Prime Minister etc. during the period from
the first day of the business year containing the initial listing application day to the listing day
(Note 1)
51
Securities registration statement including amendment theretoand document attached

thereto
Notice of effectiveness of securities registration statement
Securities notification (including amendment thereto) and document attached thereto
49
(e) Documents to be filed after making initial listing application where necessary /
applicable
(If there are shares that have not been issued as of the new listing application date in
the shares as of desired listing date)
Number
A document certifying the resolution authorizing the issuance of such stocks, etc., a copy of the
securities notification, a copy of the notice of effectiveness of the securities registration
52
statement or a copy of shelf registration statement, or a copy of notification of receipt of

securities notification or a copy of notification of receipt of shelf registration notification, as well
as a document certifying completion of payment (certificate of registered matters, etc.) (Note
1)
53
Notification of initial listing application securities report amendment (at time of effect of
amended details)
(f) Documents to be filed after making initial listing application but no later than listing
approval is granted
Number
54
Written Confirmation Regarding Compliance with Exchange Rules and Regulations
The written document containing the effect that the representative of such initial listing
55
applicant is aware that the Securities Report for Initial Listing Application (Part I) and other
documents do not contain any untrue statements
Corporate Governance Report (PDF version)
56
etc. and a foreign stock, etc. for which TSE is the main market)
57
The report containing risk information pertaining to the structure of the corporate group (Note
9)
58
Listing Agreement
59
Articles of incorporation (including by-laws)
60
61
Securities Report for Initial Listing Application (Part I) PDF version
62
Quarterly report of initial listing application (Note 1) (Note 2)
63
Quarterly report of initial listing application PDF version (Note 1) (Note 2)
64
Calculation of the expected market capitalization
65
Corporate Brochure of Applicant
50
(g) Documents to be filed by the applicant making a public offering, etc.

Number
66
Expected public offering or secondary offering plan
67
Securities Registration Statement and its accompanying documents (Note 1)
68
69
Amendment of Securities Registration Statement (after the determination of the tentatively set
price range) (Note 1)(Note 10)
Amendment of Securities Registration Statement (after the determination of offering price)
(Note 1)
70
Notice on effectiveness of securities registration statement
71
Notice of Execution of public offering or secondary offering
72
Press release of notice of the determination of offering prices and the reasons, etc. therefor
73
Press release of notice of provisional conditions and the reasons for deciding them (Note 10)
74
Materials pertaining the determination of the assumed tentatively set price range
75
Materials pertaining the determination of the tentatively set price range
76
Materials pertaining the determination of offering price
77
Notification of the revisions of the Security Initial Listing Application Form
Note 1:
In cases of submission to the Prime Minister, etc. via electronic data processing for disclosure (refers to electronic data
processing for disclosure as prescribed by Rule 27-30-2 of the Financial Instruments and Exchange Act), the submission of
such documents is not required.
Note 2:
The applicant applying for a multiple listing need not submit the document.
Note 3:
Only the applicant applying for a multiple listing needs to submit the document.
Note 4:
Only the applicant applying for a listing of Foreign Stock Depositary Receipts needs to submit the document.
Note 5:
Submission only required in cases of a company succeeding business due to a shareholder-directed split of a listed company,
which conducts initial listing application prior to such shareholder-directed split.
Note 6:
In cases where the foreign stock, etc. pertaining to initial listing application is not listed or continuously traded on a
domestic financial instruments exchange or foreign financial instruments exchange, etc., submission is only required when
public offering or secondary offering will not be conducted for the foreign stock, etc. pertaining to initial listing application.
Note 7:
There may be cases which require a copy of the "minutes of the board of directors meeting," "internal audit documents,"
"monthly performance management documents," "documents used in annual budget plan, medium-term management
plan, and planning," "important agreements," etc.
Note 8:
The applicant needs to submit the document where none of the following is the case:
(1) the shares issued by the parent company, etc. are listed on a financial instruments exchange in Japan
(2) the shares issued by the parent company, etc. are listed or continuously traded on a foreign financial instruments
exchange, etc. and it is not deemed that disclosure status of the parent company, etc. in its home country, etc. is
seriously detrimental to investor protection.
(3) the parent company, etc. is subject to ongoing disclosure
(4) the parent company, etc. is subject to ongoing disclosure in its home country and such status is not deemed to be
Note 9:
Submission only required in cases where TSE deems the corporate group to have a special composition.
Note 10: Submission only required in cases of direct listing.

Note 11: The applicant needs to submit documents pertaining a shelf registration, possession of a large volume of shares, and
tender offer that it makes after the beginning of the business year containing the initial listing application day
51
(2) Mothers (Primary Listing)

Item
Requirements
1. Number of shareholders 200 shareholders or more

the Regulations]
Regulations]

2. Number of tradable
shares
the Regulations]
Regulations]
3. Implementation of
public offering
a.
The number of tradable shares: 2,000 units or more;
b. The market capitalization of the tradable shares: 500 million yen

or more; and
(in principle, the value derived by the expected price at the time of
public offering for the purpose of listing by the number of tradable
shares expected at the time of listing)
c. The number of tradable shares (as a percentage of the total
number of issued shares outstanding): 25% or more
The applicant must carry out a public offering of a stock, etc. of at
least 500 units pertaining to an initial listing application during the
period from the initial listing application day to the day preceding the
listing day
the Regulations]
Regulations]

(The market capitalization is, in principle, determined by multiplying
the prospective prices for public offering or secondary offering by the
number of listed shares expected at the time of listing)
the Regulations]
Regulations]
5. Number of consecutive The applicant has conducted the business activities, setting up a
years of business conduct board of directors (meaning an institution corresponding to this in
cases of a foreign company) for at least a year before the initial listing
[Rule 213, Paragraph 1, Item 1 of application day
52
the Regulations]
Regulations]

a. The audit report attached to a "Securities Report for Initial Listing
Application" (excluding an audit report attached to financial
statements, etc. for the business year or the consolidated business
year ending in the last year) shall contain an "unqualified opinion"
or a "qualified opinion with exceptions" of certified public
accountants, etc.; provided, however, that the same shall not apply
to cases where the Enforcement Rules specify otherwise;
6. False statement or
adverse opinion, etc.
the Regulations]
Regulations]
b. The audit report (limited to an audit report attached to financial

statements, etc. for the business year or the consolidated
business year ended in the last year), an interim audit report or a
quarterly review report attached to a "Securities Report for Initial
Listing Application" shall contain an "unqualified opinion", an
"opinion that the interim financial statements, etc. provide useful
information" or an "unqualified conclusion" of certified public
accountants, etc.; provided, however, that the same shall not apply
to cases specified by the Enforcement Rules; and
c. No false statement shall be made in a Securities Report, etc.
containing or making reference to financial statements, etc.,
interim financial statements, etc., or quarterly financial statements,
etc. pertaining to the audit report, the interim audit report, or the
quarterly review report prescribed by a. and the preceding b.;
7. Handling by a
book-entry transfer
institution

a. Said issue shall be subject to the custody and book-entry transfer
operation for foreign stocks, etc. or the book-entry transfer
operation of the designated book-entry transfer institution; and
the Regulations]
b. Said issue is expected to become so by the time of listing
the Regulations]
8. Restriction on transfer The following a. or b. must be satisfied:

of stocks, etc.
a. There is no restriction on transfer of a foreign stock, etc. pertaining
to an initial listing application; and
the Regulations]
b. It is expected that there will be no restriction by the time of listing;

53
the Regulations]
9. Deposit agreement, etc.

the Regulations]
the Regulations]
[Rule 213, Paragraph 3 of the
Rules]
imposing a restriction on transfer of a foreign stock, etc. is deemed
necessary to receive application of provisions of laws in its home
country or a case equivalent to this and, in addition, where its
details are deemed not to hinder trading in TSE market
Where an initial listing applicant is an applicant for initial listing of a
foreign stock depositary receipt, etc., the deposit agreement, etc.
concerning a foreign stock depositary receipt, etc. and any other
agreement pertaining to an initial listing application shall be those
entered into pursuant following a. or b.:
a. Foreign stock depositary receipts: Said deposit agreement, etc. is to
be concluded among the initial listing applicant, the depository,
etc. pertaining to said foreign stock depositary receipts, and
holders of said foreign stock depositary receipts; and
b. Foreign stock trust beneficiary certificates: Said deposit agreement,
etc. is to be concluded between the depository, etc. pertaining to
said foreign stock trust beneficiary certificates and holders of said
foreign stock trust beneficiary certificates; and the initial listing
applicant has concluded a contract deemed appropriate by TSE
54
Item
Requirements
(1) The corporate group of an initial listing applicant is deemed to be
able to properly manage corporate information of facts, etc. which
will have a material effect on management and to disclose it to
investors in a timely and appropriate manner, and a system for the
preemptive prevention of insider trading is deemed to be
eveloped and operated appropriately

of initial listing application documents, are deemed to be prepared
in compliance with laws and regulations, and contain the matters
enumerated in the following a to c and other matters appropriately
in consideration of the state of the business line and the business
condition of an initial listing applicant and its corporate group
1. Appropriateness of the
a. Useful matters for investment decisions of investors such as
information, risk
analysis and explanation pertaining to the state of financial
information, etc.
conditions, management performance & receipt and disbursement
of funds, the state of the related companies, the state of R&D
The company is able to
activities, the state of major shareholders, the state of officers &
make disclosure of the
employees, dividend policy, purposes of funds of an increase in
corporate information, risk
paid-in capital through a public offering concerning an initial listing
information, etc. may be
applicant and its corporate group;
carried out in an
appropriate manner
the Regulations]
[III, 2 of Guidelines]
b. Matters that should be considered as a risk factor of an initial listing

applicant, when investors make investment decisions, such as a
small number of years in business operations, the state of the
occurrence of cumulative losses or business losses, dependence on
a specified officer, the state of competition of business with other
companies, uncertainties of markets and technologies, the state of
support for the purpose of the administration of business from a
specified entity, etc., concerning an initial listing applicant; and
c. Matters enumerated in the following (a) to (d) with respect to
matters which are the premises of the main business activities of
an initial listing applicant and its corporate group:
(a) Details of the matters which are the premises of the main
business activities of an initial listing applicant and its corporate
group;
(b) Where the validity period of permission and authorization, etc.
and any other time limit is specified by laws and regulations or a
55
(c) Where cancellation, rescission and any other event of permission

and authorization, etc. are stipulated by laws and regulations or a
contract, etc., such fact; and
(d) The effect that there is no factor which hinder their continuity
concerning the matters which are the premises of the main
applicant, and if there is such factor, the effect that it will have a
material effect on business activities;
(3) The corporate group of an initial listing applicant does not make
corporate group of the initial listing applicant by carrying out a
trading act with its related party or any other specified entity or
adjustment of the stock ownership ratios, etc.
(4) Where an initial listing applicant has a parent company, etc., any
one of the following a or b shall be met on the premise that
disclosure of such parent company, etc. is valid;
the business relationship between the initial listing applicant and
such parent company, etc. is weak and, in addition, it is clear that
the ownership of the stock of the initial listing applicant by such
parent company, etc. is for the purpose of encouraging investment,
not for the substantial control of business activities of the initial
listing applicant:
a. A stock, etc. issued by a parent company, etc. of an initial listing
applicant is listed on a domestic financial instruments exchange
(including cases where a stock, etc. issued by such parent
company, etc. is listed or continuously traded on such foreign
financial instruments exchange, etc., and, the state of disclosure of
corporate information in a country in which such parent company,
etc. or such foreign financial instruments exchange, etc. is located
is not deemed to conspicuously lack investor protection); and
b. An initial listing applicant can appropriately understand company
information such as facts concerning the parent company, etc.
which has a material effect on its management, and the initial
listing applicant pledges in writing that such parent company, etc.
agrees to its disclosure of company information which has a
material effect on its management, out of such company
information concerning the parent company, etc., to investors in an
appropriate manner
56
(5) Where an initial listing company is a foreign company, the

accounting system adopted by the initial listing company shall be
deemed appropriate from the viewpoint of investor protection
(6) Where an initial listing company is a foreign company, and a stock,
etc. pertaining to such initial listing applicant is not listed or
continuously traded on a Foreign Financial Instruments Exchange,
etc., and the initial listing application is made only to TSE, the
"Securities Report for Initial Listing Application (Part I)" shall
contain matters enumerated in the following a. and b.:
a. Matters enumerated in the following (a) and (b) for a period from a
day one year prior counting from the end date of a business year
immediately prior to the initial listing application date to a day
immediately prior to the listing date:
(a) The state of new stock issues, or issues of subscription warrants
or subscription warrant securities by the method other than
allocation to shareholders; and
(b) The state of change in the ownership of the shares pertaining to a
stock, etc. by an entity with special interest, etc. (meaning an
entity as prescribed in i) and ii) of Item (31) of Paragraph 1 of
Rule 2 of the Cabinet Office Ordinance on Disclosure);
b. Where a holder of a stock, a subscription warrant or a subscription
warrant security has made an arrangement concerning the holding
of such securities for a certain period after listing with an initial
listing applicant or with a financial instruments broker-dealer which
enters into the principal underwriting agreement with an initial
listing applicant, such details.
(1) The corporate group of an initial listing applicant is recognized, as
a general rule, not to give or enjoy profit wrongfully through a
2. Soundness of corporate
trading act or any other management activities with relevant
management
parties or other specified entities, for the reason of the matters
enumerated in the following a. and b. and other matters:
The company is carrying
out business in a fair and
a. Where a transaction has occurred between the corporate group of
faithful manner
an initial listing applicant and its relevant parties or any other
specified entities, and such transaction has rationality of continuing
the transaction, and trading terms including trading prices are
the Regulations]
clearly not disadvantageous to the corporate group of an initial
listing applicant; and
b. Benefits of the corporate group of an initial listing applicant are not
57
lost wrongfully because relevant parties and any other specified

entities of the corporate group of an initial listing applicant give
priority to their own benefits;
(2) The mutual relationship of relatives of officers of an initial listing
applicant, its composition, actual situation of providing services or
the state of concurrent posts as officers and employees, etc. with
any other company, etc. are recognized not to impair the fair,
faithful and full execution of office duties or the implementation of
effective auditing as officers of such initial listing applicant. In this
case, where directors, accounting advisors or executive officers,
spouses of persons corresponding to these and relatives by blood
within the second degree of kinship and relatives by affinity take a
position as an auditor, a member of an auditing committee or any
other persons corresponding to these, it shall be deemed to impair
the implementation of an effective auditing
applicant are recognized to have independence from such parent
company, etc. for the reason of the matters enumerated in the
following a. to c. or any other matters:
corporate group of the parent company, etc., the state of business
adjustment made by the corporate group of the parent company,
etc. and its possibility and any other matters, an initial listing
applicant is not recognized to be substantially a business division of
such parent company, etc.;
company, etc., as a general rule, does not coerce or induce a
trading act which becomes disadvantageous to such parent
company, etc. or the corporate group of such initial listing
applicant, such as transactions under markedly different terms
from those of normal transactions in principle; and
an initial listing applicant is recognized not to excessively depend
on the parent company, etc. and not hinder continuing
management activities.
58
(1) The system to secure the execution of appropriate work duties of

officers of the corporate group of an initial listing applicant is
recognized to be reasonably developed and appropriately operated
in light of the matters enumerated in the following a and b and
other matters:
a. An initial listing applicant has an organizational plan and an officer
composition which is able to effectively conduct checking and
auditing concerning the execution of work duties of officers of the
corporate group of an initial listing applicant; and
b. Checking and auditing the execution of work duties of officers for
efficient management is carried out and functions effectively in the
corporate group of an initial listing applicant
3. Effectiveness of
(2) The internal management system is recognized to be reasonably
internal management
developed and appropriately operated for an initial listing applicant
system of an
and its corporate group to carry out effective management
enterprise
activities for the reason of the matters enumerated in the following
a. and b. and other matters:
Corporate governance and
internal management
system are developed in a. A necessary managerial and administrative body is reasonably
developed and appropriately operated to secure efficiency of
accordance with the size,
management activities and internal checking functions of the
corporate maturity, etc. of
corporate group of an initial listing applicant; and
the enterprise, and
functioning properly
b. An internal auditing system of the corporate group of an initial
listing applicant is reasonably developed and appropriately
operated;
the Regulations]
(3) Necessary personnel are recognized to be competent to carry out

stable and continuing execution of management activities of the
corporate group of an initial listing applicant and to maintain its
internal management system;
(4) The corporate group of an initial listing applicant adopts
accounting treatment standards adaptable to its actual situation
and, in addition, a necessary accounting body is recognized as
being prepared and operated appropriately; and
(5) It is recognized that an effective system to comply with laws and
regulations, etc. concerning management activities and other
matters in the corporate group of an initial listing applicant is
prepared and operated appropriately, and that no material breach
59
of laws and regulations has recently been made, and no act which
is likely to become a material breach of laws and regulations in the
future is being carried out
4. Reasonableness of the
business plan
(1) The business plan of the business group of the initial listing
applicant is deemed to have taken into account the business
model, business environment, risk factors, etc. and appropriately
drawn up.
The listing applicant has

developed reasonable and
suitable business plans,
(2) The operating base necessary for executing the business plan of
and has developed the
the business group of the initial listing applicant is deemed to have
operating base necessary
been developed or that there is reasonable expectation that such
for executing such
operating base will be developed.
business plans, or there is
reasonable expectation
that it will develop such
operating base
the Regulations]
(1) The contents of the rights of shareholders or holders of foreign

stock depositary receipts, etc. and the state of their exercise are
deemed appropriate from the viewpoints of the public interest or
the protection of investors, in light of the matters enumerated as
follows and other matters:
5. Other matters deemed a. The contents of the rights of shareholders or holders of foreign
stock depositary receipts, etc. and their exercise are not
unreasonably restricted; and
interest or the protection
of investors.
b. Where an initial listing applicant has introduced a takeover defense
measure, the initial listing applicant complies with the matters
enumerated in the following (a) to (d):
the Regulations]

(b) Transparency:
Conditions of implementation and abolishment of takeover
defense measures shall not depend on arbitrary decisions by the
management;
60

factors which may cause unpredictable damage to investors;
and
(2) The corporate group of an initial listing applicant does not have a
contention or dispute, etc. which would have a material effect on
management activities and business performance
(3) Concerning the matters which are the premises of the main
applicant, there is no factor which hinders their continuity
develop an internal system to prevent criminal and extremist
elements from being involved in management activities, and
making efforts to prevent such involvement and their actual state is
recognized as appropriate from the viewpoints of the public
(5) Other cases deemed appropriate from the viewpoints of the public
61
application. Each of such documents is requested to be filed when the requirements for the filing
(a) Documents to be filed at the time of conducting the initial listing application
Number
Preliminary Application Form for initial listing of securities
6
7
Statement concerning the matters which constitute the premise underlying major business
activities
Table of Distribution of Share Ownership
(unnecessary if the company conducts offering) (Note 2)
Written document of the last financial information of non-listed parent company, etc. (Note 3)
Written confirmation concerning timely disclosure, etc. of parent company, etc.
10
11
Minutes of the Meeting of the Board of Directors on initial listing application
12
A legal opinion
13
14
15
16
17
Table of Change in Number of shareholders or of holders of Foreign Stock Depositary Receipts,
etc. (Note 5)
18
19
20
Sponsors Letter of Confirmation
21
Various explanatory materials concerning listing applicant: Lines of business; Business plan
22
Going Forward; Nature of Transactions with Special Interested Party; Status of Industry and
Trading Partners;
23
Statement of accounts of consolidated subsidiaries for the last two business years
62
24
Financial statements, etc. of merged companies in a merger transaction for the recent two
business years
25
26
27
Written confirmation concerning timely disclosure, etc.

28
29
30
Audit Reports, Interim Audit Reports or Quarterly Review Reports Excluding applicants
exempted under the clause in Rule 211, Paragraph 6 of the Rules)
Summary Audit Reports, Summary Interim Audit Reports or Summary Quarterly Review Reports
(Excluding Applicants exempted under the clause in the Rule 211, Paragraph 6 of the Rules)
31
32
33
Corporate Reportmaterials describing the applicant's business and operation)
34
Materials sent to Shareholders and official publications (including the notice of the general
shareholders' meeting) regarding the General Shareholders' Meetings in the past two (2) years
Documents (such as prospectuses) sent to shareholders regarding rights issue in the past two
35
36
37
38
39
40
A copy of the Annual Report sent to shareholders or holders of Foreign Stock Depositary
Receipts in the past one (1) year
A copy of the Interim Report and Quarterly Reports sent to shareholders or holders of Foreign
Stock Depositary Receipts in the past one (1) year
A copy of the Securities Report, Annual Report, Interim Report, Quarterly Reports and
Extraordinary Reports submitted to the Prime Minister etc. in the past one (1) year (Note 1)
A copy of the Securities Registration Statement (including amendments thereto) submitted to
the Prime Minister etc. in the past one (1) year (Note 1)
41
Relevant laws pertaining to the incorporation of the applicant in the applicant's jurisdiction
42
List of Agenda of the Meeting of the Board of Directors in the past two (2) years
43
44
A set of documents submitted by the applicant to relevant authorities in relation to application

of tax refund
45
Sample of foreign stock certificates and etc. (to be attached stock sample list)
46
Other matters deemed necessary by TSE for listing examination (Note 8)
63
(b) Documents to be filed after the initial listing application where necessary /applicable
Number
Quarterly Reports for Initial Listing Application where: (Note 1) (Note 2)
The listing day falls anytime after three (3) months from the beginning of the business
year containing the initial listing application day, the Quarterly Report for Initial Listing
47
Quarterly balance sheet of the end day of the above period
48
(In cases where a management company is the entity preparing consolidated financial
statements) (Note 9)
Notice of board meeting resolutions or General Shareholders' Meeting resolutions during the
49
listing day
50
(Note 1)
51
Securities Registration Statement including amendment theretoand document attached

thereto
Notice of effectiveness of Securities Registration Statement
52
Notification of Initial Listing Application Securities Report Amendment (at time of effect of
amended details)
64
(c) Documents to be filed after the initial listing application but no later than listing
approval is granted
Number
53
54
Listing Agreement
55
56
57

58
59

60
61
Quarterly Report of Initial Listing Application (Note 1)
62
Quarterly Report of Initial Listing Application PDF version (Note 1)
63
64
Drafted disclosures (matters concerning growth potential) as of listing date
(d) Documents to be filed by the applicant making a public offering, etc.

Number
65
Expected Public Offering or Secondary Offering Plan
66
67
68
Press release of Notice of Provisional Conditions and the reasons for deciding them
69
70
price range) (Note 1)
71
Press release of Notice of the Determination of Offering Prices and the reasons, etc. therefor
72
73

(Note 1)
74
Notice on effectiveness of Securities Registration Statement
75
Notice of execution of Public Offering or Secondary Offering
76
65
Note 1:
processing for disclosure as prescribed by Article 27-30-2 of the Financial Instruments and Exchange Act), the submission
of such documents is not required.
Note 2:
The applicant applying for a multiple listing need not submit the document.
Note 3:
The applicant needs to submit the document where none of the following is the case:
(1) the shares issued by the parent company, etc. is listed on a financial instruments exchange in Japan
(2) the shares issued by the parent company, etc. is listed or continuously traded on a foreign financial instruments
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
There may be cases which require a copy of the "Minutes of the Board of Directors Meeting," "Internal Audit Documents,"
"Monthly Performance Management Documents," "Documents Used in Annual Budget Plan, Medium-Term Management
Plan, and Planning," "Important Agreements," etc.
Note 9:
Submission only required in cases where TSE deems the corporate group to have a special composition.
66
(3) JASDAQ Market (Primary Listing)

Requirement
Item
Standard
1. Number of shareholders
Growth
200 shareholders or more (in

Japan)
200 shareholders or more (in

Japan)
500 million yen or more
[Rule 216-4, Item 1-b of the

Regulations]
[Rule 216-7, Item 2 of the
Regulations]
2. Market capitalization of
tradable shares
[Rule 216-4, Item 2-a of the
Regulations]
Regulations]
Regulations]
3. Implementation of Public The applicant is required to implement public offering or secondary

Offering or Secondary
offering of the higher of the number of shares described below and
Offering
10% of the number of listed shares expected at the time of listing
during the period from the listing application date to the day
[Rule 216-4, Item 1-a of the preceding the listing date.
Regulations]
Regulations]
(a) Issues with a trading unit of 1,000 shares: one million shares
(b) Issues with a trading unit of 500 shares: 500,000 shares
(c) Issues with a trading unit of 100 shares: 100,000 shares
(d) Issues with a trading unit of 50 shares: 50,000 shares
(e) Issues with a trading unit of 10 shares: 10,000 shares
(f) Issues with a trading unit of 1 share: 1,000 shares
67
4. Net Asset Value

Positive
The following a. or b. must be

satisfied:

Regulations]
Regulations]
Regulations]
Regulations]
5. Profits or Market
Capitalization
(Amount of profits
calculated based on the
consolidated income
statement. Market
capitalization is expected at
listing)
a. Profits during the most recent

year are at least JPY 100
million.
b. Market capitalization is
expected to reach JPY 5
billion by the time of listing.
Regulations]
Regulations]
The following a. through d. must be satisfied:

a. No false statements in Securities Reports for the year ended
during the recent two years are identified.
6. Audit by listed company
audit firm, including false
statement or adverse
opinion
Regulations]
b. The audit opinion on financial statements and so on for the

business year ended during the recent two years (excluding the
recent one year) is unqualified and fair or qualified opinion
with exceptions.
c. The audit opinion on financial statements and so on for the
business year ended during the recent one year is, in principle,
unqualified and fair.
Regulations]
[Rule 212, Item 6 of the Regulations]
d. If any stock of an applicant is listed on another financial

instruments exchange in Japan, it shall not meet both (a) and
(b) below.
(a) An internal control audit report for the business year ended
during the recent one year includes the statement that no
assessment result can be expressed.
68
(b) An internal control audit report for the business year ended
during the recent one year includes the statement that any
opinion is refrained from being expressed.
7. Treatment at designated The following a. or b. must be satisfied:
book-entry transfer
institution
a. The stock is subject to the foreign stock book-entry transfer or
book-entry transfer of the designated book-entry transfer
institution.
Regulations]
Regulations]
b. The stock is expected to be subject to the transfer as mentioned

above by the time of listing.

8. Restrictions on transfer of a. No restrictions have been imposed on the transfer of foreign
stock
stock, etc. for which an initial listing application is filed.
Regulations]
Regulations]
9. Depository agreement,
etc.
Regulations]
Regulations]
[Rule 213, Paragraph 3 of the Rules]
b. No restrictions are expected be imposed by the listing;

provided, however that this criterion does not apply to cases
where imposing restrictions on the transfer of foreign stock is
required to meet the provisions of laws and regulations of a
home country and the nature of such restrictions is determined
not to impede trading on JASDAQ
If an initial listing applicant files an application for listing of foreign
stock depositary receipts, the depository agreement and other
agreements for foreign depository receipts for which the listing
applicant is filed shall meet the requirements of a and b below.
a. In the case of foreign stock depositary receipts, the depository
agreement will be entered into concerning the depository period
of the receipts and by and between the holders of the receipts.
b. In the case of foreign stock trust beneficiary certificates, the
depository agreement will be entered into concerning the
depository period of the certificates and by and between the
holders of certificates, and the initial listing applicant enters into
the agreement which TSE determines is appropriate.
69
b. Eligibility Requirements (Standard Market)

Item
Requirements
(1) Outlook for business performance and financial condition of the
corporate group of an initial listing applicant do not hinder the
corporate continuity of the applicant in the future. In this case,
when falling under the following a. or b., the outlook for business
performance and financial condition shall be deemed to not hinder
corporate continuity.
a. Maintenance of the levels of recent business performance and
financial condition of the corporate group of an initial listing
applicant is reasonably expected.
1. Business continuity
b. In cases where the business performance or financial condition of

the corporate group of an initial listing applicant is deteriorating or
poor, such situation is deemed to improve in such way as the levels
of such performance and conditions are expected to recover or
improve in the future based on an objective fact(s).
There are no obstacles to (2) Management activities of the corporate group of an initial listing
applicant are deemed to be able to be carried out stably and
continuity of business
continuously in light of matters including those enumerated in the
activities
following a. to d.:
[Rule 216-5, Paragraph 1, Item 1
of the Regulations]
[III-2, 2 of Guidelines]
a. Business activities of the corporate group of an initial listing

applicant can be conducted stably and continuously in light of
purchases, production, sales, and actual results of transactions
with customers and suppliers, as well as characteristics and
demand trends for manufactured products and services and the
state of performance of any other business.
b. Investment activities such as capital investment and business
investment, etc. of the corporate group of the initial listing
applicant do not hinder the continuity of management activities in
light of the trend and future outlook, etc. for its investment.
c. Financial activities such as fund-raising, etc. of the corporate group
of the initial listing applicant do not hinder the continuity of
management activities in light of the trend and future outlook, etc.
of its financial state.
d. With respect to the matters which are the basis of the main
business activities of the corporate group of the initial listing
70
applicant, there are no issues that will hinder the continuity of such
business activities.
(1) The system to ensure the appropriate execution of duties of
officers of the corporate group of the initial listing applicant is
deemed to be properly established and appropriately operated in
light of matters including those enumerated in the following a. and
b.:
a. An initial listing applicant has an organizational structure and an
officer composition which allow for effective checking and audit of
the execution of duties by officers of the corporate group of an
initial listing applicant. The listing examination in such case shall be
conducted in consideration of the state of compliance with matters
prescribed in the provisions of Rules 436-2 through 439 of the
Regulations.
2. Establishment of sound
b. Checking and audit of the execution of officer duties are carried out
and function effectively toward the efficient management of the
internal management
corporate group of an initial listing applicant.
system
Corporate governance and (2) The mutual relationship between relatives of officers of an initial
listing applicant, its composition, the actual working situation or the
internal management
state
of concurrent positions as officers and employees, etc. at
system have been
another company, etc. are deemed to not impair the fair, faithful,
established in
and proper execution of officer duties or effective audit of such
accordance with corporate
initial listing applicant. In this case, where a spouse, blood relative
scale and function
within the second degree of kinship, and relations by affinity of
effectively
directors, accounting advisors, executive officers, or persons
equivalent thereto assume a position as an auditor, a member of
of the Regulations]
an audit committee, or persons equivalent thereto, it shall be
deemed to impair effective audit.
(3) The corporate group of an initial listing applicant is deemed to
adopt accounting treatment standards suited to its actual situation
and, in addition, a necessary accounting structure is deemed to be
established and operated appropriately.
(4) An effective system for compliance with laws and regulations, etc.
concerning management activities and other matters in the
corporate group of an initial listing applicant is deemed to be
(5) The internal management system is deemed to be properly
71
established and appropriately operated so that an initial listing

applicant and its corporate group carry out effective management
activities in light of matters including those enumerated in the
following a. and b.:
a. A necessary managerial and administrative system is properly
established and appropriately operated to ensure efficiency of
management activities and internal check-and-balance functions of
the corporate group of an initial listing applicant.
b. An internal audit system of the corporate group of an initial listing
applicant is properly established and appropriately operated.
(6) Necessary personnel are deemed to be secured in order to carry
out stable and continuous execution of management activities and
maintenance of the internal management system of the corporate
group of an initial listing applicant.
(1) The corporate group of an initial listing applicant is deemed, as a
general rule, to not unfairly grant or enjoy benefits through a
transaction or any other management activities with relevant
parties or other specific entities in light of matters including those
enumerated in the following a. and b.:
an initial listing applicant and relevant parties or other specific
entities, and such transaction has reasonability of continuance, and
3. Reliability of Corporate
its terms including the transaction price are appropriate.
Actions
b. The interests of the corporate group of an initial listing applicant
Corporate actions which
are not unfairly undermined due to relevant parties or other
cause market disorder are
specific entities of the corporate group of an initial listing applicant
not expected
giving priority to their own interests.
of the Regulations]
(2) Where an initial listing applicant has a parent company, etc.

(excluding cases where such applicant is expected to cease to have
a parent company, etc. by the end of the first business year after
listing), management activities of the corporate group of an initial
listing applicant are deemed to be independent of such parent
company, etc. in light of matters including those enumerated in the
following a. to c.:
corporate group of the initial listing applicant and that of the
72
corporate group of the parent company, etc., the state and

possibility of business line adjustment made by the corporate
group of the parent company, etc. and any other matters, the
initial listing applicant is not deemed to be substantially a business
division of such parent company, etc.
company, etc., as a general rule, has not been coercing or inducing
transactions which will undermine the interests of such parent
applicant, such as transactions that have markedly different terms
from those of normal transactions
an initial listing applicant is deemed not to excessively depend on
the parent company, etc. and not hinder continuous management
activities.
(3) The management of the corporate group of an initial listing
applicant has insight into the responsibilities and significance of
being listed on a financial instruments market.
(4) An initial listing applicant shall not fall under any of the following a.
through c.
a. In case where the listing applicant plans to effect merger, divesture
of business, or become a subsidiary or non-subsidiary within three
years from the end of the business year following the initial listing
application date, TSE determines that the initial listing company
would not be a de facto surviving company through any of such
acts;
provided that this will not apply to cases where it is determined
that the merger is effected to make any company without
substance a surviving company and the divesture is determined to
be a divesture of business to receive the business from the parent
company.
b. The initial listing applicant plans to effect a merger where the initial
listing applicant becomes a dissolved company, a share exchange
or share transfer where the initial listing applicant becomes a fully
owned subsidiary of another company within three years from the
end of business year immediately preceding the initial listing
application date.
73
c. The initial listing applicant plans to delist its stock by means of

acquisition of all the shares by large shareholders, management,
employees or other specified persons or other means within three
years from the end of business year immediately preceding the
initial listing application date.
(5) Where an initial listing applicant has introduced a takeover
defense measure, the initial listing applicant complies with the
matters enumerated in the following (a) to (d):
(b) Transparency:
Conditions of implementation and abolishment of takeover defense
measures shall not depend on arbitrary decisions by the
management;
factors which may cause unpredictable damage to investors; and
(6) The corporate group of an initial listing applicant has developed a
corporate structure to prevent anti-social forces from intervening in
management activities and is making efforts to prevent such
intervention, and such efforts are deemed appropriate in light of
the public interest or investor protection.
(7) The corporate group of an initial listing applicant has not recently
committed material violations of laws and regulations or acts
against the public interest, and furthermore is deemed not to
conduct acts which are likely to become a material violation of laws
and regulations or work against the public interest in the future.
details, etc.

will have a material impact on management and to disclose it to
investors in a timely and appropriate manner. Moreover, its system
The company is capable of
for the preemptive prevention of insider trading is deemed to be
developed and operated appropriately.
appropriately disclosing
corporate details, etc.
74

of the Regulations]

in compliance with laws and regulations, and appropriately contain
the matters enumerated in the following a. to c. and other matters
in consideration of the state of the business line and the business
condition of an initial listing applicant and its corporate group:
analysis and explanation pertaining to the state of financial
condition, management performance, and receipt and
disbursement of funds, the state of related companies, the state of
research and development activities, the state of major
shareholders, the state of officers and employees, dividend policy,
and purposes of funds raised for capital increase through a public
offering with respect to an initial listing applicant and its corporate
group.
b. Matters that should be considered as risk factors of an initial listing
applicant when investors make investment decisions, such as the
small number of years in business operation, the state of
cumulative losses or business losses, dependence on a specific
officer, the state of competition for business with other companies,
uncertainties of markets and technologies, and the state of support
for the purpose of the administration of business from a specific
entity, etc., concerning an initial listing applicant.
an initial listing applicant and its corporate group:
(a) Details of the matters which are the premises of the main business
activities of an initial listing applicant and its corporate group;
(b) Where the validity period of permission and authorization, etc. and
any other time limit is specified by laws and regulations or a
(c) Where cancellation, rescission, and any other event of permission,
authorization, etc. are stipulated by laws and regulations or a
contract, etc., such fact; and
(d) The effect that there is no factor which hinders their continuity
concerning the matters which are the premises of the main
applicant, and if there is such factor, the effect that it will have a
material effect on business activities.
75

trading act with its relevant party or any other specific entity or
adjusting share ownership ratios, etc.
(4) If an initial listing applicant owns a company which in effect holds
a majority of voting rights of the initial listing applicant, the
disclosure on the company must be effective and meet either a. or
b. below;
provided that this will not apply to cases where the actual
relationship between the initial listing applicant and its apparent
major shareholding company is thin and the shareholding by the
majority shareholding company has been made for the fostering of
investment and has not been made for substantially controlling the
business activities of the initial listing applicant.
a. Stock, etc. issued by the majority shareholding company of an
initial listing applicant is listed on a domestic financial instruments
exchange (including cases where a stock, etc. issued by such
parent company, etc. is listed or continuously traded on such
foreign financial instruments exchange, etc., and the state of
disclosure on corporate affairs in a country in which such parent
company, etc. or such foreign financial instruments exchange, etc.
is located is not deemed to markedly lack investor protection).
b. The listing applicant can appropriately grasp the facts, etc.
concerning the majority shareholding company which may
significantly affect its management and the applicant undertakes in
writing that the majority shareholding company agrees to
appropriately disclose to investors any information of its corporate
information which may have significant effect on the management
of the initial listing applicant.
deemed appropriate from the viewpoint of investor protection.
(6) Where an initial listing company is a foreign company, the stock,
continuously traded on a foreign financial instruments exchange,
etc. and the initial listing application is made only to the Exchange,
the "Securities Report for Initial Listing Application (Part I)" shall
a. Matters enumerated in the following (a) and (b) for the period from
76
the day that falls one year prior to the end of the first business year
immediately before the initial listing application date to the day
immediately prior to the listing date
(a) The state of new stock issues, or issues of subscription warrants
or bonds with subscription warrants by a method other than
allocation to shareholders
(b) The state of change in the ownership of the shares pertaining to
the stock, etc. held by parties having special interests, etc.
b. Where a holder of a stock, a subscription warrant or a bond with
subscription warrants has made an arrangement concerning the
holding of such securities for a certain period after listing with an
initial listing applicant or with a financial instruments business
operator which enters into the principal underwriting agreement
with an initial listing applicant, such details.
(1) The details of the rights of shareholders or holders of foreign stock
depositary receipts, etc. and the state of their exercise are not
unfairly restricted.
(2) The corporate group of an initial listing applicant does not have an
ongoing lawsuit or dispute, etc. which would have a material
impact on management activities and business performance.
(3) Where the domestic stock, etc. pertaining to an initial listing
applicant is shares without voting rights or shares with a small
number of voting rights, all of the following a. to f. shall be met:
a If a company is controlled with an extremely small ratio of equity
interest or investor
contribution, a scheme of shares without voting rights or a small
protection
number of voting rights is expected to be dissolved.
of the Regulations]
Where conflicts of interest arise between shareholders of different

classes, it is deemed that protection measures can be taken so that
shareholders of a domestic stock, etc. pertaining to such initial
listing applicant are not unfairly damaged.
c. Where the issuer of the domestic stock, etc. pertaining to such

initial listing application carries out a transaction with an entity
enumerated in the following (a) to (c) (including transactions, out
of transactions carried out between an entity enumerated in the
following (a) to (c) and such issuer on behalf of a third party and
those between such issuer and a third party, where an entity
enumerated in the following (a) to (c) has a material impact on
such issuer concerning such transactions), it is deemed that
77
measures to protect minority shareholders are expected to be able

to be taken:
(a) A parent company
(b) The controlling shareholders (excluding a parent company) and
their close relatives
(c) The company, etc. whose majority of voting rights are held by the
entities enumerated in the preceding (b) for their own account
that holds the majority of the voting rights on its own account and
a subsidiary of such company, etc.
d. Where the domestic stock, etc. pertaining to such initial listing
application are shares with a small number of voting rights, shares
with a large number of voting rights shall be converted to shares
with a small number of voting rights when the transfer of such
shares, etc. is carried out.
e. Where the domestic stock, etc. pertaining to such initial listing
application has preferential contents concerning dividends from
retained earnings, as a general rule, estimated profits for two (2)
years after the end of the business year immediately prior to listing
application date and a distributable amount as of the end of the
business year immediately prior to the listing application date are
deemed to be good, and it is expected that the issuer of such
domestic stock, etc. will record enough profits to carry out
dividends from retained earnings pertaining to such domestic
stock, etc.
f. The interests of shareholders and investors are deemed to be highly
unlikely to be undermined.
(4) It is deemed appropriate from the viewpoint of the public interest
or investor protection.
78
c. Eligibility Requirements (Growth Market)

