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New Listing Guidebook
2017 1st and 2nd sections
Tokyo Stock Exchange

Table of Contents
Table of Contents
Introduction ................................................................................................. 1
Legend: ....................................................................................................... 2
I About Listing .............................................................................................. 3
1. Benefits of Listing .............................................................................................. 3
(1) Smooth and Diversified Fundraising ························································ 3
(2) Enhance Corporate Value ···································································· 3
(3) Improve its Internal Management System and Enhance the Employees’
Motivation························································································ 3
2. Mechanism for Initial Listing................................................................................ 4
(1) Mechanism for Initial Listing ·································································· 4
(2) Composition of Market ········································································ 5
3. Parties Involved in Listing and Their Roles ........................................................... 7
(1) Securities Companies ········································································· 7
(2) Certified Public Accountants (Auditing Firms) (CPAs) ··································· 7
(3) Shareholder Services Agent ································································· 8
4. Steps to be Taken Before Listing ......................................................................... 9
(1) Before the Listing Application ······························································ 11
(2) Preliminary Review ·········································································· 13
(3) Listing Application ············································································ 16
(4) Listing Examination ·········································································· 18
(5) After TSE’s Listing Approval································································ 20
(6) Follow-ups after Listing ····································································· 21
II Formal Requirements (relating to Rule 205 of the Regulations) .................. 26
1. Number of Shareholders (Rule 205, Item 1 of the Regulations) ............................ 31
2. Tradable Shares (Rule 205, Item 2 of the Regulations) ........................................ 36
a. Number of Tradable Shares ································································ 36
b. Market Capitalization of Tradable Shares ··············································· 41
c. The Number of Tradable Shares as a Percentage of Total Shares of Listed
Stock ··························································································· 42
3. Market Capitalization (Rule 205, Item 3 of the Regulations) ................................. 47
4. Number of Consecutive Years of Conducting Business ........................................ 48
5. Amount of Net Assets (Rule 205, Item 5 of the Regulations)................................. 49
6. Amount of Profits and Market Capitalization (Rule 205, Item 6 of the Regulations) . 51
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7. False Statement or Adverse Opinion and Audit by a Listed Company Audit Firm (Rule
205, Item 7 and Item 7-2 of the Regulations) ...................................................... 57
(1) False Statement and Adverse Opinion, etc. ············································· 57
(2) Audit by a Listed Company Audit Firm ··················································· 62
8. Establishment of Shareholder Services Agent (Rule 205, Item 8 of the Regulations). 64
9. Share Unit and Classes of Stock (Rule 205, item 9 and Item 9-2 of the Regulations) 65
(1) Share Unit ····················································································· 65
(2) Classes of Stock·············································································· 67
10. Restrictions on Transfer of Shares (Rule 205, Item 10 of the Regulations) ............. 68
11. Handling at Designated Book-Entry Transfer Institution (Rule 205, Item 11 of the
Regulations) ................................................................................................... 69
12. Expected Implementation of Merger, etc. (Rule 205, item 12 of the Regulations) .... 70
13. Assignment of the Stock to the First Section at Initial Listing (Rule 210, Paragraph 1 of
the Regulations) .............................................................................................. 73
14. List of Share Prices Used for Initial Listing and Assignment to the First Section ...... 74
III Listing Examination (Relating to Rule 207 of the Regulations) ................... 77
1. Corporate Continuity and Profitability (Rule 207, Paragraph 1, Item 1 of the
Regulations) ................................................................................................... 81
2. Soundness of Corporate Management (Rule 207, Paragraph 1, Item 2 of the
Regulations) ................................................................................................... 89
3. Effectiveness of Corporate Governance and Internal Management System of an
Enterprise (Rule 207, Paragraph 1, Item 3 of the Regulations) ............................103
4. Fairness of Disclosures of Corporate Information, etc. (Rule 207, Paragraph 1, Item 4
of the Regulations) .........................................................................................117
5. Other Matters Deemed Necessary by the Exchange from the Viewpoint of the Public
Interest or the Protection of Investors (Rule 207, Paragraph 1, Item 5 of the Securities
Listing Regulation) ..........................................................................................126
IV Listing Examination Q&A ....................................................................... 165
1. Corporate Continuity and Profitability ..................................................................165
2. Soundness of Corporate Management ...............................................................170
3. Effectiveness of Corporate Governance and Internal Management System of an
Enterprise ......................................................................................................179
4. Appropriateness of Disclosure of Corporate Profile, Risk Information, etc. ..............187
5. Other Matters Deemed Necessary by the Exchange from the Viewpoint of the Public
Interest or the Protection of Investors ...............................................................190
V Receipt or Transfer of Stocks, etc. Before Listing and Allotment, etc. of Offered
Stocks Through Third Party Allotment ................................................... 192
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1. Receipt or Transfer of Shares, etc. before Listing ...............................................194

(1) Descriptions Concerning the Status of Changes in Shares before Listing ········ 194
(2) Retention, etc. of the Record of Changes in Ownership of Stocks, etc. Before
Listing ························································································· 195
2. Allotment of Offered Stocks by Third Party Allotment, etc. Before Listing ..............196
(1) Regulations on Allotment of Offered Stocks by Third-Party Allotment, etc. ······ 196
(2) Regulations on Allotment and Holding of Offered Subscription Warrants by
Third Party Allotment, etc. ································································· 206
(3) Regulations on Allotment and Holding of Subscription Warrants as Stock
Option ························································································· 209
(4) Descriptions of the Status of Offered Allotment of Shares, etc. by Third Party
Allotment ······················································································ 215
VI Public Offering or Secondary Offering before Listing................................ 217
Public Offering or Secondary Offering before Listing ................................................217
(1) Submission of Scheduled Plan for Public Offering or Secondary Offering ······· 217
(2) Procedures for Public Offering, etc. Before Listing ··································· 217
(3) Determination of Offering Price ··························································· 218
(4) Allocation Pertaining to Public Offering, etc. Before Listing ························· 220
(5) Submission of Notice of Execution of Public Offering or Secondary Offering,
etc. ····························································································· 221
(6) Other ·························································································· 222
VII Handling of Corporate Reorganization Event ......................................... 224
1. Merger ..........................................................................................................225
2. Becoming a Holding Company .........................................................................227
3. Stock Swap....................................................................................................229
4. Company Split-up, Receipt of Business.............................................................231
VIII Assignment to the First Section ............................................................ 234
1. Steps to be Taken Before Assignment to the First Section .....................................234
(1) Assignment to the 1st Section ···························································· 234
(2) Timing of Assignment to the 1st Section and the schedule thereof ················ 235
2. Criteria for Assignment to the 1st Section ............................................................241
e. Number of Shareholders ··································································· 243
f. Number of Tradable Shares ······························································· 244
g. Trading Volume ·············································································· 246
h. Market Capitalization ······································································· 248
i. Amount of Net Assets ······································································ 249
j. Amount of Profit or Market Capitalization ··············································· 251
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Table of Contents
k. False Statement or Adverse Opinion, etc. ·············································· 255

l. Share Unit ···················································································· 257
3. Details of Examination for Assignment to the 1st Section ......................................258
IX Alteration of Markets ............................................................................. 259
1. Steps to be Taken Before Alteration of Markets ..................................................259
(1) Alteration of Markets········································································ 259
(2) Timing of Alteration and Procedures ····················································· 260
2. Criteria for Alteration of Markets .......................................................................266
(1) Number of Shareholders ··································································· 273
(2) Tradable Shares ············································································· 274
(3) Trading Volume ·············································································· 277
(4) Market Capitalization ······································································· 279
(5) Number of Consecutive Years of Conducting a Business ··························· 280
(6) Amount of Net Assets ······································································ 281
(7) Amount of Profit or Market Capitalization ··············································· 283
(8) False Statement or Adverse opinion, etc. ··············································· 287
(9) Establishment of a Shareholder Services Agent ······································ 287
(10) Shares Unit ··················································································· 287
(11) Restriction on Transfer of Shares ························································ 287
(12) Handling by the Designated Book-Entry Transfer Institution ························ 288
(13) Expected Implementation of Merger, etc. ··············································· 288
3. Nature of Examination for Alteration of Markets .................................................289
X Listing Fees ........................................................................................... 290
1. Listing Examination Fees ..................................................................................290
2. Initial Listing Fees ............................................................................................291
3. Fees to be Paid by Listed Companies.................................................................293
(1) Annual Fees for Maintaining Listing ····················································· 293
(2) Fees for Issuance of New Shares, etc. after Listing ·································· 296
(3) Fees for Listing of Shares of New Stock ················································ 298
(4) Fees for Merger, etc. ······································································· 299
4. Fees for Assignment to the 1st Section and Alteration of Markets ..........................300
(1) Assignment to the 1st section····························································· 300
(2) Alteration to the 2nd or 1st section from Mothers ····································· 301
(3) Alteration to the 2nd or 1st section from JASDAQ ···································· 302
XI IPO Center (Support Given to Prospective Issuers) ................................. 303
1. Assistance Activities through Visits to Individual Companies and Consultation ......303
2. Seminars for Prospective Issuers .....................................................................303
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Table of Contents
3. Mail Magazine................................................................................................303
A Documents, etc. to be Filed for Initial Listing Application (Japanese Stocks)
.......................................................................................................... 305
List of Documents, etc. to be Filed for Initial Listing Application (Japanese Stocks)......305
(1) Documents, etc. to be Filed for Initial Listing Application (Japanese Stocks) ···· 305
(2) Securities Report for Initial Listing ······················································· 331
Guide to Completing the Securities Report for Initial Listing Application (Part II) ..........334
B Documents, etc. to be Filed for Assignment to the First Section Market
Application .......................................................................................... 403
List of Documents, etc. to be Filed for Assignment to the First Section Market Application
(Japanese Stocks) ..........................................................................................403
C Documents, etc. to be Filed for Alteration of Markets Application ............... 414
List of Documents, etc. to be Filed for Alteration of Markets Application (Japanese
Stocks) ..........................................................................................................414
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Introduction
Introduction
A company can benefit from listing of its stock on a stock market by gaining access to smooth and
diversified fundraising, enhanced credit quality and profile of companies, etc. On the other hand, the
listing of shares means that the company will be a choice of investments by a large number of
investors, including individual investors.
Thus Tokyo Stock Exchange, Inc. requires a company which applies for listing to meet certain
eligibility for listing of its stock (listing eligibility) from the perspective of investor protection, and will
implement the examination of listing application in accordance with the standards for listing
examination.
Any company considering listing its stock is required to fully understand the standards for listing
examination and to prepare itself for meeting criteria for listing by improving internal management
and control system before filing the listing application.
This booklet is issued in order to help any company considering the listing of its shares on the
market and other parties involved in the listing to fully understand the standards for listing
examination as it illustrates key points of standards for listing examination and procedures related to
the listing examination in a way that is very understandable. We strongly hope that this booklet will
be useful when you consider listing your shares on the market. If any regulations and rules are
revised after this booklet is issued, we will update the “New Listing Guidebook” with a comparison
table between the previous and revised regulations on our website
(http://www.jpx.co.jp/equities/listing-on-tse/new/guide/index.html).
August 2017
Tokyo Stock Exchange, Inc.
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Legend:
Legend:
TSE: Tokyo Stock Exchange

JPXR: Japan Exchange Regulation
Regulations: Securities Listing Regulations
Rules: Enforcement Rules for Securities Listing Regulations
Guidelines: Guidelines for Listing Examination, etc.
Copyright 2017, Tokyo Stock Exchange, Inc. (TSE). All rights reserved. The contents of this booklet
are protected under the Copyright Act. No reproduction, copy, transmission, modification or sales of
all or a part of the contents shall be permitted without prior written permission. Doing so is regarded
as the breach of the copyright retained by TSE. In addition, the contents may be modified or
abolished without any prior notice.
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I About Listing
I About Listing
1. Benefits of Listing
By listing on Tokyo Stock Exchange (TSE), your company can:
(1) Smooth and Diversified Fundraising
Once listed on TSE, your company will have access to direct finance by capital increase by
issuing shares at a market price through publicly offering stock or issuing subscription
warrants, corporate bonds with subscription warrants, etc. Our highly liquid market can bring
more efficient and diverse fund-raising capacity for your company to grow further.
(2) Enhance Corporate Value
Coverage by media, including market news of newspapers, will allow your company to
enhance its corporate and product reputation in Japan. The company will be able to retain
and attract excellent people as well.
(3) Improve its Internal Management System and Enhance the

Employees’ Motivation
Corporate disclosure will allow investors and other third parties to examine your company’s
corporate management. Therefore, your company has obligations to continue to improve
and strengthen its management system as well as its internal management. Becoming a
public company will also help boost the morale of the officers and employees of the
company.
Please keep in mind that since the shares of stocks issued by a listed company will be a
choice of investment by a large number of public investors, going public also involves taking
on new social responsibilities and duties for the purpose of protection of investors. It will be
required, among other things, to disclose earnings information and corporate profile in an
appropriate and timely manner.
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I About Listing
2. Mechanism for Initial Listing
(1) Mechanism for Initial Listing
Listing of stock is effected on the basis of application filed by a company issuing the stock
(hereinafter referred to as an “applicant”). When the stock is listed, it will be an investment
choice for a large number of general investors. Thus, TSE (Note) will examine whether an
applicant is eligible for listing on TSE from the perspective of investor protection. TSE has
developed and set forth various regulations and rules for initial listing. The listing
examination will be conducted by assessing whether the requirements in the regulations
and rules are satisfied. (“Securities Listing Regulations” and “Enforcement Rules for
Securities Listing Regulations,” etc.) by which the examination will be conducted. When the
examination results reveal that the applicant is eligible for listing, TSE will approve and
announce the listing of applicant, following which the stock will eventually be listed on TSE.
Various rules concerning initial listing comprise “Securities Listing Regulations,”

“Enforcement Rules for Securities Listing Regulations” and “Guidelines for Listing
Examinations, etc.” The standards for listing examination specified by various rules provide
for “Formal Requirements” which specify quantitative requirements for the number of
shareholders, amount of profit, etc. and standards for “Substantive Examination Standards”
which represent the qualitative criteria for assessing disclosure systems, corporate
governance practices and so on. Please refer to “II Formal Requirements” and “III Listing
Examination,” respectively, in this booklet.
As a result of listing examination, when an applicant is determined to meet the eligibility for
listing, TSE will approve and announce the listing of the applicant. Subsequently the
applicant will be listed through the process of public offering or secondary offering.
Note: Actual examination will be conducted by JPXR to which the role of examination is
delegated by TSE.
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I About Listing
(2) Composition of Market
TSE operates five markets of the First Section, Second Section, Mothers, JASDAQ and
TOKYO PRO Market.
1) First Section and Second Section
The First and Second Sections represent the main boards of TSE where leading large and
second tier Japanese and foreign companies are listed. Especially the First Section is
viewed as one of the top rank markets in terms of the size and liquidity, as foreign investors
account for a large portion of equity trading. The First and Second Sections are collectively
referred to as the “Main Markets.”
2) Mothers
Mothers offers a trading market for companies with growth potential which aim to be
reassigned to the First Section in near future. Thus TSE requires applicants to demonstrate
high growth potential. Whether an applicant has growth potential or not shall be assessed
and determined by lead underwriters on the basis of its business model or business
environment. As the objective of Mothers is to offer financing opportunities for many
companies with growth potential, Mothers has no restrictions on the size or business
category of applicants. After successfully listing their stock on Mothers, many have satisfied
the criteria for alteration to the First Section and listed their stock on the First Section.
3) JASDAQ
JASDAQ is a market characterized by the three concepts of (1) reliability, (2) innovativeness
and (3) region and internationalization. JASDAQ is split into the “Standard” market for
growth companies with a certain size and business performance and the “Growth” market
for companies with stronger future growth potential and unique technologies or business
models.
* Please refer to the “New Listing Guidebook Mothers” for listing on Mothers and the
“New Listing Guidebook JASDAQ” for listing on JASDAQ.
Furthermore, any company which successfully lists its stock can change its listed market
according to the stage of business development and growth after initial listing as follows.
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I About Listing
Assignment to the First Section or alteration thereto requires an application by a listed

company, which has to receive the re-examination of the application. The examination
thereof will be implemented in accordance with the examination procedures for the listing on
the main board of the TSE markets.
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I About Listing
3. Parties Involved in Listing and Their Roles
(1) Securities Companies
There are a number of tasks that need to be completed by a securities company before
listing. At the stage of preparation for listing, the securities company will provide advice to
the applicant on capital policy and internal systems and also carry out the examination of the
corporate profile of the applicant to determine whether the securities company can perform
the required listing procedures for listing and underwrite the public offering and secondary
offering (underwriting examination). When the securities company decides to underwrite the
public offering and secondary offering, it has to implement a series of tasks according to the
listing schedule. Even after the applicant successfully lists their shares on the market, it will
assist the applicant in various aspects, including raising secondary funds and investor
relation or IR activities.
The securities companies that assist the applicant in carrying out various tasks for listing
procedures are called an “underwriter” (If the securities company is a TSE’s member, it is
also called a “trading participant”). The main underwriter among them is called the “lead
underwriter (lead trading participant)”. A securities company which enters into a prime
contract for underwriting for public offering, etc. with the applicant is called the “prime
underwriter (prime trading participant).”
(2) Certified Public Accountants (Auditing Firms) (CPAs)
Certified public accountants (auditing firms) express their audit opinion on the applicant’s
financial statements to be submitted to TSE, in compliance with the Securities Listing
Regulations. They will also advise the applicant on its accounting practices and internal
management.
For the purpose of Securities Listing Regulations, the applicant is required to submit an
audit report on financial statements attached to “Securities Report for Initial Listing
Application (Part 1) “hereinafter referred to as “Part 1” documents) as prescribed in the
Financial Instruments and Exchange Act.
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I About Listing
(3) Shareholder Services Agent
A shareholder services agent is an entity which is required to be appointed in order to

implement smooth services related to shareholders. Their services include preparation of a
shareholders registry, and handling various rights granted to shareholders including voting
rights and dividend payments to shareholders. The applicant is required to outsource
services related to shareholders to a shareholder service agent or to receive preliminary
consent to the acceptance of services provided to shareholders from a shareholder service
agent by the date when the listing application is filed (please refer to section 8
“Establishment of Shareholder Services Agent” at II Formal Requirements.
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I About Listing
4. Steps to be Taken Before Listing
In general, the following steps will be taken before the successful listing of stock.
Note: Actual examination will be effected by Tokyo Stock Exchange Self-Regulatory
Corporation to which the role of examination is delegated by TSE (hereinafter referred
to as “JPXR”).
Model schedule from listing application entry to listing approval

<First part>
Month X One month after month X
Listing application, Receipt of “Part I” documents
1 Sun 1 Wed and “Part II” Documents
Interview, Schedule coordination
2 Mon 2 Thu
3 Tue 3 Fri
At seven business days interval
4 Wed 4 Sat
5 Thu 5 Sun
6 Fri 6 Mon
7 Sat 7 Tue
8 Sun 8 Wed
9 Mon 9 Thu
10 Tue 10 Fri
11 Wed 11 Sat
12 Thu 12 Sun
13 Fri 13 Mon First presentation of questions

14 Sat 14 Tue
15 Sun 15 Wed
16 Mon Holiday 16 Thu
17 Tue 17 Fri
18 Wed Listing application entry 18 Sat
19 Thu 19 Sun
20 Fri 20 Mon
21 Sat 21 Tue
Approximately two weeks
22 Sun 22 Wed
At three business days interval
23 Mon 23 Thu Receipt of answers to the first questions
24 Tue 24 Fri
Preliminary review related to

25 Wed listing application, 25 Sat
Schedule coordination
26 Thu 26 Sun
27 Fri 27 Mon
28 Sat 28 Tue
29 Sun 29 Wed First interview

30 Mon 30 Thu Second presentation of questions
31 Tue 31 Fri
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I About Listing
<Second part>
Two month after month X Three month after month X
1 Sat 1 Mon Receipt of answers to the third questions
2 Sun 2 Tue
3 Mon 3 Wed
4 Tue Physical inspection 4 Thu

5 Wed 5 Fri Third interview
6 Thu 6 Sat
At five business days interval

7 Fri 7 Sun
8 Sat 8 Mon Holiday
9 Sun 9 Tue
10 Mon 10 Wed
11 Tue Receipt of answers to the second questions 11 Thu
12 Wed 12 Fri
13 Thu 13 Sat
14 Fri 14 Sun
15 Sat 15 Mon
16 Sun 16 Tue Interview with CPAs
Meeting with president
17 Mon Holiday 17 Wed
Meeting with statutory auditors
18 Tue Second interview 18 Thu
19 Wed Third presentation of questions 19 Fri
20 Thu 20 Sat
21 Fri 21 Sun
22 Sat 22 Mon
23 Sun 23 Tue
24 Mon 24 Wed
25 Tue 25 Thu Presentation by president
26 Wed 26 Fri
27 Thu 27 Sat
28 Fri 28 Sun
29 Sat 29 Mon
30 Sun 30 Tue
31 Wed Listing approval
Note 1: For finance schedule after the approval of listing, please refer to “Model
schedule from the listing approval to listing” at the end of this chapter.
Note 2: Interview CPAs may be carried out during the first part of examination process
depending on nature and category of businesses of applicants.
Note 3: The Sponsor’s Letter of Recommendation (prepared by lead underwriter) shall
be submitted at least three business days prior to the listing approval.
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I About Listing
(1) Before the Listing Application
Having its stock listed on a stock market means that a company will be a choice of
investment by a large number of investors.
It is therefore important for an applicant to prepare itself for the prospective IPO by
strengthening its revenue base, and improving management system, etc. The applicant is
primarily responsible for this preparation process and implements the process with
necessary assistance and advice offered by the applicant’s lead underwriter and audit firms.
Meanwhile, the standards for the listing examination will be applied to the profit level for the
period for two years preceding application year (Note 1). Thus an audit made by certified
public accountants (auditing firms) will be required in accordance with the Financial
Instruments and Exchange Act. In case of a non-listed company, the period to which the
standards apply represents the period during which some restrictions are imposed on
offered shares, etc. allotted to third parties including the requirements for continuous holding,
effective from the end of the previous year (Note 2).
Should you have any questions regarding examination standards, eligibility, etc., please
contact New Listings of TSE or the Listing Examination Division of JPXR either directly or
via your lead underwriter before the listing application (Note 3).
When all the required preparation work is complete, the lead underwriter makes an entry for
the listing application at least two weeks prior to the listing application (for the purpose of the
entry, the lead underwriter sends e-mail to TSE with the “Listing Application Entry Sheet”
attached including the descriptions of the trade name of the applicant; contact of the lead
underwriter; expected listing schedule (listing application date, listing approval date, listing
date) and other necessary matters (Note 4).
Note 1: Rule 205, Item 6 of the Regulations (see “6 Amount of profit or market capitalization”
in “II Formal Requirements”)
Note 2: When the end of the previous year is March 31, 2017, the date will be April 1, 2016.
Note 3: TSE will express its view on your questions in consideration of facts and
circumstances disclosed to TSE at the time of consultation. Therefore, if any fact not
disclosed at the time of consultation emerges or changes in conditions of the
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I About Listing
applicant or environment surrounding the applicant, including any revision to the

criteria for listing, takes place subsequent to the consultation, some views derived
from the listing examination would likely be different from the views expressed by
TSE at the time of consultation.
Note 4: If TSE (i.e., New Listings of TSE or the Listing Examination Division of JPXR) is
concerned that some significant issues may take place in terms of substantive listing
examination criteria before the listing application, TSE believes that the applicant
must stand ready to clearly address these issues before the listing application.
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I About Listing
(2) Preliminary Review
When JPXR is satisfied with the explanations of the lead underwriter of matters related to (1)
appropriate instructions and advice on going public (2) no ties or relationship with any
anti-social or criminal organization, and (3) listing schedule, JPXR will accept the listing
application. The preliminary review takes place between the person in charge of the listing
application at the lead underwriter and the officials in charge of the examination at JPXR at
least one week prior to the acceptance of listing application.
1) Report on the Contents of Instructions on Going Public and Underwriting

Examination
Preliminary review focuses on the matters which the lead underwriter has specifically
considered during the process of instructions and advice on going public or underwriting
examination and matters it has confirmed in depth (including matters corrected or improved
during the preparation for going public). JPXR assesses these matters by the time of
listing application on the basis of the descriptions (draft permitted) included in the “Report
Related to the Contents of Instructions on Going Public and Underwriting Examination."
Practically the lead underwriter is requested at the preliminary review to discuss the matters
of special consideration in light of factors specific to the applicant such as lines and category
of business and the growth stage of the company and any other matters on which the lead
underwriter focused its considerations (e.g., design and implementation of significant
internal management system, adoption of special accounting treatments, existence of
material breach of laws and regulations, and characteristic risks associated with risks) on
the basis of the descriptions included in this report.
JPXR may request the lead underwriter to explain the reasons why it commenced its
instructions on going public and the timing thereof (the background why the lead underwriter
began contacting the applicant and its timing).
2) Ties with Anti-Social Forces
In evaluating any ties with any anti-social or criminal organizations, JPXR will review the
following points on the basis of “Draft of Sponsor’s Letter of Confirmation,” prepared by the
lead underwriter, and the “Draft of Declaration of No Association with Criminal
Organizations” prepared by the applicant to the effect that the applicant has no ties with any
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I About Listing
criminal organizations (attached separately).
a. Scope of related persons for whom the lead underwriter checked their personal
records and backgrounds and attributes (board members, executive officers,
corporate auditors, shareholders and trading partners); the contents if the lead
underwriter considered the background for founding the initial listing applicant and
its customers, suppliers and other trading partners, and industry and trading
conventions specific to the applicant; and
b. Contents and nature of investigations to ensure that the applicant has no ties with
any anti-social forces (including the contents of investigations of assessments of
any customers, suppliers and other trading partners with initial listing applicant, if
any)
3) Review of Listing Schedule
While the lead underwriter presents the listing and finance schedule of the applicant, JPXR
will propose the examination schedule with a period of three months from the listing
application to listing approval based on the proposed schedule.
By the time of listing application, JPXR will coordinate the examination schedule as
appropriate such that the schedule will not be irrational in consideration of the routine and
ordinary business of the applicant.
Note 1: The three month period is usually identified as the standardized period subject to the
examination. However, in consideration of size of the applicant group, seasonality of
its business or routine businesses, a response period which is different from the
standardized period may be determined or the number of interviews might be
adjusted. As a result of adjustment, the overall period for the examination may
change.
The examination period will be determined assuming that no issues to be
specifically addressed would arise during the examination. Thus, it might be
extended if any unexpected issue is found during the examination or new facts
concerning the applicant are discovered including news of other media such as
press or provision of information from external parties.
Note 2: For any applicants expected to significantly influence the market or investors, the
Listing Examination Division of JPXR will reach a conclusion on the listing after
making several rounds of discussions at the Board of Directors. For example, such
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I About Listing
applicants include:
- Privatized enterprise applicants;
- Applicants adopting any scheme requiring considerations in terms of corporate
governance such as the use of class stocks with voting rights;
- Re-listing applicant;
- Applicants concerned with compliance as a company of the applicant group or
those for which the management of the applicant committed a serious incident
or breached laws and regulations in the past;
- Other applicants requiring considerations for other issues; or
- Applicants with an expected market capitalization of 100 billion yen or more at
the time of listing.
For such applicants, a large number of issues must be discussed and assessed
during listing examination. Therefore TSE would request the applicants to allow for
one month or more in addition to the standard listing examination period.
Note 3: If the applicant has any matters to be coordinated with respect to the schedule
including the matters in Note 1 and Note 2 above, please consult JPXR beforehand
through the lead underwriter after consulting it.
Meanwhile, in case of preliminary review, the applicant is requested to submit the draft of
any pages in “Part II” documents responding to the questions made at the time of
acceptance of application before interviews at the time of listing application through the lead
underwriter will submit such draft.
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I About Listing
(3) Listing Application
Listing application can be classified into two categories: ordinary application and preliminary
application. The nature of examination is similar, but various procedures will differ between
ordinary application and preliminary application. The differences are as follows:
a. Ordinary Application
An ordinary application will be made after the completion of the general shareholders’
meeting for the previous year. Officers in charge of listing application and persons in charge
of contact of the applicant as well as officers of the lead underwriter in charge of listing
application will attend the meeting for the acceptance of listing application. At the time of
acceptance, JPXR will accept documents to be filed for the purpose of listing application and
examination officers will brief the applicant on the prospective listing examination and
overview of listing examination as well as practical procedures for examination (written
schedule and examination items will also be provided).
Then the applicant is requested to explain the reasons for listing application, lines of
businesses, business environment, and status of officers, directors and shareholders. Then
the examination officers will make additional questions with reference to the explanation.
Expected questions are as follows:
[Questions at the time of acceptance of application]
1) Reasons for listing application

► You are requested to explain the reasons for applying for listing in a precise manner
(including purposes and expected effect).
2) History and lines of business

► You are requested to explain the lines of business and business model in a precise
manner. In making explanation, you are encouraged to use presentation materials, IR
materials, catalogs and brochures to be used for presenting your products as
appropriate.
► You are requested to explain the reasons for establishment of current businesses, the
purposes of the businesses and an up to date history (how the business model has
been developed). In making explanation, you are encouraged to use IR materials, “Part
I” documents and “Part II” documents as appropriate.
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I About Listing
► With respect to major changes in business since establishment, you are encouraged to
use “Part II” documents to discuss events which have had a significant impact on the
business of your group in a precise manner.
3) Business environment
► You are encouraged to discuss the market size (if possible), recent developments in the
market (including market prices) and future prospectus.
► You are encouraged to discuss the characteristics of your company compared to peer
companies (if any).
4) Status of officers, directors and shareholders

► You are encouraged to use “Part II” documents to explain the status of incumbent
officers and directors with the outline of their careers and the reasons for their election.
► You are encouraged to use “Part I” and “Part II” documents to explain the background
and reasons for investments by large shareholders.
Expected date of listing application will be determined by consulting the lead underwriter in
advance.
b. Preliminary Application
Preliminary application practices represent an approach designed to mitigate adverse

aspects of listing application arising from the concentration of listing of stock. A preliminary
application can be filed during the three months preceding the end of application year. The
examination will be proceeded with on the basis of materials and documents required for the
preliminary examination (preliminary application form for listing of securities and drafts of
documents required for ordinary listing application). Then listing application will be newly
filed when the accounts are finalized for the previous year after the completion of the regular
general shareholders’ meeting (in case of any company listed or continuously traded on
another stock exchange, after the filing of the securities report).
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I About Listing
(4) Listing Examination
Actual listing examination will be implemented as follows:
a. Interviews
The examiners will gain deeper understanding of the corporate profile of the applicant and
assess whether the applicant meets the Listing Criteria on the basis of documents filed at
the time of listing application. At that time, if there are any issues which the examiners
cannot understand clearly or any matters about which the examiners wish to know more,
they will present questions and ask the applicant to prepare responses to them. Then they
will hold interviews with the applicant on the basis of such responses. Three rounds of
interviews will usually be made not including the one at the time of listing application. When
the third round of interviews completes, if there remain issues to be clarified, additional
interviews may be requested.
b. Field Inspection
In general the examiners visit the head office, plants and business offices to more
thoroughly understand the substance of the applicant and confirm the appropriateness of
accounting by checking accounting vouchers and books.
c. Attending e-learning courses

Directors and officers of a listed company are required to have insights on a wide variety of
matters on company management. Especially, they are requested to attend e-learning
courses to help them deepen their understanding of the issues to which they have to pay
close attention during the examination period for a listing application. They include the
duties and attitudes of mind entailed in listing, the need to develop and appropriately
operate a management system meeting all the requirements of a listed company, and
preventive measures against insider trading, communication of information and issuance of
trading recommendations.
d. Interviews with Certified Public Accountants (CPAs)

The examiners hold interviews with certified public accountants that carry out the audit of the
applicant with a primary focus on the background for entering into an engagement letter,
communications with management, corporate auditors and others, status of design and
implementation of internal management system, accounting and disclosure system, etc.
Though the interviews with the CPAs will, in general, be conducted at the final stage of
examination, they may be held at the initial stage of the examination depending on the
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I About Listing
industry and lines of business of the applicant.
e. Meeting with the President (CEO), the Company Auditors and the independent
director/auditor
For the purpose of meetings with the president (CEO), the examiners will visit the applicant
and meet the president (representative director, chief executives). During the interviews the
examiners will ask the following issues:
- The overview of the company and industry;
- What vision does the president as the management have on the operation and
management of the company;
- Measures to address investors (shareholders) when it becomes a listed company
(including IR activities); and
- Systems to disclose operating results and ensure control of internal information
During the interviews with company auditors, the examiners will, in principle, ask full time
company auditors of the status of audits they perform and any challenges faced by the
applicant.
In addition, during the interviews with independent director/auditor, the examiners will, in
principle, ask them of the following:
- Policies, present status and implementation conditions for the corporate governance
practices of the applicant;
- Status of development and improvement of environments for independent
director/auditor to execute their duties (provision of information, sufficient time to review,
etc.);
- How they assess the existence of transactions involving the management and check
and balance system over the transactions; and
- How they recognize the roles and functions, etc. expected of them after the listing.
In addition when the examiners find it necessary to have interviews with other officers on
any specific matter, they may have interviews with such other officers. If the applicant
appoints accounting advisors, the examiners may ask them of design and implementation of
accounting organization and their roles.
A six business day interval will be provided between the interview (final round) and the
meetings with the president and company auditors.
f. Presentation by the President
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I About Listing
JPXR will ask the president (representative directors, chief executives) to visit JPXR and
make a presentation of the company in terms of the characteristics, management policies
and business plans, etc. of the company. Then JPXR will decide to proceed with the final
determination of the listing based on the result of questions and answers session regarding
them. In addition, the executive officers of JPXR will ask some questions concerning the
presentation and explain the issues the applicant should consider and the requests to be
satisfied when it becomes a listed company. Since such considerations and requests also
relate to the matters concerning disclosure systems required of a listed company, any
“officer in charge of information management” (Note) is requested to be present together
with the president.
Note: A listed company is required to appoint an “officer in charge of information

management” of the applicant form directors, executives or persons who are deemed
equivalent thereto and register the officer with JPXR. The officer is required to respond
to inquiries made by JPXR and make necessary communications concerning the
matters related to disclosure of corporate information. In practice the officer will be
the JPXR contact for the communication with JPXR and will be responsible for the
internal management and discloser of corporate information.
f. Internal Discussions in JPXR

Following the completion of the presentation by the president, JPXR will make the final
decision on the listing and the listing examination process will substantially complete. After
JPXR completes its internal procedures for the approval of listing, JPXR will inform the
applicant of TSE’s approval and explain the subsequent procedures to be followed.
(5) After TSE’s Listing Approval
a. Announcements of the Approval of Listing

TSE will announce the approval of listing of the applicant via its homepage. If any public
offering or secondary offering is effected, listing will be realized approximately four weeks
thereafter. If no public offering or secondary offering is effected as it has already listed its
stock on another stock exchange, listing will be realized one week after announcement of
the listing.
In the meantime, listing approval may be cancelled if any requirement of standards for the
listing examination is not satisfied as public offering or secondary offering is discontinued.
b. Meetings with TSE’s Listing Department and Market Surveillance and Compliance
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I About Listing
Department of JPXR
Between the approval and the actual listing, the TSE Listing Department will meet the
company in order to introduce the TSE contact in charge of information management as well
as filing of disclosure package with TSE after listing, together with various procedures in
terms of timely disclosures and earnings announcement.
In order to prevent any insider trading, Market Surveillance and Compliance Department of
JPXR will explain the regulations on prevention of insider trading.
c. Public Offering and Secondary Offering

JPXR will assess whether the company meets criteria for liquidity (the number of
shareholders, criteria for shares traded on the secondary market, the number of shares
publicly offered and market capitalization) through the public offering and secondary offering.
In addition, JPXR ensures that for a company before listing, public offering, or public offering
and secondary offering have been carried out according to various rules set forth for public
offering and secondary offering, etc.
d. Listing
The Listing Contract entered into by and between the company and TSE requires the
company to comply with various rules set forth for timely disclosure, etc. effective from the
listing date. On the listing date, the recent financial information, etc. will be disclosed
through the TDnet as the “Earnings Release” (including the contents of future forecast
information (information related to the forecast for company’s future performance results
and financial position; the same shall apply hereinafter) if it is disclosed). A listing ceremony
will be held where TSE will present the company a memorial token of listing.
(6) Follow-ups after Listing
Given that a newly listed company is required to continuously carry out appropriate business
activities after listing, TSE will continue to follow up the business activities of the listed
company for approximately one year after listing. Such follow-ups will mainly focus on the
matters identified by TSE during the process of listing examination.
In practice TSE will continuously follow up material business activities after listing and the
status of matters requested by JPXR to be addressed during the process of listing
examination on the basis of timely disclosures. If necessary and appropriate, TSE will make
inquiries and interviews with the listed company and the lead underwriter.
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I About Listing
As a result of the follow-ups, if TSE detects any inappropriate business activities after listing
or the some issues identified to be corrected in the listing examination remain uncorrected,
TSE will require improvements and corrections of such matters. In response to such
requirements, the listed company should provide a written response outlining the
prospective corrective measures.
Items to be monitored after listing may include:
[Material business activities after listing (examples)]

- Resignation of chief executive officer (such as president)
- Corporate reorganization through mergers and other transactions (stock swap, share
transfer, merger and split-up)
- Material business partnership or its termination
- Changes in the parent company, changes in controlling shareholders (excluding the
parent company) or changes in other related companies
[Issues detected during the examination process, to be addressed by the listed company
(examples)]
- Appropriate operation of internal management system improved during the period
subject to the examination
- Gradual decrease and elimination of transactions with related parties, which should
eventually be eliminated
[Timely disclosures after listing (examples)]

- Revision of future prospective information including earnings forecast
- Modifications and/or reviews of business plan and mid-term management plan
presented at the listing examination
Listed companies are encouraged to review and update the contents of the securities report,
as appropriate, after listing in consideration of external and internal environments
surrounding them.
As a part of TSE’s follow-ups after listing, it will ensure that listed companies have
appropriately reviewed and updated the securities reports filed after listing, especially the
section “Risks, etc. associated with business” in consideration of their specific conditions
and environments.
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I About Listing
[Model Schedule form the Listing Approval to the Listing]

Note: The below is given only for reference. Actual financing schedule (pre-marketing period
or book building period, timing of the board meeting on the terms and conditions or the
filing of Securities Registration Report) may differ from one applicant to another.
(1) New Listing with Public Offering and Secondary Offering (Non-Listed Companies)
Month Y One month after month Y
1 Sun 1 Wed
Listing approval, resolution at the Board of
Subscription period
(4 business days)
Directors to issue new shares, filing of
2 Mon Securities Registration Statement (filing with 2 Thu
the Financial Services Agency by the
applicant)
3 Tue 3 Fri
4 Wed 4 Sat
5 Thu 5 Sun
Payment date and date when new shares

6 Fri 6 Mon
Pre-marketing period
take effect
(9 business days)
7 Sat 7 Tue Listing date

8 Sun 8 Wed
9 Mon 9 Thu
15 days or over
10 Tue 10 Fri
11 Wed 11 Sat
12 Thu 12 Sun
13 Fri 13 Mon
14 Sat 14 Tue
15 Sun 15 Wed
Meeting of the Board of Directors to

determine provisional terms and conditions
17 Tue 17 Fri
(payment amounts for the purpose of the
Companies Act)
Filing of (Primary) Amended Registration
18 Wed Statement (filing with the Financial Services 18 Sat
Agency by the applicant)
19 Thu 19 Sun
Book building period
20 Fri 20 Mon
(5 business days)
21 Sat 21 Tue
22 Sun 22 Wed
23 Mon 23 Thu
24 Tue 24 Fri
25 Wed 25 Sat
Determination of issue prices and

26 Thu 26 Sun
underwriting prices
Filing of (Secondary) Amended Registration
27 Fri Statement (filing with the Financial Services 27 Mon
Agency by the applicant)
28 Sat 28 Tue
29 Sun 29 Wed
Date when the registration statements take

30 Mon 30 Thu
effect
31 Tue 31 Fri
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(2) New Listing with Public Offering and Secondary Offering (Listed Companies)
Month Y
1 Sun
Listing approval, resolution at the Board of
Directors to issue new shares, filing of
2 Mon Securities Registration Statement (filing with
the Financial Services Agency by the
applicant)
3 Tue
4 Wed
5 Thu
6 Fri
Book building period
7 Sat
(9 business days)
8 Sun
9 Mon
15 days or over
10 Tue
11 Wed
12 Thu
13 Fri
14 Sat
15 Sun
16 Mon Holiday
Meeting of the Board of Directors to
determine issue prices and underwriting
prices (payment amounts for the purpose of
17 Tue the Companies Act)
Filing of Amended Registration Statement
(filing with the Financial Services Agency by
the applicant)
18 Wed
Date when the registration statements take
19 Thu
effect
Subscription period
20 Fri
(4 business days)
21 Sat
22 Sun
23 Mon
24 Tue
25 Wed
Payment date and date when new shares
26 Thu
take effect
27 Fri Listing date
28 Sat
29 Sun
30 Mon
31 Tue
Note: For a company which satisfies the eligibility criteria for reference approach, the period
between the filing of Securities Registration Statement and the date when it takes
effect will be 7 days (the number of days may be extended to 30 days as appropriate).
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(3) New Listing without Public Offering and Secondary Offering (Listed Companies)
Month Y
1 Sun
2 Mon Listing approval
3 Tue
4 Wed
( 1 week)
5 Thu
6 Fri
7 Sat
8 Sun
9 Mon Listing date

10 Tue
11 Wed
12 Thu
13 Fri
14 Sat
15 Sun
16 Mon Holiday
17 Tue
18 Wed
19 Thu
20 Fri
21 Sat
22 Sun
23 Mon
24 Tue
25 Wed
26 Thu
27 Fri
28 Sat
29 Sun
30 Mon
31 Tue
Note: In case of current listed companies, approximately 1 week will be needed for the
purpose of dissemination of listing.
When a non-listed company lists its stock without effecting any public offering or
secondary offering, about one month after listing will be required for the purpose of
participating in electronic book-entry transfer systems.
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II Formal Requirements (relating to Rule 205 of the Regulations)
II Formal Requirements (relating to Rule 205 of

the Regulations)
With respect to formal requirements for the purpose of listing application, it is essential that
an applicant meet the requirements of Rule 205 of the Securities Listing Regulations and
should not meet any criteria for non-acceptance of listing application as prescribed in
various rules set forth by TSE for public offering and secondary offering before listing (see
“V Receipt or Transfer of Stocks, etc. Before Listing and Allotment, etc. of Offered Stocks
Through Third Party Allotment” and “VI Public Offering or Secondary Offering before
Listing).
This section focuses on the requirements of Rule 205 of the Securities Listing Regulations
(hereinafter referred to as the “formal requirements”).
JPXR will assess whether an applicant complies with formal requirements on the basis of
materials submitted by the applicant at the time of listing application.
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List of Formal Requirements
Item Requirement
(1) Number of
shareholders
800 or more
(by the time of
listing)
a. The number of tradable shares: 4,000 units or more

(2) Number of tradable b. The market capitalization of the tradable shares: ¥1,000
shares million or more
(by the time of c. The number of tradable shares (as a percentage of the total
listing) number of issued shares outstanding): 30% or more of the
listed stocks, etc..
(3) Market
capitalization
¥2,000 million or more
(by the time of
listing)
The business activities have been continuously carried out by
(4) Number of
setting up a board of directors since a day before the day which is
consecutive years
three (3) years prior to the end of a business year immediately
of conducting
prior to the business year containing the initial listing application
business
day;
(5) Amount of net
assets ¥1,000 million or more
(by the time of (net assets on a separate basis should not be negative)
listing)
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(6) Amount of profit

and market
capitalization
(Profits represent a. The total amount of profits in the recent two years shall be at
ordinary income on a least ¥ 500 million or more;
consolidated basis
while the market b. Sales for the last year is expected to reach at least ¥10,000
capitalization million and the market capitalization is expected to reach at
represents the value least ¥50,000 million
expected at the
time of listing)
a. No false statement is made in the securities reports, etc. for

each of business years which ended during the last two years
b. The audit report attached to financial statements, etc. for each

business year which ended in the last two (2) years contains
(7) False statement or an "unqualified opinion" or a "qualified opinion with exceptions"
adverse opinion, of certified public accountants, etc.
etc. and audit by a
listed company c. The audit report attached to financial statements, etc. for the
audit firm business year which ended in the last year contain an
"unqualified opinion", in principle.
(a. through d. must
be satisfied) d. Where a stock, etc. pertaining to an initial listing applicant is
listed on any other financial instruments exchange in Japan,
such stock, etc. shall not meet either of (a) and (b) below:
(a) The internal management report pertaining to the business
year ending in the last year contains the fact that "appraisal
results cannot be provided" contained in; and
(b) The internal management audit report regarding the internal
management report pertaining to a business year ending in the
last year contains the fact that "no opinion is provided".
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The financial statements, etc. for each business year or

consolidated accounting year ending in the last two (2) years as
well as the quarterly financial statements, etc. for a quarterly
accounting period in the business year or for a quarterly
consolidated accounting period in the consolidated accounting
year ending in the last year have undergone audit or quarterly
review equivalent to that in the provisions of Article 193-2 of the
Act by a listed company audit firm (including audit firms registered
in the list of associate registered audit firms based on the
Registration System for Listed Company Audit Firms of The
Japanese Institute of Certified Public Accountants (limited to those
which have undergone quality control reviews by The Japanese
Institute of Certified Public Accountants)) (excluding those deemed
inappropriate by the Exchange).
Shareholder services have been entrusted to an institution
(8) Establishment of a specified by the Enforcement Rules as the applicant’s shareholder
shareholder services agent, or an informal consent of assurance the
services agent entrustment of such shareholder services from the shareholder
services agent has been received. assurance
The Share Unit shall be expected to be 100 shares at the time of
listing
Stocks, etc. pertaining to a listing application shall meet any one of

a. to c. below:
a. In the case of a company issuing one class of stock with voting
rights, said stock with voting rights;
(9) Share unit and
b. In the case of a company issuing multiple classes of stock with
classes of stock
voting rights, a class of stock with voting rights whose value of
rights, etc. to receive economic benefits including claim for
surplus dividend pertaining to the number of shares that
enables exercise of one voting right at a general shareholders
meeting with regard to important matters including selection
and dismissal of board members is higher than any other class
of stock;
c. Stock with no voting rights
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Transfer of shares pertaining to an initial listing application is not

(10) Restriction on
restricted or it is expected that there will be no restriction by the
transfer of shares
time of listing.
(11) Handling by the

The relevant issue is subject to the book-entry transfer operation of
designated
the designated book-entry transfer institution, or is likely to be so
book-entry transfer
by the time of listing
institution
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
years from the end of the most recent business year before
such day and, in addition, where TSE deems that an initial
(12) Expected listing applicant will cease to be a substantial surviving
implementation of company by such an act.
merger, etc. 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).
The following elaborates on the requirements of each item under the formal requirements.
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1. Number of Shareholders (Rule 205, Item 1 of the
Regulations)
The number of shareholders (this represents the number of persons holding a share unit or
more; the same shall apply hereinafter) is expected to reach at least 800 by the time of
listing (Note 1, 2).
The criterion for the number of shareholders is designed to require that the ownership of
shares of an applicant is diversified.
For the purpose of this criterion, the number of shareholders is determined on the basis of
the number of shareholders as of the last record date (Note 3). The objective of this criterion
is to ensure smooth distribution and fair price formation of stocks after listing. If this criterion
is not met as of the last record date, the satisfaction thereof by the time of listing will suffice.
Note 1: Where an applicant adopts the number of shares per Share Unit, one unit means the
number of shares, and if the applicant does not adopt any number, one unit refers to
one share.
Note 2: If the applicant issues any depository receipts (DRs) denoting rights, etc. attached to
stock certificates and other similar instruments, the number of persons who hold
DRs denoting rights equivalent to those attached to stock certificates comprising
one trading unit or more can be included in counting the number of shareholders.
Note 3: “Record date” means the record date prescribed by the Company Act of Japan or
Act on Preferred Equity Contribution of Japan and the base date when the
convocation notice of the general shareholders’ meeting is issued by a book-entry
transfer institution prescribed by Rule 2, Paragraph 2 of the Act on Book-Entry
Transfer of Corporate Bonds, Shares, etc. (hereinafter referred to as the
“Book-Entry Transfer Act”) pursuant to Article 151, Paragraph 1 or Paragraph 8 of
the same Act (including cases where Article 235 of the same Act applies mutatis
mutandis).
Note 4: Unless the applicant accurately understands the latest status of shareholders as of
-31-
the record date, etc., the number of shareholders may be determined based on the
number of shareholders as of the immediately preceding record date when the
status of shareholders was fully understood.
In addition, if the applicant purchases its own stocks according to the resolution authorizing
the acquisition of own stocks or the applicant resolves at its board meeting to authorize the
disposal of its treasury shares owned by the applicant, the number of shareholders is
determined as follows:
1) Applicant Purchases its Own Stocks
The number of shareholders which reduces as a result of purchase of own stocks shall be
reduced from the number of shareholders as of the most recent record date. The number of
shareholders to be reduced is determined as follows:
<An applicant is a non-listed company>
The number of sellers pertaining to the resolution authorizing acquisition of own stocks
(excluding sellers who are certain not to sell any of their holding stocks, etc. in response to
the offer of said purchase).
<An applicant is a listed company>
The number of shareholders to be reduced is basically determined assuming that the

number of stocks held by a shareholder who holds the smallest number is reduced first.
This is typically carried out as follows.
- The number of shareholders to be reduced is determined by dividing the number of

purchased own stocks by the average number of shares held per person classified into
the smallest trading unit category as per the table which shows the number of
shareholders for respective trading units.
- However, in cases where the number of own stocks purchased equals or exceeds the
number of shares held by the shareholders classified into the smallest trading unit
category, add the number of shareholders classified into the next smallest trading unit
category and repeat the same until the total of shares held by them exceeds the number
of treasury shares bought back, then count the number of shareholders up to the
categories just before the one exceeding the number of treasury shares bought back (a).
-32-
Next determine the number of shareholders obtained by dividing the number of shares
derived by deducting the number of in (a) from the number of treasury shares bought
back, by the average number of shares held per shareholder in the category exceeding
the number of treasury shares bought back (b). The number of shareholders to be
reduced will be the total of numbers of the shareholders in (a) and (b)
- When the number of selling shareholders can be confirmed on the basis of TOB report,
the number of shareholders reduced by such TOB transactions.
-33-
Examples: Cases where the numbers of shareholders classified into respective categories
of trading units are as follows:
Shares comprising over one trading unit

Shares
Over Over Over Over Over Over Over
comprising
1,000 500 100 50 10 5 one
less than
Sections trading trading trading trading trading trading trading
Total one
units units units units units units unit
trading
or or or or or or or
unit
more more more more more more more
Number of 7
3 35 43 86 63 3,164 3,401
shareholders people
Number of Units
shares held 24,055 1,847 7,837 2,762 1,760 388 3,862 42,511 399
Example 1: Where the number of treasury shares acquired is equivalent to the number of
shares comprising 2,000 trading units:
The number of shareholders to be reduced through the acquisition of treasury shares
=2,000 units÷(3,862 units÷3,164 people)
=1,638.5 people
⇒1,639 people (rounded up)
Example 2: Where the number of treasury shares acquired is equivalent to the number of
shares comprising 4,500 trading units
=3,164 people + 63 people + {(4,500 units - 3,862 units - 388 units)÷(1,760 units÷86
people)}
=3,227 people + {250 units÷(1,760 units÷86 people)}
=3,227 people + 12.2 people
⇒3,240 people (rounded up)
As indicated above, on the basis of the criterion for the number of shareholders, the number
of shareholders which is theoretically reduced is treated as the “number of shareholders to
be reduced through the acquisition of treasury shares”, if the applicant acquires treasury
shares after the latest record date.
-34-
2) An Applicant Makes a Resolution Authorizing Disposal, etc. of Treasury

Stocks held
In cases where a resolution authorizing disposal, etc. of treasury stocks held relates to the
transfer to specified entities, the number of such persons shall be added to the number of
shareholders as of the record date as if they held the treasury stocks.
(Reference) Formula for determining the number of shareholders
Total number of shareholders holding shares comprising one trading unit or more
- ) the number of shareholders to be reduced when shares of treasury stock are acquired
based on a resolution to acquire shares of treasury stock
+) the number of shareholders expected to increase when the resolution is made that the
shares acquired will be transferred to specified entities
The number of shareholders
-35-
2. Tradable Shares (Rule 205, Item 2 of the Regulations)
Tradable shares represent securities excluding stocks held by large shareholders or officers,
etc. and treasury stocks held by the applicant, whose holding is almost fixed and unlikely to
be publicly traded, from securities for which a listing application is filed.
The objective of this criterion is to ensure the number of tradable shares at a certain level
and limit to a certain level or below the number of listed shares unlikely to be publicly traded
as their holding is almost fixed.
Consistent with the criterion for the number of shareholders, for the purpose of this criterion,
the number of tradable shares will be, in principle, determined on the basis of the number as
of the immediately preceding record date (details below).
The objective of this criterion is also to ensure smooth distribution and fair price formation of
stock certificates after listing. Even if this criterion is not met as of the immediately preceding
record date, the satisfaction thereof by the time of listing will suffice.
In practice, the applicant is required to meet the requirements from (1) to (3) below:
Note: A domestic company that is listed or will list on a foreign financial instruments
exchange would be accepted if it meets any one of the formal requirements of the
market capitalization of tradable shares and the number of tradable shares as a
percentage of total shares of listed stock. For a foreign company that is listed or will
list on a foreign financial instruments exchange, the formal requirements will be
handled in a similar manner. To prevent abuse of these provisions, the applicant shall
be checked, through the substantive examination, on whether it has or is sufficiently
likely to secure adequate liquidity in the foreign financial exchange.
a. Number of Tradable Shares
The number of tradable shares is expected to reach at least 4,000 share units by the time of
listing.
► Calculation of the number of tradable shares
-36-
The number of tradable shares is determined as the difference between the total number of
shares outstanding of the applicant as of the last record date and the aggregated number of
shares certificates which are not traded actively.
Note: If an applicant has resolved at its Board of Directors to authorize the cancellation of
treasury stocks held, the number of stocks would be deducted from the number of
stocks for which the listing application is filed as they were cancelled even though
they are not cancelled as of the record date.
<Number of shares certificates which are not actively traded>
The applicant aggregates the numbers of stocks which JPXR determines are not traded
actively. In practice, the numbers of stocks held by the persons mentioned below will be
aggregated. Meanwhile, the numbers of stocks held by the same persons should not be
counted twice (Note 1).
- Applicant (shares of treasury stock owned by the applicant) (Notes 2, 3, 4 and 5)

- Officers of the applicant (the Board of Directors, accounting advisors ((including
employees of an accounting advisor who are in charge of accounting advice if the
accounting advisor is a corporation), company auditors, and executive officers (including
governor, auditor, and a person who can be regarded as equivalent thereto), including
the share ownership plan of directors and officers)company auditor
- Spouse and relatives by blood within the second degree of kinship of an officer of the
applicant
- Company for which spouses and relatives by blood within the second degree of kinship
of officers of the applicant hold the majority of voting rights held by all the shareholders
- Related companies of the applicant (related companies defined in Rule 8, Paragraph 8
of the Regulations on Terminology, Forms and Methods of Preparation of Financial
Statements (hereinafter referred to as the “Financial Statements Regulations”)
- Shareholders or associations holding 10% or more of the number of securities (Note 6)
Note 1: Suppose that President A is an officer of the applicant who holds 20% of shares
eligible for listing application. When the number of shares held by A is added to “the
number of shares held by officers of the applicant,” it will not be added to the number
of shares held by “shareholders or associations holding 10% or more of the number
of securities.”]
-37-
Note 2: The treasury shares to be excluded from the tradable shares represent the treasury
shares currently held by the applicant. Even if resolutions to acquire treasury shares
(resolutions prescribed in Article 156, Paragraph 1 of the Companies Act concerning
the acquisition of treasury shares (including cases where the Article would be
applicable by rewording pursuant to Article 165, Paragraph 3 of the same act; the
same shall apply hereinafter)) have been made, those which are not currently held
by the applicant cannot be included in the number of treasury shares.
Note 3: When the applicant has resolved at its board meeting to authorize the disposal of
shares of treasury stocks held by the applicant (*), the number of shares pertaining
to the resolution authorizing the disposal of treasury shares will be treated as if the
applicant did not hold them. Unless they are disposed of, the applicant deducts the
number of shares pertaining to the resolution from the number of shares of
treasury stocks held thereby.
* Resolution authorizing the disposal, etc. of treasury stocks refers to the resolution
specified in Articles 199, Paragraph 1 of the Companies Act concerning the disposal of
treasury stocks (including the decision of executive officers in case of companies with
committees system) or the resolutions specified in Article 795, Paragraph 1 of the
Companies Act when the applicant delivers its treasury shares in exchange for cash,
etc. in Article 749, Paragraph 1, Item 2, Article 758, Item 4 or Article 768, Paragraph 1,
Item 2 of the Companies Act (including the resolution of the Board of Directors on the
provisions of contracts for merger and acquisition, for divesture of a business to the
successor entity or for share exchange (including the decisions of executives in case of
companies with committees); the same shall apply hereinafter) where such resolution is
not required pursuant to Article 796, Paragraph 1 or Paragraph 3 of the Companies Act.
Note 4: When the applicant resolved at its board meeting to authorize the disposal, etc. of
treasury stocks held by the applicant after the recent record date and the resolution
was to transfer treasury stocks to some specified entities, the number of treasury
stocks is to be calculated as if such specified entities held the treasury stocks.
Therefore, when the transfer according to the resolution is made to the persons who
hold the stocks which JPXR determines are not actively traded, the number of
stocks to be transferred will be included in the number of stocks which are not
actively traded.
-38-
Note 5: When the applicant resolved at its board meeting to authorize the retirement, etc. of
treasury stocks held by the applicant, such treasury stocks are deemed to have
been retired and they would be deducted from the treasury stocks held after the
retirement even if they are yet to be cancelled.
(Reference)
Formula for determining the number of treasury stocks held by the applicant
The number of treasury stocks held (limited to those currently held)
-) the number of treasury stocks pertaining to the resolution authorizing the disposal,
etc. thereof
-) the number of treasury stocks retired
The number of treasury stocks held by the applicant
Note 6: Of the securities held by the persons who hold more than 10%, the following is
considered to be substantially the aggregation of a large number of small
investments. Thus they are included in the number of tradable shares and
excluded from the number of stocks not actively traded. In such cases, the
applicant is required to submit written documents certifying that such shares are
currently held by the persons below (e.g., written documents which show the
inclusion into securities investment trust or pension trust managed by an investment
advisor or a bank engaging in a trust business). Employee share ownership plans
shall not be included in the number of tradable shares when its percentage exceeds
10% and shall be treated as shares which are not actively traded.
► Securities included in an investment trust or pension trust and other securities included
in a trust that is organized for the purpose of investment management of trust assets by
an investment advisor or a bank engaging in the trust business, or an entity deemed
equivalent thereto who is authorized to manage investments of the trust assets under a
discretionary investment contract or other contracts, or pursuant to provisions of law;
► Securities held in the course of its business by an entity that engages in business
operations related to custody of assets of an investment corporation or foreign
investment corporation
► Securities held by a securities finance company or a financial instruments firm that
pertain to margin trading
► Securities in the account of a depository pertaining to depositary receipts (including
registered holders of the depository); or
-39-
► Other securities substantially held by entities other than an entity that holds 10% or
more of the total number of said security that are deemed appropriate.
-40-
b. Market Capitalization of Tradable Shares
Market capitalization of tradable shares is expected to be ¥1,000 million or more on the

listing date.
► Calculation of the market capitalization of tradable shares
The market capitalization is determined by multiplying the number of tradable shares (same
as the number of tradable shares in a above) by the share price. The following share prices
are used for the determination of market capitalization).
<Applicant is a non-listed company>