Item
Requirements
(1) The profit/loss situation or financial condition of the corporate
group of the initial listing applicant is expected to rise. An initial
listing applicant that falls under the following a or b shall be
handled as being in a situation where its profit/loss situation or
financial condition is expected to rise.
a. From the business plan, it can reasonably be expected to achieve
sustainable growth from the fiscal year of the application.
1. Corporate growth
potential
b. In the case of a company that is an anticipatory investment

prospect expected to achieve sustainable growth in the future,
from the business plan, it is expected to achieve net income within
The company has growth
five (5) years counting from the fiscal year of the application.
potential
Regulations]
(2) There are reasonable grounds for the competitive edge and
business environment on which the business plan is based.
(3) There are no questions regarding the current state or the basis for
plans for staff allocation in the company and construction of
facilities to achieve the business plan.
(4) There are no factors, regarding matters which are the premises of
the main business activities of the corporate group of the initial
listing applicant, will hinder the continuity of such matters.
2. Establishment of sound (1) The system to ensure the appropriate execution of duties of
officers of the corporate group of an initial listing applicant is
recognized to be properly developed and appropriately operated in
internal management
systems in accordance
light of matters including those enumerated in the following a. and
with the stage of growth
b.:
Corporate governance and a. Organ design and composition of executives whereby effective
check and balance functions will be provided for the execution of
internal management
duties of executives of the corporate group of the initial listing
systems have been
applicant and effective audit can be performed.
established in accordance
with the company's stage
of growth and function
b. Check and balance functions are implemented and audit is
effectively
performed for the execution of executives of the corporate group
of the initial listing applicant to ensure efficient management.
79
Regulations]
(2) The mutual relative relationship among officers of an initial listing

applicant, its composition, the actual working situation or the state
of concurrent positions as officers and employees, etc. at another
company, etc. are deemed not to impair the fair, faithful, and
proper execution of officer duties or effective audit of such initial
listing applicant. In this case, where a spouse, blood relative within
the second degree of kinship, and relations by affinity of directors,
accounting advisors, executive officers, or persons equivalent
thereto assume a position as an auditor, a member of an audit
committee, or persons equivalent thereto, it shall be deemed to
impair effective audit.
(3) The corporate group of an initial listing applicant is deemed to
adopt accounting standards suited to its actual situation and, in
addition, a necessary accounting structure is deemed to be
(4) It is recognized that an effective system to comply with laws and
regulations, etc. concerning management activities and other
matters in the corporate group of an initial listing applicant is
prepared and operated appropriately.
(5) The internal management system is deemed to be established
properly and operated appropriately so that an initial listing
applicant and its corporate group carry out effective management
activities in light of matters including those enumerated in the
following a. and b.:
a. A necessary managerial and administrative system required to
ensure efficiency of management activities and internal
check-and-balance functions of the corporate group of an initial
listing applicant have been properly established and appropriately
operated.
b. An internal audit system of the corporate group of an initial listing
applicant is properly established and appropriately operated.
(6) Necessary personnel are deemed to be secured in order to carry
out stable and continuous execution of management activities and
maintain the internal management system of the corporate group
of an initial listing applicant.
80
(1) The corporate group of an initial listing applicant is deemed, as a

general rule, to not unfairly grant to or enjoy benefits from relevant
parties or other specific entities through a transaction or any other
management activities in light of matters including those
enumerated in the following a. and b.:
an initial listing applicant and relevant parties or other specific
entities, and continuance of such transaction is reasonable and its
terms and conditions including the transaction price are not clearly
disadvantageous for the corporate group of an initial listing
applicant.
b. The interests of the corporate group of an initial listing applicant are
not unfairly undermined due to relevant parties and other specific
entities of the corporate group of an initial listing applicant giving
priority to their own interests.
3. Reliability of Corporate
Actions
Corporate actions which
applicant are deemed to be independent of such parent company,
cause market disorder are
etc. in light of matters including those enumerated in the following
not expected
a. to c.:
Regulations]

corporate group of the parent company, etc., the state and
possibility of business line adjustment made by the corporate
group of the parent company, etc. and any other matters, the
initial listing applicant is not deemed to be substantially a business
division of such parent company, etc.
company, etc., as a general rule, has not been coercing or inducing
transactions which will undermine the interests of such parent
applicant, such as transactions that have markedly different terms
and conditions from those of normal transactions
an initial listing applicant is deemed not to excessively depend on
the parent company, etc. and not hinder continuous management
activities.
81
(3) The management of the corporate group of an initial listing

applicant has insight into the responsibilities and significance of
being listed on a financial instruments market.
(4) An initial listing applicant shall not fall under any of the following a.
through c.
a. In case where the listing applicant plans to effect merger, divesture
of business, or become a subsidiary or non-subsidiary within three
years from the end of the business year following the initial listing
application date, TSE determines that the initial listing company
would not be a de facto surviving company through any of such
acts;
provided that this will not apply to cases where it is determined
that the merger is effected to make any company without
substance a surviving company and the divesture is determined to
be a divesture of business to receive the business from the parent
company.
b. The initial listing applicant plans to effect a merger where the initial
listing applicant becomes a dissolved company, a share exchange
or share transfer where the initial listing applicant becomes a fully
owned subsidiary of another company within three years from the
end of business year immediately preceding the initial listing
application date.
c. The initial listing applicant plans to delist its stock by means of
acquisition of all the shares by large shareholders, management,
employees or other specified persons or other means within three
years from the end of business year immediately preceding the
initial listing application date.
(5) Where an initial listing applicant has introduced a takeover
defense measure, the initial listing applicant complies with the
matters enumerated in the following (a) to (d):
(b) Transparency:
Conditions of implementation and abolishment of takeover defense
measures shall not depend on arbitrary decisions by the
management;
82

factors which may cause unpredictable damage to investors; and
(6) The corporate group of an initial listing applicant has developed a
corporate structure to prevent anti-social forces from intervening in
corporate activities, is making efforts to prevent such intervention,
and such efforts are deemed appropriate in light of the public
interest or investor protection.
(7) The corporate group of the initial listing applicant has not recently
committed material violations of laws and regulations or acts
against the public interest, and furthermore is not conducting acts
which are likely to become a material violation of laws and
regulations or work against the public interest in the future.
will have a material impact on management and to disclose it to
investors in a timely and appropriate manner. Moreover, its system
for the preemptive prevention of insider trading is deemed to be
developed and operated appropriately.
details, etc.

in compliance with laws, regulations, etc., and appropriately
contain the matters enumerated in the following a. to c. and other
The company is capable of
matters in consideration of the state of the business line and the
appropriately disclosing
business condition of an initial listing applicant and its corporate
corporate details, etc.
group:
Regulations]

technologies with growth potential, features of its business model,
business environment, schedule or state of progress until full
business launch, analysis and explanation pertaining to the state of
financial condition, management performance & receipt and
disbursement of funds, the state of the related companies, the
state of R&D activities, the state of major shareholders, the state of
officers & employees, dividend policy, and purposes of funds raised
for capital increase through a public offering concerning an initial
listing applicant and its corporate group.
83
b. Matters that should be considered as risk factors for an initial listing

applicant when investors make investment decisions, such as the
small number of years in business operation, the state of the
occurrence of cumulative losses or business losses, management
dependence on a specific officer, the state of competition for
business with other companies, uncertainties of markets and
technologies, and the state of support for the purpose of the
administration of business from a specific entity, etc., concerning
an initial listing applicant.
the corporate group of an initial listing applicant:
(a) Details of the matters which are the premises of the main
applicant
(b) Where the validity period of permission and authorization, etc.
and any other time limit is specified by laws and regulations or a
contract, etc., such time limit
(c) Where cancellation, rescission, and any other event of
permission and authorization, etc. are stipulated by laws and
regulations or a contract, etc., such fact
(d) With regard to the matters which are the premises of the main
applicant, the effect that there is no factor which hinders their
continuity, and if there is such factor, the effect that it will have
a material impact on business activities
(3) An initial listing applicant is able to appropriately develop a
medium-term management plan and hold briefings and other
sessions for investors.
trading act with its relevant party or any other specific entity or
adjusting share ownership ratios, etc.
(5) If an initial listing applicant owns a company which in effect holds
a majority of voting rights, the disclosure on the company must be
effective and meet either a. or b. below;
provided that this will not apply to cases where the actual
relationship between the initial listing applicant and its apparent
84
major shareholding company is thin and the shareholding by the

majority shareholding company has been made for the fostering of
investment and has not been made for substantially controlling the
business activities of the initial listing applicant.
a. Stock, etc. issued by the majority shareholding company of an
initial listing applicant is listed on a domestic financial instruments
exchange (including cases where a stock, etc. issued by such
parent company, etc. is listed or continuously traded on such
foreign financial instruments exchange, etc., and the state of
disclosure on corporate affairs in a country in which such parent
company, etc. or such foreign financial instruments exchange, etc.
is located is not deemed to markedly lack investor protection).
b. The listing applicant can appropriately grasp the facts, etc.
concerning the majority shareholding company which may
significantly affect its management and the applicant undertakes in
writing that the majority shareholding company agrees to
appropriately disclose to investors any information of its corporate
information which may have significant effect on the management
of the initial listing applicant.
deemed appropriate from the viewpoint of investor protection.
(7) Where an initial listing company is a foreign company, the stock,
continuously traded on a foreign financial instruments exchange,
etc. and the initial listing application is made only to the Exchange,
the "Securities Report for Initial Listing Application (Part I)" shall
a. Matters enumerated in the following (a) and (b) for the period from
the day that falls one year prior to the end of the first business year
immediately before the initial listing application date to the day
immediately prior to the listing date:
(a) The state of new stock issuance, or issuance of subscription
warrants or bonds with subscription warrants by a method other
than allocation to shareholders
(b) The state of change in the ownership of the shares pertaining to
the stock, etc. held by a party having special interests, etc.
b. Where a holder of a stock, a subscription warrant or a bond with
85
subscription warrants security has made an arrangement

concerning the holding of such securities for a certain period after
listing with an initial listing applicant or with a financial instruments
business operator which enters into the principal underwriting
agreement with an initial listing applicant, details of such
arrangement.
(1) The details of the rights of shareholders or holders of foreign stock
depositary receipts, etc. and the state of their exercise are not
unfairly restricted.
(2) The corporate group of an initial listing applicant does not have an
ongoing lawsuit or dispute, etc. which would have a material
impact on management activities or business performance.
(3) Where the domestic stock, etc. pertaining to an initial listing
application is shares without voting rights or shares with a small
number of voting rights, all of the following a. to f. shall be met:
a. If a company is controlled with an extremely small ratio of equity
contribution, a scheme of shares without voting rights or a small
number of voting rights is expected to be dissolved.
b. Where conflicts of interest arise between shareholders of different
interest or investor
classes, protection measures are deemed to be able to be taken so
protection.
that shareholders of the domestic stock, etc. pertaining to such
Regulations]
initial listing application are not unreasonably damaged.

c. Where the issuer of the domestic stock, etc. pertaining to such
initial listing application carries out a transaction with an entity
enumerated in the following (a) to (c) (including transactions, out
of transactions carried out between an entity enumerated in the
following (a) to (c) and such issuer on behalf of a third party and
those between such issuer and a third party, where an entity
enumerated in the following (a) to (c) has a material impact on
such issuer concerning such transactions), it is deemed that
protection measures for minority shareholders are expected to be
able to be taken:
(a) A parent company
(b) The controlling shareholders (excluding a parent company) and
their close relatives
(c) The company, etc. in the preceding (b) that holds the majority
of the voting rights on its own account and a subsidiary of such
company, etc.
86
d. Where the domestic stock, etc. pertaining to such initial listing

application is shares with a small number of voting rights, shares
with a large number of voting rights shall be converted to shares
with a small number of voting rights, when transfer, etc. of such
shares is carried out.
e. Where the domestic stock, etc. pertaining to such initial listing
application has preferential contents concerning dividends from
retained earnings, estimated income for two (2) years after the end
of the business year immediately prior to the listing application
date and a distributable amount as of the end of the business year
immediately prior to the listing application date are, as a general
rule, deemed to be good, and it is expected that the issuer of such
domestic stock, etc. will record enough income to carry out
dividends from retained earnings pertaining to such domestic
stock, etc.
f. The interests of shareholders and investors are deemed to be highly
unlikely to be undermined.
(4) It is deemed appropriate from the viewpoint of the public interest
or investor protection.
87
d. Documents to be Filed
application. Each of such documents is requested to be filed when the requirements for the filing
(a) Documents to be filed at the time of conducting the initial listing application
Number
Preliminary Application Form for initial listing of securities
Financial Statement of account for non-listed majority holding company, etc (Note 3)
7
8
Written statement of assurance of parent companys concerning cooperation regarding listing

examination, etc. of parent company (Note 3)
Written statement of assurance of parent companys concerning timely disclosure,
etc. of parent company (Note 3)
10
Minutes of the Meeting of the Board of Directors on initial listing application
11
A legal opinion
12
13
14
15
16
Table of Change in Number of shareholders or of holders of Foreign Stock Depositary Receipts,
etc. (Note 5)
17
18
19
Sponsors Letter of Confirmation
20
21
JASDAQ Listing Application Report
22
23
24
Written confirmation concerning timely disclosure, etc.
88
25
26
Audit Reports, Interim Audit Reports or Quarterly Review Reports Excluding applicants
exempted under the clause in Rule 211, Paragraph 6 of the Rules)
Summary Audit Reports, Summary Interim Audit Reports or Summary Quarterly Review Reports
(Excluding Applicants exempted under the clause in the Rule 211, Paragraph 6 of the Rules)
27
28
29
Corporate Reportmaterials describing the applicant's business and operation)
30
Materials sent to Shareholders and official publications (including the notice of the general
shareholders' meeting) regarding the General Shareholders' Meetings in the past two (2) years
Documents (such as prospectuses) sent to shareholders regarding rights issue in the past two
31
32
33
34
35
36
37
38
39
A copy of the Annual Report sent to shareholders or holders of Foreign Stock Depositary
Receipts in the past one (1) year
A copy of the Interim Report and Quarterly Reports sent to shareholders or holders of Foreign
Stock Depositary Receipts in the past one (1) year
A copy of the Securities Report, Annual Report, Interim Report, Quarterly Reports and
Extraordinary Reports submitted to the Prime Minister etc. in the past one (1) year (Note 1)
A copy of the Securities Registration Statement (including amendments thereto) submitted to
the Prime Minister etc. in the past one (1) year (Note 1)
Relevant laws pertaining to the incorporation of the applicant in the applicant's jurisdiction
A set of documents submitted by the applicant to relevant authorities in relation to application
of tax refund
40
Sample of foreign stock certificates and etc. (to be attached stock sample list)
41
Written oath concerning matters relevant to the applicant

Financial statements and supplementary statements about the business year that the company
42
has not made its consolidated financial statements and/or non-consolidated financial
statements in last five years (copy) (Note 8)
43
44
45
46
List of meetings of Board of Directors for the last two years and the year in which the
application is filed (Note 8)
Minutes of meetings of Board of Directors for the latest year and the year in which the
application is filed (copy) (Note 8)
List of meetings of Board of Company Auditors for the last two years and the year in which the
application is filed (Note 8)
Minutes of meetings of Committee of Company Auditors for the latest and the year in which the
A series of company auditors (audit committees) audit materials ranging from the audit
47
planning and implementation to report, etc. for the latest year and application year (copy)
(Note 8)
48
Financial statements, business report or corporate tax return of related parties of the corporate
group of the applicant for each of the last two years (Note 8)
89
49
Monthly performance management data for the previous year and the year in which the
Annual budget plan and medium-term management plan and (the series of internal data used
50
for the preparation thereof) for the fiscal year in which the listing application is filed (copy)
(Note 8)
51
Contract which is important for Material contracts for the management
52
Management organization chart and assignment plan as of listing date (Note 8)
53
Catalogs and pamphlets for products, goods, and services, etc. (Note 8)
54
Flow chart (related to procurement and sales procedures) (Note 8)

55
JASDAQ Listing Application Report 15(5) Materials were documenting the correspondence
56
described in the "management of timely disclosure materials, etc." (company regulation and
manuals, etc.)
57
A series of internal audit materials ranging from the audit planning and implementation to
report, etc. for the recent year and application year (copy)
Financial statements, business reports or a document submitted by the applicant to relevant
58
authorities in relation to application of tax refund of each fiscal year in the last two years of
related parties of the applicant company group. (Note 8) (Note 9)
90
(b) Documents to be filed after the initial listing application where necessary /applicable
Number
Quarterly Reports for Initial Listing Application where: (Note 1) (Note 2)
The listing day falls anytime after three (3) months from the beginning of the business
year containing the initial listing application day, the Quarterly Report for Initial Listing
59
Notice of board meeting resolutions or General Shareholders' Meeting resolutions during the
60
listing day
61
(Note 1)
62
Securities Registration Statement including amendment theretoand document attached

thereto
Notice of effectiveness of Securities Registration Statement
63
Notification of Initial Listing Application Securities Report Amendment (at time of effect of
amended details)
91
(c) Documents to be filed after the initial listing application but no later than listing
approval is granted
Number
64
65
Listing Agreement
66
67
68
69
A document describing the matters relating to a controlling shareholder, etc PDF version
70
Financial Statement of account for non-listed majority holding company, etc PDF version (Note
3)
71
72

73
74
Quarterly Report of Initial Listing Application (Note 1)
75
Quarterly Report of Initial Listing Application PDF version (Note 1)
76
77
Drafted disclosures (matters concerning growth potential) as of listing date
(d) Documents to be filed by the applicant making a public offering, etc.

Number
78
Expected Public Offering or Secondary Offering Plan
79
80
(accompanying documents of calculation of the expected market capitalization)
81
Press release of Notice of Provisional Conditions and the reasons for deciding them
82
83
price range) (Note 1)
84
Press release of Notice of the Determination of Offering Prices and the reasons, etc. therefor
85
86

(Note 1)
87
Notice on effectiveness of Securities Registration Statement
88
Notice of execution of Public Offering or Secondary Offering
89
92
Note 1:
processing for disclosure as prescribed by Article 27-30-2 of the Financial Instruments and Exchange Act), the submission
of such documents is not required.
Note 2:
The latest quarterly report is only required in the business year containing the initial listing application day. The applicant
applying for a multiple listing need not submit the document.
Note 3:
The applicant only needs to submit the document when an applicant has a non-listed majority holding company. However,
"Financial Statement of account for non-listed majority holding company, etc" and "Written statement of assurance of
parent companys concerning timely disclosure, etc. of parent company" are needed to submit, where none of the following
is the case:
(1) the shares issued by the parent company, etc. is listed on a financial instruments exchange in Japan
(2) the shares issued by the parent company, etc. is listed or continuously traded on a foreign financial instruments
Note 4:
Note 5:
Note 6:
Note 7:
In cases where the foreign stock, etc. pertaining to initial listing application is not listed or continuously traded on a
domestic financial instruments exchange or foreign financial instruments exchange, etc., submission is only required when
public offering or secondary offering will not be conducted for the foreign stock, etc. pertaining to initial listing application.
Note 8:
When the company did not make the documents or is too difficult to made them due to a foreign company, please contact
New Listings, Tokyo Stock Exchange.
Note 9:
Submission only required in cases where the applicant for Growth Market.
93
(4) Listing Examination Schedule (Primary Listing)

The listing examination schedule of stock of foreign companies may vary dependent on the legal
basis for foundation, accounting standards applied or whether the application relates to single or
multiple listing. For reference, the following shows a typical listing schedule for foreign companies.
The examination period for foreign companies may take three months from the acceptance of listing
application. Actual examination will be carried out by JPX Regulation entrusted by TSE to do so.
Standard Examination Schedule (Foreign companies) 9, 10
The schedule shown here is a typical example and may be subject to change.
TSE shall examine the regulatory system of the home country of an applicant company in preliminary
confirmation procedure. Note that, it may take longer time than the others when the applicant company
is the first from its country to apply. Please refer to forms of "Confirmation Report prior to Initial Listing
Application (for Applicant Company)" and "Confirmation Report prior to Initial Listing Application (for
Trading Participant Handling Matters)" at A.
10
94
7. Listing Examination by TSE (Multiple Listing)

When a foreign company that is already listed on the market of its home country lists on TSE, it
shall be treated as a multiple listing. Subset of the listing criteria of multiple listing are different from
primary listing. The formal requirements and the eligibility requirements of each market are as
follows.
In application of the rules and regulations of TSE to a foreign country or a foreign corporation
where the foreign country or the foreign corporation is an issuer, etc. of a listed security, TSE shall
take into account legal systems, practices and customs, etc. in such foreign country or the country,
etc. of the foreign corporation.
(1) Main Markets (TSE 1st Section and 2nd Section)(Multiple Listing)
The formal requirements for the purpose of multiple listing are similar to those for the purpose of
primary listing in many aspects. However the following criteria differ from those for primary listing.
For the formal criteria for primary listing, please refer to Formal Criteria at section 6(1) a.
Requirements
Item
TSE 1st Section
TSE 2nd Section
Status of distribution of a A remarkably large number of shares is deemed not to be held by

foreign stock, etc. 11
specific shareholders or holders of a foreign stock depositary receipt,
etc.
the Regulations]
Tradable shares
(expected at listing) 12
the Regulations]
[Rule 205, Item 2-a of the
The number of tradable shares : The number of tradable shares :

20,000 units or more; and
4,000 units or more; and
Regulations]
Regulations]
Regulations]
11
Required for multiple listing.

The market capitalization of the tradable shares and The number of tradable shares (as a percentage
of the total number of issued shares outstanding), which are required for primary listing, are not
required for multiple listing.
12
95
b. Eligibility Requirements and Special Exceptions to Multiple Listing of Foreign Companies

The same eligibility requirements as those for primary listing will apply.
eligibility requirements, please refer to sections 6(1) b.
For the requirements of
Where an initial listing applicant is a foreign company, and the main market of a foreign stock, etc.
issued by such initial listing applicant is other than TSE and, furthermore, where TSE deems it
appropriate in light of listing of securities, timely disclosure of the issuer of listed securities, delisting,
the state of the development and operation of the legal system and rules concerning listed securities
in such main market, they shall be treated as appropriate for all or part of the examination.
[II. 12 of the Guidelines]
In addition, Special Exceptions to Multiple Listing Foreign Companies is not for Mothers market or
JASDAQ market but for Main Markets (TSE 1st Section and 2nd Section).
The same documents as those for primary listing are required to be filed. For details, please refer
to section 6(1)c.
96
(2) Mothers (Multiple Listing)

For the formal criteria for primary listing, please refer to Formal Criteria at section 6 (2) a.
Item
Requirements
13
Tradable shares
The number of tradable shares : 2,000 units or more; and
the Regulations]
Regulations]
eligibility requirements, please refer to section 6 (2) b.
to section 6 (2) c.
13
The market capitalization of the tradable shares and The number of tradable shares (as a
percentage of the total number of issued shares outstanding), which are required for primary listing, are
not required for multiple listing.
97
(3) JASDAQ Market (Multiple Listing)

a. Formal Requirements (Standard and Growth Markets)
For the formal criteria for primary listing, please refer to Formal Criteria at section 6 (3) a.
Item
Multiple listing
(Standard and Growth)
Primary listing
Public offering or secondary offering at the
higher of the number of shares described in
the division mentioned below or 10% of the
number of shares issued expected at the time
of listing shall be implemented during the
period from the listing application date to the
previous day of the listing date.
Implementation of
public offering or
secondary offering
(a) Trading unit comprising 1,000 shares:

one million shares
(b) Trading unit comprising 500 shares:
500,000 shares
(c) Trading unit comprising 100 shares:
100,000 shares
(d) Trading unit comprising 50 shares:
50,000 shares
(e) Trading unit comprising 10 shares:
10,000 shares
(f) Trading unit comprising 1 shares: 1,000
shares

Regulations]
b. Eligibility Requirements (Standard and Growth Markets)

eligibility requirements, please refer to sections 6 (3) b and 6 (3) c.
to section 6 (3) d.
98
(4) Listing Examination Schedule (Multiple Listing)

Listing schedules of foreign companies may vary dependent on their legal basis for their
foundation and the accounting standards applied. For the listing schedule of foreign companies,
please refer to section 6 (4).
99
8. Listing of JDR
8. Listing of JDR
(1) What is JDR?
Japanese Depositary Receipt (JDR) is a beneficial interest in trust issuing beneficiary certificate
whose trust assets are foreign stocks, etc., as defined in the Trust Act (Act No. 108 of 2006) provided
in Rule 2, Paragraph 1, Item 14 of the Act. JDR is often called Japanese ADR or Japanese GDR.
In the United States and Europe, the depositary receipt scheme has traditionally allowed foreign
companies to list their stocks on US stock exchanges. In the United States, American Depositary
Receipts or ADRs are issued and listed on a US stock exchange pursuant to the laws of the United
States of America. In the United Kingdom, depositary receipts (Global Depositary Receipts or GDRs)
are issued and listed on UK stock exchanges mainly under the laws of European jurisdictions. A
depositary receipt represents a negotiable certificate issued by a depositary facility as a document
evidencing the stocks (hereinafter, underlying stock) deposited at the depositary facility located in
the home country in which the depositary receipt is issued, and it is listed as an alternative for the
underlying stock. This listing of shares via depositary receipt scheme is an effective fund-raising
mechanism for any foreign company whose underlying stock has difficulty or inconvenience in direct
listing in a foreign market (e.g. when foreign investors are restricted from acquiring underlying stock
of a company in the country, or when the governing laws in the country in which the underlying stock
is issued do not allow the issuer to list the underlying stock in any foreign stock exchange). JDR is
positioned as a Japanese version of depositary receipt. To be more precise, JDR is not a depositary
receipt but a beneficiary certificate.
In November 2007, TSE prepared listing rules for JDRs for foreign stocks, and made a partial
revision to the rules in February 2008. JDR is defined as a foreign stock trust beneficiary certificate
in the Rules (Rule 2, Item 10 of the Rules).
100
8. Listing of JDR
(2) JDR Issue Scheme

An example of JDR issue scheme is shown in the diagram below. The following procedures are
expected.
(1) Foreign Company assigns the stock (underlying stock) to a Securities Company (Type I
Financial Instruments Business Operator) which serves as Trustor
(2) Securities Company (Trustor) entrusts the underlying stock to a Trust Bank serving as Trustee.
(3) Trust Bank (Trustee) consigns the custody of the underlying stock to a Foreign Financial
Institution (Custodian).
(4) Trust Bank (Trustee) issues JDR for Trustor.
(5) & (6) Securities Company (Trustor) performs an IPO via JDR, and investors pay the value.
(7) After JDRs are listed on the TSE market, investors may buy and sell JDRs in the TSE market.
JDR Issue Scheme (Example) 14
14
The above example indicates a basic scheme for JDR and does not exclude other schemes.
101
8. Listing of JDR
(3) Listing of Stock via JDR

When an issuer lists its stock on the TSE market via JDR scheme, the statutory disclosure under the
Financial Instruments and Exchange Act (See section 10) and the procedures under the listing rules
are almost the same as the case when listing the stock (underlying stock) directly on the TSE market.
Therefore, the Foreign Company is required to implement the statutory disclosure as issuer and also
to make a listing application to TSE as a listing applicant.
(4) Handling of DRs under the Formal Requirements
In addition to the JDR, listing of stock via GDR or ADR is also possible. There are two different types
of formal requirements on the cross-listing of stock via Depositary Receipt (DR): one is to assess the
underlying stock deposited in addition to the DR; and the other is to assess only the DR. The relevant
formal requirements are as shown below.
For your reference, the table below indicates the formal requirements in the case of cross-listing in
the main market (TSE First and Second Sections). The same will apply to cases of cross-listing in TSE
Mothers and JASDAQ markets.
Reference: Listing Examination Criteria for
Handling of DR
(JDR/ADR/GDR/etc.)
Number of shareholders
(estimated as of listing
date)
2,200 persons or
*JASDAQ only requires the
more
of tradable shares
Significantly-large number of shares shall not

be held by a specific shareholder or owner of
foreign stock depositary receipts, etc.
Outstanding number of
DRs
20,000 units or more
20,000 units or more
(on a world wide basis)

DRs
(3) Ratio of tradable
shares to listed
DRs
shares
800 persons or more
number of holders in Japan.
listing date)
(2) Market capitalization
TSE Second Section
Number of DR Holders
(estimated as of
shares
TSE First Section
Tradable shares
(1) Number of tradable
Main Markets (Multiple Listing)

Market capitalization of
Market capitalization
(estimated as of listing
date)
all the outstanding

shares and DRs
(including the market
JPY 25 billion or more
JPY 2 billion or more
capitalization of other
class shares listed)
(Reference) Deposit
agreement, etc.
Deposit agreement shall be concluded in the
case of foreign stock depositary receipt, etc.
102
9. Finance through Listing (Public Offering and Secondary Offering)

(1) Procedure for Public Offering, etc. for Listing
Under TSE Rules, there are no special rules for foreign companies regarding the procedure of public
offering or secondary offering on listing. In general, foreign companies are required to take the same
procedures as Japanese companies. In addition, all the listing procedures in the past fifteen years
have been performed via book-building. 15, 16
(i) Book-building (Survey on investors' demand for public offering, etc. before listing that is
conducted pursuant to TSE Rules).
(ii) Public offering, etc. through competitive bidding (Public offering, etc. before listing that is
conducted pursuant to TSE Rules)
[Rule 233 of the Rules]
15
There have been no cases where Rule 233 of the Rules applied to foreign companies. Therefore,
foreign companies are not solely subject to the above procedures.
16
As far as a company incorporated in Japan goes, when a company allocates shares for subscription
through third party allotment, etc. on and after the date one year prior to the final date of the fiscal year
immediately before the listing application date, both the listing applicant and the person who received the
allocation of shares are required to submit a notice in writing to TSE with regard to the continued holding
of the shares for subscription and the state of holding of the shares when transferred and inquired by TSE
and also submit a commitment in writing to TSE to the effect that they will affirm public inspection on the
above document and the description or any other matters TSE considers necessary. In cases where the
listing applicant fails to submit the document to TSE, TSE will refuse the listing application or cancel the
approval. In addition, TSEs accreditation as to whether the shares for subscription are allocated or not
will be made on the basis of the due date of payment or the final date of the payment period with respect
to the shares for subscription.
103
(2) Finance Schedule on Listing (in the case of an Unlisted Company)

The chart below indicates a model schedule up to the listing of shares. As this schedule is only a
model, the actual finance schedule (including pre-marketing period, book-building period, board of
directors meeting for resolution of terms and conditions thereof, and timing of submission of
Securities Registration Statement) may differ according to each applicant.
104
10. Statutory Disclosure

Statutory disclosure under the Financial Instruments and Exchange Act shall be classified into two
categories of disclosures: Offering Disclosure, which is required at the time of offering securities; and
Continuous Disclosure, which is required after offering or listing securities.
(1) Offering Disclosure
a. Securities Registration Statement
(a) Filing of Securities Registration Statement
In normal cases, IPOs (public offering and secondary offering) of shares of foreign
stock are conducted in the Japanese market before listing. In this case, before the
solicitation for subscription for sales of shares of foreign stock, the foreign company is
required to file the Securities Registration Statement with the Kanto Finance Bureau as
part of Offering Disclosure (stipulated in Article 4, Paragraph (1) of the Financial
Instruments and Exchange Act). The form of the Securities Registration Statement, the
matters to be described and required accompanying documents, etc. are defined by law
(please refer to section 10 (1) a (c)).
The Securities Registration Statement, other disclosure documents and the
accompanying documents shall be filed and made available to the public via an electronic
disclosure system called EDINET (Electronic Disclosure for Investors' NETwork), managed
by the Financial Services Agency.
Please keep in mind that the foreign company is required to appoint a standing proxy
for the purpose of filing the Securities Registration Statement (stipulated in Article 7,
Paragraph (1) of the Cabinet Office Ordinance on Disclosure of Information, etc.). In
practice, Japanese law firms are usually appointed for that purpose, and such law firms in
the capacity of standing proxy in Japan file the Securities Registration Statement on
behalf of foreign issuers.
(b) Prohibition of Solicitation before the Notification of Securities Registration

Statement and Transactions before the Effective Date
As stated above, as it is required to file the Securities Registration Statement with the
Kanto Finance Bureau before the solicitation for subscription for sales of shares of foreign
stock (Article 4, Paragraph (1) of the Financial Instruments and Exchange Act), such
solicitation to Japanese investors (promotion etc.) is prohibited before the filing of the
Securities Registration Statement.
In addition, it shall not be allowed to have Japanese investors acquire any shares of
foreign stock or sell any shares of foreign stock to Japanese investors before the
Securities Registration Statement takes effect (Article 15 of the Financial Instruments and
Exchange Act). The period required for the Securities Registration Statement to take
effect (waiting period) is usually fifteen (15) days (stipulated in Article 8, Paragraph (1) of
the same act).
105
However, pre-hearing which refers to a preliminary hearing conducted by an issuer

and/or underwriters regarding the prospective of investors demand for the securities that
plans to offer or sale in advance should not be deemed as solicitation of securities,
together with targeting the Specified Investors (tokutei-toushika) or existing
shareholders holding 5% or more of all the voting securities of the issuer and taking
certain required measures (Consideration Points with respect to Disclosure of Corporate
Affairs, etc. (the Disclosure Guidelines 2-12-2)).
(c) Matters to be Described and Required Accompanying Documents, etc. of the

Securities Registration Statement
Foreign companies are required to file Form 7 of the Securities Registration Statement
(stipulated in Article 8, paragraph 1, item (4) of the Cabinet Office Ordinance on
Disclosure of Information, etc.). Description items required in Form 7 are as follows:
Cover Page
Part I Information Concerning Securities
I
Terms and Conditions of Primary Offering
II
Terms and Conditions of Secondary Offering
III
Special Description of Third Party Allotment
IV
Other Description
Part II Corporate Information
I
Outline of the Legal and Other Systems in the Home Country
II
Outline of the Company
III
Description of Business
IV
Conditions of Facilities
V
Description of the Company
VI
Financial Conditions
(*)This includes the financial statements for the recent two or three years.
VII
Trend of Foreign Exchange Rates
VIII Summary of Issuer's Share Handling, etc. in Japan
IV
Reference Information of Issuer
Part III Information on Guarantor, etc.
(*)This is required for Guaranteed Bonds but is not required for
Foreign Stock.
Part IV Additional Information
(*) Financial statements for the recent five fiscal years other than
those listed in VI of Part II shall be posted; provided, however, that
this does not applicable to cases where financial statements for the
recent three fiscal years are posted in VI of Part II.
As stated above, foreign companies are required to include the financial statements for
the recent three years in Part IV Additional Information of the Securities Registration
106
Statement. For details of accounting standards and audit certificates of the financial
documents, please see section 10 (3).
In addition, foreign companies are required to file the following documents as
accompanying documents (Article 10, paragraph (1), item (4) of the Cabinet Office
Ordinance on Disclosure of Information, etc.).
1) Articles of Incorporation
2) Minutes of the board of directors' meeting, etc. (any of the following: a copy of
minutes of the board of directors meeting at which a resolution authorizing the
issuance of the securities; a copy of minutes of the board of directors meeting in the
case where a resolution of the shareholders meeting; a copy of minutes of the
shareholders meeting; or certificate evidencing a permission, approval or admission
by the administrative agency regarding the issuance
3) A certificate of authorization related to changes in the amount of capital (a written
statement containing description sufficient to understand that the company obtained
permission, authorization, or approval from administrative agencies in cases where
such permission, authorization, or approval from administrative agencies is required
for changing the amount of capital of the company)
4) Trust agreement or other major contract (in case of JDR)
5) Certificate of incumbency (a written statement that proves that the representative of a
foreign company submitting such Securities Registration Statement is a person who
has legitimate authority regarding the registration of such offering or secondary
offering of the securities)
6) Power of attorney (a written statement that proves that such foreign company granted
the authority to represent the company for all acts regarding the registration of such
offering or secondary offering of securities to a party domiciled in Japan.)
7) Written legal opinion by a legal expert (certifying that the public offering or secondary
offering is legitimate and the statement contained in the Securities Registration
Statement is correct and accurate)
8) Certificate of authorization pursuant to the Foreign Exchange and Foreign Trade Act (a
written statement that proves that such foreign company obtained such permission in
cases where it is necessary pursuant to Article 21, Paragraph 1 or 2 of the Foreign
Exchange and Foreign Trade Act)
9) A copy of the principal underwriting agreement (a copy of the principal underwriting
agreement that was concluded between such foreign company and a financial
instruments business operator)
b. Obligation of Preparation and Delivery of Prospectus

An issuer who has filed the Securities Registration Statement shall prepare Prospectus
(stipulated in Article 13, paragraph (1) of the Cabinet Office Ordinance on Disclosure of
Information, etc.) and subsequently (or at the same time) deliver Prospectus to investors
(stipulated in Article 15, paragraph (2) of the Cabinet Office Ordinance on Disclosure of
Information, etc.)
107
Description items required to be included in Prospectus are almost the same as shown
above in the Securities Registration Statement. Therefore, in practice, the Securities
Registration Statement as amended to some extent could be used and delivered as the
Prospectus.
108
(2) Continuous Disclosure

After listing, foreign companies are required to file Annual Securities Reports, Internal Control
Reports, Quarterly Securities Reports and Extraordinary Reports as part of Continuous Disclosure.
These disclosure documents and the accompanying documents shall be filed and disclosed via
EDINET consistent with the Securities Registration Statement. In addition, the practical submission
of the documents will be made by a standing proxy in Japan, which is also the same with the
Securities Registration Statement.
a. Annual Securities Report

Foreign companies whose shares of stock are listed on a Japanese stock exchange are
required to file Annual Securities Report to the Kanto Finance Bureau within six (6) month
after the end of each fiscal year (stipulated in Article 24, paragraph (1) of the Financial
Instruments and Exchange Act , Article 3-4 of the Order for Enforcement of the Financial
Instruments and Exchange Act).
However, foreign companies shall be allowed to extend the deadline for submission of
Annual Securities Reports by obtaining approval of the FSA Commissioner in cases where it is
deemed that they are unable to submit the reports by the deadline due to unavoidable reasons
such as the laws and regulations or practices in their home country (stipulated in Article 24,
paragraph (1) of the Financial Instruments and Exchange Act, Article 3-4 of the Order for
Enforcement of the Financial Instruments and Exchange Act, Article 15-2-2 of the Cabinet
Office Ordinance on Disclosure of Corporate Information, etc.).
Foreign companies are required to file Form 8 of Annual Securities Report (stipulated in
Article 15, Paragraph 2, Item a. of the Cabinet Office Ordinance on Disclosure of Information,
etc.). Description items required in Form 8 are almost the same as shown above in the
Securities Registration Statement (Form 7). However, Part I Information Concerning
Securities and Part IV Additional Information are not required in the Annual Securities
Report.
Foreign companies are required to include the financial documents for the most recent two
(2) fiscal years (the financial documents for the most recent fiscal year, in the case where the
financial documents for the most recent fiscal year include information equivalent to
comparative information, prescribed in the Ordinance on Consolidated Financial Statements or
the Ordinance on Financial Statements, etc., and the financial documents for the most recent
two (2) fiscal years have already been disclosed in past submissions of Securities Registration
Statements or Annual Securities Reports) in the Annual Report. For details of accounting
standards applied to and audit certificate on the financial documents, please see section 10
(3).
It is necessary to file the following documents as accompanying documents of the Annual
Securities Report (stipulated in Article 17, Paragraph (1), Item (2) of the Cabinet Office
1)
2)
Articles of Incorporation
Matters reported or resolved at ordinary general shareholders meeting (Annual Report,
109
3)
4)
5)
6)
7)
etc.)
Copy of Trust agreement or other major contract (in case of JDR)
Certificate of incumbency (a written statement that proves that the representative of a
foreign company described in the Annual Securities Report is a person who has
legitimate authority regarding the submission of the Annual Securities Report)
Power of attorney (a written statement that proves that such foreign company granted
the authority to represent the company for all acts regarding the submission of the
Annual Securities Report to a party domiciled in Japan.)
Written legal opinion by legal expert (certifying that the statement as to legal matters
contained in the Securities Registration Statement is correct and accurate)
(In cases where a foreign company submitted the Securities Registration Statement,
etc. with respect to bonds issued and outstanding) Copy of any agreement by the
foreign company and the other parties for the purpose that the foreign company will
entrust the credit management or acts for other creditors, the act for itself, or task for
the act for itself, and copy of agreement on payment of the principal and interest.
b. Internal Control Report

Listed companies are required to submit an Internal Control Report each year, together
with Annual Securities Report (stipulated in Article 24-4-1, Paragraph (1) of the Financial
Instruments and Exchange Act). The Internal Control Report is a report which is made by the
management for the purpose of validity assessment of the organization required to secure the
reliability of financial reporting.
In cases where a foreign issuer includes financial documents in the Annual Securities
Report in the home country or a third country and where the Commissioner of the Financial
Services Agency determines that such disclosure is appropriate in the light of the protection of
investors, the foreign issuer may submit the Internal Control Report disclosed in the home
country or third country to the Japanese authority as eligible Internal Control Report.
(Stipulated in Article 24-4-4, Paragraph (1) of the Financial Instruments and Exchange Act;
and Article 12 of the Cabinet Office Ordinance on Disclosure of Information, etc.). In fact,
there are past cases where Internal Control Reports disclosed in the United States, Korea and
Malaysia have been submitted in Japan.
This Internal Control Report shall be audited by an auditing firm, etc., including the auditing
firm which issued the notification to the Financial Services Agency (stipulated in Article 193-2,
Paragraph (2) of the Financial Instruments and Exchange Act). In the case where a company
submits its internal control report during the period of three years from the date on which the
company became an issuer of listed securities, the company is exempted from an obligation to
audit internal control reports (Stipulated in Article 193-2, Paragraph (2) of the Financial
Instruments and Exchange Act; and Article 35-3 of the Order for Enforcement of the Financial
Instruments and Exchange Act) 17.
However, newly-listed companies that are deemed to exert a strong influence over the market or
over society or over the economy (such as those with capital amounts of 10 million yen or more, or
total liabilities of 100 billion yen or more) would not be subject to the exemption.
17
110
c. Quarterly Securities Report