When an applicant effects public offering or secondary offering pertaining to the listing
application, “expected issue prices” are used for the calculation.
“Expected public offering or secondary offering prices” represent the prices used as basis
for the determination of the total amounts for offering value or secondary offering value
(so-called expected offering prices, expected secondary offering prices) of stocks described
in the Securities Registration Statement.
When an application does not effect public offering or secondary offering pertaining to the
listing application, the value assessed using the formula JPXR deems appropriate will be
used.
<Applicant is a listed company>
application, “expected offering price (Note 1)” or “the lowest price of the said stock, etc.
observed during the period one month prior to two days before the day on which the TSE
approves listing of the stock is used shares for the period of one month before two days prior
to the date when the listing is approved (Note 2)” is used, whichever is lower..
Note1: The day prior to two days before the day on which the TSE approves the listing is
decided on a calendar basis. For example, if the listing approval day is November
2, the period would be the one month from October 1 to October 31, irrespective of a
day of a week..
Note 2: The lowest price means the lowest price of final (closing) prices of trading days
during the period on the trading sessions of financial instruments exchanges in
-41-
Japan where the applicant’s shares are listed. Therefore, any indicative prices,
off-trading session prices or off-market prices are not viewed as the lowest price.
c. The Number of Tradable Shares as a Percentage of Total

Shares of Listed Stock
The number of tradable shares is expected to reach 30% or more of listed stock, etc. by the
time of listing.
► Calculation of tradable shares as a percentage of shares of listed stocks certificates

The percentage is determined by dividing the number of tradable shares (same as the
number at (1) above) by the number of shares for which the listing application is filed.
Note: The number of shares pertaining to the listing application represents the total number
of issued shares outstanding of the applicant expected on the listing date. It is
determined by adding or deducting expected changes in the number of shares by the
time of listing to or from the total number of issued shares outstanding as of the
immediately preceding record date.
(Reference) Calculation of tradable shares (example)
1) Number of shares for which the listing application is filed

Total number of issued shares outstanding as of the last record date = 12,325,000 shares
(A) (Share unit: 100 shares)
2) Number of shares not actively traded
a. Treasury stocks held

Number of treasury
100,000
stocks
-42-
b. Large shareholders who hold 10% or more (underlined holders will not be added)
(In shares)
Number of shares
Name Attribute Reason for not adding
held (%)
α Bank Business relation 1,972,000 (16.0%)
Trust bank (trust unit) ←Because of

1,848,750 (15.0%)
investment trust unit (*)
Representative
Mr. A ←As added at section
Director and 1,479,000 (12.0%)
President (3)
Employee share
1,355,750 (11.0%)
ownership plan
* Any document certifying that shares are held in investment units must be submitted.
3. In addition to shares at b. above, any securities defined as those not actively traded in
the Enforcement Rules for the Securities Listing Regulations (*)
(In shares)
Name Attribute Number of shares held (%)
Mr. A Representative director and president 1,479,000 (12.0%)
Mr. B Senior managing director 123,250 (1.0%)
Mrs. C Wife of Mr. A 61,625 (0.5%)
β Limited Company whose majority of voting

61,625 (0.5%)
Company rights is held by Mr. A
Total 1,725,500 (14.0%)
* For details, please see <Number of shares certificates which are not actively traded> at (1)
Number of tradable shares above
= a. 100,000 shares + b. 3,327,750 shares + c. 1,725,500 shares = (B) 5,153,250 shares
-43-
3) Calculation of tradable shares
- Number of tradable shares (unit) (A) － (B)

(A) 12,325,000 shares － (B) 5,153,250 shares = 7,171,750 shares : 71,717 units
(fractions are disregarded)
- Ratio of tradable shares [(A)－(B)] / (A) x 100

[(A) 12,325,000 shares － (B) 5,153,250 shares] ÷ (A) 12,325,000 shares x 100 =
7,171,750 shares ÷ 12,325,000 shares x 100 = 58,1886 : 58.18%
<Increase in the number of shareholders and tradable shares: public offering or secondary
offering before listing>
The criterion for the number of shareholders and tradable shares is expected to be met on
the listing date, rather than the condition required to be satisfied at the time of listing
application.
Therefore, if the application does not meet this criterion as of the immediately preceding
record date, the listing application would be accepted if it would be expected to be met by
In this case, in order to increase the number of shareholders or tradable shares, the
applicant could effect public offering or secondary offering.
As of the immediately preceding record date, if:

- The number of shareholders is not 800 or more;
- The number of tradable shares does not represent 4,000 trading units or more800 or
does not account for 30% or more of shares of listed stock, or
- The market capitalization of tradable shares does not stand at ¥1,000 million or more,
The applicant needs to effect public offering or secondary offering, or off-auction distribution
(this refers to an off-auction distribution within below 50 trading units which is effected by a
company listed on another financial instruments exchange in Japan and on which
restrictions on buying are imposed).
Note 1: If an applicant meets the criterion for the number of shareholders or tradable shares
after the listing approval date by effecting public offering or secondary offering, or
-44-
off-auction distribution on another financial instruments exchange in Japan, the

applicant is required to submit to TSE the “Plan for Public offering or secondary
offering” or “Plan for Distribution with Restrictions Imposed” before effecting it or
“Notice of execution of public offering or secondary offering” or “Table of distribution
status of shares following restriction thereon” immediately after effecting it.
Note 2: If a company listed on another financial instruments exchange in Japan meets the
criterion for the number of shareholders or tradable shares by public offering or
secondary offering effected before the listing approval or off-auction distribution on
another exchange in Japan, the company is required to submit to TSE the “Notice of
execution of public offering or secondary offering” or “Table of distribution status of
shares following restriction thereon.”
Note 3: A non-trading participant or foreign securities company may only describe the
portion it accepts and underwrites under the contract with the applicant providing
for the report on public offering (sales) in the “Plan for Public offering or secondary
offering” or the “Notice of Public offering or secondary offering Effected.”
Note 4: For the purpose of the number of shareholders or tradable shares, “sales through
overallotment” (addition sales responsive to demands in public offering or
secondary offering) may be treated as follows.
- In case of public offering or secondary offering for which the “Notice of execution of
public offering or secondary offering” is submitted after the approval of initial listing
Criterion Handling
Tradable shares
Any movements of the number arising from the secondary
Number of offering due to overallotment will not be taken into consideration.
shareholders
- In cases of public offering or secondary offering for which “Notice of execution of public
offering or secondary offering” is submitted between the latest record date and the
approval of initial listing
-45-
Criterion Handling
When a “Notice of execution of public offering or secondary

offering” including the description of movements due to the
Tradable shares
exercise of rights attached to green shoe option, such changes
must be considered
When a “Notice of execution of public offering or secondary

Number of offering” including the description of movements arising from the
shareholders secondary offering due to overallotment, such changes must be
considered
Meanwhile if an applicant who has effected or expects to effect any public offering or
secondary offering acquires some its own stocks according to the resolution at the general
shareholders’ meeting authorizing the acquisition, it may conflict with the acquisition of
own stocks. Therefore the reasonableness of each act must be acknowledged. Even if it is
acknowledged to be reasonable, the acquisition of treasury shares before any public
offering or secondary offering may give rise to a problem in terms of regulations on insider
trading, so the applicant must fully consider the timing of acquisition of treasury shares and
the method thereof.
Note: When an applicant does not make any book building or auction-based public offering
or secondary offering at the time of listing (excluding any companies which have listed
their stock on another financial instruments exchange), JPXR requires that the
applicant should receive the consent of shareholders to sell a certain number of
shares in trading transaction where the first contracted price after listing is determined.
This requirement is to mitigate a temporary imbalance between demand and supply at
the trading transaction where the first contracted price after listing is determined and
implement a fair price formation. The level of sales will be determined on the basis of
the number of shares of listed stock.
-46-
3. Market Capitalization (Rule 205, Item 3 of the
Regulations)
It is required that the market capitalization on listing day is expected to be at least ¥2,000
million.
► Calculation method of market capitalization
The market capitalization will be determined by adding the value derived by multiplying the
number of shares of listed stock certificates expected at the time of listing (note) by the
share price, to the market capitalization related to all other shares issued by the applicant
(limited to those listed or continuously traded on another financial instruments exchange in
Japan or a foreign country). For the purpose of determination of market capitalization, the
following prices are to be used as share prices.
<Applicant is a non-listed company>

When an applicant effects public offering or secondary offering related to the listing
application, “expected public offering prices” are used for the calculation.
“Expected public offering or secondary offering prices” represent the prices used as basis
for the determination of the total amounts for public offering or secondary offering value
(so-called expected public offering prices, expected secondary offering prices) of stocks
described in the Securities Registration Statement.
When an applicant does not effect public offering or secondary offering pertaining to the
listing application, a value assessed using the formula TSE deems appropriate will be used.
<Applicant is a listed company>

application, “expected offering price (Note 1)” or “the lowest price of the said stock, etc.
observed during the period one month prior to two days before the day on which the TSE
approves listing of the stock is used shares for the period of one month before two days prior
to the date when the listing is approved (Note 2)” is used, whichever is lower.
Note1: The day prior to two days before the day on which the TSE approves the listing is
-47-
day of a week.
Note 3: In cases where a resolution authorizing cancellation of treasury stocks held by the
initial listing applicant has been passed, the number of listed stocks, etc. shall be
calculated by deeming that the treasury stocks pertaining to the resolution had been
cancelled by the initial listing applicant (Rule 212, Paragraph 1, Item 2 of the Rules).
4. Number of Consecutive Years of Conducting Business
The business activities have been continuously carried out by setting up a board of directors
since a day before the day which is three (3) years prior to the end of the previous year.
-48-
5. Amount of Net Assets (Rule 205, Item 5 of the
Regulations)
The amount of net assets on the listing day is expected to reach at least ¥1,000 million.
JPXR will examine the following “amount of net assets on the listing day.”
a. When an applicant files a “quarterly financial statements for initial listing application”
or a copy thereof for the period after the beginning of application year, JPXR will
examine the amount of net assets at the end of immediately preceding quarterly
period (Note 1) described in the recent “quarterly financial statements for initial
listing application” or a copy thereof. When the applicant does not prepare any
consolidated quarterly financial statements, JPXR will examine the values on the
quarterly balance sheet (on a separate basis). In addition it is required that the
amount of net assets determined on the basis of quarterly balance sheets (on a
separate basis) (Note 2) should not be negative.
b. In cases other than a. above, JPXR will examine the amount of net assets as of the
end of the previous year described in the “Securities Report for Initial Listing
Application.” (Note 3). When the applicant does not prepare any consolidated
financial statements, JPXR will examine the values on the balance sheet (on a
separate basis). In addition it is required that the amount of net assets determined
on the basis of balance sheets (on a separate basis) (Note 4) should not be
negative.
Even when the amount of net assets does not meet the criterion, the applicant may subject
the amount of net assets added by expected cash inflows or actual cash inflows arising from
the public offering before listing to the examination. In this case, the applicant is required to
submit to TSE a “Statement of Net Assets” in the form required by JPXR including the
descriptions of the “amount of net assets as of the end of the immediately preceding
quarterly period or the previous year,” “expected cash inflows arising from public offering”
and “amount of net assets subject to the examination.”
Note 1: This value represents the value determined by deducting the values of subscription
warrants and non-controlling interests stated in the section of Net Assets from the
-49-
total amount determined by adding reserves, etc., prescribed in Article 60,

Paragraph 1 of the Quarterly Consolidated Financial Statements, etc. Rules to the
section of Net Assets in a quarterly consolidated balance sheet prepared under the
same rules.
warrants stated in the section of Net Assets from the total amount determined by
adding reserves, etc., prescribed in Article 53, Paragraph 1 of the Quarterly
Financial Statements, etc. Rules to the section of Net Assets in a quarterly balance
sheet prepared under the same rules.
warrants and non-controlling interests stated in the section of Net Assets from the
total amount determined by adding reserves, etc. prescribed in Article 45-2,
Paragraph 2 of the Consolidated Financial Statements, etc. Rules to the section of
Net Assets in a consolidated balance sheet prepared under the same rules.
warrants stated in the section of Net Assets from the total amount determined by
adding reserves, etc. prescribed in Article 54-3, Paragraph 1 of the Financial
Statements, etc. Rules to the section of Net Assets in the balance sheet prepared
under the same rules.
Note 5: If an applicant is an IFRS compliant company, the amount equivalent to the amount
of net assets shall be determined on the basis of quarterly consolidated balance
sheets or consolidated balance sheets.
► Treatment of “amount of profit” and “amount of net assets” according to the adoption of
accounting standards for retirement benefits
Exceptions to the determination of “amount of profit” and “amount of net assets” have been
provided under the accounting standards for retirement benefits (Rule 705 and 717 of the
Rules).
-50-
6. Amount of Profits and Market Capitalization (Rule 205,
Item 6 of the Regulations)
The following a. or b. must be satisfied:
a. The total amount of profits in the last two (2) years (hereinafter referred to as the
“profit criterion”) shall be at least ¥ 500 million yen;
b. The market capitalization as of the listing day is expected to reach at least ¥50,000
million yen.
<Application of profit criterion>

(Reproduced)
a. The total amount of profits in the last two (2) years (hereinafter referred to as the “profit
criterion”) shall be at least ¥ 500 million yen;
In the context of this criterion, the amount of profit determined based on the consolidated
income statement or consolidated statement of profit and loss and comprehensive income
(hereinafter referred to as the “consolidated income statement, etc.”) will be subject to the
examination (if there is any period subject to the examination where no consolidated
financial statements have been prepared, the amount of profit determined on the income
statement (on a separate basis) will be subject to the examination).
For the purpose of this paragraph, the “amount of profit” represents the amount determined
by adding or deducting the amount presented according to Article 65, Paragraph 3 of the
Consolidated Financial Statements, etc. Rules (so-called profit or loss arising from
non-controlling interests) to or from the ordinary income or ordinary loss presented
according to Article 61 of the same rules (in case of separate income statement, it
represents ordinary income or ordinary loss presented according to Article 95 of the same
rules).
Meanwhile the “amount of profit” will be determined as follows:
- In cases of a company listed on another financial instruments exchange in Japan or
-51-
company making consistent disclosures

In determining the amount of profit for the year before the previous year, “consolidated
financial statements or financial statements for the previous year” included in the Securities
Registration Statement or Securities Report filed in the past will be used, rather than
“comparative information included in the consolidated financial statements or financial
statements for the previous year” described in the “Securities Report for Initial Listing
Application (Part I)” (hereinafter referred to as “Part I” in this paragraph). In this case, audit
report issued by certified public accountants or audit firm shall be attached to the
consolidated financial statements or financial statements for the year preceding the previous
fiscal year.
- In case of initial public offering (IPO)
“Part I” documents include the description of consolidated financial statements or financial

statements for the previous year and the year before the previous year, to which the
accounting standards for the previous fiscal year were applied. Thus, the determination of
the “amount of profit” uses the consolidated financial statements or financial statements for
these two periods will, in principle, be used.
Diagram: Consolidated financial statements or financial statements to be used for

determining the amount of profit
In cases of a listed company or company making consistent

In cases of IPO
disclosures
the year
　　　comparative information financial statements
before the
(the year three years before for the year before
previous the previous year
the application year)
year
accounting
A
standards
financial
　comparative information financial
the previous statements for
financial statements statements for
(the year before the year
year for the previous year the previous
the previous year) before the
year
previous year
accounting
B B B (Note 4) B
standards
*A; accounting standard for the year preceding the previous year
B; accounting standard for the previous year
-52-
* In determining the amount of profit, the highlighted financial statements will be used.
Note 1: If the amount of profit is negative, such negative amount should be added. For
example, if the amounts of profit for the two years stands at a loss of ¥500 million
and income of ¥1,000 million, respectively, the amount of profit for the recent two
years would stand at an income of ¥500 million (¥500 million loss － ¥1,000 million
income).
Note 2: Application year starts from the end of the previous year. For example, for a
company where the previous year ends March 31, 2017, the “recent two years”
would be two years from April 1, 2015 through March 31, 2017. The same definition
of “recent” will be applied hereinafter.
Note 3: If a company voluntarily applies IFRS, the amount of profit should be the one
equivalent to the amount of profit determined (which is calculated on the basis of the
amount of profit before tax) based on the consolidated income statement.
Note 4: In cases of IPO, the “Part I” documents include the consolidated financial statements
or financial statements for the year before the previous year and the previous year,
to which the accounting standards for the previous year have applied. For the
purpose of determining the “amount of profit” for the year preceding the previous
year, the applicant might use the consolidated financial statements or financial
statements for the year before the previous year, to which the accounting
standards for the year preceding the previous year applied (including documents
TSE deems appropriate as they are similar to them in nature), rather than the
consolidated financial statements or financial statements for the year preceding the
previous year, to which the accounting standards for the previous year applied. In
such cases, the applicant is required to submit a statement by which the certified
public accountants or audit firm has expressed its audit opinion or opinion on
audited reports or financial values, etc.
Note 5: In the event that the amount of profit may be affected by the audit opinion of audit
firm or certified public accountants, the amount of profit adjusted based on such
opinion would be subjected to the examination, except for cases where the
non-adjusted amount is determined to be appropriate as a result of change to
accounting standards.
-53-
Note 6: When the amount of profit for the period subject to the examination can not be
determined simply adding the amount for each period as the applicant has changed
the length (balance sheet date) of the fiscal year, the amount of profit for the period
subject to the examination would be determined by proportionately dividing the
amounts of profit in the consolidated income statement or income statement, or
quarterly consolidated income statement or quarterly income statement by the
number of months. For example, if a company whose fiscal year ends on November
30 each year changes its balance sheet to March 31, 2016 after the completion of
the fiscal year ended November 30, 2015, and files a listing application making the
year ended March 31, 2017 the previous year, the amount of profit shall be
determined as follows:
Determination of annual amount of profit in case where the fiscal year (balance sheet
date) has been changed
Change of balance sheet date
▼
Consolidated Year ended March 31, 2017(immediately
Year ended November 30, 2015 Year ended March 31, 2016
accounting year preceding accounting year)
Number of
12 months 4 months 12 months
moths
(\300million)
Amount of
1Q 2Q 3Q 4Q (\800million) (\1,000million)
profit (loss)
(\500million (\600million) \300million \500million
Period for calculating profit
April 1, 2015 to March 31, 2017 April 1, 2016 to March 31, 2017
12 months (8 months*) + (4months) 12 months
\400million* + (\800million) = (\400million) \1,000million
Amount of profit=(\400million)+\1,000million=\600million
* In these cases the amounts of profit will be determined based on the consolidated income statement and consolidated quarterly income
(Calculation in the case above)

Ordinary income in consolidated quarterly statement (consolidated quarterly period)= (\500million) (a)⇒1Q profit amount ; a = (\500million)
Ordinary income in consolidated quarterly statement (cumulative consolidated quarterly periods to
⇒2Q profit amount; b – a = (\600million)
the second quarter)= (\1,100million) (b)
Ordinary income in consolidated quarterly statement (cumulative consolidated quarterly periods to
⇒3Q profit amount ; c – b = \300million
the third)= (\800million) (c)
Ordinary income in consolidated income statement (\300million) ⇒4Q profit amount; d – c = \500million
Profit for the 8 month period

2Q profit amount (proportion to the number of months) x 2/3 + (3Q profit amount) + (4Q profit amount)
= (\600million) x 2/3 + \300million + \500million = \400 million
► Treatment of “amount of profit” and “amount of net assets” as the accounting for
retirement benefits is applied
provided under the accounting standards for retirement benefits. (Rule 705 of the
Regulations, Rule 717 of the Rules)
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► Handling of a company whose rehabilitation is supported by Regional Economy

Vitalization Corporation of Japan (REVIC)
TSE has provided for the following exceptions to the criteria for the amount of profit or
market capitalization for the purpose of standards for the listing examination as Regional
Economy Vitalization Corporation of Japan (REVIC) was established (Rule 707 of the
Regulations and Rule 719 of the Rules).
- Companies eligible for the exceptions
Companies to which REVIC has decided to provide rehabilitation support (Note 1)

(hereinafter referred to as the “supported company”) will be eligible for the exceptional
treatment (Note 2).
Note 1: Support decision prescribed in Article 25, Paragraph 4 of the Act Concerning
Regional Economy Vitalization Corporation of Japan (REVIC) (Law No. 63 of
2009).
Note 2: The exceptional treatment excludes any company for which the support decision is
subsequently revoked after REVIC decided to provide support or the decision to
acquire any debts of the company is not made (this decision refers to the decision
to acquire debts as prescribed in Article 31, Paragraph 1 of the Act Concerning
Regional Economy Vitalization Corporation of Japan).
- Conditions for application

The exceptions are provided when stock issued by a supported company is delisted on TSE
after REVIC has decided to provide support, and if the company files an initial listing
application for the stock by making the business year commencing within five years from the
date when REVIC announces the decision to acquire the debts of the company as the
previous year.
- Contents
In filing an initial listing application, the “amount of profit or market capitalization” should
meet either a. or b. below:
a. The amount of profit for the recent one year stands at ¥400 million or more.
b. The sales for the recent one year are ¥10,000 million or more and the market
capitalization as of the listing day is expected to stand at ¥50,000 million or more.
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<Market capitalization criterion>
(Reproduced)
b. The sales for the recent one year shall be ¥10,000 million or more and the market
capitalization as of the listing day is expected to reach ¥50,000 million or more.
Note 1: For the determination of market capitalization, please refer to “Calculation Method of
Market Capitalization” in “3. Market Capitalization”.
Note 2: Sales represent the amount of sales included in the consolidated income statements,
etc. (income statement if during the period subject to the examination there is any
period when the applicant is not required to prepare consolidated financial
statements).
Note 3: When the amount of sales cannot be determined by simple aggregation as the
applicant has changed the fiscal year, the sales for the period subject to the
examination will be determined by proportionately dividing the amounts of profit in
consolidated income statements or income statements, or quarterly consolidated
income statements or quarterly income statements by the number of months.
opinion would be used for the examination purpose, except for cases where the
adjustment to the sales is made as a result of change to accounting standards made
by appropriate reasons. .
Note 5: When an applicant is demutualized into a joint stock company and if the period
subject to the examination includes any period before the demutualization, with
respect to the period before the demutualization, the amount equivalent to the
amount of profit determined based on the consolidated income statements for each
consolidated fiscal year of the mutual company and the sales stated in the income
statements for each consolidated fiscal period of the mutual company will be used
for the purpose of the examination.
-56-
7. False Statement or Adverse Opinion and Audit by a Listed
Company Audit Firm (Rule 205, Item 7 and Item 7-2 of the
Regulations)
(1) False Statement and Adverse Opinion, etc.
1) False Statement
No false statement (Note 1) shall be made in a Securities Report, etc.(Note 2) containing or

making reference to financial statements, etc.(Note 3), interim financial statements, etc., or
quarterly financial statements, etc. pertaining to the audit report, the interim audit report, or
the quarterly review report for each of the last two years.
In addition, no false statement shall be made in quarterly financial statements, etc. (Note 4)
for the quarterly periods in each business year and quarterly consolidated financial
statements for the quarterly consolidated periods in each consolidated accounting year
which ended during the last two years.
Note 1: “False statement” represents statements included in securities reports, etc. whose
correction is deemed to be material as a correction order, order for the payment of
penalty or accusation is issued by the Prime Minister or the applicant issues an
amended registration statement.
Note 2: Securities report comprises:
- Securities registration statement and its accompanying documents, as well as reference

documents therefor;
- Shelf registration statement and its accompanying documents, as well as reference
documents therefor;
- Supplementary documents to Shelf Registration Statement and reference documents
therefor;
- Securities Report and its accompanying documents
- Half-year report;
-57-
- Quarterly report; and

- Prospectus
Note 3: Financial statements, etc. represent financial statements and consolidated financial
statements.
Note 4: Quarterly financial statements, etc. represent quarterly financial statements or

quarterly consolidated financial statements (in case of specified business company,
including interim financial statements, etc.)
2) Adverse Opinion, etc.
Audit opinion issued by an audit firm, etc., shall, in principle, include:
- “Unqualified opinion” or “qualified opinion with exceptions” in the audit report (excluding
audit report attached to financial statements, etc. for business year or accounting year
which ended during the recent one year) attached to financial statements, etc. for each
business year and each consolidated fiscal year which end during the last two years;
- “Unqualified opinion” for the business year or consolidated accounting year in the audit
report attached to the financial statements, etc. for the business year or consolidated
accounting year which ended in the recent one year, and “unqualified conclusion (in
case of specified business company, including the “statement to the effect that interim
financial statements, etc. include useful information”) in the quarterly review report
attached to the quarterly financial statements for the quarterly accounting period in the
business year and for the quarterly consolidated accounting period for the consolidated
accounting year, which ended in the last year.
This is because the examination of the amount of profit, etc. shall be made on the basis of
financial statements, etc. prepared in accordance with fair accounting treatment, etc., and
because especially during the previous year, the applicant is required to address all the
accounting issues identified by the audit firm.
Meanwhile, if additional information is included in the audit report that there is a serious
doubt on a corporate continuity though an audit opinion represents an “unqualified opinion,”
for the purpose of examination, an applicant is required to eliminate any serious event, etc.
giving rise to any concern with a corporate continuity, as represented by the elimination of
the additional information on a corporate continuity in the quarterly review report, etc. during
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the so-called business year as Rule 207 of the Securities Listing Regulations requires that a
corporate continuity corporate continuity should be examined. In addition even if any
“adverse opinion” etc. is included in the report for the business year before the previous year
or consolidated accounting year due to a reason associated with a corporate continuity
(including “qualified opinion” for the business year and consolidated accounting year which
ends during the recent one year), the filing of listing application is possible. In such cases,
JPXR will review the background, etc. for the inclusion of such adverse opinion during the
course of examination.
Table: Outline of Criteria for Listing Application Concerning Audit Opinion
Quarterly review
Audit report
report (Note 4)
Unqualified opinion or
First year qualified opinion -
(Note 1) (Note 2)
Recent two Unqualified opinion
Second year
years (Note 3) (Note 4) Unqualified
The conclusion
Unqualified opinion
previous (Note 3) (Note 4)
(Note 3) (Note 4)
year
Note 1: For example, since an audit engagement letter was entered into after the beginning
of the year before the previous year, the evaluation of adequacy of opening balances
was difficult or sufficient time required for audit was not taken. As a result, the audit
report for the year before the previous year expressed a qualified opinion. Even in
such cases, a listing application can be filed.
-59-
Example: Successful listing in case of a “qualified opinion” expressed in the audit report, etc.
for the year before the previous year
March 31, 201X March 31, 201X+1 March 31, 201X+2 March 31, 201X+3
The year before the
The previous year Application year
previous year
　　　　　　　▲
Engagement letter
Period subject to audit
- Audit engagement letter was entered into in December 201X

- The audit report for the year before the previous year (year ended March 31, 201X+1)
expressed a “qualified opinion (*)”, and the audit report for the previous year (year
ended March 31, 201X+2) expressed an “unqualified opinion.”
- Descriptions in audit report
As the audit firm entered into the engagement letter on July xx, 201X, it could not attend the
physical counting of the inventory in the value of ¥ xxx million as of March 31, 201X.
The audit firm acknowledged that xxx Company’s financial statements fairly presented all
the significant aspects of financial position as of March 31, 201X+1 and operating results
and cash flows for the business year ended the same date in accordance with generally
accepted accounting principles in Japan, except for the effect of the above items on the
company’s financial statements.
Note 2: Even when the audit report expresses the refraining from the opinion due to any
events beyond the control of the applicant such as natural disaster and any event
associated with a corporate continuity, the applicant may file the application.
Note 3: If certified public accountants express a “qualified opinion” or “qualified opinion with
exceptive items” limited to comparative information, the applicant may file the
application.
Note 4: Unless “unqualified opinion” or “unqualified conclusion” is expressed due to any

event associated with a corporate continuity, the application can be filed.
Note 5: Even in case of a non-listed company making consistent disclosures which has
prepared a half-year report, quarterly report must be filed at the time of listing
-60-
application. Therefore, for the purpose of formal requirements, the opinion included
in the quarterly review report to be submitted to JPXR will be subject to the
examination.
► Internal management report, etc.
For the handling of “internal management over financial reporting,” if stock certificates
related to an applicant are listed on another financial instruments exchange in Japan, it is
required that they do not meet the items both in 1) and 2) below:
1) The internal management report for the business year which ended during the recent
one year includes the statement of “inability to express assessment results.”
2) The internal management audit report on internal management report for the business
year which ended during the recent one year includes the statement of “inability to
express assessment results”*
* This shall not apply to cases where the audit certificate is exempted over the period
for which the applicant is allowed to elect to apply the exemption from the audit
certificate over the internal control report.
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(2) Audit by a Listed Company Audit Firm
The financial statement, etc., an interim financial statement, etc. or a quarterly financial
statement contained in or attached to a "Securities Report for Initial Listing Application" have
undergone audit, interim audit or quarterly review equivalent to that in the provisions of
Article 193-2 of the Act by a listed company audit firm (including audit firms registered in the
list of associate registered audit firms based on the Registration System for Listed Company
Audit Firms of The Japanese Institute of Certified Public Accountants (limited to those which
have undergone quality control reviews by The Japanese Institute of Certified Public
Accountants)) (excluding those deemed inappropriate by TSE). (Rule 205, Item 7-2 of the
Regulations)
Globalization of capital markets and business activities, sophistication of IT used by

companies, and adoption of international accounting standards, significant amendments to
accounting and auditing standards or exposed embellishments of large companies have
significantly changed the practices of CPAs. Thus reliability of audits performed by CPAs as
independent auditors over financial statements, etc. issued by companies must be further
enhanced.
Given evolving circumstances surrounding companies, accounting or auditing practices, a

more organized audit system than ever is required. It is not desirable that the same firms,
leaders or partners are engaged in the audits of the same company for a long time from the
perspective of independence.
Therefore, TSE requires an initial listing applicant to receive the audits of listed company
audit firms (including audit firms which are registered in the quasi-registered firms list
(limited only to those which have received the Quality Control Review of JICPA)) and to
have joint audits performed by audit firms and several CPAs.
In addition, in order to ensure an enhanced audit system and independence, TSE has
encouraged the Committee on Listed Company Audit Firms to select audit firms or joint CPA
offices as independent auditors, whose organizations have been registered as an audit firm
or joint CPA office and organization-level audit system has been properly designed and
implemented.
Meanwhile, TSE has not included the requirements for continuous audits in the listing
criteria, and the timing of conclusion of audit engagement letter is left to the decision of audit
-62-
firm, etc.
-63-
8. Establishment of Shareholder Services Agent (Rule 205,
Item 8 of the Regulations)
Shareholder services have been entrusted to an institution specified by the Enforcement

Rules as the applicant’s shareholder services agent (hereinafter referred to as a
"shareholder services agent approved by TSE"), or an informal consent of acceptance of the
entrustment of such shareholder services from the shareholder services agent has been
received; provided, however, that the same shall not apply to a shareholder services agent
approved by TSE.
Note: The shareholder services agent must have size and organizational functions such that
it could gain confidence of investors and provide conveniences to investors.
Shareholder services agents authorized by TSE include trust and banking companies,
Tokyo Securities Transfer Co., Ltd., Japan Securities Agent, Inc., and IR Japan, Inc.
-64-
9. Share Unit and Classes of Stock (Rule 205, item 9 and
Item 9-2 of the Regulations)
(1) Share Unit
The Share Unit shall be expected to be 100 shares at the time of listing; provided, however,
that the same shall not apply to the cases specified by the Enforcement Rules (Note 1);
With a view to enhancing conveniences for market participants including investors, TSE
aims at eventually aligning the number of shares comprising one trading unit (Note 2) for all
the listed companies to 100 shares. In this regard, TSE encourages an initial listing
applicant to initially set the number of shares comprising one trading unit at 100 shares.
In practice, at the time of listing application, JPXR will check the existence of a trading unit
system and the number of shares comprising one trading unit on the basis of the rules
prescribed in the Articles of Incorporation and listing application documents including
certificates of registered items. When the applicant does not adopt any trading unit system
or it applies a trading unit system where the number of shares comprising one trading unit is
not 100 shares at the time of listing application, JPXR will require the applicant to adopt a
trading unit system or change the number of shares comprising one trading unit (Note 3).
Even if the applicant has listed its stock on another financial instruments exchange in Japan
or is a Green Sheet company designated by the Japan Securities Dealers Association, the
number of shares comprising one trading unit must be 100 shares.
Note 1: The cases specified by the Enforcement Rules include cases where a large number
of holders of fractional Share Units are expected to occur at the time of listing as in
the case when a mutual company converts into a stock corporation,
Note 2: Trading on financial instruments exchanges is effected in the integral multiple of the
unit determined for each company. This unit is referred to as the trading unit. Usually,
the trading unit relates to the number of shares comprising one unit in case of
companies adopting trading unit system while one share in case of those not
adopting the system.
-65-
Note 3: The applicant is required to amend documents associated with the listing application
including Articles of Incorporation, a certified copy of the commercial register,
various internal rules and “Part I” documents with respect to the adoption of trading
unit system and submit them during the period for the listing examination.
Note 4: Procedures required to adopt the number of shares per Share Unit system and
change the number of shares per Share Unit are as summarized in the table below:
Table: Procedures for changing the number of shares comprising one trading unit to 100
shares
Treatment of shares
Procedures
comprising unit
Increase and setting Special resolution at the general meeting of shareholders
No increase
in the total
number of
Resolution of the Board of Directors
issued shares
Split ratio equals or outstanding is
exceeds increase required.
or setting ratio of Special resolution

Two or more
Increase and setting effected the number of at the general
classes of shares
concurrently with share split shares comprising shareholders’
have been issued
one trading unit meeting
Required
Two or more
Resolution of the
classes of shares
Board of
have not been
Directors
issued
Special resolution at the general shareholders’

Below the above
meeting
Only decrease Resolution of the Board of Directors
Decrease effected concurrent

Special resolution at the general shareholders’ meeting
with the share consolidation
-66-
(2) Classes of Stock
Japanese stock certificates for which a listing application is filed shall, in principle, be one of
stock certificates mentioned in a. to c. below.
a. In the case of a company issuing one class of stock with voting rights, said stock
with voting rights;
b. In the case of a company issuing multiple classes of stock with voting rights, a class
of stock with voting rights whose value of rights, etc. to receive economic benefits
including claim for surplus dividend pertaining to the number of shares that enables
exercise of one voting right at a general shareholders meeting with regard to
important matters including selection and dismissal of board members is higher
than any other class of stock;
c. Stock with non-voting rights
Note: In case of stock mentioned b. above, it is assumed that there are no other class of
shares other than it for which the listing application is filed.
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10. Restrictions on Transfer of Shares (Rule 205, Item 10 of
the Regulations)
A joint stock company may impose restrictions on transfer of shares by virtue of the Articles
of Incorporation. However, financial instruments exchanges provide open marketplaces
where a large number of public investors can participate freely. Therefore, restrictions on
transfer of shares associated with any trading may conflict any rules set by the exchanges.
Therefore it is required that the applicant has not imposed restrictions on the transfer of
shares for which the listing application is filed or is expected to remove such restrictions by
So any applicant which has imposed certain restrictions on transfer of shares for which the
listing application is filed will be required to revise the Articles of Incorporation and submit
the certificate of revised registered items which reflects such revised items during the
examination period.
Note: An exception to this criterion would be provided when the transfer of stocks is
restricted by virtue of laws such as the Broadcasting Act or Aviation Act and if such
restrictions may not hamper trading on markets operated by TSE.
-68-
11. Handling at Designated Book-Entry Transfer Institution
(Rule 205, Item 11 of the Regulations)
The stock of the applicant will be handled by a designated depository institution under the
Book-Entry Transfer Act. The designated book-entry transfer institution under the
Book-Entry Transfer Act is the Japan Securities Depository Center, Inc. (hereinafter referred
to as “JASDEC”).
Therefore it is required that the shares of an applicant are already handled by JASDEC or
are expected to be handled by JASDEC by the time of listing.
An applicant is required to dematerialize its stock certificates, such that they are eligible for
the book-entry transfer of JASDEC. So, if the applicant has issued materialized stock
certificates and has not completed the procedures for the dematerialization of stock
certificates, the applicant shall complete the procedures by the end of examination period.
After the listing approval (listing approval date, in principle), the applicant is required to
submit consent in the form designated by JASDEC to the effect that the applicant agrees
that JASDEC will handle its listed stocks.
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12. Expected Implementation of Merger, etc. (Rule 205, item
12 of the Regulations)
It is required that an applicant does not meet a. and b. below:
Item Descriptions
a. Merger, demerger, turning a company An applicant expects to effect any of the
into a subsidiary, or turning a subsidiary following on or after the listing application
into non-subsidiary company, receipt or date and within two years from the end of
transfer of business the previous year, and the applicant ceases
to be a substantive surviving company
through such transactions:
- Merger (Note)
- Demerger
- Turning another company into a
subsidiary of the applicant or turning the
applicant into a subsidiary of another
company (the applicant ceases to be a
parent company of another company)
- Receipt or transfer of business (Note)
b. Merger, stock swap or transfer of The applicant expects to effect a merger in
shares which the applicant will be dissolved, or
stock swap or transfer of shares which turns
the applicant into a wholly owned subsidiary
of another company within two years from
the end of the previous year (excluding
transactions expected to be implemented
before the listing date)
Note: These transactions include cases where a subsidiary of the applicant has
implemented or expects to implement any one of them.
The following outlines the nature thereof, respectively.
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a. Merger, split-up of company, turning a company into a subsidiary, or turning a

subsidiary into non-subsidiary company, receipt or transfer of business
If it is expected that a merger (Note 1) will take place within two years (Note 2) from the end
of the previous year, such that an applicant would substantively cease to be a surviving
company, the nature, financial conditions and management performance of the applicant
would dramatically change because of such act.
In such cases, TSE will not accept the listing application because it will be difficult to capture
the nature of the company after such act.
Note 1: Since this two years period does not include the “period from the beginning of
application year to the initial listing application date,” listing application would be
possible.
Note 2: Split-up of a company excludes a divesture of business where the applicant takes
over a business from a listed company (limited cases where a business taken over
from the listed company constitutes a main business of the applicant).
Even when a listing application would be accepted as the merger, etc. effected by an
applicant would not meet any one of the transactions mentioned above, JPXR may
separately require the applicant to submit additional data when JPXR determines that such
merger, etc. would give rise to significant influence. For more information, please refer to
“A1 (4) Handling of Reorganization for the Purpose of Examination; b. Documents to be
Submitted When Significant Influence Takes Place.”
b. Merger, stock swap or share transfer
A listed company may be delisted when the listed company is dissolved or it effects stock
swap or share transfer to make the listed company a 100% subsidiary of another company.
Thus, since it would not be desirable to permit any company expected to be delisted at the
time of listing application to list its stock, TSE would not accept any listing application
regardless of when the applicant expect to effects merger which results in the dissolution of
the applicant or stock swap or share transfer to make the listed company a subsidiary of
another company within two years from the end of the previous year.
-71-
Note: However, if the applicant intends to reorganize the company before the listing date,
the listing application would be possible.
-72-
13. Assignment of the Stock to the First Section at Initial
Listing (Rule 210, Paragraph 1 of the Regulations)
For a company which is an initial listing applicant and applies for the assignment of its stock
to the 1st section, such assignment would be permitted if the company meets the
requirements of Rule 205 of the Securities Listing Regulations and satisfies the following
criteria.
It is expected that the number of shareholders will be 2,200 or more and the number of
tradable shares will constitute 20,000 trading units or more and account for 35% or more of
shares of listed stock by the time of listing and that the market capitalization on the listing
day will stand at ¥25,000 million or more.
-73-
14. List of Share Prices Used for Initial Listing and
Assignment to the First Section

<An applicant is a non-listed company>
Underlying
Item Used prices
regulations
Market Rule 212, Expected public offering or
capitalization Paragraph 2, secondary offering prices
With
of tradable Item 2 of the (prices which are used as the
public
shares Rules basis for calculating the
offering
expected total value of stock
and
Rule 212, or expected total value of
Market secondary
Paragraph 3 sales described in the
capitalization offering
Formal of the Rules Securities Registration
Requirements Statement)
Market Rule 212, Assessment value of stock,
Without
capitalization Paragraph 2, etc. calculated by using
public
of tradable Item 2 of the formula TSE determines to be
offering
shares Rules reasonable
and
Rule 212,
Market secondary
Paragraph 3
capitalization offering
of the Rules
With Prices for public offering and
public secondary offering
Rule 217,
offering
Paragraph 2
and
Assignment of the Rules
secondary
of stock to
Market offering
the 1st
capitalization Without Assessment value of stock,
section at
public etc. calculated by using
initial listing Rule 217,
offering formula TSE determines to be
Paragraph 2
and reasonable
of the Rules
secondary
offering
-74-
< Applicant is a company already listed on another exchange>
Underlying
Item Used prices
regulations
Market Rule 212, a. Lowest Lower of a
capitalization Paragraph price during and b
of tradable 2, Item 1(a) the one
shares of the Rules month from
With public the date
offering preceding the
and day before
Rule 212,
secondary the listing
Market Paragraph
offering approval date
capitalization 3 of the
b. Expected
Formal Rules
public offering
Requirements
or secondary
offering price
Market Rule 212, Lowest price on another
capitalization Without Paragraph market during the one month
of tradable public 2, Item 1(b) from the date preceding the
shares offering of the Rules day before the listing approval
and Rule 212, date (Note 1)
Market secondary Paragraph
capitalization offering 3 of the
Rules
a. Lowest Lower of a
price during and b
the one
Assignment month from
With public
of stock to Rule 217, the date
st
offering
the 1 Market Paragraph preceding the
and
section at capitalization 2 of the day before
secondary
initial listing Rules the listing
offering
(Note 2) approval date
b. Expected
public offering
or secondary
-75-
offering price
Lowest price on another

Without market during the one month
public Rule 217, from the date preceding the
Market offering Paragraph day before the listing approval
capitalization and 2 of the date (Note 1)
secondary Rules
offering
Note 1: The lowest price represents the lowest price of daily closing prices of the stock at
trading session on a financial instruments exchange in Japan (if there is no closing
price on a day, the price of the day will be included in the determination).
Note 2: Similar treatment shall apply to Assignment of stock to the 1st section at alteration of
Listing Market.
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III Listing Examination (Relating to Rule 207 of the Regulations)
III Listing Examination (Relating to Rule 207 of

the Regulations)
The examination will be made for the corporate group of an applicant (Note) which meets
the formal requirements (Rule 205 of the Securities Listing Regulations) based on the items
prescribed in Rule 207 of the Securities Listing Regulations (hereinafter referred to as the
“substantive examination standards”)
Note: The corporate group represents a group comprising the applicant, its subsidiaries and
affiliated companies.
Substantive examination standards comprise five eligibility criteria which should be satisfied
by listed companies. Actual standards to determine whether each eligibility criterion is met or
not are included in “Guidelines Concerning Listing Examination, etc.”.
In the actual examination, JPXR will mainly examine the matters described in the “Securities
Report for Initial Listing Application (Part I)” which an applicant files with TSE and assess the
status of compliance with standards through interviews and meeting with the applicant.
In the meantime, while it is determined that the corporate group of an applicant meets the
standards, JPXR may encourage the applicant to improve its corporate profile so that it will
be more suitable as a listed company.
The following summarizes the requirements of the listing criteria and key points of the listing
examination.
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List of Substantive Requirements of Examination Standards
Rule 207 of the Securities Guidelines Concerning Listing Examination, etc. II 2 – 6

Listing Regulations (summary)
(1) The business plan of corporate group of an initial listing
applicant is appropriately drawn up in light of its
1. Corporate continuity and
business model, business environment, risk factors,
profitability:
etc.;
(2) The corporate group of an initial listing applicant is
A business is operated
reasonably expected to be able to maintain a stable
continuously and a stable
profit in the future;
revenue base is present
(3) Management activities are recognized to be able to be
carried out stably and continuously
(1) An applicant is not deemed to give or enjoy profit
wrongfully through a trading act or any other
management activities with specified entities.
2. Soundness of corporate (2) The mutual relationship of relatives, the state of
management concurrent posts with any other company are
recognized not to impair the fair, faithful and full
A business is carried out execution of office duties and effective implementation
fairly and faithfully. of audit practices.
(3) When an applicant has a parent company, etc., its
management activities are recognized to have
independence from such parent company, etc.
(1) The system to ensure the appropriate execution of
3. Effectiveness of
duties of officers of the corporate group of an initial
corporate governance
listing applicant is recognized to be appropriately
and internal
prepared and operated.
management system of
(2) The internal management system is recognized to be
an enterprise
reasonably developed and appropriately operated to
carry out effect management activities.
Corporate governance and
(3) Necessary personnel are recognized to be competent to
internal management system
carryout stable and continuing management activities.
are developed in accordance
(4) A listing applicant adopts accounting treatment
with the size, corporate
standards adaptable to its actual situation and in
maturity and functioning
addition, necessary accounting body is recognized as
properly.
being prepared and operated appropriately.
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(5) It is recognized that an effective system to comply with

laws and regulations is prepared and operated
appropriately, and that no material breach of laws and
regulations has recently been made.
(1) The applicant is in a status where any corporate
information including facts which have a significant
impact on the management has been managed and
disclosed in a timely and appropriate manner. The
system to prevent any insider trading has appropriately
been designed and implemented.
(2) Documents for the disclosure of corporate information
4. Appropriateness of have been prepared in accordance with laws and
disclosure of corporate regulations, and have prominently described any items
profile, risk information, which may potentially have significant effect on
etc. investment decisions of investors, items to be
considered as risk factors and items to be regarded as
The applicant is in a status significant premises for business activities, in an
where disclosure of the understandable manner
corporate information, etc. (3) Any transactions between related parties and other
may be carried out in an specified parties or adjustments for shareholding ratio
appropriate manner have not distorted the disclosure of the substance of the
corporate group.
(4) When a listing applicant has a parent company, etc., the
applicant is deemed to be able to appropriately
understand company information of the parent which
may significantly influence the management of the
applicant and to disclose the information to investors in a
timely and appropriate manner.
(1) The contents of the rights of shareholders and the state
of their exercise are deemed appropriate from the view
5. Other matters deemed
points of the public interest or the protection of
necessary by the
investors.
Exchange from the
(2) The applicant does not have a contention or dispute,
viewpoint of the public
etc. which would have a material; effect on the
interest or the protection
management activities and business performance.
of investors.
(3) The applicant is recognized to develop an internal
system to prevent criminal and extremist elements from
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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) When domestic stocks pertaining to initial listing
application are stocks with no voting rights (limited to
cases where there are no types of stocks other than the
domestic stocks for which the listing application is
made) or stocks with less voting rights, they must
satisfy each item enumerated in Guidelines II, 6. (4).
(5) When domestic stocks pertaining to initial listing
application are stocks with no voting rights (limited
cases to where there are stocks other than the
domestic stocks for which the listing application is
made), they must satisfy each item enumerated in
Guidelines II, 6 (5).
(6) It is deemed appropriate from the viewpoints of the
public interest or the protection of investors.
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1. Corporate Continuity and Profitability (Rule 207,
Paragraph 1, Item 1 of the Regulations)
(1) The business plan of corporate group of an initial listing applicant is appropriately drawn
up in light of its business model, business environment, risk factors, etc.;
(Guidelines II 2, (1) )
Requirements of criterion and focus of examination
In examination on the basis of these criteria, JPXR will assess whether the business plan of
applicant which is filed with JPXR has been prepared in due course of process.
In practice, the examiners will gain in-depth understanding of characteristics (strength and
weakness) of business model and profit generating structure of the applicant with reference
to, but not limited to, factors in prior years which gave rise to changes in operating results.
Then they will mainly assess whether the business plan exhaustively reflects various factors
to be reflected in developing businesses going forward (industry environments and status of
peer companies, market size and market prices at the market where the applicant operates,
trend in demands for products and services, trends in raw materials market, etc., status of
major customers, suppliers and other business partners, and status of law and regulations).
At that time, they will also assess whether the plan to generate profit, sales plan,
procurement and production plan, capital investment plan, personnel plan and fundraising
plan are consistent with each other.
In addition, JPXR will determine whether the business plan represents a reasonable plan
which has been reasonably developed through the due process of the applicant on a
company-level, rather than a plan which merely shows internal target goals based on the
sole determination of specific management, departments or divisions.
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(2) The corporate group of an initial listing applicant is reasonably expected to be able to
maintain a stable profit in the future;
(Guidelines II 2 (2) )
For the purpose of examination on the basis of the criteria, JPXR will evaluate whether an
applicant is reasonably expected to recognize stable profit for a certain period of time
following listing in consideration of the business plan of the corporate group.
The reference “a certain period of time” for the purpose of this paragraph basically
represents two years period including application year. However, if it is expected that any
event which is likely to significantly affect the performance of the corporate group may take
place in the third year or after following listing, JPXR will make the assessment including
such event.
For the purpose of this criterion, JPXR will assess the profitability of main business of an
initial listing applicant, so the profit to be examined will, in principle, be an ordinary income.
In evaluating “whether an applicant is reasonably expected to recognize stable profit,” JPXR

will make examination responsive to changes in performance of the corporate group of initial
listing applicant as mentioned in (i) or (ii) below.
(i) Performance, revenue and profit improve on a stable basis
When the performance, revenue and profit of the corporate group of initial listing applicant
improves on a stable basis, JPXR will evaluate whether the business plan has been
developed appropriately (no examination of any points other than those referred to in
Guidelines II, 2 (1) will be made).
However, if the amount of profit of the corporate group of initial listing applicant is small,
JPXR will assess the basis for continuous recognition of profit following listing. In practice,
JPXR will evaluate the profit and loss break even point and basis for continuously clearing
the point, as well as the stability of segments which have consistently recognized profit in
excess of costs and expenses incurred by the corporate group as a whole.
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(ii) Performance declines as revenue and profit are decreasing
When the performance of the corporate group of initial listing applicant declines as its
revenue and profit are decreases, JPXR will examine the basis for continuously recognizing
profit after listing. In practice, JPXR will evaluate the profit and loss break even point and
basis for continuously clearing the point, as well as the stability of segments which have
consistently recognized profit in excess of costs and expenses incurred by the corporate
group as a whole.
In the meantime, if the amount of profit is small, the corporate group of initial listing applicant
is highly likely to incur ordinary loss after listing. So JPXR will more strictly evaluate the
basis for continuously recognizing profit. When it is difficult to evaluate the basis, JPXR may
assess the bottom of operating results on the basis of historical experiences during the
application period.
When profit and loss significantly fluctuates due to special events or reasons, JPXR will
conduct the evaluation including consideration of such events.
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(3) Management activities (meaning business activities, and investment activities and
financial activities; the same shall apply hereinafter) of the corporate group of an initial
listing applicant are recognized to be able to be carried out stably and continuously in
light of matters including those enumerated in the following a. to d.
a. Business activities of the corporate group of an initial listing applicant are in a state
enumerated in the following (a) and (b):
(a) Business activities are able to be conducted stably and continuously in light of
purchases, production and sales, actual results of transactions with customers and
suppliers, characteristics and demand trends for manufactured products and services,
and the state of performance of any other business (excluding the viewpoint of the
structure of the corporate group); and
(b) The structure of the corporate group is no serious obstacle to continuous business
activities;
(Guidelines II 2 (3) )
Note: For example, like a Chinese company subject to the restrictions on foreign
investments which lists its stock on a foreign stock exchange, if there is some
special structure between an applicant and the Chinese company belonging to its
corporate group, JPXR will make the examination, focusing on points in (b) above.
While the criteria with respect to (1) and (2) above represent those for examining prospectus
for performance mainly characterized by profit and loss, as well as cash flows, the
examination on the basis of criteria in (3) above will focus on actual status of corporate
management including the evaluation as to whether the management activities of the
corporate group of applicant will be carried out stably after listing. For the status of
subsidiary, etc., JPXR will make the examination in consideration of significance of its effect
on the corporate group.
The following outlines how JPXR examines these issues.
First, JPXR will assess the nature and status of business activities of the corporate group of
applicant, represented by procurement, production and sales (in this paragraph,
manufacturing industry is referred to as an example; naturally items to be examined will
differ, depending on the category and lines of business).
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For procurement, the examination point is that the applicant can procure necessary items of
relevant quality and volume in a timely manner.
For production, the examination point is that the applicant has in place organizations and
systems where it can produce products in quantity which may not hamper continuous sales
activities and in quality which should not impair the confidence of customers in products.
When the applicant outsources a part of production activities, JPXR will naturally evaluate
whether the applicant has selected a good outsourced entity.
With respect to sales, the examination point is that the relationship with major customers
has been well maintained or there are no ailing companies in customers. If the business
relationship with a customer is deteriorating, JPXR will more closely examine how the
curtailment or termination of business with the customer will affect the corporate group of
applicant or how it can compensate for losses arising from such situation. JPXR will also
assess the existence of any factors which significantly impede the continuous operations of
business after listing.
Procurement, production and sales activities should not be carried out in isolation, but
should be carried out as a whole in a consistent and aligned manner.
For the purpose of examination of these issues, the conditions of and competition within the
industry where the corporate group of applicant operates are also considered to be material.
Therefore, JPXR will examine the business environments surrounding the corporate group
and whether the marketability of products are not declining, as well as the products of the
applicant group are characterized such that they may continue to evoke relevant demands.
Even when the market in which the applicant operates is expanding, if its market share
declines, JPXR will assess the factors which giving rise to such decline, future prospectus
and how the applicant actually addresses such situations.
The following are also regarded as examination points.
 Development policies for business offices and current status

In cases where the applicant carries out business represented by operation of several shops,
a key point in this case is that the applicant will be able to continuously open shops on the
basis of the development of shop opening policies and the satisfaction of requirements for
shop opening.
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 Status of contracts which are significant in terms of management

JPXR will examine the existence of material contracts for the business management,
including franchise contract and royalty contract, and whether such contracts are certain to
be maintained and renewed.
 Legal disputes, litigation cases and breach of laws and regulations, etc.
JPXR will assess whether a legal case will not impair the reputation of products, etc. and
whether there is any case which adversely affects business activities.
 Risk management
JPXR will assess whether the applicant has in place systems to ensure the continuation of
business and recovery in the event of occurrence of any accident or disaster.
b. Investment activities such as capital investment and business investment, etc. of the
corporate group of an initial listing applicant do not hinder continuous management
activities in light of the trend and future outlook, etc. of the state of investment;
c. Financial activities such as fundraising, etc. of the corporate group of an initial listing
applicant do not hinder continuous management activities in light of the trend and future
outlook, etc. of the state of financial affairs
In examining the continuation of management activities of the corporate group, points relate
to the status of investment activities and financial activities, underlying the continuity of
business activities.
For investment activities, JPXR will assess whether the applicant has appropriately
developed investment plan for capital expenditures and investments in research and
development activities which are required to maintain competitive power in business and
address future expansion of business, as well as whether the applicant has made sufficient
and necessary consideration of cash flow plan and investment recovery plan in making
investment in a new business.
With respect to financial activities, JPXR will assess the availability and prospectus for
necessary funds to realize business expansion and business expansion on the basis of the
financial conditions of the corporate group of the applicant.
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In addition, when the borrowing is expected to continue to increase because of capital

expenditures going forward, JPXR will assess whether financial conditions which
significantly affect the continuation of business are unlikely to deteriorate significantly on the
basis of trends in the industry, business relationship between the applicant and banks, and
fundraising plan including capital increase through public offering after listing.
In addition when the applicant increases its capital concurrent with initial listing, JPXR will
also assess the nature of the actual investment plan backed by funds raised and the
prospectus for the recovery of such investments.
d. Concerning the matters which become the premise of the main business activities of the
corporate group of an initial listing applicant (meaning permission, authorization, license,
or registration pertaining to main businesses or manufactured goods and commodities or
selling agent agreements or production entrustment agreements; the same shall apply
hereinafter), there are no obstacles to the continuous business activities.
For the purpose of the examination on the basis of this criterion, if the business of the
applicant requires any permit or authorization, etc., JPXR will assess whether the applicant
is in a position to continuously renew such permit or authorization.
The term “the matters which constitute the premise underlying main business activities”
refers to “permission, authorization, license, or registration pertaining to main businesses or
manufactured goods and commodities or sales agent agreements or production entrustment
agreements.”
When a main business of the corporate group relates to industry categories which require
permission, authorization, license or registration of administrative agencies, etc., or largely
depends on selling agent agreement or production entrustment agreement with as specific
business partner, it is expected that the business will not be able to continue in the event
that they are terminated or cancelled.
Therefore, JPXR will assess whether such event leading to cancellation or termination
thereof has not emerged.
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In addition, JPXR requests the applicant to submit the statements which describe the
following and assess the matters which become the premise of main lines of business on
the basis of descriptions therein.
- Matters which constitute the premise underlying the main business activities of the
corporate group of the applicant;
- Effective period of permission, etc. and the validity when it is specified by laws and
regulations or contract;
- Events leading to cancellation or termination of licenses, etc. when they are specified by
laws and regulations, or contracts;
- For the matters which constitute the premise underlying main business activities of the
corporate group of applicant, the statement that no factors which hamper the
continuation thereof have taken place and that any occurrence of such factors would
have significant impact on business activities.
Meanwhile, if there are no matters which constitute the premise underlying the main
business, the applicant is required to disclose the fact.
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2. Soundness of Corporate Management (Rule 207,
For the purpose of the examination on the basis of this criterion, in order to protect investors,
JPXR will assess whether the corporate group of applicant carries out its business on a fair
and faithful basis.
In practice, for the soundness of corporate management, JPXR will assess whether the
corporate group of the applicant meets the following criteria.
(1) The corporate group of an initial listing applicant is recognized not to give or receive
profits wrongfully through a trading act (including indirect trading acts and free supply of
services and its reception; the same shall apply hereinafter) or any other management
activities with relevant parties and other specified entities, in light of the matters
enumerated in the following a. and b. and other matters:
a. Where a transaction has took place between the corporate group of an initial listing
applicant and its relevant parties (Note 1) or any other specified entities, and such
transaction has rationality of continuing the transaction and reasonability of trading terms
including trading prices; and
b. Benefits of the corporate group of an initial listing applicant are not 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
Note 1: “Relevant party” means relevant parties referenced in represents “related parties”
prescribed in Rule 8, Paragraph 17 of the Financial Statements, etc. Rules.
Note 2: “Other specified entity” refers to any person which is deemed to have a strong
relationship with the corporate group of the applicant in terms of human and
financial resources, though they are not within the scope of related parties
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(hereinafter collectively referred to “related party, etc.”).
Note 3: “Transactional acts” include trading transactions, finance transactions, lease

transactions of real estate, etc., and transactions associated with the use of
industrial properties. They include cases where the corporate group of the
applicant has carried out transactional acts indirectly rather than direct
transactional acts and where the corporate group merely provides services as its
business without charging any proper consideration.
Since transactions with related parties represent a transaction with a person having special
relationship, there is a concern that the applicant is forced to enter into transactions which
are not primarily necessary or the terms and conditions of the transaction may be distorted.
Therefore such transactions could be alleged to represent transactions for which the
applicant is required to exercise a high degree of caution.
On the other hand, there are cases where it is reasonable to continue transactions after
listing because the applicant finds it difficult to identify an alternative partner as transactions
have continuously been carried out, starting with the time before the preparation of the
listing or as the applicant cannot identify any partner who shows more favorable terms and
conditions of transactions. In such cases JPXR will assess the reasonableness (necessity
for the purpose of its business) of the transactions and appropriateness of the terms and
conditions thereof.
Point for the purpose of this criterion is that even if the terms and conditions of the
transaction are determined to be adequate compared to others, it might be regarded as
undue grant of benefit if the transaction itself lacks in reasonableness (necessity for the
purpose of business)
In addition, even if transaction between the corporate group of applicant and related party,
etc. is carried out under the terms favorable to the corporate group of applicant, the
transaction would be determined to grant undue benefits to the group if the influence of the
group over the related party increases as the group receives benefits associated with the
transaction.
In the examination on the basis of this criterion, one of the determinant factors to decide that
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the transaction is determined to grant undue benefit is that, for example, the management of
the applicant can reasonably explain that the transactions activities can be justified when
considering the benefit of the corporate group of applicant, not individuals, in the first place.
Especially, it might not be questioned whether the transaction was necessary for a company
or its owner as an individual because the ownership and management of the company were
not sharply separated before listing. However, as a listed company has a large number of
general investors, in carrying out any transaction, it is required to satisfy the benefits of
shareholders including general investors by clearly separating the assets of the company
from those of the owner.
In consideration of the above, when any related party transaction occurs at the applicant,
the applicant is required to consider organically whether such transaction is reasonable
(necessity for the business) or the terms and conditions are adequate.
Moreover, JPXR will assess whether the applicant has appropriate recognition on related
party transactions or has in place appropriate check and balance functions so that no
transaction without reasonableness or adequate terms and conditions would take place after
listing even in cases where no related party transactions have been entered into or the
terms and conditions are acknowledged to be adequate.
For any transaction involving the management (e.g., any business acquired or planned
through the efforts of the management in itself, or any project whose necessary matters are
exceptionally determined by the management), any internal check is unlikely to be properly
applied, which may result in some frauds. Therefore, the examiners will assess whether an
appropriate system has been developed and operated where such project will be
considered at a corporate level and appropriate check and balance functions will be applied
properly, and whether or not any transaction involving the management, which was actually
carried out, is an inappropriate one.
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(2) The mutual relationship of relatives of officers of an initial listing applicant, its
composition, actual working situation 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 board members, accounting advisors or
executive officers, otherwise, spouses of persons corresponding to these and blood
relatives within the second degree and relatives by affinity take a position as an auditor, a
member of an auditing committee or any other positions corresponding to these, it shall
be deemed to impair the implementation of an effective auditing.
For the purpose of examination on the basis of this criterion, JPXR will assess whether the
status of officers of applicant is not to impair faithful and sufficient execution of duties. This
criterion might be infringed if the decision making of applicant is highly likely to be distorted
because of biased composition of officers of applicant (because family members or relatives
of the management account for a large portion of the Board of Directors) or because of any
decision favorable to a specific interest group, or if a flexible and fair decision in the due
course of ordinary business is highly likely to be impeded, including the decision on the
holding of meeting of the Board of Directors of applicant, as officers of the applicant
concurrently hold positions of directors or officers of another company.
The following outlines how JPXR will assess these issues.
First, since it is assumed that for a company for which family members or relatives of the
management account for a large portion of the Board of Directors, the influence thereof over
the company would be strong, JPXR will assess whether the interest of officers from family
members or relatives of the management would be preferred to that of company as a whole
in consideration of the background for the election thereof and the status of related party
transactions therewith. Especially in case where the family members or relatives of the
management who serve as officers account for the majority of the Board of Directors), JPXR
will more closely examine resolutions made by the Board of Directors as their influence over
the company is strong.
For company auditors or the committee of company auditors, in consideration of their
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functions, it is desirable to avoid the assignment of any family members to such capacities.
Especially in the event that any spouse or blood relative of a second degree of directors,
executive officers or accounting advisors ((including employees of an accounting advisor
who are in charge of accounting advice if the accounting advisor is a corporation) are
appointed to the offices of company auditors or members of the committee of company
auditors, such appointment will be determined to be a self-audit, giving rise to situations
where the effective implementation of the audit would be impaired.
Next, if any officer of the applicants concurrently holds the position of officer at another
company, JPXR will assess whether such officers execute their required supervision duties
properly in consideration of attendances at the board meetings of the applicant and for
full-time officers, assess whether the mobility of the execution of their duties have not been
impaired.
If the applicant has any business relationship with such another company, JPXR will assess
in the listing examination whether the applicant has in place any governance system to
exercise checks and balances on any such business relationship, and whether or not the
applicant is forced to make any onerous decisions, in consideration of the status of
procedures for the determination of the terms and conditions of the transaction. If JPXR
affirms the relevant systems and implementation, it may determine that such concurrent
holding of positions could be permitted.
In addition, in cases where an applicant has an parent company, etc. (so called “subsidiary
listing”) and the decisions on management policies or execution of duties are significantly
influenced by the parent company, etc. as the total number of officers who concurrently
holds other positions and directors seconded from the parent company, etc. accounts for the
majority of the Board of Directors (in case of a company with committee system, including
each committee) or because of the resolution requirements specified in the Articles of
Incorporation, JPXR will more closely examine this point in order to protect minority
interests.
In considering the status of composition of officers or positions concurrently held, an

applicant is required to appropriately address enhanced efficiency of management,
establishment of corporate ethics and effective checking functions over management, fully
recognizing the importance of corporate governance practices followed by listed companies.
In the context of the soundness of corporate management of the applicant, though in rare
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cases, there are cases where officers and employees of the parent company, etc. may have
made equity investments in the applicant or cases where the applicant has issued any
subscription warrants to the officers and employees of the parent company, etc. In its listing
examination JPXR will carefully address the equity investments by officers and employees
of the parent company, etc. which do not directly relate to the business operation of the
applicant as such investments lack in reasonableness or necessity in conjunction with the
clear ownership of responsibilities or grant of incentives. Though rare, officers or employees
of the parent company, etc. may have made equity contributions to the applicant or the
applicant may have granted some subscription warrants to officers and employees thereof.
Any equity contribution of officers or employees of parent company, etc. to the applicant has
nothing to do with the management of applicant and such transactions may lack in clarified
ownership of management responsibility or reasonableness and necessity for granting
incentives. Thus JPXR will more strictly address these issues in conjunction with the
soundness of business management of applicant.
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► When an applicant has a parent company, etc. (Note)
(3) 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 carried out
independently from such parent company, etc. in light of the matters enumerated in the
following a. to c. or any other matters:
Where an applicant has a parent company, etc. (i.e., in the case of a “subsidiary listing”), the
relationship is assumed to entail potential conflict of interests between the interests of the
parent company and the minority interests of the applicant. In examining a listing application
of this type, i.e., subsidiary listing, JPXR will therefore evaluate whether the applicant’s
independence from the parent company, etc. satisfies the criteria set forth by JPXR on
independence of the applicant, in addition to the criteria enumerated in a. to c. below, in
order to ensure that the rights and benefits of the minority interests of the applicant will not
be impaired.
With respect to a “subsidiary listing,” the parent company, etc. may hold a large percentage
of the voting rights of the applicant after listing. Likewise, some of the directors, officers, etc.
of the parent company, etc. may concurrently hold positions as directors and employees of
the subsidiary. Under these circumstances, the applicant will not be permitted ideally to
make decisions at its discretion. It is not of intrinsic benefit for the governance of a listed
company if a specific parent company, etc. has significant influence over the listed company.
Rather, it would be preferable for an applicant to have its discretion to develop and transform
its operations and management system in consideration of the environment and
characteristics of its business by taking relevant measures to reduce the ratio of equity
investment of the parent company, etc. in the listed company and reduce the number of
directors, officers, etc. who concurrently serve in similar positions in the parent company, etc.
in future.
Meanwhile, the listing of a subsidiary making up an integral part of a parent or listing of a

subsidiary deemed to be a core company (a subsidiary accounting for a large portion of the
enterprise value of a parent company group as a whole) will not, in substance, constitute a
new target for investment. Moreover investors may be concerned that a listed parent
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company intends to acquire dual gains by making a subsidiary with a core role in the
company group list its shares. Thus, the JPXR is certain to address these concerns carefully
when it examines the listing application.
On the other hand, when the applicant has already listed its shares on another financial
instruments exchange, we may not be able to argue that the parent company intends to
obtain dual gains associated with the initial public offering. In this case, the abovementioned
concerns are less pressing. We do, however, consider the circumstances and conditions
under which the new listing on the other financial instruments exchange was made.
Moreover, an applicant may significantly increase its relative contribution to the enterprise
value of a parent company group, either through fluctuations of the parent company’s
performance or through the growth of the applicant itself. In such cases, the JPXR will
decide on listing by comprehensively considering historical performances and future
earnings prospects. The JPXR will not decide the listing based solely on temporary
fluctuations of operating results.
Note: A “parent company” means a parent company of an applicant prescribed in Rule 8,

Paragraph 3 of the Financial Statements, etc. Rules. On the other hand, a “parent
company, etc.” means a “parent company” or other affiliated companies or a parent
company of other affiliated companies, as described in Rule 8, Paragraph 17, Item 4
of the same rules; provided, however, that these will not apply to cases where the
applicant is not expected to have a parent company, etc. due to a public offering or
sale effected prior to the listing by the last day of the first business year ending after
the listing.
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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. (excluding
the corporate group of an initial listing applicant; the same shall apply hereinafter.), 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.;
When an applicant was established through a divesture of one business of the parent
company, etc., it is likely that the activities of the applicant merely relate to the performance
of a part of business activities of the parent company and the business activities of the
applicant have been directed by the parent company, etc., whereby the applicant cannot
make any decisions on business activities at its discretion
The applicant may also find it difficult to determine management policies or operation
policies at its discretion which are necessary in continuously and freely carrying out its
businesses because of the management policies of the parent company, etc. on related
companies.
In such cases, earnings which should be returned to the shareholders of the applicant are
likely to be impaired at the discretion of the parent company, etc., and the applicant is
deemed to constitute only a business department of the parent company, etc. Such
companies are not appropriate as an investment choice offered to investors.
Therefore in determining whether or not the applicant constitutes a business department of

the parent company, etc., JPXR will assess the following points and determine that the
applicant has capabilities to carry out its business activities at its discretion, the parent
company, etc. has not impeded free business activities or management judgments of the
applicant and such likelihood is remote in the near future.
- The positions of officers of the applicant concurrently held by those at the corporate
group of the parent company, etc. are unlikely to impede the applicant’s own decisions;
- The ordinary business operations of the applicant have been carried out under the
applicant’s own decisions and they are not necessarily directed by the parent company,
etc.;
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- There are no rules or procedures which require the prior approval of the parent company,
etc. on the decision making of the applicant;
- The applicant has its own capabilities, technologies or know-how to implement the
market research, developments, design and planning for products; and
- The applicant has been carrying out price negotiations, new customer exploration, and
activities to expand sales to existing customers by itself.
Furthermore, if a company which carries out similar businesses of the applicant exists in the
corporate group of the parent company, etc., it is expected that the parent company, etc.
may leverage its controlling position to restrict or coordinate the business activities of the
applicant as the parent company, etc. strives to prefer the earnings of the group as a whole
to those of the applicant. In such cases, in consideration of the positioning of each group
company on the basis of the nature and characteristics of the businesses (operating
segments, customers and distribution channels) (the background for competitions among
group companies, if any), the reasons why the applicant implements management
independent of the parent company, etc. and the nature of business coordination made by
the parent company, etc., JPXR will assess whether the applicant secures sufficient
independence from the parent company, etc. such that it may not be exposed to undue
business coordination of the parent company, etc.
In the event that it is concerned that the applicant constitutes a “business department or
division” of the parent company, etc., and the shareholding ratio of the parent company, etc.
is high, JPXR will assess this point by confirming the intention of the applicant to reduce the
shareholding ratio of the parent company, etc.
<Applicant recognizes sales arising from the parent company, etc.>

When an applicant recognizes sales arising from its parent company, etc., it is assumed that
there would be close relationship between the applicant and the parent company, etc. In
practice, JPXR will assess whether the applicant has not discretionally depended on the
parent company, etc. for the purpose of business by carefully evaluating functions the
applicant plays in the business.
TSE may determine that the applicant constitutes a business department of the parent
company, etc., for example in the following cases:
- The applicant recognizes sales as it provides services for which the parent company, etc.
becomes an end user under the instructions thereof; or
- The applicant recognizes sales as it receives orders from the parent company, etc. on a
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preference basis, rather than making sales efforts by itself
On the other hand, even when the applicant recognizes sales arising from the parent
company, etc., JPXR may determine that the applicant does not constitute a business
department or division of the parent company, etc. if the applicant carries out sales activities
to users based on proprietary technologies or know how or the parent etc. merely serves as
a contact in form (providing transaction account) due to the relationship with the customers.
In addition, though the applicant recognizes sales arising from entities other than the parent
company, etc., JPXR may determine that the applicant constitutes a business department or
division of the parent company, etc. unless the applicant has proprietary technologies or
know how or if it is determined that the applicant totally depends on the parent company, etc.,
for example, where it comprehensively depends on the parent company, etc. for business
activities.
<An applicant is determined to partially constitute a business department>

Even when some of the businesses of applicant are determined to constitute a business
department or division of the parent company, etc., if others are determined not to constitute
a business department or division (the applicant has an independent business) and they
generate relatively large revenue and are expected to maintain its continuity and have
growth potential, JPXR will make examination in comprehensive consideration.
<Lease transaction of real estate>

In the following cases, JPXR will determine whether an applicant constitutes a business
department or division based on a degree of dependence on the parent company, etc. with
respect to each relationship (ratio and amount, etc.) and on materiality of business activities:
- The applicant rents a real estate from the parent company, etc.;
- The applicant has made borrowings from the parent company, etc.;
- The applicant has received financial guarantee of the parent company, etc. with respect
to borrowings or loans from external entities, or
- The applicant has received some secondment from the parent company, etc.
When an applicant made borrowing directly from the parent company, etc. or received
financial guarantee of external loans from the parent company, etc. after the beginning of the
previous year, and if some borrowing or financial guarantee remains outstanding, it is
expected that the applicant has no capability to raise funds by itself. In such cases, JPXR
will carefully assess whether the applicant constitutes a department or division (Note).
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Note: In cases where there is a cash management system (CMS) in the corporate group of
the parent company, etc., if there are a relatively large number of companies which
use its services (borrowers and lenders) and the CMS holds a large value of funds, it is
considered that the CMS has substantively played the same role as financial
institutions. In such cases, if the applicant made borrowing from the CMS, the
applicant’s capability to raise funds may not be questioned, compared to the direct
borrowing from the parent company, etc. Therefore, JPXR will flexibly assess the
conditions of borrowing after the beginning of the previous year when the applicant’s
own capability to raise funds are not questioned as the applicant demonstrates the
capability to borrow funds from external financial institutions.
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b. The corporate group of an initial listing applicant or that of a parent company, etc. does
not coerce or induce transaction which become disadvantageous to such parent
company, etc. or the corporate groups of such initial listing applicant such as transactions
under markedly different terms from those of normal transactions (meaning a current
market price, for example; the same shall apply hereinafter.);
It is likely that transactions between the applicant and the parent company, etc. may be
carried out under the terms and conditions significantly different from those at arm’s length
as they can more arbitrarily determine the terms and conditions for the transactions
compared to those carried out with third parties.
In such cases, the interests of the shareholders of the applicant or the parent company, etc.
might be impaired. In addition, contrary to the intention of the applicant, if the applicant is
forced by the parent company, etc. to carry out transactions under terms and conditions
significantly different from those at arm’s length, it is considered that the independence
required of listed companies is not assured.
Thus this criterion requires the transaction with the parent company, etc. to be carried out at
the conditions similar to those at arm’s length.
In evaluating the “terms and conditions similar to those at arm’s length,” JPXR will compare
the transactions with others or assess the procedures for determining such terms and
conditions. For example, for sales transactions, JPXR will mainly compare the transaction
terms with those of other transactions. For finance transactions, JPXR will make comparison
with prevailing market interest rate while assessing the guarantee cost in case of financial
guarantee of the parent company, etc. For real estate leases, JPXR will look into the
conditions by comparing the rate with that for adjacent areas or confirming an “official
property appraisal” as appropriate. For the royalties for the use of any brand, comparison
with the “terms and conditions of other companies in the corporate group” or confirmation of
“method to determine royalties for use of brands” will be made. JPXR will also consider
some changes in terms and conditions of transaction in the past.
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c. The state of receiving seconded persons of the corporate group of an initial listing
applicant is recognized not to excessively depend on the parent company, etc. and not to
hinder continuous management activities.
corporate group of the applicant can secure necessary personnel to carry out its business
activities independent of the corporate group of the parent company, etc.
If the corporate group of the applicant has accepted any secondment from the corporate
group of the parent company, etc., JPXR will assess whether the assignments of the
seconded persons have not impeded the independence of management of the applicant’s
corporate group. If the seconded persons are assigned to positions as officers or general
managers who manage departments exposed to the influence of the parent company, etc.,
JPXR will be concerned with such situations from the perspective of independence.
However if such seconded persons are assigned to any department which has nothing to do
with the determination of management policies or transactions with the parent company, etc.,
JPXR may permit such situations in consideration of effect on controlling power.
In addition it is important that the status of secondment from the parent company, etc. does
not affect the corporate continuity of the corporate group of the applicant as the replacement
of the seconded persons is ensured when the secondment contract is terminated. It is likely
that the status of secondment may adversely affect the continuation of the businesses of the
corporate group of the applicant when the businesses highly depends on the special
knowledge or know how of the seconded persons. However, if any replacement of such
seconded persons is available by recruitment outside or elevation of employees inside,
JPXR may conclude that such situations may not adversely affect the continuation of
businesses.
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3. Effectiveness of Corporate Governance and Internal
Management System of an Enterprise (Rule 207,
(1) The system to ensure the appropriate execution of duties of officers is recognized to be
appropriately prepared and 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
is able to effectively implement checks and balances as well as auditing concerning the
execution of work duties of officers of the corporate group of an initial listing applicant. A
listing examination in such a 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; and
b. In the corporate group of an initial listing applicant, checks and balances as well as
auditing are implemented with regard to the execution of work duties of officers for the
purpose of the continuous and efficient management of the corporation. Moreover, such
checks and balances as well as auditing effectively function.
When a company goes public by publicly offering its stocks, the company is required to
ensure and maintain the capability to generate profit, ensure soundness of its management
and to design and implement appropriate disclosure practices. So the company must have
in place appropriate mechanisms for corporate governance practices.
For the purpose of examination on basis of this criterion, JPXR will evaluate whether the
corporate group of applicant has designed appropriate corporate governance systems and
implemented them effectively, mainly focusing on the design of organs and composition of
officers. In practice, JPXR will confirm the background and reasons for the adoption of
current systems and the composition of officers in consideration of basic concept on
corporate governance practices (Note 1).
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Note 1: For the purpose of the examination of the corporate governance systems, the
applicant is requested to submit a “Corporate Governance Report (Draft)” and
JPXR will assess the contents described in the report. For the procedures for the
descriptions in the report, please refer to the TSE website at the section of
“Download Documents to be Submitted by Initial Listing Applicant”.
(http://www.jpx.co.jp/english/equities/listing/cg/01.html).
In addition, with respect to Board of Auditors (,Audit Committee or Audit and Supervisory
Committee), given the importance of the roles it plays in terms of corporate governance,
JPXR will assess the nature of daily auditing work and its efforts through interviews with
full-time company auditors.
Meanwhile corporate governance systems may differ from one entity to another depending
on its size and circumstances surrounding the entity. On the other hand, some organs are
required to be formed to ensure the corporate governance system suitable for publicly
traded companies.
Regulations on “Corporate Code of Conduct” specify the code of conduct with which listed
companies should comply. An applicant company is also required to establish organs and
enact initiatives as provided in Rules 436-2 to 439 of the Regulations. (Notes 2, 3, 4 and 5)
The Code of Corporate Conduct also defines, as one of the matters expected of listed
companies, that "an issuer of listed domestic stocks shall make efforts to secure at least one
(1) independent director (Rule 445-4 of Securities Listing Regulations)." The listing
examination requires listing applicants to clarify the policy on composition of independent
director(s)/auditor(s) (number of independent director(s)/auditor(s), distinction of directors
and auditors and so forth). In cases where listing applicants do not secure any independent
directors, the listing examination also requests the listed company to identify its policy to
secure an independent director(s) and the progress of actions to secure an independent
director(s), as well as to describe the verified progress in the Corporate Governance Report.
In particular, in cases (i) where a company submits a new listing application for assignment
to the 1st Section of the Tokyo Stock Exchange, (ii) where there is a parent company, etc.
with a strong relationship with the applicant company, or (iii) where the board is
family-controlled, such applicant is required to specify a plan to secure an independent
director(s). When examination is conducted on an applicant with respect to assignment to
the 1st Section or alteration of markets, the same requirements will be applicable.
Furthermore, in cases where the applicant company already clarified the policy to secure an
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independent director(s) and the progress of actions to secure an independent director(s) in

the preceding listing examination procedure (at the time of new listing), the applicant
company is required to clarify the subsequent progress.
Furthermore, the Corporate Governance Code (hereinafter referred to as the “Code”)

specifies for the requirements of listed companies in the context of “Code of Corporate
Conduct” that listed companies shall respect the "Principles and Spirits of Corporate
Governance for Listed Companies" formulated by the Exchange and make efforts to
enhance their corporate governance.” (Rule 445-3 of the Listing Regulations). In addition,
with respect to items to be complied with by listed companies, the provisions also require
listed companies to state its commitment to implement each principle of the Code or the
reasons if it does not intend to do so in the report over the corporate governance (Rule
436-3 of the Listing Regulations). During the course of listing examination, the examiners
examine the descriptions (the existence of descriptions of reasons why they do not
implement each principle of the Code and existence of descriptions of items requiring
disclosures by each principle of the Code) in the Corporate Governance Report (draft),
submitted at the time of the listing application.
Note 2: Requirements prescribed in Rules 436-2 to 439 of Regulations are as follows:
Rule 436-2: 1. For the protection of general investors, an issuer of listed domestic
stocks must secure at least one independent director/auditor
(meaning an outside director (meaning an entity falling under an
outside director prescribed in Rule 2, Item 15 of the Companies Act
who is an outside director/auditor prescribed in Rule 2, Paragraph 3,
Item 5 of the Ordinance for Enforcement of the Companies Act (the
Ordinance of the Ministry of Justice No. 12 of 2006)) or outside
auditor (meaning an entity falling under an outside auditor
prescribed in Rule 2, Item 16 of the Companies Act who is an
outside director/auditor prescribed in Rule 2, Paragraph 3, Item 5 of
the Ordinance for Enforcement of the Companies Act) who is
unlikely to have conflicts of interest with general investors;
hereinafter the same).
2. JPXR shall specify the necessary items for securing an independent
director(s)/auditor(s) in the Enforcement Rules.
Rule 436-3 An issuer of domestic listed stocks must describe its committment to
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implement various principles of “Corporate Governance Code” as

attached herewith or the reasons if it does not intend to do so in the
report specified in Rule 419. In this case, the scope of various
principles which require the description of “commitment to implement
or the reasons if it does not intend to do so” shall be defined in the
following items according to the section of market on which it is
listed:
(a) Basic principles, principles, and supplemental principles; listed
on the First Section or Second Section:
(b) Basic principles; listed on MOTHERS or JASDAQ
Rule 437: A listed domestic company shall set up a body enumerated in each of the
following items:
(1) A board of directors;
(2) A board of company auditors, an audit and supervisory committee or
committees (meaning a committee specified in Rule 2, Item 12 of the
Companies Act); and
(3) Accounting auditors.
Rule 438: An issuer of a listed domestic stock shall appoint its accounting auditors
as certified public accountants, etc. who carry out audit certification, etc.
of financial statements, etc. or quarterly financial statements, etc.
contained in a securities report or a quarterly report.
Rule 439: A listed domestic company shall decide the development of a system and
structure necessary to ensure that the execution of duties of directors,
executive officers or administration directors of such listed domestic
company as well as the businesses of corporate group comprising the
listed domestic company and its subsidiaries comply with laws and
regulations and the Articles of Incorporation, and any other systems
necessary to ensure the appropriateness of business of the domestic
company (meaning development of a system and structure prescribed in
Rule 362, Paragraph 4, Item 6 of Companies Act or Rule 399-13,
Paragraph 1, Item 1 Sub-item c or Rule 416, Paragraph 1, Item 1,
Sub-item e of the same Act or development of a system and structure
corresponding thereto), as well as appropriately create and operate such
system and structure.
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Note 3: The applicant is required to elect necessary independent directors/auditors

prescribed in Rule 436-2 of the Regulations by the date of listing and submit to
TSE the “Registration Statement of Independent directors/auditors” with the
description of the status of election of independent directors/auditors. The
registration statement will be available for public inspection. (Rule 436-2 of the
Rules).
Note 4: Independent directors/auditors prescribed in Rule 436-2 of the Regulations must be

elected from outside directors or outside auditors who are unlikely to give rise to any
conflict of interest with general shareholders. When any one of the independence
criteria enumerated in a to d below (Guidelines III 5, (3) 2 relating to the listing
management, etc.) is met, the registration as an independent officer will not be
allowed. So if the applicant is otherwise concerned with the satisfaction of these
criteria, the applicant is encouraged to consult JPXR beforehand via the lead
underwriters.
a. Any entity which makes the company a major trading partner or executives of
the entity, or major trading partner of the company or executives of the trading
partner;
b. Consultant, accounting, or legal professionals who receive a large amount of
cash or other properties from the company, in addition to the remunerations for
officers (the persons who receive such properties meet the definition of
association such as union, the persons who belong to the association);
c. Any person who recently meets a to c above;
(a) Person mentioned in a or b above;
(b) Executives of the parent company of the company (including directors who
are not executives, and including company auditors if any outside auditor
is designated as an independent officer; or
(c) Executives of brother company of the company;
d. his/her relatives of any person mentioned in (a) to (f) below (excluding any
entity which is not important):
(a) Person mentioned in a or b above;
(b) Accounting advisor of the company (limited to the case where the outside
auditor is designated as an independent officer; including employees of an
accounting advisor who are in charge of accounting advice if the
accounting advisor is a corporation; the same shall apply hereinafter);
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(c) Executives of the subsidiary of the company (including directors or

accounting advisors who are not executives if an outside auditor is
designated as an independent officer);
(d) Executives of the parent of the company (including directors who are not
executives and including company auditors if an outside auditor is
designated as an independent officer);
(e) Executives of the brother company of the company; or
(f) Any person who has recently been the person in (b) or (c) above or an
executive of the company (any director who is not an executive if an
outside auditor is designated as an independent officer)
Note 5: The descriptions concerning independent directors/auditors must also be included in

the “Corporate Governance Report.” (Rule 211, Paragraph 4, Item 5 of the Rules).
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(2) The internal management system is deemed to be appropriately developed and

operated so that an initial listing applicant and its corporate group carry out effective
management activities in light of the matters enumerated in the following a. and b. and
other matters:
a. A necessary managerial and administrative system (including various internal rules; the
same shall apply hereinafter) is developed and operated appropriately to secure
efficiency of management activities and internal check-and balance functions of the
corporate group of an initial listing applicant; and
b. An internal auditing system of the corporate group of an initial listing applicant is prepared
and operated appropriately;
For the purpose of the examination on the basis of this criterion, JPXR will assess whether
the corporate group of the applicant has sufficiently designed and implemented
management organization such that the corporate group as a listed company could
appropriately and consistently perform its management activities, as well as whether the
group has developed and taken appropriate measures to prevent incidents, fraud and errors
while carrying out efficient management activities.
The focus points of the examination on the basis of these criteria relate to the status of
implementation of internal management over the management control organizations,
development of various internal rules, accounting practices, budget control and internal
audit, etc.
First, for the management control organizations and design and implementation of internal
regulations, JPXR will evaluate whether the requirements of various internal rules, etc., and
practical method and status of management control are appropriate in conjunction with the
lines and types of business of the corporate group of the applicant.
The point is that the applicant has appropriately designed and implemented systems in
terms of organizations and regulations. Practically, for procurements, the applicant has in
place systems to reduce or stabilize procurement costs, procedures to maintain assets such
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as raw materials at an adequate level. For sales, the applicant can appropriately assess the
management conditions of customers, manage trades receivable from customers and
manage assets such as products at an adequate level. The examination also includes the
assessment as to whether the applicant has in place organizations and regulations which
enable the applicant to implement relevant check and balance functions in order to prevent
frauds or errors.
In addition, JPXR will evaluate the implementation thereof based on the flow chart for
accounting works.
Moreover, for the status of budget control, JPXR will evaluate whether the applicant has
developed consolidated and separate budgets on an organically and reasonable basis.
In evaluating this issue, the point is that various budgets have been prepared for appropriate
period and unit (distinction of annual, half-year, and quarterly, segments by lines of business,
business divisions and products handled), in consideration of actual conditions of corporate
group of applicant. JPXR will also evaluate whether such budgets are of quality such that
they could be published for investors after listing.
For the budget control, JPXR will evaluate whether the applicant appropriately analyzes the
differences between budgets and actual results on a consolidated and separate basis, and
has in place systems to address any impediments to timely disclosures and whether
budgets are useful for effective judgments of management or reflected in subsequent
business activities or budget compilation.
Furthermore, JPXR will assess whether the internal management system to check the
status of organizational operations and the compliance with regulations has been
appropriately implemented in consideration of the size, etc. of the applicant. In this respect
TSE will consider that the applicant has developed the system to be implemented on a fair
and independent basis. If the applicant has special organizations for the internal
management, TSE will evaluate whether the special organizations do not belong to any
specific departments. When the applicant has no special organizations for internal
management and has assigned staff members responsible for internal management, JPXR
will consider that the internal management over the department such staff members work for
has been implemented such that it does not constitute any self-audit practices.
On the other hand, when the internal management practices are outsourced to any third
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party, it is considered that the fairness and independence thereof have been ensured. In
such cases, JPXR will assess whether the applicant does not leave all the decisions to the
outsourcer and is proactively involved in the internal management practices as the president
is fully aware of the importance of such internal management practices. For example, the
applicant is expected to carry out major works including the development and revision of the
audit plan and contents. However in cases where the applicant may have to
comprehensively outsource the internal management practices including such works due to
the know how the outsourcer has or due to limited resources of the applicant, the applicant
is required to be principally involved in the internal management practices such that highly
effective internal audits can be implemented by proactively communicating the status of the
company, the lines of businesses and any identified issues to the outsourcer in an
appropriate manner.
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(3) Necessary personnel are deemed to be secured in order to carry out stable and
continuous execution of management activities of the corporate group of an initial listing
applicant and to maintain its appropriate internal management system;
For the purpose of the examination on the basis of the above criteria, JPXR will assess
whether the group can employ necessary personnel to carry out its business activities on its
own.
First, JPXR will assess whether the applicant has employed necessary personnel to operate
businesses on the basis of recent changes in employees (status of employment through
recruitment of new employees and retirement). In this case, if a large number of employees
have retired due to their own reasons, JPXR will assess the background and reasons for the
retirement of so many employees and determine whether such retirement would impede
business operations going forward.
An additional focus point of the examination is whether the corporate group of the applicant
has assigned personnel necessary to ensure the sufficient implementation of check and
balance functions. When employees concurrently hold several positions across the
company or in several capacities in silos across different functions in a department, JPXR
will assess whether holding of such several positions may impede the effective check and
balance practices.
For example, in the following cases, JPXR may not approve the listing as they give rise to
concerns with the business operations from the perspective of internal check and balance
practices.
- The representative director, etc. concurrently holds the position of general manager for a
specific department or division and necessary check and balance functions do not
operate effectively;
- As the representative director, etc. is concurrently responsible for several departments
or division, the execution of duties primarily performed by the representative director, etc.
has been impeded.
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Next, if the applicant accepts any seconded persons from external organizations, JPXR will
confirm the reasons why the applicant accepts such secondment, and assess whether such
secondment would be accepted voluntarily in accordance with human resource policies.
Voluntary third parties including a company which seconds employees to the applicant (for
example, parent company, etc. of the applicant or large customers or suppliers, financial
institutions) may dispatch seconded persons to the applicant at its own discretion with a
view to controlling the corporate group of the applicant. In such cases JPXR may carefully
evaluate whether the applicant performs its business operations independently on the basis
of the number of such seconded persons and positions they hold.
In the meantime, when officers and employees of applicant comprise many seconded
persons, JPXR will mainly evaluate whether the applicant may easily substitute such officers
and employees with other people from the perspective of corporate continuity.
The examination also includes the assessment of the following issues.
► Status of labor union

The operation of applicant has not been impeded because of labor disputes with labor
unions.
► Employee education and training

When some operation of business requires special qualification or special knowledge and
skills, the applicant has in place education and training systems to foster competent
personnel.
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(4) The corporate group of an initial listing applicant adopts accounting treatment standards
adaptable to its actual condition, and a necessary accounting system is deemed to be
developed and operated appropriately; and
applicant has appropriately performed routine practices including accounting treatment
which constitutes the basis for the appropriate preparation of disclosure package and
whether the applicant has in place accounting organizations to make appropriate accounting
treatment.
The examination for this purpose would be carried out mainly by using flow charts.
First, JPXR will evaluate whether the applicant has implemented accounting treatment in
accordance with accounting standards or procedures included in its accounting regulations,
etc. While checking some samples from accounting books, if it is found out that actual
practices deviate from the regulations, JPXR staff visit the applicant to reiterate the similar
assessments and proceeds with the examination with reference to views of applicant’
accounting auditors.
In addition, JPXR will confirm that accounting standards are responsive to actual conditions
of applicant and that the application thereof is not arbitrary.
For accounting organizations, JPXR will evaluate whether relevant check and balance
functions work properly as the accounting department and financial department are
appropriately separated, and whether the accounting practices do not excessively depend
on experiences and skills of certain individuals. In addition, in case of a company with a
committee of accounting advisors, JPXR will have interviews with certain accounting
advisors, as appropriate, in order to ensure that the design and operation of accounting
organization does not excessively depend on them.
Meanwhile, the applicant must prepare itself to address the internal management reporting
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system over financial reporting applied prospectively from the listing. In consideration of the
size, the lines of business and the timing of the applicant, the applicant is required to
develop preparation plans suitable for the applicant and establish systems to submit the
internal management reports effective from listing.
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(5) It is deemed 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 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.
corporate group of the applicant has in place systems to ensure the compliance practices
(abiding by laws and regulations) in order to perform its management activities.
JPXR will first confirm the laws and regulations related to the management activities of the
corporate group of the applicant and the administrative instructions issued by competent
ministries and agencies. Then JPXR will evaluate that the items subject to the internal audit
and items audited by the company auditors have properly included the items required by
laws and regulations.
Meanwhile, if the applicant committed a breach of laws and regulations in the past, JPXR
will carefully evaluate the status of remedies of legal defects associated with such breach
and the design and implementation of systems to prevent any reiteration of such event.
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4. Fairness of Disclosures of Corporate Information, etc.
(Rule 207, Paragraph 1, Item 4 of the Regulations)
(1) The corporate group of an initial listing applicant is deemed to be able to reasonably
manage corporate information including facts which will has a material effect on
management and to disclose it in a timely and appropriate manner to investors.
Moreover, its system for the preemptive prevention of insider trading is deemed to be
developed and operated appropriately.
an applicant can, in a timely and appropriate manner, disclose company information that
may significantly affect investment decisions of investors after listing, as well as whether the
applicant has systems in place for appropriately managing information until it is disclosed in
order to prevent any insider trading, information dissemination, and trade recommendation
practices (hereinafter “insider trading, etc.”).
For the purpose of this criterion, the key points of the examination relate to the management
of monthly budgets and actual results. JPXR will evaluate how soon the applicant could
accurately grasp the operating results.
For the management on a monthly basis, methods and their degree of precision may vary
depending on lines and sizes of businesses and their sizes of the corporate group of the
applicant. At least, the applicant is required to develop systems where it can appropriately
identify the need to revise any announced performance forecast and it can appropriately
determine what revisions should be made, if any.
In its Securities Listing Regulations, JPXR requires that the applicant must fully recognize
that timely and accurate disclosures of company information to investors would lay down the
foundation for the sound financial instruments exchanges and the applicant strives to
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perform operations with integrity by making thorough disclosures of accurate and fair
company information from the perspective of investors. Thus, JPXR will evaluate whether
the applicant has in place systems to comply with the rules on timely disclosures including
preliminary release of earnings after listing and address other demands.
Next, with respect to the prevention of insider trading, etc., JPX-R will assess the following
issues:
- Whether the applicant has adopted regulations on the management of insider
information or prevention of insider trading;
- Whether the requirements of such regulations are appropriate in the context of laws and
regulations;
- Whether the applicant has provided or expects to provide sufficient education and
training to officers and employees in terms of the prevention of insider trading, etc. and
is committed to such continuous advocacy practices after listing; and,
- Whether officers and persons charged with the prevention of insider trading, etc. or with
information control are sufficiently aware of the significance of regulations on insider
trading, etc.
Furthermore, if the applicant has already listed its stock on another financial instruments
exchange, JPXR will also assess whether the applicant has in place appropriate systems to
check the trading of its own shares by persons related to the applicant at the time of
pre-notification of such trading.
The cases of accusation and requirements of payment of penalties and fines associated
with some breaches of laws and regulations such as insider trading, etc. by related persons
including officers and employees of the applicant have recently increased. Any acts in the
breach of laws and regulations such as insider trading, etc. by an officer or employee will
significantly impair the reputation of the applicant and reduce confidence in the financial
instruments markets as whole. As such, the applicant is encouraged to pay further attention
to the prevention of these incidents.
JPXR will also assess the degree of security related to the publication of corporate
information via website when it is made before the scheduled timing.
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(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, etc., and contain the following items enumerated in the following a. and b.
and other matters:
a. The financial position and financial results of an initial listing applicant and its corporate
group, and matters which may have a significant effect on investment decisions of
investors with respect to significant matters, etc. concerning officers, major shareholders,
affiliated companies, etc.; and
b. Items enumerated in the following (a) to (d) pertaining to the matters which are the
premises of main business activities of the corporate group of an initial listing applicant:
(a) Details of the matters which are the premises underlying the main business activities of
the corporate group of an initial listing applicant;
(b) Where the validity period of permission and authorization, etc. and any other time limit is
specified by laws and regulations or contract, etc., such time limit;
(c) Where cancellation, rescission and any other event of permission and authorization, etc.
are stipulated in laws and regulations or contract, etc., such event; and
(d) The effect that there is no factor which hinder their continuity concerning the matters
which are the premises of the 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
the applicant has fairly prepared disclosure documents on which investors base their
investment decision in accordance with relevant laws and regulations, and other rules
(Cabinet Office Ordinance, etc.) and whether the descriptions in the disclosure documents
reflect the actual conditions of the applicant in a faithful and understandable manner, such
that they would not mislead investors.
For the purpose of the examination in this section, JPXR will make assessment mainly on
the basis of “Securities Report for Initial Listing Applicant (Part I).”
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First, JPXR will evaluate whether Part I documents have appropriately been prepared in
accordance with laws and regulations, and other rules and whether there are any
differences in descriptions or presentation methods from those of the documents prepared
by other peer companies. If any errors are acknowledged to have been made in the
descriptions, the applicant is required to correct such errors. The applicant will be ineligible
for listing if the errors are significant, errors were intentionally made by the applicant or the
procedures for correcting errors in or preparing the disclosure documents of the applicant
are highly unlikely to be improved. When the form of some descriptions is different from that
of other peer companies, JPXR may request the applicant to make them more
understandable from the perspective of comparability with others through the consultation
with accounting auditors of applicant..
The applicant is required to describe the following at the sections of “Nature of business” or
“Business risks, etc.” in “Securities Report for Initial Listing Applicant (Part I).”
- When there are some matters constituting premises underlying business activities of the
corporate group of the applicant (e.g., permission, authorization, license or registration,
selling agent agreements or production entrustment agreements in relation to main
businesses or products), their descriptions;
- Effective period of permission, etc. and the validity when it is specified by laws and
regulations or contracts;
- Events leading to cancellation or termination of licenses, etc. when they are specified by
laws and regulations, or contracts;
- Statement that no events giving rise to significant adverse effect on the assumptions of
corporate continuity have taken place, or
- Statement that the occurrence of such events would have significant adverse effect on
the business activities.
JPX-R then confirms that the descriptions included in the Disclosure materials are clearly
understandable in the context of the business activities of the corporate group of the listing
applicant and in no way mislead the readers. Disclosure materials are intended for use by a
variety of investors for the purpose of investment decision. As such, it would be
inappropriate to provide any descriptions that may be difficult to understand at a glance due
the use of unduly abstract expressions or technical terminology or ambiguous meanings left
open to a reader’s interpretation. If JPX-R finds such a description, it will request the
applicant to amend the description during the examination process. Furthermore, JPX-R
may request the applicant to have disclosure systems in place to avoid such descriptions, if
appropriate.
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When an applicant has a parent company, etc., it is likely that the applicant will be influenced
by the parent company through the business relationship with it in various ways after listing.
Thus in addition to information on the corporate profile of the applicant, information on the
parent company, etc. would be useful for the investment decisions made by investors who
invest in the applicant. Thus, the applicant is required to describe the business relationships
with the parent company, etc. according to the degree of materiality of influence over the
applicant at the sections of “Nature of business” or “Business risks, etc.” in “Securities
Report for Initial Listing Applicant (Part I).” In actual examination JPXR will assess whether
the descriptions therein concerning the following issues are appropriately included:
- With respect to business relationships, the nature, amount, terms and conditions thereof
and the policy for determining such terms and conditions;
- In case of concurrent holding of positions, names and positions of officers who
concurrently hold other positions and the reasons for such concurrent holding,
- In cases of acceptance of secondment, the number of seconded persons, their positions
in the applicant and notion concerning the stable employment of employees in order to
ensure stable business operations.
Meanwhile, if there is any company in the corporate group of the parent company, etc. which
carries out businesses similar to those carried out by the applicant, JPXR will assess the
descriptions of the roles and position of the applicant in the corporate group of the parent
company, etc.
Naturally it is important that the applicant actively prepares disclosure documents in depth
and JPXR will assess such point during the course of examination.
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(3) The corporate group of an initial listing applicant does not make distorted information
disclosure on the actual state of the corporate group of the initial listing applicant by
carrying out a trading act with its relevant party or any other specified entity or adjustment
of the share ownership ratios, etc.; and
no transactions with or equity contributions to any company under the patronage of the
corporate group have taken place such that the company information of the applicant (i.e.,
the descriptions in disclosures of corporate profile of the applicant) has been intentionally
distorted.
First, no matter when unusual descriptions are detected with respect to various transactions
during the business activities of the applicant or anomalies in entries in lines items on
financial statements are recognized, JPXR will further examine the details. If any
transactions have apparently been conducted only to make the financial statements of the
applicant look better, the applicant would not meet this criterion.
With respect to coordination of equity contributions, JPXR will first evaluate the equity
composition of the corporate group of the applicant. In this case, when 100% contribution is
not made by the group, or there are any investors in the applicant other than the group,
JPXR will check the background or reasons for such contribution by any entity other than the
group. If the result reveals that the reason for the contribution is not clear and the
contribution is made only to circumvent the consolidation requirements for the applicant,
JPXR may require the applicant to improve the equity composition of the group so that the
conditions of the corporate group of the applicant may be disclosed appropriately.
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► When an applicant has a parent company, etc.
(4) Where an initial listing applicant has a parent company, etc. (excluding where it will
cease to have a parent company, etc. by the end date of a business year which ends first
after listing), any one of the following a. or b. shall be met on the condition that disclosure
of such parent company, etc. is valid:
a. A stock, etc. issued by a parent company, etc. of an initial listing applicant (where there
are a number of parent companies, etc., it means a company which is deemed to have
the greatest effect on the initial listing applicant, and it means one of the parent
companies, where the effect is deemed to be the same; the same shall apply hereinafter
in a and b.) is listed on a domestic financial instruments exchange (including 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 conspicuously lack investor
protection); and
b. An initial listing applicant can appropriately grasp company information such as facts
concerning the parent company, etc. which has a material effect on its management
(excluding a parent company, etc. which falls under the preceding a.), 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.
It is likely that the applicant will be influenced by the parent company through the business
relationship with it in various ways after listing. Thus in addition to the information of
corporate profile of the applicant, information on parent company, etc. would be useful for
investment decisions made by investors who invest in the applicant.
This criterion requires that the applicant be in a position to disclose information of the parent
company, etc. in the listing of the applicant.
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The parent company, etc. to which this criterion applies refers to companies which are
acknowledged to have the most significant influence over the applicant. If the degree of
influence is identical among such companies, one of them could be identified as the parent
company.
In determining the company which exercises the most significant influence over the
applicant, the determination will be based on the positions of the applicant and parent
companies in the corporate group, and relationships between the applicant and parent
companies in terms of equity contributions, financing, personnel, technologies and
transactions.
► Matters related to controlling shareholders and financial information of the non-listed

parent company
An applicant who has a parent company, controlling shareholders (excluding parent

companies) and other related companies is required to submit the “Matters related to
controlling shareholders.” (Note 1)
When the applicant has a parent company, etc., which is a non-listed company, the applicant
is required to submit the documents describing the financial information related to the
immediately preceding settlement of accounts of the parent company for the business year
or half-year accounting period (Note 2) or consolidated accounting period or half-year
consolidated accounting period (Note 2) (hereinafter referred to as the “financial information
of non-listed parent company, etc.” in addition to “Matters related to controlling
shareholders” at the time of listing application (Note 3).
However, if it is likely that the applicant will not have any controlling shareholders or parent
companies at the end of the business year first coming after the listing, the applicant is not
required to submit any of them.
Note 1: If any change in descriptions takes place during the listing examination, the
applicant is requested to update the contents and re-submit them.
Note 2: When the parent company, etc. is an entity which files quarterly financial statements,
the half-year period represents the period totaling relevant quarterly periods.
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Note 3: When a non-listed parent company, etc. is an entity which files quarterly financial
statements, and if the earnings information of the parent company, etc. is updated
during the examination period, the applicant is required to re-submit the financial
information of a non-listed parent company, etc.
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5. Other Matters Deemed Necessary by the Exchange from
the Viewpoint of the Public Interest or the Protection of
Investors (Rule 207, Paragraph 1, Item 5 of the Securities
Listing Regulation)
(1) The contents of the rights of shareholders and the state of their exercise are deemed
appropriate from the viewpoints of the public interest or the protection of investors, due to
the matters enumerated in the following a. and b. and other matters:
a. The contents of shareholder rights and exercise thereof are not unreasonably restricted;
and
b. Where an initial listing applicant has introduced a takeover defense measure, the initial
listing applicant complies with the matters enumerated in each item of Rule 440 of the
Regulations;
(Guidelines III 6, (1) )
If an applicant has issued shares of class stock other than common shares for which listing
application is filed, it is assumed that some classes of shares may significantly restrict the
rights of equity holders of common shares or the exercise thereof, JPXR will carefully
examine the nature of such shares of class stock and any expected effect thereof on the
rights of equity holders of common shares and the status of disclosures thereof.
With respect to the adoption of any takeover defense measures, JPXR will assess the
following issues.
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1) Rights held by shareholders and the status of exercise thereof
When an applicant has adopted any takeover defense measure, the applicant shall ensure
that the measure has been undertaken by fully assuring its adequacy in consideration of
legitimacy and corporate value standards (takeover defense measure which does not
preclude any takeover leading to enhanced corporate value, but avoid any takeover
initiatives to impair the corporate value). In addition, the rights of shareholders and their
exercise should not be unduly restricted.
The following acts may be deemed to be included in acts which unduly restrict the rights of
shareholders and the exercise thereof, so any company performing such an act shall not be
qualified for a listed company.
► Introduction of rights plan issued at unduly low prices

Introduction of rights plans which may allocate any subscription warrants with an
exercise price significantly lower than the market prices of the stock at the
introduction of the plan (since such subscription warrants are usually allocated to
shareholders at the time of launch of takeover defense measures, this will exclude the
cases where the subscription warrants are tentatively allocated to certain types of
persons at the time of introduction of the takeover defense measures).
If any rights plan issued at unduly lower prices are actually effected, any shareholders who
acquire shares after the allocation date of subscription warrants may suffer significant
damages from the dilution of shares, irrespective of whether the shareholders are the
acquirer or not. In cases where the measure is not actually enacted, the expectation of the
measure to be effected may lead to significantly unstable price formation of shares. Thus the
introduction of rights plan with subscription warrants issued at unduly low prices are treated
as acts to unduly restrict the rights of shareholders and their exercise as such a plan gives
rise to significantly unstable price formation of shares and significantly impairs the asset
rights of shareholders. Thus any company which has adopted such a rights plan shall not be
qualified to become a listed company.
On the other hand, with respect to trust rights plan, the subscription warrants are originally
issued to a trust bank and the subscription warrants are delivered to shareholders for the
first time when an acquirer emerges and the predetermined conditions for the takeover
defense measure to be enacted are satisfied. As a result, those who become shareholders
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after the issue of subscription warrants can equally receive the subscription warrants when
the takeover defense measure is enacted. The introduction of rights plans ensuring the
issue of stock acquisition plans at the market prices may not be included in any act to unduly
restrict the rights of shareholders and their exercise as there are no differences between the
takeover defense measure under such rights plan and the takeover defense measure such
as pre-warning defense measures or defense measures whose conditions are resolved by
the board, which do not issue any subscription warrants at the time of introduction in that the
subscription warrants are not issued at unduly lower prices.
► Introduction of dead hand type rights plan

Introduction of dead hand type rights plan which represents the rights plan where it
cannot be abolished or discontinued even if the majority of the board members are
replaced
So-called dead hand type takeover defense measures are defined as takeover defense
measures in conflict with the enterprise value criteria as it does not realize even proposed
takeover to enhance enterprise value.
In addition the shares of the company which has introduced such takeover defense
measures are under conditions where the exercise of the rights of shareholders to replace
the management in effect has been unduly restricted. Thus such restriction will be included
in acts to unduly restrict the rights of shareholders and their exercise. Hence any company
which has introduced any dead hand type rights plan shall not be qualified for a listed
company.
► Issue of class stocks with veto rights

Resolutions or decisions on the issue of shares of class stock with veto rights
requiring the resolution at the class meeting of shareholders on the appointment or
removal of the majority of the board members and other significant matters (excluding
cases where TSE acknowledges that the interests of shareholders and other
investors are unlikely to be impaired).
* When a subsidiary which performs major lines of business of the applicant which is
a holding company issues any class stocks with veto rights (Article 108, Paragraph 1,
Item 8 of Companies Act) or shares of class stock with appointment rights of directors
(article 108, Paragraph 1, Item 9 of Companies Act) to any person other than the
applicant as the allocated party, and if TSE deems that the issuance of such shares of
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class stock may constitute any method which makes the realization of the acquisition
of the applicant difficult, it is interpreted that the applicant issues shares of class stock
with veto rights which require the resolutions at the class meeting of shareholders on
significant matters.
The issuance of shares of class stock with veto rights requiring the resolutions at the class
meeting of shareholders on the appointment and removal of the majority of the board
members and other significant matters may unduly restrict important rights of shareholders
concerning the appointment or removal of directors. Thus such issuance is included in acts
to unduly restrict the nature of rights of shareholders and their exercise. As a result any
company which issues class stocks with veto rights shall not be qualified for a listed
company, in principle.
However, if TSE deems that the interest of shareholders and other investors are very
unlikely to be impaired in consideration of the objective of business of the company, the
objective of issuance of shares of class stock of stock with veto rights, attributes of the
allocated parties and the nature of rights thereof and other conditions, the issuance may
exceptionally be permitted. This may include cases where a privatized company issues
shares of class stock with veto rights to the central government as an allocated party such
that the business activities of the company does not significantly diverge from the policy
objectives of the country.
In addition if the applicant is a holding company, the issuance by its subsidiary of any class
stocks with veto rights or class stocks with appointment rights of directors to any party other
than the applicant may be included in acts to unduly restrict the nature of rights of
shareholders and their exercise.
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2) Covenants to the introduction of takeover defense measures
When the applicant has adopted a takeover defense measure, the applicant is required to
comply with the maters mentioned in each item of Rule 440 of the Securities Listing
Regulations, in addition to the fact that the nature of rights of shareholders and their
exercise have not been unduly restricted.
► Sufficient disclosures (Rule 440, Item 1 of the Regulations)

The listed company shall make Necessary and sufficient timely disclosure concerning
takeover defense measures;
In disclosing takeover defense measures on a timely basis, the applicant is required to

provide information which could constitute sufficient basis for the judgment of shareholders
concerning agreement or disagreement with the takeover defense measure and the
investment decisions of investors.
► Transparency (Rule 440, Item 2 of the Regulations)

Conditions of implementation and abolishment of takeover defense measures shall not
depend on arbitrary decisions by the management;
If conditions to enact or abolish takeover defense measures excessively depend on the

judgment of the management, the enactment or abolishment of the measure may be
deemed to be arbitrarily decided by the management as the decision process lacks
transparency. This is inappropriate from the perspective of corporate value and also does
not provide sufficient information for the investment decisions of investors, thereby forcing
investors to trade amidst uncertain circumstances surrounding the trends of the company.
Thus, it is required that the conditions for the exercise or abolishment of takeover defense
measures should not be determined excessively depending on arbitrary judgment of the
management.
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► Effect on the secondary market (Rule 440, Item 3 of the Regulations)

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; and
It is required that the nature of takeover defense measures will not significantly destabilize
the stock price formation or reduce the value of shares held by investors.
► Respect for shareholders’ rights (Rule 440, Item 4 of the Regulations)

Takeover defense measures shall give consideration to shareholders’ rights and their
exercise
Takeover defense measures may take various forms. They include the method to change
the structure of voting rights of shareholders including acquirer or method to impair property
rights other than voting rights. Thus the applicant has to consider and respect the rights of
shareholders and their exercises in introducing any takeover defense measures.
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3) Other considerations in conjunction with the introduction of takeover defense

measures
Other considerations when the applicant introduces takeover defense measures are as
follows:
► Considerations for the purpose of disclosures

The applicant is encouraged to make detailed disclosures of the nature of takeover defense
measures by press releases or posting on the applicant’s website. The applicant is
requested to concisely describe the objective of the introduction of takeover defense
measures and the outline of the scheme in “Part I” documents and “Corporate Governance
Report”. (The applicant is concurrently required to mention the URL of its website where the
details of takeover defense measure are disclosed)
The applicant is required to disclose the following matters in the press release and on the
website of the applicant.
- Purpose of the introduction of takeover defense measures;

- Nature of scheme;
- Procedures when an acquirer emerges; and
- Effect of such emergence on shareholders and investors
* For the nature of the scheme, the applicant needs to describe which entity decides to
enact or abolish the takeover defense measure and the basis for determination in details, as
well as the innovative efforts to enhance the reasonableness of the takeover defense
measures (e.g., provisions for periodic review of resolutions on the introduction at the
general shareholders’ meeting, the development of objective conditions to discontinue the
measures when all the shares are acquired in cash and retired, the establishment of
committee with emphasis placed on the judgment of independent outside officers, and
sunset provisions (provisions to review the nature and necessity of takeover defense
measures at the general shareholders’ meeting) and the criteria for the appointment and
removal of directors and the term of their offices) in an understandable manner.
* The title of disclosure of takeover defense measures must include the term “takeover
defense measure.”
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► Considerations for each type of takeover defense measures

In adopting takeover defense measures, the applicant must consider the following issues for
each type of takeover defense measures.
a. Rights plan
- Collective intention of shareholders

The design and adoption of the structure to reflect the intension of shareholders (not
intentions of individual shareholders, but the collective intention of shareholders expressed
through the resolution at the general shareholders’ meeting) in determining to enact or
abolish the takeover defense measures are very important for the purpose of appropriate
implementation of takeover defense measures.
Thus the applicant evaluates whether the applicant may encounter difficulties in controlling
the majority of the directors at one general shareholders’ meeting by assessing the criteria
for resolutions on the appointment and removal of directors at the general shareholders’
meeting, in addition to whether the rights plan constitutes any dead hand type takeover
defense measure.
- Framework for decision to enact takeover defense measures

The decision to enact takeover defense measures must not lack transparency as it depends
on arbitrary judgment of the management. The fairness and neutrality of the judgment of the
entity making substantive decisions to enact or abolish rights plan (including independent
committees when the board of directors make such decisions based on the
recommendations of the independent committee, etc.) constitute very important information
for investors. Thus TSE will assess whether the matters including the independence of the
decision making entity from the management and its technical competence (including the
involvement of experts to compensate for the insufficient knowledge on enterprise value or
authority to carry out independent research) as well as its responsibility to the company (e.g.,
the composition of directors, company auditors and outside academic specialists at
respective committee) have sufficiently been disclosed.
When the fairness and neutrality of the decision making entity cannot be sufficiently
demonstrated by the above, JPXR will assess whether objective conditions to enact and
abolish takeover defense measures or the criteria for such decisions have been disclosed.
- Effect of takeover defense measures in the secondary markets
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Any takeover defense measure is required not to include any factors which may give rise to
unexpected damage to investors such that it significantly destabilizes the price formation of
stocks.
When the rights plan is decided to be enacted, but if it is likely that the enacted rights plan
would be discontinued even after the shareholders who receive the allocation of shares are
determined, the price formation after the allocated shareholders are determined might be
destabilized. In consideration of the objective of rights plan to realize equal negotiation with
the acquirer, the possible discontinuation of takeover attempt after the decision to enact the
measure or possible discontinuation which can be agreed by both parties as higher
purchase conditions are indicated might be significantly meaningful since such
discontinuation enhances corporate value and shareholders’ interests. Thus JPXR will
evaluate whether such possibility has been disclosed sufficiently.
JPXR will also assess whether there are any other factors inherent in the scheme, which
may destabilize price formation.
b. Pre-warning (development of rule on large purchase)
With respect to so-called pre-warning type takeover defense measures, the applicant will
decide rules to be abided by the acquirer (rules specifying the provision of information on the
acquirer or its procedures) at its discretion and may require a prospective acquirer to comply
with them.
In disclosing this type of takeover defense measure, the applicant is required to disclose the
contents of the rules in an understandable manner, thus contributing to the decision of
shareholders and investors on the reasonableness of the rules.
Actual rules must address the entity responsible for the implementation of rules, the
procedures for the contents of information to be submitted and the submission thereof, the
company’s response when the prospective acquirer complies with the rules on large
purchase or when they do not comply. JPXR will also assess whether the contents of the
rules are described in an understandable manner and the explanation of the
reasonableness of the rules has been included (as to whether the rules do not require the
excessive information when shareholders and investors consider them, the applicant’s
evaluation period might be excessively prolonged, or countermeasures against the breach
of rules might be prohibitive).
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When a takeover defense measure adopts pre-warning characterized by the rules on large
purchase and if the applicant is likely to enact any takeover defense measure equivalent to
rights plan (i.e., allocation of subscription warrants under the conditions that they are
allocated to any parties other than the prospective acquirer) in future, the applicant is
required to state the facts and disclose the matters mentioned in a above.
c. Issuance of class stocks, etc.
When the issuance of shares of class stock or subscription warrants may likely restrict the
voting rights of shareholders or impair the property rights of shareholders, JPXR will assess
whether the rights of shareholders are sufficiently respected.
Definition of Terms
Term Definition
Act to acquire the number of shares which may have influence
Acquisition
over the company
Measures implemented by a joint stock company to make the
realization of acquisition of the company difficult by issuing new
Takeover defense shares or subscription warrants not with a view to financing or
measure satisfying business purposes, some measures implemented by
the management before the acquisition attempt is commenced
by any party who is not favorable to the company
Deciding actual contents of takeover defense measures as the
Introduction company resolved at the board meeting to issue new shares or
subscription warrants as a takeover defense measure
Make the realization of takeover difficult by implementing the
Enactment
contents of takeover defense measures
Discontinuing the takeover defense measures implemented as
Abolishment (of takeover
the company retire new issues or subscription warrants issued
defense measure)
for the purpose of takeover defense measures
A kind of takeover defense measure where subscription
warrants are allocated under the conditions that the rights are
Rights plan
allocated to shareholders other than the acquirer, who may
exercise the rights
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Note 1: They have the same meaning as defined in “Guidelines Concerning Takeover
Defensive Measures for Securing and Ensuring Corporate Value and the Common
Interests of Shareholders” (Corporate Value Protection Guidelines) (Ministry of
Economy, Trade and Industry, Ministry of Justice), except for the definition of a
rights plan.
Note2: “Takeover defense measure” defined above refers to the takeover defense measures
implemented during the ordinary course of business.
(2) The corporate group of an initial listing applicant does not have an ongoing lawsuit or
dispute, etc. which may have a material effect on management activities and business
results;
For the purpose of the examination on the basis of this criterion, JPXR will assess the
existence of any legal action or dispute which may potentially have significant adverse
influence of business activities or operating results.
If the corporate group of the applicant has an actual active or pending legal case or dispute,
which may potentially have a significantly adverse effect on management activities or
operating results, the applicant is not deemed to be an appropriate investment choice
offered to investors. Thus, JPXR will evaluate the nature of the legal case or dispute and its
effect on operating results, etc.
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(3) The corporate group of an initial listing applicant is deemed to have developed an
internal system to prevent criminal and extremist elements from being involved in
management activities, and make efforts to prevent such involvement, and their actual
state is deemed to be appropriate from the viewpoint of the public interest or the
protection of investors;
If any anti-social organization including organized criminal organizations or a group of

persons equivalent to them (hereinafter “anti-social force”) is involved in the management
activities of the corporate group of the applicant, the applicant is deemed to be not qualified
for the listing.
The involvement in this context is not limited to the cases where the anti-social force is
directly involved in the management activities of the corporate group of the applicant. This
includes cases where they are alleged to be involved, in effect, in the management activities,
for example when a group company, officers, those equivalent to officers, major
shareholders and major trading partners of the applicant (hereinafter referred to as the
“applicant group company or related person”) represent an anti-social force, when the
applicant group company and related persons cooperates or contributes to the survival and
operation of an anti-social force by providing financing, or when a applicant group company
and related persons intentionally maintains contact with an anti-social force. In such cases
the applicant is not qualified for listing.
JPXR will assess any involvement of anti-social force in the management activities on the
basis of “Confirmation statement showing that the applicant has no ties with any anti-social
force” (hereinafter referred to as the “Confirmation statement”) prepared by the applicant.
The form of Confirmation statement explicitly provides for the scope and items to which
relevant responses are automatically required by the applicant. However, this does not
mean that any items out of the scope of Confirmation statement will not be subject to the
examination and JPXR may additionally assess any items out of the scope in consideration
of the degree of implications thereof.
In order to prevent any involvement of anti-social force in the management activities, the
applicant is required to develop and provide systems necessary to preclude any organized
criminal organizations, etc. by itself. For that purpose, the applicant must regularly monitor
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the circumstances of the applicant group company and related persons and the conditions
under which the management activities are carried out and implement due process when
establishing a new business relationship. In designing and implementing such systems the
applicant is encouraged to do so with reference to “Guideline as to How Companies Prevent
Damage from Anti-Social Forces” (Cabinet Meeting on Anti-Crime Measures on June 19,
2007).
For the purpose of the examination of the above item, JPXR will assess the system of the
corporate group of the applicant to preclude anti-social forces, given the above notion and
determine whether the nature of system is appropriate (whether there is no involvement in
management activities of the corporate group of the applicant) from the perspective of public
interest or investors protection.
Recently it is alleged that some anti-social forces which strive to be involved in the corporate
group of an applicant have emerged utilizing a connection with any person having a close
relationship with any organized anti-social forces or cooperating in its activities. Thus cases
where any person concerned with such a relationship is involved in the corporate group of
the applicant shall be subject to the examination of JPXR.
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(4) When domestic stocks pertaining to initial listing application are stocks with no voting
rights (limited to cases where there are no types of stocks other than the domestic
stocks for which the listing application is made) or stocks with less voting
rights(meaning those enumerated in Item 9-2, Sub-item b of Rule 205 of the
Regulations), all of the following a. to h. shall be met;
Share classes of stock with voting rights can be utilized to maintain the controlling right of a
company with less percentage of equity contributions than usual cases and such shares are
likely to distort corporate governance. Therefore, they may not always be desirable.
However, free design of shares of class stock is permitted by laws and fundraising using
such shares of class stock have actually been effected. Furthermore, they would provide a
variety of investment choices to investors. So JPXR has allowed shares of class stock with
less voting rights, etc. (*) which respect the rights of shareholders to be listed on it.
Meanwhile, in order to ensure the continued sound use of the schemes for class stocks
with voting rights, JPXR will carefully determine the listing of each class stock in
comprehensive consideration of individual incidents.
(*) This means class stocks with fewer voting rights and those with no voting rights.
In this section, given that the listing system for shares of class stock with less voting rights,
etc. is different from the listing system for common shares in terms of actual examination
standards and other issues, in this section, we first outline the categories of shares of class
stock with less voting rights, etc. which are eligible for listing and formal requirements
followed by the method to decide the section where listing is effected, then provide
explanation concerning actual criteria (a to f above) and frequently asked questions and
answers (Class Stock Q&A) in terms of overall listing system for shares of class stock with
less voting rights, etc.
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(1) Shares of class stock with voting rights eligible for listing
TSE has limited the listing of shares of class stock in conjunction with understandability of
investors or for the purpose of investor protection.
For the time being, in order to avoid confusion arising from misunderstanding class of listed
stock, TSE will not allow an identical company to list several classes of shares with voting
rights (both of common shares and non-voting shares could be listed concurrently).
(Reference) Classes of shares with voting rights eligible for listing
Non-listed company
Listed Listing concurrent
Listing markets
company Single listing with common
shares
Shares with less
× ○ ×
voting rights the 1st and 2nd
sections,
Shares with more
× × × Mothers,
voting rights
JASDAQ
Non-voting shares ○ ○ (Note 2)
○
(Note 1) (Note 2) (Note 2)
Note 1: Non-voting shares subject to the listing system for shares of class stock with voting
rights represent participating preference shares or non-voting shares with
preference dividends (of shares of class stock having senior feature of profit
distributions, participating preference shares represent shares for which the
shareholders thereof may also receive dividends from residual distributable value
together with common shareholders after receiving preference dividends).
Meanwhile, JPXR will examine non-participating preference shares of non-voting
shares in consideration of listing system for preference shares as prescribed in Part
III of the Securities Listing Regulations.
Note 2: For concurrently listing common shares with non-voting shares and listing
non-voting shares of a listed company, JPXR will conduct listing examination in
accordance with Guidelines II, 6.(5).
Note 3: With respect to the category of markets, when a company has listed both common
shares and non-voting shares concurrently, shares of class stock with voting rights
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are assigned to the same market as the common shares. When a company only lists
class stock with voting rights, the market section will be decided on the basis of
criteria applied to listing of common shares.
(2) Formal requirements for class stock with less voting rights, etc.
Formal requirements for shares of class stock with less voting rights, etc. are, in principle,
similar to those for listing examination of common stock (see “II Formal Requirements”).
They require each stock for which listing application is filed to meet relevant requirements.
Meanwhile, since a criterion for market capitalization relates to formal requirements related
to companies, the market capitalization will be determined by aggregating the market
capitalization of each stock for which listing application is filed (if there is another stock for
which listing application is filed concurrently, including the market capitalization of such other
stock) and the market capitalization of other stocks issued by the applicant (limited to those
listed or continuously traded on a financial instruments exchange in Japan and in foreign
countries).
(3) Category of market for shares of class stock with less voting rights, etc.
Formal requirements for market category of shares of class stock with less voting rights, etc.
(alteration of market, assignment to the 1st section) will be similar to those for common
stock.
(4) Nature of listing examination for class stock with less voting rights, etc.
For the purpose of examination of class stock with less voting rights, etc. the listing will be
determined in the public interest or for the protection of investors, in addition to the
requirements of substantive examination standards for listing of common stock, in
accordance with the items mentioned in a to h below.
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a. It is deemed necessary to ensure a situation where a specified entity can continue to

be involved in management by holding stocks with more voting rights (meaning
stocks with voting rights and stocks with more voting rights (i.e., stocks with voting
rights other than those with less voting rights; the same shall apply hereinafter) from
the perspective of the common interest of shareholders, and it is also deemed that
the scheme is appropriate based on such need and does not give rise to any undue
benefits to holders of stocks with more voting rights. In this case, the determination of
whether the scheme is appropriate or not shall be made on the basis of such need by
examining the items mentioned in (a) to (c) below;
(Guidelines II 6.(4) )
For the purpose of this criterion, JPXR will examine whether the use of stocks with more
voting rights is necessary from the perspective of the common interest of shareholders
(need) and whether the scheme for the shares of class stock with voting rights is deemed to
be appropriate on the basis of the need to use stocks with more voting rights, etc.
(appropriateness).
With respect to the need, JPXR will examine whether it is necessary to ensure a situation
where a specified entity may continue to be involved in management by using stocks with
more voting rights, etc. from the perspective of the common interest of shareholders. In
practice, JPXR will assess whether the continuous involvement of the entity with the ability
to have certain knowledge and skills that is essential to achieve the business plan may be in
the common interest of shareholders or it is difficult to collect the voting rights of specific
shareholders. In addition, JPXR will assess whether the management’s ability to have
certain knowledge and skills is necessary to achieve the business plan on the basis of the
following items (*)
(*) Examples of issuance and listing of several shares of class stocks with voting rights
typically include cases where the person in management holding stocks with more voting
rights is the inventor of the technology and founder of the company, and these requirements
are developed based on these cases.
- How is the person involved in and influence business development, R&D,
recruitment, etc.?
- Is the basis for the need practically explainable in light of the record of the person
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and actual business performance of the applicant?