Foreign listed companies are required to file Quarterly Securities Reports every three
months (Article 24-4-7, Paragraph (1) of the Financial Instruments and Exchange Act).
Therefore, Quarterly Securities Report shall consist of 1Q, 2Q, and 3Q securities reports. In
addition, the deadline for the submission of the Quarterly Securities Report is within forty-five
(45) days after the end of each quarterly period (Article 24-4-7, Paragraph (1) of the Financial
Instruments and Exchange Act; and Article 4 -2-10, Paragraph 3 of the Order for Enforcement
of the Financial Instruments and Exchange Act).
However, foreign companies shall be allowed to extend the deadline for submission of
Quarterly Securities Reports in cases where it is deemed that they are unable to submit the
reports by the deadline due to unavoidable reasons such as the laws and regulations or
practices in their home country (Article 24-4-7, Paragraph (1) of the Financial Instruments and
Exchange Act; and Article 17-15-2, Paragraph (1) of the Cabinet Office Ordinance on
Disclosure of Corporate Information, etc.).
Foreign issuers are required to file Form 9-3 of the Quarterly Securities Report (stipulated
in Article 17-15, Paragraph (1), Item (2) of the Cabinet Office Ordinance on Disclosure of
Information, etc.). Description items required in Form 9-3 are as follows:
Cover Page
Part I
Corporate Information
I
Outline of the Legal and Other Systems in the Home Country
II
Outline of the Company
III
Description of Business
IV
Description of the Company
V
Financial Conditions
VI
Trend of Foreign Exchange Rates
Part II Information on Guarantor, etc.
(*) This is required for Guaranteed Bonds and is not required for Foreign
Stock.
Foreign companies are required to include quarterly financial statements in V Financial
Conditions of Part I Corporate Information as listed in the above table in the quarterly
reports. For details of accounting standards applied to and audit certificate on the financial
documents, please see section 9 (3).
Foreign companies are required to submit the following documents as accompanying
documents to Quarterly Securities Report (Article 17-15, Paragraph 3 of the Cabinet Office
foreign company described in the Quarterly Securities Report is a person who has
legitimate authority regarding the submission of the Quarterly Securities Report)
the authority to represent the company for all acts regarding the submission of the
Quarterly Securities Report to a party domiciled in Japan.)
111
d. Confirmation Letter
Listed companies are required to submit to the Prime Minister a Confirmation Letter to the
effect that they confirmed these documents are in compliance with the applicable laws and
regulations (stipulated in Article 24-4-2 and Article 24-4-8 of the Financial Instruments and
Exchange Act). If a listing company has a Chief Financial Officer, the Confirmation Letter
requires a signature of the Chief Financial Officer as well as the Representative Director
(Stipulated in Article 17-10, Paragraph 1, Item (1) of the Cabinet Office Ordinance on
Disclosure of Information, etc.; Form 9-2).
112
e. Extraordinary Report
Listed companies are required to file an Extraordinary Report without delay when a
significant event exceeding prescribed criteria occurs (Article 24- 5, Paragraph (4) of the
Financial Instruments and Exchange Act).
Main events that are required for the submission of the Extraordinary Report are as listed
below; provided, however, that the submission of the Extraordinary Report is not required in
the case of minor events which do not meet certain conditions (Article 19 of the Cabinet Office
[Non-Consolidated Basis]
1) Public Offering or Secondary Offering of Securities in Foreign Market
2) Issuance of Privately Placed Securities
3) Issuance of Stock Options Not Required for Notification
4) Change in Parent Company or Specified Subsidiaries
5) Change in Major Shareholders
6) Occurrence of Significant Disaster
7) Filing or Settlement of Lawsuit
8) Determination of Stock Swap, Stock Transfer, Absorption-type Company Split,
Incorporation-type Company Split , or Consolidation-type Merger
9) Determination of Transfer or Acquisition of Key Business
10) Change of President or Representative Director
11) Commencement of Bankruptcy Proceedings, etc.
12) Occurrence of Large Uncollectible Claims
13) Occurrence of Event Significant Adverse Effect on Financial Condition and Results of
Operations
14) Occurrence or Change of Initial Public Offering Information
[Consolidated Basis]
1) Occurrence of Significant Disaster at Consolidated Subsidiary
2) Filing or Settlement of Lawsuit at Consolidated Subsidiary
3) Determination of Stock Swap, Stock Transfer, Absorption-type Company Split,
Incorporation-type Company Split , or Consolidation-type Merger at Consolidated
Subsidiary
4) Determination of Transfer or Acquisition of Key Business at Consolidated Subsidiary
5) Commencement of Bankruptcy Proceedings, etc. at Consolidated Subsidiary
6) Occurrence of Large Uncollectible Claims at Consolidated Subsidiary
7) Occurrence of Event Significant Adverse Effect on Financial Condition and Results of
Operations at Consolidated Subsidiary
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(3) Accounting Standards Applied to and Audit Certificate on Financial Documents

a. Accounting Standards
As stated above, foreign companies are required to include their financial statements in
Securities Registration Statement, Annual Securities Report and Quarterly Securities Report.
In the same way as Japanese companies, foreign companies may adopt US GAAP 18 or J-GAAP
in consolidated financial statements (or non-consolidated financial statements if the company
does not submit consolidated financial statements) if they satisfy certain requirements.
However, in cases where the Commissioner of the Financial Services Agency determines
that such financial statements are appropriate in light of the public interest or the investor
protection, the foreign issuer may use the financial statements as disclosed in the home
country or another country. (Rule 131, Paragraph (1) & (2) of the Regulations for Financial
Documents; Article 85, Paragraph (1) & (2) of Quarterly Regulations for Financial documents)
Approval by the Commissioner of the Financial Services Agency will be made on a
case-by-case basis. However, in cases where a foreign company submits financial statements
that were approved by the Commissioner of the Financial Services Agency in the past, the
procedure to obtain approval could be simplified. The accounting standards approved by the
Commissioner of the Financial Services Agency in the past are as given below. Therefore, in
case of initial public offering, an foreign company is required to confirm whether the type of
financial document disclosed by the company in the home country or another country has
been approved by the Commissioner of the Financial Services Agency in the past or not.
18
For a company registered with the US Securities and Exchange Commission (SEC) that prepares
consolidated financial statements in accordance with the terminology, forms, and preparation methods
for issuance, etc. of American depositary receipts as required by SEC, it may apply said terminology,
forms, and preparation methods in the submission of such consolidated financial statements as statutory
filings if the Commissioner of the Financial Services Agency deems them to be sufficient in terms of the
public interest and investor protection. However, this shall exclude items on which the Commissioner of
the Financial Services Agency has deemed necessary to provide instruction. (Article 95 of the Ordinance
on Consolidated Financial Statements)
114
International Financial Reporting Standards (IFRS)

Accounting principles generally accepted in the United States of America
Accounting principles generally accepted in Canada
Accounting principles generally accepted in Mexico
Accounting principles generally accepted in the United Kingdom
Accounting principles generally accepted in Ireland
Accounting principles generally accepted in Germany
Accounting principles generally accepted in France
Accounting principles generally accepted in Holland
Accounting principles generally accepted in Spain
Accounting principles generally accepted in Italia
Accounting principles generally accepted in Switzerland
Accounting principles generally accepted in Luxembourg
Accounting principles generally accepted in Sweden
Accounting principles generally accepted in Finland
Accounting principles generally accepted in Norway
Accounting principles generally accepted in Korea
Accounting principles generally accepted in Hong Kong
Accounting principles generally accepted in Taiwan
Accounting principles generally accepted in Australia
Accounting principles generally accepted in Singapore
Accounting principles generally accepted in Malaysia
b. Audit Certificate
In order to disclose financial statements in the Securities Registration Statement, Annual
Securities Report, and Quarterly Securities Report, it is necessary to obtain an audit certificate
issued by a certified public accountant or audit firm (Article 193-2, Paragraph 1 (body text) of
the Financial Instruments and Exchange Act; Article 1, Paragraph 1 and 7 of the Cabinet Office
Ordinance on Audit Certification of Financial Statements, etc.). However, in cases of foreign
companies, it is generally considered that an audit certificate or equivalent to that issued by a
foreign audit firm, etc. is deemed as eligible, as long as it is consistent with the audit
certificate in Japan (stipulated in Article 193-2, Paragraph (1), Item (1) of the Financial
Instruments and Exchange Act; Rule 35, Paragraph (2), Item (4) of the Order for Enforcement
of the Financial Instruments and Exchange Act; Article 1-2 of the Cabinet Office Ordinance on
Audit Certification of Financial Statements, etc.). Therefore, practically, foreign companies
may usually use audit certificates abroad (in other words, do not obtain new audit certificates
issued by a Japanese certified public accountant or auditing firm in Japan). However, in this
case, please keep in mind that it is necessary to file a prior notification to the Financial
Services Agency in order to be approved as eligible foreign audit firm, etc. (Article 193-2,
Paragraph (1), Item (1) of the Financial Instruments and Exchange Act; and Rule 1-3,
Paragraph (7) and Article 34-35, Paragraph (1) of the Certified Public Accountants Act).
On the other hand, it is not required to provide audit certificates on quarterly financial
115
statements that are disclosed in Quarterly Securities Report. However, in cases where such
quarterly financial statements are reviewed in home countries, some foreign companies
disclose the results of the reviews in Japan at their own discretion.
116
(4) English Language Disclosure System

a. Outline
The English-Language Disclosure System is a system which allows foreign companies to
submit English documents (limited to those which were actually disclosed in a foreign country
pursuant to laws and regulations, including rules of a stock exchange or an equivalent
institution, in the foreign country) in place of the Securities Registration Statement, Annual
Securities Report and other disclosure documents that are required to be submitted under the
Financial Instruments and Exchange Act Japanese documents, in cases where these English
documents are deemed not to be inadequate in consideration of the public interest and
investor protection in Japan.
In cases where a foreign company submits these English documents (including those which
are required as supplementary documents), such company shall be deemed to have submitted
Securities Registration Statement, Annual Securities Report and other disclosure documents,
with the same effect under the governing laws and regulations (Article 5, Paragraph 8 and
Article 24, Paragraph 11 of the Financial Instruments and Exchange Act and others).
The outline of the English Language Disclosure System will be discussed below. For further
discussion, please see Preparation Procedure of Foreign Company Annual Securities Reports,
etc. (1.5 version) as published on the website below.
http://www.jpx.co.jp/english/equities/products/foreign/en-disclosure/index.html
b. Documents Eligible for the English-Language Disclosure
Among the documents that are eligible for the English-Language disclosure, the important
items for foreign companies are as below:
Corresponding documents under the
Type of the disclosure documents
English-Language Disclosure System
Securities Registration Statement (limited to
Foreign Company Registration Statement
those prepared in the regular method) and its
and supplementary documents as well as their
amendment statements
Annual Securities Report and its amendment

statements
Quarterly
Foreign Company Annual Securities Report

Securities
Report
and
its
Confirmation
Letter
Foreign
Company
Quarterly
Securities
Report and supplementary documents as well as

their amendment statements
and
its
amended
Confirmation Letter
Foreign Company Confirmation Letter and

supplementary documents
as well as their
amended Confirmation Letter
Internal Control Report and its amendment

statements
Foreign Company Internal Control Report

Extraordinary Report and its amendment
Foreign Company Extraordinary Report and

its amendment statements
statements
117
c. Requirements for the English-Language Disclosure

For the use of the English-Language Disclosure System, the requirements specified in the
followings in accordance with the classification of the documents listed in each item shall be
met.
A. Foreign Company Registration Statement, Foreign Company Annual Securities Report, and
Foreign Company Quarterly Securities Report, etc. (Article 5, Paragraph 6, Item 2 of the
Financial Instruments and Exchange Act, and Article 9-6, Paragraph 1 of the Cabinet Office
Ordinance on Disclosure of Information, etc.)
1) The document shall be prepared in English.
2) The documents were disclosed pursuant to the laws and regulations in the foreign
country.
3) The documents shall be deemed not to be inadequate by the FSA Commissioner in
consideration of the public interest and investor protection in Japan.
B. Foreign Company Internal Control Report and Foreign Company Confirmation Letter
Only a foreign company which submitted a Foreign Company Annual Securities Report may
submit a document containing matters required in the form of an Internal Control Report or
Foreign Company Confirmation Letter are provided in English (Article 24-4-2, Paragraph 6 and
Article 24-4-4, Paragraph 6 of the Financial Instruments and Exchange Act, etc.). Such
company shall be allowed to submit either a newly prepared document or an existing
document which was disclosed in a foreign country.
C. English Language Disclosure in lieu of Extraordinary Report
In cases where a foreign company satisfies the requirements in the following requirements
1) and 2), it may submit a document in which matters required in the form of the
Extraordinary Report are provided in English (Article 24-5, Paragraph 1 of the Financial
Instruments and Exchange Act, and Article 19-2-2 of the Cabinet Office Ordinance on
Disclosure of Information, etc.). Such company shall be allowed to submit either a newly
prepared document or an existing document which was disclosed in a foreign country.
1) The reason for submission is provided in Japanese.
2) The document shall be deemed not to be inadequate by FSA Commissioner in
consideration of the public interest and investor protection in Japan.
d. Supplementary Documents
For the purpose of English-Language Disclosure, foreign companies are required to submit
the following supplementary documents (Article 5, Paragraph 7 of the Financial Instruments
and Exchange Act, Article 9-7, Paragraphs 2 through 4, of the Cabinet Office Ordinance on
Disclosure of Information, etc.).
1) Japanese Translation of Summary on Specific Items
For example, with regards to Foreign Company Registration Statement, summary of
transition of major management indicators, etc., outline of business and risks in
118
business etc. are required to be translated into Japanese and attached as one of
supplementary documents.
2) Non-described items falling under the items for which Japanese translation of a
summary should be prepared.
In cases where there is no description for items which are required to be included in
each form corresponding to a Foreign Company Registration Statement, Foreign
Company Annual Securities Report, and Foreign Company Quarterly Securities Report,
etc., and such items fall under those for which a Japanese translation of a summary
should be prepared (specifically, the items enumerated in the preceding 1)), documents
which include such items in Japanese or English are required to be attached as
supplementary documents. A Japanese translation of a summary must be attached in
cases where these documents are prepared in English.
3) Non-described Items
In cases where there is no description for items which are required to be included in
each form equivalent to a Foreign Company Registration Statement, Foreign Company
Annual Securities Report and Foreign Company Quarterly Securities Report, etc.
(excluding the items specified in the above 2), documents which include such items in
Japanese or English are required to be attached as one of the supplementary
documents.
4) Comparison Table
For the Foreign Company Registration Statement, etc. (excluding the Foreign
Company Extraordinary Report), foreign companies are required to prepare a
comparison table for items in each corresponding form and those in the Foreign
Company Registration Statement, etc. (excluding the Foreign Company Extraordinary
Report) to be submitted.
5) Certificate of Incumbency and Power of Attorney, etc.
e. Attachments
The following documents are required to be attached to a Foreign Company Registration
Statement (Article 5, Paragraph 10 of the Financial Instruments and Exchange Act, and Article
10, paragraph 1, item 8 of the Cabinet Office Ordinance on Disclosure of Information, etc.).
1) Minutes of board of directors meetings, etc. (a copy of the minutes, etc. of board of
directors meetings or general shareholders meeting in cases where the issuance of the
securities is resolved at such board of directors meetings or general shareholders meeting,
or a written statement that proves that the company was authorized by administrative
agencies)
2) A certificate of authorization related to changes in the amount of capital (a written
statement containing description sufficient to understand that the company obtained
permission, authorization, or approval from administrative agencies in cases where such
permission, authorization, or approval from the administrative agencies is required for
changing the amount of capital of the company (including a designated corporation) due
to the issuance of such securities)
3) Copies of the trust agreement and other important agreements (in the case of JDR)
119
4) Written legal opinion by a legal expert (written legal opinion by a legal expert on the
legality of such offering or secondary offering of securities)
foreign company submitting such Securities Registration Statement is a person who has
legitimate authority regarding the registration of such offering or secondary offering of the
securities)
the authority to represent the company for all acts regarding the registration of such
offering or secondary offering of securities to a party domiciled in Japan.)
7) Certificate of authorization pursuant to the Foreign Exchange and Foreign Trade Act (a
written statement that proves that such foreign company obtained such permission in
cases where it is necessary pursuant to Article 21, Paragraph 1 or 2 of the Foreign
Exchange and Foreign Trade Act)
8) A copy of the principal underwriting agreement (a copy of the principal underwriting
agreement that was concluded between such foreign company and a financial instruments
business operator)
f. Submission Deadline
With regard to a Foreign Company Annual Securities Report that will be submitted in lieu of
an Annual Securities Report, the foreign company is required to submit such report within four
months after the end of its fiscal year (Article 24, Paragraph 10 of the Financial Instruments
and Exchange Act; and Article 4-2-2 of the Order for Enforcement of the Financial Instruments
and Exchange Act). Please note that the period is shorter compared to cases where a foreign
company submits an Annual Securities Report. In contrast, a foreign company is allowed to
submit an Annual Securities Report within six months after the end of its fiscal year taking into
account the burden of translation into Japanese.
In principle, foreign companies are required to submit other English-Language Disclosure
documents by the same deadline as Japanese companies.
120
11. Shareholder Services and Book-Entry Transfer Systems for Foreign Stocks, etc.18F
11. Shareholder Services and Book-Entry Transfer Systems for

Foreign Stocks, etc. 19
(1) Custody and Book-Entry Transfer Systems for Foreign Stocks, etc.
Foreign stocks are settled under the business regulations relating to the depository and
book-entry transfers for foreign stocks, etc. of Japan Securities Depository Center, Inc. (JASDEC).
In this system, securities companies and banks, etc. establish participant accounts in JASDEC and
general investors establish customer accounts in securities companies or banks, etc. in accordance
with the rules of JASDEC and TSE. Regular transactions of foreign stocks listed on the TSE market
are settled, in the same way as domestic stocks, via book-entry transfer on the fourth business day
counting from the trade day (T+3) based on the system for custody and book-entry transfer for
foreign stocks, etc. of JASDEC.
Please also visit JASDEC's website for description of custody and book-entry transfer system for
foreign stocks, etc. (http://www.jasdec.com/system/foreign/)
The physical certificates of foreign stocks are not brought into Japan but are held in custody in
the foreign depository designated by JASDEC. The shareholdings of beneficial shareholders
(customers who actually own the foreign stocks, etc.) are recorded in the relevant customer
accounts.
(2) Dividend Payment

The foreign depository receives dividends from listed foreign companies on behalf of JASDEC
and transfers the corresponding amount to the dividend-paying bank in Japan (trust bank or major
retail bank). When the dividend-paying bank receives dividends, it distributes the dividends to the
beneficial shareholders on the relevant lists of the beneficial shareholders according to the
instructions from shareholder services agents (trust banks). These distributions of dividends are
made by crediting the accounts designated by beneficial shareholders or sent in the form of postal
money orders.
Dividend payments are made in Japanese yen. As a general rule, conversion into Japanese yen
is calculated using the Telegraphic Transfer Buying (TTB) rate on the day when the dividend-paying
bank receives the dividends.
(3) Record Date of Shareholders Eligible for Dividend

In the case of registered stocks, the record date shall, as a general rule, be the same as that in
the home market. For the most of bearer stocks, the record date on the TSE market shall be one
business day prior to the dividend payment date in the home market. Dividends will be paid to the
beneficial stockholders as of record date.
19
Please refer to the following TSE website regarding stock administration and clearing rules for foreign
stocks.
http://www.tse.or.jp/english/rules/clearing/clearing.html
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(4) Other Rights such as Subscription Warrants

In cases where subscription warrants are granted, if a beneficial shareholder wishes to
subscribe for new shares and pays for them through a participant, JASDEC exercises the
subscription warrants and receives the new shares which are then credited to the customer
account of the beneficial shareholder. Such payment is generally made in Japanese yen.
On the other hand, if a beneficial shareholder does not wish to subscribe for new shares or
JASDEC determines that it is unable to exercise the rights taking into account factors such as the
payment schedule in the home country, JASDEC collectively sells all such subscription warrants in
the home market of the listed foreign company and pays sales proceeds to the beneficial
shareholders via shareholder services agents. In addition, in the case of a stock listed only on the
TSE market, if a corresponding subscription warrants market is opened at TSE, JASDEC will not
collectively sell all subscription warrants and the beneficial shareholder may sell the subscription
warrants in such market.
New shares, which are allotted due to a stock split or gratis allotment, etc., shall be received by
JASDEC and credited to the costumer account of the corresponding beneficial shareholder.
However, JASDEC will sell fractional shares in the home market of the listed foreign company and
pay sales proceeds to the relevant beneficial shareholders via shareholder services agents.
Note that, if there is no market to sell the relevant rights, there may be no choice other than to
abandon such rights.
(5) Exercise of Voting Rights at General Shareholders Meetings

Voting rights at general shareholders meetings are exercised by JASDEC in accordance with
instructions issued by beneficial shareholders (submission of instruction for the proxy exercise of
voting rights). If no instruction is issued by a beneficial shareholder, JASDEC will not exercise the
corresponding voting right.
In addition, in cases where the record date for a general shareholders meeting is set in the
home country, the same date is set as record date in Japan. Documents such as notice of
convening a general shareholders meeting and form for instruction for the proxy exercise of voting
rights are sent to the beneficial shareholders as of the record date. Beneficial shareholders are able
to exercise their voting rights referring to such documents.
However, even though a record date is set, in cases where procedures, such as sending of
notice of convening a general shareholders meeting to beneficial shareholders, are deemed
difficult due to the limited schedule, such beneficial shareholder will be required to perform
procedures to exercise the voting right through the shareholder services agent within the period
published by the company in the newspapers.
In the case of a company which does not set a record date for the general shareholders
meeting, a beneficial shareholder intending to exercise his/her voting right should perform the
procedures within the period published by the company in newspapers.
For your information, TSE has defined Framework Improvement to Facilitate Exercise of Voting
Rights for Listed Foreign Companies as a measure in line with the Code of Corporate Conduct. For
details, please see section 12 (3) c (d).
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(6) Book-Entry Transfers from JASDEC to Securities Companies

Foreign stocks bought on the TSE market can be sold in any other market where the foreign
company is listed. In this case, the shareholder will be able to sell his/her shares after transfer of
custody under the custodian of JASDEC to that of a securities company, etc. is completed. In
addition, in cases where TSE decides to delist a foreign stock, such stock will also be transferred
from a foreign custodian of JASDEC to that of a securities company, etc.
Workflow of Shareholder Services and Dividend Payments
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(7) Handling under TSE Listing Administration Rules

Based on the shareholder services and book-entry transfer systems as discussed above, listed
foreign companies shall assume the following obligations:
a. Selection of Agent and Entity Responsible for Handling Information in Japan
Selection of Agent of the Company in Japan
A listed foreign company is obliged to select a person as agent in Japan who has an address
or residence in Japan and has the authority to deputize or represent such listed foreign company
with respect to all acts in relation to TSE.
The agent in Japan shall, in principle, be selected from amongst the officers and employees of
the listed foreign company. However, if selection from such officers and employees is difficult,
the agent shall be a person approved by TSE.
Listed Foreign Companies, etc. with a main market listing on TSE
It is assumed that a listed foreign company with a main market listing on TSE has a large
number of shareholders in Japan. Therefore, in principle, such listed foreign company shall
select a person responsible for handling of information amongst the directors, executive officers
or equivalent senior persons residing in Japan and notify TSE of such person responsible for
handling of information for the purpose of ensuring smooth communication and reporting in
reply to inquiries from TSE.
The person responsible for handling of information shall be not only in charge of liaison
pertaining to reporting to TSE but also engaged in internal management of important corporate
information and timely disclosure.
In addition, the person responsible for handling of information may reside in a home country
or countries other than Japan, as long as he/she can ensure smooth reporting structure with
TSE. For details, please consult with TSE in advance.
b. Setting Up Offices for Handling Exercise, etc.

A listed foreign company who is an issuer of a listed convertible bond shall set up an exercise
handling office or agency office for a subscription warrant pertaining to a listed convertible bond
in Chuo-ku, Chiyoda-ku or Minato-ku in Tokyo or any of the places specified by TSE.
c. Ensuring Appropriate Shareholder Services and Dividend Payment Services

A listed foreign company shall ensure that shareholder services and dividend payment
services for beneficial shareholders of foreign stocks, etc. will be carried out appropriately in
each of the following items.
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A. Notice shall be made in Japanese as to measures taken by a listed foreign company

(including depository facilities, etc. pertaining to listed foreign stock depositary receipts,
etc., if the listed foreign company is an issuer of listed foreign stock depositary receipts,
etc.) with respect to surplus dividends, granting of subscription warrants, and other rights
or interests of shareholders.
* The notice may be made by public notice in Japan (which shall be carried out in a
manner similar to public notice carried out by an issuer of listed domestic stocks), by a
method subject to the prior approval of TSE in which the notice is kept at an office of
the shareholder services agent, or by other methods that are prescribed by TSE.
B. Notice shall be made in Japanese for Business Reports, such as Annual Securities Reports,
Interim Securities Reports, and Quarterly Securities Reports (Quarterly Securities Reports
may replace Interim Securities Reports).
* These reports may be summarized or replaced by other reports pursuant to the
provisions of TSE. However, when the listed foreign company does not provide such
notice to the shareholders, these notices are not required.
d. Notification and Public Notice of Period or Date for Rights Allotment

Where a listed foreign company decides a period or a date to determine those who may
exercise voting rights, those who receive dividends or allocation of a stock, or those who may
exercise rights as shareholders (in cases of an issuer of a listed foreign stock depositary receipt,
etc., where a depository, etc. pertaining to the listed foreign stock depository security, etc.
decides a period or a date to determine entities who may exercise rights concerning such
foreign depositary receipt, etc.), the listed foreign company shall notify TSE of such period or
date two (2) weeks before such period or date (where the deadline of notification and public
notice required in the home country, etc. of such listed foreign company is earlier than a day two
(2) weeks prior to such period or date, prior to such deadline) and, in addition, shall make public
notice in Japan; provided, however, that it may omit such public notice in the cases listed below:
A. Public notice of a period or date that is determined to fix the persons who are entitled to
exercise the voting rights at a general shareholders meeting, if applicable; provided,
however, that the documents necessary to exercise voting rights are delivered to beneficial
shareholders before the date of said general shareholders meeting;
B. Public notice of the period or date that has been determined in advance to fix the persons
who are entitled to receive dividends, if applicable;
C. Public notice of the period or date that is determined to fix the persons who are entitled to
exercise rights, from amongst those that are impossible or extremely difficult to exercise in
Japan, that are deemed by TSE to have particularly low economic value; and
D. Public notice of matters that correspond to matters to be publicized through public notice,
if such matters are disclosed in a manner prescribed by TSE.
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e. Notification of Decision Concerning Depositories, etc. Pertaining to Listed Foreign

Stock Depositary Receipts, etc.
Where a dividend or a subscription warrant or any other right is given to a foreign stock
pertaining to a right representing a listed foreign stock depositary receipt, etc., if a depositary,
etc. pertaining to the listed foreign stock depositary receipt, etc. makes decision on how to deal
with such right, etc. concerning such foreign stock depositary receipt, etc., the issuer shall
immediately notify TSE thereof.
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12. Overview of Listed Company Compliance

(1) Overview of Timely Disclosure System
a. Significance of Timely Disclosure
A financial instruments market functions to contribute to the development of the national economy
through the proper and efficient linking of asset management via securities by the public and stable,
long-term fund-raising via the issue of securities by companies. In order for a market to fulfill this role,
it is vital to maintain investors' confidence in the fairness and soundness of the market, as well as
provide appropriate information on securities required for investment decisions.
Rules for statutory disclosure (securities registration statement, securities report, quarterly
financial reports, etc.) based on the Financial Instruments and Exchange Act as discussed in section
10 (Securities Registration Statement, Annual Securities Report, and Quarterly Securities Report, etc.)
as well as rules for timely disclosure in financial instruments exchanges co-exist and serve the function
of providing information required for investment decision-making. Timely disclosure rules are
established pursuant to the rules of a financial instruments exchange for the purpose of providing
investors with important corporate information from listed companies. These disclosures are
characterized by their widespread and timely transmission to investors, through either the media or
Timely Disclosure network (TDnet).
Because of the large impact corporate information occurring minute-to-minute has on trading,
timely disclosure is extremely vital to investors. Particularly, during this period of dynamic changes to
the corporate environment where investors need access to accurate information, timely disclosure is
becoming increasingly important as a quick, accurate, and fair means of providing the latest corporate
information.
Timely disclosure of corporate information should be initiated by each listed company responsible
for the function. Therefore, each listed company is required to recognize the significance and
importance of timely disclosure of corporate information and maintain a faithful stance to fulfill the
disclosure, and at the same time, is required to prepare and improve its internal structure to carry out
disclosure in a timely and appropriate manner.
TSE prescribes requirements on timely disclosure about corporate information in the Securities
Listing Regulations (hereinafter referred to as the "Regulations") and requires each listed company to
disclose important corporate information, with the basic understanding that timely and appropriate
disclosure of corporate information lies at the foundations of a sound financial instruments market.
b. Overview of the Rules Concerning Timely Disclosure of Corporate Information

(a) Basic Principle Concerning Faithful Execution of Services
The Regulations stipulate the obligations of listed companies, including but not limited to
strengthening prompt, accurate and fair disclosure of corporate information at all times from the
viewpoint of investors with full recognition that timely and appropriate disclosure of corporate
information to investors is the foundation of a sound financial instruments market. Each listed
company is required to understand the meaning of this basic principle to the full extent, carry
out faithful services and work on pro-active timely disclosure.
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(b) Maintenance of Timely Disclosure Structure

Appropriate and timely disclosure of important corporate information upholds an important
role for investors as basic premise of self-responsibility in investments in the financial
instruments market. Therefore, each listed company needs to conduct effective internal
structure so as to fulfill appropriate information disclosure.
In preparing and improving a timely disclosure structure appropriately, the following three
points are especially important:
A. Management of each listed company should indicate a clear stance and policy on the
importance of corporate information disclosure in person in order to maintain and manage
timely disclosure structure effectively, and also enlighten employees about the clear stance
and policy.
B. Clarifying key points to be accomplished for the purpose of conducting timely disclosure in an
appropriate manner.
C. Conducting monitoring of the timely disclosure structure by the internal audit division,
director and company auditor (audit committee or similar bodies in the case of a company
with committees) so as to manage and maintain the structure in appropriate manner.
Outline of a listed company's timely disclosure structure is included in the report containing
matters concerning corporate governance, and this information is publicly-available on the TSE
homepage (corporate governance information service), etc.
(c) Corporate Information Required for Timely Disclosure

Corporate information required for timely disclosure includes information related to the
company's business, operations, or performance which has a significant effect on securities
investment decisions.
The Regulations stipulate that a listed company is obliged to immediately disclose any items,
excluding those falling under any of criteria items having insignificant influence on investors
decision-making as in the Rules (hereinafter, De minimis Criteria). Since a listed foreign
company should pay careful attention that it is required to disclose any item in a timely manner,
even though it is not clear whether it falls under the De minimis Criteria or not.
When applying the rules and regulations of TSE to a foreign country or a foreign corporation
where the foreign country or the foreign corporation is an issuer, etc. of a listed security, TSE
shall take into account legal systems, practices and customs, etc. in such foreign country or the
country, etc. of the foreign corporation as well.
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Corporate Information Required for Timely Disclosure

i. Listed Company Information
(i) Decisions by Listed Companies
Offering of issued shares, treasury shares to be disposed of, issued subscription
warrants, or offering to entities who will subscribe to treasury subscription warrants
to be disposed of, or a secondary offering of shares or subscription warrants
Shelf-registration or commencement of a demand survey
Decrease in amount of capital
Decrease in amount of capital reserve or profit reserve
Acquisition of own stock
Gratis allotment of shares or gratis allotment of subscription warrants
Shelf-registration concerning gratis allotment of subscription warrants or
commencement of a demand survey or a survey on intention to exercise the
warrants
Stock split or reverse stock split
Issue of stock options
Dividend from surplus
Stock swap, stock transfer, merger, demerger
Takeover bid or takeover bid for own shares
Announcement of opinions about a takeover bid, etc.
Transfer or acquisition of all or part of a business
Dissolution (excluding dissolution by means of merger)
Commercialization of a new product or new technology
Business alliance or dissolution of business alliance
Transfer or acquisition of shares or equity interest accompanied by a change in a
subsidiary or other matters accompanied by a change in a subsidiary
Transfer or acquisition of fixed assets, lease of fixed assets
Suspension or abolition of all or part of a business
Application for delisting
Petition for commencement of bankruptcy proceedings, commencement of
rehabilitation proceedings, or commencement of reorganization proceedings
Commencement of a new business
Change in representative directors or representative executive officers
Rationalization such as personnel reduction
Change in a trade name or a corporate name
Change in the number of shares for a share unit of a stock, or abolition/introduction
of provisions for the number of shares for a share unit
Change in accounting period (change in the end date of the business year)
Petition to the Prime Minister stating an excess of liabilities or possibility of the halt
of repayment of deposit, etc. (Petition pursuant to the provisions of Article 74,
Paragraph 5 of the Deposit Insurance Act)
Petition for mediation in accordance with specified mediation procedures pursuant
to the Act on Specified Mediation for Promoting Adjustment of Specified Liabilities,
etc.
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Advanced redemption of a listed bond or convocation of a bondholders meeting and

any other important matters related to rights pertaining to listed bonds
Change in certified public accountants, etc.
Putting notes on matters related to the going concern assumption
Submission of application for approval of deadline extension for submission of
Annual Securities Report or Quarterly Securities Report
Cancellation of entrustment of shareholding services to a shareholding service proxy
institution
Submission of internal control reports containing content to the effect that there is a
material deficiency or that the evaluation result cannot be stated
Amendment to the articles of incorporation
Acquisition of all classified stocks subject to whole acquisition clause
Approval or rejection of a special controlling shareholders request for sale of shares,
etc.
Other important matters related to listed company operations, business, assets, or
listed company stock certificates, etc.
(ii) Facts which Occurred for a Listed Company
Loss arising from a disaster or damage which occurs in the course of business
execution
Change in major shareholders or the largest shareholder
Fact which causes delisting
Filing of a lawsuit or a court decision
Petition for a provisional disposition or decision on such petition, etc.
Cancellation of a license, suspension of a business or any other disciplinary action
corresponding to these on the basis of laws and regulations by an administrative
agency or accusation of violation of laws and regulations by an administrative
agency
Change in a parent company, change in controlling shareholders (excluding a parent
company) or change in other related company
Petition or notification for commencement of bankruptcy proceedings,
commencement of rehabilitation proceedings, commencement of reorganization
proceedings, or execution of enterprise mortgage
Dishonor of a bill or check or suspension of trading by a clearing house
rehabilitation proceedings, commencement of reorganization proceedings, or
execution of enterprise mortgage pertaining to a parent company, etc.
Default on obligations or delay in collection
Suspension of trade with a business partner
Financial support, such as exemption of obligations
Discovery of natural resources
Special controlling shareholders request for sale of shares, etc.
Claim for suspension of issue of stock or subscription warrants
Demand for convocation of a general shareholders meeting
Unrealized loss of securities held
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Acceleration of obligations pertaining to a corporate bond

Convocation of a meeting of bondholders for a listed bond, etc. and other important
facts pertaining to rights of a listed bond, etc.
Change in certified public accountants, etc.
Delay in submission of Annual Securities Report or Quarterly Securities Report
Approval and etc. of deadline extension for submission of Annual Securities Report
or Quarterly Securities Report
The fact that an audit report attached to financial statements, etc. contains an
"adverse opinion", "opinions are not expressed", or a "qualified opinion" with
making issues concerning a going concern assumption as exceptions
An internal control audit report contains an "adverse opinion" or the fact that
"opinions are not expressed"
Receipt, etc. of a notice of canceling a shareholder services agent agreement
Other important matters related to operation, business or assets of such listed
company or related to a listed stock certificates, etc.
(iii) Listed Company Earnings Information
Earnings Reports (Kessan Tanshin)
Quarterly Earnings Reports (Shihanki Kessan Tanshin)
(iv) Amendments, etc. to Performance Estimates or Dividend Estimates of Listed
Company
Amendments to performance estimates, differences in estimates and earnings
values
Dividend estimate or amendment to dividend estimate
(v) Other Information
Disclosure related to lowering the size of investment units
Disclosure of the status of membership in Financial Accounting Standards
Foundation
Disclosure of status of conversion or exercise of MSCB, etc.
Disclosure of matters relating to controlling shareholder, etc.
Earnings information of unlisted parent company, etc.
Disclosure related to delisting, etc.
iiInformation on Subsidiaries
(i) Decisions by Subsidiaries
Stock swap, stock transfer, merger, demerger
A takeover bid or a takeover bid for own shares
Transfer or acquisition of all or part of a business
Dissolution (excluding dissolution by means of merger)
Commercialization of a new product or new technology
Business alliance or dissolution of business alliance
Transfer or acquisition of shares or equity interest accompanied by change in a
sub-subsidiary, or other matters accompanied by change in a sub-subsidiary
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Transfer or acquisition of fixed assets, lease of fixed assets

Suspension or abolition of all or part of a business
rehabilitation proceedings, or commencement of reorganization proceedings
Commencement of a new business
Change in trade name or corporate name
Petition to the Prime Minister stating an excess of liabilities or possibility of the halt
of repayment of deposit, etc. (Petition pursuant to the provisions of Article 74,
Paragraph 5 of the Deposit Insurance Act)
Petition for mediation in accordance with specified mediation procedures pursuant
to the Act on Specified Mediation for Promoting Adjustment of Specified Liabilities,
etc.
Other important matters related to operation, business or assets of a subsidiary of
such listed company
(ii) Facts which Occurred for a Subsidiary
Loss arising from a disaster or damage which occurs in the course of business
execution
Filing of a lawsuit or a court decision
Petition for a provisional disposition or decision on such petition, etc.
Cancellation of a license, suspension of a business or any other disciplinary action
corresponding to these on the basis of laws and regulations by an administrative
agency or accusation of violation of laws and regulations by an administrative
agency
Petition or notification for commencement of bankruptcy proceedings,
commencement of rehabilitation proceedings, commencement of reorganization
proceedings, or execution of enterprise mortgage
Dishonor of a bill or check or suspension of trading by a clearing house
rehabilitation proceedings, commencement of reorganization proceedings, or
execution of enterprise mortgage pertaining to a sub-subsidiary
Default on obligations or delay in collection
Suspension of trade with a business partner
Financial support, such as exemption of obligations
Discovery of natural resources
Other important matters related to operation, business or assets of such subsidiary
(iii) Amendment, etc. to Performance Estimates of Subsidiary
(Amendment to Performance Estimate of Subsidiary, Difference in Estimate and
Earnings Values, etc.)
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Implementation of Timely and Appropriate Disclosure of Corporate Information

The provisions defined in the Regulations state the minimum requirements, methods, etc.
that a listed company should observe with respect to timely disclosure of corporate information,
etc., and a listed company shall not use the provisions of the same section as an excuse for
failures to disclose corporate information in a more timely and appropriate manner. A listed
company is urged to make a proactive timely disclosure of corporate information in any event
that is assumed to have influence on investors decision making in the light of each individual
situation of such event which occurred with the listed company.
[Rule 411-2 of the Regulations]
For example, when an event falls under the following case examples, it is appropriate to
regard that it is significant in the light of investment decision-making even though it may fall
into the De minimis Criteria.
In cases where a decision or occurrence of a corporate event is expected to cause

the listed company to turn business around or vice versa for and after the fiscal
year to which the decision or occurrence of the corporate event belongs.
In cases where a decision or occurrence of a corporate event is expected to bring
about a significant change in fundamentals of the listed company related to its
management, operations and properties, including but not limited to a change in
business organization or earnings structure thereof.
In cases where separate facts of decision or occurrence that fall under the same
disclosure items are deemed to collectively have material impact on the listed
company in light of continuity or connection on the whole, even though each of
events does not fall under the criteria of corporate information required for timely
disclosure (in the case that combination of separates events falls under the criteria
of the corporate information required for timely disclosure).
(d) Disclosure Timing

Listed companies are obliged to disclose any important information immediately upon
decision or occurrence pursuant to the Regulations.
As for disclosure timing, listed companies are required to make a judgment based on actual
conditions without heavily depending on any formal aspects, such as resolution of board of
directors meeting. Concretely, any facts of decision made by a listed company shall be disclosed
immediately upon resolution or decision by an organization body with substantial authorization
to make a decision to perform operations of the company. On the other hand, any facts of
occurrence to be caused by external factors shall be disclosed upon recognition of the
occurrence.
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Given that quick disclosure to investors is required with respect to timely disclosure of
corporate information, listed companies are required to disclose the information immediately
upon occurrence, irrespective of trading hours.
(e) Matters to be Described in Disclosure Documents (Disclosure Matters)

It is extremely important to make a disclosure document that fully and accurately describes
corporate information because timely disclosure is the basis for providing material for investors
to properly understand the situation and make investment decisions.
The Enforcement Rules includes the following matters as requiring disclosure. (TSE may
deem disclosure as inappropriate if it is found lacking in matters corresponding to the following.)
a. Reason behind the decision by the listed company or how and why it was made
b. Summary of decided facts and facts that occurred
c. Future prospects related to decided facts and facts that occurred
d. Other matters that are deemed by TSE to have material significance on investment
decisions
[Rule 402-2, Paragraph 1 of the Enforcement Rules]
A listed company is required to comply with following matters pertaining to timely disclosure
of corporate information and shall pay careful attention in preparing disclosure documents.
The contents of the information to be disclosed do not contain false statements.
The information to be disclosed is not lacking information deemed to be significant to
The information will not cause misunderstanding regarding investment decisions.
The information is not found lacking in appropriateness in any other way.
[Rule 412, Paragraph 1 of the Regulations]
* Even though this guide book only describes certain matters, this does not contradict the
above points regarding whether disclosure is lacking in information deemed important for
investment decisions and will not cause misunderstanding regarding investment decision.
Whether it is material information for investment decisions or may cause
misunderstanding in investment decisions are judged on a case-by-case basis.
(f) Examinations Pertaining to Disclosure of Corporate Information

JPX Regulation conducts examinations concerning disclosure of corporate information based
on the Regulations when JPX Regulation deems it is necessary and appropriate for ensuring the
adequacy of disclosure of company information.
The examination is carried out for disclosure of material corporate information from the
following points of view. In case where a disclosure document has any problem concerning the
following points, such disclosure may be regarded as inappropriate.
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Whether or not the timing of disclosure is appropriate

Whether or not the details of disclosed information are false
Whether or not the disclosed information lacks information deemed important for
investment decisions
Whether or not the disclosed information gives rise to misunderstandings for investment
decisions
Whether or not the disclosure is lacking in appropriateness
[Rule 412, Paragraph 2 of the Regulations, II of the Guidelines]
(g) Prior Explanation on Corporate Information before Disclosure of Corporate

Information
If a listed company decides, for the smooth implementation of timely disclosure of material
corporate information, to disclose the corporate information based on the Rules 402 to 411-2
and 416, the listed company is required to explain the contents of the disclosure to TSE before
the corporate information is disclosed.
At TSE, each listed company has a TSE-side staff responsible for disclosure. When a listed
company registers a disclosure document via TDnet, TSE will call the person responsible for
disclosure at the listed company to ask for an explanation of the contents (generally within 30
minutes). Therefore, the person (not limited to the one responsible for handling information)
should wait for a call from TSE.
(h) Matters to Note Concerning Publication of Corporate Information on Listed