- Will the need go beyond the current period and remain relevant in the future?
- In addition to the person, do the Board of Directors, Board of Company Auditors
and the company as a whole appropriately recognize the need?
Meanwhile, the examination does not automatically preclude other needs and if such
other needs are deemed relevant from other perspectives, JPXR will examine such
needs. JPXR does not anticipate that the need will arise solely for a reason such as the
stability of a family-managed company being deemed necessary from the perspective of
the common interest of shareholders.
In addition, for the purpose of examination of the need, JPXR will assess the reasons
why the collection of voting rights for specified shareholders would be difficult in the
case of common shares. In practice, JPXR will examine whether the fund raising would
be required for the execution of the business plan, and may lead to a dilution of the
voting rights. A threshold for the future dilution of voting rights may include cases where
in consideration of fund raising, the shareholding ratio of shareholders of shares of
stocks with more voting rights, etc. will be below 50%, which is necessary to stably elect
board members. Even in the case of low fund raising needs, JPXR will consider that the
need has existed if the shareholding ratio of holders of stocks with more voting rights,
etc. is below 50% at the time of listing. In the case of strong fund raising needs and an
expected dilution of voting rights, JPXR does not anticipate the existence of the need,
for example when the likelihood of the execution of business plan is uncertain, where
holders of stocks with more voting rights, etc. may underwrite each capital increase or
the main nature of the investment plan relates to future M&A activities.
For appropriateness, JPXR shall confirm that the scheme for the stocks with voting
rights may not provide undue benefits to holders of stocks with more voting rights and
that the scheme is appropriate in light of the need to use stocks with more voting rights,
etc. In practice, JPXR will determine the need on the basis of the items mentioned in (a)
to (c) below and other facts and circumstances.
(a) When the need no longer exists, the scheme for non-voting shares or for shares with
less voting rights can be expected to be dissolved.
(Guidelines II 6. (4) )
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For the purpose of this criterion, the applicant is required to adopt measures to prevent
the scheme for non-voting shares or for less voting rights from being continuously
applied on an unconditional basis, if the need to use the scheme of shares with more
voting rights, etc. ceases to exist.
If the need for the scheme is for the purpose of allowing the continued involvement of a
particular person in management, JPXR will assess that the scheme is dissolved when
the person retires from the board and ceases to be involved in the management of the
company. In practice, the applicant is expected to carry out procedures for confirming
the intent of shareholders to continue the scheme, in addition to the measures to
dissolve the scheme when the person retires from the board. If the applicant has
procedures to confirm shareholders’ intent with respect to the continuation of the
scheme, the applicant is required to also develop such procedures to regularly confirm
shareholders’ intent after the need for the scheme ceases to exist. It is deemed to be
appropriate to include the descriptions thereof in the Articles of Incorporation, etc.
If a particular corporation holds shares with more voting rights, etc., JPXR will also
assess whether the scheme allows the corporation to continue to hold them on an
unconditional basis when the need ceases to exist.
(b) It is required to include in the Articles of Incorporation to the effect that where a state
of controlling a company with an extremely small ratio of contribution, a scheme of
shares without voting rights or less voting rights is expected to be dissolved;
For the purpose of this criterion, an applicant is required to have designed and implemented
measures to prevent a state where the controlling company has an extremely small
contribution ratio.
Practically, the enactment of breakthrough provisions (scheme where if a person who holds
a certain level of shares emerges, the mechanism for class stock with voting rights would be
dissolved) or sunset provisions (when certain conditions are satisfied, a measure to dissolve
the scheme) could be considered.
An applicant should consider the criteria triggering breakthrough provisions or sunset

provisions in consideration of the need to use the scheme of class stock with voting rights or
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shares with more voting rights, and the state of controlling shareholders.
In addition, the applicant is required to appropriately include breakthrough provisions and

sunset provisions in the Articles of Incorporation, etc.
(c) In cases where domestic stocks, etc. pertaining to the initial listing application are
stocks with less voting rights, the provision that when stocks with more voting rights
(i.e., the meaning stocks with voting rights other than those with less voting rights;
the same shall apply hereinafter) are transferred, they will in principle be converted to
stocks with less voting rights shall be appropriately included in the Articles of
Incorporation, etc.
Investors in stocks with less voting rights are assumed to have done so on the basis that
a particular person in management holds unlisted stocks with more voting rights.
Therefore, the Articles of Incorporation, etc. is required to appropriately state that when
stocks with more voting rights, etc. are transferred and the shareholders thereof change,
in principle, stocks with more voting rights held by the person shall promptly be
converted to stocks with less voting rights (listed stocks).
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b It is deemed that the main purpose of using stocks with more voting rights is other
than to preserve the positions of the board members of the initial listing applicant or a
takeover defense measure.
JPXR anticipates that the use of stocks with more voting rights, etc. is generally necessary
from the perspective of the common interest of shareholders. If an applicant indicates a
purpose for the use of stocks with more voting rights that differs from the perspective of the
need, JPXR will not question such purpose.
However, the applicant may use stocks with more voting rights, etc. as a means to maintain
the state of a controlling company with smaller than usual ratio of contribution, which may
act as a takeover defense measure. So if the applicant has adopted the scheme of stocks
with more voting rights, etc. in order to preserve the positions of the board members or as a
takeover defense measure, TSE will not permit the listing.
Therefore, if the applicant states a different purpose together with the need, JPXR will
assess during the examination whether such purpose lack reasonableness such as lacking
actual grounds.
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c It is acknowledged that the purpose, need and scheme of the use of stocks with more
voting rights, etc. have been appropriately described in any document related to the
disclosure of corporate information in the initial listing application.
When there are stocks with more voting rights, etc., since the purpose, need and scheme
thereof constitute significant factors for investment decisions, appropriate disclosure is
required.
JPXR will assess whether disclosure concerning the purpose of the use of stocks with more
voting rights, etc. as well as the need for the continuous involvement of a particular person in
the management is necessary from the perspective of the common interest of shareholders
(the need), have been made in a manner that facilitates understanding by investors. Though
JPXR anticipates that the use of stocks with more voting rights will be necessary from the
perspective of common interests of shareholders, in such cases the description of the
purpose of the use may overlap with that for the need. The applicant is recommended to
include the practical descriptions of the purpose of use as well as the need in “Risks
Associated with Business, etc.” or “Distributions of Ownership of Shares” in Part I, Securities
Report for the Initial Listing Application or “Shares to be Newly Issued” in the Securities
Registration Statement.
JPXR will examine whether, for the scheme, the nature of each class stock has been
disclosed in an exhaustive and appropriate manner, including the dissolution provisions
pertaining to breakthrough provisions or sunset provisions. Descriptions should be
included in “Risks Associated with Business, etc.” or “Distributions of Ownership of Shares”
in Part I, Securities Report for the Initial Listing Application or “Shares to be Newly Issued” in
the Securities Registration Statement.
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d When a shareholder holding stocks with more voting rights, etc. is not a member of
Board of Directors, etc., the shareholder must meet the requirements mentioned in
(a) and (b) below.
This criterion is required to be met when there are holders of stocks with more voting rights,
etc. who are not board members, etc.
For a typical example of listing through the issuance of class stock with voting rights, JPXR
considers cases where representative director and president or directors who are
co-founders hold stocks with more voting rights. However, a person who is not in such
positions may hold stocks with more voting rights, etc. and additional requirements apply to
such cases. In practice, JPXR will assess the cases by examining the items mentioned in (a)
and (b) below.
(a) The purpose and policy of the exercise of voting rights by holders of stocks with
more voting rights, etc. are not deemed to be clearly inappropriate in consideration of
the need thereof, and they are appropriately described in documents related to the
disclosure of corporate information in the initial listing application form.
In cases where shareholders holding stocks with more voting rights are not board
members, etc., such shareholders with interests different from those of directors may
maintain a controlling stake in the company with a small shareholding ratio. Therefore,
JPXR will examine whether the exercise of voting rights by shareholders pertaining to
the stocks with more voting rights, etc. will be made in accordance with the need thereof.
In practice, JPXR will assess for what purposes and in accordance with which policy the
shareholders holding stocks with more voting rights, etc. may exercise their voting rights,
and also assess the relationship between the purposes and policies, and the need of
use of stocks with more voting rights, etc. JPXR will assess from the perspective that
they will not provide undue benefits to holders of stocks with more voting rights, etc.
In addition, JPXR will examine that the purposes and policies of the exercise of voting
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rights by holders of stocks with more voting rights, etc. are appropriately disclosed in a
manner facilitating understanding by investors. Descriptions should be included in
“Risks Associated with Business, etc.” or “Distributions of Ownership of Shares” in Part I,
Securities Report for the Initial Listing Application.
(b) Corporate group of the initial listing applicant has no business, human resource or
transactional relationship with the corporate groups of shareholders holding stocks
with more voting rights, etc. (limited to cases of parent companies, etc. of the initial
listing applicant)
The use of stocks, etc. with a large number of voting rights by corporations (including
parent companies, etc.) may lead to some difficulties in achieving or maintaining the
prescribed objectives because of future possible changes in management policies or
the composition of large shareholders, etc. Therefore, the class stock scheme would
result in more uncertain governance practice relative to the use of natural persons.
These issues inherently prevail in case of the use of stocks, etc. with a large number of
voting rights.
Furthermore, compared to the typical listing of subsidiaries, the listing of a subsidiary
that is using stocks, etc. with a large number of voting rights by the parent company, etc.
raises more concerns over a conflict of interest, where the corporate governance is
likely to be more impaired. Therefore, it would be difficult to assess that the use of class
stocks would achieve benefits common to shareholders. In principle, such use would
not be permitted.
However, in particular cases where the use would contribute to benefits common to
shareholders, the uses of class stocks might be allowed.
In consideration of the above, this criterion is required to be met in the event that the
shareholder of stocks with a large number of voting rights is a parent company (i.e., in
case of “subsidiary listing”); and, in the examination for the listing of a subsidiary, TSE
requires that the listing application comply with the requirements of Guideline II 3, (3) for
the purpose of ensuring independence of the subsidiary.
Typically, the management of a parent company, etc. is required to fulfill its stewardship
in order to increase the profitability of the parent company, etc. As such, compared to
the control held by individual shareholders, a conflict of interest would be more likely to
take place in such a situation. Therefore, this criterion requires the strict independence
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of the subsidiary from the parent. If the use of stocks, etc. with a large number of voting
rights is made for the purpose of listing the subsidiary, more control would be acquired
and maintained by smaller investment in equity compared to the case where the use of
stocks, etc. with a large number of voting rights is not applied. Significant imbalance
between equity investments and control may take place. Therefore, such situations
certainly impair the benefits of minority interests of the listing applicant. As a result, this
criterion places more weight on the aspect of independence of the applicant relative to
typical listing of a subsidiary.
In light of the above, the criterion requires that:
- The nature of the business of the applicant does not interact with that of the parent,
etc.;
- There are no concurrent holdings by employees of the parent, etc. of the executive
positions of the applicant or no secondment from the parent, etc.; and,
- The applicant has no business relationship with the parent, etc.
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e. Where conflicts of interest arise between shareholders of different classes, protection

measures are deemed to be able to be taken so that shareholders of a domestic stock,
etc. pertaining to such initial listing application do not unreasonably suffer damage;
When an applicant issues class stock with voting rights, such issuance requires the
resolution at the class shareholders’ meeting in accordance with Article 322, Paragraph 1 of
the Companies Act as it is feared that a conflict of interest among shareholders of different
class of stock may take place with respect to some matters which may have significant
impact on the nature of their rights.
However, the applicant may provide in its Articles of Incorporation that no resolution at the
class shareholders’ meeting will be required (Article 332, Paragraphs 2 and 3 of the
Companies Act). In such a case, the applicant is required to undertake any measures to
prevent the interests of holders of stocks with less voting rights from being damaged for the
purpose of shareholders of shares of class stocks with less voting rights, etc..
The applicant is required to undertake necessary measures in consideration of the following

issues, though actual measures may vary depending on the conditions of the company or
class of stock like cases where a listed company additionally list class stock with voting
rights or cases where a non-listed company only lists class stock with voting rights.
- When some changes in proportionate rights arising from share consolidation and split or
gratis allotment of shares or subscription warrants take place, the applicant takes
measures to treat each of class shareholders equally by providing in the Articles of
Incorporation that a share split is effected for each class of shares on a same class and
ratio.
- When any reorganization of a company may take place where the issuer of class stock
with voting rights would become an extinguished company, such reorganization may
develop requirements that consideration delivered to each class of shareholders could
be freely determined in the merger contract such that the interests of class shareholders
might be damaged. For example, in order to prevent the interests of shareholders with
less voting rights, etc. from being damaged, the applicant may set special conditions for
the acquisition of stocks with more voting rights, etc. that if the reorganization is
authorized at the general meeting of shareholders, all the stocks with more voting rights,
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etc. would be converted to stocks with less voting rights, etc. or does not primarily
include the provision in the Articles of Incorporation that no resolution at the class
shareholders’ meeting is required.
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f. Where the issuer of a 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 same
(a) to (c) and said issuer on behalf of a third party and those between such issuer and the
third party, where an entity enumerated in the same (a) to (c) has a material effect on said
issuer concerning such transactions), protection measures for minority shareholders are
deemed to be expected to be able to be taken:
(a) A parent company;

(b) A controlling shareholder (excluding a parent company) and his/her close relatives; and
(c) The company referenced in the preceding (b) that holds the majority of the voting rights,
etc. and a subsidiary of such company, etc.;
A company which uses stocks with more voting rights, etc. may create and maintain the
company with less percentage of equity contributions.
Therefore in order to prevent any damages represented by the conflict of interests for any
transactions between controlling shareholders and the company, in case of any transactions
between the controlling shareholders and the company, the company is required to be in a
position to undertake necessary measures for the protection of minority interests through the
discussion of adequacy of transactions with independent directors or committee and through
consultation with holders of stocks with less voting rights, etc. as appropriate.
Even if an applicant does not have any controlling shareholder at the time of listing applicant,
in order to protect the minority interests in case of transactions expected to be carried out
with controlling shareholders after listing, the applicant is required to submit the “statement
that if the applicant will have any controlling shareholder after listing, the applicant is
committed to undertake any measures to protect minority interests no matter when any
transaction with the controlling shareholders will take place” at the time of initial listing
application.
Meanwhile, since JPXR requires all the companies listing stocks with less voting rights, etc.
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to include in the Corporate Governance Report its commitment to measures to prevent

transactions between controlling shareholders and the company from being carried out at
the arbitrary discretion of management. For companies which list class stock with voting
rights, JPXR will also require them to include the disclosures thereof in the corporate
governance report.
► What is a controlling shareholder?
Controlling shareholders refer to major shareholders who account for the majority of the
voting rights of applicant when combining voting rights of the parent company prescribed in
Article 8, Paragraph 3 of the Financial Statements, etc. Rules or the voting rights held on the
account of the applicant with voting rights held by a person mentioned in either (1) or (2)
below:
(1) Close family members of the major shareholders (family member within one degree of
consanguinity)
(2) Such major shareholders and the company, etc. (this refers to company, designated
corporation, association and other similar entities) for which the person mentioned in (1)
above holds the majority of voting rights on its account and its subsidiary.
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g. Where a domestic stock, etc. pertaining to such initial listing application has preferential
contents concerning dividends from retained earnings, estimated profits for two (2) years
after the end date of the business year immediately prior to the business year including
the listing application date and a distributable amount as of the end date of the business
year immediately prior to the business year involving the listing application date are
deemed to be good, and it is expected that the issuer of such domestic stock, etc. will
account for profits sufficient to carry out dividends from retained earnings pertaining to
such domestic stock, etc., in principle.
When it is provided that preference dividends are delivered to stocks with less voting rights,
etc., JPXR will examine whether the applicant can practically recognize profit to the extent
that such preference dividends can be practically distributed. During the usual course of
examination, JPXR will assess the profitability of an applicant, but in these cases, more
improved expected profit should be incorporated in the plan to generate profit.
In addition, when no preference dividends are paid to stocks with less voting rights, etc., the
development of mechanism to revive voting rights until the preference dividends are paid
would be desirable. Currently, the listing examination requires that the voting rights would be
revived unless preference dividends are paid for two years or more.
h. Benefits of shareholders and investors are deemed to be highly unlikely to be infringed.

JPXR will comprehensively evaluate the scheme for stocks with less voting rights, etc. with
focus on whether the scheme respects the rights of holders of stocks with less voting rights,
etc. or those having no voting rights in consideration of the issuance purpose or corporate
governance practices, in addition to the matters mentioned in a to g above
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<Frequently Asked Questions and Answers Concerning Listing System for Class
Stock with Voting Rights>
Q1: What are the characteristics of non-voting shares?
A1: Non-voting shares represent shares whose voting rights are restricted in terms of
material issues including the election and removal of directors.
Q2: How are shares with more voting rights and less voting rights defined?
A2: Shares with less voting rights represent shares whose holders have higher value of
rights to claim dividend of surplus associated with the number of shares which entitle
the holder to exercise one voting right on material matters such as election or removal
of directors at the general shareholders’ meeting or higher value of right to receive
other economic benefits than holders of other classes of shares. That is, the holders of
shares with less voting rights refer to those who have less voting rights for economic
benefits (factors for share price formation) they are entitled to receive, so the shares
with less voting rights means shares granting less voting rights for their equity
contribution.
In practice, in case of shares with more voting rights, the trading unit which entitles
the holder to exercise voting rights would be comprised of 50 shares while the
shares with less voting rights are comprised of 100 shares.
Stocks with more voting rights representmean stocks with voting rights other than
those with less voting rights.
Q3: Are we to be permitted to list class stock with voting rights which requires that the ratio
of voting rights should be below a certain level as conditions for the exercise of voting
rights (voting right restriction plan)?
A3: With respect to voting right restriction plan, some have argued that it would constitute
a breach of shareholder equality principle (Article 109, Paragraph 1 of the Companies
Act) or discretional grant of different type of voting rights to individual shareholders.
Furthermore in conjunction with the treatment of cases where the number of shares of
class stock which are restricted on the matters for which the voting rights could be
exercised accounts for a half or more of all the issued shares outstanding (relating to
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Article 115 of the Companies Act), TSE will not currently permit such shares to be
listed.
Q4: In order to prevent prices of share of non-voting stock from remaining sluggish, we
have designed voting rights so that economic benefits arising therefrom would always
be high in terms of dividends or residual asset rights. In such cases are we permitted
to list the stock?
A4: It would desirable that you will provide for equal treatment among different classes of
stock in terms of issues other than the nature of rights and preference dividends in
order for investors to gain easy understanding thereof.
Moreover, some cases may emerge where the prices of non-voting shares are
significantly higher than those of common shares as economic benefits associated
with non-voting shares are made larger in terms of dividends. In such cases the
control of the company may be attained with substantively less equity contributions.
Potential departure from Article 115 of the Companies Act may arise the applicant is
required to carefully address such situations.
Q5: When a company lists non-voting stock, Article 115 of the Companies Act requires
that the number of shares of non-voting stock to be issued should account for below
a half of the number of issued shares outstanding. For example, even when an
issuer holds a relatively large number of common shares as shares of treasury stock,
is the issuer allowed to list its stock by issuing shares of non-voting stock which
account for less than a half of the issued shares outstanding?
A5: When you list non-voting stock, you need to avoid any situations which constitute a
departure of Article 115 of the Companies Act (limiting the issuance of shares of
non-voting stock to a half of the issued shares outstanding).
Q6: When we go private through MBO or EBO, can we list our stock by introducing class
stock with voting rights?
A6: If a company which has listed its common stock goes private through MBO or EBO
and applies for listing by adopting the scheme for class stock with voting rights, JPXR
will carefully assess the situation, taking into account the soundness of the objective
of use of market, in order to protect investors.
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For interpretation for the application for re-listing of a company which has gone
private through MBO, please refer to the last section of this chapter.
Q7: Will the need from the perspective of the common interest of shareholders be
deemed to exist even for companies with no particular business record, such as
those that have just started R&D?
A7: As the listing of stocks with less voting rights may give rise to certain
disadvantages such as restrictions on the transfer of controlling rights or a
corporate governance bias, the basis for the need from the perspective of the
common interest of shareholders must be provided by clearly describing the
record of the person in management and the business record of the applicant.
Therefore, since it may be challenging for companies with no particular business
record to explain the basis for the need, JPXR does not assume that the use of
stocks with more voting rights would be needed from the perspective of the
common interest of shareholders.
Q8: For the need from the perspective of the common interest of shareholders, will it
deemed to exist in cases where there will be a shareholder that is property
preservation firms or where there is a family that holds stocks with more voting
rights?
A8: JPXR does not assume that there will be the need for collecting the voting rights
of the family owners based solely on the reason that stable management is in the
common interest of shareholders.
Q9: Are there any quantitative thresholds for enacting any breakthrough provisions?
A9: There are no specified quantitative thresholds for enacting the breakthrough
provisions.
In consideration of the objective of Article 115 of the Companies Act (limiting the
issuance of shares of non-voting stock to a half of the issued shares outstanding),
JPXR may encourage the applicant to set the percentage less than 75% of the issued
shares outstanding for the purpose of the thresholds for enacting the breakthrough
provisions in cases where the class shareholders are determined to be further
protected in consideration of the nature of the scheme of class stock with voting rights,
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the need for the use of stocks with more voting rights, etc. or the purpose of
introduction of class stock with voting rights, or the status of controlling shareholders,
though 75% as a percentage of issued shares outstanding are sometimes set as a
threshold.
Q10: It is required to have a provision stating that a transfer of shares with more voting
rights will, in principle, require them to be converted to those with less voting rights.
Are there any cases where it is determined that though some changes in shares with
more voting rights take place, no conversion is required as such shareholders are not
included in the transfer? What are actual circumstances which constitute such
situations?
A10: For transfers, which may not be needed, of stocks with more voting rights to new
shareholders, there must be a provision stating that stocks with more voting units
should be converted to those with less voting rights.
Therefore, with respect to cases where shares with more voting rights held by certain
shareholders are transferred to other shareholders who have already held shares with
more voting rights, there are some cases where the conditions for the conversion may
not be required as the need continues to be deemed to exist.
In the meantime, in cases where a company preserving property holds shares with
more voting rights, when shareholders of the company change, beneficial holders of
shares with more voting rights may change without any transfer implemented. In such
cases, the applicant is required to carefully address the situations as it is likely that
such changes may contradict the conditions precedent to the investments in class
stock.
Q11: Are no conversion conditions to be required when a transfer, etc. of shares with
more voting rights takes place on the basis of inheritance?
A11: It is extremely where an exception to transfer provisions is permitted on the basis of

inheritance. JPXR will carefully evaluate situations after confirming the
reasonableness for the exception.
However, it may be acknowledged that no conversion provisions are required when

the applicant has designed and implemented any scheme for not impairing the interest
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of class stock shareholders and the scheme for class stock with voting rights is
determined to respect the rights of such shareholders.
Q12: When a company has listed shares with less voting rights, the company is required
to set forth the provisions requiring the conversion to shares with less voting rights
when a transfer of shares with more voting rights takes place. What measures
should be undertaken when a non-listed company lists shares of non-voting stock
separately?
A12: Even in case where a non-listed company lists shares of no voting stock separately,
the transfer of non-listed shares of common stock, resulting in changes in controls
usually contradicts the conditions precedent to the investments in no voting shares
and departs from the purpose of the introduction of class stock scheme. Therefore,
the applicant is required to take steps in advance in full consideration of
shareholders of no voting shares. For example, such steps may include the grant of
rights to acquire shares to non-voting shares which may grant common shares for a
consideration.
Q13: In case where a company retains a vast amount of reserve and it would be highly
unlikely to face difficulties in continuously paying any dividends on a long term
basis, is the company required to develop any mechanism where voting rights
revive if preference dividends are not paid for two years?
A13: Notwithstanding the provisions for preference dividends, non-payment of preference

dividends may impair the rights of holders of stocks with less voting rights, etc. So it
is required to protect holders of stocks with less voting rights, etc. by reviving voting
rights unless preference dividends are paid despite sufficient reserves. Therefore,
the applicant is required to develop a mechanism where voting rights would be
revived if no preference dividends are paid for two years.
In the meantime, JPXR will require the applicant to fully discuss the reasons for the
need or raising funds using class stock when the applicant has sufficient surplus
enough to pay preference dividends.
Q14: For an initial listing, are the holders of stocks with more voting rights, etc.
allowed to make a secondary distribution?
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A14: JPXR assumes that the applicant uses the stocks with more voting rights, etc. in
order for a specified entity to continue to be involved in the management by
collecting voting rights for specified shareholders. However, the secondary
distribution of holders of stocks with more voting rights would reduce the voting
rights ratio and it would not be consistent with the need of such use. On the other
hand, JPXR believes that the secondary distribution at the time of initial listing
would be implemented in order to strike a balance among obtaining founder
gains, individual financial needs, funds required to be raised by the applicant at
the time of initial listing and ensuring liquidity after listing.
Therefore, JPXR would not automatically deny disapprove the secondary

distribution of shareholders of stocks with more voting rights, but would assess
whether the purpose of secondary distribution is significantly unreasonable
based on the need of the use of stocks with more voting rights, etc.
Q15: When a company is considering the listing of voting right class stock, what issues
should the company consider in practices?
A15: When you are considering the listing of voting right class stock, you are encouraged
to consult JPXR in advance through the lead underwriter.
Q16: Is it possible for a company to alter the scheme for voting right class stock after
listing thereof?
A16: There is likelihood that any event resulting in the delisting of the voting right class
stock may arise when a company alters the scheme for class stocks after listing or
does not comply with covenants to be followed.
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(5) Other – it is deemed appropriate from the viewpoints of the public interest or the
protection of investors.
(Guidelines II 6, (6)
When the purposes or lines of business of an applicant conflicts the public interest and good
moral, it is not appropriate to offer the applicant as an investment choice.
In addition, JPXR will assess any matters which are considered to be necessary in order to
contribute to public interest and to protect investors. For example, JPXR will assess the
following:
► When a company in the process of rehabilitation files an application for the listing, JPXR
will assess whether covenants under the rehabilitation plan would not impose any
constraints on the rights of shareholders specified in the plan and whether the design
and implementation of the management control organization would not give rise to any
problems for the purpose of the investor protection.
► When a company who has gone private through MBO (management buy-out)
transactions intends to apply for re-listing of its stock, JPXR will carefully examine the
appropriateness of purchase prices at the MBO or adequacy of disclosures, the
reasonableness of MBO (purpose of going private), and the progress of the plan to be
realized through the MBO.
► An applicant is appropriately required to carry out actions as a new participant in
financial instruments exchange such that they contribute to the sound development of
the exchange. Thus, if the applicant as a whole carries out any actions in contravention
of the Financial Instruments Exchange Act, the applicant is determined to be
inappropriate for an investment choice.
► In cases where a company that has gone private through a management buy-out
(MBO) files an application for re-listing, JPX-R will examine the re-listing application
from the following perspectives and apply them to the re-listing examination.
[Thought on re-listing after an MBO]

An MBO (management buy-out) represents a transaction where the management of a listed
company purchases shares from a company’s shareholders and thereby makes the
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company go private. By definition, an MBO makes a company that has completed its roles
as a listed company exit from the market. From another perspective, an MBO enhances
the enterprise value of a company by flexibly improving the management. On another level,
it provides shareholders with a valuable opportunity to obtain a premium over the shares
they hold.
As such, an MBO has played an important role in sustaining an active capital market, and a
large number of MBO transactions have been effected in Japan.
Some of the MBO transactions aimed to enhance enterprise value by the improvement of
management may be implemented with a view to making an exit for the purpose of re-listing
from the beginning. In such a case, an MBO is presumably implemented as a part of a
re-listing transaction.
On the other hand, an MBO generally differs from a TBO, in that an MBO gives a rise to
conflict of interest between the shareholders and the manager that the shareholders have
entrusted with management activities, and that an MBO puts the manager in a more
favorable position than shareholders in terms of access to information. The manager
implementing an MBO transaction is therefore required to ensure the adequacy of allocation
of premium and the reasonableness of the implementation of the MBO by applying fair
procedures.
In cases where a company that has been delisted through an MBO is re-listed, the
differences between the plan at the time of the MBO and the progress after the MBO are
presumably clear. As such, the relevance between the MBO and re-listing would be
questioned or the adequacy of the premium allocation and reasonableness of the
implementation of the MBO would also be questioned.
In cases where a company that was delisted through the implementation of an MBO in the
past files a re-listing application, in light of the above , JPX-R will conduct an additional
listing examination separately on the investors’ protection practices in order to maintain
confidence in the market, in addition to typical examination procedures,
[Perspective of the listing examination]

1) Relevance between an MBO and re-listing
- An MBO and re-listing represent separate transactions, and strong relevance
between them may not always be observed.
For the purpose of a listing examination, JPX-R will examine the identity and continuity of
parties involved in the MBO and re-listing (management, shareholders) and the length of
time from the MBO to the re-listing.
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2) Adequacy of premium allocation and reasonableness of the implementation of an

MBO
- It would be impracticable to primarily and objectively test the adequacy of the
premium allocation and reasonableness of the implementation of an MBO. In cases where
the procedures on which investors base their decisions have been fairly applied and the
MBO has been effected, a majority of shareholders can be assumed to have been
persuaded to enter into transactions. As such, it is unlikely that JPX-R would question the
adequacy of the premium allocation and reasonableness of the implementation of the MBO
For the purpose of a listing examination, JPX-R will examine the compliance with MBO
guidelines as a part of MBO procedures.
- Even if there is any difference between the plan at the time of the MBO and the
progress after the MBO at the time of re-listing, when a reasonable explanation of reasons
for such difference is given, it is unlikely that JPX-R would question the adequacy of the
premium allocation and reasonableness of the implementation of the MBO.
For the purpose of listing examination, JPX-R will assess whether the explanation of the
difference is given sufficiently and persuasively.
[Application to listing examination]

For the purpose of listing examination, JPX-R will make an assessment based on the
perspectives of 1) and 2) above and examine whether the relevance between the MBO and
re-listing isn’t high and whether the adequacy of the premium allocation and reasonableness
of the implementation of MBO are low.
Then, in light of the system for corporate governance practices and the explanation and
disclosure of facts and circumstances with regard to the re-listing, JPX-R will
comprehensively determine the approval of the re-listing.
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IV Listing Examination Q&A
This Q&A addresses practical items to be confirmed with respect to “III Checklists for
Mothers Listing.”
1. Corporate Continuity and Profitability
(1) Items for which Profit Level is Assessed
Q1: In principle, we use ordinary income when we assess the level of profitability. Though
ordinary income is recognized, how does JPXR treat the situations where those other
than ordinary income incur losses?
A1: For the purpose of examination for profitability, JPXR will, in principle, assess the
profitability of main businesses of initial listing applicant.
Therefore, when the applicant recognizes ordinary income by compensating for

operating losses by non-operating income which does not directly arise from main
businesses, including dividend income, JPXR does not determine that the applicant
has stably generated profits. On the other hand, for example, in case of wholesale
businesses where ordinary income is recognized by compensating for operating loss
by non-operating revenue, JPXR may determine that the applicant will stably
generate profit despite operating loss as its business model thereof indicates that
non-operating revenue is constantly recognized as discount of costs for procurement
occurs every year.
In addition, though an applicant recognizes ordinary income, if some extraordinary

losses are expected to be recognized because of the abolishment of some shops
every year or continuous payments of compensation for damages related to legal
cases, JPXR may make examination in consideration of effect of such operating
losses.
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(2) Profit Level after Listing
Q2: Formal requirements provide that an applicant is required to recognize the total
ordinary income of ¥500 million or more for the last two years. For the purpose of
examination, how does JPXR assess the situations where the total ordinary income is
below ¥500 million for the two year period including application year?
A2: The criterion for the profitability primarily requires that “it is reasonably expected that
the applicant can stably recognize profit after listing.” Therefore, in cases where the
total profit for two financial years including the recent business year is below ¥500,000,
if JPXR determines that the matters described in the “Requirements of criterion and
focus of examination” are satisfied during the course of examination, the applicant
could meet the criterion.
(3) Confirmation of Progress of Performance during the Period in which the

Application is Filed
Q3: Does this criterion mean that JPXR would not examine the progress of performance
during the periods related to that in which the application is filed, except for the
assessment of whether the performance has bottomed out?
A3: In principle, JPXR will not evaluate the actual progress of performance during the
period in which the application is filed.
However, JPXR will assess the progress of operating results in order to evaluate the
control over budgeting. In practice, JPXR will request the applicant to discuss the
systems in place to analyze the departure of actual results from the budgets, and
approaches to revise if any revision of future performance forecast is necessary and
the timing thereof by using actual data during interviews, etc. with JPXR.
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(4) Application of “Accounting Standards for Accounting Changes and Correction

of Errors”
Q4: We retrospectively applied new accounting policies with reference to the “Accounting
Standards for Accounting Changes and Correction of Errors” and as a result, prior
operating results significantly deteriorated compared to those before the application.
Please outline the points which JPXR considers for the purpose of examination.
A4: For the purpose of the examination on the basis of the criterion “Corporate Continuity
and Profitability,” JPXR will assess the profitability of main businesses of the applicant
as to “whether an applicant is reasonably expected to recognize stable profit for a
certain period of time following listing.”
Therefore, in the event that prior operating results significantly deteriorate as a result
of retrospective application of accounting changes, such factors alone would not affect
the listing examination.
(5) Recognition of Losses for the Previous Year and Application Year
Q5: There is a requirement that “the corporate group of an initial listing applicant is
reasonably expected to be able to maintain a stable profit for a certain time of period
after listing (in principle, two business years including application year.” Does this
mean that any listing would not be permitted in the event that the applicant
recognizes any ordinary loss for the previous year and application year?
A5: In principle, JPXR will confirm that the operating results in ordinary income on a full
year basis for the period in which the listing application is filed. However, in
consideration of characteristics of business model of the applicant, if JPXR is
assured that the performance for the year following the annual period in which the
listing application would result in an ordinary income on a full year basis as some
months of the listing application year shows ordinary income though recognizing a
loss on a full year basis, JPXR may exceptionally determine that the applicant meets
the requirements of the criterion.
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(6) In cases where a large amount of goodwill or borrowings has been

recognized
Q6: In the event a large amount of goodwill has been recognized from the acquisition, etc.
of a business or company, how would it be judged for the purpose of examination?
A6: In cases where a large amount of goodwill is recognized, the profit will significantly
decrease if some or all of goodwill recognized is impaired after the listing. If the
amount of goodwill exceeds the net assets, the total amount of liabilities may exceed
that of assets. These circumstances will significantly affect the going concern
assumption of the business. In such a case, JPX-R will examine the
reasonableness of the business plan and conditions of the testing of goodwill for
impairment and comprehensively assess whether the listing should be approved.
An applicant is required to appropriately include descriptions of such matters in the
section “”Risks, etc. associated with business” ” included in “Part I.”
Q7: When a large amount of borrowings is recognized as a result of a leveraged buy-out

(LBO), how would it be judged for the purpose of examination?
A7: In cases where a large amount of borrowings is recognized as a result of a transaction,

including, but not limited to, the implementation of an LBO, the borrowings are likely
to have a significant effect on the going concern assumption of the business when
the applicant delays the payment after the listing or is not able to pay the debts
depending on the Financing as the applicant fails to comply with financial covenants
and is required to pay a debt fully at one time. In such a case, JPX-R will, for example,
examine the following points and comprehensively determine whether the listing
should be approved:
- Whether negative pledge or financial covenants are provided. If so, the likelihood of
incompliance therewith
- Whether the borrowings have been properly paid or payment s are expected to
properly continue (*)
* JPX-R will, for example, examine whether the amount of borrowings and payment
schedule for the borrowings have been reasonably established based on the
business model or industry trend or cash flow conditions, or whether the payments
have been stably made based on a payment schedule so established.
In addition, in cases where any provisions which significantly restrict the freedom of
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management of a listed company have been provided under loan agreements, etc.
entered into between an applicant and a lender such that the approval of the lender is
required in advance for any amendment to a significant provision in Articles of
Incorporation or issuance of securities, the applicant will be required to modify the
agreement or remove any related provisions.
An applicant is required to appropriately include descriptions of such matters in the
section “Risk Information pertaining to Business” included in “Part I.”
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2. Soundness of Corporate Management
(1) Transactions with Related Parties
Q8: When some sales or real estate related transactions have been entered into between
the applicant and any related party, how does JPXR evaluate such transactions for the
purpose of the examination?
A8: In case of existence of any transactions with related parties, JPXR will evaluate the
reasonableness of transactions (necessity for business), adequacy of transactional
terms and conditions, and fairness of disclosures of transactions. If any
inappropriateness is identified, JPXR will more carefully perform the examination. For
example, the following are identified as inappropriate cases.
(Cases where the reasonableness of transactions (necessity for business) is not

recognized)
- The applicant leases property from a related party not within its business plan and
operating strategy (e.g., in case of retail businesses, lease of shop consistently
making losses)
- The applicant has entered into some transactions via a related party, but the
reasonableness of involvement of the related party (necessity for business) is not
recognized.
- The applicant has entered into financial transactions in a large amount.
(Cases where the adequacy of transactional terms and conditions is not recognized)
- The applicant has provided a related party the free rent of vacant spaces in the
building owned by the applicant for the purpose of individual business.
- When the applicant sells a corporate property to a related party, the applicant sold
the property at a significantly low price despite the large difference between the
market value and the book value (market value is significantly below the book
value).
- In commencing or renewing transactions, the applicant has not implemented
sufficient research into the adequacy of transactional terms and conditions such as
comparison of various quotations (in case of operational transactions) and lease
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terms of similar properties (lease transactions of real estate).
(Cases where the fairness of disclosures is not sufficient)
- Despite the fact that the applicant has leased a property from a related party, the
applicant tried to circumvent the disclosure thereof by entering into the lease with the
real estate broker.
When an event does not constitute an operational transaction, it is feared that the
event gives rise to the provision of undue benefits via other management activities
consistent with cases below and JPXR will carefully examine these issues.
- A company is deemed to have purchased a vast amount of artistic Rules such as

paintings to satisfy individual hobbies or preferences of officers of the company.
- It is deemed that properties purchased by the company (including real estate,
company car, boat, airplane, golf course membership, etc.) have been used for
personal purposes of specified officers, etc. of the company.
Q9: We have paid advisor fees to related parties by entering into an agreement with them.
How will JPXR evaluate these cases?
A9: The important point is that transactions with related parties should be truly justified
when considering the interest of the company first.
In cases where a related party is requested to serve as an advisor (needed for the
purpose of business), JPX-R will examine the reasonableness of the request in
consideration of the roles expected of the advisor and actual performance of those
roles. As a result, an applicant is required to terminate any transaction for which
reasonable explanations are not given sufficiently.
JPX-R will then examine whether the advisor fee would be adequate based on the
roles expected of the advisor or the actual performance of those roles by confirming
the method and basis for determining the advisor fee and its absolute amount (*). As a
result, an applicant is required to revise the advisor fee for any transaction that has not
been reasonably explained.
For the execution of an advisor agreement or the determination of an advisor fee, the
details should preferably be determined through a consultation involving independent
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directors rather than the decision of some management personnel.

In addition, even if a request to a related party to serve as an advisor (need for the
purpose of business) or the adequacy of an advisory fee can be reasonably explained
for the purpose of a listing examination, the necessity of executing the advisory
agreement or the roles required of the advisor would change in response to the
evolving circumstances of the applicant or related party entering into the advisory
agreement. Therefore, the applicant is required to have a mechanism in place to
review and address such a change on a timely basis.
(*) One of the thresholds is to compare the compensations of directors, etc. required to
fulfill legal responsibilities with the compensations of advisors. In cases where a
director holds a position of advisor after retirement, it would be useful to compare the
compensation as a director with the current compensation as an advisor.
Q10: Systems to check and balance the related party transactions are required to be
established. How will JPXR make examinations in relation to these issues?
A10: A degree of such systems to be designed and implemented may differ depending on
policies for related party transactions, existence of related party transactions and
status of related parties, etc. JPXR will comprehensively evaluate these issues by
assessing the method to identify, consider and follow up related party transactions.
For example, when the applicant has developed policies to permit some related party
transactions and related party transactions have practically taken place, the applicant
is encouraged to have addressed the following issues.
The applicant can identify related party transactions before the commencement
thereof.
In commencing any related party transaction, the applicant has in place the systems to
evaluate the reasonableness and adequacy of transactional terms and conditions,
including the resolutions at or report to the Board of Directors, and requirements for
the examination by independent directors/auditors or company auditors.
The applicant has in place the systems to periodically evaluate the reasonableness
and adequacy of transactional terms and conditions as related party transactions are
evaluated at the meeting of Boards of Directors for closing accounts and audited by
company auditors.
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The applicant has required the mechanism for these transactions to be consistently
implemented after listing by virtue of requirements of regulations or manuals
(Regulations on the Board of Directors, Regulations on the Board of Company
auditors, Regulations on Request for Approval, Compliance Regulations and other
manuals) and other measures.
On the other hand, if an actual (or expected) related party transaction takes place as a
part of activities of general consumers or constitutes a transaction with a major
shareholder (who is not a parent company, etc.) and similar transactions have been
entered into with many other companies, subsequent assessment mentioned in Q8
would be sufficient.
This is illustrated in the context of the implications associated with related party
transactions. So, if JPXR can confirm any check and balance systems in terms of
related party transactions, they would not give rise to any problems in this respect.
The applicant is encouraged to design and implement the systems in consideration of
actual status of the applicant.
Q11: We have developed company policies which would not permit any related party
transactions. Under these circumstances, do we have to design and implement
such mechanism?
A11: A company has developed policies which would not permit any related party
transactions, no such transactions have actually been entered into and it is highly
unlikely that such transactions would take place on the basis of status of related
parties, etc. In such cases, if the company consistently applies the procedures which
have been implemented to review the items to be described in the Securities Report
(subsequent procedures including separate inquiry to officers, confirmation of related
parties against the list of trading partners), such consistent application would not give
rise to any problem in this respect. However, there is possibility that a related party
transaction may consequentially prove to have taken place. In such cases, the
company is required to appropriately follow up the transactions by reporting them to
the Board of Directors or having them examined by company auditors.
(2) Transactions involving the management
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Q12: If there is any transaction involving the management, how do the examiners
assess the transaction? Reference to “any business acquired or planned
through the efforts of the management in itself, or any project whose necessary
matters are exceptionally determined by the management” is made in this.
What transactions do they actually refer to?
A12: The examiners will not consider any transaction involving the management itself
during the course of their assessment. However, appropriate check and balance
functions are unlikely to internally apply to such transaction. As such, the transaction
may result in some frauds. Therefore, the examiners will assess whether an
appropriate system has been developed and operated where such project will be
considered at the corporate level and appropriate check and balance functions will be
applied properly, and whether or not any transaction involving the management, which
was actually carried out, is an inappropriate one. If such assessment highlights that
there is any inappropriate element in the transaction, the examiners will carefully
examine the listing application. Any transaction which took place in the last two
years and during the period for the application is expected will be subject to the
assessment. Projects which may meet the reference to “any business acquired or
planned through the efforts of the management in itself, or any project whose
necessary matters are exceptionally determined by the management” may include the
following:
- Transactions: the management discover customers through its own relationship,
negotiate the terms and conditions and finally succeed in the acquisition;
- Transactions: the management specifically develop the plan for the operation of shop
or outlet and the plan is implemented;
- Transactions, where general managers or those in similar position usually perform
any procedures for the credit grant or conclusion of agreement and decide on them,
the management will exceptionally make such decision;
- Transactions: where the request for approval regarding the grant of credit or
conclusion of the agreement is dissented and rejected before the request is submitted
to the management, the request is exceptionally submitted to the management, who is
finally approves it; or
- Transactions: Though they are not entered into by the company in normal cases, the
company enters into the transactions as the management is involved.
(3) Agreement with Shareholders
Q13: We have entered into agreements with large shareholders which require the
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pre-approval with respect to material items (large capital investments) or which

grant the right to appoint officers. How will JPXR evaluate these examinations?
A13 The existence of any agreement which grants special rights to specific shareholders
is highly expected to impair the rights of other shareholders, and the applicant is
required to terminate the contract before the listing application, in principle.
(4) Handling of Core Subsidiary
Q14: What basis does JPXR apply in evaluating whether “a subsidiary substantially
constitutes an integral part of the parent company?"
A14: For example, JPXR will evaluate this issue on the basis of similarities of business
domain of the parent company and the applicant or effects generated by synergies
arising from the business relationship between the parent and the applicant. In such
cases, in cases where, though the business model adopted by the applicant differs
from that of the parent company, the applicant is determined to play an important role
to realize the business model of the parent company, JPXR is likely to determine that
the applicant substantially constitutes an integral part of the parent company.
(5) Shareholding of the Parent Company as a Percentage of the Total

Shareholders’ Equity
Q15: There is a requirement that “JPXR will assess this point by confirming the intention
of the applicant to reduce the shareholding ratio of the parent company, etc.” In
practice, what points will JPXR examine?
A15: When it is concerned that the applicant constitutes a department or division of the
parent company and the applicant must be consolidated by the parent because its
shareholding ratio is high, it is determined that the probability that the decision making
of the applicant would be affected by the parent company. This would give rise to a
problem in that the likelihood that the business activities of the applicant would be
restricted or influenced by the parent company would be higher. Accordingly, JPXR
will evaluate whether a degree of influences of the parent company over the
management decisions of applicant would be mitigated as the applicant expects to
reduce the shareholding ratio of the parent company or eliminate concurrent holding of
positions at the parent company.
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(6) Competition Arising from the Performance of Similar Businesses
Q16: When there are companies in the corporate group of the parent company, etc. which
performs businesses similar to those carried out by us, how does JPXR evaluate
such situations for the purpose of the examination?
A16: It may be assumed that the parent company, etc. leverages its controlling power to
restrict or coordinate the business activities of the applicant. JPXR will assess
whether the applicant ensures sufficient independence from the parent company, etc.
such that the applicant would not be exposed to undue business coordination of the
parent company, etc. in consideration of the reasons for the occurrence of competition
between the parent company, etc. and the applicant, the reasons for performing
businesses independent of the parent company, etc., the nature of business
coordination and management of subsidiaries of the parent, and the possibility of
impeding the independence of the applicant in the future.
In addition, when the boundaries of products and sales regions have clearly been
defined between the applicant and the companies performing businesses similar to
those of the applicant, JPXR may determine that it is unlikely that the businesses of
the applicant would be restricted or coordinated in future.
In the meantime, when any competition with the applicant has already occurred, JPXR
may require the applicant to disclose the situations by asking the notion underlying the
competition in order to protect the minority interests through interviews with
independent directors/auditors.
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Q17: There is a requirement that “JPXR will assess whether the applicant ensures
sufficient independence from the parent company, etc. such that the applicant
would not be exposed to undue business coordination of the parent company, etc.
in consideration of the reasons for the occurrence of competition with the parent
company, etc. and the applicant, the reasons for performing businesses
independent of the parent company, etc. and the nature of business coordination.”
In practice, which cases would give rise to problems in this context?
A17: Incidents identified as examples of cases where independence may be endangered

as the business activities of the applicant are restricted or coordinated by the
parent company, etc. would include the following cases:
- It is determined that the applicant is forced by the parent company, etc. to
manage a loss making shop in the area where the applicant competes with the
parent company, etc.
- The sales of new products of the applicant are restricted or the timing of launch is
changed at the sole discretion of the parent company, etc.
- Though the applicant receives orders which the parent company, etc. cannot
handle, many of such orders are not profitable or the parent company, etc.
generates undue profit;
- Managers for the business of departments or divisions which compete with the
parent company, etc. are seconded from the parent company, etc.
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(7) Real Estate Transactions with the Parent Company, etc.
Q18: With respect to the lease of property from the parent company, etc., it is stated that
“JPXR will determine whether an applicant constitutes a business department or
division based on the degree of dependence on the parent company, etc. with
respect to each relationship (ratio and amount, etc.) and on the materiality of
business activities.” How will JPXR assess the dependence or materiality of
business activities for the purpose of the examination?
A18: For example, if the applicant is a company which has developed its business by
operating businesses in a large number of areas nationwide and has leased property
for each area from the parent company, etc., it is likely that a degree of dependence
on the parent company, etc. is low.
However, if the property leased from the parent company, etc. at a specific area is
much more material for the purpose of the business than those leased at other areas,
JPXR will more carefully evaluate the lease transaction.
(8) Acceptance of Secondment from the Parent Company, etc.
Q19: There is a requirement that “If the seconded persons are assigned to positions of
officers or general managers who manage departments exposed to the influence of
the parent company, etc., JPXR will be concerned with such situations from the
perspective of independence. How does JPXR define officers or general managers
who manage departments exposed to the influence of the parent company, etc.?
A19: If seconded persons from the parent company, etc. are assigned to positions of
officers, etc. who manage sales departments of the applicant which has
recognized a vast amount of sales from the parent company, etc., the seconded
persons and the parent company, etc. may mutually determine the selling prices or
transaction amounts of the applicant. In such cases, they would be highly likely to
be regarded as officers or general managers having influence over the applicant.
The same would apply to cases where the seconded persons are assigned to
positions of officers, etc. who manage departments or divisions which may have
significant influence over the decision making for the management of the applicant,
including the management planning department.
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3. Effectiveness of Corporate Governance and Internal
Management System of an Enterprise
(1) Board of Directors
Q20: The attendance of outsider directors at the meetings of the Board of Directors is
infrequent. How will JPXR evaluate such situation for the purpose of the
examination?
A20: Attendance at the meetings of the Board of Directors where directors participate in
the decision making of material matters for the business and receive necessary report
is considered to be important duties of directors. Thus if attendance of some directors
at the board meetings is infrequent, it is determined that the governance of the
applicant has not functioned well. JPXR will more carefully evaluate such situation.
(2) Company Auditors
Q21: We currently do not have a board of auditors. When is the latest date by which we
must establish a board of auditors?
A21: In the "Code of Corporate Conduct" of the Securities Listing Regulations,

establishing a board of auditors is set forth under “Matters To Be Observed”. Therefore,
the applicant needs to set up a board of auditors, however, there is no set date to do
so. However, the applicant would be subject to a substantive examination which
confirms whether the board of auditors is functioning properly. As such, it would be
desirable for an applicant to apply after providing a certain operational period for the
board of auditors.
(3) Independent Directors/Auditors
Q22: When is the latest date by which we must elect independent directors/auditors?
A22: Independent directors/auditors must be elected by listing date. Thus JPXR will
check the status of election of independent directors/auditors during the process of
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examination.
Q23: It is required that outside directors or auditors who would be registered as

independent directors/auditors should be persons who will not give rise to any
conflict of interest with general shareholders. What should we consider in choosing
persons who would be registered as independent directors/auditors?
A23: In choosing persons who would be registered as independent directors/auditors, it is

required in principle that they do not meet any one of the events mentioned in
Guidelines III 5, (3) 2. Corporate Governance Report
For considerations in electing independent directors/auditors, please refer to the

section “Practical Considerations in Electing Independent Officer” in the “Company
Information Timely Disclosure Guidebook” issued by TSE. The information is also
posted on TSE’s website.
(http://www.jpx.co.jp/equities/listing/ind-executive/index.html)
When you are concerned with the satisfaction of requirements for independent
directors/auditors in filing the listing application, please consult JPXR in advance via
the lead underwriter.
Q24: We have no candidates for independent directors because we have not found
anyone qualified. For the purpose of examination, how will JPXR assess the
situation?
A24: JPXR will not treat the situation as non-conformance in the course of the
examination even though the applicant does not secure any independent directors.
However, in cases where the applicant does not secure any independent directors, the
listing examination also requests the listed company to describe its policy to secure an
independent director(s) and check the progress of actions to secure an independent
director(s), as well as to describe such progress in the Corporate Governance Report.
Q25: The Corporate Governance Code requires that “A listed company should elect at
least two or more independent outside directors” (Principle 4-8). If we do not elect
two or more independent outside directors by the listing, how does it affect the
listing examination?
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A25: The Corporate Governance Code does not necessarily require a listed company to
elect two or more independent outside directors. Under the approach of “Comply or
Explain,” the listed company may be given an option not to implement the election by
describing the reasons for not electing them. Non-election of two or more independent
outside directors by the time of listing does not constitute the non-compliance with
requirements for the listing examination. However, unless the listing company elect at
least two or more independent outside directors, it is required to explain the reasons
for not doing so in the Corporate Governance Report..
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(4) Company with Board of Directors
Q26: We are considering listing of our stock in the form of pure holding company. Among
companies under the patronage of our company, there is a company which has not
formed the Board of Directors as it has only one director. Do we have to turn the
company into a company with board of directors?
A26: It is not automatically required from the formal requirements that all the companies
under patronage of a holding company should be companies with board of directors.
JPXR will evaluate these situations on a case-by-case basis in consideration of the
existence of reasonable reasons for not establishing the board of directors, on the
basis of sizes of the company, positioning in the corporate group and the background
for the foundation of the company.
(5) Request for Approval and Decisions
Q27: If there are many incidents where transactions have been commenced before the
requests for the approval of transactions are submitted and decisions are made,
how does JPXR judge these situations?
A27: For the purpose of the examination, it is required from the perspective of a fair
internal management system that requests for approval are appropriately prepared in
accordance with regulations on work duties and appropriate decisions are made. Such
incidents may give rise to concerns with the effectiveness of the request for approval
and the decisions on the basis thereof. They are not determined to meet the
requirements and JPXR will more carefully assess the situations.
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(6) Budget Control
Q28: For the last several years, actual results have constantly deviated from budgets.
How does JPXR judge these situations?
A28: In cases of constant deviation of actual results from budgets, it is likely that there
would be some problems in terms of the budget development system (*).JPXR will
examine the budget development process (e.g., consistency among budget systems
such as profit and loss budget and capital investment plan, etc., analysis of external
environments and coordination with other departments and divisions), in depth.
When budget control has not been reasonably implemented at company level as
some problems have arisen with respect to the development process, JPXR will
more carefully assess these situations.
* In cases where actual results are constantly below budgets, it is assumed that the
feasible realization of budgets have not sufficiently discussed during the process of
budget development and budgets have been prepared only expecting the desired
performance to be reflected in the operating activities.
(7) Acceptance of Secondment
Q29: Managers (general managers or authorized to make necessary decisions)

responsible for significant departments (financial department or sales departments
which carry out transactions with important customers) are seconded from external
entities (financial institutions or large customers or suppliers?
A29: When managers responsible for important departments or divisions are seconded
from other entities, JPXR will assess whether such secondment has not been
forced (i.e., proprietary business management systems have not been impeded)
and whether the replacement will readily be available by recruiting relevant
persons or elevating internal staff members to such positions. When JPXR
determines that the applicant could address such situations by applying these
approaches, JPXR may positively assess them for the purpose of the examination.
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(8) Departure of Practices from Relevant Regulations
Q30: There are cases where though a company has adopted shipment basis as the
standards for recognizing sales, in actual practices, the shipment date has not
been clearly identified or revenue arising from the sales has been recognized at the
time of acceptance. How will JPXR assess these cases?
A30: For the purpose of the examination, JPXR will evaluate that accounting standards
are appropriately developed and included in the company level regulations and the
practices are implemented according to them. With respect to the cases in question,
since there is departure of practices form regulations (inconsistency between the
practices and the regulations), it is mandated that the applicant promptly addresses
such departure by improving the requirements of regulations or improving practices.
When the improvement is not readily available or there are significant errors which
require the retrospective restatement of financial statements due to historical errors,
JPXR will more carefully assess such situations.
(9) Labor Relationship
Q31: We have been recommended to correct some issues identified by a competent labor
standards supervision office the previous year. How will JPXR judge these cases?
A31: For the purpose of the examination, JPXR will assess whether the applicant has in
place effective systems to ensure the compliance with laws and regulations or has not
committed material breach of laws and regulations. With respect to cases where the
applicant is recommended to correct some deficiencies, it is assumed that there are
some defects or weakness in internal systems to ensure the compliance with the laws
and regulations concerning labor affairs at that time. JPXR will evaluate the nature of
corrective recommendations and how the applicant addressed such
recommendations at company level, and how the applicant has improved the systems
to prevent the reoccurrence of such incidents. JPXR will then make judgment on the
basis of such evaluation.
Thus, historical corrective recommendations would not necessarily affect the

evaluation immediately for the purpose of the examination.
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(10) Other Considerations for the Management Control
Q32: When a company outsources some aspects of management control functions

(general affairs department or finance and accounting department), does JPXR
find any problems in outsourcing it to a third party?
A32: In order to enhance the efficiency of managerial resources in the context of

performance of administrative works, an increasing number of companies have
now entrusted some works (so-called outsourcing) to third parties.
The outsourcing practices used to be applied for simple works such as payroll
calculation for the reduction of usual costs, but now circumstances have changed
such that they are applied to more strategic situations with a view to intensively
investing resources in the establishment of core competence (investing resources
into strong and important business areas while utilizing outside resources for other
areas).
For the purpose of the listing examination, JPXR would not immediately question
the existence of outsourcing practices. However, the applicant is required to
develop the system to ensure the accuracy and confidentiality of the information in
using outsourcing and to analyze the information from the outsourcer and disclose
it at the responsibility of the officer responsible for information management officer
of the applicant.
The applicant is required to assess the impact of and address the situations where
the applicant will no longer be able to outsource works to the outsourcer with which
the applicant has entered into an outsourcing agreement.
In consideration of materiality of outsourced works, the applicant is required to
describe the nature of outsourced works in Section “Risks Associated with
Businesses” of “Part I” documents
The assessment of whether the outsourced businesses are fairly managed may
vary depending on the lines of business and organizational structures of the
applicant and outsourced works. So if the applicant considers the use of
outsourcing, the applicant is encouraged to consult the lead underwriter or audit
firm.
The following highlight the considerations in making any outsourcing:
a. The applicant is principally responsible for the outsourced works.

No matter what works are outsourced, the applicant is eventually responsible for
the final decision to direct the business of the applicant including the decision
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making and strategy developments.

It is naturally assumed that the applicant is able to understand and analyze the
contents of outsourced works and data obtained from the outsourcer. The
applicant is also required to regularly assess the contents of the works
performed by the outsourcer at its discretion,
b. Appropriate disclosures
In case where the applicant outsources a part of works closely associated with
statutory disclosures or timely disclosures of preliminary releases of earnings,
the applicant should ensure the systems where such outsourcing would not
impede any timely and appropriate disclosures.
c. Regulations on insider trading

In the event that the outsourcer may have access to information such as that
associated with the operating results before the announcement publicly, the
applicant is required to undertake necessary measures to prevent leak of
information, including the conclusion of non-disclosure agreement.
d. Selection of appropriate outsourcer

The applicant is required to select reliable and experienced outsourcers such
that the works outsourced to the outsourcer would be implemented and
consistent. Also the applicant is to ensure the systems where an alternative
outsourcer is available or the applicant can handle the outsourced works in the
event that the applicant will be unable to request works to the outsourcer with
which the applicant has entered into the outsourcing agreement.
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4. Appropriateness of Disclosure of Corporate Profile, Risk
Information, etc.
(1) Revision of Future Forecast Information Including Performance Forecast
Q33: For the purpose of the examination, how do we have to address cases where we
need to revise future performance forecast information including earnings forecast
announced in order to ensure fair disclosures?
A33: Listed companies are required to disclose company information fairly and promptly.
Thus no matter when future forecast information including earnings forecast needs
to be revised, they shall disclose such revision promptly. For the purpose of the
examination, in order to confirm that the applicant has developed appropriate
disclosure systems, JPXR will assess the design and implementation of the intern
systems for timely disclosures and disclosure flow when some items required to be
disclosed arise.
In addition, for any company which lists its stock on another financial instruments
exchange, JPXR will assess the historical status of disclosures. For example,
though a company has resolved at the Board of Directors to revise future forecast
information, the company has not immediately disclosed the revision. Since it is
determined that the company has not satisfied the requirements for the fairness of
timely disclosure, JPXR will more carefully assess the situation for the purpose of
the examination.
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(2) Amendment to Disclosed Materials and Data
Q34: If we made some amendments to disclosed data in securities report, etc. in the past,
how will JPXR assess such amendments for the purpose of the examination?
A34: When the applicant makes amendments to securities report, etc., JPXR will assess
the conformity with the examination standards in consideration of factors leading to
the amendments and the approaches to address such factors, in addition to
particular amendments, the timing of amendments, the detection of items to be
amended and the frequency of such amendments. JPXR will more carefully asses
such amendments no matter when such amendments have taken place several
times including the amendments in application year and no improvements to the
disclosure system are perceived.
(3) Contents of descriptions included in the disclosure materials
Q35: What cases would be regarded as misleading with respect to the contents of
descriptions included in the disclosure materials in Securities Report for Initial
Listing Application (Part I)?
A35: The following cases may be considered misleading. The contents of descriptions
included in the disclosure materials need to be tailored to faithfully represent the
substance of the applicant.
- Cases where, for any business the applicant develops or is expected to develop
going forward, the applicant describes the nature of business by using terms that
relate to areas currently attracting strong investor interest, which would not have
much relevance to the area of such business.
- Cases where a business that is still at an early stage is described as one of the
applicant’s key businesses, or where an applicant describes a business that is still
only in the planning stages as a business that has already been developed.
(4) Acts which Distort the Disclosure of Actual Conditions
Q36: What cases are considered to distort the disclosures of actual conditions in
transactional acts?
A36: If sales are significantly increasing at the time approaching the year end, i.e., so
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called “coercive selling” is concerned, or analysis of goods and products sold or

customers is not clear, we may concern with the occurrence of so called “round trip
transactions,” or “fictitious transactions.”
In such cases, the financial statements of the applicant will not faithfully reflect the
actual conditions and present information quite different from what should have
been disclosed. Since they mislead investors, and in addition the applicant is likely
to be penalized because of breach of laws and regulations including false statement,
JPXR will more carefully assess these situations.
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5. Other Matters Deemed Necessary by the Exchange from
the Viewpoint of the Public Interest or the Protection of
Investors
(1) Change in shareholders before the listing
Q37: In cases where a change in shareholders takes place before a listing, what aspects
does JPX-R confirm for the purpose of the listing examination?
A37: In cases where any change in shareholders takes place before a listing, JPX-R
confirms the attributes of each shareholder, the reasons why the change has taken
place, and the scheme to transfer the shares and determining the share prices
before and after the Change. If, for example, JPX-R is concerned with the share
transfers at an unreasonable price or repeated changes in large shareholders,
JPX-R will confirm the circumstances on the assumption that some specific persons
may have unduly benefited from the transfers. In light of this, JPX-R will assess
whether the transfers will adversely affect general shareholders after the listing.
An applicant is required to include appropriate descriptions of share transfers in the
section “Risk Information pertaining to Business” included in “Part I.”
6. Others
(1) Internal management Report over Financial Reporting
Q38: How will JPXR assess the approach to address internal management report system
over financial reporting?
A38: When stock issued by the applicant is listed on another financial instruments
exchange in Japan, it is required that (i) the internal management report for the
business year which ends during the recent one year contains the statement that
“assessment results will be refrained from being expresses,” and (b) the internal
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management audit report for the business year which ends during the recent one
year contains the statement that “no opinion will be expressed.” (*) During the due
course of examination, JPXR will evaluate the assessment system of internal
management or matters identified as those required to be addressed during the
assessment process.
(*) This shall not apply to cases where the audit certificate is exempted over the
period for which the applicant is allowed to elect to apply the exemption from the
audit certificate over the internal control report.
On the other hand, for other non-listed companies, JPXR will evaluate the status of
preparation therefor during the process of examination.
(2) Reusability of Flow Chart
Q39: May we reuse the flow charts developed for the internal management report system
in order to present “flow chart” required to be described in “Part II” documents?
A39: The applicant may reuse the flow charts developed for the internal management
report system. However, the scope of flow charts required by “Part II” documents
may differ from such reused flow charts, so some insufficient portion may have to be
prepared separately.
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V Receipt or Transfer of Stocks, etc. Before Listing and Allotment, etc. of Offered Stocks through Third Party
Allotment
V Receipt or Transfer of Stocks, etc. Before

Listing and Allotment, etc. of Offered Stocks
through Third Party Allotment
When a non-listed company not listed on another financial instruments exchange in Japan
files a direct application for listing on TSE, for the purpose of ensuring the fairness of going
public, TSE requires such a non-listed applicant to meet the requirement of Items 1 and 2
below. The objective of these requirements is to prevent a specified entity from obtaining a
substantial income on a short-time basis through the allotment of offered stocks through a
third party allotment or allotment of subscription warrants as stock option issued by the
applicant in a period in which the realization of listing of stock is highly probable.
This section explains such requirements in detail.
<Scope of application>
These regulations shall apply to all applicants except for those which meet any one of the
items below:
(1) Issuers of a domestic stock, etc. listed on any other domestic financial instruments
exchange
(2) Initial listing applicants to whom the provisions for technical listing apply;
(3) Issuers of domestic stocks, etc. that are listed or continuously traded on a foreign
financial instruments exchange, etc.;
(4) Initial listing applicants who are a company to succeed to the business of a listed
company, an issuer of stocks, etc. listed on any other financial instruments exchange in
Japan, or an issuer of domestic stocks, etc. that are listed or continuously traded on a
foreign financial instruments exchange, etc. upon a shareholder-directed spin-off such
entity (see Note 1 below) and make initial listing application prior to said
shareholder-directed spin-off.
(Note 1) This shall be limited to cases in which the business succeeded from such entity
becomes the principal business of the initial listing applicant. Applicant who
takes over any business divested by a listed company, issuer of stock
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Allotment
certificates, etc. listed on another financial instruments exchange in Japan or

issuer of Japanese stock certificates listed or continuously traded on a foreign
financial instruments exchange, and who files an initial listing application before
the divesture (limited to cases where the applicant principally carries out the
business)
(Rule 217 of the Regulations, Rule 231 of the Rules)
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Allotment
1. Receipt or Transfer of Shares, etc. before Listing
(1) Descriptions Concerning the Status of Changes in Shares

before Listing
When special related parties, etc. (Note 1) receive or transfer shares or subscription
warrants issued by an applicant (including the exercise of subscription warrants; hereinafter
referred to as the “changes in shares, etc.”) between the following date of two years ago
corresponding to the end of the previous year (Note 2) and the date preceding the listing day,
an applicant shall describe the status of changes in shares, etc. in a document TSE deems
appropriate (Note 3); provided that this will not apply to cases where shares issued by the
applicant are those assigned to Green Sheet by Japanese Securities Dealers Association.
(Rule 253 of the Rules)
Note 1: A “special related party” represents persons enumerated below:

1) A special related party of an applicant (special related party prescribed in Article 1, Item
31 (i) of the Cabinet Order Relating to the Implementation of Disclosures);
2) Ten (10) largest shareholders who hold the largest number of stocks of the applicant
(excluding the employee share ownership plan of the applicant);;
3) Company based on human relations (company based on human relations prescribed in
Article 1, Item 31 (iii) of the Cabinet Order Relating to the Implementation of Disclosures)
or capital relationship (company having capital relationship prescribed in Article 1, Item
31 (iii) ) with an applicant; or
4) Financial instruments company (including foreign financial instruments company) and
officer thereof, company based on human relations prescribed in Article 1, Item 31 (iii)
of the Cabinet Order Relating to the Implementation of Disclosures or company having
capital relationship (company based on capital relations prescribed in Article 1, Item 31
(iii) ) therewith.
Note 2: For example, if the end of the previous year is March 31, such date is April 1 of two
years ago.
(Rule 253, Paragraph 1 of the Rules)
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Allotment
Note 3: Documents TSE deems appropriate refer to “Part I” documents and the applicant
should consider to include the basis for price calculation, described in conformity
with Exhibit 7 "Description of the Basis for Price Calculation," in the "Public
Information on Stocks - Item 1: Changes in Ownership of Stocks, etc. by Special
Related Parties, etc." section of the "Securities Report for Initial Listing Application
(Part 1)"
(2) Retention, etc. of the Record of Changes in Ownership of

Stocks, etc. Before Listing
The applicant shall retain the record about the description of the changes in ownership of
stocks, etc. for a period of five (5) years from the listing day.
The applicant shall respond to request for submission made by TSE as necessary with
respect to the record. In cases where an applicant refuses to respond to the request for
submission TSE may publicize the corporate name of such applicant and the fact that the
initial listing
applicant refuses to respond to such request for submission.
In cases where TSE determined, based on the examination of the record, that the
description of the changes in ownership of stocks, etc. provided pursuant to the provisions
of the preceding rule was clearly inaccurate, TSE may publicize the corporate name of the
applicant and the managing trading participant concerned and the fact that said description
has been determined to be inaccurate.
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Allotment
2. Allotment of Offered Stocks by Third Party Allotment, etc.
Before Listing
(1) Regulations on Allotment of Offered Stocks by Third-Party

Allotment, etc.
a. In cases where the applicant carried out an allotment of offered stocks by third-party
allotment, etc. after one (1) year before the end of the previous year (Note 1) (they refer
to offered stocks prescribed in Article 199, Paragraph 1 of the Companies Act and equity
contribution through preferred offer prescribed in Preferred Equity Contribution Act) ,
such applicant shall execute a written assurance with the allotted persons that allotted
persons shall, as a general rule, continue to hold the stocks allotted to them, they will
report to TSE on inquiries concerning the ownership thereof and make the documents
and the contents thereof available for the public inspection, and implement other acts
required by TSE. When the applicant does not submit the copy of statement, TSE may
not accept the listing applicant or may revoke the acceptance of the listing application.
Whether such allotment has been effected will be determined based on the payment
date for the offered stocks or the end of payment period (Note 2)
Note 1: The third party allotment, etc. relates to a public offering in relation represents any
method other than methods to make public offering public offer, shareholder
allotment or preferred equity contribution effected by the method where a securities
company distributes to general investors shares publicly offered which relate to
shares of stock assigned by the Japan Securities Dealers Association to the Green
Sheet.
Note 2: (1) Cases where an applicant absorbs and merges another company, (2) any stocks
issued when turning another company into a fully owned subsidiary through stock
swap, or (3) stocks issued when an applicant is established by stock transfer, do
not meet the definition of “allotment of offered stocks by third party allotment.
However concerning the another company in (1) and (2) above or a company to
which stocks are transferred in (3) above, TSE may require a written assurance
concerning continuous holding of stocks of the applicant in consideration of the
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Allotment
meaning of rules to prevent short time profit from being gained a specified entity, if
the applicant carries out the allotment of offered stocks by third party allotment after
the date of one year ago corresponding to the last day of the previous year.
(a) The reference to “they continue to hold offered stocks, report to TSE on inquiries
concerning the ownership thereof and make the documents and the contents thereof
available for the public inspection, and implement other acts required by TSE” at (a)
above” means the following:
(i) Continuous Holding
Allotted persons shall, as a general rule, continue to hold the stocks allotted to them (Note 1)
since the day on which the stocks are allotted until the day on which six (6) months have
passed since the listing day (Note 2). In this case, if allotted persons acquire new stocks or
subscription warrants as a result of stock split, gratis allotment of shares, or gratis allotment
of subscription warrants with respect to the allotted stocks, or conversion of the allotted
stocks to another class of stocks or subscription warrants, they shall continue to hold such
newly acquired stocks or subscription warrants (Note 3) until the same day.
(Note 1) This shall be the following rule and Rule 260 referred to as the "allotted stocks"
hereinafter in this rule.
(Note 2) If one (1) year has not passed since the payment date or the ending date of the
payment period pertaining to the allotted stocks as of such day, until the day on
which one year has passed since the payment date or the ending date of the
payment period pertaining to the allotted stocks.
(Note 3) This shall be referred to as the "newly acquired stocks, etc. pertaining to the allotted
stocks" hereinafter in this sub-section.
Note: “Conversion” means a transaction where with respect to shares, a company acquires
shares issued by the company and at the same time delivers other shares or
subscription warrants in exchange for such acquisition while with respect to
subscription warrants, a company acquires subscription warrants issued by the
company and at the same time delivers other shares or subscription warrants in
exchange for the acquisition.
(Rule 255, Paragraph 1, Item 1 of the Rules).
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Allotment
(ii) Report to the Applicant when Transferring the Allotted Stocks
An allotted person intending to transfer the allotted stocks or newly acquired stocks, etc.
pertaining to the allotted stocks shall notify the initial listing applicant of the intended transfer
in advance in writing and report the result of the actual transfer to the initial listing applicant
after the fact.
(Rule 255, Paragraph 1, Item 2 of the Rules)
(iii) Submission of Report to TSE when Transferring the Allotted Stocks
In cases where an allotted person transferred the allotted stocks or newly acquired stocks,
etc. pertaining to the allotted stocks, the initial listing applicant shall submit to the Exchange
a document containing the name and address of the transferor and the transferee, the
number of stocks transferred, the date of transfer, the transfer price, the reason for transfer,
and other necessary matters at the time of initial listing application, if such transfer was
executed before the initial listing application day, or immediately after such transfer, if such
transfer was executed on or after the initial listing application day
(iv) Report by Applicant to TSE in Response to Inquiry of TSE about Ownership Status
In cases where the Exchange makes an inquiry about the ownership status of the allotted
stocks or newly acquired stocks, etc. pertaining to the allotted stocks as the Exchange
deems it necessary, the initial listing applicant shall report the ownership status of the
allotted stocks or newly acquired stocks, etc. pertaining to the allotted stocks to the
Exchange without delay after confirming, as necessary, the ownership status of the allotted
stocks or newly acquired stocks, etc. pertaining to the allotted stocks with the allotted
person.
(v) Report by Allotted Person to Applicant in Response to Inquiry on Ownership Status
An allotted person who received from the initial listing applicant a request for confirmation
concerning the ownership status of the allotted stocks or newly acquired stocks, etc.
pertaining to the allotted stocks pursuant to the provisions of the preceding item shall report
such ownership status to the initial listing applicant immediately.
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(vi) Agreement with Availability for Public Inspection
An allotted person shall agree that matters enumerated in each of the preceding items and
the result of transfer of the allotted stocks or newly acquired stocks, etc. pertaining to the
allotted stocks, if applicable, will be available for public inspection.
(vii) Other matters deemed necessary by the Exchange.

(b) Timing of Submission of Documents Certifying Assurance
(i) Where the initial listing applicant carried out an allotment of offered stocks
prescribed in the preceding paragraph before the initial listing application day:
The initial listing applicant shall submit the document on the initial listing application
day.
(ii) Where the initial listing applicant carried out an allotment of offered stocks
prescribed in the preceding paragraph on or after the initial listing application day:
The initial listing applicant shall submit the document without delay after said
allotment; provided, however, that the date of submission shall be no later than the
day immediately preceding the day on which the Exchange approves the listing.
Documents certifying the assurance (assurance document) shall be prepared with reference
to the form in “A Documents to Be Submitted Pertaining to Initial Listing Application.”
assurance
b. In cases where a person who received an allotment of offered stocks by third-party

allotment, etc. does not actually hold the allotted stocks or newly acquired stocks, etc.
pertaining to the allotted stocks based on the assurance prescribed in a. of the
preceding rule, the Exchange shall either refuse to accept or cancel the acceptance of
the related initial listing application.
However, this provision shall not apply if the conditions prescribed in either of the following
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items are met and it is deemed appropriate that the person does not hold them.
(a) Where the allotted person transfers the allotted stocks or newly acquired stocks, etc.
pertaining to the allotted stocks due to significant difficulty in its business operations.
(b) Where it is deemed unavoidable in light of socially accepted norms.

c. In case where a person who received an allotment of offered stocks by third-party

allotment, etc. transfers said offered stocks during the period prescribed in Paragraph 1
of the preceding rule, the initial listing applicant shall submit to the Exchange a
document containing necessary matters at the time of initial listing application, if the
transfer of such allotted stocks by third-party allotment, etc. or newly acquired stocks,
etc. pertaining to such allotted stocks was executed before the initial listing application
day, or immediately after such transfer, if such transfer was executed on or after the
initial listing application day, and agree that such document will be made available for
public inspection by the Exchange.
d. In cases where the Exchange makes an inquiry about the ownership status of offered
stocks by a person who received an allotment of offered stocks by third-party allotment,
etc., the initial listing applicant shall report the ownership status of the offered stocks to
the Exchange without delay after confirming, as necessary, the ownership status of the
allotted stocks or newly acquired stocks, etc. pertaining to the allotted stocks with the
allotted person.
An initial listing applicant shall be subject to the provisions of the preceding two paragraphs
for a period specified in the assurance even after it becomes a listed company.
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Q1: Is any disposal of treasury stocks through third party allotment during the period to
which relevant reactions apply, to be subject to the assurance pertaining to the
continuous holding?
A1: Considering that the Companies Act requires that the procedures for the disposal of
treasury shares shall be subject to the procedures similar to those of issuance of
new shares, the disposal of treasury shares during the restriction period shall be
subject to the assurance related to continuous holding.
Meanwhile, a similar treatment applies to the disposal of subscription warrants for

treasury shares through third party allotment which is deemed to have the same
effect as the allotment of subscription warrants for shares publicly offered.
Q2: What is the final day when an actual allotment of offered stocks is made before
listing?
A2: TSE requires the applicant to submit to TSE the assurance statement related to the
allotment of such shares publicly offered by the date preceding the listing approval
date under the Rules in order to assess the satisfaction of disclosure requirements
for “Part I” documents, the status of disclosures and whether the assurance for the
continuous holding has been entered into. Therefore, the applicant cannot practically
effect the allotment for which the assurance is entered into after the date of listing
approval. The same treatment shall apply to the allotment, etc. of subscription
warrants for shares offered through third party allotment before listing.
Meanwhile, the listing approval date refers to the date when TSE approves the listing
and externally announces such approval.
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Q3: What is the treatment for shares acquired associated with the allotted shares when
any stock split, gratis allotment of stocks, gratis allotment of subscription warrants
rights or conversion to another class of stocks are made with respect to any
allotted stocks the required period for continuous holding?
A3: When any share split, gratis allotment of shares, gratis allotment for subscription
warrants or conversion to another class of shares are made with respect to any
allotted shares during the required period for continuous holding, shares acquired
associated with such transactions shall be subject to the assurance for continuous
holding. Therefore, unless the applicant describe the continuous holding of the
shares acquired associated with such allotment in the assurance statement, please
keep in mind that the listing application would not be accepted.
The continuous holding period for shares acquired associated with such allotment
represents the continuous holding period for the initially allotted shares.
Q4: When can the applicant and the allotted person appropriately enter into an assurance
statement in writing?
A4: As any person who receives the allotment of shares offered through third party
allotment is, in principle, required to hold them from the date of the allotment of such
allotted shares until the date when six months pass from listing (if one year has not
passed from the payment date or the end of payment period for the allotted shares as
of the date, until the date when one year passes from such date or end of period), the
applicant is, in principle, required to enter into the assurance statement to the effect
before the payment date or the end of payment period for the allotted shares.
Consistent with the above, when the applicant effects the allotment of subscription
warrants, the assurance must, in principle, be entered into before the allotment date
as the obligation to hold them continuously takes effect on the allotment date.
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Transfer and Continuous Holding of Allotted Shares
Cases where “it is deemed unavoidable in light of socially accepted norms” as prescribed in
Rule 256, Paragraph 1, Item 2 of the Rules include, but not limited to, the following (similar
treatment will apply to shares, etc. acquired associated with allotted shares).
Meanwhile, Rule 258, Paragraph 1, Item 2 will apply mutatis mutandis to cases where the
allotment of subscription warrants has been effected through third party allotment.
1. Holders are substantively identical before and after changes in allotted shares.
[Example 1] When a 100% owned new venture capital is established and the investment
business is transferred to the venture capital;
[Example 2] Business is transferred when a 100% owned subsidiary is established when a
company becomes a holding company
<Conditions>
► A person who has received the allotment of shares publicly offered continues to hold
them during the restriction period
► For allotted shares transferred, a person who has received the allotment has
undertaken to continuously hold them until the date when six months pass after listing
(if one year has not passed from the payment date or the end of payment period for the
allotted shares as of the said date, the person is required to hold the shares until the
one year period passes from the payment date or the end of payment period for the
allotted shares).
► Transfer price is the same as the price at the time of allotment.
<Documents to be examined>
► Assurance statement for continuous holding
► Statement certifying the provisions of contract for transfer price of allotted shares
2. The changes in shares allotted through transfer represent only formal changes
where no changes in holders would take place
[Example 1] Transfer of allotted shares associated with withdrawal of employees from the
employees share ownership plan
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<Conditions>
allotted shares).
► The reasons for the withdrawal relate to the retirement of employees.
Assurance statement for continuous holding
[Example 2] Shares public offered are formally transferred to trust banks, etc. to contribute
shares publicly offered, allotted through third party allotment to retirement
benefits trust in order to compensate for unfunded portion of the employee
pension fund
<Conditions>
allotted shares).
► Revenue arising from the trust will only appropriated to the payment of contributions to
the employee pension fund.
► In conjunction of the rights of shareholders, such shares are considered as if Company
A substantively held them in that the disposition, repayment and exercise of voting
rights attached thereto would be effected under the instruction of Company A.
Assurance statement for continuous holding
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3. Some unavoidable events are acknowledged such that no assurance to

continuously hold the allotted shares would be made at the time of allotment of
shares publicly offered.
[Example] For publicly offered shares allotted through third party allotment in the past, the
obligation to continuously hold them would subsequently arise as the timing of
expected public offering has been accelerated.
<Conditions>
► Assurance to continuously hold them is entered into promptly after the decision to
accelerate the timing of public offering.
► Assurance statement for continuous holding
► Statement with joint signatures of the applicant and the person who has received the
allotment certifying that no transfer of allotted shares has been made. However, When
the Articles of Incorporation of the applicant provide for the restrictions on the transfer of
allotted shares or when the person who receives the allotment does hold any
certificates because of dematerialization of stock certificates, a statement would be
accepted if the applicant could confirm by the statement that no transfer of the allotted
shares has been made.
Reference: Overview of allotment of shares publicly offered and regulations on continuous

holding
Free period
(~201X.3.31) 201X.4.1 201X+1.3.31 201X+1.12.1 201X+2.5.31
Listing Day preceding

End of the application Six months after the
Beginning of the previous year End of the previous year application the listing Listing date
year listing date
date approval date
Period available for the allotment of shares publicly offered through private placement
Continuous holding period (Note 1) (Note 2) (Note 3)
Note 1: This will apply to shares publicly offered which are allotted through third party
allotment (including shares, etc. acquired associated with the allotted shares)
effected after the day following the date of one year ago corresponding to the end of
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the previous year.
Note 2: When one year has not passed from the payment date or the end of payment period
for the allotted shares as of the said date, the period until the one year period
passes from the payment date or the end of payment period for the allotted shares
will be the continuous holding period.
Note 3: Continuous holding period for the shares, etc. acquired associated with the allotted
shares represents the continuous holding period for the initially allotted shares.
(2) Regulations on Allotment and Holding of Offered Subscription

Warrants by Third Party Allotment, etc.
For the allotment of offered subscription warrants by third party allotment (excluding
“subscription warrants as stock option as described in “(3) Regulations on Allotment and
Holding of Subscription Warrants as Stock Option) after the day following the date of one
year ago corresponding to the end of the previous year (including the allotment of offered
subscription warrants which may have the same effect as the allotment of subscription
warrants), the regulations similar to those on the allotment of offered stocks by third party
allotment would apply thereto (hereinafter stock acquisition rights publicly offered which are
allotted through private placement are referred to as the “allotted subscription warrants”).
The determination of whether the applicant carried out an allotment of offered subscription
warrants shall be made using the allotment date as the base date.
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Q1: Are we to be able to list our stock while offered subscription warrants rights have been
allotted?
A1: Listing would be possible while subscription warrants publicly offered have been
allotted.
Meanwhile, TSE has developed listing system for convertible bonds with subscription
warrants. However, an applicant is not allowed to list convertible bonds with
subscription warrants concurrent with listing of stock. In order to ensure fair price
formation and protect investors, a non-listed company is required to avoid concurrent
listing of two or more types of stock on the initial listing date. Therefore, the listing of
convertible bonds with subscription warrants must be effected after some time passes
since the day following the determination of initial price for initially listed stock. The
“some time passes since the day following the determination of initial price for initially
listed stock” will be decided in consideration of period required for thorough
dissemination of the price to investors and for the preparation of securities companies
Q2: If some allotted subscription warrants are converted to another class of stocks, etc. or
the warrants are exercised during the continuous holding period, is the continuous
holding period to be altered with respect to stocks and subscription warrants
acquired through the conversion or exercise and split-up or gratis allotment
associated with the stocks, and stocks or subscription warrants acquired associated
with gratis allotment of stocks or gratis allotment of subscription warrants (herein
after referred to as the “newly acquired stocks, etc. pertaining to allotted subscription
warrants”)?
A2: When some allotted subscription warrants are converted to another class of shares or
the rights are exercised during the continuous holding period, the shares, etc.
acquired associated with allotted subscription warrants require the assurance to
continuously hold them. The continuous holding period for the shares, etc. acquired
associated with allotted subscription warrants will relate to the continuous holding
period for initial allotted subscription warrants and there will be no change in the
continuous holding period.
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Q3: If some offered subscription warrants allotted during the free period (before the date
preceding the date of one year ago corresponding to the end of the previous year)
are converted to another class of stocks or the warrants are exercised, do we have to
enter into any assurance to continue to hold the newly acquired stocks, etc.
pertaining to allotted subscription warrants?
A3: Even when some publicly offered subscription warrants allotted during the free period
are converted to another class of shares or the rights are exercised on or after the
date preceding the date of one year ago corresponding to the end of the previous
year, no assurance of continuous holding is required.
Reference: Overview of allotment of subscription warrants publicly offered and regulations

on continuous holding
Free period
(~201X.3.31) 201X.4.1 201X+1.3.31 201X+1.12.1 201X+2.5.31

Beginning of the previous End of the Six months after the
End of the previous year application the listing Listing date
year application year listing date
date approval date
Period available for the allotment of shares offered through private placement
Continuous holding period (Note 1) (Note 2) (Note 3)
Note 1: This will apply to offered subscription warrants which are allotted by third party
allotment (including newly acquired stocks, etc. pertaining to allotted subscription
warrants) effected after the day following the date of one year ago corresponding to
the end of the previous year.
Note 2: The date when six months have passed since the listing date falls within the period
for which one year has not passed since the end of the previous year, the
continuous holding period will be the period until one year passes from the allotment
date of allotted stock acquisition rights.
Note 3: Continuous holding period for the newly acquired stocks, etc. pertaining to allotted
subscription warrants relates to the continuous holding period for the initially allotted
subscription warrants.
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(3) Regulations on Allotment and Holding of Subscription Warrants

as Stock Option
a. Subscription warrants as stock option relate to those subscription warrants allotted by

the applicant to its officers or employees (Note 1) as part of their compensation (Note 2)
(limited to those allotted after the day following the date of one year ago corresponding
to the previous year), which meet the requirements of (a) and (b) below:
Note 1: “Officers and employees” refer to (1) officers and employees of the applicant, and
(2) officers and employees of a subsidiary of the applicant. For the purpose of this
paragraph, officers include an share ownership plan of directors and auditors,
directors, accounting advisors ((including employees of an accounting advisor who
are in charge of accounting advice if the accounting advisor is a corporation),
company auditors, and executive officers (including governor, auditor, and a person
who can be regarded as equivalent thereto company auditor. Those cooperating to
the applicant, such as legal advisors, accountants, advisors, or university professors,
and others before the employment of the applicant do not constitute any “officer or
employee.” And contract employees do not also constitute any “officer or employee”
in principle.
Note 2: The allotment thereof for the purpose of compensation includes cases where the
applicant grants the amount equivalent to the value of issuance prices of
subscription warrants to officers or employees and allots subscription warrants to
them in exchange for their consideration, and other cases where they are allotted
in exchange for their consideration.
The determination of whether the applicant carried out an allotment of offered
subscription warrants shall be made using the allotment date as the base date.
The determination of whether the applicant carried out an allotment of offered
subscription warrants shall be made using the allotment date as the base date.
(a) The applicant has entered into a written assurance in writing with officers and
employees who received the allotment of subscription warrants as stock option with
respect to continuous holding of the subscription warrants, the report on ownership to
TSE at the time of transfer and at the request of TSE concerning the ownership and
with respect to other matters as TSE deems necessary including availability for the
public inspection.
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Other matters deemed necessary by TSE are following:
(i) Continuous Holding
Allotted persons shall, as a general rule, continue to hold the subscription warrants to which
the provisions of this rule apply (see Note 6 below) since the day on which the allotment was
made until either the day immediately preceding the listing day or the day on which the
subscription warrants are exercised, whichever is earlier.
(ii) Report to the Applicant when Transferring the Allotted Subscription Warrants
In cases where an allotted person transferred subscription warrants allotted as

compensation or newly acquired stocks, etc. pertaining to the allotted subscription warrants,
the initial listing applicant shall submit to TSE a document containing the name and address
of the transferor and the transferee, the number of stocks transferred, the date of transfer,
the transfer price, the reason for transfer, and other necessary matters at the time of initial
listing application, if such transfer was executed before the initial listing application day, or
immediately after such transfer, if such transfer was executed on or after the initial listing
application day
(iii) Report by Applicant to TSE in Response to Inquiry of TSE about Ownership Status
In cases where the Exchange makes an inquiry about the ownership status of the
subscription warrants allotted as compensation or newly acquired stocks, etc. pertaining to
the allotted subscription warrants as TSE deems it necessary, the initial listing applicant
shall report the ownership status of the subscription warrants allotted as compensation or
newly acquired stocks, etc. pertaining to the allotted subscription warrants to the Exchange
without delay after confirming, as necessary, the ownership status of the subscription
warrants allotted as compensation or newly acquired stocks, etc. pertaining to the allotted
subscription warrants with the allotted person.
(iv) Report to Applicant by Allotted Person in Response to Inquiry by TSE about

Ownership Status
An allotted person who received from the initial listing applicant a request for confirmation
concerning the ownership status of the subscription warrants allotted as compensation or
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Allotment
newly acquired stocks, etc. pertaining to the allotted subscription warrants pursuant to the
provisions of Sub-item (iii) shall report such ownership status to the initial listing applicant
immediately.
(v) Agreement with Availability for Public Inspection
When a person who has received the allotment of subscription warrants as stock option
transfers them, the person will agree that the contents of the transfer will be made available
for the public inspection.
(vi) Other matters deemed necessary by the Exchange
(b) Submission of Documents Deemed Necessary by TSE in Accordance with TSE’s

Regulations and Rules
(i) Documents to be submitted

- Documents Certifying Assurance Pertaining to Continuous Holding
Documents certifying the assurance (assurance document) shall be prepared with
reference to the form in “A Documents to Be Submitted Pertaining to Initial Listing
Application.”
- Document certifying the relevant resolution of the board of directors (including a

decision made by an executive officer in case of a company with committees) that
contains matters related to the allotment of subscription warrants, including the fact that
the subscription warrants are allotted by the applicant and intended to be acquired by its
officers or employees, etc.; and
(Rule 259, Paragraph 1, item 2b of the Rules)
- Document certifying that a contract is concluded between the applicant and its officers
or employees, etc. who have received an allotment of subscription warrants by the
applicant, in which said officers or employees, etc. assure that they will, as a general
rule, not transfer such subscription warrants or that the applicant imposes restriction on
transfer of such subscription warrants.
(Rule 259, Paragraph 1, Item 2c of the Rules)
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Allotment
(ii) Timing of submission

- Where the applicant carried out an allotment of subscription warrants as stock option
before the initial listing application day:
The applicant shall submit the document on the initial listing application day
- Where the applicant carried out an allotment of subscription warrants as stock option on
or after the initial listing application day:
The applicant shall submit the document without delay after said allotment; provided,
however, that the date of submission shall be no later than the day immediately
preceding the day on which TSE approves the listing.
b. Refuse to Accept Listing Application or Cancellation of Acceptance
In cases where a person who received an allotment of subscription warrants as stock

option does not actually hold them based on the assurance (excluding cases TSE
deems appropriate (Note) ), TSE shall either refuse to accept or cancel the acceptance
of the related initial listing application.
(Note) They refer to cases in which after the person who had owned subscription warrants
based on the assurance transferred the subscription warrants with respect to which
the assurance was given, the applicant cancelled the subscription warrants pertaining
to such transfer promptly in accordance with an appropriate procedure and such
subscription warrants have not been exercised.
(Rule 259, Paragraph 1)
c. Regulations on Stocks, etc. Acquired Through Exercise, etc. of Subscription

Warrants as Stock Options
In cases where an applicant carried out a delivery of stocks or subscription warrants

due to exercise or conversion of the subscription warrants prescribed in the preceding
rule during a period from one (1) year before the end of the previous year to the day
immediately preceding the listing day (limited to those pertaining to the subscription
warrants allotted after one (1) year before the end of the previous year), the applicant
shall execute a written assurance concerning said stock or subscription warrants with
the entity who received the delivery with respect to the matters enumerated in each of
the following items:
(Rule 260 of the Regulations)
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Allotment
(a) Documents to be Submitted and Timing of Submission

(i) In cases where the applicant has allotted the shares arising from the exercise or
conversion of subscription warrants as stock option or delivered subscription warrants
before the listing application date:
The following documents should be submitted on the listing application day.

- Documents Certifying Assurance Pertaining to Continuous Holding (Note)
- Document certifying the relevant resolution of the board of directors (including a
decision made by an executive officer in case of a company with committees)
that contains matters related to the allotment of subscription warrants; and
- Document certifying the provisions of contract concluded between the applicant
and the person who receives the subscription warrants in accordance with the
relevant resolution of the general meeting of shareholders and the board of
directors above
(ii) In cases where the applicant has allotted the shares arising from the exercise or
conversion of subscription warrants as stock option or delivered subscription warrants
after the listing application date:
The applicant shall submit said documents without delay after said delivery of stocks or
subscription warrants; provided, however, that the date of submission shall be no later
than the day immediately preceding the listing day.
- Documents Certifying Assurance Pertaining to Continuous Holding (Note)
Note: When the applicant submitted the “Documents Certifying Assurance Pertaining
to Continuous Holding” mentioned in a. (b) i above on the listing application date,
no submission is required.
(b) Refuse to Accept Listing Application or Cancellation of Acceptance

In the event that the applicant fails to submit the document specified in (a) above, TSE
shall either refuse to accept or cancel the acceptance of the related initial listing
application.
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Allotment
In cases where an entity who received a delivery of stocks or subscription warrants does
not actually hold the stocks or subscription warrants based on the assurance, TSE shall
either refuse to accept or cancel the acceptance of the related initial listing application.
However, this provision shall not apply if the conditions prescribed in either of the
following items are met and it is deemed appropriate that the entity does not hold them:
- Where the entity who received said delivery transfers stocks or subscription
warrants delivered as a result of exercise or conversion of the subscription
warrants to which the provisions of Rule 259, Paragraph 1 apply or stocks or
subscription warrants acquired through stock split, gratis allotment of shares,
gratis allotment of subscription warrants, etc. pertaining to such stocks due to
significant difficulty in its business operations; and
- Where it is deemed unavoidable in light of socially accepted norms.
In cases where the person who has received the allotment of subscription warrants as stock
option transfers the stocks, etc. acquired pertaining to the subscription warrants as stock
option, the applicant shall submit to TSE and agree with the availability thereof for the public
inspection.
Also, when an applicant receives an inquiry about the ownership status of stocks, etc.
acquired pertaining to subscription warrants from TSE, the applicant confirms the ownership
status of stocks, etc. acquired pertaining to the subscription warrants with the allotted
person, as appropriate and report the ownership status thereof to TSE.
Reference: Overview of ownership of subscription warrants as stock option and regulations

on continuous holding
Free period
(~201X.3.31) 201X.4.1 201X+1.3.31 201X+1.12.1

Beginning of the previous Day preceding
End of the previous year application the listing Listing date
year the listing date
date approval date
Period available for the allotment of stock acquisition rights as stock options
Continuous holding period (Note 1) (Note 2)
Note 1: This will apply to subscription warrants as stock option which the applicant allotted
after the day following the date of one year ago corresponding to the end of the
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previous year (including shares, etc. acquired associated with the subscription
warrants as stock option).
Note 2: The continuous holding period will be the period between the day preceding the
listing date and the allotment date.
(4) Descriptions of the Status of Offered Allotment of Shares, etc.

by Third Party Allotment
a. Descriptions of the status of allotment of offered stocks, etc., by third party allotment
In cases where the initial listing applicant carried out an allotment of offered stocks or
subscription warrants by third-party allotment, etc. during a period (hereinafter referred to as
“allotment of offered stocks, etc.”) from two (2) years before the end of the previous year to
the day immediately preceding the listing day, the initial listing applicant shall describe the
status of such allotment of offered stocks, etc. by third-party allotment, etc. in "Securities
Report for Initial Listing Application (Part I)" prescribed in Rule 204, Paragraph 1, Item 4 or
Rule 219, Paragraph 1, Item 2. However, this provision shall not apply if the domestic stocks,
etc. issued by the initial listing applicant are Green Sheet securities designated by the Japan
Securities Dealers Association.
Meanwhile, the initial listing applicant shall include the basis for price calculation, described
in conformity with Exhibit 7 "Description of the Basis for Price Calculation," in the "Public
Information on Stocks - Item 2: Overview of Allotment of Stocks by Third-Party Allotment,
etc." section of the "Securities Report for Initial Listing Application (Part 1)" prescribed in the
preceding paragraph.
b. Retention, etc. of the Record of Allotment Status of Offered Stocks, etc. by Third Party
Allotment
The initial listing applicant shall retain the description of the Status of Allotment of Offered
Stocks, etc. by Third-Party allotment, etc. provided pursuant to the provisions of the
preceding rule for a period of five (5) years from the listing day. In this case, the managing
trading participant shall confirm that the initial listing applicant has appropriately
implemented an administrative organization that enables the initial listing applicant to grasp
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and retain such record.
The initial listing applicant shall respond to request for submission made by the Exchange
as necessary with respect to the record.
In cases where an initial listing applicant refuses to respond to the request for submission,
the Exchange may publicize the corporate name of such initial listing applicant and the fact
that the initial listing applicant refuses to respond to such request for submission.
In addition, in cases where the Exchange determined, based on the examination of the
record submitted, that the description of the changes in ownership of stocks, etc. provided
pursuant to the provisions of the preceding rule was clearly inaccurate, the Exchange may
publicize the corporate name of the initial listing applicant and the managing trading
participant concerned and the fact that said description has been determined to be
inaccurate.
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VI Public Offering or Secondary Offering before Listing
VI Public Offering or Secondary Offering before

Listing
Public Offering or Secondary Offering before Listing
(1) Submission of Scheduled Plan for Public Offering or

Secondary Offering
In cases where an initial listing applicant makes a public offering, etc. before listing, the
initial listing applicant and the principal underwriting trading participant of the public offering,
etc. before listing shall submit a of "Scheduled Plan of Public Offering or Secondary
Distribution" without any delay after the listing application.
Note: A principal underwriting trading participant refers to a trading participant of TSE which
is a financial instruments company or foreign financial instruments company entering
into principal underwriting agreement for public offering, etc. before listing. If a
trading participant of TSE does not enter into a principal underwriting agreement for
public offering, etc., TSE deems a trading participant entering into an agreement for
handling offering or secondary distribution for public offering before listing to be a
principal underwriting trading participant.
(2) Procedures for Public Offering, etc. Before Listing
In cases where an applicant makes a public offering, etc. before listing, the applicant and the
principal underwriting trading participant shall perform either of the procedures enumerated
in each of the following items:
(1) Book-building (research on the demand status of investors relating to public offering, etc.
before listing, carried out in accordance with the Rules); or
(2) Public offering, etc. through competitive bidding (public offering, etc, before listing on a
competitive bidding basis in accordance with the Rules).
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(3) Determination of Offering Price
a. Conducting a Book-building
The applicant and the principal underwriting trading participant comprehensively consider
the risks and demand forecast arising from the fluctuations of share prices during the period
until the listing date on the basis of the status of investor demand grasped through the
book-building and determine the prices of public offering, etc. before listing (hereinafter
referred to as the “offering price”).
The following outlines the practical procedures for book building.
Item Descriptions
・For the purpose of appropriately grasping the status of investor

demand pertaining to public offering (Note), etc. before listing, the
principal underwriting trading participant shall establish guidelines
Establishment of concerning the method of book-building and conduct a
Guidelines book-building based on the guidelines.
(Rule 242 of the
Rules) ・The principal underwriting trading participant shall publicize the
guidelines prescribed in the preceding paragraph in a written
document in a manner deemed appropriate by TSE and notify TSE
of the contents of the guidelines.
・In conducting a book-building, the initial listing applicant and the

principal underwriting trading participant shall determine the
tentatively set price range for the offering price (Note) based on a
Determination of
comprehensive consideration of materials and opinions that are
the Tentatively Set
relevant to the determination of the offering price including financial
Price Range for the
condition and operating results of the initial listing applicant and
Offering Price
opinion of entities with expertise and experience related to
(Rule 243 of the
investment in securities.
Rules)
(Note) It means the price range, etc. presented to investors in
conducting a survey on the status of investor demand.
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・ In cases where the initial listing applicant and the principal

underwriting trading participant determined a tentatively set price
range for the offering price pursuant to the provisions of the
preceding paragraph, the principal underwriting trading participant
shall immediately publicize the tentatively set price range and the
reasons, etc. for the determination of such price range in a written
document in a manner deemed appropriate by TSE and shall
submit a copy of the written document to TSE.
・The principal underwriting trading participant shall retain the record

of the status of demand grasped by a book-building pertaining to a
public offering, etc. before listing for a period of five (5) years from
the ending date of the subscription period for the public offering, etc.
before listing.
Retention, etc. of
the Record of the ・The trading participant who is the principal underwriting trading
Survey on the participant among others shall retain the record of the result of
Status of Demand aggregation of all the status of demand grasped by a book-building
(Rule 245 of the pertaining to a public offering, etc. before listing for a period of five
Rules) (5) years from the ending date of the subscription period for the
public offering, etc. before listing.
・ The principal underwriting trading participant shall respond to

request for submission made by or inspection conducted by TSE as
necessary with respect to the record.
Note: The principal underwriting trading participant shall not include in the status of demand
to be grasped by a book-building the demand enumerated in each of the following
items and other demand that is clearly expected not to be eligible for receiving
allocation in a public offering, etc. before listing:
(1) Demand that is clearly not attributable to the investor’s own account; and
(2) Demand that represents the redundant portion where demand attributable to
single investor’s account is double-counted.
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b. Execution of Competitive Bidding
The initial listing applicant and the principal underwriting trading participant who make a
public offering, etc. through competitive bidding shall determine the offering price in
comprehensive consideration of risks arising from the fluctuation of stock market prices
during the period until the listing day and demand forecast, etc. based on the average
winning prices in competitive bidding and other status of execution of competitive bidding.
c. Publication, etc. of Offering Price
In cases where the initial listing applicant and the principal underwriting trading participant
determined an offering price, they shall immediately publicize the offering price and the
reasons, etc. for the price determination in a written document in a manner deemed
appropriate by TSE and shall submit a copy of the written document to TSE.
(4) Allocation Pertaining to Public Offering, etc. Before Listing
For the purpose of conducting allocation pertaining to a public offering, etc. before listing in a
just manner for many and unspecified entities, the principal underwriting trading participant
shall establish guidelines for allocation method, restriction on allocation, etc. and carry out
allocation based on the guidelines.
The principal underwriting trading participant shall publicize the guidelines prescribed in the
preceding paragraph in a written document in a manner deemed appropriate by TSE and,
where deemed necessary by TSE, notify it of the contents of the guidelines.
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(5) Submission of Notice of Execution of Public Offering or

Secondary Offering, etc.
The principal underwriting trading participant shall submit a "Notice of Execution of Public
Offering or Secondary Offering" predetermined by TSE stating that the determination of the
offering price and allocation pertaining to the public offering, etc. before listing was
conducted appropriately to TSE after the expiration of the subscription period for the public
offering, etc. before listing within, as a general rule, three (3) days (Note) from the ending
date of the subscription period for the public offering, etc. before listing, and notify the initial
listing applicant of the result of said public offering, etc. before listing.
(Note) This shall exclude holidays.
If there are two (2) or more principal underwriting trading participants, the "Notice of
Execution of Public Offering or Secondary Offering" prescribed in the preceding paragraph
may be submitted to the Exchange by only one trading participant representing the group of
said principal underwriting trading participants.
The "Notice of Execution of Public Offering or Secondary Offering" and the document
submitted to the Exchange shall be prepared based on entities to whom the calculation is
substantially attributable regardless of the actual name of the account.
With respect to a public offering, etc. before listing, the principal underwriting trading
participant shall retain a record containing such information as the address and name of the
entity who acquired the stocks pertaining to said public offering, etc. before listing and the
number of stocks acquired for a period of five (5) years from the ending date of the
subscription period for said public offering, etc. before listing, and shall respond to request
for submission made by or inspection conducted by the Exchange as necessary with
respect to such record.
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(6) Other
a. Handling of Conclusion of Principal Underwriting Contract, etc. by a Non-trading

Participant Financial Instruments Firm, etc.
In cases where a non-trading participant financial instruments firm or a foreign securities

broker concludes a principal underwriting contract, etc. with respect to a public offering, etc.
before listing, for the purpose of ensuring the fairness of the public offering, etc. before
listing, the initial listing applicant shall conclude a contact, with the non-trading participant
financial instruments firm or the foreign securities broker, that consists of terms deemed
necessary by the Exchange with respect to the compliance with the intent of this section. In
this case, with respect to the conclusion of such contract, the initial listing applicant who
concluded such contract shall submit to the Exchange a copy of a document certifying the
contract concluded between the initial listing applicant and the non-trading participant
financial instruments firm or the foreign securities broker.
b. Public Offering, etc. Before Listing in Cases Where Multiple Initial Listing
Applications Are Made Simultaneously
With respect to a public offering, etc. before listing made by an initial listing applicant who
made multiple initial listing applications with TSE and with any other financial instruments
exchange in Japan simultaneously, if a non-trading participant financial instruments firm that
is a member or a trading participant of such other financial instruments exchange
concludes a principal underwriting contract, etc., the initial listing applicant shall conclude a
contract, with the non-trading participant financial instruments firm, that obligates the
financial instruments firm to provide documents about said public offering, etc. before listing
that are deemed necessary by TSE to the principal underwriting trading participant and
other duties. In this case, the applicant who concluded such contract with a non-trading
participant financial instruments firm shall submit to TSE a copy of a document certifying
such contract.
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c. Designation, etc. of Financial Instruments Exchange Pertaining to Public Offering,

etc. Before Listing
Before Listing An applicant who made multiple initial listing applications with TSE and with
any other financial instruments exchange in Japan simultaneously and the principal
underwriting trading participant shall designate one of the financial instruments exchanges
in Japan with which the multiple initial listing applications were made simultaneously as the
financial instruments exchange that is mainly responsible for handling administrative work
related to public offering, etc. before listing and notify TSE of the designation
d. Measures Against Inappropriate Public Offering, etc. Before Listing
In cases where the Exchange determines that a public offering, etc. before listing has not
been made appropriately based on the result of the public offering, etc. before listing, TSE
may cancel the acceptance of the initial listing application or take any other necessary
measures.
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VII Handling of Corporate Reorganization Event
When a business transferred to an applicant through a corporate reorganization by means

of a merger, company split, receipt of business, etc. constitutes a main business of the
applicant or an applicant becomes a holding company through stock swap or stock transfer,
etc., TSE requires the applicant to include relevant descriptions concerning the corporate
reorganization as required by “a Handling of Corporate Reorganization, etc.” so that the
corporate reorganization would not hinder the listing application of the applicant and TSE
could effect listing examination on the basis of actual depictions of financial position and
management results.
In addition, when an applicant effects a merger or company split-up, or turns another

company into its subsidiary or its subsidiary into non-subsidiary, or receives or transfers a
business, such transaction may give rise to significant influence over the financial position or
management results of the applicant. In such cases, comparison of financial positions and
management results of the applicant before and after such transactions would be difficult.
So TSE requires the applicant to submit the documents mentioned in “b. Documents
Required to be Submitted When Significant Influence (note) Arises,” and makes them
available for the public inspection.
Note: “Significant influence” relates to cases where any of the total assets, amount of net
assets, sales, operating income, ordinary income and current income before tax will be
affected by 50% or more. In practice, for actual calculation method, please refer to
“Appendix 1 Significant Influence in Relation to Merger of the initial Listing Applicant”
of the “Enforcement Rules for the Securities Listing Regulations.”
The following illustrates matters to be examined in a way different from ordinary

examinations due to the occurrence of a corporate reorganization event.
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a. Handling of corporate reorganization for the purpose of examination
1. Merger
The year before the

previous year
Surviving company
Extinguished company
The year before the previous

Timing of merger (Note 1) The previous year Application year
year
“Number of years of
The number of years of continuous operations could be determined by adding the number of years of
continuous
operations of the principal entity of merger (Note 2) (Rule 212, 4(2) of the Rules)
operations”
For the amount of profits before business years in which the application is filed, the examination applies to
“Amount of profit” the amount of profit determined on the basis of consolidated income statements, etc. of principal entity of
merger (Note 3) (Rule 212, 6 (9) of the Rules)
The sales mentioned in the sentence following “provided that” may use the descriptions concerning the
“Market capitalization”amount of profit above, and the term “amount of profit determined based on” is reworded to “amount of
Handling for
profit stated (Rule 212, 6 (9) of the Rules).
the purpose
of
The examination applies to the amount of
examination
profit determined on the basis of quarterly
consolidated balance sheet or consolidated
“Amount of net assets” -
balance sheet of the principal entity of merger
(Rule 212, 5 (1) of the Rules, Rule 212, 5 (6) 2
of the Rules)
For the period before the merger within the periods subject to the examination, the examination applies to
“False statement or
the financial statements of the principal entity for respective business year and respective consolidated
adverse opinion,
business year ended within the periods subject to the examination and the securities report in which the
etc.”
financial statements are described or to which they are referred (Rule 212, 7(5) of the Rules).
Documents to be Financial statements, etc. of all the entities involved in the merger for respective business years and
Documents submitted respective consolidated accounting years ended within the periods subject to the examination
to be
submitted,
Audit opinion, etc. Required (limited to principal entity of the merger)
etc.
Availability for the
Required
public inspection
Note 1: The merger event includes the cases of merger effected by a subsidiary of the
applicant and excludes the cases of merger between the applicant and its subsidiary
or among subsidiaries of the applicant.
Note 2: The principal entity of the merger represents the company with the largest size of the
entities involved in the merger (when an initial listing applicant or a subsidiary of a
listed company effects a merger, companies involved in the merger and initial
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listing applicant or the listed company), irrespective of a surviving company and

extinguished company. Meanwhile, the size of entity will be determined on the
basis of total assets, net assets, sales and profit (Rule 2, 3 (3) of the Rules).3:
Note 3: For the periods during which the applicant is not required to prepare consolidated
income statements, etc., the examination applies to the income statement.
Note 4: When a merger is effected for the recent two years or after the beginning of the
application year and if the entity without substance becomes a surviving company
in the merger, the descriptions included in “Securities Report for Initial Listing
Application (Part I)” must also include relevant descriptions concerning all the
dissolved companies in the merger.
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2. Becoming a Holding Company