Companys Own Website
When a listed company intends to save corporate information requiring timely disclosure in a
public directory (meaning in folders on web servers, which are accessible to outsiders via the
Internet), it is obliged to take necessary measures, including not saving it before the corporate
information has been disclosed or, in the case the information is to be saved before disclosure is
carried out, to implement access controls by setting a password, etc. so that outsiders would not
be able to access the information easily.
Timely disclosure matters include information which falls under the "material facts" in the
insider trading regulations. If outsiders can access the information easily before the scheduled
disclosure time, they may use such information to carry out trading. As a result, that may
significantly undermine the fairness of the financial instruments market. Therefore, a listed
company is required to take appropriate measures.
In addition, a listed company is encouraged to establish internal rules concerning the
publication of corporate information on its own website. The rules should be made known
throughout the company, and there should also be regular inspections on compliance.
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(i) Method of Disclosure of Corporate Information

Disclosure of corporate information shall be carried out using TDnet.
TDnet functions as an integrated electronic system jointly used by Japanese financial
instruments exchanges for the purpose of achieving fairer, faster, and more extensive timely
disclosure of corporate information. Specifically, on the day when performing a timely disclosure,
listed companies are required to register disclosure documents via TDnet Online Registration
System, make a reply to an inquiry from TSE and make a prior explanation to TSE. Later, at the
specified disclosure time after completion of TSE disclosure process, the registered disclosure
documents are transmitted to a lot of media institutions via TDnet. At the same time, it is also
posted to the Timely Disclosure Information Browsing Service, a website created by TSE, and
the corporate information is made available for public inspection on the browsing service.
* Posting documents to the Timely Disclosure Information Browsing Service constitutes
one of the publication measures under insider trading regulations. By posting corporate
information to this service, listed companies are able to execute the publication measures
pertaining to material facts under insider trading regulations such as the fact concerning
tender offers (limited to those (Tender Offer for Share Certificates, etc. by Issuer)
pertaining to tender offer prescribed in Article 27-22-2, Paragraph 1 of the Financial
Instruments and Exchange Act) simultaneously (Article 30 of the Order for Enforcement
of the Financial Instruments and Exchange Act).
(j) Report and Disclosure on Inquiry Concerning Corporate Information

A listed company is required to make an accurate report on an inquiry matter immediately, in
the case where TSE makes an inquiry on corporate information of a listed company where it
deems necessary. In the case where TSE deems that it is necessary and appropriate to disclose
a fact pertaining to the inquiry, a listed company shall disclose details immediately.
When a news report or rumor concerning a listed security or its issuer is circulated, or when
TSE receives an accusation from an outside party, TSE may make an inquiry to the listed
company about the authenticity of such circulated information, etc. The listed company is
required to make an accurate report to TSE. If TSE deems it necessary and appropriate for the
listed company to clarify the authenticity, TSE may request the listed company to disclose the
details of report. In such a case, the listed company is obliged to carry out disclosure
immediately.
Listed companies are reminded that non-action on a request for disclosure by TSE may
constitute a violation of the Regulations, furthermore, that it may hinder fair price formation in
the financial instruments market and cause to investors to lose confidence in them.
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On the other hand, when a news report or rumor concerning a listed security or its issuer is
circulated, TSE may issue an alert to inform investors. For details on the system for issuing
alerts, please refer to Outline of system for issuing alerts.
(k) Cancellation, modification, or correction of disclosed information

A listed company is required to disclose "cancellation of or change in a disclosed matter" in
the case of cancellations or changes of any material corporate information already disclosed,
and "addition, correction, or explanation of timely disclosure materials" in the case of
corrections.
In the case where a change or correction should be made to a disclosed earnings
report/quarterly earnings report, the listed company shall disclose details of such change or
correction, for example, as "correction of earnings report." However, in the case where a listed
company recognizes the need to change or correct the disclosed earnings information prior to
the submission of the securities report/quarterly securities report, it shall be sufficient to carry
out disclosure after submitting such report, except in cases where such changes or corrections
may have a remarkable effect on investment decisions.
In addition, regarding voluntary disclosure that is not under the Regulations, but is carried out
via TDnet based on a decision by the listed company, in the case where a change or correction
should be made to the content of disclosed information, the listed company is also required to
disclose the details of such change or correction.
(l) Notification of Person Responsible for Handling Information

A listed company is required to select a person responsible for handling information from
among its directors or any other person of similar capacity, and notify TSE of such person.
A person responsible for handling information means a liaison for reporting in response to
inquiries from TSE and other matters regarding the disclosure of corporate information.
Specifically, the person is the point of contact for TSE, and will be in charge of managing
material corporate information and carrying out disclosure.
When a listed company changes its person responsible for handling information, or alters the
contents (e.g. name, title, or contact information) of the notification, the listed company is
required to notify TSE immediately. In the case where alteration of the person responsible for
handling information is scheduled due to the re-election of board directors, etc., the listed
company may notify TSE in advance, describing the expected date of alteration.
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c. Notes on Using TDnet

TDnet functions as an integrated electronic system jointly used by Japanese financial instruments
exchanges for the purpose of achieving extensive corporate information which have influence on
investment decisions. TDnet is developed and operated by TSE.
Besides disclosure of corporate information to be carried out under the Regulations, a listed
company is encouraged to voluntarily disclose corporate information that may be useful for
investment decisions via TDnet from the point of view of disseminating information to investors. In
this case, as the information is registered as "Timely Disclosure Information" via TDnet, such
information will be disseminated to investors, directly through the "Corporate Announcement
Disclosure Service" operated by TSE, and indirectly through the media and information vendors.
In addition, TDnet is also available for the dissemination of corporate information that may not be
useful for investment decisions to the media and information vendors. If such information is registered
as "PR information, etc.," it is not posted to the "Corporate Announcement Disclosure Service" and is
disseminated only to the media and information vendors.
Due to the public purpose of TDnet, it is permitted to be connected to major media agencies and
information vendors directly. As such, posting to TDnet is, at the same time, recognized as a
"publication measure" under the insider trading regulations. Due to this situation, listed companies are
not permitted to register information that deviates from the intended purpose of publishing corporate
information for investment decisions. This includes expressing opinions in cases where there are
differences or conflicts of opinion with other parties.
The basic policy regarding appropriate usage of "Timely Disclosure Information" and "PR
information, etc." is as follows.
(a) Matters to be disclosed as "Timely Disclosure Information"
A listed company is required to disclose its corporate information as "timely disclosure
information" when the information is required to be disclosed under the Regulations.
On the other hand, in the case where a fact is expected to have a certain effect on business
performance, even though there is no disclosure obligation under the Regulations, or where
company information briefing materials, monthly business performance reports, materials
concerning corporate management policy are prepared, a listed company is encouraged to
disclose such information as "timely disclosure information" because it is regarded as useful for
(Note) Disclosure of corporate information as "timely disclosure information" is recognized as
disclosure for the purpose of providing information that is useful for investment
decisions. Therefore, referring to the practical handling of each disclosure item, etc., a
listed company shall take care to prepare disclosure material appropriately from the
viewpoint of providing material for investment decisions by describing matters
necessary for investors to understand and judge the fact appropriately.
(b) Matters to be disclosed as "PR information, etc."
Regarding corporate information which may have little effect on business performance and
usefulness in investment decisions, disclosure of such information is required to be carried out
as "PR information, etc." instead of "timely disclosure information."
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(c) Scope of "Timely Disclosure Information" and "PR Information, etc."

The scope for "Timely Disclosure Information" and "PR Information" is different in terms of
posting to "Company Announcements Disclosure Service" as shown in the table below.
Post to Company Announcements Disclosure

Service
Display in Listed Company Search (Note 1)
Distribute to News Agencies & Information
Vendors
Timely Disclosure
Information
PR
Information, etc.
Yes
No
Yes
Yes
Yes
Yes
TDnet Database Service

Yes
Yes
(Note 1) Disclosure information is shown in the listed company search on the day after
disclosure.
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d. Overview of Trading Halt System

TSE may halt trading of a listed security when TSE deems it necessary to do so from the
perspective of ensuring fair price formation and investor protection.
[Rule 29 of the Business Regulations]
(a) Reason for trading halt
Where information on a certain security or issuer that may have a significant effect on
investment decisions is revealed and details of such information are not clear and/or TSE deems
it necessary to inform the public.
(b) Duration of trading halt
i. In the case where a trading halt is implemented due to information that may have
significant effect on investment decisions, such as a merger of a listed company, and was
reported without official disclosure by the listed company, trading will resume, in principle,
fifteen (15) minutes after disclosure regarding the authenticity of such information by the
listed company.
ii. In the case where a trading halt is implemented due to information that may have a
significant effect on investment decisions, such as a merger concerning the listed company,
and for which the listed company has carried out timely disclosure, trading will resume, in
principle, fifteen (15) minutes after disclosure by the listed company.
iii. In the case where such corporate information falls under a reason for designation as a
Securities Under Supervision or Securities To Be Delisted, trading will resume as follows.
- Designation as Securities Under Supervision: Fifteen (15) minutes after TSE
announces the designation
- Designation as Securities To Be Delisted: On the business day following TSE's
announcement of the designation
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(c) In addition to the matters falling under a. above, the following matters shall also be
subject to a trading halt.
i. Where TSE deems that the state of trading is or is likely to be abnormal, or where TSE
deems that continuing trading is not appropriate from the viewpoint of the management of
trading
ii. Where a malfunction occurs in the trading system, or where TSE deems that continuing
trading is difficult due to a failure in the facilities of TSE pertaining to trading of a security,
and other cases
iii. Where TSE deems it necessary to inform the public that it may cancel a trade
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e. Outline of System for Issuing Alerts

TSE has a system for issuing alerts regarding information about securities or its issuers (hereinafter
referred to as "system for issuing alerts") if it deems necessary to inform investors. In particular, TSE
will issue an alert in the following situations where necessary: when unclear information (i.e., a leak or
rumor) that is deemed likely to have material impact on investment decisions (hereinafter referred to
as "unclear information") becomes available, when there are other circumstances regarding a security
or its issuer deemed to require particular attention.
[Rule 30 of the Business Regulations]
* The system for issuing alerts is not a penalty or measure to ensure the effectiveness of the
Regulations. It is aimed at allowing TSE to promptly and flexibly issue alerts regarding unclear
information in cases where time may be required before appropriate information disclosure can
be made or where only certain information can be disclosed immediately.
* Under the system, an alert is issued each time TSE deems it necessary and is not removed. As
such, multiple alerts may be issued for a single case on the day when the unclear information
becomes available, and alerts may be issued on subsequent days for the same unclear
information.
* Decisions on whether to issue an alert are made separately from decisions on whether to halt
trading.
(a) Cases where alerts are issued
Information "deemed likely to have material impact on investment decisions" includes, but is
not limited to, information related to equity financing, mergers and/or acquisitions, earnings
information that may lead to disclosure requirements for "adjustments to earnings forecasts or
figures," bankruptcy or voluntary liquidation, and false statements.
"Other circumstances regarding a security or its issuer deemed to require particular attention"
include, but are not limited to, when a listed company has not made disclosure regarding its
decisions, events, earnings information, or adjustments to earnings forecasts or figures within a
required period, or when TSE deems that a listed company has not clarified the content of the
unclear information, which may, without clarification, mislead investors.
As TSE issues an alert "if it deems necessary to inform investors," TSE would not always issue
an alert when a situation falls under one of examples above.
(b) Means of issuing alerts
Alerts will be issued by means including notices to trading participants, releases to the media,
and posts on the TSE website.
(c) Daily disclosure of outstanding margin trading
Where a stock, for which margin trading can be made, becomes subject to the alert as
prescribed in Rule 30 of the Business Rules, TSE may publicize its outstanding margin
transactions on a daily basis.
[Rule 2, Item 1 of the Rules on Regulatory Measures Concerning Securities Trading, etc. or Its
Brokerage]
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i. Subjecting an issue to daily disclosure

Where a situation falls under 1. or 2. below, and, in addition, where TSE deems that the
situation has a large impact on the price or trading volume of the relevant stock in the
auction trading session, TSE may make daily disclosure of outstanding margin trading on
the issue from the next business day.
(i) A listed company has not made disclosure regarding its decisions, events, earnings
information, or adjustments to earnings forecasts or figures within the required
period.
(ii) A listed company has not clarified the content of unclear information.
Even if a listed company makes appropriate disclosure, depending on the time of
disclosure, TSE may publish outstanding margin trading on the issue just for the next
business day.
ii. Removing the daily disclosure requirement
For an issue subject to daily disclosure pursuant to (a) above, if the issue falls under any
of the following cases, TSE may remove the daily disclosure requirement on the next
business day.
(i) Where the listed company makes appropriate disclosure
(ii) Where the issue falls under the criteria for removal of the daily disclosure requirement
specified in the guidelines concerning designation, etc. of daily disclosure issues
(iii) Where TSE deems it appropriate to remove the daily disclosure requirement,
including when an appropriate period of time has elapsed since the issue became
subject to daily disclosure
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f. Disclosure to Clarify Content of Unclear Information

When TSE makes an inquiry on speculation in the media or a rumor in the public domain on a
security or its issuer, the listed company is required to respond accurately. If TSE deems it necessary
and appropriate for the listed company to clarify the content of speculation in the media or rumors,
TSE may request the listed company to disclose the content of its response, in which case, the listed
company will be required to make immediate disclosure.
[Rule 415, Paragraphs 1 and 2 of the Regulations]
(a) Outline
Disclosure requests will be made from the perspective of whether speculation in the media or
rumors have material impact on investment decisions, regardless of whether the content of the
response from the listed company falls under the de minimis criteria for timely disclosure.
Where there is unclear information and the content of speculation in the media or rumors
have factual basis, the listed company shall be required to make appropriate disclosure on the
actual situation. If, on the other hand, the content is totally or partially untrue, it is required to
deny or otherwise make appropriate disclosure. Even if the listed company provides comments
on speculation in the media or rumors, for example "The company did not make such
disclosure" is not appropriate as disclosure contents because this comment does not clarify the
content of the unclear information or contribute to investment decisions. Listed companies are
required to make as in-depth disclosure as possible.
Referring back to the relationship between this and the system for issuing alerts, listed
companies should note that inquiries and disclosure requests may not necessarily be made
before an alert is issued. In particular, when unclear information becomes available during
auction trading, TSE may issue an alert to investors before making an inquiry or disclosure
request to the listed company.
Listed companies are reminded that non-action on a disclosure request may constitute a
violation of the Regulations. In addition, it would adversely affect price discovery in the financial
instruments market and lead to a loss of investor confidence in the listed company. In particular,
in order to avoid a situation where the company's relationship with a third party may prevent
clarification, the company is advised, at the outset of negotiations regarding merger, acquisition,
etc., to agree with the third party to disclose the status of negotiations in the case speculation in
the media or a rumor on the progress of negotiation talks is disseminated.
Furthermore, if the listed company had made disclosure to clarify the content of unclear
information, it shall also disclose any subsequent significant developments or changes in the
situation.
(b) Matters to note in the case where there is unclear information regarding equity
financing
When there is unclear information regarding equity financing, TSE may make an inquiry to
the listed company on the authenticity of such information or request the listed company to
carry out disclosure to clarify the authenticity of such information.
While a listed company should consider regulations on solicitation prior to registration under
the Financial Instruments and Exchange Act when it would like to disseminate information on
the equity financing prior to submitting security registration statement, 2-12 of the "Points of
144
Attention Regarding Disclosure of Corporate Affairs, etc." provides that "disclosure which is
carried out under the articles of association of the exchange or other rules" "does not fall under
the category of Solicitation of Offers to Acquire or Solicitation of Offers to Buy." Therefore, it is
understood that even if a listed company carries out detailed disclosure concerning the status of
consideration on equity financing at TSEs request, it does not breach the regulations on
solicitation prior to registration.
In the case where a listed company, in the so-called "comment" disclosure, makes detailed
disclosure of the status of consideration regarding equity financing, it is encouraged to clarify
that the disclosure material is not prepared for Solicitation of Offers to Acquire or Solicitation of
Offers to Buy by, for example, adding explanatory notes to the text as follows.
(Example)
Note: This document was not prepared for the purpose of soliciting acquisition or sale.
(c) Matters to note in the case where there is unclear information regarding
earnings/business performance
When there is unclear information regarding earnings/business performance, TSE may also
make an inquiry to a listed company on the authenticity of such information or request a listed
company to carry out disclosure to clarify the authenticity of such information.
TSE generally requests to carry out disclosure in accordance with the timely disclosure criteria
for amendment of estimated value of business performance. In addition, TSE may also request
to carry out disclosure on the facts, including the authenticity of information, in the case where
there is a large difference between the unclear information and the actual situation or where
TSE deems that the unclear information may have material effect on investment decisions based
on the stock price or order trends. In the case where there is unclear information concerning
quarterly earnings or business performance, if the annual business performance can be
estimated from the content of such information, TSE may also request for disclosure on the
facts, including the authenticity of the unclear information.
As information regarding earnings is understood to be fixed through a series of processes,
such as audits/review of accounts by accounting auditors and auditors (audit committee
members), and account settlement operations at the listed company, etc., whether the listed
company can carry out detailed disclosure regarding the unclear information at the time of its
occurrence also depends on the circumstances.
Therefore, when there is unclear information regarding earnings or business performance,
the method of disclosure for clarifying the authenticity of the unclear information may not be
limited to the disclosure of a "comment." As disclosure concerning "adjustments to earnings
forecasts" and the advancement of schedule for disclosure of earnings results, etc. may be
available, please select an appropriate method, taking your companys own circumstances into
consideration.
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(2) Practical Guide for Timely Disclosure

When a listed company intends to carry out timely disclosure, it is required to go through the
process of (i) considering the need for timely disclosure, (ii) confirming the timely disclosure schedule,
etc., (iii) preparing the timely disclosure document, and (iv) carrying out timely disclosure.
This chapter describes the matters to note concerning the above mentioned procedures. The
general procedure for carrying out timely disclosure is as follows.
1. Considering the need for timely
disclosure
(i)
(ii)
(iii)
(iv)
(i)
(ii)
(iii)
To consider if the fact falls under any disclosure matter

To consider if the fact falls under the "de minimis criteria"
To consider if the fact falls under the basket clause
To consider making voluntary disclosure
2. Confirming the schedule
To check the timing of disclosure
To check the need and timing for prior consultation
To check the need for any operations concerning timely
disclosure
(iv) To check the need for submission of statutory disclosure
documents
3. Preparing disclosure document (i) To check "items to be disclosed" and "instruction for
preparation of disclosure document"
(ii) To prepare disclosure document using template document
form, etc.
(iii) To prepare PDF file for registration
4. Carrying out timely disclosure
(i) To register disclosure document via TDnet
(ii) To publish disclosure document in the "Company
Announcement Disclosure Service"
(iii) To disseminate information via other media
* After a listed company carries out timely disclosure, it may be required to carry out disclosure
regarding postponement/ change/ correction/ progress of the disclosed matter.
* A listed company may be required to submit document(s) to TSE concerning timely disclosure.
a. Matters to Note regarding Need for Disclosure

(a) Basic Principle Concerning Faithful Execution of Services
When a listed company determines a matter related to operations, business or assets of said
listed company or said listed stock, etc. which has material effect on investment decisions or
such a matter occurs at the listed company, it may be required to carry out timely disclosure.
When you determine such a matter or when such a matter occurs, please consider if the
matter falls under any individual disclosure matter first. Each disclosure matter is prescribed in
the Regulations.
* In the case where a fact falls under more than one disclosure matter
It is possible that a fact falls under more than one disclosure matter, depending on the
details of the fact of decision/occurrence. (For example, in the case where an allottee of a
third-party share allotment accompanying a capital and business alliance becomes a major
146
shareholder, a single action (the implementation of the capital and business alliance) will
fall under three disclosure items, which are "offering to subscribe for new shares to be
issued," "business alliance" and "change in major shareholders." Also, in the case where a
listed company newly calculates estimated value in the current consolidated accounting
year as a result of consideration of the degree of effect given to the account record, etc.
caused by the fact of decision or occurrence, it may be required to carry out timely
disclosure of the "adjustment to earnings forecasts, etc." In these cases, it is also required
to consider if the fact falls under the de minimis criteria, etc. for the respective disclosure
matter.
* In the case where delisting has been determined
Even if a listed company is scheduled to be delisted, when it determines a fact which falls
under a disclosure matter or when a fact which falls under a disclosure matter occurs, the
listed company shall carry out timely disclosure.
(b) Considering whether a Fact Falls under the De Minimis Criteria

De minimis criteria are set for many disclosure matters. If a fact falls under the de minimis
criteria, in general, timely disclosure is not required. On the other hand, there is no "de minimis
criteria" for some disclosure matters, such as corporate reorganization and mergers.
A "de minimis criterion" may involve more than one requirement. (For example, the increase
or decrease in sales is within a certain range, and the increase or decrease in net assets is within
a certain range.) Only if a fact meets all of such requirements, the fact falls under the de minimis
criteria and timely disclosure is not required.
While many de minimis criteria are determined based on consolidated indicators, such as
consolidated sales amount, the de minimis criteria quoted from such criteria in the insider
trading regulations, in principle, are determined based on non-consolidated indicators, such as
sales amount (non-consolidated basis). Therefore, when a listed company considers whether a
fact falls under the de minimis criteria, it is necessary to confirm both of the consolidated
indicators and non-consolidated indicators.
* Cases where Net Profit Attributable to Shareholders of the Parent Company should be read
Consolidated Net Profit
Because of the recent amendments to the Ordinance on Terminology, Forms, and
Preparation Methods of Consolidated Financial Statements, which were in turn based on
amendments to the Accounting Standard for Business Combination, data previously
published under the category of Net Profit in consolidated financial statements prepared
according to Japanese accounting standards are now required to be published under the
category of Net Profit Attributable to Shareholders of the Parent Company. (This change
applies to all consolidated financial statements for fiscal years starting on or after April 1st,
2015.) Based on this change, Rules have been revised so as to use Net Profit Attributable
to Shareholders of the Parent Company instead of Consolidated Net Profit in the
assessment of de minimis criteria. (The revision has been implemented as of April 1st,
2015.) In accordance with these amendments, Guidebook for Timely Disclosure of
Corporate Information adopts the use of Net Profit Attributable to Shareholders of the
147
Parent Company as the item to assess whether de minimis criteria are met. However, in
cases such as when Consolidated Net Profit is being used to assess whether de minimis
criteria are met in previous fiscal years, you should be aware that the Net Profit
Attributable to Shareholders of the Parent Company should be substituted with the
Consolidated Net Profit where applicable.
* In cases where it is not clear whether a fact falls under the de minimis criteria
In cases where it is not clear whether a fact falls under the de minimis criteria, the fact
should be considered to not fall under the de minimis criteria, and timely disclosure is
required. For example, in the case where it is difficult to calculate the amount of impact on
business performance caused by a fact of decision/fact of occurrence, timely disclosure
shall be carried out, unless the estimated maximum amount of impact still falls under the
de minimis criteria.
* In cases where a fact does not have material impact on business performance together with
the estimated amount of impact caused by another factor
Even if the aggregated amount of impact on business performance caused by a fact of
decision/occurrence (Fact A) and such amount of impact caused by another fact (Fact B)
falls under the de minimis criteria, timely disclosure shall be carried out if the estimated
amount of impact caused by Fact A does not fall under the de minimis criteria.
* In cases where the effect caused by a fact has already been included in the estimated value of
business performance
Even if the impact caused by a fact has already been reflected in the estimated value of
business performance, such a fact shall be disclosed if the estimated value of impact itself
does not fall under the de minimis criteria.
* In cases where a string of events involving more than one act is conducted
In cases where a listed company conducts a string of events involving more than one act
that falls under a specific fact of decision, even if each act falls under the de minimis criteria
prescribed in the Regulations, it is necessary to determine whether the overall impact of the
string of events falls under the de minimis criteria as far as it is deemed appropriate to
regard these as a string of events based on their aims, intention, and economic value.
* In cases where the amount of profit is small
TSE sets the disclosure criteria relating to the amount of profit for many disclosure
matters. In the case where the estimated value of impact on profit is more than 30% of
consolidated ordinary profit or net profit attributable to shareholders of the parent
company recorded for the most recent consolidated accounting year, timely disclosure shall
be carried out.
In cases where the amount of profit is small, however, special provisions are available.
The following cases fall under the special provisions.
(i) Regarding the criteria on net profit attributable to shareholders of the parent company
consolidated ordinary profit, in the case where the amount of consolidated ordinary
profit for the most recent consolidated accounting year is less than 2% of the amount
148
of sales for the most recent consolidated accounting year, and

(ii) Regarding the criteria on net profit attributable to shareholders of the parent company,
in the case where the amount of consolidated net pr1ofit for the most recent
consolidated accounting year is less than 1% of the amount of sales for the most
recent consolidated accounting year.
* In the case of irregular accounting period
In the case of irregular accounting period accompanied by change in the settlement term
(A settlement term becomes longer or shorter than 12 months), eligibility for the de
minimis criteria is to be determined based on comparing the figures based on a 12-month
period.
For example, the calculation of the de minimis criteria for a 6-month settlement term is
as follows.
Reference value for the case where the most recent accounting year (X-1 year) introduced
irregular account settlement (6-month)
X-2 year (12-month)

X-1 year (6-month)
X-1 year (after conversion)
Reference value for X year
Consolidated
Net Sales (JPY)
150 billion
80 billion
160 billion
160 billion
Net Profit Attributable to

Shareholders of the
Parent Company (JPY)
13 billion
3 billion
6 billion
6 billion
* In the case where submission of extraordinary report is not necessary

As matters for timely disclosure and requirement for timely disclosure do not always
overlap with the grounds for submission of extraordinary report, it is possible that, even if
the submission of extraordinary report is not required, timely disclosure shall still be carried
out.
(c) Considering whether a Fact Falls under the Basket Clause

In addition to individual disclosure matters prescribed in the Regulations, in the case where a
listed company makes a decision regarding important matters related to operations, business or
assets of such listed company or such listed stock, etc. which have a material effect on
investment decisions, or such matters occur, timely disclosure shall be carried out (so called the
"basket clause").
Even if a fact (i) does not fall under any disclosure matter or (ii) falls under the de minimis
criteria while it falls under a disclosure matter, it is possible that such a fact falls under the
basket clause and timely disclosure shall be carried out. Therefore, when a listed company
considers the need for timely disclosure, it is required to consider the eligibility for the basket
clause.
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(d) Considering Making Voluntary Disclosure

Even if a listed company determines that timely disclosure is not necessary to be carried out
as a result of considerations in (a) to (c) above, it is still encouraged to consider making
disclosure on a voluntary basis from the point of view of timely and appropriate disclosure of
corporate information. For example, if a listed company discloses corporate information in a
foreign country in accordance with the laws, etc. of the country, it is desirable to make voluntary
disclosure from the point of view of fair information provision.
Even when voluntary disclosure is carried out, as far as the information is disclosed as "timely
disclosure information," such information is regarded to be provided to investors as information
useful for investment decisions. Therefore, in preparing disclosure documents, a listed company
is required to pay attention in order to make appropriate disclosure from the point of view of
providing information for investment decision with referring the "disclosure matter" and "notes
in disclosure and writing" for disclosure matters, etc. Regarding the timing of disclosure, please
carry out disclosure immediately after the decision is made or the fact occurs as timely
disclosure is carried out.
Also, after a listed company carries out voluntary disclosure, it is also required to make
disclosure when the company decides not to execute the disclosed matter, or when it is
necessary to change or correct the disclosed matter.
If you have questions about the need for disclosure, please contact TSE.
b. Matters to Note regarding the Disclosure Schedule

(a) Confirming the Time of Disclosure
(i) A practical way of thinking regarding the time of disclosure of fact of decisions
In cases where a body that decides a listed companys business execution makes a decision
on carrying out a matter that falls under a material decision, the listed company shall carry out
disclosure immediately according to the provisions of the Regulations and the Enforcement
Rules.
The actual time of disclosure about a decision shall not be constrained by formal aspects,
such as a board meeting, and the time shall be determined according to the actual situation. In
general, a listed company is required to carry out disclosure at the stage where the body that
decides its business execution in practice effectively decides to carry out such matter. (A body
that decides a listed companys business execution does not always mean the body that has
authority to make the ultimate decision according to the Companies Act.)
In practice, regarding matters to be resolved at a general shareholders meeting and matters
to be resolved at a board meeting, it is generally understood that timely disclosure is carried out
immediately after the resolution at board meeting, and regarding the matters on which the
president of the company has authority, it is also understood that timely disclosure is carried out
immediately after the decision is made by the president. If it is clear that other bodies or
executives decide such business execution in practice, however, timely disclosure shall be
carried out when such resolution/decision is made. Regarding matters to be resolved at a
general shareholders meeting, in general, it is necessary to carry out timely disclosure not after
the general shareholders meeting reaches a resolution, but immediately after the board meeting
resolves to make a proposal.
150
Regarding the insider trading regulations, while a listed company is required to appropriately
manage information that may fall under material facts based on past cases from the stage
where a decision is made to start operations towards implementation (in some cases, prior to
such stage), it is not always required to carry out timely disclosure immediately at this stage.
* In the case where a basic agreement, etc. is concluded
Regarding organizational restructuring, such as merger, etc. and transfer of subsidiary,
etc., there are cases where a Memorandum of Understanding (hereinafter referred to as
"MOU") and/or Letter of Intent is concluded before a final contract is concluded. If these
acts are practically decided by conclusion of these MOU, etc., timely disclosure is necessary
to be carried out at this stage.
For example, however, in the case where such conclusion of MOU, etc. means just a
preliminary action, or a certain agreement to begin negotiations which may not necessarily
lead to the final agreement, or in the case where the disclosure of such conclusion of MOU
may cause the negotiations to collapse, timely disclosure may not be required. In addition,
please note that the need for disclosure is not determined by whether the MOU is legally
binding, or whether the ratio of the merger is described.
* In the case where administrative approval/permission is necessary
Even if the execution or implementation of an act related to corporate information
requires approval by the authority, in principal, timely disclosure is required to be carried
out when the listed company decides to execute the act. In such a case, it is required to
describe in the disclosure document that approval by authority is the condition for
execution/implementation.
* In the case where resolution at the board meeting of the counterparty has yet to be made
In the case where a listed company intends to conduct reorganization, etc. such as
merger, etc., it is possible that resolution of board of directors meeting at the other party
has not been completed at the time when the resolution of board of directors meeting at
the listed company has already been made, due to the different dates for the board
meeting at the listed company and the other party.
Even if the resolution of the board meeting has not been made at the other party, the
listed company shall carry out timely disclosure at the time when its decision making body
reaches a resolution on the execution of the operation. Therefore, if a listed company
intends to carry out timely disclosure at the same time as the resolution of the board
meeting of the other party, both parties should coordinate on the schedule, taking timely
disclosure into consideration.
(ii) A practical way of thinking about the timing of disclosure for occurred facts
A listed company shall carry out timely disclosure when material corporate information occurs
according to the provisions of the Regulations and the Enforcement Rules.
The disclosure is to be carried out at the time when the occurrence of such information is
recognized. Therefore, a listed company is encouraged to establish and maintain a system that
enables it to immediately recognize that a fact has occurred.
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(iii) A practical way of thinking about the timing of disclosure for amendments to
earnings forecasts, etc.
In the case where a listed company recalculates the forecasts for business performance for
the current consolidated accounting year (current business year), or fixes the details of account
settlement for the current consolidated accounting year (current business year), it shall carry
out timely disclosure concerning the amendment to its forecasts, etc.
* In the case where the whole picture of the act has not been decided or clarified at the time of
decision/occurrence
Even if the whole picture of the act has not been decided or the whole picture of the fact
has not been clarified, the listed company shall classify the facts into those that have been
fixed/clarified and those which have not been fixed/clarified, and then, carry out timely
disclosure concerning the facts that have been fixed/clarified. In addition, after such
disclosure is carried out, when the unfixed/unclarified fact becomes fixed/clarified, the
listed company shall carry out timely disclosure as "Progress of disclosed matter"
accordingly.
(b) To Confirm the Need and Timing for Prior Consultation

In the case where a listed company falls under any disclosure matter listed below under
certain conditions, it shall consult TSE at least 10 days (for an absorption type merger, etc. that
does not fall under the de minimis criteria for inappropriate mergers: 2 weeks before, for
introduction or exercise of takeover defense measure: 3 weeks before) prior to the scheduled
disclosure date.
Third Party Share Allotment

Issuance of MSCB, etc.
Introduction/Exercise of Takeover Defense Measures
Allotment of Share Options without Contribution
Reverse Stock Split that is Expected to Result in Delisting
Acts of Reorganization, such as Merger/Acquisition
Takeover Bid or Takeover Bid for Treasury Shares
Expression of Intent, etc. concerning Takeover Bid
Acquisition of all classified stocks subject to whole acquisition clause
Approval or rejection of a special controlling shareholders request for sale of shares, etc.
Assignment of independent auditors or directors who meet independence standards
Merger, etc. that does not Fall under the De Minimis Criteria concerning Inappropriate
Mergers
Regardless of whether an act falls under the list above, in the case where there are specific
matters to be taken into consideration concerning disclosure, including cases where the details
of the disclosure are different from the details that TSE require to be disclosed, where any
scheme with no precedent is being considered and where there are concerns over matters that
need to be observed, please provide sufficient time for prior consultation.
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Prior consultation is available by interview, telephone, and e-mail. If it is not clear whether
there is a need for prior consultation, please contact TSE.
(c) To confirm the need for any operations related to timely disclosure
Depending on the disclosure matter, there are some cases where certain procedures, such as
acquisition/submission of document, are required prior to timely disclosure.
For example, in the case where an act corresponds to a transaction with the controlling
shareholder, it is required to obtain the opinion from an entity that does not have any interest
with the controlling shareholder.
In addition, in the case of a third party share allotment that falls under a certain condition, it
is required to obtain the opinion from the third party or take procedures to confirm shareholder
intent.
(d) To confirm the need for submitting statutory disclosure document(s)

Depending on the disclosure matter, the securities registration statement or extraordinary
report is required to be submitted in addition to timely disclosure. (For the details, please
contact the Financial Service Agency or Local Finance Bureaus.)
Regardless of whether an extraordinary report has been submitted, in the case where the
body that decides a listed companys business execution makes a decision, the listed company
shall carry out timely disclosure immediately.
However, in the case where timely disclosure is carried out prior to the submission of the
securities registration statement concerning corporate information that requires such
submission, such as issuance of new shares and subscription rights for new shares, the case
may be contrary to the regulation on prior solicitation. Therefore, please take care to avoid
causing such a situation by temporarily registering the extraordinary report with EDINET in
advance to confirm if the report is ready to be submitted.
c. Matters to Note regarding Preparation of Disclosure Documents

(a) Confirm "Disclosure Matters" and "General Instructions for Preparation"
In Guidebook for Timely Disclosure of Corporate Information, the details to be described for
disclosure (the "disclosure items") and the "general instructions for preparation" are explained
for each disclosure matter. In general, these disclosure items mean items that a listed company
is required to disclose in order to enable investors to make decisions pertaining to such
information. In principle, all of these items are required to be described in a disclosure
document. Therefore, in preparing a disclosure document, please confirm these disclosure
items and the general instructions for preparation first.
In addition to the prescribed disclosure items, it is required to describe the items, which are
necessary for investors to understand/judge the corporate information properly, in a disclosure
document.
On the other hand, in the case where false description is included in a disclosed document,
where information that is regarded as important for making investment decisions is insufficient
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in the disclosure document, or where the information in the disclosure document is misleading,
the disclosure may be subject to the measure prescribed in the Regulations.
Therefore, when a listed company prepares a disclosure document, the company is required
to confirm the facts carefully, and to prepare the disclosure document accurately without errors
or omissions.
* In the case where a fact falls under more than one disclosure matter
In the case where any corporate information falls under more than one disclosure matter,
if it is regarded appropriate to combine the matters into a single disclosure document so
that the investors will be able to understand and judge the information appropriately,
prepare a single disclosure document.
On the other hand, in the case where it is regarded appropriate to explain each matter
separately so that the investors will be able to understand and judge the information
appropriately, prepare a separate disclosure document, indicating the relationship between
any related facts.
In both cases, the listed company is encouraged to describe the prescribed disclosure
items concerning each disclosure matter in order to enable investors to understand and
judge the corporate information appropriately in accordance with the practical handling of
timely disclosure of corporate information described in this guidebook.
(b) Use of disclosure templates

For the convenience of listed companies in preparing disclosure documents, templates for
disclosure are published for each disclosure matter. While a listed company is able to cover all
disclosure items that are described in Guidebook for Timely Disclosure of Corporate
Information by preparing the timely disclosure documents in accordance with each template, it
does not mean that the listed company is required to base its disclosure on the templates. In
addition, even if an item is not required to be described in the disclosure form, as far as such
item may have material impact on investment decisions on a case-by-case basis, such item
needs to be disclosed appropriately.
Also, the TDnet database service enables its users to search past timely disclosure documents.
When a listed company prepares a disclosure document, it may be useful to search the
examples of other companies, and refer to such documents when making disclosure that is easy
for investors to understand. Since such documents disclosed by other companies are prepared
for the specific circumstances, the listed company should not simply use their content but
should take care to prepare disclosure documents and carry out timely disclosure in accordance
with its own situation.
(c) General Instructions for Preparation of Disclosure Documents

(i) Preparing disclosure documents on a consolidated basis
In principle, disclosure documents should be prepared using consolidated indicators.
In cases where there is no consolidated indicator, such as in the case of a listed company that
does not prepare consolidated financial statements, or in cases where it is more appropriate to
prepare them on a non-consolidated basis, disclosure documents may be prepared using
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non-consolidated indicators.
Figures for indicators described in disclosure documents should be distinguished between
consolidated and non-consolidated indicators.
(ii) Joint preparation of disclosure documents
While disclosure documents are generally prepared under the name of a single listed company,
it is acceptable to jointly prepare disclosure documents (for example, in the case where the
parent company and subsidiary are both listed). Even if a disclosure document is jointly
prepared, the disclosure document is regarded as disclosed by the listed company. Therefore,
please note that the listed company is fully responsible for the accuracy of the disclosure
document, including details concerning the other companies involved in joint preparations.
(iii) Preparing disclosure documents that are easy to understand
In order to make disclosure documents easier to understand, the following measures should
be considered.
For technical terms used in a specific business area or industry, add explanatory notes as
far as possible.
For the style of writing, avoid using terms that are difficult to understand as far as possible,
and describe concretely.
To try to use description that is easy to understand, as well as charts and diagrams.
For facts that have already been disclosed, specify the gist of such facts by quoting the date
and title of the related disclosure documents.
(iv) Preparing disclosure documents from the standpoint of fair provision of
information
A listed company is required to provide information to investors fairly. For example, if material
information that is not described in the disclosure document is disseminated at the press
conference that is held with timely disclosure, only certain investors will be able to obtain the
information, and this is unfair. In such a case, it may even be necessary to amend or correct the
details of the disclosure.
Therefore, in preparing disclosure documents, listed companies are encouraged to include
answers to expected questions from investors in disclosure documents in order to prevent
unequal access to information.
(v) Description of future outlook
In disclosure documents, listed companies are required to describe the expected impact of an
occurred fact or decision on business performance from the current business year and its future
outlook, depending on the disclosure matter.
In this regard, as to the expected impact on business performance from the current business
year, even if the aggregation of the impact on business performance from the current business
year by the fact and impact by other facts does not result in a material impact on business
performance, the listed company is required to describe details, including the impact of other
facts. In addition, even if the expected impact on business performance from the current year is
yet to be calculated, the listed company is encouraged to describe at least the scale and/or
degree of the impact.
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d. Disclosure regarding Postponement/ Change/ Correction/ Progress of Disclosed Matters

(a) Postponement of disclosed matters
In the case where a listed company decides not to carry out the matter concerning the
material corporate information that has been disclosed, it shall disclose to that effect as
"Postponement of the disclosed matter."
(b) Change/correction of disclosed matters
In the case where a change or correction should be made to the content of disclosed
information, a listed company shall disclose the details of such change or correction immediately,
as "Change of Disclosure Matter" and "Correction of Timely Disclosure Document."
(c) Progress of disclosed matters
Regarding disclosure details that are difficult to be disclosed at the time the matter was first
disclosed, a listed company is required to make disclosure as "Progress of Disclosure Matter"
immediately after such details become available for disclosure.
e. Others
(a) Information management regarding timely disclosure matters
In general, timely disclosure matters correspond to material facts in the insider trading
regulations. Therefore, listed companies are encouraged to thoroughly conduct information
management concerning timely disclosure matters in order to avoid insider trading by people
who have gained access to the information ahead of timely disclosure.
Listed companies are also required not to provide undisclosed information individually in the
course of everyday communications with parties, including customers, individual investors,
security analysts, and the media. Regardless of whether it is intended, if a listed company
provides undisclosed information individually, it is required to carry out disclosure concerning
such information via TDnet immediately from the point of view of fair disclosure.
In the case where media speculation or a rumor is circulating in the public domain, TSE may
issue an alert to the general public. For the details of the public announcement measure, please
refer to the Outline of system for issuing alerts.
(b) Documents to be submitted

Depending on the content of timely disclosure, listed companies are required to submit
document(s) to TSE before/after such timely disclosure.
156
(3) Practical Handling of Timely Disclosure of Corporate Information for Listed Foreign
Companies
A listed foreign company (meaning an issuer of a foreign stock or foreign stock depositary receipt,
etc.; the same shall apply hereinafter) shall disclose the facts prescribed in Rule 402 through 405 of
the Regulations, in the same manner as a listed domestic company. In addition, based on Rule 407 of
the Regulations, there are items to be disclosed only by a listed foreign company such as changes in
laws and regulations of the home country concerning the company system.
On the other hand, as disclosure systems and procedures may vary depending on the home
country of the listed foreign company, it is not necessarily reasonable to apply a uniform measure.
Furthermore, foreign companies are also listed using diversified methods, including direct listing on
TSE and listing of foreign stock depository receipts. Therefore, under the Regulations, in applying the
rules and regulations of TSE to a listed foreign company, TSE shall take into account the legal systems,
business practices, and customs of the home country of the listed foreign company.
Facts that are decided by the listed company

Facts that occurred at the listed company
Earnings results of the listed company
Amendments to earnings/dividend forecasts of the listed company, etc. [Rule 405 of the
Regulations]
Information on subsidiaries, etc.
Information to be disclosed only by a listed foreign company
Changes in laws and regulations, etc. of the home country concerning the company system that
have material impact on shareholders (including holders of listed foreign stock depositary receipts,
etc.) or the companys business performance
A fact that occurs in a foreign country that has material impact on the circulation of a listed foreign
stock, etc., or a foreign stock depositary receipt, etc. that represents a right pertaining to a listed
foreign stock, etc.
In addition to the above, a decision on a change in or termination of a deposit agreement, etc.
pertaining to a listed foreign stock depositary receipt, etc. or any other agreement, other matters
that have material impact on a right, etc. related to a listed foreign stock depositary receipt, etc., or
a fact that has material impact on such right, etc.
* When these provisions are applied to a foreign company that is conducting English-Language
Disclosure for statutory disclosure, "securities registration statement," "securities report,"
"quarterly report," "internal control report," and "extraordinary report" shall be read as
"foreign company registration statement," "foreign company report," "foreign company
quarterly report," "foreign company internal control report," and "foreign company
extraordinary report" respectively.
* Regarding the approval granted to an application for an extension of the deadline for filing
securities report/quarterly report, when a listed foreign company submits a document that
describes that the reasons for application for said approval have not been changed or no
longer exist according to Paragraph (5), Article 15-2-2 or Paragraph (5), Article 17-25 of the
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Cabinet Office Ordinance on Disclosure of Corporate Information, it is required to make timely

disclosure to that effect as "Progress of Disclosed Information" that is a timely disclosure
matter of "Submission of application for an extension of the deadline for filing Securities
Report/Quarterly Report."
* A listed foreign company, for which TSE is the principal market, is encouraged to carry out
disclosure concerning earnings information, etc. in accordance with Guidebook for Timely
Disclosure of Corporate Information. In this case, among items that are uniformly required to
be described in the earnings report, "Basic approach toward Choice of Accounting Standard"
does not apply.
[Definitions of subsidiary, etc. and sub-subsidiary]

A "subsidiary, etc." means a subsidiary prescribed in Article 166, Paragraph (5) of the Financial
Instruments and Exchange Act, and in cases of a listed foreign company (limited to entities
deemed necessary by TSE), its subsidiary, affiliated company, or other entities deemed necessary
by TSE.
A "sub-subsidiary" means a sub-subsidiary prescribed in Article 29, Item (ii) of the Enforcement
Ordinance of the Financial Instruments and Exchange Act, and in cases of a listed foreign company
(limited to entities deemed necessary by TSE), it means a subsidiary, etc. of the subsidiary, etc.
[Timely disclosure of information regarding a company considered to be a capital-subordinate company,

etc.]
When TSE deems necessary, a listed foreign company is required to disclose information regarding a
capital-subordinate company, etc., including a fact of decision and fact of occurrence, etc.
A capital-subordinate company, etc. means, among affiliated companies based on human relations
and affiliated companies based on capital relations, a company considered to be substantially controlled
or owned by the listed foreign company.
Also, taking the example of a listing by a Chinese company that is conducting businesses in
industries that prohibit or restrict foreign investment, it is understood that more than a few
capital-subordinate companies, etc. may exist under such listed companies, and the relations among
the listed company, subsidiary companies, and capital-subordinate companies, etc. may depend on a
set of complicated contracts among them. In such a case, as it is predicted that the change in such
contract agreements may have material impact on the listed foreign company depending on the
substance of the change, information on such change is strongly recommended to be disclosed.
158
a. Changes in Laws and Regulations, etc. of the Home Country concerning the Company
System
(a) Disclosure Obligations under the Regulations
When changes in laws and regulations, etc. of the home country concerning the company
system that have material impact on shareholders (including holders of a listed foreign stock
depositary receipt, etc.) or the companys business performance are made, a listed foreign
company shall disclose its details immediately.
[Rule 407, Paragraph 1, item 1 of the Regulations]
(Note) As for the cases of changes in laws and regulations, etc. of the home country
concerning the company system that have material impact on shareholders (including
holders of a listed foreign stock depositary receipt, etc.) or the companys business
performance, restrictions on stock transfers, nationalization of corporations, etc. are
considered as examples.
(b) Items to be Disclosed and Notes on Disclosure/Descriptions
In disclosure material, prescribed items shall be indicated, and then, the details shall be
included so that investors can understand/judge the corporate information properly. In addition,
other than the prescribed items, items necessary for investors to understand/judge corporate
information properly shall also be described.
a. Details of changes in laws and regulations, etc. of the home country
b. Impact on shareholders or the companys business performance caused by the changes in
laws and regulations, etc. of the home country
c. Other items necessary for investors to understand/judge the corporate information
properly
b. A Fact that Occurs in a Foreign Country that Has Material Impact on the Circulation of
a Listed Stock, etc. or a Foreign Stock Depositary Receipt, etc.
When a fact that has a material impact on the circulation of a listed foreign stock etc. or a
foreign stock depositary receipt, etc. that represents a right pertaining to a listed foreign stock,
etc. occurs in a foreign country, a listed foreign company shall disclose its details immediately.
[Rule 407, Paragraph 1, item 2 of the Regulations]
(Note) As for a fact that occurs in a foreign country that has material impact on the
circulation of a listed foreign stock, etc. or a foreign stock depositary receipt, etc. that
represents a right pertaining to a listed foreign stock, etc., a takeover bid against the
stock, etc. of the listed foreign company made by an unlisted company and occurrence
of a fact that will cause delisting from an exchange other than TSE are considered as
examples.
In disclosure materials, prescribed items shall be indicated, and then, details shall be included
so that investors can understand/judge the corporate information properly. In addition, other
159
than the prescribed items, items necessary for investors to understand/judge corporate
a. Details of the fact
b. Impact on the circulation of the listed foreign stock, etc. caused by the fact
c. Other matters necessary for investors to understand/judge the corporate information
properly
c. Fact of Decision or Occurrence with Material Impact on Rights, etc. Related to Listed
Foreign Stock Depositary Receipt, etc.,
Where an issuer of a listed foreign stock depositary receipt, etc. has made a decision on a
change or termination of a deposit agreement, etc. or any other matters that have material
impact on a right, etc. related to the listed foreign stock depositary receipt, etc., or where a fact
that has material impact on such right, etc. has emerged, the issuer shall disclose details
immediately.
In disclosure materials, prescribed items shall be indicated, and then, details shall be included
so that investors can understand/judge the corporate information properly. In addition, other
than the prescribed items, items necessary for investors to understand/judge corporate
a. Details of the fact
b. Impact on the right, etc. related to the listed foreign stock depositary receipt, etc. by the
incident or fact
c. Other matters necessary for investors to understand/judge the corporate information
properly
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(4) Code of Corporate Conduct

a. Overview of Code of Corporate Conduct
A Listed company is required to keenly recognize that it is a member constituting the financial
instruments market and to improve disclosure of corporate information for the achievement of
transparency. In addition, it is also required to take the appropriate responses in corporate activity for
the purpose of protection of investors and appropriate fulfillment of market function. In the light of
these points, the Regulations defines the Code of Corporate Conduct consisting of Matters to be
Observed which clarify the minimum points to be adhered to as a listed companies and Matters
Desired to Be Observed which clearly specify the matters to be addressed by a listed company.
[Rule 432 through 452 of the Regulations]
b. Handling of Code of Corporate Conduct of Listed Foreign Companies

Provisions of Matters to be Observed applicable to listed foreign companies are: Rule 432
(Matters to be observed for third party allotment); Rule 433 (Prohibition of stock split, etc. which is
likely to disrupt the secondary market); Rule 434 (Matters to be observed pertaining to issuance of
MSCB, etc.); Rule 436 (Framework improvement to facilitate exercise of voting rights for listed foreign
companies; limited to a listed foreign company whose listed foreign stock, etc. is traded principally on
the TSE market); Rule 440 (Matters to be observed pertaining to introduction of takeover defense
measures); Rule 441 (Matters to be observed pertaining to disclosure of MBO, etc.); Rule 441-2
(Matters to be observed pertaining to significant transactions, etc. with controlling shareholder); Rule
442 (Prohibition of insider trading); Rule 443 (Exclusion of antisocial forces); and Rule 444 (Prohibition
of actions damaging to the function of the secondary market or shareholders rights). In addition,
provisions of Matters Desired to be Observed applicable to listed foreign companies are: Rule 445-3
(Respect for Corporate Governance Code); Rule 449 (System improvement for prevention of
occurrence of insider trading); Rule 450 (Development of system, etc. for excluding antisocial forces);
and Rule 452 (Fair provision of supplementary explanatory materials related to the details of account
settlement). Since the application of these items will be managed in consideration of legal systems
and practices, etc. of each home country of the relevant listed foreign company, please consult TSE
about the handling of these items, etc.
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Matters to be Observed
Matters to be observed for third party allotment (a)
Prohibition of stock split, gratis allotment of shares,
gratis allotment of subscription warrants, reverse stock
split, or change in the number of shares per share unit
which is likely to disrupt the secondary market or
infringe upon shareholder interests (b)
Matters to be observed pertaining to issuance of MSCB,
etc. (c)
Exercise of voting rights in writing, etc.
Framework improvement to facilitate exercise of voting
rights for listed foreign companies (d)
Obligation to secure independent director(s)/auditor(s)
Comply or Explain with Corporate Governance Code
Obligation to set up board of directors, board of auditors
or an audit committee and accounting auditors
Obligation to appoint an accounting auditor as certified
public accountant, etc. conducting audit certification,
etc.
Obligation to develop system and structure necessary to
ensure appropriateness of business
Matters to be observed pertaining to introduction of
takeover defense measures (e)
Matters to be observed pertaining to disclosure of MBO,
etc. (f)
Matters to be observed pertaining to significant
transactions, etc. with controlling shareholder (g)
Audit by a listed company audit firm, etc.
Prohibition of insider trading (h)
Exclusion of antisocial forces (i)
Prohibition of actions damaging to the function of the
secondary market or shareholders rights (j)
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Japanese
Company
Applicable
Foreign
Company
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Matters Desired to be Addressed

(matters to be addressed)
Efforts, etc. toward the shift to and maintenance of the
desired investment unit level
Efforts, etc. toward unification of trading unit
Respect for Corporate Governance Code (a)
Securing Independent Directors/Auditors as Directors
on the Board
Preparation of an environment for the functioning of
independent directors/auditors
Provision of information regarding independent
director(s)/auditor(s), etc.
Framework improvement to facilitate exercise of voting
rights
Documents to be delivered to shareholders owning
stock without voting rights
System improvement for prevention of occurrence of
insider trading (b)
Development of system, etc. for excluding antisocial
forces (c)
Development of systems and structures to properly
respond to changes, etc. in accounting standards, etc.
Fair provision of supplementary explanatory materials
related to the details of account settlement (d)
163
Japanese
Company
Foreign
Company
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
c. Matters to be Observed
(a) Matters to be Observed for Third party allotment
When a listed company performs an allotment of stocks, etc. by third party allotment that would
(i) dilute the ratio of voting shares by twenty five (25) percent or more, or (ii) cause a controlling
shareholder to transfer the shares held, it shall, in principle, (a) receive opinion of a person who has
a specific degree of independence from the management regarding the necessity and suitability of
such allotment, or (b) confirm the intent of shareholders regarding such allotment by means such
as a resolution in the general shareholders meeting; provided, however, that the preceding
provisions shall not apply to cases where it is difficult for the listed company to conduct any of the
procedures enumerated in (a) or (b) due to reasons such as rapidly deteriorating financial
situations.
[Rule 432 of the Regulations; Rule 435-2, Paragraph 3 of the Rules]
(b) Prohibition of Stock Split, Gratis Allotment of Shares, Gratis Allotment of

Subscription Warrants, Reverse Stock Split, or Change in the Number of Shares Per
Share Unit which is likely to Disrupt the Secondary Market or Infringe upon
Shareholder Interests
A listed company shall not carry out a stock split, gratis allotment of shares, gratis allotment of
subscription warrants, reverse stock split, or change in the number of shares per share unit which
is likely to disrupt the secondary market or infringe upon shareholder interests.
(c) Matters to be Observed pertaining to Issuance of MSCB, etc.

When a listed company issues MSCB, etc., it shall take measures to restrict conversion or exercise
of MSCB, etc. by purchasers of MSCB, etc. In addition, a listed company shall not conduct actions
deemed by TSE as damaging to the function of the secondary market or the rights of shareholders.
(d) Framework Improvement to Facilitate Exercise of Voting Rights for Listed Foreign
Companies
In cases where a listed foreign company (limited to a listed foreign company whose listed foreign
stock, etc. is traded principally on the TSE market) convenes a general shareholders meeting, it
shall send an instruction sheet written in Japanese language (*1) and a reference document
containing so adequate content that a beneficial shareholder of a foreign stock certificate, etc. can
give instruction for an exercise of a voting right (*2) to beneficial shareholders of a foreign stock,
etc. by two (2) weeks prior to a day of such general shareholders meeting. In addition, since the
164
application of these items will be managed in consideration of legal systems and practices, etc. of
each home country of the relevant listed foreign company, please consult TSE about the handling of
these items, etc.
(*1) Meaning a document by which a beneficial shareholder of a foreign stock, etc. gives
instructions for the exercise of voting rights.
(*2) Meaning a document containing matters that should serve as a reference regarding
instruction for the exercise of voting rights.
(e) Matters to be Observed Pertaining to Introduction of Takeover Defense Measures

In cases where a listed company introduces takeover defense measures (meaning decision of the
concrete substance of takeover defense measures such as making a resolution to issue new shares
or subscription warrants as takeover defense measures), it shall observe the matters referenced in
each of the following items:
. Sufficient disclosure
The listed company shall make necessary and sufficient timely disclosure concerning
takeover defense measures.
. Transparency
Conditions of implementation (meaning making the realization of an acquisition difficult
by executing the substance of takeover defense measures; the same shall apply hereinafter)
and abolishment (meaning canceling introduced takeover defense measures such as retiring
new shares or subscription warrants issued as takeover defense measures) of takeover
defense measures shall not depend on arbitrary decisions by the management.
. Effect on the secondary market
Takeover defense measures shall not include factors which may cause extremely unstable
price formation of a stock or any other factors which may cause unpredictable damage to
investors.
. Respect for shareholders rights
Takeover defense measures shall give consideration to shareholders rights and their
exercise.
(f) Matters to be Observed Pertaining to Disclosure of MBO, etc.

In cases where a listed company conducts the announcement of an opinion or representation to
shareholders relating to a takeover bid from an officer of the target of the takeover bid (including
takeover bids where the takeover bidder is conducting the bid based on the request of an officer of
165
the target of the takeover bid and has a common interest with the officer of such target) or by a
controlling shareholder or other person defined by the Rules, timely disclosure shall be made in a
necessary and sufficient manner.
[Rule 441 and Rule 441-2 of the Regulations]
(g) Matters to be Observed Pertaining to Significant Transactions, etc. with Controlling

Shareholder
A listed company that has a controlling shareholder shall, in the cases where a body which
decides the business execution of such listed company or a subsidiary thereof makes a decision on
any significant transactions, etc. with a controlling shareholder and other persons specified by the
Rules, obtain opinion from a person who has no interest in such controlling shareholder, that the
relevant decision will not undermine interests of minority shareholders of such listed company. In
addition, it shall perform necessary and sufficient timely disclosure.
[Rule 441-2 of the Regulations; Rule 436-3 of the Rules]
A controlling shareholder means a parent company or an entity specified by the Rules as entity
which directly or indirectly holds a majority of the voting rights. The latter means a main
shareholder (other than the parent company) who holds the majority of voting rights of a listed
company after combining the voting rights held for its own account and the voting rights held by a
close relative of said main shareholder and a company, etc. (meaning a company, designated
corporation, partnership, or other similar entities (including foreign entities that are equivalent to
these entities); the same shall apply hereinafter) whose majority voting rights are held by said main
shareholder and the close relative specified in the preceding item, and a subsidiary of said company,
etc.
[Rule 2, Item 42-2 of the Regulations; Rule 3-2 of the Rules]
(h) Prohibition of Insider Trading

A listed company shall not allow its officers, agents, employees and other workers to conduct
insider trading (*) for such listed companys account.
(*) Insider trading represents a transaction forbidden by Rule 166 and 167 of the Financial
Instruments and Exchange Act. The same applies hereinafter.
In addition, Matters Desired to be Observed include System Improvement for Prevention of
Occurrence of Insider Trading. Please also refer to the corresponding section.
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(i) Exclusion of Antisocial Forces

In cases where it has become clear that a listed company has relationships prescribed above as
those in which the listed company is involved with antisocial forces, and where TSE deems that
such condition has considerably damaged shareholders and investors trust in the market, the listed
company shall be delisted.
[Rule 601, Paragraph 1, item 19 of the Regulations; Rule 601, Paragraph 15 and Rule 436-4 of the
Rules]
In addition, Matters Desired to be Observed include Development of System, etc. for Excluding
Antisocial Forces. Please also refer to the corresponding section.
(j) Prohibition of Actions Damaging to the Function of the Secondary Market or

Shareholders Rights
A listed company shall, in addition to observing the individual provisions listed as Matters to be
Observed in the Code of Corporate Conduct, not conduct actions deemed by TSE as damaging to
the function of the secondary market or the rights of shareholders.
This is defined as a so-called basket clause of Matters to be Observed in the Code of Corporate
Conduct. Therefore, a listed company shall not, in addition to observing the individual provisions
listed as Matters to be Observed in the Code of Corporate Conduct, conduct any quasi-actions in
the light of the intent and purpose of the Code of Corporate Conduct.
d. Matters Desired to Be Observed (Matters to be Addressed)

(a) Respect for Corporate Governance Code
Listed companies shall respect for sense and ethos of the "Corporate Governance Code" and
address the enhancement of their corporate governance.
[Rule 445-3 of the Regulations]
(b) System Improvement for Prevention of Occurrence of Insider Trading

A listed company shall endeavor to prepare and maintain a required information management
system to prevent insider trading by its officers, agents, employees and other workers.
In addition, Matters to be Observed include Prohibition of Insider Trading. Please also refer to
the corresponding section.
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(c) Development of System, etc. for Excluding Anti-Social Forces

A listed company shall endeavor to develop a company structure to prevent damage due to
anti-social forces including criminal and extremist elements and to prevent the intervention of
anti-social forces against individual corporate activities.
In addition, Matters to be Observed include Exclusion of Antisocial Forces. Please also refer to
the corresponding section.
(d) Fair Provision of Supplementary Explanatory Materials Related to the Details of

Account Settlement
A listed company shall make efforts to ensure the fair provision of supplementary explanatory
materials on the details of the account settlement disclosed pursuant to the provisions of Rule 404
(Earnings Reports, etc.) when preparing and providing such materials to investors.
e. Measures for enforcing the Code of Corporate Conduct and reporting requirement
TSE may impose measures to ensure the effectiveness of the Code of Corporate Conduct if TSE
deems that a listed company has violated a matter to be observed. Measures available to TSE include
publicizing the fact of the violation, imposing a listing agreement violation penalty, requesting an
improvement report/improvement status report, and designating the stock as a security on alert.
Listed foreign companies shall report to TSE when it falls under the following condition:
Where a listed foreign company (limited to those whose principal market is TSE) violates the Code
of Corporate Conduct regarding improving systems to facilitate rights exercise.
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f. Japans Corporate Governance Code

Japans Corporate Governance Code
In this Corporate Governance Code, corporate governance means a structure for transparent, fair,
timely and decisive decision-making by companies, with due attention to the needs and perspectives of
shareholders and also customers, employees and local communities.
This Corporate Governance Code establishes fundamental principles for effective corporate governance
at listed companies in Japan. It is expected that the Codes appropriate implementation will contribute to
the development and success of companies, investors and the Japanese economy as a whole through
individual companies self-motivated actions so as to achieve sustainable growth and increase corporate
value over the mid- to long-term.
General Principles
Securing the Rights and Equal Treatment of Shareholders
1. Companies should take appropriate measures to fully secure shareholder rights and develop an
environment in which shareholders can exercise their rights appropriately and effectively.
In addition, companies should secure effective equal treatment of shareholders.
Given their particular sensitivities, adequate consideration should be given to the issues and
concerns of minority shareholders and foreign shareholders for the effective exercise of shareholder
rights and effective equal treatment of shareholders.
Appropriate Cooperation with Stakeholders Other Than Shareholders
2. Companies should fully recognize that their sustainable growth and the creation of mid- to long-term
corporate value are brought as a result of the provision of resources and contributions made by a
range of stakeholders, including employees, customers, business partners, creditors and local
communities. As such, companies should endeavor to appropriately cooperate with these
stakeholders.
The board and the management should exercise their leadership in establishing a corporate culture
where the rights and positions of stakeholders are respected and sound business ethics are ensured.
Ensuring Appropriate Information Disclosure and Transparency
3. Companies should appropriately make information disclosure in compliance with the relevant laws
and regulations, but should also strive to actively provide information beyond that required by law.
This includes both financial information, such as financial standing and operating results, and
non-financial information, such as business strategies and business issues, risk, and governance.
The board should recognize that disclosed information will serve as the basis for constructive
dialogue with shareholders, and therefore ensure that such information, particularly non-financial
information, is accurate, clear and useful.
Responsibilities of the Board
4. Given its fiduciary responsibility and accountability to shareholders, in order to promote sustainable
corporate growth and the increase of corporate value over the mid- to long-term and enhance
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earnings power and capital efficiency, the board should appropriately fulfill its roles and
responsibilities, including:
(1) Setting the broad direction of corporate strategy;
(2) Establishing an environment where appropriate risk-taking by the senior management is
supported; and
(3) Carrying out effective oversight of directors and the management (including shikkoyaku and
so-called shikkoyakuin) from an independent and objective standpoint.
Such roles and responsibilities should be equally and appropriately fulfilled regardless of the form of
corporate organization i.e., Company with Kansayaku Board (where a part of these roles and
responsibilities are performed by kansayaku and the kansayaku board), Company with Three
Committees (Nomination, Audit and Remuneration), or Company with Supervisory Committee.
Dialogue with Shareholders
5. In order to contribute to sustainable growth and the increase of corporate value over the mid- to
long-term, companies should engage in constructive dialogue with shareholders even outside the
general shareholder meeting.
During such dialogue, senior management and directors, including outside directors, should listen to
the views of shareholders and pay due attention to their interests and concerns, clearly explain
business policies to shareholders in an understandable manner so as to gain their support, and work
for developing a balanced understanding of the positions of shareholders and other stakeholders and
acting accordingly.
Section 1: Securing the Rights and Equal Treatment of Shareholders

General Principle 1
Companies should take appropriate measures to fully secure shareholder rights and
develop an environment in which shareholders can exercise their rights appropriately and
effectively.
In addition, companies should secure effective equal treatment of shareholders.
Given their particular sensitivities, adequate consideration should be given to the issues
and concerns of minority shareholders and foreign shareholders for the effective exercise of
shareholder rights and effective equal treatment of shareholders.
Notes
Companies have various stakeholders, including shareholders. Without appropriate cooperation with
these stakeholders, it would be difficult for companies to achieve sustainable growth. Suppliers of capital
are an important cornerstone, and shareholders are the primary starting point for corporate governance
discipline. Companies should secure appropriate cooperation with shareholders and strive toward the
achievement of sustainable growth by fully securing shareholder rights and providing for the smooth
exercise thereof.
In addition, the Companies Act requires companies to equally treat shareholders based on the class
and number of shares they hold. Gaining broad confidence of shareholders that they receive equal
treatment will also contribute to strengthening support from the suppliers of capital.
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Principle 1.1 Securing the Rights of Shareholders

Companies should take appropriate measures to fully secure shareholder rights, including voting
rights at the general shareholder meeting.
Supplementary Principles
1.1.1 When the board recognizes that a considerable number of votes have been cast against a
proposal by the company and the proposal was approved, it should analyze the reasons behind
opposing votes and why many shareholders opposed, and should consider the need for
shareholder dialogue and other measures.
1.1.2
When proposing to shareholders that certain powers of the general shareholder meeting be
delegated to the board, companies should consider whether the board is adequately constituted
to fulfill its corporate governance roles and responsibilities. If a company determines that the
board is indeed adequately constituted, then it should recognize that such delegation may be
desirable from the perspectives of agile decision-making and expertise in business judgment.
1.1.3
Given the importance of shareholder rights, companies should ensure that the exercise of
shareholder rights is not impeded. In particular, adequate consideration should be given to the
special rights that are recognized for minority shareholders with respect to companies and their
officers, including the right to seek an injunction against illegal activities or the right to file a
shareholder lawsuit, since the exercise of these rights tend to be prone to issues and concerns.
Principle 1.2 Exercise of Shareholder Rights at General Shareholder Meetings

Companies should recognize that general shareholder meetings are an opportunity for constructive
dialogue with shareholders, and should therefore take appropriate measures to ensure the exercise of
shareholder rights at such meetings.
1.2.1 Companies should provide accurate information to shareholders as necessary in order to facilitate
appropriate decision-making at general shareholder meetings.
1.2.2
While ensuring the accuracy of content, companies should strive to send convening notices for
general shareholder meetings early enough to give shareholders sufficient time to consider the
agenda. During the period between the board approval of convening the general shareholder
meeting and sending the convening notice, information included in the convening notice should
be disclosed by electronic means such as through TDnet 20 or on the companys website.
1.2.3
The determination of the date of the general shareholder meeting and any associated dates
should be made in consideration of facilitating sufficient constructive dialogue with shareholders
and ensuring the accuracy of information necessary for such dialogue.
TDnet: The Tokyo Stock Exchange operates a real-time internet service (Timely Disclosure
network) which distributes the information provided by listed companies on a timely basis in
accordance with its listing rules.
20
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1.2.4
Bearing in mind the number of institutional and foreign shareholders, companies should take
steps for the creation of an infrastructure allowing electronic voting, including the use of the
Electronic Voting Platform, and the provision of English translations of the convening notices of
general shareholder meeting.
1.2.5
In order to prepare for cases where institutional investors who hold shares in street name express
an interest in advance of the general shareholder meeting in attending the general shareholder
meeting or exercising voting rights, companies should work with the trust bank (shintaku ginko)
and/or custodial institutions to consider such possibility.
Principle 1.3 Basic Strategy for Capital Policy

Because capital policy may have a significant effect on shareholder returns, companies should
explain their basic strategy with respect to their capital policy.
Principle 1.4 Cross-Shareholdings

When companies hold shares of other listed companies as cross-shareholdings 21 , they should
disclose their policy with respect to doing so. In addition, the board should examine the mid- to long-term
economic rationale and future outlook of major cross-shareholdings on an annual basis, taking into
consideration both associated risks and returns. The annual examination should result in the board's
detailed explanation of the objective and rationale behind cross-shareholdings.
Companies should establish and disclose standards with respect to the voting rights as to their
cross-shareholdings.
Principle 1.5 Anti-Takeover Measures

Anti-takeover measures must not have any objective associated with entrenchment of the
management or the board. With respect to the adoption or implementation of anti-takeover measures,
the board and kansayaku 22 should carefully examine their necessity and rationale in light of their
fiduciary responsibility to shareholders, ensure appropriate procedures, and provide sufficient
explanation to shareholders.
Supplementary Principle
1.5.1 In case of a tender offer, companies should clearly explain the position of the board, including any
counteroffers, and should not take measures that would frustrate shareholder rights to sell their
shares in response to the tender offer.
Cross-shareholding: There are cases where listed companies hold the shares of other listed
companies for reasons other than pure investment purposes, for example, to strengthen business
relationships. Cross-shareholdings here include not only mutual shareholdings but also unilateral
ones.
22 Kansayaku: See Notes to the General Principle 4.
21
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Principle 1.6 Capital Policy that May Harm Shareholder Interests

With respect to a company's capital policy that results in the change of control or in significant
dilution, including share offerings and management buyouts, the board and kansayaku should, in order
not to unfairly harm the existing shareholders interests, carefully examine the necessity and rationale
from the perspective of their fiduciary responsibility to shareholders, should ensure appropriate
procedures, and provide sufficient explanation to shareholders.
Principle 1.7 Related Party Transactions

When a company engages in transactions with its directors or major shareholders (i.e., related party
transactions), in order to ensure that such transactions do not harm the interests of the company or the
common interests of its shareholders and prevent any concerns with respect to such harm, the board
should establish appropriate procedures beforehand in proportion to the importance and characteristics
of the transaction. In addition to their use by the board in approving and monitoring such transactions,
these procedures should be disclosed.
Section 2: Appropriate Cooperation with Stakeholders Other Than Shareholders

General Principle 2
Companies should fully recognize that their sustainable growth and the creation of midto long-term corporate value are brought about as a result of the provision of resources and
contributions made by a range of stakeholders, including employees, customers, business
partners, creditors and local communities. As such, companies should endeavor to
appropriately cooperate with these stakeholders. The board and the management should
exercise their leadership in establishing a corporate culture where the rights and positions
of stakeholders are respected and sound business ethics are ensured.
Notes
Companies have a variety of important stakeholders besides shareholders. These stakeholders
include internal parties such as employees and external parties such as customers, business partners and
creditors. In addition, local communities form the foundation for the on-going business activities of
companies. Companies should fully recognize that appropriate cooperation with these stakeholders is
indispensable in achieving sustainable growth and increasing corporate value over the mid- to long-term.
Given the recent and growing interest in social and environmental problems worldwide, taking positive
and proactive measures toward ESG (environmental, social and governance) matters may also be
included as part of this cooperation.
The appropriate actions of companies based on the recognition of their stakeholder responsibilities
will benefit the entire economy and society, which will in turn contribute to producing further benefits to
companies, thereby creating a virtuous cycle.
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Principle 2.1 Business Principles as the Foundation of Corporate Value Creation Over the
Mid- to Long-Term
Guided by their position concerning social responsibility, companies should undertake their
businesses in order to create value for all stakeholders while increasing corporate value over the mid- to
long-term. To this end, companies should draft and maintain business principles that will become the
basis for such activities.
Principle 2.2 Code of Conduct

Companies should draft and implement a code of conduct for employees in order to express their
values with respect to appropriate cooperation with and serving the interests of stakeholders and
carrying out sound and ethical business activities. The board should be responsible for drafting and
revising the code of conduct, and should ensure its compliance broadly across the organization, including
the front line of domestic and global operations.
2.2.1 The board should review regularly (or where appropriate) whether or not the code of conduct is
being widely implemented. The review should focus on the substantive assessment of whether
the companys corporate culture truly embraces the intent and spirit of the code of conduct, and
not solely on the form of implementation and compliance.
Principle 2.3 Sustainability Issues, Including Social and Environmental Matters

Companies should take appropriate measures to address sustainability issues, including social and
environmental matters.
2.3.1 With the recognition that dealing with sustainability issues is an important element of risk
management, the board should take appropriate actions to this end. Given the increasing
demand and interest with respect to sustainability issues in recent years, the board should
consider addressing these matters positively and proactively.
Principle 2.4 Ensuring Diversity, Including Active Participation of Women

Companies should recognize that the existence of diverse perspectives and values reflecting a
variety of experiences, skills and characteristics is a strength that supports their sustainable growth. As
such, companies should promote diversity of personnel, including the active participation of women.
Principle 2.5 Whistleblowing

Companies should establish an appropriate framework for whistleblowing such that employees can
report illegal or inappropriate behavior, disclosures, or any other serious concerns without fear of
suffering from disadvantageous treatment. Also, the framework should allow for an objective assessment
and appropriate response to the reported issues, and the board should be responsible for both
establishing this framework, and ensuring and monitoring its enforcement.
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2.5.1 As a part of establishing a framework for whistleblowing, companies should establish a point of
contact that is independent of the management (for example, a panel consisting of outside
directors 23 and outside kansayaku 24). In addition, rules should be established to secure the
confidentiality of the information provider and prohibit any disadvantageous treatment.
Section 3: Ensuring Appropriate Information Disclosure and Transparency

General Principle 3
Companies should appropriately make information disclosure in compliance with the
relevant laws and regulations, but should also strive to actively provide information beyond
that required by law. This includes both financial information, such as financial standing
and operating results, and non-financial information, such as business strategies and
business issues, risk and governance.
The board should recognize that disclosed information will serve as the basis for
constructive dialogue with shareholders, and therefore ensure that such information,
particularly non-financial information, is accurate, clear and useful.
Notes
Companies are legally required to disclose a wide range of information. The timely and appropriate
disclosure of information in accordance with the relevant laws and regulations is essential for investor
protection and securing market confidence. The board, kansayaku, the kansayaku board6 and external
auditors all bear an important responsibility in this regard, starting with the establishment of an
appropriate internal control system as to financial information.
Companies should actively strive to provide information other than what is required by laws and
regulations.
It has been noted that while the quantitative part of financial statements of Japanese companies
conform to a standard format and therefore excel with respect to comparability, qualitative and
non-financial information is often boiler-plate and lacking in detail, therefore less valuable. The board
should actively commit to ensure that disclosed information, including non-financial information, is as
valuable and useful as possible.
Irrespective of whether the disclosed information is required by law, the appropriate provision of
information is an effective means to develop a shared awareness and understanding with shareholders
and other stakeholders, in particular given that as outsiders they suffer from information asymmetry.
Outside director: A director who satisfies certain requirements such as not holding specific
positions, including the position of executive director, in the company or its subsidiaries (Article 2,
Paragraph 15 of the Companies Act). Furthermore, matters such as not holding a specific position
in the parent company or other subsidiaries and not having specific kinship ties with controlling
shareholders will be also required for outside directors after the 2014 amendments to the
Companies Act.
24 Outside kansayaku: A kansayaku who satisfies certain requirements such as not holding specific
positions, including the position of director, in the company or its subsidiaries (Article 2, Paragraph
16 of the Companies Act). Furthermore, matters such as not holding a specific position in the
parent company or other subsidiaries and not having specific kinship ties with controlling
shareholders will be also required for outside kansayaku after the 2014 amendments to the
Companies Act.
23
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Appropriate information disclosure will also contribute to constructive dialogue based on Japans
Stewardship Code.
Principle 3.1 Full Disclosure
In addition to making information disclosure in compliance with relevant laws and regulations,
companies should disclose and proactively provide the information listed below (along with the
disclosures specified by the principles of the Code) in order to enhance transparency and fairness in
decision-making and ensure effective corporate governance:
i) Company objectives (e.g., business principles), business strategies and business plans;
ii) Basic views and guidelines on corporate governance based on each of the principles of the
Code;
iii) Board policies and procedures in determining the remuneration of the senior management and
directors;
iv) Board policies and procedures in the appointment of the senior management and the
nomination of directors and kansayaku candidates; and
v) Explanations with respect to the individual appointments and nominations based on iv).
3.1.1 These disclosures should add value for investors, and the board should ensure that information is
not boiler-plate or lacking in detail.
3.1.2
Bearing in mind the number of foreign shareholders, companies should, to the extent reasonable,
take steps for providing English language disclosures.
Principle 3.2 External Auditors

External auditors and companies should recognize the responsibility that external auditors owe
toward shareholders and investors, and take appropriate steps to secure the proper execution of audits.
3.2.1 The kansayaku board should, at minimum, ensure the following:
i) Establish standards for the appropriate selection of external auditor candidates and proper
evaluation of external auditors; and
ii) Verify whether external auditors possess necessary independence and expertise to fulfill their
responsibilities.
3.2.2
The board and the kansayaku board should, at minimum, ensure the following:
Give adequate time to ensure high quality audits;
Ensure that external auditors have access, such as via interviews, to the senior management
including the CEO and the CFO;
iii) Ensure adequate coordination between external auditors and each of the kansayaku (including
attendance at the kansayaku board meetings), the internal audit department and outside
directors; and
iv) Ensure that the company is constituted in the way that it can adequately respond to any
misconduct, inadequacies or concerns identified by the external auditors.
i)
ii)
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Section 4: Responsibilities of the Board

General Principle 4
Given its fiduciary responsibility and accountability to shareholders, in order to promote
sustainable corporate growth and the increase of corporate value over the mid- to
long-term and enhance earnings power and capital efficiency, the board should
appropriately fulfill its roles and responsibilities, including:
(1) Setting the broad direction of corporate strategy;
(2) Establishing an environment where appropriate risk-taking by the senior
management is supported; and
(3) Carrying out effective oversight of directors and the management (including
shikkoyaku 25 and so-called shikkoyakuin 26) from an independent and objective
standpoint.
Such roles and responsibilities should be equally and appropriately fulfilled regardless
of the form of corporate organization i.e., Company with Kansayaku Board (where a part
of these roles and responsibilities are performed by kansayaku and the kansayaku board),
Company with Three Committees (Nomination, Audit and Remuneration) or Company with
Supervisory Committee.
Notes
Companies may choose one of three main forms of organizational structure under the Companies
Act (Revised in 2014): Company with Kansayaku Board, Company with Three Committees (Nomination,
Audit and Remuneration), or Company with Supervisory Committee. A Company with Kansayaku Board is
a system unique to Japan in which certain governance functions are assumed by the board, kansayaku
and the kansayaku board. Under this system, kansayaku audit the performance of duties by directors and
the management and have investigation power by law. Also, to secure both independence and high-level
information gathering power, not less than half of kansayaku, as appointed at the general shareholder
meeting, must be outside kansayaku, and at least one full-time kansayaku must also be appointed. The
latter two forms of organizational structure are similar to companies in other countries where committees
are established under the board and assigned certain responsibilities with the aim of strengthening
monitoring functions. Irrespective of which form of organizational structure is adopted, what is important
is that the various institutions within the company effectively and fully execute their responsibilities
through creativity and ingenuity.
One of the major objectives of establishing the Code is to promote transparent, fair, timely and
decisive decision-making by Japanese companies. The possibility cannot be ruled out that, due to
changes in the external environment or other factors, a decision made by a company ultimately results in
losses for the company. In such a circumstance, the reasonableness of the decision-making process at
Shikkoyaku: According to the Companies Act, Companies with Three Committees (Nomination,
Audit and Remuneration) must appoint one or more shikkoyaku from directors or non-directors by
a resolution of the board and delegate business administration to shikkoyaku. Also, authority to
make certain kinds of business decisions may be delegated to shikkoyaku.
26 Shikkoyakuin: There are cases where a Company with Kansayaku Board or a Company with
Supervisory Committee creates positions with the title of shikkoyakuin for persons who are
25
delegated by the board a certain range of discretion regarding business administration. Unlike
shikkoyaku in Companies with Three Committees (Nomination, Audit and Remuneration),
shikkoyakuin is not a statutory position.
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the time of the decision is generally considered an important factor in determining whether or not the
management and directors should owe personal liability for damages. The Code includes principles and
practices that are expected to contribute to such a reasonable decision-making process, and promote
transparency, fairness, timeliness and decisiveness as well.
Principle 4.1 Roles and Responsibilities of the Board (1)

The board should view the establishment of corporate goals (business principles, etc.) and the
setting of strategic direction as one major aspect of its roles and responsibilities. It should engage in
constructive discussion with respect to specific business strategies and business plans, and ensure that
major operational decisions are based on the companys strategic direction.
4.1.1 The board should clearly specify its own decisions as well as both the scope and content of the
matters delegated to the management, and disclose a brief summary thereof.
4.1.2
Recognizing that a mid-term business plan (chuuki keiei keikaku) is a commitment to

shareholders, the board and the senior management should do their best to achieve the plan.
Should the company fail to deliver on its mid-term business plan, the reasons underlying the
failure of achievement as well as the companys actions should be fully analyzed, an appropriate
explanation should be given to shareholders, and analytic findings should be reflected in a plan
for the ensuing years.
4.1.3
Based on the company objectives (business principles, etc.) and specific business strategies, the
board should engage in the appropriate oversight of succession planning for the CEO and other
top executives.