The year before the The previous
Application year
previous year year
Applicant A ＡＡＡ
ＢＣＢＣＢＣ
Subsidiary B
(principal entity)
Subsidiary C
Timing of becoming a holding

The year before the
company The previous year Application year
previous year
(Notes 1, 2 and 3)
“Number of years of The number of years of continuous operations could be determined by adding the number of
continuous years of major operations of the controlled entity (principal entity) of the holding company
operations” (Rule 212, 4(2) of the Rules)
For the amount of profits before business years before becoming the holding company, the
examination applies to the amount of profit determined on the basis of consolidated income
statements, etc. of a subsidiary (Note 4) (in case where there are several subsidiaries, the
“Amount of profit”
amount of profit determined on the basis of the income statement combining all the income
statements of such subsidiaries) for respective consolidated accounting year. (Rule 212, 6 (10)
of the Rules)
The sales mentioned in the sentence following “provided that” may use the descriptions
“Market capitalization”concerning the amount of profit above, and the term “amount of profit determined based on” is
Handling for reworded to “amount of profit stated (Rule 212, 6 (10) of the Rules).
the purpose
The examination applies to the amount of net
of
assets determined on the basis of
examination
consolidated balance sheet of the subsidiary
(in case where there are several subsidiaries
“Amount of net assets” - (Note 5), the amount of net assets
determined on the basis of the income
statement combining all the income
statements of such subsidiaries) (Rule 212, 5
(7) of the Rules) (Note 5)
For the period before becoming the holding company, the examination applies to the financial
statements of the subsidiary (Note 4) (in case where there are several subsidiaries, including
“False statement or
the statements concerning the combined financial information of such subsidiaries) for
adverse opinion,
respective business year and respective consolidated business year ended within the periods
etc.”
subject to the examination and the securities report in which the financial statements are
described or to which they are referred (Rule 212, 7(3) of the Rules).
<Where there are several subsidiaries as of becoming the holding company>
Documents to be Income statement combining the consolidated income statements of several subsidiaries for
Documents submitted the periods before the applicant became a holding company, and the balance sheet combining
to be consolidated balance sheets thereof (Rule 204, 1(13) of the Rules)
submitted,
etc. Audit opinion, etc. Required (Note 6)
Availability for public
Required
inspection
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Note 1: For the purpose of this section, the holding company represents a Japanese
company or any equivalent entity TSE deems appropriate as a holding company of
the holding companies prescribed in Article 9, Paragraph 4, Item 1 of the Act on
Prohibition of Private Monopolization and Maintenance of Fair Trade (Law No. 54
of 1947).
Note 2: This excludes cases where an applicant becomes a holding company as it causes
another company to receive its business or transfers its business to another
company.
Note 3: In cases where the initial listing applicant became a holding company within the last
two (2) years or on or after the beginning of the business year to which the initial
listing application day pertains, the contents of "Securities Report for Initial Listing
Application (Part I)" pertaining to the periods before the merger shall include
matters concerning all the dissolution companies in the merger. (Rule 204, 1 (4) d
of the Rules)
Note 4: It is limited to subsidiaries as of the date when the applicant becomes a holding
company.
Note 5: When an applicant becomes a holding company after the beginning of the
quarterly accounting period in which the listing application is filed, the examination
applies to the amount equivalent to the net assets determined on the basis of the
quarterly consolidated balance sheet of its subsidiary (when the applicant does not
submit any quarterly report for initial listing applicant or its , the consolidated
balance sheet included in “Securities Report for Initial Listing Application”; when
the subsidiary is not required to prepare consolidated financial statements, its
quarterly balance sheet).
Note 6: An audit report based on audit conducted in compliance with generally accepted
auditing standards or a report prepared for the purpose of stating opinions on
combined financial information based on Exhibit 3 "Standard for Statement of
Opinions on Documents Concerning Combined Financial Information" or other
procedures that are deemed reasonable. (Rule 209, (2) of the Rules)
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3. Stock Swap
The year before the The previous

Application year
previous year year
Parent: A ＡＡＡ
ＢＢＢ
Subsidiary: B
Timing of stock swap The year before the

(Note 1) previous year
For the amount of profits before the stock swap, the examination applies to the amount of profit
“Amount of profit” determined on the basis of consolidated income statements, etc. of main stock swap companies
(Note 3). (Rule 212, 6 (9) 2 of the Rules)
“Market capitalization”concerning the amount of profit above, and the term “amount of profit determined based on” is
reworded to “amount of profit stated (Rule 212, 6 (9) of the Rules)
Handling
for the
assets determined on the basis of quarterly
purpose of
consolidated balance sheet or consolidated
examination“Amount of net assets” -
balance sheet of principal companies involved
in the stock swap. (Rule 212, 5 (1) of the Rules,
Rule 212, 5 (6) 2)
For the period before the stock swap within the periods subject to the examination, the
“False statement or examination applies to the financial statements of the principal companies of stock swap for
adverse opinion, respective business year and respective consolidated business year ended within the periods
etc.” subject to the examination and the securities report in which the financial statements are
described or to which they are referred (Rule 212, 7(5) of the Rules).
Financial statements, etc. of all the parties involved in the stock swap for respective business
Documents to be
years and respective consolidated accounting years ended during the periods subject to the
Documents submitted
examination
to be
submitted, Audit opinion, etc. Required (limited to principal companies involved in the stock swap)
etc.
“Availability for the
Required
public inspection”
Note 1: The stock swap event includes the cases of stock swap by a subsidiary of the
applicant and excludes the cases of stock swap between the applicant and its
subsidiary or among subsidiaries of the applicant.
Note 2: "Main stock swap company" means the company concerned with the largest
business scale among companies involved in a stock swap (if a subsidiary of an
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initial listing applicant is a party to a stock swap, a party to the stock swap
(excluding subsidiaries of the initial listing applicant) and the initial listing applicant).
In this case, "business scale" shall be determined in consideration of such factors
as the amounts of total assets, net assets, sales, profits, etc. (Rule 2, 3 (3) -2 of the
Rules).
Note 3: For the periods during which the applicant is not required to prepare consolidated
income statements, etc., the examination applies to the income statement.
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4. Company Split-up, Receipt of Business

The year before The previous
Application year
the previous year year
Receiving company (applicant)
Business taken over or received

through a company split-up
Timing of company split-up and transfer The year before the

of business previous year
The number of years of continuous operations could be determined by adding the number of
“Number of years of
years of operations of the other companies involved in business taken over or received
continuous operations”
through a company split-up (Rule 212, 4(3) of the Rules)
For the period before the takeover or receipt of business, the examination applies to the
“Amount of profit” amount of profit described in the documents related to financial statements concerning
business which the applicant takes over or receives. (Rule 212, 6 (11) of the Rules)
“Market capitalization” concerning the amount of profit above, and the term “amount of profit” is reworded to
“amount of sales (Rule 212, 6 (11) of the Rules).
For the period before the takeover or receipt of business, the examination applies to the
“False statement or adverse financial statements of the other company for the periods subject to the examination and the
Handling for opinion, etc.” securities report in which the financial statements are described or to which they are
the purpose referred (Rule 212, 7(5) of the Rules).
of
examination “Distribution of The examination applies to the distribution of
ownership of - ownership of the applicant shares as of the
shares” listing date.
The examination applies to activities related

“Number of years of to major businesses at the time of split-up
continuous - and the number of years of operations at the
Note 1 operations” listed company could be added (Rule 212, 4
(1) of the Rules, Rule 212, 4(3) of the Rules)

assets described in the documents related to
“Amount of net
- financial statements concerning business
assets”
taken over or received from a listing company.
(Rule 212, 5 (8) of the Rules)
(The recent two year period includes the period before the takeover or receipt)
Documents relating to financial statements concerning a business taken over or received
from another company during the recent two years (Note 2). (Rule 204, 1 (14) and (16) )
(The recent two year period includes the period before the takeover or receipt)
Financial statements, etc. of such another company for the period before the takeover or
Documents to be submitted
Documents receipt (Rule 204, 1 (15) and (17) )
to be
submitted,
Copy of documents prescribed in Article 794,
etc.
Paragraph 1 or Article 806, Paragraph 1 of the
-
Companies Act concerning the divesture of
business
Audit opinion, etc. Required (Notes 3 and 4)

Availability for the public
Required
inspection
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Note 1: This is cases where the applicant is the company which receives the business of a
listed company through a divesture of business and the listing application is filed
before the divesture. For the amount of net assets, it is the same as above. *
The criteria for “Amount of profit”, “Market capitalization” and “False statement or
adverse opinion” are the same as the above.
Note 2: This refers to so-called departmental financial information.
Note 3: This refers to an audit report based on the audit in accordance with the generally
accepted auditing principles or “report to express opinion on departmental
financial information” in accordance with Appendix 4 “Standards for Expression of
Opinion on Documents Relating to Financial Statements Concerning Business
Received Through Company Split-up” or Appendix 5 “Standards for Expression of
Opinion on Documents Relating to Financial Statements Concerning Department
to Be Taken over or Received” of the Enforcement Rules for the Securities Listing
Regulations. (Rule 209, (3) and (5) of the Rules)
Note 4: This refers to audit reports based on the audit in compliance with the requirements
of Article 193-2 of Financial Instruments Exchange Act.
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b. Documents required to be submitted when a significant effect is given
Timing of corporate
reorganization
Financial statements, etc. for the consolidated business immediately preceding the
merger (Rule 229-3, 1 (2) a – (a) of the Rules)
Merger (Note 1)
Outline documents of merged companies, etc. for the purpose of the initial listing
application (Rule 204, 1(19)a of the Rules)
Financial statements, etc. of the subsidiary for the period immediately preceding the
Turning another year in which another company is turned to be a subsidiary or a subsidiary is turned to
company into a be a non-subsidiary (Rule 204, 1(4)c(b) of the Rules)
subsidiary or turning
“Outline Statement Concerning Changes in Subsidiaries for Initial Listing Application”
a subsidiary into a
designated by TSE which describes the overview of the changes in the status of
non-subsidiary subsidiaries as another company is turned to be a subsidiary or a subsidiary is turned
to be a non-subsidiary and the reasons thereof (Rule 204, 1(19)c of the Rules)
Documents related to financial statements in relation to business to be taken over
Documents
through a divesture of business (limited to those for the year immediately preceding
to be
the divesture (Rule 204, 1 (19) b – (a) of the Rules)
submitted,
“Outline Statement Concerning Changes in Subsidiaries for Initial Listing Application”
etc.
designated by TSE which describes the overview of the businesses to be taken over
through the divesture of business and the reasons thereof (Rule 204, 1 (19) b – (b) of
Company split-up,
the Rules)
takeover or receipt
of business Documents related to financial statements in relation to departments or divisions
(Notes 2 and 3) subject to the takeover or receipt (Rule 204, 1 (19) d – (a) of the Rules)
“Outline Statement Concerning Receipt (Takeover) for Initial Listing Application”

designated by TSE which describes the businesses subject to the takeover or receipt
or their overview, the reasons and consideration therefor (Rule 204, 1 (19) d- (b) of the
Rules)
Audit opinion, etc. Required

Availability for the
Required
public inspection
Note 1: This includes the cases where a subsidiary of the applicant carries out merger and
excludes the cases of merger between the applicant and its subsidiary or among
subsidiaries of the applicant.
Note 2: This includes the cases where a subsidiary of the applicant carries out divesture and
excludes the cases of divesture between the applicant and its subsidiary or among
subsidiaries of the applicant.
Note 3: This includes the cases where a subsidiary of the applicant receives or transfers a
business and excludes the cases of receipt or transfer between the applicant and
its subsidiary or among subsidiaries of the applicant.
Note 4: In any case, when TSE deems necessary, these requirements will apply to any
dissolved company through a merger with the initial listing applicant as if the
dissolved company were an initial listing applicant.
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VIII Assignment to the First Section
1. Steps to be Taken Before Assignment to the First Section
(1) Assignment to the 1st Section
When a 2nd section company applies for alteration to the 1st Section and TSE determines
that the application conforms with the requirements of listing criteria after making the
examination according to the Securities Listing Regulations and Guidelines Concerning
Listing Examination, etc., TSE will assign the company to the 1st Section.
In addition, in accordance with exceptions to the Securities Listing Regulations (see below),
TSE will allow an initial listing company which applies for listing on the 1 st Section and a
Mothers company which applies for alteration to the 1st Section, to list its stock on the 1st
Section when and if the company meets the Formal Requirements prescribed in Rule 205 of
the Securities Listing Regulations (see “II Formal Requirements”) and satisfies the criteria
mentioned below.
The requirements for the number of shareholders, the number of tradable shares and the
market capitalization are satisfied, and the distribution of ownership of shares is recognized
to be sufficient (conformity with Rule 210, Paragraph 1 of the Securities Listing Regulations)
By the time of listing, the number of shareholders is expected to reach 2,200 or more, the
number of tradable shares is expected to reach at least 20,000 units and is expected to
reach at least 35% of the total number of shares of the stock, etc.. In addition, the market
capitalization as of the listing day is expected to reach at least ¥25,000 million.
In case of direct listing, market capitalization represents the value derived by multiplying the
public offering and secondary offering price (in case of no public offering or secondary
offering, value determined by formula TSE deems appropriate) by the number of listed
shares. In case of market capitalization determined with reference to another market, it
represents the value derived by multiplying the lowest price of closing prices (when public
offering or secondary offering is effected at the time of listing, the lower of the prices for
public offering and secondary offering, and the lowest price of the closing prices on another
market for one month retrospectively from the determination of such public offering and
secondary offering prices) during one month retrospectively from the previous day
preceding the day when TSE approves the listing by the number of shares expected at the
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time of listing.
(2) Timing of Assignment to the 1st Section and the schedule

thereof
a. Timing of Assignment
If public offering or secondary offering, etc. (including sales with the number constrained)
are expected to be effected on assignment to the 1st section, then assignment to the 1st
section will be made in three or four weeks after the approval date of assignment to the 1st
section (the date when TSE approves assignment to the 1st section). If no public offering or
secondary offering are expected, then the assignment date will be a day of one week after
the assignment approval date (when the day is a holiday, the assignment date will be
deferred to the following business day. If, due to a holiday, the day after one week falls on
the second to fourth business day counting from the assignment date, then said approval
date shall be the fifth business day counting from the assignment date); provided that as of
the date assignment date to the 1st section, one year or more have passed. In addition,
assignment to the 1st section cannot be conducted if the immediately preceding fiscal year is
the year of listing.
b. Schedule
Consistent with ordinary application required for listing examination, an application for
assignment to the 1st section will be made by filing necessary documents associated with
assignment application with TSE after the completion of a regular general shareholders’
meeting for the previous year (the assignment application date may be determined by
consulting the lead underwriter in advance). As with a listing application, a preliminary
application would be possible for the assignment application.
As with listing examination, the lead underwriter present an assignment schedule and JPXR
will in turn propose an examination schedule from the assignment application to the
approval thereof, which may take three months. If a period below three years has passed
from the initial listing and no substantive changes have taken place with respect to
organizational structure and lines of business of the applicant, such examination period may
be shortened to two months.
The procedures and questions at the time of acceptance of application for assignment to the
1st section will be the same as those for the listing application. Meanwhile, with respect to
the reference to “a period less than three years has passed from the initial listing and no
substantive changes have taken place with respect to organizational structure and lines of
business of the applicant,” JPXR will mainly focus on asking any events that take place after
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the initial listing.
Note 1: Standardized examination period is three months. However depending on the

elapse of period after listing, changes in organizational structure and lines of
business after listing, and moreover the size of the applicant, busy seasons and
ordinary course of business, the period available for the preparation of responses
and the number of interviews can be coordinated. As a result of coordination, the
examination period as a whole might be modified. In addition, the examination
period will be determined assuming that no issues to be specifically addressed
would arise during the examination. Thus, it might be extended if any unexpected
issue is found during the examination or new facts concerning the applicant are
discovered including news of other media such as press or provision of information
from external parties.
Note 2: When topics for examination are diversified, and the number of items to be
examined is expected to be large, JPXR may request the applicant to take a period
of more than three months for examination.
Note 3: If the applicant has any matters to be coordinated with respect to the schedule
including the matters in Note 1 and Note 2 above, please consult JPXR beforehand
through the lead underwriter after consulting it.
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[Model schedule from listing application entry for assignment to the 1st section to listing
approval]
<First part>

Listing application, Receipt of “Part I”
1 Sun 1 Wed documents and “Part II” Documents
2 Mon 2 Thu
3 Tue 3 Fri
At three business days intervalAt seven business days interval At seven business days interval
4 Wed 4 Sat
5 Thu 5 Sun
6 Fri 6 Mon
7 Sat 7 Tue
8 Sun 8 Wed
9 Mon 9 Thu
10 Tue 10 Fri
11 Wed 11 Sat
12 Thu 12 Sun
14 Sat 14 Tue
15 Sun 15 Wed
17 Tue 17 Fri
19 Thu 19 Sun
20 Fri 20 Mon
21 Sat 21 Tue
22 Sun 22 Wed
24 Tue 24 Fri
25 Wed Schedule coordination 25 Sat
26 Thu 26 Sun
27 Fri 27 Mon
28 Sat 28 Tue
31 Tue 31 Fri
-237-
<Second part>
Two months after month X Three months after month X
2 Sun 2 Tue
3 Mon 3 Wed

6 Thu 6 Sat
7 Fri 7 Sun

8 Sat 8 Mon Holiday
9 Sun 9 Tue
10 Mon 10 Wed
12 Wed 12 Fri
13 Thu 13 Sat
14 Fri 14 Sun
15 Sat 15 Mon

At nine business days interval
20 Thu 20 Sat
21 Fri 21 Sun
22 Sat 22 Mon
23 Sun 23 Tue
24 Mon 24 Wed
25 Tue 25 Thu
26 Wed 26 Fri
27 Thu 27 Sat
28 Fri 28 Sun
29 Sat 29 Mon
30 Sun 30 Tue
Note1: Interview with CPAs may be carried out at the initial stage of examination, depending
on the category or lines of businesses of the applicant.
Note2: There are cases where the presentation by the president takes place from various
interviews to approval of assignment to the 1st section.
-238-
Three years have not passed since the initial listing and there have been no
significant changes in organizational structure and lines of business of the company
which files the application for assignment. public offering or secondary offering, etc.
(including sales with the number constrained) are expected to be effected
<First part>

2 Mon 2 Thu
3 Tue 3 Fri
4 Wed 4 Sat
5 Thu 5 Sun
6 Fri 6 Mon
7 Sat 7 Tue
8 Sun 8 Wed
9 Mon 9 Thu
10 Tue 10 Fri
11 Wed 11 Sat
12 Thu 12 Sun
14 Sat 14 Tue
15 Sun 15 Wed
17 Tue 17 Fri
19 Thu 19 Sun
20 Fri 20 Mon
21 Sat 21 Tue
22 Sun 22 Wed
24 Tue 24 Fri
26 Thu 26 Sun
27 Fri 27 Mon
28 Sat 28 Tue
31 Tue 31 Fri
-239-
<Second part>
Two months after month X
1 Sat
2 Sun
3 Mon
4 Tue
5 Wed
6 Thu
7 Fri
8 Sat
9 Sun
10 Mon
11 Tue Receipt of answers to the second questions

12 Wed
13 Thu
14 Fri
15 Sat
16 Sun
17 Mon Holiday
18 Tue Second interview

19 Wed
20 Thu
21 Fri
22 Sat
23 Sun
24 Mon
25 Tue
26 Wed
27 Thu
28 Fri Listing approval
29 Sat
30 Sun
Note1: There are cases where interviews with CPAs and various interviews are taken place.
-240-
2. Criteria for Assignment to the 1st Section
List of Formal Requirements for Assignment to the 1st Section
Item Requirement
1. Number of Shareholders
2,200 or more
(by the time of assignment)
a. The number of tradable shares: 20,000 units or
more
b. Market capitalization of tradable shares: ¥2,000
2. Tradable shares
million or more
c. The number of tradable shares (as a percentage
of the total number of shares of listed stock, etc.):
35% or more
The average monthly trading volume for each of the

3. Trading Volume
last three months and three months preceding such
last three months be at least 200 units
4. Market Capitalization
5. Amount of net assets ¥1,000 million or more
(by the time of assignment) (net assets on a separate basis are not negative)
The following a. or b. must be satisfied.

6. Amount of profits or market
capitalization a. The total amount of profits in the last two years
(Profits represent ordinary shall be at least ¥ 500 million or more;
income on a consolidated basis
while the market capitalization b. The value of sales for the recent one year is
represents the value by the ¥10,000 million or more and the market
time of assignment) capitalization is expected to reach at least ¥50,000
million.
-241-
a. No false statement is made in the securities

reports, etc. for each of business years ended during
the last five years
b. The audit opinions on financial statements, etc. for

each business years ended during the last five years
7. False statement or adverse c. The applicant shall not meet (a) or (b) below:
opinion, etc. (a) The internal management report for the business
year which ends during the recent one year
contains the statement that “assessment results
will be refrained from being expresses.”
(b) The internal management audit report for the
business year which ends during the recent one
year contains the statement that “no opinion will
be expressed.”
8. Share unit
The Share Unit shall be expected to be 100 shares.
-242-
List of Eligibility Requirements for Assignment to the 1st Section
Item Requirement
An applicant has carried out its business in a
Corporate continuity and profitability continuous manner and developed a
revenue base to generate stable profit.
The applicant has been performing its
Soundness of company management
business fairly and faithfully.
Corporate governance and internal
Effectiveness of corporate governance and management systems have been designed
internal management system and operated appropriately in consideration
of its size and the level of maturity.
Appropriateness of disclosures of relevant The applicant is able to appropriately make
corporate profile, risk information, etc. the disclosures of corporate profile.
Other matters as TSE deems necessary
from the perspectives of public interest and -
investor protection
The following discusses each criterion:
(１) Number of Shareholders
The number of shareholders (this represents the number of persons who hold the shares
more comprising one trading unit or more (Note 1)) is expected to reach at least 2,200 by
the time of listing (Note 2).
one share.
Note 2: When Depository Receipts (DRs) representing the rights, etc. attached to stock
certificates are issued, shareholders who hold DRs representing rights attached to
the number of shares comprising one trading unit or more can be included in the
number of shareholders.
-243-
(２) Number of Tradable Shares
For tradable shares, the applicant is required to meet the requirements from (1) to (3) below:
a. Number of Tradable Shares

The number of tradable shares (Note) is expected to equal or exceed the number of share
units by the time of listing.
Note: For the calculation of the number of tradable shares, please refer to “II Formal
Requirements 2. Tradable Shares.”
b. Market Capitalization of Tradable Shares
Market capitalization of tradable shares is expected to reach at least ¥2,000 million by the
time of listing.
Calculation of the market capitalization of tradable shares

The market capitalization is determined by multiplying the number of tradable shares. The
following share prices are used for the purpose of the calculation.
<Public offering or secondary offering is effected>

If public offering or secondary offering is effected for assignment to the 1st section, expected
offering price (Note 1)” or “the lowest price of the said stock, etc. observed during the period
one month prior to two days before the day on which the TSE approves listing of the stock is
used shares for the period of one month before two days prior to the date when the listing is
approved (Note 2)” is used, whichever is lower.”
<Public offering or secondary offering is note effected>

If public offering or secondary offering is not effected for assignment to the 1st section, the
“lowest market price of shares for the period of one month before two days preceding the
date when the listing is approved” will be used.
Note 1: The day prior to two days before the day on which the TSE approves the listing is
day of a week.
-244-
c. The Number of Tradable Shares as a Percentage of Total Shares of Listed Stock

Certificates
The number of tradable shares expects to be 35% or more of the total number of shares of
stock, etc. pertaining to the listing.
- Calculation of tradable shares as a percentage of shares of the total number of shares of

stock, etc.
The number is calculated by dividing the number of tradable shares by the number of shares
pertaining to the assignment application.
Note: The number of shares pertaining to the listing application means the total number of
shares of stock, etc. on the listing date. It is determined adding or deducting expected
changes in the number of shares by the time of listing to or from the total number of
shares of stock, etc. as of the latest record date.
<Increase in the number of shareholders and tradable shares – public offering or secondary
offering before assignment to the 1st section>
The criterion for the number of shareholders and tradable shares is expected to be met on
the listing date, rather than the condition required to be satisfied at the time of listing
application. The examination on the basis of this criterion will be made according to the
requirements concerning the “increase in the number of shareholders and tradable shares:
public offering or secondary offering before listing” pertaining to “II Formal Requirements.” ”
-245-
(３) Trading Volume
The average monthly trading volume for each of the last three months and three (3) months
preceding such recent three months (Note 1) on TSE be at least 200 units (where an
applicant adopts the number of shares per Share Unit, one unit means the number of shares,
and if the applicant does not adopt any number, one unit refers to one share.).
Note 1: The six month period before the end of the last month which includes the application
date for assignment to the 1st section are classified into the “first three months” and
the “second three months.” Then the total trading volume of each three months
period will be divided by the number of months.
<Examples> When the application date for assignment to the 1st section is July 1:
Last three months (second three months): April to June
Three months preceding the second three months (first second months): January to
March
Meanwhile, in determining the average monthly trading volume for the purpose of
filing an application for the assignment to the 1st section on or after July 16, 2013,
the applicant may add the trading volume on respective market of Osaka Securities
Exchange (excluding JASDAQ) to the trading volume of TSE market for the
corresponding period.
Note 2: When a listed company decreases the number of shares per Share Unit during the
period which is used for the determination of trading volume, for the period before
the change, the trading volume as required in this criterion will be determined by
using the number of share units before the change while the trading volume after the
change will be determined by using the number after the change.
<Example> Way of calculating the monthly average trading volume for the “last three
months” when a company which has changed the number of share per Share Unit
from 1,000 shares to 100 shares applied for assignment in July
Trading volume for the last three months

Trading volume from April 1 to April 30 (1,000 shares per Share Unit) 200,0000
shares = 200 share units
-246-
Trading volume from May 1 to June 30 (100 shares per Share Unit) 100,000 shares
= 1,000 share units
Average monthly trading volume: 1,200 share units / 3 months = 400 share units
Thus the average monthly trading volume meets the criterion.
Note 3: The trading volume includes the trading volume on off-auction trading (ToSTNeT
trading) and off-auction distribution.
Note 4: Trading volume can be checked by applying trading volume check tool at
https://www.arrowgate.jp/fw/dfw/tselcp/sebxportal/tsehome
-247-
(４) Market Capitalization
It is required that the market capitalization on the date of assignment to the 1st section is
expected to reach at least ¥ 4,000 million.
Calculation method of market capitalization
number of shares of listed stock certificates expected at the time of assignment to the 1 st
section by the share price, to the market capitalization related to all other shares issued by
the applicant (limited to those listed or continuously traded on another financial instruments
exchange in Japan or foreign countries). For the purpose of determination of market
capitalization, the following prices are to be used as share prices.

If public offering or secondary offering is effected for assignment to the 1st section, “expected
approved (Note 2)” is used, whichever is lower.”
<Public offering or secondary offering is not effected>

day of a week.
off-trading session prices, off-market prices or the lowest prices during the trading
session are not viewed as the lowest price.
-248-
(５) Amount of Net Assets
It is required that the net assets of an applicant are expected to reach at least ¥1,000 million
by the date of assignment to the 1st section. JPXR will examine the following “values of net
assets on the date of assignment to the 1st section.”
When an applicant files a “quarterly report for initial listing application” or a copy thereof for
the period after the beginning of fiscal year in which assignment to the 1st section is made,
TSE will examine the amount of net assets at the end of immediately preceding quarterly
period (Note 1) described in the recent “quarterly report for initial listing application.” When
the applicant does not prepare any consolidated quarterly financial statements, JPXR will
examine the values on the quarterly balance sheet (on a separate basis). In addition it is
required that the amount of net assets determined on the basis of quarterly balance sheet
(on a separate basis) (Note 2) should not be negative.
In cases other than a. above, JPXR will examine the amount of net assets as of the end of
the previous year described in the recent “Securities Report.” (Note 3). When the applicant
does not prepare any consolidated financial statements, JPXR will examine the values on
the balance sheet (on a separate basis). In addition it is required that the amount of net
assets determined on the basis of balance sheets (on a separate basis) (Note 4) should not
be negative.
submit to TSE the “Statement of Net Assets” in the form required by JPXR including the
descriptions of the “amount of net assets as of the end of immediately preceding quarterly
period or the previous year,” “expected cash inflows arising from public offering” and
“amount of net assets subject to the examination.”
warrants and non-controlling interests stated in the section of Net Assets form the
total amount determined by adding reserves, etc., prescribed in Article 60, Paragraph
1 of the Quarterly Consolidated Financial Statements, etc. Rules to the section of Net
Assets in a quarterly consolidated balance sheet prepared under the same rules.
-249-
Note 2: This value represent the value determined by deducting the values of subscription
warrants stated in the section of Net Assets form the total amount determined by
adding reserves, etc. prescribed in article 54-3, Paragraph 1 of the Financial
of net assets determined on the basis of quarterly consolidated balance sheet or
consolidated balance sheet.
Treatment of “amount of profit” and “amount of net assets” according to the adoption of
provided under the accounting standards for retirement benefits, and the exceptions could
apply to the examination for assignment to the 1st section (Rules 705 and 717 of the Rules).
-250-
(６) Amount of Profit or Market Capitalization
An applicant is required to meet either a. or b. below.
The total amount of profits for the last two years is expected to reach at least ¥500 million
(hereinafter referred to as the “profit criterion”)
The sales for the last one year is ¥ 10,000 million or more and the market capitalization on
the listing day is expected to reach at least ¥50,000 million (hereinafter referred to as the
“market capitalization criterion”).
<Application of Profit Criterion>

(Reproduced)
The total amount of profits (Note 1) for the last two years (Note 2) is expected to at least
¥500 million (hereinafter referred to as the “profit criterion”)
In the context of this criterion, the amount of profit determined (Note 3) based on the
consolidated income statement or consolidated statement of profit and loss and
comprehensive income (hereinafter referred to as the “consolidated income statement, etc.”)
will be subjected to the examination (if there is any period subject to the examination where
no consolidated financial statements have been prepared, the amount of profit (Note 4)
determined on the income statement (on a separate basis) would be subjected to the
examination).
by adding or deducting the amount presented according to Rule 65, Paragraph 3 of the
according to Rule 61 of the same rules (in case of separate income statement, it represents
ordinary income or ordinary loss presented according to Rule 95 of the same rules) (Note 5).
example, If the amounts of profit for the two years stands at a loss of ¥500 million
and income of 1,000 million, respectively, the amount of profit for the recent two
years would stand at an income of ¥500 million (¥500 million loss － ¥1,000
million income).
-251-
Note 2: The “recent” fiscal year starts from the end of the previous year (when application
date of assignment to the 1st section is within one month from the end of the
immediately preceding year, the last day of the previous year of the immediately
preceding year).
For example, for a company where the previous year ends March 31, 2015, the
“recent two years” would be two years from April 1, 2013 through March 31, 2015
whereas “recent two years” would be two years from April 1, 2012 through March 31,
2014 when application date of assignment to the 1st section is in April 2015.
Note 3: If a company voluntarily applies IFRS, the amount of profit should be equivalent to
the amount of profit determined based on the consolidated income statement.
Note 4: For example, if the year which ends March 31, 2015 is the previous year, for the
purpose of calculating the profit for the year before the previous year (the year
which ended March 31, 2014), the “consolidated financial statements or separate
financial statements for the year which ended March 31, 2014” included in the
Securities Registration Statement or Securities Report submitted in the past will be
used, rather than the “consolidated financial statements or separate financial
statements for the year which ended March 31, 2015” included in the Securities
Report for the year which ended March 31, 2015.
► Treatment of “amount of profit” and “amount of net assets” as accounting for

apply to examination for assignment to the 1st section (Rules 705 and 717 of the Rules).

-252-
market capitalization for the companies to which REVIC has decided to provide
rehabilitation support (Note 1) (Rules 707 of the Regulations and Rule 719 of the Rules).
- Companies eligible for the exceptions
Note 1: Support decision prescribed in Article 25, Paragraph 4 of the Act Concerning
Regional Economy Vitalization Corporation of Japan (REVIC) (Law No. 63 of
2009).
Note 2: The exceptional treatment excludes any company for which the support decision is
subsequently revoked after REVIC decided to provide support or the decision to
acquire any debts of the company is not made (this decision refers to the decision
to acquire debts as prescribed in Article 31, Paragraph 1 of the Act Concerning
Regional Economy Vitalization Corporation of Japan).
- Conditions for application

The exceptions are provided when stock issued by a supported company is delisted on TSE
after REVIC has decided to provide support, and if the company files an initial listing
application for the stock by making the business year commencing within five years from the
date when REVIC announces the decision to acquire the debts of the company as the
previous year.
- Contents
In filing an initial listing application, the “amount of profit or market capitalization” should
meet either a. or b. below:
b. The amount of profit for the recent one year stands at ¥400 million or more.
c. The sales for the recent one year are ¥10,000 million or more and the market
(Reproduced)
b. The sales for the last one year is ¥ 10,000 million or more and the market capitalization on
the listing day is expected to reach at least ¥50,000 million (hereinafter referred to as the
“market capitalization criterion”)
-253-
statements).
Note 3: In the event that the amount of sales may be affected by the audit opinion of audit
firm or certified public accountants, the amount of sales adjusted based on such
adjustment to the sales is made as a result of change to accounting standards
made by appropriate reasons.
► Calculation method of market capitalization
For the calculation method of market capitalization, please refer to “II Formal Requirements
3 Market Capitalization.”
-254-
(７) False Statement or Adverse Opinion, etc.
It is required that 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 for the quarterly periods in each business year and quarterly
consolidated financial statements for the quarterly consolidated periods in each
consolidated accounting year, which ended during the last five years.
In principle, it is required that 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., and an "unqualified opinion" or an“opinion to the effect that interim financial statements,
etc. present useful information,”or “unqualified conclusion.” in the quarterly review report
attached to the quarterly financial statements for the quarterly accounting period in the
business year and for the quarterly consolidated accounting period for the consolidated
accounting year mentioned above.
Meanwhile, if additional information is included in the audit report that there is a serious
doubt on a corporate continuity though an audit opinion represents an “unqualified opinion,”
for the purpose of examination, an applicant is required to eliminate any serious event, etc.
giving rise to any concern with a corporate continuity, as represented by the elimination of
the additional information on a corporate continuity in the quarterly review report, etc. during
so-called the business year as Rule 309 of the Securities Listing Regulations requires that a
corporate continuity should be examined.
In addition, it is required that for the “internal management over financial reporting,” the
statement that “the assessment results cannot be expressed” is not included in the internal
management report for the business year which ends during the recent one year and the
statement that “the expression of opinion is refrained” is not included in the internal
management audit report.
Note 1: Business year, consolidated accounting year, quarterly accounting period or

quarterly consolidated accounting period for which no audit of CPAs or audit firm
has been provided on these financial statements and quarterly financial statements,
-255-
etc. will be excluded from the said periods.
Note 2: Though the statement that “expression of opinion is refrained” is included in the
audit report or quarterly review report, if such statement is made due to any event
beyond the control of the applicant including natural disasters, the applicant may file
the application.
Note 3: Even if “adverse opinion” or the statement that “the expression of opinion is
refrained” is included in the audit report or quarterly review report for the accounting
periods other than the previous year or consolidated accounting year on the basis of
concern with the “corporate continuity,” the application would be possible. However,
in such cases, JPXR will examine the background and reasons for including such
opinion or statement.
Note 4: When an applicant or its subsidiary effects a merger (excluding a merger between
the applicant and its subsidiary or among its subsidiaries) during the period subject
to the examination, with respect to any period before the merger during the period
subject to the examination, the financial statements, etc. of the merger company for
each business year which ends during the period and the securities report which
includes or makes cross reference with the financial statements for each accounting
year or consolidated accounting year which ends during the period will be subject to
the examination.
Note 5: The criteria for the audit report on the internal control attached to the Internal Control
Report will not be applied to cases where the audit certificate is exempted for the
period during which the applicant may elect the exemption from the audit certificate.
-256-
(８) Share Unit
The Share Unit shall be expected to be 100 shares at the time of assignment.
In practice, at the time of assignment, JPXR will check the existence of a Share Unit system
and the number of shares comprising one Share Unit based on the provisions of the Articles
of Incorporation and other internal rules and regulations. If, at the time of assignment, the
number of shares comprising one Share Unit is not 100 shares, TSE will require the
applicant to adopt or change to a Share Unit system in which the number of shares
comprising one Share Unit is 100 shares (Note).
Note: The applicant is required to amend documents associated with the assignment
application including the Articles of Incorporation and other internal rules and
regulations, its certificate of registered items and submit them during the period for
the examination for assignment.
-257-
3. Details of Examination for Assignment to the 1st Section
For the purpose of assignment to the 1st section, JPXR will make necessary examination on
the basis of whether the applicant meets each item as explained in “2. Criteria for
Assignment to the 1st Section”
Especially for the purpose of the examination of items required to meet the substantive
criteria (hereinafter referred to as the “1st Section Assignment Examination”), JPXR will
mainly examine matters described in the “Securities Report” and “Response Statement for
the 1st Section Assignment Examination” and assess the conformity with the criteria through
the interviews with the company for which the 1st Section Assignment Examination is made.
For the purpose of the examination of the matters subject to the 1st Section Assignment
Examination will be made from the same perspective as the initial listing examination
according to “III Listing Examination.” So please refer to the chapter.
In cases where there are no significant changes in lines of business, corporate governance
practices or internal management system, etc., in consideration of such circumstances,
JPXR will mainly focus its examination on the historical experiences of disclosures of
corporate profile since listing (Guidelines IV, 1)
-258-
IX Alteration of Markets
1. Steps to be Taken Before Alteration of Markets
(1) Alteration of Markets
As illustrated below, alteration of listing is available among the main board (the 1st section
and the 2nd section), Mothers and JASDAQ (Standard and Growth) on the TSE market.
This section addresses the examination for the alteration application from Mothers or
JASDAQ to the 1st and 2nd sections, as follows:
-259-
(2) Timing of Alteration and Procedures
a. Timing of Alteration
The alteration date will be the alteration approval date after two to four weeks following
public offering or secondary offering, if any, (including limited distribution) for the purpose of
alteration. Unless public offering or secondary offering are not to be made, the alteration
date would be the day after one week from the alteration approval date (if the is a holiday, it
would be deferred to the next day. If, due to a holiday, the day after one week falls on the
second to fourth business day counting from the assignment date, then said alteration date
shall be the fifth business day counting from the assignment date). However, alteration to
the 1st section from Mothers requires that, at the time of alteration, one year or more has
passed since listing; while for the alteration from JASDAQ, 6 months or more should pass
since the listing at the time of alteration. In addition, the assignment to the 1st section cannot
be conducted when the immediately preceding fiscal year is the year of new listing.
b. Procedures for Alteration
Consistent with ordinary application for listing, an alteration application will be made by filing
necessary documents associated with alteration application with TSE after the completion of
a regular general shareholders’ meeting for the previous year (the alteration application date
may be determined by consulting the lead underwriter). As with a listing application, a
preliminary application would be possible for the alteration application.
As with the listing application, the lead underwriter present the alteration schedule and
JPXR will in turn propose the examination schedule from the alteration application to the
approval thereof, which may take three months. If a period less than three years has passed
from the listing and no substantive changes have taken place with respect to organizational
structure and lines of business of an alteration applicant, such examination period may be
shortened to two months.
Note 1: Standardized examination period is three months. However depending on the

elapse of period after listing, changes in organizational structure and lines of
business after listing, and moreover the size of the applicant, busy seasons and
ordinary course of business, the period available for the preparation of responses
and the number of interviews can be coordinated. As a result of coordination, the
examination period as a whole might be modified.
-260-
Note 2: When topics for the examination are diversified, the number of items to be examined
is expected to be large, JPXR may request the applicant to take a period of more
than three months for examination.
Note 3: If an applicant wishes to modify the examination schedule including the cases above
at notes 1 and 2, please consult JPXR after fully consulting the lead underwriter.
-261-
[Model schedule from listing application entry for alteration of markets approval]
<First part>

2 Mon 2 Thu
3 Tue 3 Fri
4 Wed 4 Sat
5 Thu 5 Sun
6 Fri 6 Mon
7 Sat 7 Tue
8 Sun 8 Wed
9 Mon 9 Thu
10 Tue 10 Fri
11 Wed 11 Sat
12 Thu 12 Sun
14 Sat 14 Tue
15 Sun 15 Wed
17 Tue 17 Fri
19 Thu 19 Sun
20 Fri 20 Mon
21 Sat 21 Tue
22 Sun 22 Wed
24 Tue 24 Fri
26 Thu 26 Sun
27 Fri 27 Mon
28 Sat 28 Tue
31 Tue 31 Fri
-262-
<Second part>
Two months after month X Three months after month X
2 Sun 2 Tue
3 Mon 3 Wed

6 Thu 6 Sat
7 Fri 7 Sun

8 Sat 8 Mon Holiday
9 Sun 9 Tue
10 Mon 10 Wed
12 Wed 12 Fri
13 Thu 13 Sat
14 Fri 14 Sun
15 Sat 15 Mon

20 Thu 20 Sat
21 Fri 21 Sun
22 Sat 22 Mon
23 Sun 23 Tue
24 Mon 24 Wed
25 Tue 25 Thu
26 Wed 26 Fri
27 Thu 27 Sat
28 Fri 28 Sun
29 Sat 29 Mon
30 Sun 30 Tue
Note1: Interview with CPAs may be carried out at the initial stage of examination, depending
on the category or lines of businesses of the applicant.
Note2: There are cases where the presentation by the president takes place from various
interviews to approval of assignment to the 1st section.
-263-
Three years have not passed since the initial listing and there have been no
significant changes in organizational structure and lines of business of the company
which files the application for alteration.
<First part>

2 Mon 2 Thu
3 Tue 3 Fri
4 Wed 4 Sat
5 Thu 5 Sun
6 Fri 6 Mon
7 Sat 7 Tue
8 Sun 8 Wed
9 Mon 9 Thu
10 Tue 10 Fri
11 Wed 11 Sat
12 Thu 12 Sun
14 Sat 14 Tue
15 Sun 15 Wed
17 Tue 17 Fri
19 Thu 19 Sun
20 Fri 20 Mon
21 Sat 21 Tue
22 Sun 22 Wed
24 Tue 24 Fri
26 Thu 26 Sun
27 Fri 27 Mon
28 Sat 28 Tue
31 Tue 31 Fri
-264-
<Second part>
Two months after month X
1 Sat
2 Sun
3 Mon
4 Tue
5 Wed
6 Thu
7 Fri
8 Sat
9 Sun
10 Mon
11 Tue Receipt of answers to the second questions

12 Wed
13 Thu
14 Fri
15 Sat
16 Sun
17 Mon Holiday
18 Tue Second interview

19 Wed
20 Thu
21 Fri
22 Sat
23 Sun
24 Mon
25 Tue
26 Wed
27 Thu
28 Fri Listing approval
29 Sat
30 Sun
Note1: There are cases where interviews with CPAs and various interviews are taken place.
-265-
2. Criteria for Alteration of Markets
List of Formal Requirements for Alteration of Markets
The following summarizes the formal requirements for the alteration from Mothers.
From Mothers to the 1st section

From Mothers
Item On the basis of On the basis of
to the 2nd section
market capitalization sales amount
1) Number of
shareholders (by the 800 or more 2,200 or more
time of requirements)
a. Number of tradable
a. Number of tradable shares:
shares:
20,000 units or more
4,000 units or more
b. Market capitalization
b. Market capitalization of tradable shares:
2) Tradable shares (by of tradable shares:
the time of ¥1,000 million or more
requirements)
c. Number of tradable
shares: c. Number of tradable shares:
30% or more as a 35% or more of the total number of share
percentage of listed of stock, etc.
shares
The average monthly

trading volume for
each of the last three
months and three
3) Trading volume －－
months preceding
such recent three
months be at least
200 trading units
4) Market ¥2,000 million or more ¥ 25,000 million ¥4,000 million or more
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Capitalization or more
(by the time of
requirements)
5) Number of
An applicant has established its Board of Directors and continued its
consecutive years of
operation for three years or more.
conducting business
6) Amount of net
¥1,000 million or more (it must not be negative on a separate
assets (by the time of
basis)
requirements)
7) Amount of profit or
market capitalization
Either of a. or b. below is met.
(for the amount of
a. The amount of profit for the last two years is ¥500 million or
profit, consolidated
more.
ordinary income, and
b. The sales for the recent one year is ¥10,000million or more and
for the market
the market capitalization is expected to be ¥50,000 million or
capitalization, the value
more.
expected by the time
of requirements)
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a. No false statements in
a. No false statement is made in the securities Securities Reports for
reports, etc. for each of business years which the year ended during
ends during the last two years the last five years are
identified.
b. The audit opinions on financial statements,

etc. for each business years which ended
during the last two years (excluding the
b. An "unqualified
business year ended during the recent one
opinion" or a
year) represent an "unqualified opinion" or a
"qualified opinion with
"qualified opinion with exceptions”
8) False statement or exceptions” for the
c. The audit opinion on financial statements, etc.
adverse opinion, etc. last five years
for the business year ended during the recent
one year represents “unqualified opinion”, in
principle.
c. Either of (a) and (b)

d. Either of (a) and (b) below is not met.
below is not met.
(a) The internal management report for the business year ended during the
last year contains the statement that “assessment results will be
refrained from being expressed.”
(b) The internal management audit report for the business year ended
during the last year contains the statement that “no opinion will be
expressed.”
9) Establishment of a Shareholder services have been entrusted to an institution designated by

shareholder services TSE, or a consent of acceptance of the entrustment of such shareholder
agent services from the shareholder services agent has been received.
10) Share unit

(by the time of The Share Unit shall be expected to be 100 shares
listing)
An applicant has imposed no restrictions on the transfer of shares for which

11) Restriction on
a listing application has been filed or is not expected to impose any
transfer of shares
restriction thereon by listing.
12) Handling by the Shares of stock for which a listing application is filed has been or expected
designated book-entry to be handled by the designated book-entry transfer institution.
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transfer institution
An applicant does not meet either a or b below

a. The applicant expects to effect a merger, company split-up, turning a
company into a subsidiary or vice versa, or receipt or transfer of
business on or after the listing application date and within the two
13) Expected years from the end of the previous year, and the applicant ceases to
implementation of be a substantive surviving company through such transactions; and
merger, etc. b. The applicant expects to effect a merger in which the applicant will be
dissolved, or share exchange or transfer of shares which turns the
applicant into a wholly owned subsidiary of another company within
two years from the end of the previous year (excluding transactions
expected to be implemented before the listing date)
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The following summarizes the formal requirements for the alteration to the 1st and 2nd
sections from JASDAQ.
Item From JASDAQ to the 2nd section From JASDAQ to the 1st section
1) Number of
shareholders (by the 800 or more 2,200 or more
time of listing)
a. Number of tradable shares: a. Number of tradable shares:

4,000 units or more 20,000 units or more
b. Market capitalization of tradable shares:

2) Tradable shares (by
the time of listing)
c. Number of tradable shares: c. Number of tradable shares:
30% or more as a percentage of 35% of the total number of shares
listed shares of stock, etc.
3) Trading volume －
4) Market
Capitalization ¥2,000 million or more ¥ 25,000 million or more
(by the time of listing)
5) Number of
consecutive years of An applicant has established its Board of Directors and continued its
conducting a business operation for three years or more.
years
6) Amount of net
assets (by the time of ¥1,000 million or more (it must not be negative on a separate basis)
listing)
7) Amount of profit or
(for the amount of Either of a. or b. below is met.
profit, consolidated a. The amount of profit for the last two years is ¥500 million or more.
ordinary income, and b. The sales for the last year is ¥10,000million or more and the market
for the market capitalization is expected to be ¥50,000 million or more.
capitalization, the value
expected by the time of
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listing)
a. No false statement is made in the securities reports, etc. for each of

business years which end during the recent two years.
b. The audit opinions on financial statements, etc. for each business years
which ended during the recent two years (excluding the business year
which ends during the recent one year) represent an "unqualified
opinion" or a "qualified opinion with exceptions”
c. The audit opinion on financial statements, etc. for the business year
8) False statement or which ends during the recent one year represents “unqualified opinion”,
adverse opinion, etc. in principle.
d. Either of (a) and (b) below is not met.
(a) The internal management report for the business year ended during
the recent one year contains the statement that “assessment results
will be refrained from being expressed.”
(b) The internal management audit report for the business year ended
during the recent one year contains the statement that “no opinion will
be expressed.”
9) Establishment of a Shareholder services have been entrusted to an institution designated by

shareholder services TSE, or a consent of acceptance of the entrustment of such shareholder
agent services from the shareholder services agent has been received.
An applicant has imposed no restrictions on the transfer of shares for which

10) Restriction on
a listing application has been filed or is not expected to impose any
transfer of shares
restriction thereon by listing.
11) Handling by the

Shares of stock for which a listing application is filed has been or expected
designated book-entry
to be handled by the designated book-entry transfer institution.
transfer institution
An applicant does not meet either a or b below

a. The applicant expects to effect a merger, company split-up, turning a
company into a subsidiary or vice versa, or receipt or transfer of
12) Expected business on or after the listing application date and within the two
implementation of years from the end of the previous year, and the applicant ceases to
merger, etc. be a substantive surviving company through such transactions; and
b. The applicant expects to effect a merger in which the applicant will be
dissolved, or share exchange or transfer of shares which turns the
applicant into a wholly owned subsidiary of another company within
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two years from the end of the previous year (excluding transactions
expected to be implemented before the listing date)
List of Substantive Requirements of Examination Standards

Item Requirements
1. Corporate continuity and An applicant has carried out its business in a continuous manner
profitability: and developed a revenue base to generate stable profit.
2. Soundness of company
The applicant has been performing its business fairly and faithfully.
management
3. Effectiveness of
Corporate governance and internal management systems have
corporate governance
been designed and operated appropriately in consideration of its
and internal
size and the level of maturity
management system
4. Appropriateness of
disclosures of relevant The applicant is in a position to appropriately make the disclosures
corporate profile, risk of corporate profile.
information, etc.
5. Other matters as TSE
deems necessary from
the perspectives of the -
public interest and
protection of investors
The following discusses each criterion:
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(1) Number of Shareholders
The number of shareholders (this represents the number of persons who hold at least one
share unit (Note 1)) is expected to be 800 or more for the 2nd section and 2,200 or more for
the 1st section by the time of alteration (Note 2).
one share.
Note 2: When Depository Receipts (DRs) representing the rights, etc. attached to stock
certificates are issued, shareholders who hold DRs representing rights attached to
the number of shares comprising one trading unit or more can be included in the
number of shareholders.
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(2) Tradable Shares
Tradable shares are required to meet the criteria in a to c below:
Note: A domestic company that is listed or will list on a foreign financial instruments
exchange would be accepted if it meets any one of the formal requirements of the
market capitalization of tradable shares and the number of tradable shares as a
percentage of total shares of listed stock. For a foreign company that is listed or will
list on a foreign financial instruments exchange, the formal requirements will be
handled in a similar manner. To prevent abuse of these provisions, the applicant shall
be checked, through the substantive examination, on whether it has or is sufficiently
likely to secure adequate liquidity in the foreign financial exchange.
a. Number of tradable shares

For the alteration to the 2nd section, the number of tradable shares (note) is expected to
reach 4,000 or more by the time of alteration while for the alteration to the 1st section, 20,000
or more by the time of alteration.
Note: For the determination of the number of tradable shares, please refer to “2 Tradable
Shares at “II Formal Requirements.”
b. Market capitalization of tradable shares

For the purpose of alteration to the 1st or 2nd section from Mothers, the market capitalization
of tradable shares as of the date of alteration should stand at ¥1,000 or more if market
capitalization criterion applies while ¥2,000 million or more in case of sales criterion.
On the other hand, the alteration to the 1st or 2nd section from JASDAQ requires the
expected amount of market capitalization of tradable shares to be ¥1,000 million or more at
the time of alteration.

If public offering or secondary offering is effected for alteration of markets, expected offering
price (Note 1)” or “the lowest price of the said stock, etc. observed during the period one
month prior to two days before the day on which the JPXR approves listing of the stock is
approved (Note 2)” is used, whichever is lower
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If public offering or secondary offering is not effected for alteration of markets, the “lowest
market price of shares for the period of one month before two days preceding the date when
the listing is approved” will be used.
Note 1: The day prior to two days before the day on which the JPXR approves the listing is
day of a week.
c. Percentage of Tradable Shares

► Determination of percentage of tradable shares
For the purpose of alteration to the 2nd section, the number of tradable shares is expected to
be 30% or more of the total number of shares of stock, etc. by the time of alteration while for
the alteration to the 1st section, 35% or more.
The percentage is determined by dividing the number of tradable shares by the number of
shares for which the alteration application is filed (note).
Note. The number of shares for which the alteration application is filed represents the
number of shares of stock, etc. expected at the time of alteration date, and the
number is determined by adding or deducting the number of shares expected to be
issued by the time of alteration, to or from the total number of shares of stock, etc. as
of the last record date.
<Increase in the number of shareholders and tradable shares: public offering or

secondary offering before the alteration>
The criteria for the number of shareholders and tradable shares relate to the requirements
expected to be satisfied at the time of alteration, rather than the requirements at the time of
alteration application. These requirements are interpreted in accordance with the
requirements for the “Increase in the number of shareholders and tradable shares: public
offering or secondary offering before the alteration” pertaining to “II Formal Requirements”
-275-
so please refer to the section.
-276-
(3) Trading Volume
The applicant must comply with the requirements for the purpose of alteration to the 1st
section form Mothers on the basis of trading volume criterion.
(Provided that this will not apply to the cases of alteration to the 2nd section from Mothers
and JASDAQ, and the alteration to the 1st section from JASDAQ.
The average monthly trading volume for each of the last three months and three (3) months
preceding such last three months (Note 1) on TSE be at least 200 units (when the number of
shares, and if the applicant does not adopt any number, one unit refers to one share.
Note 1: The six month period before the end of the previous month which includes the
application date for assignment to the 1st section are classified into the “first three
months” and the “second three months.” Then the total trading volume of each
three months period will be divided by the number of months.
<Examples> When the application date for assignment to the 1st section is July 1:
Recent three months (second three months): April to June
Three months preceding the second three months (first second months): January to
March
Meanwhile, in determining the average monthly trading volume for the purpose of
filing an application for the assignment to the 1st section on or after July 16, 2013,
the applicant may add the trading volume on respective market of Osaka Securities
Exchange (excluding JASDAQ) to the trading volume of TSE market for the
corresponding period.
Note 2: When a listed company decreases the number of shares per Share Unit during the
period which is used for the determination of trading volume, for the period before
the change, the trading volume as required in this criterion will be determined by
using the number of share units before the change while the trading volume after the
change will be determined by using the number after the change.
<Example> Way of calculating the monthly average trading volume for the “last three
months” when a company which has changed the number of shares per Share Unit
from 1,000 shares to 100 shares applied for alteration in July
Trading volume for the last three months

Trading volume from April 1 to April 30 (1,000 shares per Share Unit) 200,0000
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shares = 200 share units

Trading volume from May 1 to June 30 (100 shares per Share Unit) 100,000 shares
= 1,000 share units
Average monthly trading volume: 1,200 share units / 3 months = 400 share units
Thus the average monthly trading volume meets the criterion.
Note 3: The trading volume includes the trading volume on off-auction trading (ToSTNeT
trading) and off-auction distribution.
Note 4: Trading volume can be checked by applying trading volume check tool at
https://www.arrowgate.jp/fw/dfw/tselcp/webxportal/tsehome
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(4) Market Capitalization
It is required that when the market capitalization criterion is used for the alteration, the
market capitalization as of the alteration date should be ¥2,000 million or more for the
alteration to the 2nd section from Mothers, and ¥25,000 million or more for the purpose of
alteration to the 1st section. When using the sales criterion, the sales amount should be
¥4,000 million or more for the alteration to the 1st or 2nd section.
On the other hand, for the alteration from JASDAQ, the market capitalization as of the
alteration date should be ¥2,000 million or more for the alteration to the 2nd section, while
¥25,000 million or more for the alteration to the 1st section.
Calculation method of market capitalization
number of shares of listed stock certificates expected at the time of assignment to the 1 st
section by the share price, to the market capitalization related to all other shares issued by
the applicant (limited to those listed or continuously traded on another financial instruments
exchange in Japan or foreign countries). For the purpose of determination of market
capitalization, the following prices are to be used as share prices.

If public offering or secondary offering is effected for assignment to the 1st section, expected
approved (Note 2)” is used, whichever is lower

day of a week.
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off-trading session prices, off-market prices or the lowest prices during the trading
session are not viewed as the lowest price.
(5) Number of Consecutive Years of Conducting a Business
It is required that an applicant has established a Board of Directors for three years or more
counting from the end of the previous year and has continuously carried out its main
business at the time of listing application for three years or more as of the end of the
previous year.
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(6) Amount of Net Assets
It is required that the net assets of an applicant are expected to reach at least ¥1,000 million
by the date of assignment to the 1st section. JPXR will examine the following “values of net
assets on the date of assignment to the 1st section.”
When an applicant files a “quarterly report for initial listing application” or a copy thereof for
the period after the beginning of fiscal year in which assignment to the 1st section is made,
TSE will examine the amount of net assets at the end of immediately preceding quarterly
period (Note 1) described in the recent “quarterly report for initial listing application.” When
the applicant does not prepare any consolidated quarterly financial statements, JPXR will
examine the values on the quarterly balance sheet (on a separate basis). In addition it is
required that the amount of net assets determined on the basis of quarterly balance sheet
(on a separate basis) (Note 2) should not be negative.
In cases other than a. above, JPXR will examine the amount of net assets as of the end of
the previous year described in the recent “Securities Report.” (Note 3). When the applicant
does not prepare any consolidated financial statements, JPXR will examine the values on
the balance sheet (on a separate basis). In addition it is required that the amount of net
assets determined on the basis of balance sheets (on a separate basis) (Note 4) should not
be negative.
submit to TSE the “Statement of Net Assets” in the form required by JPXR including the
descriptions of the “amount of net assets as of the end of immediately preceding quarterly
period or the previous year,” “expected cash inflows arising from public offering” and
“amount of net assets subject to the examination.”
total amount determined by adding reserves, etc., prescribed in Article 60, Paragraph
1 of the
Quarterly Consolidated Financial Statements, etc. Rules to the section of Net Assets
in a quarterly consolidated balance sheet prepared under the same rules.
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adding reserves, etc. prescribed in Article 54-3, Paragraph 1 of the Financial
of net assets determined on the basis of quarterly consolidated balance sheet or
consolidated balance sheet.
Treatment of “amount of profit” and “amount of net assets” according to the adoption of
apply to the examination for assignment to the 1st section (Rules 705 and 717 of the Rules).
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(7) Amount of Profit or Market Capitalization
An applicant is required to meet either a. or b. below.
The total amount of profits for the last two years stands at ¥500 million or more (hereinafter
referred to as the “profit criterion”)
The sales for the recent one year stand at ¥ 10,000 million or more and the market
capitalization on the listing day is expected to be ¥50,000 million or more (hereinafter
referred to as the “market capitalization criterion”).
<Application of profit criterion>

(Reproduced)
The total amount of profits (Note 1) for the last two years (Note 2) stands at ¥500 million or
more (hereinafter referred to as the “profit criterion”)
In the context of this criterion, the amount of profit determined (Note 3) based on the
consolidated income statement or consolidated statement of profit and loss and
comprehensive income (hereinafter referred to as the “consolidated income statement, etc.”)
will be subjected to the examination (if there is any period subject to the examination where
no consolidated financial statements have been prepared, the amount of profit (Note 4)
determined on the income statement (on a separate basis) would be subjected to the
examination).
by adding or deducting the amount presented according to Article 65, Paragraph 3 of the
according to Article 61 of the same rules (in case of separate income statement, it
represents ordinary income or ordinary loss presented according to Rule 95 of the same
rules) (Note 5).
example, If the amounts of profit for the two years stands at a loss of ¥500 million
and income of 1,000 million, respectively, the amount of profit for the recent two
years would stand at an income of ¥500 million (¥500 million loss － ¥1,000
million income).
-283-
Note 2: The “last” fiscal year starts from the end of the previous year. For example, for a
company where the previous year ends March 31, 2015, the “recent two years”
would be two years from April 1, 2013 through March 31, 2015. The same definition
of “recent” will be applied hereinafter.
Note 3: If a company voluntarily applies IFRS, the amount of profit should be equivalent to
the amount of profit determined based on the consolidated income statement.
Note 4: For example, if the year which ends March 31, 2015 is the year immediately
preceding application year, for the purpose of calculating the profit for the previous
year of the previous year (the year which ended March 31, 2014), the “consolidated
financial statements or separate financial statements for the year which ended
March 31, 2014” included in the Securities Registration Statement or Securities
Report submitted in the past will be used, rather than the “consolidated financial
statements or separate financial statements for the year which ended March 31,
2015” included in the Securities Report for the year which ended March 31, 2015.
► Treatment of “amount of profit” and “amount of net assets” as accounting for

apply to examination for assignment to the 1st section (Rules 705 and 717 of the Rules).

market capitalization for the companies to which REVIC has decided to provide
rehabilitation support (Note 1) (Rules 707 of the Regulations and Rule 719 of the Rules).
For details, please refer to “II Formal Requirements 6 Amount of Profit and Market
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Capitalization.”
-285-
(Reproduced)
b. The sales for the recent one year are ¥10,000 million or more and the market
Note 1: For the calculation method of market capitalization, please refer to “II Formal
Requirements 3 Market Capitalization.”
statements).
Note 4: In the event that the amount of sales may be affected by the audit opinion of audit
firm or certified public accountants, the amount of sales adjusted based on such
adjustment to the sales is made as a result of change to accounting standards
made by appropriate reasons.
Note 5: When an applicant is demutualized into a joint stock company and if the period
subject to the examination includes any period before the demutualization, with
respect to the period before the demutualization, the amount equivalent to the
amount of profit determined based on the consolidated income statements for each
consolidated fiscal year of the mutual company and the sales stated in the income
statements for each consolidated fiscal period of the mutual company will be used
for the purpose of the examination.
-286-
(8) False Statement or Adverse opinion, etc.
For the interpretation for “false statement and adverse opinion, etc.” in effecting the
alteration to the 2nd section from Mothers or JASDAQ, the alteration to the 1st section from
Mothers applying the market capitalization criterion and the alteration to the 1st section from
JASDAQ, please refer to “(7) False Statement and Adverse Opinion, etc.” at “VIII
Assignment to the First Section. ”
(9) Establishment of a Shareholder Services Agent
Please refer to “8. Establishment of Shareholder Services Agent” at “II Formal

Requirements.”
(10) Shares Unit
The Share Unit shall be expected to be 100 shares at the time of alteration.
In practice, at the time of ateration, JPXR will check the existence of a trading unit system
and the number of shares comprising one trading unit on the basis of the rules prescribed in
the Articles of Incorporation and listing application documents including certificates of
registered items. When the applicant does not adopt any trading unit system or it applies a
trading unit system where the number of shares comprising one trading unit is not 100
shares at the time of alteration, TSE will require the applicant to adopt a trading unit system
or change the number of shares comprising one trading unit (Note).
Note: The applicant is required to amend documents associated with the alteration
application including Articles of Incorporation, a certified copy of the commercial
register, various internal rules and “Part I” documents with respect to the adoption of
shares unit system and submit them during the period for the examination for
assignment.
(11) Restriction on Transfer of Shares
Please refer to “10 Restriction on Transfer of Shares” at “II Formal Requirements.”
-287-
(12) Handling by the Designated Book-Entry Transfer Institution
Please refer to “11 Handling at Designated Book-Entry Transfer Institution” at “II Formal
Requirements.”
(13) Expected Implementation of Merger, etc.
Please refer to “12 Expected Implementation of Merger, etc.” at “II Formal Requirements.”
-288-
3. Nature of Examination for Alteration of Markets
For the examination of the alteration to the 1st and 2nd section on the basis of formal
requirements, JPXR will assess whether the applicant meets the requirements of each item
mentioned in “2 Criteria for alteration of Markets”
For the items subject to substantive examination (hereinafter referred to as the “alteration
examination,” JPXR mainly examines the descriptions included in “Securities Report for the
Application for alteration of Market (Part I)” and “Securities Report for the Application for
alteration of Market (Part II) by assessing the satisfaction of the requirements through the
interviews with the applicant.
JPXR will examine the market alteration application in accordance with “III Listing
Examination” in a manner similar to that for initial listing.
Meanwhile when there are no significant changes in line of business, corporate governance
and internal management system, JPXR will mainly focus its examination on the historical
experiences of disclosure of corporate profile as well as continuity and profitability of
business (Guidelines IV 2.).
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X Listing Fees
X Listing Fees
Consumption taxes and local consumption taxes will be levied on various dues and fees
mentioned in this chapter.
1. Listing Examination Fees
Listing examination fees will be charged to an applicant at the time of listing application.
Fees Amount Payment date
By the end of the month following the

Listing
¥4 million month to which the listing application
examination fees:
date pertains
Note 1: When applicant has an experience of filing a listing application or preliminary

application and the applicant files a listing application within three years counting
from the business year in which the most recent listing application was filed (in case
of a preliminary application, the date on which the listing application described in the
securities preliminary listing application), the fees will be halved.
Note 2: When the applicant files a preliminary application, the preliminary examination fees
at the same amount as the listing fees will be charged to the applicant. When a
preliminary listing application is filed and if the listing application is filed in the
business year described in the preliminary securities listing application, the
applicant needs to pay no listing examination charge.
Travelling expenses incurred when conducting on-site investigations and interviews
at locations far away from Japan, such as in Europe and the US, etc. or other
expenses deemed necessary for the purpose of listing examination, JPXR will
charge amounts equivalent to expenses actually incurred.
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X Listing Fees
2. Initial Listing Fees
An applicant is required to pay initial listing fees and fees of public offering or secondary
offering at the time of initial listing.

By the end of the
First month following the
¥ 15 million
section month to which listing
Initial date pertains
listing fees By the end of the
Second month following the
¥12 million
section month to which listing
date pertains
(1) Fees for public offering of stock
certificates for which the listing
application is filed
Number of shares for which the listing

application is filed x public offering By the end of the
Fees for public offering price x 9/10,000 month following the
or secondary offering (2) Fees for secondary offering of month to which listing
stock certificates for which the date pertains
listing application is filed (Note 1)
Number of shares for which secondary

offering are effected (Note 2) x sales
prices x 1/10,000
Note 1: Initial listing fees for the 1st section represent initial listing fees when the applicant is
listed on the 1st section while initial listing fees for the 2nd section represent initial
listing fees when the applicant is listed on the 2nd section.
Note 2: Fees for public offering or secondary offering will be paid for the public offering or
secondary offering of shares for which the initial listing application is filed between
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X Listing Fees
the listing approval date and the listing date.
Note 3: These are limited to cases mentioned in Article 2, Paragraph 4, Item 1 of the Act.
Note 4: The number of shares for which secondary offering is effected includes the number
of over allotted shares. In addition in case of capital increase via third party
placements related to the green shoe option, the “fees for listing of new shares”
reflecting the number of allotted shares at the third party placement capital increase
will be charged (explained below)
Note 5: Amount less than ¥100 arising in the calculation process will be disregarded
(consumption taxes and local consumption taxes will be excluded; the same shall
apply hereinafter).
[Illustrative examples of calculation of fees required for initial listing]

(Conditions precedent)
- Listing on the 2nd section
- Public offering: 1,000 shares
- Secondary offering (purchase underwritten by the underwriter): 500 shares
- Secondary offering (overallotment): 200 shares
- Prices for public offering or secondary offering: ¥256,000
(Calculation)
Initial listing fees ¥12,000,000
+ fees for public (Public offering)
offering or 1,000 shares x ¥256,000 x 9 / 10,000 = ¥230,400
secondary (Secondary offering)
offering (500 shares + 200 shares = 700 shares) x ¥256,000 x 1/10,000 =
¥17,900 (fraction of less than ¥100 is disregarded)
Total ¥12,248,300
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X Listing Fees
3. Fees to be Paid by Listed Companies
Listed companies will be charged annual fees for maintaining listing, fees for issuance of
new shares, fees for listing of new shares and fees associated with merger, etc. as
mentioned below.
(1) Annual Fees for Maintaining Listing
After listing, a listed company will be required to pay the amount mentioned in the table
below, with the addition of ¥120,000 for the use of TDnet.
Market capitalization at
1st section 2nd section Payment date
the time of listing
¥5,000 million or below ¥960,000 ¥720,000

Over ¥5,000 million ¥1,680,000 ¥1,440,000
and ¥25,000 million or
By the end of
below
February and the
Over ¥25,000 million ¥2,400,000 ¥2,160,000
end of August
and ¥50,000 million or
(one-time payment
below
represents a half of
Over 50,000 million ¥3,120,000 ¥2,880,000
the amounts
and ¥250,000 million
mentioned in the left
or below
column with the use
Over ¥250,000 million ¥3,840,000 ¥3,600,000
fees of TDnet)
and ¥500,000 million
or below
Over ¥500,000 million ¥4,560,000 ¥4,320,000
Note 1: The market capitalization is calculated by applying the closing price on the final day
of the trading session in December each year (if no trading is effected on the trading
session of the day, the closing price at the trading session at the most recent date
when the trading was effected) and the number of listed shares at the end of
December each year.
-293-
X Listing Fees
Note 2: Annual fees for maintaining listing at the time of initial listing year will differ
depending on the month in which the listing is made.
Annual fees for maintaining listing to be paid by the end of February

Month in which an
Annual fees for maintaining listing
initial listing is made
Amount of one twelfth of annual fees for maintaining listing on the
August of the
basis of market capitalization of listing as of listing date with addition
previous year
of a half of annual fees for maintaining listing
September of the A half of annual fees for maintaining listing
previous year
October of the Five twelfths of annual fees for maintaining listing
previous year
November of the Four twelfths of annual fees for maintaining listing
previous year
December of the Three twelfths of annual fees for maintaining listing
previous year
Two twelfths of annual fees for maintaining listing on the basis of
January
market capitalization of listing as of listing date
February No payment of annual fees for maintaining listing is required.
-294-
X Listing Fees
Annual fees for maintaining listing to be paid by the end of August

Month in which an
Annual fees for maintaining listing
initial listing is made
Seven twelfths of annual fees for maintaining listing on the basis of
February
A half of annual fees for maintaining listing on the basis of market
March
capitalization of listing as of listing date
Five twelfths of annual fees for maintaining listing on the basis of
April
Four twelfths of annual fees for maintaining listing on the basis of
May
Three twelfths of annual fees for maintaining listing on the basis of
June
Two twelfths of annual fees for maintaining listing on the basis of
July
August No payment of annual fees for maintaining listing is required
-295-
X Listing Fees
(2) Fees for Issuance of New Shares, etc. after Listing
If a listing company issues new shares, etc., the amounts mentioned below will be charged.

Stock certificates, etc. (Note 1) Paid amount per share x 1/10,000
are issued or disposed of of the number of shares to be
(Note 2) issued or disposed
(Issuance price of new subscription
warrants x total number of new
New subscription warrants
subscription warrants + amounts By the end of the
(Note 3) are issued where
paid at the exercise of new month following the
shares acquired through
subscription warrants (Note 4) x month in which new
subscription warrants become
number of shares acquired through shares were issued.
listed shares
new subscription warrants) x
1/10,000
Number of shares for which
Secondary offering of listed
secondary offering are effected x
stock certificates (Note 5)
sales prices x 1/10,000
Note 1: Listed stock certificates, etc. include stock certificates which can be converted to
listed stock certificates (this means the delivery of new stock certificates, etc. in
exchange for the acquisition of shares issued by the company).
Note 2: Disposal is limited to stock certificates publicly offered as prescribed in Article 199,
Paragraph 1 of the Companies Act (in case of foreign companies, securities
equivalent to them). This excludes issuance or disposal of shares through third
party placement arising from the exercise of rights to acquire offered shares from
the issuer or holder of the offered shares, which are granted to the prime financial
instruments underwriter who implements an overallotment in relation to the initial
listing in entering into a prime underwriting contract.
Note 3: Subscription warrants are limited to those offered according to Article 238,
Paragraph 1 of the Companies Act and free allocation of subscription warrants
prescribed in Article 277 of the same act.
Note 4: “Payment amount associated with the exercise of subscription warrants” represents
-296-
X Listing Fees
the value of assets contributed in exercising of subscription warrants (the same

shall apply hereinafter).
Note 5: They are limited to the sales which meet Article 2, Paragraph 4, Item 1 of the Act.
-297-
X Listing Fees
(3) Fees for Listing of Shares of New Stock
Fees mentioned below will be required for listing of shares, etc. newly issued by a listed
company.

Issuance price per one share (Note 1) End of the month following
Fees for listing of
x the number of shares of newly issued the month in which listing of
new shares
stock certificates (Note2) x 8/100,000 new shares is effected
Note 1: When listing is effected for shares newly issued through the conversion of shares
where shares can be converted to another class of shares, the calculation is made
with reference to issuance price per share as the “issuance price per share” in the
table.
In listing new shares issued through the exercise of subscription warrants, the
calculation is made with reference to the amount equivalent to the price per share
determined using the formula below as the issuance price per share.
[Issuance price of each stock acquisition right x total number of subscription
warrants / payment amount related to the exercise of subscription warrants x the
number of shares whose rights are exercised]
In addition, in listing shares issued at the time of acquisition by a company of
subscription warrants with special conditions, the calculation is made with reference
to the amount equivalent to the price per share calculated as follows as the
issuance price per share.
[Issuance price of each stock acquisition right x total number of subscription
warrants (if subscription warrants represent those attached to bonds with
subscription warrants, the total of the amount for subscription warrants and the
amount for bond portion of the bonds with subscription warrants)]
Note2: New shares to be listed by virtue of Rule 303 of the Regulations shall be excluded.
Note 3: In listing new shares issued through the conversion of shares which can be
converted to another class of shares, the payment date is separately determined
where new share issues through the exercise of subscription warrants are listed or
new issues issued concurrently at the time of acquisition of subscription warrants
with acquisition rights are listed.
-298-
X Listing Fees
(4) Fees for Merger, etc.
If a listed company effects a merger and acquisition (merger, divesture or share exchange),
the fees mentioned below shall be paid.

(Number of shares issued at the time
of merger + number of shares of
End of the month following
Fees for merger, treasury stock to be delivered) x
the month in which the
etc. closing price of the shares (Note 1) at
merger takes effect
the trading session where the merger
takes effect (Note 2) x 2/10,000
Note 1: If no trading is effected in the trading session of the day when the merger, etc. takes
effect, this refers to the closing price at the trading session first effected after the day
when the merger, etc. takes effect.
Note 2: It refers to the date when merger, divesture or share exchange takes effect (the
same shall apply hereinafter).
Note3: The maximum fees for the merger, etc. will be ¥10 million.
-299-
X Listing Fees
4. Fees for Assignment to the 1st Section and Alteration of
Markets
(1) Assignment to the 1st section
When the application for alteration to the 1st section from the 2nd section is filed, the fees for
the examination of the assignment to the 1st section will be charged.
Examination fees for By the end of the month

assignment to the first ¥4 million following the month in which
section the listing application is filed
Fees for the assignment to

－－
the 1st section
Note: When the applicant files a preliminary application, the preliminary examination fees at
the same amount as the examination fees for the assignment to the 1st section will be
charged to the applicant. When a preliminary application is filed and if the preliminary
1st section assignment application is filed in the business year described in the
preliminary 1st section assignment application, the applicant needs to pay no 1st
section assignment fees.
-300-
X Listing Fees
(2) Alteration to the 2nd or 1st section from Mothers
When the application for alteration to the 2nd or 1st section from Mothers is filed, the fees for
the alteration examination will be charged.
By the end of the month

Examination fees for
¥4 million following the month in which
Alteration
the listing application is filed
Initial listing fees － (¥1

million + Fees for public By the end of the month
Fees for Alteration offering or secondary offering following the month in which
at the time of listing on alteration is made
Mothers)
Note 1: When the applicant files a preliminary application, the preliminary examination fees
at the same amount as the alteration examination fees will be charged to the
applicant. When a preliminary application is filed and if the preliminary alteration
application is filed in the business year described in the preliminary alteration
application, the applicant needs to pay no alteration fees.
Note 2: For any company listed on Mothers by application filed before April 1, 2003,
notwithstanding the above, the amount determined as follows will be the alteration
fees.
“Initial listing fees (¥15 million in case of listing on the 1st section concurrent with the
alteration and ¥12 million in case of listing on the 2nd section concurrent with the
alteration)－listing fees paid at the time of listing on Mothers (¥1 million + offering
price per share for the public offering at the time of listing on Mothers x the number
of shares publicly offered x 9/10,000 (up to ¥20 million) )－listing fees paid at the
listing of new stock (offering price per share x the number of shares of newly listed
stock x 9/10,000)”
-301-
X Listing Fees
(3) Alteration to the 2nd or 1st section from JASDAQ

Examination fees for
¥4 million following the month in which
Alteration
the listing application is filed

Fees for Alteration Initial listing fees －¥6 million following the month in which
alteration is made
Note : When the applicant files a preliminary application, the preliminary examination fees at
the same amount as the alteration examination fees will be charged to the applicant.
When a preliminary application is filed and if the preliminary alteration application is
filed in the business year described in the preliminary alteration application, the
applicant needs to pay no alteration fees.
-302-
XI IPO Center (Support Given to Prospective Issuers)
XI IPO Center (Support Given to Prospective

Issuers)
1. Assistance Activities through Visits to Individual
Companies and Consultation
TSE staff will directly visit any company considering to list its stock and present the overall
picture of and procedures for listing.
The TSE New Listing Department will provide consultation at every stage of preparation for
listing, ranging from the evaluation of listing to actual preparation for listing. Please feel free
to contact us in any case where you do not understand what you should start with in
considering listing or you wish to directly hear from TSE on listing though you have started
some preparatory works.
2. Seminars for Prospective Issuers
TSE holds various seminars for companies which consider listing or are preparing
themselves for listing at any location in Japan. These seminars will outline the listing system
and preparation for listing and views and opinions of companies which succeeded in listing
will be informed.
3. Mail Magazine
“IPO Center Mail Magazine” will provide information on seminars and other events given by
TSE, as well as Q&A on listing examination and explanation of the system on a weekly
basis.
Please feel free to send any message to the address below as TSE responds to any
-303-
XI IPO Center (Support Given to Prospective Issuers)
questions concerning initial listing, including listing system such as listing examination and
actual preparation for listing.
IPO Center, New Listing, Tokyo Stock Exchange, Inc.

ipo@jpx.co.jp
-304-
A Documents, etc. to be Filed for Initial Listing

Application (Japanese Stocks)
List of Documents, etc. to be Filed for Initial Listing
The documents to be filed for the purpose of application are described below in
“Documents to be Filed for Initial Listing Application. They must be filed at the time of the
initial listing application or in a manner otherwise specified by the filing requirements.
When and if a preliminary application is submitted, the “documents for the purpose of
preliminary application” (to be specified later) need to be filed on the date of the preliminary
application. The remaining documents to be filed should be filed at the official application
date after the completion of the regular general shareholders’ meeting. For any document
filed as a draft or whose descriptions have been changed after the preliminary filing, new
and official documents must be filed on the date of the official application.
(1) Documents, etc. to be Filed for Initial Listing Application

(Japanese Stocks)
(Considerations)
(1) When an applicant prepares application documents of a type that can be prepared by
electromagnetic means in accordance with relevant laws and regulations (convocation
notice of general shareholders’ meeting, minutes of general shareholders' meeting,
minutes of Board of Directors meeting, etc.), the applicant may file the documents by
electromagnetic means (CD-ROM, etc.).
(2) The written Articles of Incorporation need to be filed as a hard copy by the listing
application date. Later, on the listing date, the applicant should register the Articles of
Incorporation via TDnet. For the corporate governance report, the applicant is required to
submit a draft version on the listing application date and a finalized version by the listing
approval date, and then to register the report via TDnet.
-305-
(Marks and legend)
※ Must be submitted in the form designated by TSE for the form, please refer to: “Forms
of Documents to be Filed for Initial Listing Application”(Japanese only)
◎ Underwriter (lead underwriter) is required to submit
(Copy) A copy of the original will be submitted
◆ Documents to be submitted for the preliminary application
Though submitted at the time of preliminary application, draft or non-finalized version

◇
would be accepted.
Rules: Enforcement Rules for the Securities Listing Regulations
-306-
Time Documents Remarks Number Basis
Documents required to be filed by all the applicants
Security initial listing Preliminary

Listing
application form※◆ application form for Rule 204① of the
application One
initial listing of Regulations
date
securities ※
Minutes of the board of

Same as directors meeting for Rule 204①(1) of the
One copy
above authorizing the initial listing Rules
application (copy)
A certified copy of the

Same as commercial register of the Rule 204①(2) of the
One
above initial listing applicant Rules
◆
Same as Articles of incorporation◆ Hardcopy Rule 204①(3) of the

One
above Rules
Securities report for initial Audit report

listing application (Part I)◇ attached
In cases of
companies making
continuous
disclosures,
Rule 204② of the
financial
Same as Regulations
statements and Two
above Rule 204 ①(4)b of
consolidated
the Rules
financial
statements for the
previous year of the
previous year, with
audit report
attached.
Same as Securities report for initial Rule 204② of the

Two
above listing application (Part II)◇ Regulations
-307-
Written confirmation certifying

Same as Rule 204①(6) of the
that the applicant has no ties One
above Rules
to any anti-social forces※◆
Written confirmation※◎◆
Same as One Rule 204①(7)b of
above the Rules
A document describing
matters which were given
Same as particular attention or were the Rule 204①(7)c of
One
above focus of confirmation in the the Rules
course of public guidance and
underwriting examination◎◇
Minutes of a general Submission at

shareholders meeting or the every meeting after
board of directors during the the listing
period from the first day of the application date
business year containing the However, when
initial listing application day such document has
Same as (copy) been already One , Rule 206(1) of the
above submitted through respectively Rules
the Electronic
Disclosure for
Investors' NETwork
(EDINET), it is not
required to be
submitted.
Summary audit report◇ For each

consolidated
accounting year Rule 204⑦ of the
which ends during Regulations
Same as
the recent two One
above
years
The most recent

Rule 208②(3) of the
audit summary
Rules
must accompany
-308-
the statements
required by Rule
208②(3) of the
Rules which
describes the
assessment of
CPAs or audit firm
on the company
organization,
accounting
regulation and
other systems’
design and
implementation .
Written oath concerning

Same as Rule 204① of the
application for initial listing※ One
above Regulations
◆
Quarterly report (balance Not required when

sheet) for period ending the financial
most recent quarter◆ statements (stand
alone) is include in
the “Quarterly
Report for Initial
Listing Application.”
As a quarter period
ends during the
Same as Rule 206①(9)-2 of
examination period, One
above the Rules
it must be
submitted every
end of a quarterly
period.
However, when
such document has
been already
submitted through
the Electronic
-309-
Disclosure for
Investors' NETwork
(EDINET), it is not
required to be
submitted.
Book of rules (copy)◆ Including

regulations on
Same as Rule 204①(10) of
handling of One
above the Rules
shareholder
services (copy)
A copy of notice of general

shareholders’ meeting for the
Same as Rule 204①(11) of
business year ending within One
above the Rules
the latest year and attached
documents◇
Written documents stating the

Same as matters of the assumption of
One Rule 204①(12)
above the principal business
activities◆
Table of distribution status of Not required when

stocks※◇ the criteria for the
number of
shareholders or the
number of publicly
traded shares are
Same as expected to be met Rule 204①(21) of
One
above through public the Rules
offering or
secondary offering
or limited
distribution of
shares before
listing
Same as Document certifying the Rule 204①(23) of

One copy
above establishment of a the Rules
-310-
shareholder services agent

(copy)◆
Consolidated financial Limited to cases

statements for the recent five where securities
years (copy)◇ reports have been
prepared for the
recent five years
(including
consolidated
financial
statements when
securities reports
have not been
prepared but
consolidated
Part II
Same as financial
One Procedures for
above statements have
Description XI(3)
been prepared).
Periods described
in “Securities
Report for Initial
Listing Application
(“Part I”
documents”) will be
excluded. However,
submission is not
required when
submission is made
electronically (via
EDINET)
Consolidated financial
statements for the last five
Part II
Same as years and in case of
Procedures for
above non-preparation of financial
Description XI(4)
statements, accounts and
attached schedule for the
-311-
business year(copy)
Minutes of the meetings of the Part II

Same as
board of directors for the last One copy Procedures for
above
two years (copy)◆ Description XI(5)
Minutes of board of auditors Part II

Same as (audit committee) meeting for Procedures for
One copy
above the business year ending Description XI(6)
within the latest year (copy)◆
Materials related to the board Vouchers in Procedures for

of the statutory auditors (audit relation to IV.4.c Description XI(7)
Same as
committee) for the recent one One copy
above
year and application year
(copy)◆
Materials related to internal Vouchers in Part II

Same as management for the recent relation to IV.3.d Procedures for
One copy
above one year and application year Description XI(8)
(copy)◆
Corporate tax return and Applicant and Part II

Same as breakdown of the item of subsidiaries to be Procedures for
One copy
above accounts attached thereto for described Description XI(9)
the last two years(copy)◆
Monthly performance Part II

management data for each Procedures for
Same as
month of the fiscal year in One copy Description XI(10)
above
which the listing application is
filed (copy)◆
Annual budget plan and Vouchers in Part II

mid-term management plan relation to flow in Procedures for
and a series of internal data VII 1.(1) and (2) Description XI(11)
Same as
used for the preparation One copy
above
thereof for the fiscal year in
which the listing application is
filed (copy)◆
Same as Contract which is important for One copy Part II
-312-
above management (copy)◆ Procedures for

Description XI(12)
Catalogs and pamphlets for Part II

Same as
products, goods and services, One Procedures for
above
etc.◆ Description XI(13)
Independent director /auditor Part II

Same as
notification(draft)※◆ One Procedures for
above
Description XI(14)
Draft Corporate Governance Part II

Same as
Report※◆ One Procedures for
above
Description XI(15)
Documented materials to
address the descriptions
included in the “Management
Conditions of Timely Part II
Same as
Disclosure Materials, etc.” at One Procedures for
above
Part II, Procedures for Description XI(16)
Description IV 5.(1)d (e.g.,
internal regulations, manuals,
etc.)◆
Work flow ◇ Part II

Same as
One Procedures for
above
Description XI(17)
By listing Written recommendation※◎ Rule 204①(7)a of

One
approval the Rules
Written confirmation regarding

Same as Rule 204 ⑪(1) of
compliance with exchange One
above the Regulations
rules and regulations※
Statement of confirmation
concerning the fairness of the
Same as securities report of initial Rule 204 ⑪(2) of
One
above listing application (part I) and the Regulations
the fairness of quarterly report
for Initial listing application
-313-
Report concerning corporate Submission by

governance※ listing approval
Same as date and Rule 204⑫(1) of the
One
above registration via Regulations
TDnet on the listing
date
Same as Format of listing agreement※ Rule 203① of the

One
above Regulations
Same as Securities report for initial Rule 201①(2) of the

One
above listing application (part I) Rules
Quarterly report for Initial Quarterly Report

listing application during application
year. However,
when such
document has been
already submitted
Same as Rule 210①(3)of the
through the One
above Rules
Electronic
Disclosure for
Investors' NETwork
(EDINET), it is not
required to be
submitted.
Computation document for

Rule 205 (2) b of the
Regulations
Same as Rule 205 (3) of the
One
above Regulations
Rule 205 (6)b of the
Regulations
Articles of incorporation Registration via

Rule 210 ①(1) of
Listing date TDnet on the listing One
the Rules
date
Same as Independent director/auditor Rule 436-2,

One
above notification※ Paragraph 1 of the
-314-
Rules
Formal Requirements for “Amount of net assets” will be met through public offering
By listing Computation document for net Rule 212⑤(12)of the

One
approval assets※ Rules
When financial statements or consolidated financial statements for the year preceding the previous
year have not been included in the Securities Registration Statement and Securities Report and
Rule 212⑥(16) of the Enforcement Rules for the Securities Listing Regulations applies.
Financial statements or Accompanying Rule 204①(4) g of

consolidated financial audit report or the Rules
statements to which statement
accounting standards for the expressing opinion
Listing
previous year of the previous on financial values,
application One
year applied or other etc. of CPAs or Rule 212⑥(16) of
date
documents which TSE deems audit firm the Rules
appropriate as those
equivalent to such statements
◆
When an applicant is a company with committee system
Minutes of each committee Excluding those

and statement concerning concerning routine
decisions of executives (copy) business
At every holding
after the listing
application date
Listing However, when

Rule 206(1) of the
application such document has One each
Rules
date been already
submitted through
the Electronic
Disclosure for
Investors' NETwork
(EDINET), it is not
required to be
submitted.
-315-
Document certifying the

contents of the resolutions at
the board of directors
Same as prescribed by article 416, Rule 204①(27) of
One
above paragraph 4 of companies act the Rules
(matters delegated to
executives for the decisions
on businesses)
-316-
When there is a consolidated subsidiary which has a degree of influence of 20% or more of
influence over the group for the previous year.
Financial statements of the Copy of securities Part II

consolidated subsidiary for the report, if any Procedures for
Listing
last five years (including Description XI(1)
application One copy
consolidated financial
date
statements when it has
prepared them) (copy)
When securities reports, etc. for the recent three years and application year have been amended
(submission of amended registration statement, amended shelf registration statement or amended
report)
A revision notice, registration Excluding amended

statement of issuing revision report attached to
or revision statement (copy) “Section II
Information” of
Listing II Part Attached data
“Securities Report
application One each Procedures for
for Initial Listing (art
date Description Ⅺ(2)
I)”
When accounting for “net assets” is applied when accounting for retirement benefits is adopted.
Document stating the amount

of net assets and the process
Listing
of such calculation when the Rule 705 of the
application One
accounting standards for Regulations
date
◇
When material facts, etc., arise for the purpose of management
Immediately Report on the event Rule 206(2) of the

after One Rules
occurrence
-317-
When an applicant has controlling shareholders
A document describing the When there are

matters relating to a some changes
controlling shareholder, etc.◇ during the
Listing
examination period, Rule 204①(30) of
application One
the statement the Rules
date
should be updated
and then
re-submitted.
When an applicant has a non-listed parent company, etc.
Written statement of Guidelines II 5(4)b

Listing
assurance of parent
application One
company's timely disclosure,
date
etc.
Financial information of When a non-listed

non-listed parent company, parent company,
etc.◇ etc. prepares
quarterly financial
statements and if
Same as financial Rule 204①(28) of
One
above information is the Rules
amended during
the examination
period, it must be
updated and
re-submitted.
When an applicant resolved at the Board of Directors to acquire shares of its treasury stock on or
after the beginning of application year (resolutions prescribed by Article 156, Paragraph 1 of
Companies Act (including cases where Article 165, Paragraph 3 of the same act applies by
rewording) )
Listing Minutes of general In cases of

application shareholders’ meeting or the company with
Rule 204①(5) of the
date or Board of Directors meeting committee system, One copy
Rules
without any concerning the acquisition of including
delay after shares of treasury stock statements
-318-
resolutions (copy) concerning the

decisions of
executives
When a resolution to acquire shares of treasury stock is made on or after the beginning of
business year in which the listing application is filed (resolutions by Article 199, Paragraph 1 of the
Companies Act or resolutions by Article 795, Paragraph 1 of the Companies Act where shares of
treasury stock are delivered in exchange of money, etc. as prescribed by Article 749, Paragraph 1,
Item 2, Article 758, Item 4 or Article 768, Paragraph 1, Item of the Companies Act (where no
resolutions are required by Article 796, Paragraph 1 or Paragraph 3 of the Companies Act,
resolutions of the Board of Directors concerning the merger and acquisition agreement,
acquisition and divesture agreement or stock swap agreement) )
Minutes of general In cases of

Listing shareholders’ meeting or the company with
application Board of Directors meeting committee system,
date or concerning the disposal of including Rule 204①(5) of the
One copy
without any shares of treasury stock statements Rules
delay after (copy) concerning the
resolutions decisions of
executives
When a resolution to retire shares of treasury stock is made on or after the beginning of application
year (resolution by Article 178, Paragraph 2 of Companies Act)
Minutes of the Board of In cases of

Listing Directors meeting concerning company with
application the cancellation of shares of committee system,
date or treasury stock (copy) including Rule 204①(5) of the
One copy
without any statements Rules
delay after concerning the
resolutions decisions of
executives
When an initial listing application is made for stock of a stock corporation formed after
reorganization of mutual company
Notice for convocation of

Date of listing general member meetings or Rule 204①(26) a of
One copy
application general representative the Rules
meetings of the business year
-319-
ended in the most recent year

(copy)
Documentary proof of the

resolution of the general
member meeting or general
representative meeting on
Rule 204①(26) a of
Same as above reorganization from a mutual One copy
the Rules
company to a stock
corporation and the Articles of
Incorporation of the stock
corporation
Document prescribed in
Rule 204①(26) c of
Same as above Article 87, Paragraph 1 of the One copy
the Rules
Insurance Business Act (copy)
When TSE deems that the structure of the corporate group for an initial listing application is
peculiar.
Report describing risk

Without delay
information pertaining to the Rule 204○
12(2) of the
after listing One copy
structure of the corporate Rules
application
group
-320-
Documents to be submitted in relation to third party allotment or grant of stock

options, etc.
Submission
Documents to be submitted Remarks Number Basis
time
When a direct listed company has effected the allotment of offered shares and subscription warrants
through third party allotment (limited to the allotment on or after the following date of one year ago
corresponding to the end of the previous year; excluding subscription warrants granted as stock options)
Listing Written statement of assurance Rule 255①of the

application (concerning continuous Rules
date (if it is on holding) (copy)
or after the
One copy
listing Rule 257 ① of the
application Rules
date, without
any delay)
When a person who received the allotment transfers the allotted shares or subscription warrants
Listing Notification of transfer of newly Rule 255①(2) of the

application acquired stocks thorough Rules
date (if it is on third-party
or after the allotment, etc. and the allotted
One
listing subscription warrants Rule 257①(2) of the
application Rules
date, without
any delay)
When there are subscription warrants to be granted as stock options (limited to those which are
allotted on or after the following date of one year ago corresponding to the end of the previous
year)
Listing Written statement of assurance

application (concerning continuous
date (if it is on holding) (copy)
Rule 259①(2)a of the
or after the One copy
Rules
listing
application
date, without
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any delay)
Minutes of Board of Directors In cases of

meeting concerning the company with
allotment of subscription committee system,
Same as warrants, etc. (copy) including Rule 259①(2)b of the
One copy
above statements Rules
concerning the
decisions of
executives
Document certifying that a

contract not allowing
Same as Rule 259①(2)c of the
Transfer nor restriction on One
above Rules
transfer of such subscription
warrants.
When shares or subscription warrants are delivered associated with the exercise or conversion of
subscription warrants as stock options (limited to those allotted on or after the following date of
one year ago corresponding to the end of the previous year)
► Shares or subscription warrants are delivered before the listing application date
Listing Written statement of assurance

application (concerning continuous One copy
Rules
date holding) (copy)
Minutes of general In cases of

shareholders’ meeting company with
authorizing the allotment of committee system,
Same as subscription warrants and the including Rule 260③(1)of the
One each
above Board of Directors’ meeting statements Rules
authorizing said allotment concerning the
(copy) decisions of
executives
Document certifying the terms

Same as of the contract concerning the Rule 260③(2) of the
One
above allotment of subscription Rules
warrants
► When shares or subscription warrants are delivered associated with the exercise or
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conversion thereof on or after the listing application date
After Written statement of assurance

Rule 260②(2)of the
acquisition of (concerning continuous One copy
Rules
shares holding) (copy)
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Documents to be submitted in relation to public offering and secondary offering,

determination of offering prices, etc.
(However, when any of the documents listed below has been already submitted through the
Electronic Disclosure for Investors' NETwork (EDINET), it is not required to be submitted.)
Submission time Documents to be submitted Remarks Number Basis
When public offering and secondary offering for securities are effected (common to other markets
and directly listed stock)
Without delay Scheduled plan of public

Rule 212①(6)of the
after listing offering or secondary offering One
Rules
application ※◎
Immediately Securities registration Including

after submitting statement and attached amendments
to the documents (copy) Rule 206(3)a of the
Two
Director-General Rules
of Financial
Bureau, etc.
Notice of effectiveness of the

Rule 206(3)b of the
Same as above securities registration One copy
Rules
statement (copy)
Securities notification and Including statement Two Rule 206(3)c of the

Same as above
attached documents (copy) notifying changes copies Rules
By the second Notice of execution of public

business day offering or secondary offering
following the ※◎
end of Rule 212①(6) of the
One
application Rules
period
(excluding a
holiday)
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When book building is made by a non-listed company which effects public offering or secondary
offering in listing
Guidelines of allocation Limited to prime

By listing pertaining to a public offering, trading participants Rule 235② of the
One
approval etc. before which has not Rules
listing◎ submitted
Application form for the Limited to prime

entrustment of administrative trading participants
work related to forming with whom no Rule 236 ② of the
Same as above One
syndicate◎ contract has been Rules
entered into;
forwarded by TSE
Notice of the determination of Press release

Immediately Rule 234 ② of the
offering prices and the One
after decision Rules
reasons, etc.
Guidelines concerning the Rule 242 ② of the

Same as above One
method of book-building◎ Rules
Notice of the tentatively set Press release

price range and the reasons, Rule 243 ② of the
Same as above etc. One
Rules
When a non-trading participant or foreign securities firm enters into prime underwriting agreement
Immediately Contract (copy)

Rule 238 of the
after agreement One copy
Rules
conclusion
When a company is a non-listed company which effects public offering and secondary offering in
listing and effects an auction
Listing List of special interest parties Rule 204①(20)a of

One
application date the Rules
List of subsidiaries and

affiliated companies and list of Rule 204①(20)b of
Same as above One
officers of the the Rules
these companies
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List of employees Rule 204①(20)c of

Same as above One
the Rules
Guidelines of allocation Limited to

By listing pertaining to a public offering, non-submitted Rule 235② of the
One
approval etc. before listing◎ prime trading Rules
participants
Contract for the entrustment

Rule 247① of the
Same as above of administrative work related One
Rules
to competitive bidding◎
Notice of offering price and Press release

Immediately Rule 234② of the
secondary offer price after One
after decision Rules
bidding
Document describing
Same as above calculated comparable price One
Rules
of similar companies
Notice of minimum bid price Press release Rule 246②(4) of the

Same as above One
Rules
Within two Successful bidder registry◎

business days
Rule 251② of the
following the One
Rules
notice date of
bid award
When a company listed on another market which effects public offering and secondary offering in
listing
Computation document for Press release

Immediately
offering price and secondary One -
after decision
offer price
When another exchange listed company effects off-session distribution in listing
Without delay A schedule of distribution with

Rule 212①(6)b(a) of
after listing a quantitative limit※◎ One
the Rules
application
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By two business Table of distribution of stocks,

days following etc. Subsequent to distribution
Rule 212①(6)b(c) of
the distribution with a quantitative limit※◎ One
the Rules
date (excluding
holiday)
When a non-listed company does not effect public offering and secondary offering in
listing
By two days Report for secondary market

One -
before listing reference rate
Materials regarding the

Immediately valuation of domestic stocks, Rule 204①(24) of the
One
after decision etc. pertaining to the initial Rules
listing application※
When a non-listed company does not effect public offering, etc., TSE requests the lead trading
participant to obtain consent, etc. of shareholders for their outsourcing the sales of shares to the
lead trading participant
Confirmation statement of the

By listing number of shares whose
One -
approval selling is agreed to be
outsourced◎
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Other data to be submitted

(However, when any of the documents listed below has been already submitted through the
Electronic Disclosure for Investors' NETwork (EDINET), it is not required to be submitted.)
Submission
Documents to be submitted Remarks Number Basis
time
When an applicant effects or withdraws public offering of securities or shelf registration of sales of
securing during the period between the beginning date of application year and the listing date, or
effects public offering or secondary offering through the shelf registration.
Shelf registration statement, Including Two

Immediately Rule 206(4)a of the
attached document and amendments copies
after effecting Rules
reference document (copy) each
Same as Notice of effectiveness of shelf Rule 206(4)b of the

One copy
above registration (copy) Rules
Shelf registration supplements, Two

Same as Rule 206(4)c of the
attached document and copies
above Rules
reference document (copy) each
Shelf registration prospectus

(including preliminary Two
Same as Rule 206(4)d of the
prospectus) and shelf copies
above Rules
registration supplements each
prospectus (copy)
Same as Registration for withdrawal of Two Rule 206(4)e of the

above shelf-registration (copy) copies Rules
The following documents are filed to the Director-General of Finance Bureau between the
beginning of application year and the listing date.
Immediately Securities report (copy) and Including Two Rule 206(5)a of the
after filing attached document amendments copies Rules
Same as Interim report (copy) Including Two Rule 206(5)b of the

above amendments copies Rules
Same as Quarterly financial Including Two Rule 206(5)c of the

above statements(copy) amendments copies Rules
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Same as Extraordinary report (copy) Including Two Rule 206(5)d of the

Same as Report on purchase of own Including Two Rule 206(5)e of the

above stocks (copy) amendments copies Rules
Same as Tender offer notification (copy) Including Two Rule 206(5)f of the
Written withdrawal
Same as Two Rule 206(5)f of the
thereof(copy) / written
above copies Rules
cancellation thereof
Same as Tender offer notification (copy) Including Two Rule 206(5)f of the
Subject company’s position Including

Same as Two Rule 206(5)g of the
statement pertaining to a amendments
above copies Rules
tender offer(copy)
Report on possession of a Including

large volume of shares and amendments
Same as report of change pertaining to a Two Rule 206(5)h of the
above report on possession of large copies Rules
volume
(copy)
Same as Internal management report Including Two Rule 206(5)i of the

above (copy) amendments copies Rules
When an applicant receives the sending of following documents concerning securities issued by
the applicant
Immediately Tender offer notification (copy) Including

Rule 206(6)a of the
after amendments One copy
Rules
receiving
Written withdrawal
Same as Rule 206(6)a of the
thereof(copy) / written One copy
above Rules
cancellation thereof (copy)
Same as Tender offer notification (copy) Including Rule 206(6)a of the

One copy
above amendments Rules
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Report on possession of a Including respective

large volume of shares and amendments
Same as report of change pertaining to a Rule 206(6)b of the
One copy
above report on possession of large Rules
volume
(copy)
Subject company’s position Including

Same as Rule 206(7) of the
statement pertaining to a amendments One copy
above Rules
tender offer(copy)
When the listing date is after the elapse of three months following the beginning of application year
Quarterly report for initial listing Report relating to

application the first quarter of
Rule 206(9)a of the
Without delay application year, Two
Rules
with quarterly
review attached.
When the listing date is after the elapse of six months following the beginning of application year

application the first and second
quarters of Rule 206(9)a and b of
Without delay Two
application year, the Rules
with quarterly
review attached..
When the listing date is after the elapse of nine months following the beginning of application year

application the first, second
and third quarters of Rule 206(9)a, b and c
Without delay Two
application year, of the Rules
with quarterly
review attached.
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(2) Securities Report for Initial Listing
1) Types of securities reports for initial listing application

As outlined in “List of Documents to be Filed for Initial Listing Application,” the Securities
Report for an Initial Listing Application is made up of Part I documents, Part II documents,
and quarterly reports.
When an applicant submits a Securities Report for Initial Listing Application (Part I
documents and quarterly reports) for initial listing application, TSE will examine whether the
reports accurately describe the corporate profile, lines of business, and financial data in a
manner readily understandable to investors, and whether the reports are prepared properly
in accordance with the Cabinet Office Ordinance Concerning Implementation of Disclosures
for the purpose of listing examination. The Securities Report for Initial Listing Application
(Part I documents and quarterly reports for initial listing application) will be made available
for public inspection after listing approval is granted.
On the other hand, the Securities Report for Initial Listing Application (Part II documents) will
be used to verify the contents described in Part I documents and to gain an understanding of
the lines of business and the status of the internal organizations, etc. of the applicant. They
are not the main materials for the listing examination. Unlike the Part I documents, the Part II
documents are treated as data for the examination and will not be made available for public
inspection after listing.
2) Forms of Securities Reports for Initial Listing Application (Part I documents)

The applicant is required to file the Securities Report for Initial Listing Application (Part I
documents) in the following forms in accordance with the Securities Listing Regulations and
the Enforcement Rules for the Securities Listing Regulations.
A continuous disclosure company filing an application also needs to attach financial
statements, consolidated financial statements, and audit reports (Rule 204, Paragraph 1,
Item 4b-2 of the Rules).
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Paragraph No.
Forms required by relevant provisions of the Cabinet Office Ordinance
of Part I
Concerning Implementation of Disclosures (Note 1)
documents
1. Person who has already submitted securities reports consistently for one year or more as of the
listing application date (Note 2) (Note 3)
Part I From under Item 2-2 (additional information)
Part II From under Item 2-2 (Part 4) (embedded information)
Part III From under Item 2 (Part 4) (special information)
Part IV From under Item 2-4 (Part 4) (information on stock public offering)
2. Person who has listed its stock on another exchange and has already submitted securities
reports consistently for one year or more (Note 2) (Note 3)
Part I From under Item 2-2 (Part 3) (additional information)
Part II From under Item 2-2 (Part 4) (embedded information)
Part III From under Item 2-2 (Part 4) (special information)
3. Person who has listed its stock on another exchange, but has not met the requirements of the
preceding two items (Note 3) (Note 4)
Part I From under Item 2 (Part 2) (company information)
From under Item 3 (Part 2) (information on guarantee company of filing
Part II
company)
Part III From under Item 2 (Part 4) (special information)
4. Person who has not met the requirements of 1. to 3. above (Note 4)
Part I From under Item 2-4 (Part 2) (company information)
From under Item 3 (Part 2) (information on guarantee company of filing
Part II
company)
Part III From under Item 2-4 (Part 3) (special information)
Part IV From under Item 2-4 (Part 4) (information on stock public offering)
Note 1: “Cabinet Office Ordinance on Disclosure of Corporate Affairs, etc.” (MOF Ordinance
No. 5 of 1973)
Note 2: A “Person who has already submitted securities reports consistently for one year or
more” is any person who has not submitted a securities report to TSE for the
previous year but has submitted securities reports to another exchange where the
person’s stock is listed and has made continuous disclosures for one year or more.
Note 3: In the case of any of 1, 2 and 3, it can be shortened to financial statements of tow
business years from five business years in special information as in the case of the
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IPO.
Note 4: When the balance sheet date of the immediately preceding quarterly period as of
the listing application date differs from that as of the listing approval date, drafted
descriptions in Part I documents to be submitted on the listing application date will
be accepted (descriptions of the items will be sufficient).
3) Considerations in preparing Securities Report for Initial Listing Application (Part II

documents)
The Securities Report for Initial Listing Application (Part II documents) must be prepared in
accordance with the “Procedures for Descriptions in the Securities Report for Initial Listing
Application (Part II documents).” Note, however, that for some categories of business, it may
be unsuitable to align the descriptions to the forms required by the Procedures. When this is
so, an applicant may modify the forms at its discretion.
In the meantime, since the examiners will gain an understanding of the lines of business by
reading the Securities Report for Initial Listing Application (Part II documents), the applicant
is encouraged to describe the strengths and weaknesses of the company as thoroughly as
possible to help the examiners carry out their examination smoothly. Thorough descriptions
will give the examiners a detailed understanding of the applicant at an early stage. This will
shorten the time frame required for the examination and improve the overall efficiency of the
examination process.
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Guide to Completing the Securities Report for Initial Listing
Application (Part II)
Introduction
The company applying for initial listing (hereinafter referred to as the “Applicant”)
is required to submit a Securities Report for Initial Listing Application (hereinafter
referred to as “Part II”) as part of the examination materials to assess the line of
business and other relevant matters of the Applicant. Part II should clearly indicate
the necessary matters in an understandable manner that reflects the nature of the
Applicant.
Points to Note when Completing the Report

(1) Part II should be signed by the representative of the Applicant with the corporate seal
affixed to it and should be addressed to the President and CEO of Tokyo Stock
Exchange, Inc. (“TSE”). The Applicant is required to indicate at the beginning of Part II
that the Applicant has indicated all the matters necessary for the application in
relevant documents, in addition to Part II, without any omission and that they are true
and correct in all respects, as well as that if any material breach thereof is found to
exist, the Applicant will not express any objections to any action and penalty imposed
by TSE in relation to the breach.
(2) This Guide has been developed mainly for applicants operating in commercial and
industrial sectors, and those in other sectors will also be recommended to
appropriately complete the Securities Report for Initial Listing Application with
reference to this Guide. If the Applicant has voluntarily applied the IFRS, said
Applicant may be allowed to provide IFRS-compliant information rather than the
information specified in this Guide.
(3) If the Applicant believes that more useful and understandable information about the
nature of the Applicant could be provided by developing any format other than that
specified in this Guide, or if it is impractical to complete Part II in accordance with the
requirements in this Guide, the Applicant may be allowed to apply other formats that
more fairly reflect its substance by stating the fact and the reasons therefor.
(4) If there are any items or time frames that are materially difficult to indicate, though
required in this Guide, the Applicant may omit the descriptions thereof by stating the
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fact and the reasons therefor.

(5) If some items cannot be classified into a relevant operating segment as specified by
the section where classification into an “Operating segment” is required, and when
such classification is difficult, the Applicant may use an optional classification that
would more faithfully depict the nature of the Applicant. The classification for the
purpose of the management accounting is an example thereof. The sum of the totals
for each operating segment does not necessarily have to coincide with the totals
included in the consolidated financial statements (meaning, the totals in the financial
statements in cases where no consolidated financial statements are prepared). If the
Applicant operates only a single line of business, and it is materially difficult to clarify
said business, the Application may contain relevant descriptions without any
classifications.
(6) For items whose descriptions are required in the “Applicant and subsidiaries that must
be Indicated” section, the Applicant is encouraged to indicate them by using voluntary
classifications that more faithfully depict the nature of the Applicant group, provided
however, that these are able to enhance the descriptions of the nature of the Applicant
group.
(7) If the Applicant has conducted a merger and a legally extinguished company is clearly
considered to be a de facto surviving company, unless otherwise specified, the
Applicant is required to make descriptions concerning said de facto surviving
company rather than the legally surviving company and state the fact at the beginning
of this section. In this case, the legally surviving company shall be treated as the
merged company.
(8) When the Applicant and subsidiaries have acquired any major business from other
companies through a company split-up, for the period prior to the acquisition, the
Applicant is required to indicate the business conditions of the split-up company under
the operational divisions of the Applicant.
(9) If the main line business of the Corporate Group of the Applicant has materially
changed from the previous as a result of the Applicant and subsidiaries having
conducted a merger, turned a company into its subsidiary or acquired a business, the
Applicant is required to indicate the business conditions of the merged company,
subsidiaries and the operational divisions acquired prior thereto.
(10) If this Guide requires any specific year to be indicated, the Applicant has to use
regular business years with 6 (six) or more months remaining in this report; provided
that even if the remaining period of a year is shorter than 6 months, the Applicant is
also required to include such irregular year in the description, as appropriate.
(11) For values or amounts recorded in Part II, the Applicant is required to use the units
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indicated in the “Securities Report for Initial Listing Application (Part I),” i.e., in millions
of yen or thousands of yen, when describing those values or amounts.
(12) If some of the items the Applicant must indicate as required by the Guide overlap, the
Applicant may omit said items by stating the fact.
(13) If it becomes necessary to make any changes or additions to the contents indicated
after Part II has been submitted, the Applicant is required to prepare and immediately
submit a document pertaining to such changes or additions as an appendix.
(14) When the Applicant submits a document as an appendix to Part II, the Applicant has
to state that the document is an appendix and record the name of the President and
CEO as in (1) above.
(15) If a company that has filed a listing application within the last 1 (one) year files a new
listing application, the company may submit Part II documents that are amendments
to the contents of or new additions to the Part II documents said company had already
submitted, provided that the TSE deems them to be appropriate.
(16) The Applicant is required to prepare Part II with a table of contents in portrait
orientation on A4-size paper and inserted into a folder or ring binder. To the extent
possible, the contents should be printed on both sides of the paper. The Applicant
may freely decide the paper size of the appendix and attachments and submit them
via electromagnetic media (CD-ROM, etc.) or by postal mail depending on the
volume.
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Definition of Terms
(1) “Company Group” means a “company, its subsidiaries and affiliated companies” as prescribed in
Article 2, Paragraph 1, and Item 27 of the Securities Listing Regulations.
(2) “Corporate Group” means the “corporate group” prescribed in Article 4, Paragraph 1, and Item 1 of the
Regulations of Consolidated Financial Statements.
(3) “Operating segment” means the “operating segment” prescribed in Paragraph 6 of Accounting
Standards for Disclosures about Segments of an Enterprise and Related Information (ASBJ Statement
No.17).
(4) “Business year to which the application date pertains” means the business year that includes the
listing application date.
(5) “Immediately preceding business year” means the business year immediately preceding the business
year that includes the application date.
(6) “Last … year(s)” shall start dating back up to the last day of the immediately preceding business year.
(7) “Total of net assets” means the sum of all net assets in the consolidated balance sheet prepared in
accordance with the requirements of Regulations on Consolidated Financial Statements. “Amount of
net assets” means the amount determined by deducting the values of subscription warrants and
minority interests in the “Net assets” from the total amount determined by adding reserves, etc.,
prescribed in Article 45-2, Paragraph 1 of the Regulations on Consolidated Financial Statements, etc.
to the “Net assets” in a consolidated balance sheet prepared under the same regulations.
(8) “Amount of profit” means to operating profit or operating loss, ordinary income or ordinarily loss,
current net income or loss before income taxes, etc. (current net income or loss before taxes when no
consolidated financial statements are prepared).
(9) “Subsidiaries that must be indicated” means subsidiaries (including companies expected to be turned
into subsidiaries) whose value (prior to the application of consolidation procedures) of either total
assets, net assets, sales and profit in their consolidated financial statements (or financial statements if
no consolidated financial statements are prepared or if preparation of consolidated financial
statements is materially difficult) is 20% or more as a percentage, as determined based on the
following formula, of total assets, net assets, sales and profit in the consolidated financial statements
(or financial statements if no consolidated financial statements are prepared) of the Applicant for the
immediately preceding business year.
Formula
|Value of total assets (net assets, sales or profit) in the consolidated financial statements
of subsidiaries|
× 100(%)
| Value of total assets (net assets, sales or profit) in the consolidated financial statements
of the Applicant|
(10) “Directors” means directors, accounting advisors (including employees of an accounting advisor who
are in charge of accounting advice if the accounting advisor is a corporation), company auditors and
executives (including governor, auditor, and a person who can be regarded as equivalent thereto).
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(11) “Persons equivalent to directors” include executive officers, counselors and advisors.
(12) “Persons related to directors, etc.” means directors and persons equivalent to directors, their spouses
and relatives by blood within the second degree of kinship, or companies (including their subsidiaries,
partnerships not taking the form of companies and other entities equivalent to the partnerships) for
which directors and persons equivalent to directors (including their spouses, relatives by blood within
the second degree of kinship and relatives of spouses) hold the majority of their voting rights.
(13) “Owner” means a directors or person equivalent to a director of the Applicant who holds one third or
more of shares of the Applicant (calculated by including the shares held by spouse or relatives by
blood within the second degree of kinship, relatives of spouses and property preservation firms).
(14) “Parent company, etc.” means the parent company prescribed in Article 2, Paragraph 1, Item 3 of the
Securities Listing Regulations, its affiliated company prescribed in Article 8, Paragraph 17, and Item 4
of the Regulations on Financial Statements and the parent company of the affiliated company.
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I. Reasons for Filing Listing Application

The Applicant is required to concretely indicate the reasons for applying for listing (including
the purpose, advantages and background for choosing the current year for the application)
in consideration of the actual conditions and circumstances of the Company Group.
II. Overview of Company Group
1. History
(1) Background for the establishment of Applicant
The Applicant is required to comprehensively indicate the background for reaching the
decision on their establishment, their goals thereof and establishment date. If there are any
founders or persons related thereto in current management of the Applicant, please also
indicate said details (names, kinship, etc.).
Note: “Establishment” above means the de facto foundation of a company. The Applicant is required to
indicate relevant matters, irrespective of the structural composition of the company, whether it is a
personal company, LLC or limited liability company under the old Companies Act. If the Applicant is not
a company with a system of Board of Directors, it is required to disclose the background, the purpose
and date when it last was a company with a system of Board of Directors in footnotes.
(2) Developments at Company Group

The Applicant is required to indicate the developments of the Company Group, including
the following events after the establishment of the Applicant, in an understandable manner
by using, for example, flow charts or tables that chronically present events, such as merger,
new establishments (acquisitions) or liquidations (sales) of subsidiary and affiliated
company/ies, acquisition or transfer of business, capital alliances, stock swaps, company
split-ups, etc. Note, however, that the Applicant is allowed to omit descriptions of events,
such as a merger, that have had an immaterial impact on the Company Group.
(Sample <1>)
Applicant
Transfer of business, liquidation (date)
Company A Company B
Merger (date) Subsidiary established (date) Company B

Turned into a subsidiary (date)
(Sample <2>)
Company D
Company split-up (date)
Applicant
Note: A vertical flow chart could also be used.
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(3) Merger, company split-up, etc. taking place within the last 5 years
If the Applicant or its consolidated subsidiary (or subsidiary if no consolidated financial
statements are prepared) have carried out any of the acts enumerated in (a) to (e) below
anytime within the last 5 years and such acts have had material effects, the Applicant is
required to provide an overview of the acts as shown in the table below (however, for the
descriptions of a newly established subsidiary or acquired affiliated company in (c) below,
the Applicant is also required to indicate the activities carried out prior to the last 5 years).
Note: With respect to items (a) –(d) below, “material effect” shall mean cases where the percentage of
any of the total assets, net assets, sales or profit equals 10% or more as calculated by using the
formula indicated in “Definition of Terms”(9); and for item (e), cases where the value of shares
acquired (sold) by the other party as a percentage of the value of common shares or net assets,
whichever is larger, is 10% or more or where the number of shares acquired (sold) by the other
party as a percentage of the total number of issued shares outstanding is 5% or more. In these
cases, the value or data for the business year immediately preceding the business year when such
acts were carried out should be used in determining whether it has had a “material effect”. However,
the value for the business year immediately preceding the business year to which the listing
application date pertains should be used for a new establishment (acquisition) of a subsidiary and
affiliated company in case of (c) below.
a Merger
Date of merger
Name of merging company
Name of merged company
Line of businesses of merged
company
Purpose of merger
Merging ratio and its basis
Note: For the date, the Applicant is required to state the year and month. The same shall apply to
(b)-(e) below.
b Company split-up
Date of company split-up
Name of splitting company
Name of established
company or successor
company
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Nature of split-up business

Reason for company split-up
Method of company split-up
Split ratio and its basis
c New establishment (acquisition) or liquidation (sales) of subsidiary and

affiliated company
Date of new establishment,
etc.
Company name
Method of acquisition
(transfer) of shares
Purpose of acquisition
(transfer) of shares
Reason for new establishment
(dissolution) of company
Status of Number of
number of shares
shares held moved
Number of
shares held
after
movement
Acquisition
(transfer)
value
Basis for
acquisition
(transfer)
value)
Notes
i. If a stock swap or stock transfer was made at the time of the new establishment
(acquisition) of a subsidiary and affiliated company, please state the fact in “Method of
acquisition (transfer) of shares”.
ii.The number of shares moved and the number of shares held after movement as a
percentage of the issued shares outstanding should be indicated in “Number of shares

moved” and “Number of shares held after movement.”
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d Acquisition or transfer of business

Date of acquisition (transfer)
Name of company acquiring
(transferring) business
Nature of division acquired
(transferred)
Purpose of acquisition
(transfer)
Acquisition (transfer) value
and settlement method
Basis for Acquisition (transfer)
value
e Capital alliance (settlement of capital alliance)

Date of Capital alliance
(settlement of capital
alliance)
Name of the other party
Method of capital alliance
a l l i a n c e )
Purpose of capital alliance
a l l i a n c e )
Acquisition (sales) value of
shares
Status of Changes in shares
(number of shares acquired
and number of shares sold)
(4) Developments at businesses within Company Group

The Applicant is required to chronically indicate the developments at businesses within
the Company Group up to the listing application date, including any developments and sales
of main products and goods, when provision of main services commenced, whether there’s
been advancement into new businesses (or exits from existing businesses), development of
production and sales systems, changes in main customers and suppliers, etc.
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However, for any matters that have not had any material effect on the management
activities of the Company Group in the last 5 years, the description thereof may be omitted.
(5) Status of takeover bid transactions in the last 5 years and the business year to which
the application date pertains
If the Applicant has offered a takeover bid for the shares of another company during the
business year to which the application date pertains or has carried it in the last 5 years, or a
takeover bid has been offered for the shares of the Applicant during the business year to
which the application date pertains or in the last 5 years, the Applicant is required to state
the fact and the nature thereof (name of takeover bidder, dates, percentages, etc.).
(6) Status of notes and bills dishonored in the last 10 years

If the Applicant or its consolidated subsidiary has met any of the following a – g below in
the last 10 years, the Applicant is required to indicate the relevant matters (date, event, and
conditions thereafter).
a Note or bill dishonored
b Petition for the commencement of company rehabilitation
c Petition for the commencement of civil rehabilitation
d Application for authorization of business restructuring plan under Act on Special
Measures for Reviving Industrial Vitality
e Application for business restructuring plan under Act on Special Measures for
Industrial Revitalization and Innovation
f Petition for conciliation under the Act on Special Conciliation to Facilitate the
Conciliation of Specified Obligations, etc.
g Private liquidation
h Economic assistance from others (forgiveness of debts by creditors, reduction and
forgiveness of interests, or extension of period for repayment or assumption of
liabilities, repayment, and other financial support by a third party)
2．Regarding the Company Group

(1) Management policies, etc.
The Applicant is required to concretely indicate the management policies, business
development policies and roles and responsibilities of each company in the Company
Group.
(2) Lines of business for each segment, etc.