The board should view the establishment of an environment that supports appropriate risk-taking by
the senior management as a major aspect of its roles and responsibilities. It should welcome proposals
from the management based on healthy entrepreneurship, fully examine such proposals from an
independent and objective standpoint with the aim of securing accountability, and support timely and
decisive decision-making by the senior management when approved plans are implemented.
Also, the remuneration of the management should include incentives such that it reflects mid- to
long-term business results and potential risks, as well as promotes healthy entrepreneurship.
4.2.1 In order for management remuneration to operate as a healthy incentive for sustainable growth,
the proportion linked to mid- to long-term results and the balance of cash and stock should be set
appropriately.
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The board should view the effective oversight of the management and directors from an
independent and objective standpoint as a major aspect of its roles and responsibilities. It should
appropriately evaluate company performance and reflect the evaluation in its assessment of the senior
management.
In addition, the board should engage in oversight activities in order to ensure timely and accurate
information disclosure, and should establish appropriate internal control and risk management systems.
Also, the board should appropriately deal with any conflict of interests that may arise between the
company and its related parties, including the management and controlling shareholders.
4.3.1 The board should ensure that the appointment and dismissal of the senior management are
based on highly transparent and fair procedures and reflect the results of company performance.
4.3.2
The establishment of effective internal control and proactive risk management systems for
compliance and financial reporting has the potential of supporting sound risk-taking. The board
should place priority on the appropriate establishment of such systems and the oversight of
whether they effectively operate, and should not limit itself to the examination of compliance with
respect to specific business operations.
Principle 4.4 Roles and Responsibilities of Kansayaku and the Kansayaku Board
Kansayaku and the kansayaku board should bear in mind their fiduciary responsibilities to
shareholders and make decisions from an independent and objective standpoint when executing their
roles and responsibilities including the audit of the performance of directors duties, appointment and
dismissal of external auditors and the determination of auditor remuneration.
Although so-called defensive functions, such as business and accounting audits, are part of the
roles and responsibilities expected of kansayaku and the kansayaku board, in order to fully perform their
duties, it would not be appropriate for kansayaku and the kansayaku board to interpret the scope of their
function too narrowly, and they should positively and proactively exercise their rights and express their
views at board meetings and to the management.
4.4.1 Given that not less than half of the kansayaku board must be composed of outside kansayaku and
that at least one full-time kansayaku must be appointed in accordance with the Companies Act,
the kansayaku board should, from the perspective of fully executing its roles and responsibilities,
increase its effectiveness through an organizational combination of the independence of the
former and the information gathering power of the latter. In addition, kansayaku or the
kansayaku board should secure cooperation with outside directors so that such directors can
strengthen their capacity to collect information without having their independence jeopardized.
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Principle 4.5 Fiduciary Responsibilities of Directors and Kansayaku

With due attention to their fiduciary responsibilities to shareholders, the directors, kansayaku and
the management of companies should secure the appropriate cooperation with stakeholders and act in
the interest of the company and the common interests of its shareholders.
Principle 4.6 Business Execution and Oversight of the Management

In order to ensure effective, independent and objective oversight of the management by the board,
companies should consider utilizing directors who are neither involved in business execution nor have
close ties with the management.
Principle 4.7 Roles and Responsibilities of Independent Directors

Companies should make effective use of independent directors 27, taking into consideration the
expectations listed below with respect to their roles and responsibilities:
i) Provision of advice on business policies and business improvement based on their knowledge
and experience with the aim to promote sustainable corporate growth and increase corporate
value over the mid- to long-term;
ii) Monitoring of the management through important decision-making at the board including the
appointment and dismissal of the senior management;
iii) Monitoring of conflicts of interest between the company and the management or controlling
shareholders; and
iv) Appropriately representing the views of minority shareholders and other stakeholders in the
boardroom from a standpoint independent of the management and controlling shareholders.
Principle 4.8 Effective Use of Independent Directors

Independent directors should fulfill their roles and responsibilities with the aim of contributing to
sustainable growth of companies and increasing corporate value over the mid- to long-term. Companies
should therefore appoint at least two independent directors that sufficiently have such qualities.
Irrespective of the above, if a company in its own judgement believes it needs to appoint at least
one-third of directors as independent directors based on a broad consideration of factors such as the
industry, company size, business characteristics, organizational structure and circumstances surrounding
the company, it should disclose a roadmap for doing so.
4.8.1 In order to actively contribute to discussions at the board, independent directors should endeavor
to exchange information and develop a shared awareness among themselves from an
independent and objective standpoint. Regular meetings consisting solely of independent
directors (executive sessions) would be one way of achieving this.
Independent director: The listing rules of securities exchanges provide that the outside directors,
as defined in the Companies Act, are independent directors where they satisfy independence
criteria of securities exchanges and the company determines that they do not have the possibility of
conflicts of interest with its shareholders.
27
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4.8.2
Independent directors should endeavor to establish a framework for communicating with the
management and for cooperating with kansayaku or the kansayaku board by, for example,
appointing the lead independent director from among themselves.
Principle 4.9 Independence Standards and Qualification for Independent Directors

Boards should establish and disclose independence standards aimed at securing effective
independence of independent directors, taking into consideration the independence criteria set by
securities exchanges. The board should endeavor to select independent director candidates who are
expected to contribute to frank, active and constructive discussions at board meetings.
Principle 4.10 Use of Optional Approach

In adopting the most appropriate organizational structure (as stipulated by the Companies Act) that
is suitable for a companys specific characteristics, companies should employ optional approaches, as
necessary, to further enhance governance functions.
4.10.1 If the organizational structure of a company is either Company with Kansayaku Board or
Company with Supervisory Committee and independent directors do not compose a majority of
the board, in order to strengthen the independence, objectivity and accountability of board
functions on the matters of nomination and remuneration of the senior management and
directors, the company should seek appropriate involvement and advice from independent
directors in the examination of such important matters as nominations and remuneration by, for
example, establishing optional advisory committees under the board to which independent
directors make significant contributions.
Principle 4.11 Preconditions for Board and Kansayaku Board Effectiveness

The board should be well balanced in knowledge, experience and skills in order to fulfill its roles and
responsibilities, and it should be constituted in a manner to achieve both diversity and appropriate size.
In addition, at least one person who has appropriate expertise on finance and accounting should be
appointed as kansayaku.
The board should endeavor to improve its function by analyzing and evaluating effectiveness of the
board as a whole.
4.11.1 The board should have a view on the appropriate balance between knowledge, experience and
skills of the board as a whole, and also on diversity and appropriate board size. Consistent with its
view, the board should establish policies and procedures for nominating directors and disclose
them along with its view.
4.11.2 Outside directors, outside kansayaku, and other directors and kansayaku should devote sufficient
time and effort required to appropriately fulfill their respective roles and responsibilities.
Therefore, where directors and kansayaku also serve as directors, kansayaku or the management
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at other companies, such positions should be limited to a reasonable number and disclosed each
year.
4.11.3 Each year the board should analyze and evaluate its effectiveness as a whole, taking into
consideration the relevant matters, including the self-evaluations of each director. A summary of
the results should be disclosed.
Principle 4.12 Active Board Deliberations

The board should endeavor to foster a climate where free, open and constructive discussions and
exchanges of views take place, including the raising of concerns by outside directors.
4.12.1 The board should ensure the following in relation to the operation of board meetings and should
attempt to make deliberations active:
i) Materials for board meetings are distributed sufficiently in advance of the meeting date;
ii) In addition to board materials and as necessary, sufficient information is provided to directors
by the company (where appropriate, the information should be organized and/or analyzed to
promote easy understanding);
iii) The schedule of board meetings for the current year and anticipated agenda items are
determined in advance;
iv) The number of agenda items and the frequency of board meetings are set appropriately; and
v) Sufficient time for deliberations.
Principle 4.13 Information Gathering and Support Structure

In order to fulfill their roles and responsibilities, directors and kansayaku should proactively collect
information, and as necessary, request the company to provide them with additional information.
Also, companies should establish a support structure for directors and kansayaku, including
providing sufficient staff.
The board and the kansayaku board should verify whether information requested by directors and
kansayaku is provided smoothly.
4.13.1 Directors, including outside directors, should request the company to provide them with
additional information, where deemed necessary from the perspective of contributing to
transparent, fair, timely and decisive decision-making. In addition, kansayaku, including outside
kansayaku, should collect information appropriately, including the use of their statutory
investigation power.
4.13.2 Directors and kansayaku should consider consulting with external specialists at company expense,
where they deem it necessary.
4.13.3 Companies should ensure coordination between the internal audit department, directors and
kansayaku. In addition, companies should take measures to adequately provide necessary
182
information to outside directors and outside kansayaku. One example would be the appointment
of an individual who is responsible for communicating and handling requests within the company
such that the requests for information about the company by outside directors and outside
kansayaku are appropriately processed.
Principle 4.14 Director and Kansayaku Training

New and incumbent directors and kansayaku should deepen their understanding of their roles and
responsibilities as a critical governance body at a company, and should endeavor to acquire and update
necessary knowledge and skills. Accordingly, companies should provide and arrange training
opportunities suitable to each director and kansayaku along with financial support for associated
expenses. The board should verify whether such opportunities and support are appropriately provided.
4.14.1 Directors and kansayaku, including outside directors and outside kansayaku, should be given the
opportunity when assuming their position to acquire necessary knowledge on the companys
business, finances, organization and other matters, and fully understand the roles and
responsibilities, including legal liabilities, expected of them. Incumbent directors should also be
given a continuing opportunity to renew and update such knowledge as necessary.
4.14.2 Companies should disclose their training policy for directors and kansayaku.
Section 5: Dialogue with Shareholders

General Principle 5
In order to contribute to sustainable growth and the increase of corporate value over
the mid- to long-term, companies should engage in constructive dialogue with shareholders
even outside the general shareholder meeting.
During such dialogue, senior management and directors, including outside directors,
should listen to the views of shareholders and pay due attention to their interests and
concerns, clearly explain business policies to shareholders in an understandable manner so
as to gain their support, and work for developing a balanced understanding of the positions
of shareholders and other stakeholders and acting accordingly.
Notes
With the establishment of Japans Stewardship Code, institutional investors are encouraged to
engage in purposeful dialogue (engagement) based on the in-depth knowledge of investee companies
and their business environment.
Regularly engaging in dialogue with shareholders to gain their understanding of specific business
strategies and business plans and taking appropriate action when there are concerns are extraordinarily
useful for companies to strengthen the foundations of management legitimacy and support their efforts
to generate sustainable growth. Although the management and directors have opportunities to interact
and exchange views with employees, business partners and financial institutions on a daily basis, these
stakeholders are all creditors. In contrast, the management and directors typically have limited
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interactions with shareholders. If the senior management and directors give due attention to the views of
shareholders through dialogue, they can absorb views and analyses of business management from the
perspective of capital providers. Dialogue with shareholders should also inspire healthy entrepreneurship
in the management and directors and thereby contribute to sustainable corporate growth.
Principle 5.1 Policy for Constructive Dialogue with Shareholders

Companies should, positively and to the extent reasonable, respond to the requests from
shareholders to engage in dialogue (management meetings) so as to support sustainable growth and
increase corporate value over the mid- to long-term. The board should establish, approve and disclose
policies concerning the measures and organizational structures aimed at promoting constructive dialogue
with shareholders.
5.1.1 Taking the requests and interests of shareholders into consideration, to the extent reasonable,
the senior management and directors, including outside directors, should have a basic position to
engage in dialogue (management meetings) with shareholders.
5.1.2
At minimum, policies for promoting constructive dialogue with shareholders should include the
following:
i) Appointing a member of the management or a director who is responsible for overseeing and
ensuring that constructive dialogue takes place, including the matters stated in items ii) to v)
below;
ii) Measures to ensure positive cooperation between internal departments such as investor
relations, corporate planning, general affairs, corporate finance, accounting and legal affairs
with the aim of supporting dialogue;
iii) Measures to promote opportunities for dialogue aside from individual meetings (e.g., general
investor meetings and other IR activities);
iv) Measures to appropriately and effectively relay shareholder views and concerns learned
through dialogue to the senior management and the board; and
v) Measures to control insider information when engaging in dialogue.
5.1.3
Companies should endeavor to identify their shareholder ownership structure as necessary, and it
is desirable for shareholders to cooperate as much as possible in this process.
Principle 5.2 Establishing and Disclosing Business Strategy and Business Plan
When establishing and disclosing business strategies and business plans, companies should
articulate their earnings plans and capital policy, and present targets for profitability and capital efficiency.
Also, companies should provide explanations that are clear and logical to shareholders with respect to the
allocation of management resources and specific measures that will be taken in order to achieve their
plans and targets.
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(5) Submission of Documents, etc.

a. Corporate Governance Report
A listed foreign company whose principal market is TSE shall, in the same way as a listed
domestic company, submit a corporate governance report that describes the companys approach
toward corporate governance, and when any change has occurred in the contents, it shall also
submit without delay a document that describes the details of such changes.
Submitted corporate governance reports are published on the TSE website.
[Outline of Contents]
(1) Basic approach to corporate governance and basic information about the initial listing
applicant including capital structure, corporate attributes, etc.;
(2) Status of the corporate governance system including business management organization
pertaining to management decision making, execution, and oversight;
(3) Implementation status of measures to protect the interests of shareholders and other
stakeholders;
(4) Basic approach to and implementation status of the internal control system; and
(5) Other matters deemed necessary by TSE.
* Regarding the descriptions in the report, TSE shall take into account the legal systems, etc. of
the home country.
b. Notice Concerning Submission of Foreign Company Registration Statement, etc.

In the case where a listed foreign company decides, for the first time, to submit a Foreign
Company Registration Statement, etc. (meaning the Foreign Company Registration Statement, etc.
prescribed in Article 117, Paragraph (1), Item (25) of the Cabinet Office Ordinance regarding
Financial Instruments Business (Cabinet Office Ordinance No.52 of 2007)) to the Prime Minister, etc.
it is required to submit a document that describes of that effect and the expected submission date
of such Foreign Company Registration Statement, etc. to TSE immediately after such decision is
made.
[Rule 424 of the Enforcement Rules]
* In the case where a listed foreign company that has been submitting a Foreign Company
Registration Statement, etc., decides to cease submitting Foreign Company Registration
Statements, etc., it is required to advise TSE to that effect and provide the date that it will
submit the Securities Registration Statement, etc. (statutory disclosure documents in
Japanese)
(6) Mothers Global

Since December 1, 2006, foreign stocks and foreign stock depositary receipts, etc. listed on the
Mothers market of TSE have been collectively called "Mothers Global." This sub-category was
introduced, from the viewpoint of expressing more clearly the character of foreign companies listed
185
on Mothers, with the intent of promoting the listing of growth companies from Asia and other
foreign countries In this sense, TSE makes efforts to offer information, such as the character of
each issue, etc. to investors through a website prepared specially for providing information on
Mothers Global companies.
Mothers Global website
URL: http://www.jpx.co.jp/equities/products/foreign/mothers/index.html
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[Example of information on Mothers Global website]
Country of
incorporation
Whether there is a company

operating the main business in the
listed foreign company's corporate
group that has no capital
relationship with the listed foreign
company.
Main
business
region
Type of
issue
(stock or
depository
receipt)
Governing
law
Whether there is a company that is

not a subsidiary company, and that
is an object for timely disclosure in
accordance with the provision of
Rule 402, Item 1.q of the
Regulations. (attach PDF file)
Risk
factors
TSE
US
Nil
US
Stock
US laws
Principal
listed
market
Name of listed foreign
Company (Code, Listing
Date)
XYZ Corporation
(XXXX, DD/MM/YY)
Nil
Nil; PDF
PDF
A listed foreign company shall provide sufficient information for the table above. For risk factors
(PDF file), please prepare the document by abstracting the "Risk of business, etc." section of the
securities report for new listing application (Part I) (include the company name and date of
submission).
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(7) Disciplinary Actions against Listed Companies

The Regulations define that in cases where a listed company violates or infringes the Regulations,
TSE may take effective measures to ensure the effectiveness of the punishment against such
violation, etc., including designation of securities on alert, submission of improvement report and
improvement status report, designation to disclosure-in-question securities, publication of such
violation fact, and imposition of listing agreement violation penalty.
a. Overview
Self-regulation operations on financial instruments exchange comprise the following:
Listing examination to examine the soundness of the financial position and corporate
management of an unlisted company;
Listing supervision to examine whether a listed company falls under any of the criteria for
delisting;
Inspection to test and ensure the soundness of and confidence in trading participants
charged with trade execution and settlement on the Exchange market; and
Trading examination and inspection carried out to surveil for unfair trading practices such
as market manipulation, insider trading, etc.
Japan Exchange Group has Tokyo Stock Exchange, Inc. (the Exchange) and Osaka Exchange, Inc.,
both of which run markets on financial instruments exchanges, and Japan Exchange Regulation
(JPX-R) designed to perform self-regulation operations under its auspices. By entrusting JPX-R
independent of both Exchanges with self-regulation operations, the independence of the
self-regulation function will certainly be strengthened. By using a holding company, the effectiveness
of self-regulation function will certainly be ensured through the adequate collaboration between the
Exchanges charged with market operations and JPX-R charged with self-regulation practices.
Tokyo Stock Exchange as a market operator carries out overall businesses related to the operation
of the Exchange financial instruments market, with the exception of the businesses entrusted to JPX-R.
The Listing Department of the Exchange provides various consultations and advice to listed companies
as a consultation window and carries out various procedures for listed securities such as listing section
reassignment, while additionally developing and implementing plans for listing and disclosure
systems.
Meanwhile, the Exchange has entrusted self-regulation operations for listed company compliance,
etc. to JPX-R, and the Listed Company Compliance Department performs those self-regulation
operations.
Specifically, the self-regulation operations include:
(1) Examination of disclosures of corporate information based on the regulations of Part 2, Chapter
4, Section 2 of the Securities Listing Regulations;
(2) Examination of compliance with the code of corporate conduct based on the regulations of Part
2, Chapter 4, Section 2 of the Securities Listing Regulations;
(3) Examination to ensure the effectiveness in relation to listing agreement violation penalties,
public announcement measures, the submission of improvement reports, the designation as a
security on alert, etc.
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(4) Examination focused on delisting based on criteria for inappropriate mergers, false statements
or adverse opinions, listing agreement violations, undue restrictions on the rights of
shareholders, public interest and investors protection
The Listing Department of the Exchange assesses the results of these examinations, etc. carried
out by JPX-R to determine delisting, regulatory or disciplinary actions, and other measures for listed
companies.
The Exchange has also entrusted JPX-R with a survey to ensure the fairness of the trading of
securities, etc. on the Exchange market. Based on the survey results, the Examination and Inspection
Department of JPX-R carries out examinations relating to any trading likely to violate laws and
regulations or other rules, including insider trading.
b. Examination Related to the Disclosure of Corporate Information
Disclosure examinations in accordance with the requirements of Part 2, Chapter 4, Section 2 of
Securities Listing Regulations shall be carried out in light of the following (1) to (5) concerning
disclosure of material corporate information:
(1) Whether or not the timing of disclosure is appropriate;
(2) Whether or not the details of disclosed information are false;
(3) Whether or not disclosed information lacks information deemed important for investment
decisions;
(4) Whether or not disclosed information gives rise to misunderstandings for investment
decisions; and
(5) Whether or not disclosed information lacks appropriateness of disclosure
Guidelines for Listed Companies Compliance, etc. II 2
Where the Exchange makes an inquiry of corporate information of a listed company by deeming
that it is necessary to do so, such listed company shall make an accurate report on an inquiry matter
immediately. The listed company is also required to make an accurate report on an inquiry matter
immediately made by JPX-R.
Rule 415 Paragraph 1 of Securities Listing Regulations;
Rule 3 Paragraph 2 of the same regulations
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c. Disciplinary Actions or Measures to Ensure Effectiveness

Securities Listing Regulations provide that the Exchange may designate any listed company as
Securities on Alert, require submission of improvement report and public announcement measures
or charge listing agreement violation penalty for any listed company in violation of Securities Listing
Regulations in order to ensure effectiveness.
Measures to ensure effectiveness
Measures involving penalty
Improvement measures
Improvement report and improvement
Public announcement measure
status report
Designation of securities on alert
Listing agreement violation penalty
(a) Designation system as a security on alert

When any one of the following items is met by a listed company and TSE deems highly necessary
for it to improve its internal management system, TSE should designate the securities, etc. issued
by the listed company as a security on alert.
When the Exchange does not determine that a listed company meets each item of the following
though it previously assessed that the listed company was likely to do so:
Rule 601, Paragraph 1, Item 9-2 of Securities Listing Regulations
Damage to sound transactions with controlling shareholders
Rule 601, Paragraph 1, Item 12 of Securities Listing Regulations
Breach of listing agreement, etc.
Involvement of Anti-Social Forces
Public interest or the protection of investors
When a listed company meets any one of the following:

<False statement>
A listed company made any false statement in its securities report (Rule 2, Item 30 of
Securities Listing Regulations)
<Adverse opinion>
Where, in audit reports attached to financial statements, etc. or quarterly review reports
attached to quarterly financial statements, etc. a certified public accountant, etc. expresses an
"adverse opinion" or the fact that "opinions are not expressed" in an audit report, or a
"negative conclusion" or the fact that "conclusion is not expressed" in a quarterly review report
(in cases of a specified business company, an "opinion that interim financial statements, etc.
do not provide useful information" or the fact that "opinions are not expressed");
* However, excluding cases where the fact that "opinions are not expressed" or the fact
that "conclusion is stated, and such statements are made due to reasons not attributable
to the listed company, such as act of providence;
Where the Exchange deems that a listed company has violated the provisions;
Where the Exchange deems that a listed company has violated the Matters to be Observed for
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the code of corporate conduct;

Where the Exchange deems it will not recognize improvement in the execution of improvement
measures and operating conditions in a listed company which has submitted an improvement
report pertaining to the timely disclosure and code of corporate conduct
A listed company which is the issuer of a listed stock, etc. designated as a security on alert shall
submit a document specified by the Enforcement Rules that contains the status of the internal
management system, etc. (hereinafter referred to as a "Written Confirmation of Internal
Management System") promptly after one (1) year has elapsed since such designation. The
Written Confirmation of Internal Management System" is required to be prepared pursuant to
"Securities Report for Initial Listing Application(Part II) prescribed in Rule 204, Paragraph 1, Item
4 of the Enforcement Rules for Securities Listing Examination; provided that the submission of
documents specified by the Exchange will suffice when it deems unnecessary the submission of
documents pursuant to Securities Report for Initial Listing Application (Part II) if the audit report
contains the fact that no opinion is provided due to any problems relating to the going concern
assumption.
The Exchange shall conduct examination on the internal management system, etc. on the basis of
the substance of the Written Confirmation of Internal Management System. Where the Exchange
deems that there is no problem in the internal management system, etc., the Exchange shall cancel
the designation as a security on alert; provided that the Exchange deems that there are problems
on the Internal Management System where the listed company does not submit the submitted the
Written Confirmation of Internal Management System, or that the contents described in the
Written Confirmation of Internal Management System provided are apparently inadequate.
When the Exchange deems necessary and makes an inquiry of the internal management system,
etc. to a listed company that is an issuer of a listed stock, etc., for which designation as a security on
alert continued, the listed company shall accurately make reports on inquired matters promptly.
JPX-R entrusted by the Exchange with the self-regulation operations will also make similar inquiries.
The listed company shall accurately make reports on inquired matters promptly in the same manner
to the Exchange. The examination of the internal management system, etc. described above shall
consider the matters reported against the enquiries.
Where the Exchange does not deem that there is a problem in the internal management system,
etc., the Exchange shall cancel the designation as a security on alert. However where the Exchange
deems that there is still a problem in the internal management system, etc., it continues the
designation as a security on alert.
A listed company that is an issuer of a listed stock, etc., for which designation as a security on
alert continued must resubmit the Written Confirmation of Internal Management System promptly
after one (1) year and six (6) months have elapsed since the designation.
The Exchange will make the examination based on the substances, etc. of resubmitted Written
Confirmation of Internal Management System, etc.
Rule 501 of Securities Listing Regulations;
Rule3, Paragraph 2 of the same regulations
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The designation as a security on alert will be made in comprehensive consideration of the

following matters and others.
Case where a listed company is likely to meet the criteria for delisting;
- The details, the background, the cause, and the actual state of affairs relating to the event
that the Exchange deems likely to fall under the criteria for delisting;
Case where a listed company is likely to meet the criteria for false statement or adverse
opinion, etc.;
- The period, amount of money, actual state, and impact on stock prices pertaining to false
statements or adverse opinion, etc. in securities reports, etc.
- The act, involvement of company-related parties, and development and administration of
internal management system that are causes of false statements or adverse opinion, etc., in
securities reports, etc.,
Case where the Exchange deems that a listed company violates the provisions on timely
disclosure;
- The materiality of information timely disclosed for investment decisions
- The background, cause, and circumstances of a listed company that violated the provisions
on timely disclosure
- State of compliance in the past with the provisions on timely disclosure
Case where the Exchange deems that a listed company violates the provisions on the Matters
to be Observed for the code of corporate conduct;
- The details, the background, the cause, and the actual state of affairs relating to the
violations of the Matters to be Observed for the code of corporate conduct;
Case where an improvement report is submitted;
- The details, the background, the cause, and the actual state of affairs relating to the event
on which the Exchange requests submission of an improvement report
- The state of implementation and operation of improvement measures described in an
improvement report
Guidelines for Listed Company Compliance, etc. III 1
The assessment of whether there is a problem in the internal management system, etc. for the
cancellation of the designation as a security on alert shall be made in comprehensive consideration
of the matters described below and other matters.
- The state of the system and implementation of audit concerning business execution by
internal audit and audit by auditors, etc.;
- The state of internal management system such as the organization of the business
administration or establishment of internal rules;
192
- The state of administration of corporate information such as facts that have a significant
impact on management, and the state of timely disclosure system pertaining to such
corporate information;
- The state of the system to ensure compliance with the provisions concerning the Matters to
be Observed for the code of corporate conduct
- The state of development and operation of internal organizations concerning preparation of
securities reports and other accounting related matters;
- The state of compliance with laws, regulations, etc.; and
- The state of compliance with the provisions concerning listed company compliance, etc. after
the designation as a security on alert
Guidelines for Listed Company Compliance, etc. III 2
If a listed company that is an issuer of a listed stock, etc., for which designation as a security on
alert meets any one of the following, the stock will be delisted:
- Where the Exchange deems that the internal management system, etc. of the listed
company has not been improved within one (1) year and six (6) months from the designation
as a security on alert (limited to cases where the Exchange deems that the improvement is
no longer expected);
- Where the Exchange deems that the internal management system, etc. of the listed
company has not been improved within one (1) year and six (6) months from the designation
as a security on alert;
- Where the Exchange deems that improvement of the internal management system, etc. of
the listed company can no longer be expected
Rule 601, Paragraph 1, Item 11-2 of Securities Listing Regulations
(b) Improvement report system and improvement status report system
1) Submission of improvement report and its availability for the public inspection
Improvement report: application of designation as a security on alert (image)
Submission of
improvement report
Deems that no
improvement has
not been made
Designation as a security on
alert is applicable
Deems
that
improvement has
been made
No additional improvement
measures are necessary
* Improvement report system is a measure before the designation as a security on alert is made
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2) Submission of improvement report pertaining to timely disclosure and code of

corporate conduct
In the cases provided in the following items and where the Exchange deems that improvement is
highly necessary, the Exchange may request that the listed company submit a report which contains
its background and improvement measures (hereinafter referred to as an "Improvement Report").
In such cases the listed company is required to submit the improvement report promptly.
- Where the Exchange deems that a listed company has breached the provisions concerning
the timely disclosure; and
- Where the Exchange deems that a listed company has breached the provisions concerning
the Matters to be Observed for of the code of corporate conduct.
Where the Exchange deems that the contents of the Improvement Report submitted are
apparently inadequate, the Exchange may request such listed company to change it and resubmit
an Improvement Report. In such cases the listed company is required to submit the improvement
report promptly.
The Exchange may make the improvement report submitted available for the public
inspection and widely disseminate it through the Exchange website.
Rule 502 of Securities Listing Regulations
The necessity of submission of improvement report will be determined in comprehensive
consideration of the following:
In case of breach of provisions concerning timely disclosure
- Materiality of information made public as timely disclosure, etc., as information relating to
investment decisions; and
- The background, the cause, and the actual state of affairs relating to the circumstances
where timely disclosure was not made fairly; and
- The state of past compliance, etc. with the provisions concerning timely disclosure
Guidelines for Listed Company Compliance, etc. III 3. (1)
For example if a listed company falls under any one of the following, the Exchange considers it as
a determinant factor for the request of improvement report and in principle requires the listed
company to submit the improvement report..
i. It was deemed that unfair information disclosure was made for the past two years (delay in
disclosure or inadequate contents of disclosed information and Exchange deemed it necessary
for the listed company to improve the state though it did not deem it necessary to submit the
improvement report and the listed company submitted the document containing the
description of backgrounds and improvement measures (hereinafter Background Document).
However the listed company has committed a violation of the regulations at a similar or more
significant level;
ii. A listed company which submitted an improvement report during the past five years
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committed the violation of the regulations.

Furthermore, though the Exchange required a listed company to submit the Background
Document, the listed company did not do so promptly (within two weeks) or the contents thereof
were clearly inadequate, the Exchange considers them to be determinant factors for the request of
improvement report as other matters, and the Exchange requests the submission of improvement
report.
In case of breach of provisions concerning Matters to be Observed
- The background, the cause, and the actual state of affairs relating to the circumstances
where timely disclosure was not made fairly; and
- The state of past compliance, etc. with the provisions concerning timely disclosure
Guidelines for Listed Company Compliance, etc. III 3. (2)
Where the Exchange requests a listed company to submit the improvement report and the listed
company falls under any one of following, the listed company is determined to commit a material
breach of the listing agreement and shall be delisted.
- Though the Exchange notifies a listed company of the submission, etc. of the improvement
report and establishes the submission date, the company does not submit an Improvement
Report by the established date and time; and
- Though the Exchange requires a listed company to submit the improvement report, the
Exchange deems that the improvement of state of disclosure of corporate information is no
longer expected.
Rule 601, Paragraph 1, Item 12 of Securities Listing Regulations;
Rule 601, Paragraph 11, Items 1 and 2 of Enforcement Rule
3) Improvement status report pertaining to timely disclosure and code of corporate

conduct
- A listed company which submitted an Improvement Report shall promptly submit an
Improvement Status Report containing the status of implementation and operation of the
improvement measures after six (6) months from the submission of such Improvement
Report.
- In this case, where the Exchange deems that the contents of the Improvement Status Report
are clearly inadequate, it will request the change of contents and require the resubmission of
the Improvement Status Report. In such cases the listed company shall be required to
submit the Improvement Status Report promptly. The Exchange will make the
Improvement Status Report submitted available for the public inspection and disseminate it
through the Exchange website.
- When a listed company is required to submit the Improvement Status Report, the Exchange
may request the submission of necessary data or make them available for the public
inspection or make necessary inquiries or interviews in order to confirm the status of
implementation and operation of implementation measures and if the Exchange deems that
195
the contents included in the Improvement Status Report are clearly inadequate, the
Exchange shall request the listed company which submitted the Improvement Status Report
to resubmit the Improvement Report.
In addition to the above, the listed company which submitted the Improvement Report is required
to submit the Improvement Status Report pertaining to the implementation and operation of
improvement measures for five (5) years from the submission of the Improvement Status Report
whenever the Exchange deems necessary.
Furthermore, if the Exchange makes any inquiry to the listed company which submitted the
Improvement Report concerning the implementation and operation of implementation measures
when the Exchange deems necessary, the listed company shall make accurate reports on inquired
matters. The JPX-R which is entrusted by the Exchange with the self-regulation operations may
make similar inquiries. In such case the listed company is required to make accurate reports on
the inquired matters in the manner similar to the Exchange promptly.
Rule 503 of Securities Listing Regulations; Rule 3, Paragraph 2 of the same regulations
4) Improvement Report pertaining to the submission of documents

Where the Exchange deems that a listed company did not appropriately make the submission of
documents or in case of a listed company in MOTHERS or JASDAQ Growth section, it did not
properly make holding of presentation pursuant to the Securities Listing Regulations, and deems
that the necessity of improvement is high, the Exchange may request the listed company to submit
the Improvement Report. In such cases the listed company is required to submit the Improvement
Report promptly.
In addition where the Exchange deems that the contents of the Improvement Report are clearly
inadequate, the Exchange can request the listed company to change the contents and resubmit the
Improvement Report. In such cases the listed company is also required to submit the
Improvement Report promptly.
5) Improvement Report pertaining to the affirmation related to third-party

allotment, etc.
Where a listed company does not appropriately provide a report on the transfer of an offered
stock allotted by third-party allotment, etc. and its affirmation, etc. on the basis of the provisions of
Rule 422, the Exchange may request such listed company to submit the Improvement Report.
The Exchange may make such report available for the public inspection if the Exchange deems it
necessary and appropriate.
(c) Public Announcement Measures
In cases referred to in each of the following items, the Exchange may make a public
196
announcement of such information if the Exchange deems this necessary:

-
Where the Exchange deems that a listed company has breached the provisions pertaining
to timely disclosure;
- Where the Exchange deems that a listed company has breached the provisions pertaining to
the Matters to be Observed for of the code of corporate conduct; and
- Where a listed company breaches the provisions of Article 331, Article 335, Article 337, or
Article 400 of the Companies Act.
The Exchange decides the necessity of public announcement measures in comprehensive
consideration of the following:
In case of breach of provisions concerning timely disclosure
- Materiality of information made public as timely disclosure, etc., as information relating to
investment decisions;
- The background, the cause, and the actual state of affairs relating to said violation of the
provisions of Chapter 4, Section 2 by a listed company; and
- The state of implementation measures such as a regulatory action taken by the Exchange in
response to said violation.
Guidelines for Listed Company Compliance, etc. III 4.
In case of breach of provisions concerning the Matters to be Observed for the code of
corporate conduct
<Matters to be observed for third-party allotment>
- The state of implementation and contents of the proceedings taken prescribed in the
provisions of each item of Rule 432 of the Regulations
<Stock split>
- The ratio of stock split, etc., the investment unit after completing stock split, etc. and any
other circumstances regarding the stock split, etc.
<Matters to be observed for issuance of MSCB etc.>
- The exercise terms, the quantity to be issued, the scale of dilution, the contents of the
measures taken in relation to the monthly exercise quantities with regard to MSCB, etc.
< Matters to be observed for appointment of independent directors/auditors>
- The status of a person(s) who is reported to the Exchange as being an independent
director(s)/auditor(s) by the issuer of a listed domestic stock pursuant to the provisions of
Rule 436-2 of the Enforcement Rules
<Matters to be observed for the adoption of takeover defense measures>
- The contents of takeover defense measures and the state of their disclosure;
197
<Matters to be observed for the disclosure of MBO transactions>

- The state of disclosure of measures to ensure fairness and prevent a conflict of interest
described in disclosure regarding public announcement of opinions in relation to a takeover
bid or presentation of such opinions to shareholders as defined in Rule 441 of the
Regulations
<Prevention of insider trading>
- The nature of violation of the provisions of Rule 442 of Securities Listing Regulations,
background, the cause, and the actual state of affairs relating to the event that give rise to
such violation and the state of development of the information management system required
for the prevention of insider trading
<Elimination of anti-social force>
- The state of development of the internal system for the prevention of involvement of
anti-social forces; and
<Prevention of damages to the function of secondary market or rights of shareholders>
- The state where the function of the secondary market or shareholder rights are undermined.
(d) Listing Agreement Violation Penalty
The Exchange has established the listing agreement violation penalty when a listed company
violates the listing agreement at the level in which such violation does not result in delisting. The
listing agreement violation penalty aims to enhance effectiveness of various listing related
regulations and rules and would be applied to any violation acts which the Exchange deems to
undermine the confidence of shareholders and investors in the Exchange market.
The enhancement of effectiveness of various listing related rules is essential for the benefits of
shareholders and investors, but also is considered to be essential to listed companies from the
perspective of contribution to the quality of market and maintenance of their reputation. The
Exchange encourages listed companies to abide by various listing related rules by fully
understanding the purpose of the system.
Outline of listing agreement violation penalty
In cases provided in each of the following items, if the Exchange deems that said listed
company has undermined the confidence of shareholders and investors in the Exchange
market, the Exchange may claim payment of a listing agreement violation penalty against said
listed company. In this case, the Exchange shall make a public announcement of such
information.
-
Where the Exchange deems that a listed company has breached the provisions pertinent
to timely disclosure;
Where the Exchange deems that a listed company has breached the Matters to be
Observed for the code of corporate conduct; and
198
In addition to the cases provided in the preceding two items, where the Exchange
deems that a listed company has breached the Securities Listing Regulations or other
regulations.
A decision on whether or not to impose the listing agreement violation penalty shall be made in
comprehensive consideration of the matters assessed in deciding whether the public announcement
measures should be implemented. The decision on the public announcement measures and claim
for the listing agreement penalty shall be made based on the assessment of whether such violation
undermines the confidence of shareholders and investors on the Exchange market.
Since the objective of this system is to enhance the effectiveness of listing regulations, it is not
designed to apply to immaterial violating acts. Therefore the system does not apply to the breach
of requirements for timely disclosure which does not trigger the submission of improvement report
or the breach caused by a listed company which simply forget submitting relevant documents.
Violation acts to which the listing agreement violation penalty may apply include:
- Where a listed company whose stock is designated as a security on alert amended the
earnings report which had already amended in the past as an inappropriate accounting
treatment was identified; or
- Where a listed company whose stock is designated as a security on alert did not carry out
necessary procedures which were required at the time of third-party allotment with dilution
ratio of 25% or more or expected change in controlling shareholders (Securities Listing
Regulations Rule 432).
- These acts apparently violate the requirements of timely disclosure or code of corporate
conduct. If a listed company makes such act, it certainly undermines the confidence in the
Exchange markets and listed companies as a whole. The listing agreement violation
penalty applies to these cases.
The Exchange is certainly to improve the illustration of any violation acts to which the penalty
applies to enhance the foreseeability of such acts by showing specific incidents to which the penalty
applies.
199
The amount of the listing agreement violation penalty shall be calculated for each issue of listed
stocks, etc. in accordance with the following table;
Market Section, etc.
1st Section
2nd Section
Mothers
JPY 19.2 mil.
JPY 14.4 mil.
JPY 9.6 mil.
Foreign stocks, etc.

(excluding
listed
companies whose
main market is the
Exchange
and
JASDAQ-listed
companies)
JPY 2.4 mil.
Over JPY 5 bil., but

JPY 25 bil. or less
JPY 50 bil. or less
JPY 250 bil. or less
Over JPY 500 bil.
JPY 33.6 mil.
JPY 28.8 mil.
JPY 24 mil.
JPY 4.8 mil.
JPY 48 mil.
JPY 43.2 mil.
JPY 38.4 mil.
JPY 9.6 mil.
JPY 62.4 mil
JPY 57.6mil.
JPY 52.8 mil
JPY 12 mil.
JPY 76.8 mil.
JPY 72 mil
JPY 67.2 mil.
JPY 14.4 mil.
JPY 91.2 mil
JPY 86.4 mil.
JPY 81.6 mil.
JPY 16.8 mil.
Market Section, etc.

Market Capitalization
Over JPY 100 bil.
JASDAQ
Market Capitalization
JPY 5 bil. or less
JPY 20 mil.
JPY 24 mil.
(Note) Listed market capitalization shall be calculated as specified in the following items
-
Domestic stocks, etc.

Listed market capitalization is calculated, using (i) the last price on the last day of the
auction session in December immediately prior to the day on which the Exchange
decided to claim the listing agreement violation penalty (if no transaction is executed in
the auction session on such last day, the last price in the auction session on the most
recent day prior to such last day on which transactions are executed) and (ii) the
number of listed domestic shares, etc. at the end of February. However, if the claim for
the listing agreement violation penalty is decided before the last day of auction
sessions in December that arrives for the first time after listing, the market
capitalization on the day of listing is used for such calculation. In addition, adjustments
due to a stock split, gratis allotment of share, or reverse stock split shall be made as
specified the Exchange.
Foreign stocks, etc.

Listed market capitalization is calculated by using (i) the last price on the last day of
the auction session on the last day of the business year immediately prior to the day on
which the Exchange decided to claim the listing agreement violation penalty (if no
200
transaction is executed in the auction session on such last day, the base price on such
day) and (ii) the number of listed foreign shares, etc. on such day. However, if the claim
for the listing agreement violation penalty is decided before the last day of the business
year that arrives for the first time after listing, the market capitalization on the day of
listing is used for such calculation.
A listed company shall pay the amount specified in the preceding item by the last day of the
month immediately following the month containing the day on which the Exchange required
payment of the listing agreement violation penalty. In cases where a listed company fails to pay the
listing agreement violation penalty by the due date, the Exchange may charge the delinquency
damages.
d. Principle of Equity Finance
The financing of a listed company using equity finance should be respected as it utilizes the
inherent function of the capital market. It would be inappropriate, however, to simply assume that
any act is justified insofar as it stays within the bounds of laws and regulations or the Exchange
regulations and rules.
In order to address ever-evolving circumstances surrounding the capital market, the Exchange is
certainly required to revise regulations and rules as appropriate in response to such evolution.
Notwithstanding its efforts to do so, some incidents unmanageable under the scope of the revised
regulations and rules will inevitably take place. While JPX-R carries out self-regulation operations,
some listed companies deem that mere compliance with regulations and rules, no matter how
superficial, serves as sufficient justification for their acts. In some cases, several equity finance
transactions which may not instantly be alleged to violate the laws and regulations or the
Exchange regulations and rules are carried out and the proceeds from the transactions are used not
for the original business purposes but ultimately for the benefits of specific persons or corporations.
In order to address these conditions and circumstances, JPX-R has noted that it would be effective
to combine a rule-based approach with a principle-based approach. JPX-R thus developed what it
calls the Principles of Equity Finance.
(a) Principle-based approach
Principle-based approach mentioned herein refers to the approach where the principles which all
the listed companies must observe and share shall be confirmed and each would exercise its
normative consciousness derived from the principles to act independently, thereby improving the
quality of capital market as a whole.
In this context, the Principles of Equity Finance represent fundamental concepts which listed
companies must rely on in raising funds using capital markets beyond the minimum disciplines
specified in laws and regulations and the Exchange regulations and rules. Unlike rules, they would
not automatically bind the behaviors of listed companies or market participants.
* Even if a listed company does not fully meet the Principles of Equity Finance, no measures
would be imposed on the listed company without any reasonable reasons associate with the
Exchange regulations and rules.
201
(b) Expected effect of the Principles of Equity Finance

JPX-R expects that the following effect will be achieved as listed companies and market
participants share and implement the Principles of Equity Finance.
1) When there are no explicit rules or there is diversity in interpretations of regulations and
rules, listed companies may exercise management judgement to carry out equity finance
in reliance on fundamental notions guided by the Principles of Equity Finance.
2) Market participants including subscribers or securities companies, legal advisors, CPAs,
consultants and others who provide advice to listed companies may give advice such that
listed companies do not depart from the underlying concept of the Principles of Equity
Finance, by fully understanding them and may contribute to the appropriate management
decision of listed companies.
3) Shareholders and investors may rely on the Principles to assess the adequacy of equity
finance effected by listed companies and make more reasonable investment decisions.
4) Financial instruments exchange may carry out dialogues with listed companies or market
participants within the underlying concepts derived from the Principles while implementing
self-regulation operations. When financial instruments exchange interprets and applies
more general regulations and rules in the absence of directly applicable regulations and
rules, the underlying concepts derived from the Principles could guide its judgment and
financial instruments exchange could address specific situation more responsive to the
substances thereof.
(c) Nature of the Principles of Equity Finance
The Principles of Equity Finance have been developed based on principles comprising the
following four principles, which clearly define and embody the purposes and spirits underlying laws
and regulations and other rules pertaining to equity finance, then adding to various aspects and
perspectives acquired while JPX-R has carried out self-regulation operations. Any of principles
represents the underlying principle which should be and should previously have been shared and
applied by all the market participants.
202
Principles of Equity Finance

1. Contribute to the enhancement of enterprise value
It is reasonably certain that the funds procured are used effectively to improve the earnings
power of a listed company based on the assessment of the purpose of fund procurement, use
of funds, appropriation status of funds procured in the past, and earnings forecasts. The
performance results and financial position of the listed company do not give rise to any threat
to reasonable expectations.
The financing is expected to realize sustainable improvements in the enterprise value of the
listed company as sound management is carried out after the financing transaction.
2. No damage to the benefits of existing shareholders
The financing methodology, timing, and issuance terms are determined in full consideration of
potential dilution associated with the financing transaction and the impact of the transactions
on the secondary market. The transactions must be clearly explained to existing shareholders.
3. No threat to the fairness of or confidence in markets
Any entity or cooperating party who endeavors to obtain profit in any unfair manner should
not be allowed to participate in or trade on the capital market. No scheme should be
developed to obtain undue profit as a whole by combining transactions that may not instantly
be alleged to violate the Exchange regulations or rules on an individual basis.
4. Ensure transparency by disclosing information in a timely and adequate
manner
For information disclosure, timing is important. The information disclosed must be true and
consistent. The scope of the disclosure is sufficient and the explanations included with the
disclosed data, etc. must be straightforward and useful to the investment decisions of
shareholders and investors.
It must be demonstrated that the contents of disclosure will be adequate even after the
financing transaction is implemented.
e. Duty of CPAs, etc.to Cooperate with the Exchange, Which Seeks Explanations of CPAs,
etc.
Where the Exchange deems it necessary to decide the appropriateness pertaining to delisting of a
listed stock, etc. issued by such listed company and requests certified public accountants (CPAs),
etc. (including entities who were such certified public accountants, etc.) who carry out audit
certification, etc. of financial statements, etc. or quarterly financial statements, etc. to give
explanation on the circumstances, etc. , the listed company shall cooperate in this process so that
CPAs, etc. could readily provide such explanations, etc.
Rule 606, Paragraph 1 of Securities Listing Regulations
JPX-R carries out the operation entrusted to it by the Exchange may request a listed company to
provide similar explanations, etc. Whenever requested so, the listed company shall cooperate in the
203
process in the similar way to the Exchange.

Where the Exchange requests a listed company for the purpose of requiring such certified public
accountants, etc. to give explanation on the circumstances, etc., the listed company shall promptly
submit a document stating that such certified public accountants, etc. agree to give explanation on
the circumstances, etc.
Note: It should be noted that when a listed company refuses the submission of agreement
statement of the certified public accountants, etc. or delays it, such situation may meet the
provisions of Rule 601, Paragraph 1, Item 12 of the Securities Listing Agreement (Listing
Agreement Violation).
f. Examination and Inspection of Securities Trading, etc.

The Exchange has entrusted JPX-R with self-regulation operations pertaining to survey to ensure
fairness of trading of securities on the Exchange market, in addition to self-regulation operations for
the listing of securities. Accordingly, JPX-R (Examination and Inspection Department) carries out
the examination and inspection of trading pertinent to trading acts which violate relevant laws and
regulations, including insider trading.
(a) Duty to report the background for public announcement of corporate information
JPX-R (Examination and Inspection Department) shall inquire into the developments, etc. from
the occurrence of corporate information to the public announcement, to a listed company, where
JPX-R deems it necessary to carry out a survey in order to secure fairness of securities trading, etc.
Rule 16, Paragraph 2 of JPX-R Business Regulations
Where JPX-R entrusted by the Exchange with the self-regulation operations deems it necessary to
carry out a survey in order to ensure fairness of securities, trading, etc. and makes an inquiry into
listed stock, etc. including the developments, etc. from the occurrence of corporate information to
the public announcement, to a listed company by deeming that it is necessary for the purpose of
trading supervision, the listed company shall accurately report on the inquired matters.
Rule 415, Paragraph 4, Item 1 of Securities Listing Regulations;
Rule 3, Paragraph 2 of the same regulations
Where another domestic financial instruments exchange requests a listed company to provide
information concerning a listed company pertaining to information from the occurrence through the
public announcement of corporate information due to a survey in order to ensure fairness of
securities trading, etc. in such market, the listed company shall promptly make report on the
inquired matters.
204
(b) Issuing warnings to listed companies

JPX-R (Trading Examination Department) may issue warnings to an issuer of a listed security,
where it deems that the act of such issuer of the listed security is an act in violation of laws and
regulations or an act which is likely to fall under the violation of laws and regulations or where it
concludes that the internal system (*) for the prevention of unfair trading with respect to corporate
information is not adequate and deems it necessary, as a result of the examination of securities
trading, etc.
Note: The internal system includes necessary systems to prevent insider trading, etc. by its
officers, agents, employees and other workers as specified by Rule 449 of Securities Listing
Regulations.
JPX-R shall require a listed company to report improvement measures, etc. by a document, where
it deems necessary when issuing warnings.
(8) Delisting
In cases where a listed stock, etc. falls under the Delisting Criteria for Listed Companies as
defined in the Regulations, it shall be delisted.
For details of the Delisting Criteria for Listed Companies, please refer to 13.
[Rule 601 through 612 of the Regulations]
205
13. Delisting Criteria (Primary Listing)

For the purpose of maintaining quality of certain level and liquidity as a market, we set up strict and
detailed delisting criteria. Delisting criteria for each market are as follows.
(1) Main Markets (TSE 1st Section and 2nd Section)(Primary Listing)
Item
Requirement
[Rule 602, Paragraph 1, Item 1 of the
Regulations]
Where the number of shareholders is less than 400 as at the end of a

business year of a listed company, and the number does not reach at least
400 within a year.

Regulations]
Where any of the following a. through c. is met;

provided, however, that the same shall not apply to cases where the
Enforcement Rules specify otherwise:
a. Where the number of tradable shares is less than 2,000 units as at the
end of a business year of a listed company and the number does not
reach at least 2,000 units within a year;
2. Tradable shares
Regulations]
Regulations]
b. Where the market capitalization of the tradable shares is less than 500
million yen as at the end of a business year of a listed company and the
number does not reach at least 500 million yen within a year;
provided, however, that where the general market condition rapidly
deteriorates and TSE deems that this criterion is not appropriate, TSE
shall specify the criterion on a case by case basis; or
c. Where the number of tradable shares is less than 5% of the total
number of a listed stock, etc. as at the end of a business year of a listed
company and the listed company does not submit a scheduled plan of
public offering, secondary offering or distribution by a day specified by
the Enforcement Rules.
3. Trading volume
Regulations]
Regulations]
Where the following a. or b. is met;

provided, however, that the same shall not apply to cases where public
offering, secondary offering or off-auction distribution is carried out as
specified by the Enforcement Rules (Rule 601, Paragraph 2 of the
Enforcement Rules) within three (3) months after the following a. or b. is
met:
[Rule 601, Paragraph 2 of the Rules]
a. Where the average monthly trading volume of a listed stock, etc. for
206
each year ending December 31 is less than ten (10) units; or

b. Where no trade has been made for three (3) months before the end of
every month
Where the following a. or b. is met:
Regulations]
Regulations]
5. Liabilities in excess of assets

Regulations]
Regulations]
6. Suspension of bank
transactions
a. Where the market capitalization is less than one (1) billion yen and does
not reach at least one (1) billion yen within nine (9) months;
deteriorates and TSE deems that this criterion is not appropriate, other
criteria shall apply as specified by TSE on a case by case basis; or
b. Where the market capitalization of said stock, etc. is less than the
amount obtained by multiplying the number of the listed stock, etc. by
two (2) and does not reach at least such amount within three (3)
months
Where a listed company has liabilities in excess of assets as of the end of

the business year and the liabilities in excess of assets is not cleared
within a year;
provided, however, that this means cases where the liabilities in excess of
assets are not cleared within two (2) years if such listed company plans to
clear the liabilities in excess of assets within a year counting from a day
when such year passes by carrying out rehabilitation proceedings or
reorganization proceedings on the basis of the provisions of laws,
business revitalization based on Specific Certified Dispute Resolution
Procedures prescribed in Rule 2, Paragraph 25 of the Industrial
Revitalization Act, or workouts based on the "Guidelines for Multi-Creditor
Out-of-Court Workouts" formulated by the Study Group on Multi-Creditor
Out-of-Court Workouts (limited to cases deemed appropriate by TSE);
Where a bill, etc. issued by a listed company is dishonored and its bank
transactions are suspended or their suspension becomes certain

Regulations]
Regulations]
7. Bankruptcy proceedings,
rehabilitation proceedings or
reorganization proceedings
Regulations]
Where a listed company become necessary to enter its bankruptcy

proceedings, rehabilitation proceedings or reorganization proceedings on
the basis of the provisions of laws or where it falls under a situation
equivalent to these. In this case, it means circumstances where the
company discloses a restructuring plan prescribed by the Enforcement
207

Regulations]
8. Suspension of business
activities
Rules and the market capitalization does not reach at least one (1) billion
yen for a month counting from the day following the day on which such
restructuring plan is disclosed
Where a listed company suspends its business activities or where it falls
into a situation equivalent to this

Regulations]
Regulations]
In cases of the following a. or b., where TSE deems that such a. or b. is

met:
a. Where a listed company carries out an absorption-type merger of an
unlisted company or an act specified by the Enforcement Rules as an
act classified as this:
Where TSE deems that such listed company is not a substantial
surviving company and such listed company does not satisfy the criteria
specified by the Enforcement Rules within three (3) years; or
9. Inappropriate merger, etc.

Regulations]
Regulations]
[Rule 208, Item 1, 3 and 5 of the
Regulations]
10. Damage to Sound

Transactions with Controlling
b. Where a company is listed subject to the following (a) through (c); and
TSE deems that a listed company as prescribed by the following (a)
through (c) is not a substantial surviving company pertaining to such
company, and such company does not satisfy the criteria specified by
the Enforcement Rules within three (3) years:
(a) Where a listed stock, etc. is delisted due to dissolution caused by a
merger of a listed company on the Main Markets:
The newly created company or the surviving company, or the parent
company of the surviving company pertaining to such merger;
(b) Where a listed company on the Main Markets becomes a
wholly-owned subsidiary of another company by a stock swap, stock
transfer and other means or where it is specified by the Enforcement
Rules as a status equivalent to this:
Such other company or the parent of such other company;
(c) Where a listed company on the Main Market is delisted due to falling
under the case where a listed company on the Main Market ceases
to be the party to the listing agreement by making another company
succeed the listing agreement based on its agreement of a split by a
merger or a plan of a split by creating a new company at the time of
carrying out a shareholder directed spin-off:
Such other company
Where there is a change of a controlling shareholder due to private
placement, when TSE deems there is considerable damage to sound
208
Shareholder
transactions with the controlling shareholder within the coming 3 years.

Regulations]
[Rule 601, Paragraph 1, Item 9-2 of
the Regulations]
11. Delay in Submission of Annual Where Annual Securities Report or Quarterly Securities Report to which an
Securities Report or Quarterly
audit report or a quarterly review report as specified in Article 3,
Securities Report
Paragraph 1 of the Cabinet Office Ordinance on Audit Certification
[Rule 602, Paragraph 1, Item 1 of the prepared by two (2) or more certified public accountants or an audit firm
Regulations] is attached) is not submitted to the Prime Minister within one (1) month
[Rule 601, Paragraph 1, Item 10 of the after a period specified in the Financial Instruments and Exchange Act.
Regulations]
12. False Statement or Adverse

Opinion, etc.
Regulations]
Regulations]
a. Where a listed company makes a false statement in a securities report,

etc. and, in addition, TSE deems that its effect is material; or
b. Concerning an audit report attached to financial statements, etc. or a
Quarterly Review Report attached to Quarterly Financial Statements,
etc. of a listed company, where certified public accountants state an
"adverse opinion" or a fact that "opinions are not expressed" in an
audit report, and a "negative conclusion" or a fact that "conclusions are
not expressed" in a quarterly review report and, in addition, TSE deems
that such fact has a material impact.
Where the following a., b. or c. is met:
13. Breach of Listing Agreement, a. Where a listed company has committed a material breach of the listing
etc.
agreement as prescribed by the Enforcement Rules (Article 601,
Paragraph 10 of the Enforcement Rules);
Regulations]
Regulations]
b. Where a listed company has committed a material breach as to matters

taken on oath in the Written Oath submitted; or
[Rule 601, Item 10 of the Rules]
c. Where a listed company ceases to be a party to the listing agreement.

14. Becoming a Wholly-Owned
Subsidiary
Where a listed company becomes a wholly-owned subsidiary of another

company by stock swap or stock transfer.

Regulations]
Regulations]
15. Unreasonable Restriction on
Where the details of shareholders rights and their exercise are

209
Shareholders Rights
unreasonably restricted as specified by the Enforcement Rules (Article

601, Paragraph 13 of the Enforcement Rules).
Regulations]
Regulations]
16. Whole Acquisition
Where a listed company acquires all shares pertaining to such stock.

Regulations]
Regulations]
17. Involvement of Anti-Social

Forces
Regulations]
Where it has become clear that a listed company has relationships

prescribed in the Enforcement Rules as those in which the listed company
is involved with anti-social forces, when TSE deems that such condition
has considerably damaged shareholders and investors trust in the market.

Regulations]
18. Handling by Designated

Book-Entry Transfer Institution
Regulations]
19. Restriction on Transfer of

Share Certificates, etc.
Regulations]
20. Termination of Deposit

Agreement, etc.
Regulations]
Regulations]
21. Others
Regulations]
Where such security has ceased to be handled in the custody and

book-entry transfer operation of listed foreign stocks, etc. or the
book-entry transfer operation of a designated book-entry transfer
institution.
Where a listed foreign company imposes a transfer restriction on a listed
foreign stock, etc. issued by such company;
transfer restriction on a stock, etc. is deemed necessary to receive the
application of the provisions of laws and regulations of a home country or
in cases equivalent thereto where the details are deemed not to hinder
trading in the market of TSE.
Where a deposit agreement, etc. or any other agreement is terminated if a
listed foreign company is an issuer of such listed foreign stock depositary
receipt, etc.;
provided, however, that the same shall not apply to cases where such
deposit agreement, etc. or any other agreement is terminated because of
a change in a depository, etc. pertaining to a listed foreign stock
depositary receipt, etc.
In addition to each of the preceding items, where TSE deems that
delisting of such security is appropriate for the public interest or the
protection of investors.

Regulations]
210
(2) Mothers (Primary Listing)

Item
Requirement
Regulations]
Regulations]
Where the number of shareholders is less than 400 as at the end of a

business year of a listed company, and the number does not reach at least
400 within a year (within a period of ten (10) years since listing, where the
number is less than 150, and the number does not reach at least 150
within a year (where ten (10) years since listing elapse during such year,
at least 400))
Where a listed domestic stock, etc. falls under any of the following a.
through c.;
Enforcement Rules specify otherwise:
a. Where the number of tradable shares is less than 2,000 units as at the
end of a business year of a listed company, and the number does not
reach at least 2,000 units within a year (within a period of ten (10)
years since listing, where the number is less than 1,000 units, and the
number does not reach at least 1,000 units within a year (where ten
(10) years since listing elapse during such year, at least 2,000 units));
2. Tradable shares
Regulations]
Regulations]
b. Where the market capitalization of tradable shares is less than 500

million yen as of the end of a business year of a listed company, and it
does not reach 500 million yen within a year (within a period of ten (10)
years since listing, where it is less than 250 million yen, and it does not
reach at least 250 million yen within a year (where ten (10) years since
listing elapse during such year, at least 500 million yen));
shall prescribe on a case by case basis; or
c. Where the number of tradable shares is less than 5% of the total
number of a listed stock, etc. as at the end of a business year of a listed
company and the listed company does not submit a scheduled plan of
public offering, secondary offering or distribution with a quantitative
limit by the day specified by the Enforcement Rules;
3. Liabilities in excess of assets

Regulations]
Regulations]
Where a listed company has liabilities in excess of assets as at the end of

a business year (excluding cases where a listed company falls into
liabilities in excess of assets within three (3) years after listing) and the
liabilities in excess of assets do not cease within a year;
provided, however, that in cases where such listed company plans to clear
liabilities in excess of assets within a year counting from a day when such
211
year passes by undertaking rehabilitation proceedings or reorganization

proceedings pursuant to the provisions of laws, business revitalization
based on Specific Certified Dispute Resolution Procedures prescribed in
Article 2, Paragraph 25 of the Industrial Revitalization Act, or workouts
based on the "Guidelines for Multi-Creditor Out-of-Court Workouts"
formulated by the Study Group on Multi-Creditor Out-of-Court Workouts,
the liabilities in excess of assets is not cleared within two (2) years;
4. Sales
Regulations]
Regulations]
Where sales are less than 100 million yen in the last year (excluding cases
where the amount of profits is recorded in the last year and where sales
are less than 100 million yen in the last year within five (5) years after
listing). In this case, "the last year" shall be counted from the end of the
most recent business year
Regulations]
Regulations]
a. Where the market capitalization is less than one (1) billion yen, and it
does not reach at least one (1) billion yen within nine (9) months
(within a period of ten (10) years since listing, where it is less than 500
million yen and it does not reach at least 500 million yen within nine (9)
months (where ten (10) years since listing elapse during such nine (9)
months, at least one (1) billion yen));
shall prescribe on a case by case basis; or
b. Where the market capitalization of said stock, etc. is less than the
amount obtained by multiplying the number of the shares of the listed
stock by two (2) and does not reach a least such amount within three
(3) months;
6. Stock price
Regulations]
[Rule 603, Paragraph 1, Item 5-2 of the
Regulations]
7. Trading volume
Regulations]
Regulations]
Where, by the point of time when 3 years have elapsed since listing, the
stock price falls below 10% of the public offering price at the time of initial
listing, the price fails to recover to 10% or more of such public offering
price within 9 months;
provided, however, that this shall be handled as specified by TSE on a
case-by-case basis if TSE deems that application of the above standard is
inappropriate in consideration of changes in market trends and other
circumstances
provided, however, that the same shall not apply to cases where public
offering, secondary offering or off-auction distribution is carried out as
specified by the Enforcement Rules (Article 601, Paragraph 2 of the
Enforcement Rules) within three (3) months after the following a. or b. is
212
met:
a. Where the average monthly trading volume of a listed stock, etc. for
each year ending December 31 is less than ten (10) units; or
b. Where no trade has been made for three (3) months before the end of
every month
8. Suspension of bank
transactions
transactions are suspended or their suspension becomes certain

Regulations]
Regulations]
Regulations]
Regulations]
10. Suspension of business

activities

Rules and the market capitalization does not reach at least one (1) billion
yen for a month counting from the day following the day on which such
restructuring plan is disclosed
into a situation equivalent to this

Regulations]
Regulations]

met:
11. Inappropriate merger, etc.

Regulations]
Regulations]

[Rule 208, Item 1, 3 and 5 of the

Regulations]
213

Such other company
12. Damage to Sound
Shareholder

transactions with the controlling shareholder within the coming 3 years

Regulations]
[Rule 601, Paragraph 1, Item 9-2 of
the Regulations]
13. Delay in Submission of Annual Where Annual Securities Report or Quarterly Securities Report to which an
Securities Report
[Rule 604, Paragraph 1, Item 2 of the prepared by two (2) or more certified public accountants or an audit firm
Regulations] is attached) is not submitted to the Prime Minister within one (1) month
[Rule 601, Paragraph 1, Item 10 of after a period specified in the Financial Instruments and Exchange Act.
the Regulations]

Opinion, etc.
Regulations]
the Regulations]

214

15. Breach of Listing Agreement, a. Where a listed company has committed a material breach of the listing
etc.
Regulations]
the Regulations]


Subsidiary


Regulations]
the Regulations]

Shareholders Rights

601, Paragraph 13 of the Enforcement Rules).
Regulations]
the Regulations]
the Rules]

Regulations]
the Regulations]

Forces
Regulations]


the Regulations]

Regulations]

institution.

Regulations]

215

Regulations]
Regulations]

Agreement, etc.
Regulations]
Regulations]
23. Others
Regulations]

receipt, etc.;

Regulations]
216
(3) JASDAQ (Standard Market) (Primary Listing)

Item
Requirements
1. Stock Price
[Rule 604-3, Item 1 of the Regulations]
In the event that stock price is less than JPY 10, it does not increase to JPY
10 or above within 3 months.
[Rule 604-2, Paragraph 1, Item 2 of the

Regulations]
2. Corporate Performance
Regulations]
3. Number of Shareholders
The operating income and the cash flow in operating activities for the 4
most recent consolidated fiscal years are negative and this state is not
resolved within 1 year (excluding cases where the 4 most recent
consolidated fiscal years includes the 5 fiscal years prior to the fiscal year
following that in which the company made its listing application).
Where the number of shareholders is less than 150 in Japan as at the end
of a business year of a listed company, and the number does not reach at
least 150 within a year.
Regulations]
Where a listed stock falls under any of the following a. and b.
4. Tradable Shares
Regulations]
a. Where the number of tradable shares is less than 500,000 shares for
1,000-share unit stock, 250,000 shares for 500-share unit stock,
50,000 shares for 100-share unit stock, 25,000 shares for 50-share unit
stock, 5,000 shares for 10-share unit stock, and 500 shares for 1-share
unit stock, respectively, as of the end of a business year of a listed
company, and the number does not reach at least 500,000 shares for
unit stock, respectively, within a year;
b. Where the market capitalization of tradable shares is less than JPY250
million as of the end of a business year of a listed company, and it does
not reach JPY250 million within a year;
shall prescribe on a case by case basis;
5. Liabilities in Excess of Assets

Where a listed company has liabilities in excess of assets as of the end of

a business year and the liabilities in excess of assets do not cease within a
year.
Regulations]
6. Suspension of Bank
217
Transactions
transactions are suspended or their suspension becomes certain.

Regulations]
Regulations]
8. Suspension of Business
Activities

Rules and the market capitalization does not reach at least JPY 500 million
for a month counting from the day following the day on which such
restructuring plan is disclosed.
into a situation equivalent to this.

Regulations]

met:
9. Inappropriate Merger, etc.
Regulations]
[Rule 216-9, Item 1, 3 and 5 of the Reg
ulations]
218

Such other company
10. Damage to Sound
Shareholder


Regulations]
Where Annual Securities Report or Quarterly Securities Report to which an

11. Delay in Submission of Annual
Securities Report
prepared by two (2) or more certified public accountants or an audit firm
is attached) is not submitted to the Prime Minister within one (1) month
after a period specified in the Financial Instruments and Exchange Act.
Regulations]

Opinion, etc.
the Regulations]

13. Breach of Listing Agreement,

etc.
the Regulations]
a. Where a listed company has committed a material breach of the listing

219

Subsidiary

company by stock swap or stock transfer

the Regulations]

Shareholders Rights

601, Paragraph 13 of the Enforcement Rules)

the Regulations]

the Regulations]

Forces

the Regulations]


institution.
Regulations]

Regulations]

Agreement, etc.
Regulations]
Regulations]
21. Others

receipt, etc.;
220
the Regulations]
221
(4) JASDAQ (Growth Market) (Primary Listing)

Item
Requirements
1. Stock Price
In the event that stock price is less than JPY10, it does not increase to JPY
10 or above within 3 months.

Regulations]
Regulations]
2. Corporate Performance
Regulations]
The operating income and the cash flow in operating activities for the 4
most recent consolidated fiscal years are negative and this state is not
resolved within 1 year (excluding cases where the 4 most recent
consolidated fiscal years includes the 5 fiscal years prior to the fiscal year
following that in which the company made its listing application).
Regulations]
3. Operating Income
Regulations]
In the event where the operating income for the consolidated fiscal year
of a listing application is negative and the operating income for the 9 fiscal
years after it is listed are negative, the operating income of the listed
company's corporate group does not become positive within 1 year.
Where the number of shareholders is less than 150 in Japan as of the end
of a business year of a listed company, and the number does not reach at
least 150 within a year.
Regulations]
Where a listed stock falls under any of the following a. and b.
5. Tradable Shares
Regulations]
a. Where the number of tradable shares is less than 500,000 shares for
unit stock, respectively, as of the end of a business year of a listed
company, and the number does not reach at least 500,000 shares for
unit stock, respectively, within a year;
b. Where the market capitalization of tradable shares is less than JPY 250
million as at the end of a business year of a listed company, and it does
not reach JPY 250 million within a year;
deteriorates and TSE deems that this criterion is not appropriate, TSE e
shall prescribe on a case by case basis.
222
6. Liabilities in Excess of Assets

Where a listed company has liabilities in excess of assets as at the end of

a business year and the liabilities in excess of assets do not cease within a
year.
Regulations]
7. Suspension of Bank
Transactions
transactions are suspended or their suspension becomes certain.

Regulations]
Regulations]
9. Suspension of Business

Rules and the market capitalization does not reach at least JPY 500 million
for a month counting from the day following the day on which such
restructuring plan is disclosed.
into a situation equivalent to this.

Regulations]

met:
10. Inappropriate Merger, etc.

surviving company and such listed company does not satisfy the
criteria specified by the Enforcement Rules within three (3) years; or

Regulations]
[Rule 216-9, Item 1, 3 and 5 of the Reg
ulations]
223

under the case where a listed company on the Main Market ceases to
be the party to the listing agreement by making another company
Such other company
11. Damage to Sound
Shareholder


Regulations]
Where Annual Securities Report or Quarterly Securities Report to which an

12. Delay in Submission of Annual
audit report or Quarterly Review Report as specified in Article 3,
Securities Report
prepared by two (2) or more certified public accountants or an audit firm
is attached) is not submitted to the Prime Minister within one (1) month
after a period specified in the Financial Instruments and Exchange Act.
Regulations]

Opinion, etc.
the Regulations]

not expressed" in a Quarterly Review Report and, in addition, TSE
deems that such fact has a material impact.
14. Breach of Listing Agreement,

etc.
a. Where a listed company has committed a material breach of the listing
agreement as prescribed by the Enforcement Rules (Rule 601,
the Regulations]

224

Subsidiary


the Regulations]

Shareholders Rights

unreasonably restricted as specified by the Enforcement Rules (Rule 601,
Paragraph (xiii) of the Enforcement Rules).

the Regulations]

the Regulations]

Forces

the Regulations]


institution.
Regulations]

Regulations]

Agreement, etc.
Regulations]
Regulations]

receipt, etc.;
225
22. Others

the Regulations]
226
14. Delisting Criteria (Multiple Listing)

For the purpose of maintaining market quality and liquidity at certain level, we set up strict and
detailed listing criteria. Listing criteria for each market are as follows.
(1) Main Markets (TSE 1st Section and 2nd Section)(Multiple Listing)
The delisting criteria for multiple listing are mostly same as the delisting criteria for primary listing,
however, the following criteria are different from each other. In addition, for the delisting criteria for
primary listing, please refer to sections at section 12 (1).
Item
Multiple listing
Primary Listing
None
Where the number of shareholders is less

than 400 as at the end of the business
year of the listed company, and the
number does not reach at least 400
within a year
None
Where a listed domestic stock, etc. falls

under any of the following a. through c.;

Regulations]
[Rule 601, Paragraph 1, Item
1 of the Regulations]
a. Where the number of tradable shares

is less than 2,000 units as at the end of
the business year of the listed
company, and the number does not
reach at least 2,000 units within a year
2. Number of Tradable
Shares
b. Where the market capitalization of

tradable shares is less than 500 million
yen as at the end of the business year
of the listed company, and it does not
reach 500 million yen within a year;
provided, however, that where the
general market condition rapidly
deteriorates and TSE deems that this
criterion is not appropriate, TSE shall
prescribe on a case by case basis; or

Regulations]
Regulations]
c. Where the number of tradable shares is

less than 5% of the total number of a
listed stock, etc. as at the end of the
business year of the listed company
227
and the listed company does not

submit a scheduled plan of public
offering, secondary offering, or
distribution with a quantitative limit by
the day specified by the Enforcement
Rules;
None

provided, however that the same shall
not apply to cases where public offering,
secondary, offering, or off-auction
distribution is carried out as specified by
the Enforcement Rules (Rule 601(2) of
the Enforcement Rules) within three (3)
months after the following a. or b. is met:
3. Trading Volume
Regulations]
a. Where the average monthly trading

volume of a listed stock, etc. for each
year ending December 31 is less than
ten (10) units; or

Regulations]
b. Where no trade has been made for

three (3) months before the end of
every month
4. Delisting from Foreign

Financial Instruments
Exchange, etc.
Regulations]
None
Where delisting of a listed foreign
stock, etc. from a foreign financial
instruments exchange, etc. is
decided or where TSE deems that
circumstances have changed to a
degree where market prices, etc. of
such listed foreign stock, etc. on a
foreign financial instruments
exchange, etc. cannot be obtained
immediately;
provided, however, that the same
shall not apply to cases where
delisting is deemed to be
inappropriate in consideration of
reasons for delisting such listed
foreign stock, etc. from a foreign
financial instruments exchange, etc.
or in consideration of the trading
status at TSE and any other event
228
5. Status of Trading
Regulations]
The status of trading in a listed

None
foreign stock, etc. is deemed to have
radically deteriorated as at the end
of a business year of a listed foreign
stock, etc.
229
(2) Mothers (Multiple Listing)

The delisting criteria for multiple listing are mostly same as the delisting criteria for primary listing,
however, the following criteria are different from each other. In addition, for the delisting criteria for
primary listing, please refer to sections at section 12 (2).
Item
Multiple listing
Primary listing
None
Where the number of shareholders

is less than 400 as at the end of the
business year of the listed company,
and the number does not reach at
least 400 within a year (within a
period of ten (10) years since
listing, where the number is less
than 150, and the number does not
reach at least 150 within a year
(where ten (10) years since listing
elapsed during such year, at least
400))
None
Where a listed domestic stock, etc.

falls under any of the following a.
through c.;
shall not apply to cases where the
Enforcement Rules specify
otherwise:
Regulations]
Regulations]
a. Where the number of tradable

shares is less than 2,000 units as
at the end of the business year of
the listed company, and the
number does not reach at least
2,000 units within a year (within
a period of ten (10) years since
listing, where the number is less
than 1,000 units, and the
number does not reach at least
1,000 units within a year (where
ten (10) years since listing
elapsed during such year, at
least 2,000 units));
2. Number of Tradable Shares

Regulations]
Regulations]
b. Where the market capitalization

230
of tradable shares is less than

500 million yen as at the end of
the business year of the listed
company, and it does not reach
500 million yen within a year
(within a period of ten (10) years
since listing, where it is less than
250 million yen, and it does not
reach at least 250 million yen
within a year (where ten (10)
years since listing elapsed during
such year, at least 500 million
yen));
provided, however, that where
the general market condition
rapidly deteriorates and TSE
deems that this criterion is not
appropriate, TSE shall prescribe
on a case by case basis; or
c. Where the number of tradable
shares is less than 5% of the
total number of the listed stock,
etc. as at the end of the business
year of the listed company and
the listed company does not
submit a scheduled plan of public
offering, secondary offering, or
distribution with a quantitative
limit by the day specified by the
Enforcement Rules;
None

public offering, secondary offering
or off-auction distribution is carried
out as specified by the Enforcement
Rules (Rule 601(2) of the
Enforcement Rules) within three (3)
months after the following a. or b. is
met:
a. Where the average monthly
trading volume of a listed stock,
etc. for each year ending
3. Trading Volume
Regulations]
Regulations]
231
December 31 is less than ten

(10) units; or
b. Where no trade has been made
for three (3) months before the
end of every month
4. Delisting from a Foreign

Financial Instruments
Exchange, etc.
Regulations]
the Regulations]
5. Status of Trading
Regulations]
Where delisting of a listed foreign None

stock, etc. from a foreign financial
instruments exchange, etc. is
decided or where TSE deems that
circumstances have changed to a
degree where market prices, etc. of
such listed foreign stock, etc. on a
foreign financial instruments
exchange, etc. cannot be obtained
immediately;
delisting is deemed to be
inappropriate in consideration of
reasons for delisting such listed
foreign stock, etc. from a foreign
financial instruments exchange, etc.
or in consideration of the trading
status at TSE and any other event
The status of trading in a listed
None
foreign stock, etc. is deemed to
have radically deteriorated as at the
end of a business year of a listed
foreign stock, etc.
the Regulations]
232
(3) JASDAQ (Standard and Growth Markets) (Multiple Listing)

In the case of multiple listing the following criteria are required to be met in addition to the
satisfaction of criteria required for primary listing. In addition, for the delisting criteria for primary listing,
please refer to sections 12 (3) and 12 (4).
Item
Requirements
Delisting from Foreign Financial

Instruments Exchange, etc.
Regulations]
Regulations]
When the delisting of foreign stock, etc. on a foreign financial instruments

and exchange is determined or TSE determines that the quoted prices of
stock, etc. on a foreign financial instruments and exchange can not be
observed immediately;
provided that this will not apply to cases where the delisting is determined
to be inappropriate in consideration of reason for delisting on the foreign
financial instruments and exchange and the status of distribution, and
other factors.
233
15. Listing Fees
15. Listing Fees

Consumption taxes and local consumption taxes will be levied on various dues and fees mentioned in
this chapter.
(1) Fees for Initial Listing on TSE
(Listing Examination Fee, Initial Listing Fee, and Public Offering/Secondary Offering Fee)
A foreign company, when applying for listing on TSE, shall pay fees consisting of listing
examination fee, initial listing fee, and public offering/sales fee.
When TSE is the main
When TSE is not
market
the main market
First Section
Second
First & Second
Section
Sections
Mothers
JASDAQ
2,000,000
2,000,000
2,000,000
1,000,000
6,000,000
Listing
Examination
4,000,000
Fee
Initial Listing
Fee
Public
Offering/Sales
Fee
2,500,000
15,000,000
12,000,000
+ Fixed rate fee

(See below)
Number of new shares
Number of new
offeredoffer price
shares offeredoffer
(9/10,000)
Number of existing shares
price (9/10,000)
Number of existing
soldsales price
shares soldsales
(1/10,000)
price (1/10,000)
Furthermore, in cases where an applicant previously filed a listing application or preliminary

application and the applicant intends to file a re-application within three years counting from the
beginning date of the business year to which the most recent application date pertains (in case of
the preliminary application, the date which was described in the preliminary application form for
listing of securities as the date on which the listing application was expected to be filed), the listing
fees is expected to be halved.
When TSE implements a field visit or meeting, etc. at locations remote from Japan, in particular
including Europe, the United States, and so on, TSE will separately charge to the applicant the
amount equivalent to actual expenses incurred for the field visit and meeting purposes.
234
15. Listing Fees
Initial Listing Fee for Foreign Stock, etc. with a Main Market Listing on any Overseas
Exchange
Initial listing fee for foreign stock, etc. with a main market listing on any overseas exchange is
computed as 2.5 million yen plus a fixed rate fee as shown in the table below:
Ratio of number of foreign stock, etc.

held by individuals and legal entities
having address and residence in Japan to
Initial Listing Fee
the total number of listed foreign stock.

etc.
2,500,000Number of Listed Foreign Stock, etc.
More than 5%
(225/10,000) 1/10
More than 2% and less than or equal to
5%
(225/10,000) 1/20
Less than or equal to 2%

(225/10,000) 1/50
(2) Annual Listing Fee (Main Market (First & Second Sections) and Mothers)
After the listing on TSE, listed foreign companies shall pay the Annual Listing Fee, which shall be
the amount defined in the table below (tax excluded) plus TDnet usage fee of 120,000 (tax
excluded).
In addition, as for foreign companies listed in Mothers market, for the initial three (3) years after
the listing, the annual listing fee shall be half of the amount defined in the table below (tax excluded)
plus TDnet usage fee of 120,000 (tax excluded).
When TSE is the Main Market
Market Cap at IPO
Less than or equal to 5 billion
More than 5 billion and less than
or equal to 25 billion
More than 25 billion and less
than or equal to 50 billion
More than 500 billion
First Section
Second
Section
When TSE is not
Mothers
the Main Market
960,000
720,000
480,000
120,000
1,680,000
1,440,000
1,200,000
240,000
2,400,000
2,160,000
1,920,000
480,000
3,120,000
2,880,000
2,640,000
600,000
3,840,000
3,600,000
3,360,000
720,000
4,560,000
4,320,000
4,080,000
840,000
235
15. Listing Fees
(3) Annual Listing Fee (JASDAQ)

After listing on TSE, listed foreign companies shall pay the Annual Listing Fee, which shall be the
amount defined in the table below (tax excluded) plus TDnet usage fee of 85,000 (tax excluded).
Market Cap at IPO
JASDAQ
100 billion or less
1,000,000
1,200,000
(4) Fees for Listing on Tokyo PRO Market

Initial listing fee, fee related to issuance, etc. of new shares at IPO and Annual Listing Fee on
TOKYO PRO Market are as shown in the table below:
When TSE is the Main
When TSE is not the
Market
Main Market
1. Initial Listing Fee
3,000,000
Number of new shares offeredoffer price
2. Fee related to issuance, etc. of new shares at IPO
(9/10,000)
Number of existing shares soldsales price
(1/10,000)
3. Annual Listing Fee

Market Cap at IPO
Less than or equal to 5 billion
More than 5 billion and less than or equal to
25 billion
50 billion
250 billion
500 billion
236
480,000
120,000
1,200,000
240,000
1,920,000
480,000
2,640,000
600,000
3,360,000
720,000
4,080,000
840,000
16. Securities Taxation System (Japanese Investors27F Investing in TSE Listed Foreign Stocks)
16. Securities Taxation System (Japanese Investors 28 Investing in

TSE Listed Foreign Stocks)
In principle, the same taxation in domestic stock is applied to foreign stock. However please take note
of the following two items:
With regard to dividend income, the above tax rates shall be applicable to the amount after
deduction of income tax is imposed for the above-mentioned tax rates to the amount of money
after tax withheld at the source in the home country on the basis of tax rates provided by the tax
convention concluded between the home country of the listed foreign company and Japan. Please
note that this is applicable only to individuals and that exclusion from gross revenue in dividend
income is not applicable to institutional investors.
In the case where shares of stock of a subsidiary of a listed foreign company are allotted (spun
off) and where the allotment of shares meets the distribution of profits, it is subject to taxation
(the tax amount is determined based on the market value of shares of stock allotted). A
shareholder may choose to receive shares of the stock by paying the amount equivalent to the
withheld taxes on the allotted shares or receive the proceeds arising from the sales of the shares
without paying the amount equivalent to the withheld taxes (residual value after deducting the
amount equivalent to such taxes. The proceeds from the sale of the shares of stock are subject to
capital gain taxation. (Refer to Foreign Securities Account Agreement.)
(1) Taxation for Individual Investors

Item
Taxation Method
<January 1, 2014 through December 31, 2037>
20.315% Self-assessed separated taxation (Income tax & Special
reconstruction income tax: 15. 315%; Residential tax: 5%)
<January 1, 2038 and later>
20% Self-assessed separated taxation (Income tax 15%;
Residential tax 5%)
Capital Gains associated with
[Specified Account System]
Listed Shares, etc.
Individuals are exempt from tax procedures because financial

instruments operators collect taxes on transactions via tax
withholding accounts (specified account for tax withholding).
However, the acceptance of specified account for listed stock
certificates, etc. held at general accounts, etc., ended on May 31,
2009.
[Aggregation of profit and loss and carry-forward on capital loss
28
Japanese nationals.
237
and dividend income]

Capital loss on sale of listed stock certificates, etc. via financial
instruments operator can be tax-deductible in order of capital
gain/loss of listed stock certificates, etc., capital gain/loss of
unlisted stock, dividend income of listed stock certificates, etc. (only
applicable to self-assessed separated taxation). Amount that cannot
be tax-deductible for the relevant year may be carried over for three
(3) years against the capital gains of listed stock certificates, etc. by
filing a tax return.
<January 1, 2014 through December 31, 2037>
20. 315% Tax withholding (exempt from filing declaration) or
Self-assessed separated taxation
(Income tax & Special reconstruction income tax: 15. 315%;
Dividend Income associated
Residential tax: 5%)
with Listed Stock
< January 1, 2038 and later >

20% Tax withholding (exempt from filing declaration) or
Self-assessed separated taxation
(income tax: 15%residential tax: 5%)
(2) Taxation on Corporations

Item
Taxation Method
Since there is no application of the exemption of dividends as a
general rule, taxation is combined in taxable income. However, if
Dividend on Stock
applicable to the Foreign Dividend Exclusion System, the amount

equivalent to 95% of the dividend income is exempt from taxation.
Capital Gains on Sale of Stock

Certificates, etc.
Taxable (however, capital losses can be included in deductible

expenses)
238
(3) Taxation on Deemed Dividend

When money or other assets are granted due to merger, etc. and the aggregate value of such
money or other assets exceed the portion of capital stock out of the changes in net assets, the
excess value is taxable as Deemed Dividend.
(Note) Acquisition of new shares by share splitting is not taxable due to the abolishment of
taxation on Deemed Dividend on incorporation of earned surplus.
(4) Consumption Tax

Item
Taxation Method
Brokerage Commissions, etc.
Taxable to the total amount of fees
Sales and Purchase of Securities
Tax-exempt
Stock Dividend
Untaxed
Although this material is prepared based on information deemed reliable, no guarantee is

made regarding the accuracy or completeness of the information.
This material is prepared based on the laws and regulations effective or applicable as of July
31, 2012, but they are subject to change depending on tax reforms in the future.
For practical tax treatments, please consult with your tax advisor or tax office.
239
17. Q&A
17. Q&A
(1) Insider Trading Regulations
Q. Tell me about the Insider Trading Regulations.
A. Foreign stocks, etc. trading and JDRs trading are subject to the Insider Trading Regulations. For
details, please refer to FAQ on Consultation Examples for Insider Tradingpublished by Tokyo
Stock Exchange.
FAQ on Consultation Examples for Insider Trading (Japanese Only)
http://www.jpx.or.jp/self-regulatory-activities/ensuring/preventing/insider-faq.html
(2) Tender Offer Rules (TOB Rules)

Q. Tell me about Regulations on Tender Offer in Japan.
A. Tender Offer Rules (TOB Rules) are defined for Japanese stocks, etc. with the aim of ensuring
transparency and fairness for securities trading which would potentially affect control of a
company, etc. When a person (Tender Offeror) tries to purchase a large quantity of stock, etc.
through off-market trading, the Tender Offeror is required to disclose the tender offer period,
number of stocks to be purchased, price of shares and other relevant facts so as to provide the
shareholders with equal opportunities to sell the relevant stocks, etc. The Tender Offeror is
required to make such a tender offer with adequate disclosure, if any of the following conditions
apply:
When the stocks, etc. are purchased by a large number of persons (meaning more than ten
(10) persons during 60 days), and the number of shares owned to exceed five (5) percent of
the shares issued after the purchase; or
When the stocks, etc. are purchased by an extremely small number of persons (meaning ten
or fewer persons during 60 days), and the number of shares owned to exceed one-third of
the shares issued after the purchase.
(3) Large Shareholding Reporting System

Q. Whats the Large Shareholding Reporting System?
A. With regards to Japanese stocks, there are rules in Japan as indicated below with the aim of
notifying investors about the state of large shareholding of stocks, etc.:
A person who has become a holder of the listed stocks, etc. whose shareholding ratio exceeds
five (5) percent shall submit a large shareholding report within five (5) business days from
the reference date.
If the shareholding ratio of any such large shareholder later increases or decreases by more
than one (1) percent, the person shall file an amendment report within five business days.
Exceptional measure for reduction of reporting frequency is taken separately for institutional
investors engaging in a large amount of transactions in day-to-day business operations, such as
securities companies, banks, trust banks, insurance companies, investment trust companies and
investment advisory companies, etc. in consideration of their administrative workload.
240
17. Q&A
(4) Listing on TSE through the Establishment of a Japanese Company

Q. How is the setup of a company in Japan for the purpose of having its stock listed on
TSE treated?
A.
Please refer to New Listing Guidebook - 1st and 2nd sections, New Listing Guidebook
Mothers and New Listing Guidebook JASDAQ in cases where a Japanese entitys common
stock is listed on TSE. The New Listing Guidebook is available at:
http://www.jpx.co.jp/english/equities/listing-on-tse/new/guide/index.html
241
A. Forms of Documents, etc. to be Filed for Initial Listing Application (Foreign Stocks)
A. Forms of Documents, etc. to be Filed for Initial Listing Application

(Foreign Stocks)
(1) Confirmation Report prior to Initial Listing Application (for Applicant Company)
(Reference Transaction)
Confirmation Report prior to Initial Listing Application
(for Applicant Company)
Submitted: MM/DD/YYYY
To
President and CEO of Tokyo Stock Exchange, Inc.
Company name
Name and title of
representative
Name of
agent
Address and
contact details of
agent
Seal
(Note 1) Applied exchange rate: JPY XXX

(The middle rate between the telegraphic transfer selling rate and the telegraphic transfer buying
rate in Tokyo foreign exchange market as of MM/DD/YYYY)
(Note 2) In the case of an initial listing application for foreign stock depositary receipts (hereafter "DRs";
the same shall apply hereafter), please include matters concerning such DRs in a manner equivalent
to that of stocks.
[Matters for Attention]

The company shall agree to the following matters and state such fact at the beginning of each report.
1.
After submitting this report, in cases where there is a change or addition in facts of such statements or
where there arises a new fact, the company shall report it accordingly to Tokyo Stock Exchange
(hereafter "TSE").
2.
The company shall cooperate with TSE where it confirms the contents of this report.
242
3.
The company shall not object to the provision of this report to Japan Securities Depository Center, Inc.
(hereafter "JASDEC"), and the utilization of its contents from the perspective of facilitating smooth
handling of securities issued by the company at JASDEC.
4.
The company confirms that all matters stated in this report are true. Furthermore, where it is found that
any statement in this report is false, the company shall not object to any disposition made by TSE.
In addition, this report shall be written in Japanese.
I.
Summary of Applicant Company
1. Governing law for incorporation and related laws and regulations

(1) Governing laws for incorporation
(2) Describe major matters which are subject to special regulations by the abovementioned laws in
comparison with a general company in terms of major laws and regulations, administrative guidance, etc.
that regulate the operations, etc. of the applicant company
2. Details of securities issued by the company other than the initial listing application stock, etc.
Where the applicant company has issued securities whose rights differ from those of the initial listing
application stock, etc., state details of rights included in such securities.
3. Relationship with the government in the home country (*) (permission and authorization, and
contractual and transactional relationship, etc.)
Where the applicant company and its major affiliates have permission or authorization from the
government in the home country, or are under contract or have transactions with the government, state
details of such permission, authorization, contracts or transactions. State whether the applicant company has
any special contracts or transactional relationship with the government.
* In addition to the country of incorporation of the applicant company, please include countries where
major businesses operate in the home country.
4. Relationship with major shareholders (holding 10% of voting rights) (holding ratio, contractual
and transactional relationship, etc.)
Where the applicant company and its major affiliates are under contract or have transactions with a major
shareholder, state details of such contracts or transactions. State whether the applicant company is under
contract or has transactions with special conditions for each contract or transaction in comparison with those
with other third parties.
5. Relationship with officers (Shareholding ratio, contractual and transactional relationship, etc.)
Where the applicant company and its major affiliates have a contract or transactional relationship with an
officer(s) of the applicant company (including companies in which the officer(s) make equity contributions,
describe details of such contracts or transactions). If the applicant company is under contract or has
transactions with special conditions for each contract or transaction in comparison with those with other
third parties.
243
6. Financial results for the most recent five years

State the financial results in the most recent five years and the main factors behind changes
Year ended in Year ended in Year ended in Year ended in
Year ended
MMMM
MMMM
MMMM
MMMM
in MMMM
Sales
Operating income
Ordinary income
Extraordinary income
Extraordinary los
Net income before tax
Net in come
Total assets
Net assets
<Factors behind changes>
(Example) If changes are due to any of the following, describe a reason(s) for such changes
Where there was a large change from the previous year
Where performance shows a declining trend
Where there is an abnormal value due to a change(s) in accounting processing
Where there is the effect of a merger, or acquisition, etc.

(Note 1) If it is difficult to state results of 5 full years, results for less than five years are also allowed
(Note 2) Where financial documents include consolidated financial statements, state such consolidated figures.
Where financial documents do not include consolidated financial statements, state figures in financial
statements or combined financial statements.
7. Corporate reorganization
Where the applicant company has implemented or plans a major merger, transfer or acquisition of
business, making a company(s) its subsidiary, or disposition of a subsidiary(s) (hereafter collectively
"corporate reorganization"), state the purpose, specific method, and effect of the corporate reorganization.
8. Defense measures against hostile takeovers
Where the applicant company has introduced a takeover defense measure, or has plans to introduce or is
considering introducing such a measure, state the following matters.
(1) Date (or schedule) of introducing such measure
(2) Introduction procedure (including decision-making body)
(3) Outline
(i)
Details of scheme
(ii)
Trigger conditions and decision procedures (including decision-making body)
(iii) Conditions for non-implementation and decision procedures (including decision-making

body)
(iv)
Conditions for abolishing such measure and decision procedures
(4) Where, in the last three years, there has been a hostile takeover entity(s) and the takeover defense
measure was triggered, not implemented, or abolished, provide outlines of such cases. (Whether there
was a fact or rumor of a hostile takeover entity(s), attach a copy(s) of news articles related to such case)
(5) Legal system, etc. on hostile takeovers in the home country
244
9. Establishment of an agent and a person for handling information, or an entity responsible for
information handling
State the applicant company's possibility of appointing "the agent prescribed in Rule 426 of the Securities
Listing Regulations" and "the entity responsible for information handling prescribed in Rule 417" of the
same regulations (excluding cases where the main market of the listed shares or listed DRs issued by the
applicant company is not the TSE market), or a person for handling information (excluding cases where the
main market of the listed shares or listed DRs issued by the applicant company is not the TSE market.) for
appropriately issuing notices to TSE and conduct disclosure in Japan with regard to material facts.
(Note 1) Even though the material facts include "issuance, etc. of shares, "merger with other company(s), and
"cessation of business activity," the applicant company will be required to notify TSE of other matters
pursuant to Rule 407, etc. of the Securities Listing Regulations.
(Note 2) The agent prescribed in Rule 426 of the Securities Listing Regulations shall be appointed from among
the following persons:
Officers or employees of a listed company(s)
Officers or employees of a subsidiary or affiliate company(s)
Attorneys-at-law
(Note 3) The person for handling information shall be able to communicate with TSE in Japanese or English,
and, as a general rule, satisfy the following items.
Person handling disclosure of corporate information in the home country.
Person handling disclosure of corporate information to the financial instruments
exchange in the home country.
10. Management of corporate information
State internal rules and structure to prevent insider trading and whether or not there is an actual case(s) of
insider trading which violated laws and regulations in the home country, etc.
11. Development and management of accounting system
State issues that were pointed out by an auditor(s) with regard to developments and operations of the
accounting system during the one year period prior to the application date, as well as the applicant
company's response to such issues. (Such developments and operations include "development of and
compliance with the accounting regulation" and "development of and compliance with the internal control
system and internal audit system," and also include that of consolidated subsidiaries, etc.)
12. Disclosure of earnings report and quarterly earnings report (The following documents are
required to be disclosed in Japanese in Japan)
With respect to earnings reports and quarterly earnings reports, state how many days it will take to
conduct disclosure after the end of the fiscal year or quarterly period.
13. Other
State that there is no issue in terms of the public interest or social nature.
II. Other Matters to be Confirmed

1. Stock Company System
(1) Stock System
(i)
Restrictions on acquisition, transfer, and assignment of stocks as well as the governing laws
and regulations or provisions of the articles of incorporation, etc. pertaining to such
restrictions
a. Restrictions on domestic or overseas investors, the governing laws and regulations or provisions of
the articles of incorporation pertaining to such restrictions
245
b. Restrictions on foreign nominees and the governing laws and regulations, or provisions of the articles
of incorporation, etc. pertaining to such restrictions
c. Where there is a limit on the number of shares to be held, the method of understanding, identifying,
and proving the number of shares held by residents, and non-residents, etc. (including nominees)
whose share holdings are subject to restrictions
(ii)
Rights, procedures, and restrictions related to dividend
a. Dividend payment schedule

Item
Actual date, etc.
Announcement date
Date of resolution by the board of
directors (Date of resolution by general

shareholders meeting)
Record date
Dividend amount per share
Dividend payment date
Ex-dividend date at the foreign financial
instruments exchange, etc.

(Note) State for the most recent two years and the year of the application. Where there is no information for
such years, state the latest information in the most recent five years. In addition, where a method
other than record date (share provision date) is used to fix the shareholders who have right to
dividend, state such method, actual cases, and announcement dates.
b. Provisions of laws and regulations or the articles of incorporation, etc. for date of fixing shareholders
eligible for dividend
c. The name of the body which has the authority to determine dividend payment (for example, the board
directors in the case of interim dividends, or the general shareholders meeting in the case of year-end
dividends)
d. Venue of dividend payment, payment method (route), and payment currency
e. Restrictions related to dividend payment
f. Oversight regulations in the foreign exchange market, such as restrictions on remittance of dividends
to Japan and conversion into Japanese yen
(2) General shareholders meeting
(i)
Venue for the general shareholders meeting
(ii)
Date and time for exercising voting rights at the general shareholders meetings
Item
Actual date
Announcement date
directors
Record date
Date of the general shareholders meeting
(Note) State for the most recent two years and the year of the application. Where there is no information for
dividend, state such method, actual cases, and announcement dates.
(iii) Provisions of laws and regulation or the articles of incorporation, etc. pertaining to the date
of fixing shareholders who can exercise voting rights
246
(iv)
Restrictions on voting rights exercise by domestic and overseas investors, and the governing
laws for such restrictions
(v)
Restrictions on voting right exercise by proxy
(vi)
Possibility of a system of non-uniformed exercise of voting rights
(vii) Method of exercising voting rights (ballot, etc.)

(viii) Notice of general shareholders meeting (convocation notice), deadline for notifying
shareholders of documents and reference materials required for voting right exercise
(ix)
Possibility of creating Japanese translation of documents and reference materials required

for voting right exercise in order to allow beneficial shareholders in Japan sufficient time to
give proxy voting instructions
(3) Issuance of new shares

(i)
With respect to new share issuance, in addition to provisions of the company law in the home
country, matters uniquely stipulated in the articles of incorporation
(ii)
Possibility of sales of new shares, subscription warrants, subsidiary shares, etc. at venues
such as a foreign market in cases of granting or allotting such shares, etc.
(iii)
Oversight regulations on the foreign exchange market, such as restrictions on remittance of

proceeds from selling such shares, etc. to Japan and restrictions on conversion into Japanese
yen
(iv)
Stock split (including stock dividend and bonus issue): Fill out the following items as well as
resources (capital surplus, retained earnings, etc.) and difference of rights between new
shares and pre-split shares.
Item
Actual date, etc.
Announcement date

shareholders meeting
Record date
Split ratio (with or without change in face
value)
Date of delivery of new shares
Ex-right date at the foreign financial

(Note) State for the most recent two years and the year of application. Where there is no information for
dividend, state such method, actual cases, and announcement dates
247
(v)
Capital increase via allotment shares to shareholders (including rights offering): Fill out
the following items as well as whether or not there is a subscription rights market, trading
period, and difference of rights between new shares and pre-split shares.
Item
Actual date, etc.
Announcement Date

shareholders meeting)
Record date
Allotment ratio
Payment amount per share
Application period
Deadline for payment
Date of delivery of new shares
Ex-right date at the foreign financial

(Note 1) State for the most recent two years and the year of application. Where there is no information for
other than record date (share provision date) is used to fix shareholders who have right to dividend,
state such method, actual cases, and announcement dates.
(Note 2) Where there is no negotiability of subscription rights, state the governing provisions.
(vi)
Form of capital increase conducted in the most recent two years and the year of application,
schedule of the announcement until new share delivery, and procedures for payment
(including those for reinvesting dividend, granting of options for stock dividend, etc., but
excluding those stated in (iii) and (iv) above). Where there was no case during such period,
state the latest information in the most recent five years.
(vii) The name of the institution having authority over new share issuance and the announcement
method in the home country, etc.
2. Disclosure and notification
(1) State the possibility of notifying TSE by two weeks before for the deadline (record date), etc. for fixing
entities who can exercise shareholder rights or will receive new share allotment. (If it is difficult to
notify two weeks in advance, state the possibility of notifying TSE by the deadline for notification, etc.
required in the home country.)
(2) State where the applicant company has violated disclosure rules (laws and regulations in the home
country, etc. or rules and regulations of the exchange pertaining to corporate information disclosure.
3. Other matters that specially requested by TSE for confirmation in advance
III. Attached materials (if available, attach Japanese or English translation)

1. Company overview document (Documents which can understand an overview of the company such as,
Securities Report for Initial Listing Application (Part I), etc.): 1 copy
2. Notice to shareholders or announcement documents pertaining to general shareholders meetings in the
last two years (Notice of general shareholders meeting, etc.): 1 copy
248
3. Materials sent to shareholders about capital increase via allotment of shares to shareholders (including
rights offering) in the last two years (in cases where there is no such case during such two years, the last
among cases during the most recent five years (prospectus, etc.)): 1 copy
4. Annual reports sent to shareholders and holders of DRs during the most recent five years (for Mothers,
one year): 1 copy
5. Semi-annual reports and quarterly reports sent to shareholders and holders of foreign stock depositary
receipts during the most recent five years (for Mothers, one year): 1 copy
6. Securities reports, annual reports, semi-annual reports, quarterly reports, and extraordinary reports
submitted to the Prime Minister, etc. in the recent two years (for Mothers, one year): 1 copy
7. Securities registration statements (including amendment statements) submitted to the Prime Minister, etc.
in cases of public offering or secondary distribution of securities in the most recent two years (for
Mothers, one year): 1 copy
8. Press releases and newspaper announcements regarding the following items during the most recent year:
1 copy each
Announcement of financial results
Dividends
Stock splits
Capital increase via allotment of shares to shareholders (including rights offering)
Other material facts
DISCLAIMER: This translation may be used for reference purposes only. This English version is not an official translation of the
original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the
Japanese version shall prevail. This translation is subject to change without notice. Tokyo Stock Exchange, Inc., Japan Exchange
Group, Inc., Osaka Securities Exchange Co., Ltd., Tokyo Stock Exchange Regulation and/or their affiliates shall individually or
jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with
regard to this translation.
(July 16, 2014)
249
(2) Confirmation Report prior to Initial Listing Application (for Trading Participant Handling
Matters)
(Reference Translation)
Confirmation Report prior to Initial Listing Application
(for Trading Participant Handling Matters)
Submitted: MM/DD/YYYY
To
President and CEO of Tokyo Stock Exchange, Inc.
Name of trading
participant
handling matters
Name and title of
representative
Seal
Seal
(Note 1) Applied exchange rate: JPY----(The middle rate between the telegraphic transfer selling rate and telegraphic transfer buying rate in
the Tokyo foreign exchange market as of MM/DD/YYYY.)
(Note 2) In the case of an initial listing application for foreign stock depositary receipts (hereafter "DRs";
the same shall apply hereafter), please include matters concerning such DRs in a manner equivalent
to that of stocks.
[Matters for Attention]

The company shall agree to the following matters and state such fact at the beginning of each report.
1.
After submitting this report, in cases where there is a change or addition in facts of such statements or
where there arises a new fact, the company shall report it accordingly to Tokyo Stock Exchange
(hereafter "TSE").
2.
The company shall cooperate with TSE where it confirms the contents of this report.
3.
The company shall not object to the provision of this report to Japan Securities Depository Center, Inc.
(hereafter "JASDEC"), and the utilization of its contents from the perspective of facilitating smooth
handling of securities issued by the applicant company at JASDEC.
In addition, this report shall be written in Japanese.
250
(Point for Attention regarding Report)

When content of the governing law and regulations, articles of incorporation and etc., are described in
this report, please also describe the number or place of relevant provisions of governing law and regulations,
articles of incorporation and etc.
I. Matters concerning Stock Company System

1. Stock System
(1) Rights and Obligations of Shareholders
(i)
Rights of Shareholders
a. Single shareholder right (right to dividend, voting right, and residual claim, etc.)
b. Minority shareholder right (book inspection right, general shareholders meeting convocation right, etc.
(ii)
Obligations of shareholders
(2) Stock acquisition, transfer, and assignment

(i)
Procedures for stock acquisition, transfer, and assignment
(ii)
Restrictions on stock acquisition, transfer, and assignment
(3) Dividend
(i)
Dividend notice
(ii)
Method of fixing shareholders
(iii)
Restrictions related to dividend
(iv)
Deadline for notifying the financial instruments exchange, etc. in the home country, etc. (Not
required in cases where the company will only be listed on TSE or cases where any other
TSE-listed foreign company is listed on the financial instruments exchange, etc. in the same
home country as the company.)
2. Company Organization
(1) General Shareholders Meeting
(i)
Type of general shareholders meetings (annual, extraordinary, and class shareholders
meetings)
(ii)
Matters to be put forth, matters to be reported and quorum for each type of general
shareholders meetings
(iii) Method of fixing shareholders

(iv)
Procedure for convening general shareholders meetings (method of issuing notice to

shareholders and notice deadline) and deadline for notifying the financial instruments
exchange, etc. in the home country, etc.
(v)
Resolution method (types of resolutions, required number of voting rights for approval,
voting by proxy, and carte-blanche in proxy voting)
(2) Directors and Representative directors

(i)
Procedure for appointing and removing directors, their authorities, obligations, and
responsibilities
(ii)
Procedure for appointing and removing representative directors, their authorities, obligations,
and responsibilities
(3) Authorities, obligations, and responsibilities of the board of directors

251
(4) Auditors and Board of Auditors

(i)
Procedure for appointing and removing auditors, their authorities (duties), obligations, and
responsibilities
(ii)
Board of auditors' authorities (duties), obligations, and responsibilities
3. Procedures for Amending Articles of Incorporation

4. Issuance of New Shares
(1) Type and procedure of new share issuance and deadline for notifying the financial instruments exchange,
etc. in the home country, etc.
(i)
Issuance of shares via allotment to shareholders
(ii)
Issuance of shares via a stock split (Incorporation of reserves to capital, stock dividend, etc.)
(iii) Issuance of shares by public offering, private placement, and other methods
(iv)
Issuance of shares other than common shares
(2) Procedures for issuing subscription warrants, as well as methods for exercising such warrants and
assigning such warrants (If not available for assignment, such provisions)
5. Capital Reduction Method and Procedures
6. Procedures for Merger
7. Bankruptcy Legal System and Procedures
II. Disclosure System

1. Indirect Disclosure
(1) Statutory disclosure
(i)
Governing laws and regulations
(ii)
Type and content of documents, submission period (deadline), entity for submission, and
public inspection method
(2) Disclosure documents required by exchange (Not required in cases where the company will only be
listed on TSE)
(i)
Applied rules
(ii)
Type and content of documents, submission period (deadline), entity for submission, and
public inspection method
2. Direct Disclosure to Shareholders

(1) Statutory disclosure
(i)
Governing laws and regulations
(ii)
Type and content of documents, submission (public announcement) period (deadline),

entity for submission, and public inspection method
(2) Disclosure documents required by the exchange (Not required in cases where the company will only be
listed on TSE)
(i)
Applied rules
252
(ii)
Type and content of document (public announcement), submission (public announcement)

period (deadline), entity for submission, and public inspection method
3. Listing Supervision (Not required in cases where the company will only be listed on TSE)
(1) Procedures for trading halts and typical duration of a trading halt
(2) Delisting criteria and procedures
4. Penalties
Responsibility of, penalties on, and disciplinary actions against the related parties (officers of the issuer
company, accountants, attorneys-at-law, financial instruments business operators) in the case of a violation
of related laws and regulations or exchange rules, or other similar acts
III. Trading Supervision Rules and Systems (Not required in cases where the company will only be listed
on TSE)
1. Laws, Regulations, and Rules of the Exchange regarding Trading Supervision, and their Content
(1) Method for trade execution
(2) Daily price limits
(3) Procedures (schedule, etc.) for ex-rights (dividend, new share issuance) and applied provisions
2. Rules on Unfair Trading and Penalties
(1) Market manipulation
(2) Market stabilization
(3) Insider trading
(4) Tender offer
(5) Others
IV. Settlement System

1. Matters listed below regarding stock custody at the central depository or banks offering custody
services in the home country of the applicant company
(1) Method of exercising voting rights concerning shares in custody
(2) Dividend distribution method concerning shares in custody
(3) Form of holding shares (registered names of shares in custody, etc.) (In the case of dematerialized shares,
overview of registration system, etc.)
(4) Existence of causes which impede share deposit or withdrawal or rights acquisition such as delay of
rights transfer procedure in transfer of shares
2. Necessity of notification to or registration with the administrative authorities or the issuer
company in the case where a foreign nominee (JASDEC) puts shares in custody, or deposits to, or
withdraws from a local custodian or a bank.
253
V.
Tax Regime
1. Tax on dividend
(1) Tax regime in the home country of the applicant company (any taxes, tax classification, tax rate, etc.)
(limited to those pertaining to Japanese beneficiaries)
(2) Necessity of refund application procedure
(3) Deadline and method of refund application procedure
(4) Availability of procedure of batch refund application for beneficial shareholders by JASDEC
(5) Refund payment period
(6) Possibility of receiving dividends for which reduced tax rates are applied from the outset in accordance
with tax treaties, without refund application procedure
2. Other Taxes
(1) Where JASDEC deposits to or withdraws from the custodian of JASDEC, or transfers to a JASDEC
nominee, any taxes applicable to parties that deposit or withdraw shares.
(2) Any taxes on transactions at exchanges
(3) Existence of capital gain tax, etc. on proceeds from selling subscription warrants (limited to those
pertaining to Japanese beneficial shareholders)
VI. Other Matters Specially Requested by the Exchange for Confirmation in Advance
VII. Attached Documents
1. Act(s) under which the applicant company was established (in Japanese or English translation)
2. A set of documents required for refund application procedure (If applicable)
3. A copy of the checklist submitted to the Financial Services Agency regarding the accounting and audit
systems in the home country, etc. (If applicable)
DISCLAIMER: This translation may be used for reference purposes only. This English version is not an official translation of the
original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the
Japanese version shall prevail. This translation is subject to change without notice. Tokyo Stock Exchange, Inc., Japan Exchange
Group, Inc., Osaka Securities Exchange Co., Ltd., Tokyo Stock Exchange Regulation and/or their affiliates shall individually or
jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with
regard to this translation.
(July 16, 2014)
254
B. Tokyo Stock Exchange Listing by US Companies

(1) Overview of Disclosure Requirements for Primary Listing on Tokyo Stock Exchange by
US Companies
When a US company conducts a primary listing on Tokyo Stock Exchange (TSE), the domestic US
statutory disclosures are generally implemented in addition to domestic Japanese statutory
disclosures. Like domestic Japanese disclosure, the statutory disclosure requirements determined by
the US Securities and Exchange Commission (SEC) involve two types of disclosure: offering disclosure
when stocks are issued, and subsequent continuous disclosure.
a. Offering Disclosure
In a public offering in the US, the issuer must submit a registration statement to the SEC
before selling, buying or applying to do so (Section 5 of US Securities Act of 1933 (hereinafter,
Securities Act)). The contents of the registration statement are provided under Section 7 of
the Securities Act and schedule A. Specifically, the content of accounting information,
including financial documents, is determined by Regulation S-X, and the content of
non-accounting information, including the issuer, conditions on distribution and use of
proceeds, and the registrants securities information, is provided by Regulation S-K. In the
case of a primary listing, even though no issuance of securities within the US is planned, an
issuers registration statement is typically submitted based on the relevant US regulations on
such securities transactions prior to an IPO of foreign company stocks in Japan 29.
Regarding the registration statement, the forms of the statement are decided based
on the nature of the securities issuer. In the case of a US firm undertaking a primary
listing in Japan, a registration statement using Form S-1 is normally filed. Disclosure is
implemented by submitting Form S-1 and other disclosure documents, as well as their
attachments, through the EDGAR system.
b. Continuous Disclosure
An issuer that has submitted the registration statement in accordance with the
Securities Act must also submit annual, quarterly and extraordinary reports to the SEC in
compliance with the Securities Exchange Act of 1934 (hereinafter, the Exchange Act).
As with the registration statement, these disclosure documents and their attachments
are submitted through the EDGAR system for disclosure.
29
The SEC stipulates a safe harbor rule under Regulation S to the effect that the filing of a registration statement
to the SEC shall not be required when shares are offered or distributed outside the United States. However, while
non-US companies (foreign issuers) are comparatively easily qualified for an exemption from registration (Rule
903(b)(1) of the General Rules and Regulations promulgated under the Securities Act), US companies (domestic
issuers) are bound by strict qualification requirements (requirements for registration exemption application
when issuing equity-related securities (Rule 903(b)(3) of the General Rules and Regulations promulgated under
the Securities Act). Seemingly, the application of the safe harbor rule would be difficult due to the background
above.
255
(a) Annual Reports

i. Annual Reports
An issuer that has submitted a registration statement must submit an annual report
each business year using Form 10-K (Section 13 of the Exchange Act).
The annual report includes information on the issuer, financial documents for the
business year concerned and discussions and analysis by managers of the firms financial
state, business performance, etc. This information on the issuer consists of more or less
the same content as that included in the registration statement at the time of issuance.
Depending on the public float of the company submitting the annual report, and
whether continuous disclosure has been performed to date, submission may be
required 60, 75, or 90 days after the end of the business year. Since an annual securities
report in Japan comparable to the US annual report is required to be filed within six
months of the end of the business year (Article 24, Paragraph (1) of the Financial
Instruments and Exchange Act; and Article 3-4 of the Order for Enforcement of the
Financial Instruments and Exchange Act), preparation of the former is normally based on
the annual report submitted in the US.
ii. Internal Control Reports
An issuer that undertakes a commitment to continuous disclosure is required to
establish and maintain appropriate internal control systems relevant to financial
reporting. An internal control report must be submitted as part of the annual report 30.
Based on the Sarbanes-Oxley Act (hereinafter, SOX), the internal control report must
state the responsibility of the management for establishing and maintaining internal
control related to financial reporting and contain an assessment of the effectiveness of
internal controls, as well as a record showing that an accounting auditor has issued
certification of this evaluation. In addition, an accounting auditor who has issued an
audit report of an issuer is required to audit whether the management assessed the
effectiveness of internal controls in an appropriate manner or not.31
30
Since an audit control report is also required to be submitted together with an annual securities report in
Japan, there are cases in which an internal control report submitted within the US can be approved to be
filed in Japan instead of one produced domestically (Article 24-4-4, Paragraph (1) of the Financial
Instruments and Exchange Act; and Article 12 of the Cabinet Office Ordinance on Disclosure of Information,
etc.).
31
It is assumed that there would be a difference in timing between the United States and Japan with regards to
the time when the obligation to audit the internal control report arises. This is partly because Emerging Growth
Companies (issuer with net sales of $1 billion or less in the most recent accounting period) are not subject to the
audit of the internal control report for five years at the longest under the Jumpstart Our Business Startups (JOBS)
Act, and partly because each issuer is required to commence the audit of the internal control report from the
business year following the that of listing shares even in the cases where the relevant issuer does not fall under
the category of Emerging Growth Company or is not subject to the JOBS Act. In such cases, even if the obligation
to audit the internal control report does not arise in the United States, the audit is voluntarily conducted in
practice in consideration of the audit obligations defined in Japan.
256
(b) Quarterly Reports

An issuer that has submitted a registration statement must submit a quarterly report
every three months using Form 10-Q (Article 13 of the Exchange Act and Exchange Act
Rule 13a-13).
The quarterly report indicates the issuers current status. The deadline for
submission can be either 40 or 45 days after the end of the quarter depending, as with
the annual report, on the public float of the issuing company and whether it has
engaged in continuous disclosure. In Japan, companies that submit quarterly reports
must do so within 45 days of the end of the quarter (Article 24-4-7, Paragraph (1) of the
Financial Instruments and Exchange Act). In order to submit quarterly reports required
domestically in both the US and Japan, it is necessary to prepare for submission of the
domestic Japanese quarterly report in parallel with preparations for the domestic US
report. In practice, however, given the differences in content between quarterly reports
in the US and those in Japan, as well as the time required to translate financial and other
documents, a submission deadline extension request can be filed for the Japanese
quarterly report (Article 24-4-7, Paragraph (1) of the Financial Instruments and Exchange
Act; and Article 17-15-2, Paragraph (1) of the Cabinet Office Ordinance on Disclosure of
Corporate Information, etc.).
(c) Certification, etc.
Under SOX, an issuer that undertakes a commitment to continuous disclosure is
required to include written confirmation in its annual and quarterly reports on the
appropriateness of the financial reporting and other information on the issuers financial
status and business operations included in the documentation disclosed with the reports.
Together with the pertinent disclosed documentation, the issuer is also required to file a
written statement certified by a CEO and CFO. The CEO and CFO should certify that the
financial status and business performance are appropriately presented in the disclosed
documentation, and the CEO and CFO are responsible for the establishment and
maintenance of internal control systems.
(d) Extraordinary Reports
In the event that a matter of significant to the issuing company occurs, the issuer
who has submitted a registration statement must submit an extraordinary report on the
important matter using Form 8-K, in principle, within four days of its occurrence (Article
13 of the Exchange Act and Exchange Act Rule 13a-11). The 8-K is triggered by certain
significant events in which additional information emerges regarding changes to the
firms financial or operational status. Specifically, these events may include (i) entering
into or terminating a material definitive contract not made in the ordinary course of
business of the issuer, (ii) initiation of bankruptcy proceedings, (iii) completion of
acquisition or disposition of important assets, (iv) notice of delisting or failure to satisfy
listing rules or standard, (v) change of certified public accountants, (vi) change of
corporate control, and (vii) departure of directors or certain officers, etc. Some of these
257
items are similar to the domestic Japanese criteria requiring extraordinary reports.
Therefore, whenever an event occurs meriting an extraordinary report in either Japan or
the US, it is regarded as appropriate to confirm whether it will be necessary to submit an
extraordinary report in the other country as well.
(e) Regulation FD
Selective disclosure, by the issuer to a limited number of persons, of important
information regarding the issuer or the issuers securities is categorized under insider
trading and restricted under Regulation FD. These persons include brokers, dealers,
investment advisors, institutional investment managers, investment firms, and holders
of securities who can reasonably be expected to conduct transactions based on such
information. When disclosure to such persons is intentional, the relevant information
must be publicly disclosed simultaneously, and in cases where partial disclosure is
non-intentional, public disclosure must be accomplished promptly. Persons with a
fiduciary or confidentiality obligation to the issuer, however, are not obligated to
disclose the relevant information publicly. The method of disclosure is, in principle, in
accordance with Form 8-K.
(f) Procedures for submission of Earnings Reports, Form 10-K, Form 10-Q and Form 8-K
When an issuer listed on a stock exchange has determined the content of documents
for an accounting period, whether a business year, cumulative quarterly period,
consolidated fiscal year, or cumulative quarterly consolidated period, that issuer is
obligated to immediately disclose such content in the form of the earnings reports or
quarterly earnings reports prescribed by the exchange. In practice, disclosure in Japan of
earnings reports and quarterly earnings reports is executed at virtually the same time as
disclosure in the US using Forms 10-K and 10-Q. In addition, upon the disclosure in
Japan of earnings reports and quarterly earnings reports, notice of such disclosure and
its content are immediately disclosed in the US using Form 8-K.
258
(2) Securities Taxation System

a. Japanese Investors32 Investing in TSE Listed US Stocks
(a) Income Subject to Withholding Tax and Applicable Tax Rates

In general, a thirty percent (30%) withholding tax will be deducted from fixed income for a certain
period of time payable to non-resident foreigners in the US (*1), foreign partnerships and foreign
legal entities that are not related to the business in the US. However, withholding tax rates are
reduced as follows pursuant to the US-Japan Tax Treaty (Internal Revenue Code (Section 1441 and
1442 of the Internal Revenue Code); hereinafter, IRC).
Dividends
Interest
Holding, for not less than 12 months, not less

than half of dividends
10% or more but less than 50%
Other than the above
Interest received from financial institutions
Other
Tax-exempt
5%
10%
Tax-exempt
10%
*1. An expatriate in the US who is not a US citizen shall be deemed a resident of the US when
his/her length of stay exceeds 31 days and if the number of days determined by the following
formula exceeds 183 days.
Length of stay for the current year + Length of stay for the previous year 1/3 + Length of stay
for the year before last 1/6
(b) Application and Tax Payment Procedures

In the case where an employer that is subject to withholding income tax has unpaid taxes in
amounts of $2,000 or more as of the end of each quarter of a month, the employer shall be required
to pay the unpaid taxes within three (3) business days after the end of each quarter of a month. The
payment shall be made by electronic payment methods. A quarter of a month means each period
ending on 7th, 15th, 22th and the last day of each month. In addition, When the employer has
unpaid taxes in amounts of $200 or more but less than $2,000 as of the end of each month, it shall
pay the unpaid taxes within fifteen (15) days after month-end.
32
Japanese nationals.
259
b. US Investors 33 Investing in TSE Listed US Stocks

In general, investment in US companies listed on TSE shall be subject to the same taxation system for
investments in US companies listed on US securities markets, such as NYSE, NASDAQ and etc.
(a) Taxation on Individuals

Item
Taxation method
Dividends
Tiered tax structure (federal tax)

Three tiers: 0, 15 and 20% (*1)
+
Comprehensive taxation (State and local government tax) (*1)
[In the case of New York City]
State tax: 4.00 to 8.82%
City tax: 2.55 to 3.40% + Additional tax of 14% of the tax imposed
Capital gains from sale of

stocks or similar financial
instruments
Tiered tax structure (federal tax)

Three tiers: 0, 15 and 20% (*1)(*2)
+
Comprehensive taxation (State and local government taxes) (*1)(*2)
[In the case of New York City]
State tax: 4.00 to 8.82%
City tax: 2.55 to 3.40%+Additional tax of 14% of the tax imposed
*1. Taxable income is computed by adding the items in order of employment and similar income,
dividend income, and long-term capital gains. On that basis, the following tax rates are imposed
on dividend income and long-term capital gains: (i) 0% on the portion in the bracket up to
$36,250; (ii) 15% on the portion in the bracket above $36,250; (iii) 20% on the portion in the
bracket above $400,000 (in the case of single-person households). Note that state and local
government tax rates vary depending on the state or local government.
*2. In the case of holding for 12 months or less, the tax rate shall be 10-39.6% plus state and local
government taxes.
33
US citizens and resident aliens.

260
(b) Taxation on Business Entities

Item
Taxation method
Dividends
Dividends received from domestic corporations shall be included in

gross income. However, the tax deduction will be allowed up to the
following percentages, depending on the ownership: (i) 100% of the
amount of dividends received (ownership of 80% or more); 80% thereof
(ownership of 20% or more but less than 80%); and (iii) 70% thereof
(ownership of less than 20%) (Section 243 of the IRC). Similarly, the tax
credit for dividends will be allowed up to the following percentages,
depending on the ownership: (i) 70% of the taxable amount (ownership
of less than 20%); and (ii) 80% thereof (ownership of 20% or more).
Furthermore, with respect to dividends received from a foreign
corporation in which the relevant business entity holds 10% or more of
ownership, out of the amount included in dividends, the business entity
may deduct the amount of US business-related income calculated by
multiplying the applicable percentage above (Section 245 of the IRC).
Capital gains from sale of

stocks or similar financial
instruments
Capital gains shall be included in gross income and subject to taxation

(Section 61 (a) of the IRC).
This section is prepared on the basis of reliable information resources, but no guarantee is made
as to accuracy or completeness of the information.
This material is prepared based on laws and regulations that are being enforced or are to be
enforced as of the end of January 2013, and may be subject to change due to future tax reforms.
261
2016 New Listing Guidebook for Foreign Companies

Date of issue:
August 31, 2016
Revised edition: October 31, 2016

Publisher:
Tokyo Stock Exchange, Inc.

New Listings
IPO Center
2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo
103-8220 Japan
URL: http://www.jpx.co.jp/english/
Copyright Tokyo Stock Exchange, Inc. All rights reserved.
Contact
If you want to know about our system and rules for listing such as listing criteria, or if you are
wondering what you should do to prepare for listing, please feel free to contact us at IPO Center,
New Listings, Tokyo Stock Exchange, Inc.
Tokyo Stock Exchange, Inc.

New Listings
IPO Center
E-mail: ipo@jpx.co.jp
URL: http://www.jpx.co.jp/english/

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New Listing Guidebook

for Foreign Companies

2016 New Listing Guidebook for Foreign Companies

c. Documents to be Filed ............................................................................................................. 47

a. Accounting Standards ............................................................................................................ 114

Foreign Stock Depositary Receipt, etc., ............................................................................ 160

(3) Large Shareholding Reporting System ................................................................................ 240

1. Unique Benefits Foreign Companies May Gain by Listing on TSE

1. Unique Benefits Foreign Companies May Gain by Listing on TSE

1. Unique Benefits Foreign Companies May Gain by Listing on TSE

2. Attractive Features of the Japanese Capital Market

2. Attractive Features of the Japanese Capital Market

US$ = JPY 100

2. Attractive Features of the Japanese Capital Market

Source: World Bank, 2015

2. Attractive Features of the Japanese Capital Market

Number of Listed Companies of the Worlds Major Stock Exchanges

2. Attractive Features of the Japanese Capital Market

(3) High Liquidity

2. Attractive Features of the Japanese Capital Market

(4) Broad Market for Listed Companies

Source: WFE 2013 ANNUAL REPORT & STATISTICS

2. Attractive Features of the Japanese Capital Market

(5) Accessibility to Japanese Capital Markets for International Investors

Source: Tokyo Stock Exchange

Distribution % of market value owned by type of shareholder

Source: Tokyo Stock Exchange 2015 Shareownership Survey 3

Share of trading value by foreigners

Source: Tokyo Stock Exchange

Source: Tokyo Stock Exchange

2. Attractive Features of the Japanese Capital Market

(6) The Largest Institutional Investor in the World

2. Attractive Features of the Japanese Capital Market

(7) The Huge Pool of Financial Assets Held by Japanese Individuals

Source: The Bank of Japan

2. Attractive Features of the Japanese Capital Market

(8) Retail Investors' Investment Policy and Average Holding Period

Retail Investors' Investment Policy for Stocks

(9) Market with High Transparency and Reliability

3. TSE Market Structure and Market Concept

3. TSE Market Structure and Market Concept

(1) Selecting a Market Suitable for a Companys Growth Strategy

3. TSE Market Structure and Market Concept

TSE Market Structure

Note: As of June 30, 2016.

3. TSE Market Structure and Market Concept

(3) TOKYO PRO Market: Professional-Oriented Market

Overview of TOKYO PRO Market

3. TSE Market Structure and Market Concept

Overview of Listing Requirements

TOKYO PRO Market

Mothers and JASDAQ

Japanese and/or English

Japan GAAP, IFRS, US GAAP, Other standards

* please refer to section 10 (3) a to

approved by J-Adviser or accountant

Minimum shareholders, free

Criteria judged by J-Adviser

(J-Adviser to express intent before listing

Main market3 months

2 most recent fiscal years

Last fiscal year only

Professional investors and non-residents

Standard listing examination period for domestic companies