The Applicant is required to briefly indicate the lines of business by operating segment
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and concretely indicate the business development policies of each segment as shown in
the table below. Furthermore, if multiple companies within a single segment carry out
similar business, please clearly state the differences, roles and responsibilities of those
companies.
Name of operating segment

Lines of businesses
Business development policies
(3) Percentage of equity investment in each company in the Company Group and business
relationship
The Applicant is required to indicate the percentage of equity investment by the Applicant
into each company in the Applicant Company Group at the end of the immediately preceding
business year and its business relationship (transaction value and volume at the end of the
immediately preceding business year) by using bird’s eye view chart. If the use of the chart
is impracticable, the Applicant may separate the description of the percentage of equity
investment from that of business relationships.
(Sample)
The Company
40%
Product Purchases 80
(¥1,234 million) Product Maintenance Product Sales

% Product
100
Sales
%
for purchased products (¥789 million)
95%
(¥1,011 million)
(¥56 million)
5
%
Manufacturer Services KK Sales KK
Sales A KK
20
Maintenance of production equipment
%
(¥12million)
Legend: 1. Percentage of equity investment

2. Business relationship
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(4) Lines of business of subsidiaries and affiliated companies, etc.

The Applicant is required to indicate the lines of businesses of subsidiaries and affiliated
companies at the end of the immediately preceding business year as shown in the table
below. If the Applicant plans to newly establish or acquire a company that satisfies the
definition of subsidiary or affiliated company of the Applicant, the Applicant is required to
disclose the timeline, purpose, name of said company and other matters that must be
indicated for existing subsidiaries and affiliated companies of the Applicant in footnotes.
Segment Title of business

Name of company
a Lines of business
b Background for
establishment and equity
investment
c Shareholder structural
organization
d Equity investment by
directors and their
equivalents
e Structural organization of
directors and their
equivalents
Notes i Please indicate the title of operating segment in “Segment” and bundle and indicate those
other than those composing the segment as non-consolidated companies at the end of the
section. In describing non-consolidated companies, please state those to which the equity
method of accounting is applied first, and then others. Please indicate said priority in
parentheses ( ) along with the distinctions. If the Applicant has decided or plans to
change segments or consolidated companies or companies to which the equity method
applies at the end of the immediately preceding business year, please disclose the fact in
these notes.
ii If there is any subsidiary or affiliated company belonging to several segments, please state
the titles of all the segments in “Name of segment.”
iii In “b Background for establishment and equity investment,” please indicate the date of
equity investment and percentage of equity investment. If the equity investments span over
several times in stages, for those equity investments that result in a company becoming a
subsidiary or vice versa or a company becoming an affiliated company or vice versa, the
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Applicant may state the date of equity investment and the percentage of equity investment
only.
iv In “c Composition of Shareholders”, please indicate the number of shares held and the
percentage of equity investment for the 5 largest shareholders. For an Applicant that is a
large shareholder, please indicate the amount in the balance sheet for the immediately
preceding business year in relation to the number of equity investment units. For large
shareholders other than the Applicant at consolidated companies, please indicate the
relationship with the Company Group and the reasons why such large shareholders made
equity investments in them (excluding cases where it would be difficult to identify the
reasons for the equity investments).
v In “d Equity investment by directors and their equivalents”, when any director or person
equivalent to director of the Applicant or the consolidated subsidiary has made equity
investments, please indicate the names of investors, the number and percentage of shares
invested, the names of their companies and positions (excluding shareholders indicated in
column “c” above).
vi In “e Structural organization of directors and their equivalents”, if any director of the
Applicant has concurrently held a position at a subsidiary or affiliated company, please

indicate the position of such director or employee at the Applicant. If any director or
employee who holds a concurrent position is remunerated in the form of compensation or
bonuses, please indicate the amount thereof, and in cases where any director or person
equivalent to director of the subsidiary or affiliated company received any award or penalty
in the last 10 years, please disclose the nature thereof in these notes.
vii If any material changes to the descriptions (for example, change of any director or persons
equivalent thereto) were made, or are expected to be made after the end of the
immediately preceding business year, please disclose the fact in these notes.
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(5) Performance results of subsidiary and affiliated company for the immediately preceding
business year
Please indicate the performance results of subsidiary and affiliated company as shown in
the table below.
Name of company
Applicant
(Location of main office)
Percentage of equity ( ) ( )
investment
Common stock
Number of employees
Balance sheet date
Sales ( ) ( )
Ordinary income ( ) ( )
Current net income ( ) ( )
Total amount of dividends
Dividend payout ratio
Total assets ( ) ( )
Total of net assets ( ) ( )
Sales to Applicant ( ) ( )
(Transaction details)
Purchase from Applicant ( ) ( )
Other income from
Business relationship
Applicant
Other expenditure to
Applicant
Notes i Please indicate the name of Applicant first in “Name of Company”. Following it, please indicate the
names of other companies in the order they were listed in section (4) above. For the financial values
and amounts for the Applicant, please use the values and amounts from the consolidated financial
statements (excluding the total of dividends and dividend payout ratio). (Please use the amounts from
the financial statements if the company prepares no consolidated financial statements)
ii In “Location of main office,” please indicate the name of the prefecture or country name.
iii In “Percentage of equity investment” please indicate the percentage of equity investment by
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aggregating the percentages of subsidiaries, if any, and indicate the percentage of the subsidiary in
parenthesis ( ).
iv For financial value and amount of each company, please indicate the value and amount for the
immediately preceding business year (When a subsidiary or affiliated company prepares consolidated
financial statements, please use the amounts from the consolidated financial statements, excluding
the total amount of dividends and dividend payout ratio.)
v In the box for financial values or amounts of each company, please indicate the value or amount as a
percentage of each value or amount in the consolidated financial statements (or in the financial
statements if consolidated financial statements are not prepared) in parenthesis ( ) in addition to the
amount in “iv” above.
vi In “Total of net assets”, please indicate the total of net assets in the consolidated balance sheet (the
amounts in the balance sheet if subsidiary and affiliated companies do not prepare consolidated
financial statements).
vii In “Business relationship”, please indicate the transaction value immediately followed by the nature
thereof.
viii In “Sales to Applicant”, please indicate the sales to Applicant as a percentage of the purchase amount
(including expenses for contracting-out) of the Applicant in parenthesis ( ); provided that if the sales
to Applicant does not constitute a purchase by the Applicant, no parenthetical description shall be
made to indicate the fact in these notes.
ix In “Purchase from Applicant”, please indicate the purchase from Applicant as a percentage of sales by
the Applicant in parenthesis ( ); provided that if the purchase from Applicant does not relate to the
sales by Applicant, no parenthetical description shall be made to indicate the fact in these notes.
x For foreign subsidiaries and affiliated companies, please convert all values into Japanese yen and
disclose the foreign exchange rate used to compute the balance sheet data in these notes.
xi If any material changes to assets, liabilities or equities were made, or were expected to be made after
the end of the immediately preceding business year for any company indicated, please disclose the
fact and its nature in these notes.
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(6) Status of investment funds

Please indicate the status of the investment fund (anonymous association, specified
purpose entity, non-incorporated association, investment business limited liability
association and any other equivalent/similar thereto under any foreign act; the same shall
apply hereinafter) in which the Applicant and its Company Group has made investments,
lending or with which the Applicant and its Company Group has been involved, as shown in
the table below.
Name
Date of creation
Maturity
Organizational
structure
Manager
Investors and their
percentages of equity
investment
Investment target
Notes i “Investment fund” can mean anonymous association, specified purpose entity,
non-incorporated association, investment business limited liability association and any
other equivalent/similar thereto, under any foreign act (for this box, the same shall apply
hereinafter).
ii In “Investors” please indicate the name, address and representative in the case of a
corporation, and the name and address in the case of individuals (for addresses in the
case of individuals, the smallest division the Applicant needs to indicate is that of the city,
town, municipality, or village).
iii If the Applicant is an investor in an investment fund and the fund has any investment fund,
please provide an overview of the latter investment fund as shown in the table above.
i For any investment fund subject to any foreign act, please indicate the standing proxy in
v Japan (including the address and the name of the representative).
2. Regarding relationship with the parent company, etc.

If any item in (1) – (6) below is met with respect to the parent company, etc., please
indicate the relevant conditions for the immediately preceding business year. In addition, if
there are any material events other than such items that have taken place in the last 5
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years, please indicate those as well.
(1) Conditions of the parent company, etc.

If the Applicant has another company that meets the definition of the parent company,
etc., please indicate the overall conditions of the parent company, etc. (name, time of
investment, percentage of equity investment, distinction as to listing or non-listing,
continuing disclosures, etc.) and the background and reason for having such company.
If any of the items below are met, please indicate the overall conditions and the
background and reason for having such company.
a If the Applicant had a company other than the parent company, etc. that may meet
the definition thereof; or
b If the Applicant had a company that is not a parent company, etc., but has made
15% or more investment as a percentage of the equity investment in the Applicant.
Note: Such company, etc. includes any investment fund. In the case of an investment fund, please
indicate the conditions thereof as shown in the table below.
(Sample for a parent company, etc. that is an investment fund)

Name
Date of creation
Maturity
Organizational
structure
Manager
Investors and their
percentages of equity
investment
Investment target
Notes i “Investment fund” can mean anonymous association, specified purpose entity,
non-incorporated association, investment business limited liability association and any
other equivalent/similar thereto under any foreign act (for this box, the same shall apply
hereinafter).
ii In “Investors” please indicate the name, address and representative in the case of
corporation, and the name and address in the case of individuals (for addresses in the
case of individuals, the smallest division the Applicant needs to indicate is that of the city,
town, municipality, or village).
iii If the Applicant is an investor in an investment fund and the fund has any investment fund,
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please provide an overview of the latter investment fund as shown in the table above.
i For any investment fund subject to any foreign act, please indicate the standing proxy in
v Japan (including the address and the name of the representative).
(2) Company Group where the parent company, etc. plays a main role
Please indicate the roles or responsibilities the Company Group of the Applicant have in
the Company Group where the parent company, etc. plays the prominent role. If any
company in the group where the parent company, etc. plays the prominent role carries out
a business similar to that carried out by a company in the Company Group of the Applicant,
please also indicate the differences between them.
(3) Approval by and advance reporting to the parent company, etc.

If there are any items for which the Applicant or consolidated subsidiary is required to
obtain approval from the parent company, etc. or report in advance, please indicate the
nature thereof.
(4) Conditions of positions concurrently held by directors, etc. of the parent company, etc. or
fellow subsidiary, etc.
When any director or person equivalent thereto of the parent company, etc. or fellow
subsidiary, etc. (referring to the fellow subsidiary, etc. prescribed in Paragraph 13 (3) of the
ASBJ Guidance 13 Related Party Disclosures; the same shall apply hereinafter)
concurrently holds the position in the capacity of director or person equivalent thereto at
the Applicant or consolidated subsidiary (including any secondment), please indicate the
details thereof (company name, positions and name, and position at the parent company,
etc.) and the reasons why such position is concurrently held. In addition, if any director or
person equivalent thereto at the parent company, etc. who concurrently serves as a
director or person equivalent thereto at the Applicant or consolidated subsidiary receives
any remuneration or bonus from the Applicant or consolidated subsidiary, please indicate
the amount thereof.
(5) Conditions of secondment from the parent company, etc. or fellow subsidiary, etc.
If the employees of the Applicant or consolidated subsidiary included any person
seconded from the parent company, etc. or fellow subsidiary, etc. (or any employees
seconded to the Applicant or consolidated subsidiary), please indicate the name of the
company offering the secondment (receiving the secondment), the number of seconded
employees for each of company offering or receiving secondment (with positions indicated
in parenthesis ( ) ) and the purposes and reasons for the secondment.
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(6) Financial guarantee by the parent company, etc.

If the Applicant or consolidated subsidiary has been granted any financial guarantee
(including forward financial guarantee or comfort letter from the parent company, etc.) and
other economic support from the parent company, etc., please indicate the nature thereof
(including amounts and reasons).
III. Overview of Businesses
1. Regarding the industry

Please indicate the matters required in (1) and (2) below for each operating segment.
(1) Trends and future prospectus for the industry

Please indicate the size of the market, market conditions, production results, selling
prices, procurement of raw materials, development of alternative products, recent trend
and future prospectus concerning international competitiveness and technological
innovation. If there are any specific characteristics related to each item that should be
indicated, please do so.
(2) The conditions surrounding competitors

Please indicate the conditions surrounding competitors (names of competitors, their
characteristics (characteristics of the products they handle, characteristics of sales and
marketing strategies, etc.), state of the competition, factors differentiating the Applicant
from other competitors, status of new advancement into the market by others). If there is
any statistical data indicating the ranking and the market share, please provide such data
and the sources thereof.
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2. Regarding line of business

Please indicate the items required in (1) – (10) below for each operating segment.
(1) Characteristics of business

Please indicate the characteristics of businesses in general. If there are competitors,
please include the comparisons. Please indicate any matters that may have material effect
on the performance of business activities, if any.
(2) Characteristics of products, goods, and services

Please indicate the characteristics (use, prices, etc.) of products, goods and services for
each of the main or representative items. Please include comparisons with competitors, if
any.
(3) Development policies of operation facilities and their progress, etc.

a Basic policies for the expansion of business bases
Please indicate the basic policies for the expansion of factories, sales offices, shops, etc.
(policies for identifying areas into which the Company Group has expanded in the past and
expects to expand into in the future, as well as the number of business bases). Please
indicate the basic policy for the expansion of distribution and logistics centers in item “c”
below. Please indicate any major developments and changes in the number of business
bases over the last 5 years for each business base. If the Applicant operates a large
number of business bases, these can be categorized by area rather than by each specific
business base.
b Criteria for the expansion of retail locations

If the Applicant has developed specific criteria (market area, sales floor area, performance
of respective retail locations, etc.) for the expansion or discontinuation of retail locations,
please indicate the details of the criteria and concepts underlying the criteria (relationship
between the market area and sales, relationship between the floor area and sales). These
matters must be indicated even for all types of businesses that expand several retail
locations on an annual basis. If the Applicant has not determined the criteria as the
Company Group’s criteria, please indicate the criteria applied by the Applicant and
subsidiaries that must be indicated.
c Expansion policies for distribution and logistics centers

Please indicate the basic policies for the expansion of distribution and logistics centers.
Please also indicate the characteristics of and other relevant information on delivery
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systems and frequency of delivery of products and goods to and from the Company Group.
(4) Status of research and development, etc.

a Research and development system
Please indicate the concrete status of the research and development system, including
personnel. structure, etc.
b Research and development policies

Please indicate the policies for research and development activities. Please indicate all
aspects (objectives of research, main challenges, research results, research and
development systems, etc.) and changes in research and development expenses for the
last 5 years, as well as the factors that gave rise to such changes, such that investors may
be able to understand how research and development activities for new products and
technologies are conducted.
c Protection of intellectual property

Please indicate the Company Group’s view on the protection of intellectual property and
any internal systems in place to avoid infringement of intellectual properties of other
enterprises.
d Conditions of intellectual property rights

Please concretely indicate which, what kinds of, and whether certain patents have been
obtained or are pending, as well as the expiration dates with respect to patents obtained or
pending and industrial property rights of utility model patents, all of which may have
material effects on the sales.
(5) Statutory regulations, summary of administrative guidance and existence of competent

supervisory ministry and agency, etc.
Please indicate the statutory regulations, summary of administrative guidance and
existence of competent supervisory ministry and agency. In addition thereto, please
indicate any regulations that may have material impact on the industry, if any. Please also
indicate regulations applicable to customers and suppliers, which may have material
impact on the management of the Applicant, if any.
(6) Conditions of permits/authorizations, licenses and registration, etc.

Please indicate any permits or authorizations, licenses, registration, administrative
guidance, and other items of similar effects thereto as shown in the table below. Please
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indicate the status of acquisition or application with respect to relevant ISO, ISMS or
privacy marks. Note, however, that you may omit any items that do not have a material
effect on the Applicant’s management activities.
[Segment]
Date of acquisition
Title of permit or
authorization, etc.
Governing authority,
etc.
Description
Valid through
Conditions
constituting breach of
laws and regulations
and main events
deeming revocation
(7) Status about material contracts, etc. for the purpose of management
Please indicate the following as shown in the table below; lease of all or part of main
operations or delegation of the management to other entities, profit sharing agreements
with other entities for operating profit and loss, technological or marketing arrangements
and other agreements, which have material effect on the management results, income, or
financial position.
[Segment]
Date of conclusion
Title
Counterparty
Summary of contracts
Note In the section “Summary of contracts” please also indicate the period, consideration (rate or
value), etc.
(8) Conditions of purchases

a Market trends for major raw materials, etc. in the last 3 years
Please indicate the changes in, market trends and characteristics of market conditions,
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etc. with the market divided into two categories: raw materials and products. For changes
in the market conditions, please also refer to movements in purchase price changes over
the last 3 years.
b Method, etc. for selecting suppliers

Please indicate the following items pertaining to the purchase of major raw materials and
products. If the Corporate Group has established any purchase requirements, please
indicate those requirements; and if not, please indicate the requirements applied by the
Applicant and subsidiaries that must be indicated.
(a) Selection method of suppliers
(b) Method to determine the terms and conditions of purchase (unit price, volume,
settlement conditions, etc.)
(c) Appropriate level and management method of inventories
(d) Management method of quality control and delivery time, etc.
(e) Specific efforts to reduce purchase costs (or stabilize purchase costs), if any (for the
last 3 years and as scheduled in the future)
c Purchase flow, etc.

For the purchase of major raw materials and products, please illustrate the flow of
purchases thereof by using relevant charts, and include the purchase cost for each
flow-type (incoming and outgoing) as a percentage of the total purchase costs (actual
percentage for the immediately preceding year). If there are any special conventions for
any flow-type or item, or if there are any special reasons attributable to the flow, please
indicate those details in footnotes.
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d Major suppliers in the last 3 years

For major suppliers (top 5 for the immediately preceding year), please indicate the actual
results of the suppliers for the last 3 years as shown in the tables below. If there are
material changes in purchase volumes and values (commencement of transaction,
expansion, reduction or settlement, etc.), please disclose the reasons therefor in footnotes.
[Segment]
(a) Suppliers
Number
Lines of Name of Common of Items to be
Name Location
business representative stock employe purchased
es
Number of other
suppliers
(b) Transaction value

Outstanding balances
Value of purchase
payable
Name
Period Period Period
Period % Period % Period %
Number of other
suppliers:
Total 100 100 100
(c) Terms and conditions of settlement

Outstanding balances of
Terms and conditions of settlement
notes and bills payable
Name Liquidation Sight of Remarks
Closing Payment
of notes note or Period Period Period
date date
into cash bill
Number of other
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suppliers
Total
Notes i For other suppliers and terms and conditions of settlement, please indicate the averages or general
terms and conditions in “Total”.
ii For suppliers whose sales to the Applicant account for the majority of total sales of the Applicant,
please indicate the ratio of dependence on the supplier in “Remarks”.
iii If a supplier has a parent company or affiliated company, please state the fact in “Remarks.”
iv If it is possible to indicate the purchase volume, please add a “Purchase volume” field next “Purchase
value” for this purpose.
v An approximation can be used for the number of other suppliers if the exact number is difficult to
ascertain.
e Changes in suppliers in the last 3 years and the business year to which the
application date pertains
If the Applicant has changed major suppliers or the terms and conditions of settlement,
please indicate said fact, details and the reasons therefor.
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f Conditions of major raw materials, etc. in the last 3 years

Please indicate the status of actual purchases of major raw materials and products for
each of the last 3 years in as shown in the table below. If there are any changes therein,
please indicate the reasons therefor.
[Segment]
Period
Period
Opening
Purchase Use (sales) volume Closing balance
balance
Item
Amount Amount Amount % Amount
Materials
Others
Sub-total 100
Products
Others
Sub-total 100
Total
Period Period
Item Amount Amount % Amount
Materials
Others
Sub-total 100
Products
Others
Sub-total 100
Total
Period Period
Item Amount Amount % Amount
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Materials
Others
Sub-total 100
Products
Others
Sub-total 100
Total
Notes i Please indicate any major raw material and product items.
ii If it is possible to indicate the volume, please add a “Volume” field next “Amount” for this purpose
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(9) Conditions of production

a Matters concerning production
Please indicate the following matters in regard to production. If production is particularly
different from that of competitors, please also indicate any unique characteristics thereof.
(1) Characteristics of production in general (production system (personnel, production
capacity, etc.) and whether these are based on already received orders or
projections, etc.
(2) Manufacturing flow chart of major products
Note i Be specific in indicating any processes that involve outsourcing.
ii Please disclose the time required for production in footnotes.
(3) Main characteristics of manufacturing technologies

(4) Development method of production plan and method for managing progress
(5) Indicate concrete details of measures for streamlining production, if any (actual
measures implemented within the last 3 years and future plans).
(6) Cost accounting method used, the reasons therefor and accounts chart
b Actual values of orders received and production for the last 3 years
Please indicate the actual results of orders received (in case of production based on
orders received) and production for each of the last 3 years as shown in the table below. If
there have been any material changes, please disclose the reasons therefor in footnotes.
[Segment]
(a) Changes in the results of orders received
Period
Period Opening balanced of Volume of orders Outstanding balance of
orders received received orders received
Item
Amount Amount Amount
% %
Other
Total 100 100
Period Period
Period
Volume of Outstanding Volume of Outstanding
orders balance of orders orders balance of orders
Item
received received received received
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Amount Amount Amount Amount

% %
Other
Total 100 100
Notes i Pease indicate major items in “Item”
ii If it is possible to indicate the volume, please add a “Volume” field next “Amount” for this purpose
(b) Changes in the actual production results

Period Period Period Period
Utilizatio Utilizatio Utilizatio
Amount Amount Amount
Item % n (%) % n (%) % n (%)
Other
Total 100 100 100
Notes i Pease indicate major items in “Item”
ii Please disclose the method for calculating the utilization ratio in these notes. If it is impracticable to
calculate the utilization ratio, said ratio can be omitted.
iii If it is possible to indicate the volume, please add a “Volume” field next “Amount” for this purpose
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c Matters in relation to outsourced production

If the applicant carries out any outsourced production, please indicate the following items.
If the Corporate Group has established any requirements for the outsourced production,
please indicate said requirements; otherwise, please indicate the requirements applied by
the Applicant and subsidiaries that must be indicated.
(a) Basic outsourcing policies
(b) Selection method of outsourcee
(c) Method for determining transaction terms with outsourcee (unit price, terms and
conditions of settlement, whether items are supplied for a fee or free)
(d) Method for managing outsourcee (quality, time of delivery, etc.)
(e) Details of any other considerations (specific measures to reduce costs, etc.)
when outsourcing production, if any
d Major outsourcees in the last 3 years

If the Applicant carries out any outsourced production, please indicate the past
performance of major outsourcees (top five companies for the immediately preceding
business year) for the last 3 years as shown in the table below, listing specific pricing for
outsourcees that provide raw materials for a fee in (a) and (b) and relevant details for those
who provide said materials free of charge in (c) and (d). If there have been any material
changes in the figures, please disclose the reasons therefor in footnotes.
[Segment]
(a) Information on for-a-fee outsourcees
Number
Name of Outsourced
Name of Lines of Commo of
Location representativ item and
outsourcee businesses n stock employe
e process
es
Number of other
outsourcees
(b) Transaction value (for-a-fee outsourcees)

Value of supply Value of receipt
Name of
Remarks
outsourcee Period Period Period Period Period Period
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Number of other
outsourcees
Total
Notes i Under “Outsourced item and process,” please indicate the name of outsourced process in parenthesis
( ) next to the name of the outsourced item.
ii If outsourcees include the parent company and its related company, please disclose the fact in
iii “Remarks.”
iv For “Number of other outsourcees,” an approximation would suffice if it is difficult to determine the exact
number.
For “Value of supply” and “Value of receipt,” please indicate a monetary value.
(c) Information on free-of-charge outsourcees

Number
Outsourced
Name of Lines of Name of Commo of
Location item and
outsourcee businesses representative n stock employee
process t
s
Number of other
outsourcees
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(d) Transaction value (free-of-charge outsourcees)

Value of work outsourced
Name of
Remarks
outsourcee
Number of other
outsourcees
Total 100 100 100
Notes i Under “Outsourced item and process,” please indicate the name of outsourced process in
parenthesis ( ) next to the name of the outsourced item.
ii For any outsourcee whose sales account for the majority of the sales of the Applicant for the
immediately preceding year, please indicate the percentage (%) of dependence on the Applicant in
iii “Remarks.”
If outsourcees include the parent company and its related company, please disclose the fact in
“Remarks.”
iv For “Number of other outsourcees,” an approximation would suffice if it is difficult to determine the
exact number.
(10) Conditions of sales

a Market trends for major products, goods and services
Please indicate the market trends for, characteristics of and changes in market conditions
for major products, goods and services; provided, however, that if the market trends, etc. are
similar to the industry trends indicated in 1.(1) , the Applicant can omit said market trend
information by indicating the fact. If sales are subject to seasonal changes, please indicate
the concrete nature of said changes. Please also refer to changes in selling prices for the
last 3 years within the context of changes in market conditions.
b Matters in relation to sales

Please indicate the following matters regarding sales. If the Corporate Group has
established any sales requirements, please indicate said requirements; otherwise, please
indicate the requirements applied by the Applicant and subsidiaries that must be indicated.
(a) Details of specific measures applied to increase sales (marketing system, system
to develop the customer base, increases in transaction volume, etc.), if any
(b) Method for deciding the terms and conditions of sales (selling price, settlement
terms, etc.)
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(c) Method for managing receivables (including new accounts)

(d) Appropriate levels and management methods for inventories
c Sales flow, etc.

For major products, goods and services, please illustrate the flow sales thereof by using
relevant chart, and include total sales for each flow-type (actual results for the immediately
preceding business year). If the Applicant exports, products, goods, or services, please
illustrate the relevant flow of exports. If there are any special conventions for any flow-type
or item, or if there are any special reasons attributable to the flow, please indicate those
details in footnotes.
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d Major customers in the last 3 years

For major customers (approximately the top 5 for the immediately preceding business
year), please indicate the actual sales thereto for the last 3 years in the tables below. If
there are any material changes in sales volume and values, please disclose the reasons
therefor in footnotes.
[Segment]
(a) Information about customers
Name of
Name of Lines of Commo Number of
Location representativ Sales item
customer businesses n stock employees
e
Number of other
customers
(b) Transaction value

Outstanding balance of
Sales value
receivables
Name of customer
Number of other
customers
Total 100 100 100
(c) Terms and conditions of settlement

Outstanding balance of
Terms and conditions of settlement
notes receivable
Ratio of
Name of customer Remarks
Closing Payment notes and Site of
date date bills to note or bill
cash
Number of other
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customer
Total
Notes i For other customers and the terms and conditions of settlement, please indicate the averages or general
terms and conditions in “Total”.
ii If a customer has a parent company or affiliated company, please state the fact in “Remarks”.
iii If it is possible to indicate the sales volume, please add a “Sales volume” field next to “Sales value” for this
purpose.
e Changes in customers in the last 3 years and the business year to which the
If the Applicant has changed major customers or the terms and conditions of settlement in
the last 3 years and the business year to which the application date pertains, please indicate
said fact and the reasons therefor.
f Actual sales by area in the last 3 years

Please indicate the actual sales by area in the last 3 years. If there are any material
changes, please indicate the reasons therefor.
[Segment]
Area Amount % Amount % Amount %
Domestic
Sub-total
Overseas
Sub-total
Total 100 100 100
Note If there are any material differences between areas in the context of sales method or strategies, please indicate
said differences.
g Actual sales by industry category

Please indicate the actual sales by industry category for the last 3 years as shown in the
table below. If there are any material changes, please disclose the reasons therefor in
footnotes. If classifying sales by industry category does not seem to be useful, you may
indicate actual sales by lines of business.
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[Segment]
Category Amount % Amount % Amount %
Total 100 100 100
h Status of problems and complaints, etc. in the last 3 business years and the year to
which the application date pertains
Please indicate the method for identifying and addressing customer-related problems and
complaints, etc. (“customer-related” encompasses customers, consumers and other
relevant persons). Please categorize the status of occurrences and settlements of the
aforementioned problems and complaints (including recalls and recovery of products, etc.)
based on problem/complaint type for the last 3 years and also indicate the number of
occurrences for each classification.
IV. Regarding Management Systems, etc.
1. Regarding organizational structure

(1) Organizational chart
Please indicate the names of departments and divisions, the positions, titles, names and
number of head personnel for each department or division in the organization of the
Applicant by using a chart (organizational chart), etc. For those who concurrently hold two or
more positions, please indicate so in a manner that makes it easy to identify the status of
their concurrent roles.
(2) Organizational reshuffling in the last 3 years and the business year to which the
If any organizational reshuffling (organizational reform) has been implemented in the last
3 years and the business year to which the application date pertains, please indicate details
and the purpose thereof.
2. Corporate governance, etc.

(1) Management method of subsidiaries and affiliated companies of the Applicant
a Basic policies
Please indicate the basic policies for management involvement in subsidiaries and
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affiliated companies of the Applicant and their return on profits.
b Department charged with the corporate governance, items to be managed and

management method
If there are any items to be managed and require the approval of the Applicant or that
must be reported thereto, please indicate said fact. If any meeting is held in the Company
Group to discuss management methods, please indicate the name of the meeting and
contents of the discussion.
3. Regarding internal audit

a Basic policies for internal audit of the Company Group
Please indicate the basic policies for internal auditing in consideration of the purpose and
expected effect of the implementation of internal audit tasks.
b Department or division in charge of internal audit tasks at the Applicant and its
subsidiaries, and size of personnel engaged in the internal audit
If the department or division in charge of internal audit tasks is also responsible for other
tasks, please indicate which department carries out the internal audit of said other tasks
and the size of personnel engaged in the auditing.
c Details of internal audit at the Applicant and its subsidiaries

Please indicate the scope of internal audit, details of items subject to auditing, and the
rotation of internal audit functions, etc.
d Procedures for the internal audit at the Applicant

Please indicate a series of procedures from the development of an internal audit plan,
implementation, report to improvements, etc.
e Status of implementation of internal audit at the Applicant for the immediately

preceding business year
Please indicate audit policies, items subject to audit, the schedule, audited departments
and divisions, status of improvements, etc.
f Internal audit plan at the Applicant for the business year to which the application date
pertains.
Please indicate audit policies, items subject to audit, the schedule, audited departments
and divisions.
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g Status of implementation of special audits

If there are any special audits other than those carried out on a regular basis internal
audit, please indicate the details of such audits (positioning in the context of the overall
internal audit scheme, expected audited events and incidents, etc.). If there are any
incidents for which such special audits have been carried in the last 3 years, please also
indicate them in footnotes.
4. Audits by company auditors

a Segregation of duties for company auditors of the Applicant and its subsidiaries, and
the secretariat for (the board of) auditors.
A company with a committee system is required to indicate the items subject to audit by
replacing the audits of the relevant committee with the audits of the Committee of Company
Auditors.
b Details of the audits by company auditors at the Applicant and its subsidiary
Please indicate the audited items, audit procedures, etc.
c Audit process by company auditors at the Applicant

Please indicate a series of procedures from the development of the internal audit plan,
implementation to the report.
d Conditions of the implementation of audits by company auditors at the Applicant for

the immediately preceding business year.
Please indicate audit policies, audited items, the schedule, audited departments and
divisions, audit method, audit results, etc.
5. Timely disclosure system

(1) Development and implementation conditions of timely disclosure system
a Efforts to develop and improve timely disclosure system
Please indicate the basic policies for timely disclosure and efforts to develop and improve
the timely disclosure system (conditions of development of organization to collect
information and education and training system for timely disclosure). Please indicate the
methods for granting fair and easy access of information to shareholders.
b Conditions of the organization in charge of timely disclosure (the name of

department/division and size of personnel engaged in timely disclosure tasks)
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Please indicate the conditions at the department in charge of timely disclosure (such as
personnel size) and the person in charge of handling information after listing.
c Timely disclosure process

Please indicate the work flow for timely disclosure tasks in an understandable manner by
using a chart. Be sure to indicate the specific procedures for collecting, analyzing and
publishing each type of information, meaning information on decision-making or events and
closed accounts. If the Applicant has any subsidiary or unlisted parent company, etc., please
indicate the timely disclosure procedures applied to the Corporate Group.
d Management conditions of data, etc. pertaining to timely disclosures

Please indicate the measures in place to prevent any person outside the Applicant from
having access to timely disclosure data pertaining to company information after listing or
press releases with similar contents thereto before the expected time of publication of such
data and information (including any system-wide security measures). Please also indicate
the measures taken to thoroughly disseminate information on such measures internally
(including any documents specifying such measures).
(2) Policies for disclosures on expected performance results

Please indicate the basic policies for the disclosure of performance results (types of
values disclosed, consistency with the profit plan, etc.). Please also indicate the method for
identifying discrepancies between actual and expected performance results and the criteria
for assessing whether any revisions to expected performance results are be necessary.
(3) The earnings announcement date after listing and details of efforts to earnings
announcement at an early date
For listed companies, please indicate dates of earnings announcement after listing (in the
last 3 years), and an expected date of earnings announcement for the business year to
which the listing application date pertains (including the publication dates for quarterly and
mid-year earnings announcement), and the details of efforts to earnings announcement. For
unlisted companies, please indicate an expected date of earnings announcement for the
business year to which the listing application date pertains.
(4) Any actions taken in regard to timely disclosure in the last 3 years and the business year
to which the application date pertains
For listed companies, please indicate what actions were taken (including the time and
reasons therefor) by a financial instruments exchange in regard to timely disclosures in the
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last 3 years and the business year to which the application date pertains (including demands
for reports on improvements, etc.) .
6. Regarding securities reports drafting and handling system, etc

(1) Securities report drafting and handling system
Please indicate a series of the work flow process from the preparation through to
confirmation of a securities report and submission by using a chart, etc. in an
understandable manner. If any portion of the drafting or handling tasks for securities reports
is outsourced, please indicate the pertinent details and an overview of the outsourcee.
(2) Conditions of amendments to securities report, etc. in the last 3 years and the business
year to which the application date pertains
If the applicant has prepared securities reports (including securities registration
statements, shelf-registration statements and shelf registration supplements and any
appendixes to or reference documents for said statements, mid-year reports, quarterly
reports and prospectus) and has made some amendments (submission of amended
registration statements, amended shelf-registration statements or amended reports), please
indicate the specific contents of the amendments (date of amendment, amended securities
reports, contents of amendments, background for the identification of items to be amended,
any resulting actions taken in relation to the amendments (demands for payment of
penalties, recommendations, etc.) ).
7. Regarding management system for insider information and preventive measures against
insider trading
(1) Management of material facts, etc. and measures to prevent directors/employees
engaging in insider trading
Please indicate, in detail, the management system of “material facts relating to business”
etc. as prescribed in Article 166, Paragraph 1 of the Financial Instruments Exchange Act
and the measures in place to prevent any director or employee from the engaging in insider
trading (if there is a prohibition term for transactions, please provide an overview of the
system). Please also indicate the status of any seminars and training sessions that have
been held to prevent insider trading in the last one year and the business year to which the
application date pertains.
(2) Status of trading of the Applicant’s shares by directors and those equivalent thereto in
the last 2 years and the business year to which the application date pertains
For listed companies, please indicate the status of trading of the Applicant’s shares by
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directors and those equivalent thereto in the last 2 years and the business year to which the
application date pertains (trading dates, whether they were buying or selling, the number of
shares traded, and prices).
(3) Received heads-ups due to the trading of the Applicant’s shares in the last 3 years and
the business year to which the application date pertains
For listed companies, please indicate the details of heads-ups received from financial
instruments exchanges (including the time and details of regulatory guidance or instruction)
on the trading of the Applicant’s shares in the last 3 years and the business year to which
the application date pertains (including any buy backs of its down shares by the Applicant).
8. Regarding risk management and compliance systems

(1) Risk management and compliance systems
Please indicate the current systems and improvements to risk management and
compliance systems, including information security and personal information protection
policies.
(2) Conditions of violations of laws and regulations in the last 3 years and the business year
to which the application date pertains
Please indicate the details of violations of laws and regulations in the last 3 years and the
business year to which the application date pertains and future measures to address said
violations (the information indicated in IV, 5(3), IV. 10 (7) and VI. 8 can be omitted if indicated
in this section).
(3) Conditions, etc. of development and improvement of system to preclude any anti-social
forces
Please indicate the existence/nonexistence of relationships with any anti-social forces,
basic policies for avoiding such relationships, status of development and improvement of for
systems and specific measures to preclude any anti-social forces (including policies and
criteria for assessing anti-social forces, methods for assessing any anti-social forces
associated with new and existing customers and suppliers, and methods for assessing any
anti-social forces associated with shareholders, directors, and employees).
9. Regarding directors and persons equivalent to directors

(1) Officers and persons equivalent to directors in the last 3 years and the business year to
which the application date pertains
Please indicate the names (with hurigana) and background (date of birth, final education,
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all the career histories before joining the Applicant company, prior and current positions at
the Applicant company, awards and penalties incurred in the last 10 years) of the directors
and persons equivalent thereto in the last 3 years (5 years in the case of the representative
director) and the business year to which the application date pertains. Please also indicate
the following:
- Where a director or person equivalent to a director has joined the Applicant from
another company or organization, etc., the specific background and reasons for the
joining;
- Where a director or person equivalent to a director concurrently holds any position at
another company or organization, etc., the name of said other company and roles at
the other company (concrete details of position, including whether it is a full-time or
part-time position if the director or person holds the position of director at said other
company; and in case of a full-time director the background and reasons for holding a
concurrent position); or
- Where a director or person has retired, the date of retirement, background and reason
for the retirement; provided that since the person retired and it can be difficult to
indicate these items, the Applicant can omit this information by stating the reasons
therefor.
(2) Status of Board of Directors meetings in the last 2 years and the business year to which
Please indicate the status of any Board of Directors meetings held in the last 2 years and
the business year to which the application date pertains as shown in the table below. If the
Applicant has omitted any resolution, for example, by written or electromagnetic means at a
Board of Directors meeting or plans to do so going forward, please indicate the policies and
reasons therefor.
Date of Date of Attendance of

Action items and issues reported
meeting disclosure directors
Note i For existing listed companies, please indicate any resolutions that meet the requirements for “Material
facts concerning business, etc.” specified in Article 166, Paragraph 1 of the Financial Instruments
Exchange Act.
ii Please indicate the fact if the Applicant has made any resolution by written or electronic means.
iii For existing listed companies, please indicate the date of disclosure for the items indicated in “Action
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items and issues reported” in “Date of disclosure.”

iv In “Attendance”, please indicate which directors were in attendance or absent.
(3) Regarding Independent Directors/Auditors

Please indicate the policies in regard to the composition of Independent
Directors/Auditors (number of Independent Directors/Auditors and whether they are
directors or auditors, etc.). Also indicate what concrete plans are in place for appointing an
Independent Director/Auditor who is a director if no Independent Directors/Auditors have
currently been appointed. Indicate the means that allow Independent Directors/Auditors to
exert their expected roles (i.e.: outlets for sharing information with Independent
Directors/Auditors, etc.). Please indicate the policies as to how information about
Independent Directors/Auditors and the independence of Outside Directors/Auditors is
indicated in the convocation notice of the general meeting of shareholders.
(4) Spouses and relatives by blood within second degree of kinship and relatives of a
spouse
If any director or person equivalent thereto is the spouse of or is related by blood within
second degree of kinship or is the relative of a spouse of another director or person
equivalent thereto, a large shareholder (approximately the top 15 shareholders) or an
employee, please indicate the name of the director or person equivalent thereto and their
relationship.
(5) Lines of business of company for which a director or person equivalent thereto
substantially holds the majority of voting rights
Please indicate the lines of business of the company (including its subsidiary) for which a
director or person equivalent thereto (including the spouse and relative by blood within the
second degree of kinship) substantially holds the majority of voting rights as shown in the
table below.
Name of director and the like Name of director and the like
Item
Company name Company name Company name Company name
a Composition
of shareholders
b Lines of
business
c Location
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d Composition
of directors
e Number of
employees
f Balance sheet
date
g Total assets
h Sales
i Ordinary
income
j Net income
Not i In “Composition of shareholders,” please indicate the number of shares held, percentage of equity
e investment, and any relationship with the director and person equivalent thereto for the top 5 largest
shareholders.
ii Please use and indicate the financial amounts for the immediately preceding year for the financial data
of each company (please indicate the financial data if the company prepares consolidated financial
statements).
iii If any material changes in the contents indicated at the end of the immediately preceding year have
taken place or are expected to take place, please disclose the contents in these notes.
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(6) Conditions of the company, etc. in which the owner has interests
Please indicate the lines of business, etc. of the company for which the owner has
substantially invested in equity, made loans, or assumed the office of director (including its
subsidiary) as shown in the table below.
Name of owner Name of owner

Item Name of company, Name of Name of Name of
etc. company, etc. company, etc. company, etc.
a
Composition
of
shareholders
b Lines of
business
c Location
d
Composition
of director
e Level of
involvement
f Business
relationship,
etc.
Note i The applicant can omit information for the Applicant, affiliated company and companies indicated in 9.
(5).
ii Please only indicate companies whose equity investment is 5% or more as a percentage of the total
number of issued shares outstanding.
iii In “Composition of shareholders,” please indicate the number of shares held, percentage of equity
investment, and any relationship with the owner for the top 5 largest shareholders.
iv In “Level of involvement,” please provide specific level of the involvement such as the status of equity
investment, loans and assumption of position for the director.
v In “Business relationship, etc.,” please indicate any business relationship, financial relationship, or
personal relationship between the company and the Company Group or director and person
equivalent thereto of the Company Group of the Applicant, if any.
vi If any material changes in the contents indicated at the end of the immediately preceding year have
taken place or are expected to take place, please disclose the contents in these notes.
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vii If it is difficult to indicate the information in Part II, the Applicant can alternatively submit an appendix
by stating the fact.
(7) Details of management contract

If the Applicant or its subsidiary has individually entered into a management contract
(such as contracts concerning success fees) with related parties such as directors, etc. of its
subsidiary and the Applicant, please indicate the details thereof.
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10. Status of Employees

(1) Human resources policies at the Company Group
Please indicate the policies for human resources of the Applicant and its Company Group
from the perspective of recruitment policy and specific recruitment methods, education and
training of personnel, and assignments.
Note: Please indicate any matters specifically highlighted in the context of the use of dispatched
personnel and adoption of performance-based wages, if any.
(2) Conditions of personnel changes of the Corporate Group in the last 3 years
Please indicate personnel changes by operating segment of the Corporate Group in the
last 3 years as shown in the table below.
No.at the No.at the Total at term

In Out Moved In Out Moved In Out Moved
end end end
Admin
Segment
Sales
Technical
Operation
Total
s
Admin
Sales
Segment
Technical
Operation
Total
…
Admin
Sales
Technical
Total
Operation
Total
Note i The Applicant may modify the format for work function categories to reflect the nature of the
company.
ii If there is any distinction between career-track and non-career track positions, please indicate these
distinctions under each work function category.
iii If there have been any material changes in the number of employees due to regular recruitment and
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other factors, please disclose said increases or decreases in the number of employees (including
the breakdown thereof for each work function category) in these notes.
iv Please collectively disclose the reasons (e.g., reached retirement age, voluntarily quit, etc.) for
leaving the position for those who have left their posts in the last 3 years in these notes.
v Please individually disclose the reasons for leaving the position for each person who left a
management post in the last 3 years.
vi For those personnel whose positions that are difficult to classify into a relevant segment, please
provide any information necessary to distinguish them from other segments, for example, by
specifying a particular segment name, such as “department associated with all
departments/divisions”.
vii If the number of employees at the end of period includes the number of seconded persons from and
to other companies, please indicate the number thereof in parenthesis ( ) in “Total at term end”.
However, if it is difficult to indicate these totals under each segment or work function category, it
would suffice to only indicate a figure in parenthesis ( ) next to the figure in “Total”
viii If the number of dispatched personnel accounts for a material portion of the total number of
employees, please enclose this figure in parenthesis ( ) next to the main total for that section.
ix If it is difficult to indicate totals for “In” “Out” and “Moved”, the Applicant can omit these by disclosing
the fact and reasons in these notes.
x If it is difficult to indicate personnel changes at the Corporate Group for the last 3 years for each
operating segment, the Applicant can indicate these changes for each company that comprises the
Corporate Group (the Applicant and its subsidiary). In this case, for any subsidiary whose number of
employees is below 10% as a percentage of the total number of employees of the Corporate Group
at the end of the immediately preceding year, the Applicant can omit figures for each work function
category and simply indicate the total number of personnel that was moved.
(3) Status of seconded employees

If any of the employees at the Corporate group are seconded employees or dispatched
personnel (including cases where the company carrying out the secondment (or dispatch) is
part of the Corporate Group), please indicate the number of seconded employees received
(respective number for each position), the name of the company offering the secondment (or
dispatching employees), the purpose and reasons for the secondment (or dispatch). (The
applicant can omit this information in II. 3.(5)).
(4) Personnel plan for the next two years

Please indicate the personnel plan for the next two years for each of the operating
segments of the Corporate Group.
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(5) Methods for managing overtime work and work on days off and status of
labor-management agreements
Please indicate the methods for managing overtime work and work on days off (including
worktime record-keeping procedures, whether manager/supervisor approval is required and
how the human resources department handles these matters) and the status of
labor-management agreements (including the provisions of said agreements).
(6) Status of overtime work

If there are any employees who have breached the provisions of Article 36 of Labor Law
(indicate relevant provisions if the employer and employee have entered into any special
agreements) in the context of overtime works for the 6 months prior to the month
immediately preceding the month to which the listing application date pertains, please
indicate the status of overtime works for such employees.
(7) Status of investigations by a labor standards office for the last 3 years and the business
year to which the application date pertains.
Please indicate the status of investigations by the labor standards office concerned with
the Corporate Group for the last 3 years and the business year to which the application date
pertains (date of investigation, details of investigation and existence of guidance or
recommendations on corrective measures, etc.). (If the Applicant finds it difficult to indicate
said information for any company in the Corporate Group, the Applicant can omit this
information by providing the reasons therefor.)
V. Regarding Stocks, etc.
1. Regarding large shareholders

(1) Changes in number of shares held by large shareholders and their shareholding ratios
over the last 3 years
Please indicate the changes in the number of shares held by large shareholders
(approximately the top 15 largest shareholders) at the end of the immediately preceding
year and their shareholding ratios over the last 3 years as shown in the table below.
Period End of the period End of the period End of the period
Number of shares held Shareholding ratio Number of shares held Shareholding ratio Number of shares held Shareholding ratio
Name of large shareholder
Note i Please indicate the background leading up to the equity investment and the shareholder’s description
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(relationship with the Applicant and directors or persons equivalent thereto, etc.) in a separate table.
ii Please indicate the reasons for material changes (to the extent practicable), if any, in a separate table.
iii If the employees’ shareholding association, directors’ shareholding association and business partners
shareholders' association are not included in large shareholders that must be indicated (approximately the
top 15 largest shareholders), please indicate them separately.
(Sample) Background for equity investment and shareholder description

Name of large
Description Background for equity investment
shareholder
(Sample) Reasons for material changes

Name of large
Period Reasons for changes
shareholder
(2) Status of lock-up agreements, etc. or shareholders agreements

If the Applicant has entered into, or expects to enter into an agreement or contract for the
transfer of shares of the Applicant (including a lock-up agreement) or operation of the
Applicant (including the selection of candidates for directors, pre-approval of shareholders,
etc.) with large shareholders (approximately the top 15 largest shareholders) as of the end
of the listing application date (in the case of a listed company, the last record date), please
indicate the details thereof (year and month of conclusion, parties to the agreement or
contract, its overview, etc.).
(3) Material contracts such as collateral contracts, etc.

If there are stock loan contracts, collateral contracts, selling back contracts, forward sales,
and other material contracts or arrangements for the shares of the Applicant held by
directors, persons equivalent thereto, the Applicant or affiliated companies, please indicate
the details of such contracts or arrangements (type of contracts, date of conclusion, parties
to contracts, overview of contracts, etc.).
2. Acquisition of treasury stocks

If the Applicant holds treasury stocks (excluding the purchase of the number of shares not
constituting a Share Unit), please indicate the background therefor and policies for keeping
them going forward.
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3. Regarding Shareholding under the name of another person

If a director or person equivalent thereto holds shares under the name of another person, please
indicate the name of such other person, the number of shares held thereby, and the shareholding ratio.
4. Regarding class shares

For class shares issued by the Applicant, please indicate the number of stocks issued,
details (voting rights, rights such as dividend payments of surplus, etc.), date of issuance,
amount of payment, and parties to which the allocation is made.
5. Regarding Distribution of profit of the Applicant after listing

Please indicate the rationale and policy for the distribution of profit of the Applicant
(including interim and quarterly dividends) after the listing (in the case of a listed company,
all applicable distributions to the present). (If there is any policy concerning the level of
dividend payment, please also indicate it.) If the distribution of surplus is subject to a
resolution of the Board of Directors, please indicate the reasons therefor.
VI. Regarding Accounting
1. Regarding schedule of consolidated financial statements for the last 3 years

Please indicate the rationale, policy, and criteria for short- and long-term loans listed in
each of the consolidated financial statements for the balance sheets covering periods
ending in the last 3 years. If there are any material loans, please indicate them for each
consolidated accounting year as shown in the table below. If the Applicant finds it difficult to
indicate the above details for any item or period, the Applicant can omit this information by
stating the reasons therefor.
Name of party to Original Period Period Period

which the loan loan Highest Lowest Year-end Highest Lowest Year-end Highest Lowest Year-end
is/was extended amount balance balance balance balance balance balance balance balance balance
Total
Notes i Please indicate the time and terms for loan extension and the reasons therefor in a separate table.
ii If there are a large number of parties to which loans have been extended, the number of parties,
representative terms and conditions of loans, and the reasons for the loans can be grouped.
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(Sample) Time and terms for loan extension and reasons for the loan
Name of party to Terms and
Date of original
which loan is/was conditions of Reasons for the loan extension
loan extension
extended loan
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2. Regarding schedule of financial statements for the last 3 years

(1) Schedule of manufacturing costs for the last 3 years
If the Applicant has indicated a schedule of manufacturing costs or a schedule of costs of goods sold in
“Securities Report for Initial Listing Application (Part I)” please indicate the said schedule of manufacturing
costs and the schedule of costs of goods sold for the Applicant and subsidiaries that must be indicated as
shown in the table below.

Line item Amount % Amount % Amount %
1. Materials costs
Opening balance of
inventories
Current purchases
Less: year-end balance of
inventories
Current cost of materials
2. Outsourced processing
costs
Outsourced processing
costs
Cost of parts purchased
Less: costs of materials
supplied with prices
charged
Current outsourced
processing costs
3. Labor costs
……
……
Current labor costs
4. Expenses
……
……
Current expenses
Total of current
100 100 100
manufacturing costs
Opening balance of
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inventories in progress
Less: Closing balance of
inventories in progress
Current manufacturing
costs
Notes i For any subsidiary that must be indicated, if the Applicant finds it difficult to indicate the above details for
each of business years with balance sheets covering periods ending in the last 3 years, the Applicant can
omit this information for the relevant period by stating the reasons therefor.
ii The Applicant can change the format for figures in “2. Outsourced processing costs” as long as it reflects
the nature of accounting processing.
iii Please indicate the applicable statements under “3. Labor cost” and “4. Expenses”.
(2) Schedule of balance sheets for the last 3 years pertaining to the Applicant and
subsidiaries that must be indicated
With respect to balance sheets covering periods ending in the last 3 years for the
Applicant and subsidiaries that must be indicated, please indicate the items that meet the
requirements in the following “a” and “b” as shown in the table below. If the Applicant finds it
difficult to indicate the above details pertaining to periods ending in the last 3 years for a
subsidiary that must be indicated, the Applicant can omit this information for the relevant
period by stating the reasons therefor.
a Schedule of receivables past due

Period
Counterparty Cause Overdue period Amount
Total
Notes i Please indicate the counterparties in descending order by balance for each period.
ii If the number of counterparties is large, the Applicant may indicate approximately the top 10
counterparties in detail and group the others under the total.
b Schedule of payables past due

Please indicate this item in a manner similar to the above “a Schedule of receivables past
due”.
3. Related party transactions, etc. (transactions between the Corporate Group and a
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related party and a subsidiary/affiliated company of the Applicant , a director of affiliated

company, or a large shareholder of the Applicant; the same shall apply hereinafter)
(1) Basic policies for the implementation of related party transactions
Please indicate the basic policies for the implementation of related party transactions
(including any perceptions, understanding, or considerations regarding related party
transactions).
(2) System to ensure the fairness of related party transactions

Please indicate the system in place to identify the existence of related party transactions
and ensure the fairness thereof (including any procedures required for the commencement
of related party transactions, systems to continuously monitor and review existing
transactions with a related party, and other relevant matters).
(3) Regarding related party transactions in the last 2 years and the business year to which
If any related party transactions have taken place in the last 2 years and the business year
to which the application date pertains, please indicate the details thereof as shown in the
table below.
a Transactions details
Transaction Closing Concrete
Name
Descriptio value Lin balance terms and
of
Typ n of e method for Remark
compan
e transaction Perio Perio ite Perio Perio determinin s
y or
s d d m d d g said
entity
terms
b Overview of related parties

Line of
Name of Common Ratio of Relationship
Location business
Type company stock or voting with related
or address or
or entity. equity rights, etc. party
occupation
Notes i “Related parties” means those referred to in Article 8, Paragraph 17 of the Ordinance on the
Terminology, Forms, and Preparation Methods of Financial Statements, etc..
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ii Please also indicate any new transaction that has taken place in the business year to which the
application date pertains (including any expected/scheduled transactions).
iii Please indicate all the transactions irrespective of the materiality of the transaction value.
iv Please indicate all of the transactions with subsidiaries and directors of subsidiaries and affiliated
companies. The applicant can omitted this information for transactions that would eliminate as a
result of elimination of intra-company transactions.
v Please indicate all of the transactions with individual large shareholders indicated in “1. Large
shareholders (1)” under “V. Regarding Stocks, etc. 1. Regarding large shareholders (1)”
vi In the case of individuals, please indicate the “occupation” not the “Line of business” and the
“address” not the “location”.
vii If the directors of the Corporate Group receive any fringe benefits (such as leasing of corporate
housing) outside of their remuneration, please indicate the amount incurred by the Corporate
Group.
viii Please provide detailed information under “Concrete terms and method for determining said
terms”, including but not limited to current transaction terms, detailed procedures implemented to
ensure the fairness of transaction terms, and which entities have the right to authorize such
transactions.
ix Under “Remarks”, please state any transactions included in “Securities Report for Initial Listing
Application (Part I)”. If the Applicant has decided to refrain from disclosing any transaction, please
state the reasons therefor in “Remarks”.
x If any person meets the criteria for spouse, relative by blood within the second degree of kinship
and relative of a spouse, please indicate the relationship category in “Remarks”. Alternatively, if
any entity meets the criteria for subsidiary holding the majority of voting rights on the proprietary
account of the Applicant and its subsidiary, please indicate the percentage of holding of voting
rights, etc. in “Remarks”.
xi Please refer to “ASBJ Statement for Related Party Disclosures” and “Guidance on Accounting
Standards for Related Party Disclosures” to determine what other items or information should be
indicated, if any.
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4. Regarding pledged assets

If any assets of the Applicant or its subsidiary are pledged as collateral, please indicate
the details thereof as shown in the table below.
Party Reasons
Pledged Description Value of Secured Description Value of
pledging for
asset of pledged pledged debt of secured secured
the offering
accounts asset asset accounts debt debt
assent collateral
Note i Please also indicate new collateral offered during the business year to which the application date
s pertains.
ii Please indicate all of pledged assets irrespective of their values.
5. Auditor’s opinions for the last 5 years

Please indicate whether consolidated financial statements for the last 5 years have been
audited by certified public accountants or audit firms. If so, please indicate the names of the
certified public accountants or audit firms and their auditor’s opinion (for example
“unqualified”) for each of the last 5 years. If a qualified opinion has been expressed for any
consolidated accounting year and business year, please disclose the details of the qualified
opinion in footnotes.
Please indicate whether financial statements for the last 5 years have been audited by a
financial auditor or company auditor (or by an audit committee in the case of a company
committees) according to the provisions for audit prescribed in the Companies Act. If so,
please indicate their auditor’s opinion (for example “lawful”).
Notes i If the Applicant has changed certified public accountants or audit firms
(including changes of party to an engagement letter and any other pertinent
contract such as an advisory contract for listing application ), please indicate
the reasons for the changes. If the Applicant has changed certified public
accountants or audit firms during the business year to which the application
date pertains, please disclose the fact and the reasons therefor in footnotes.
ii If any additional information paragraphs were furnished in the audit report for
any of the last 5 years, please disclose the fact and the contents thereof.
iii Please disclose the date when the engagement letter under Financial
Instruments Exchange Act or any act similar thereto was entered into for the
first time.
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(Sample)
Period Period Period Period Period

Name of certified public accountant or
－ Name of audit firm
audit firm
Unqualifi Unqualifi Unqualifi
Consolidated financial Qualified
Audit as per － ed ed ed
statements opinion
Financial opinion opinion opinion
Instruments Unqualifi Unqualifi Unqualifi
Qualified
Exchange Act Financial statements － ed ed ed
opinion
opinion opinion opinion
Auditor’s opinion by
Unqualifi Unqualifi Unqualifi
financial auditor Qualified
－ ed ed ed
(consolidated financial opinion
opinion opinion opinion
statements)
Audit as per Auditor’s opinion by Unqualifi Unqualifi Unqualifi
Qualified
Companies Act financial auditor － ed ed ed
opinion
(financial statements) opinion opinion opinion
Auditor’s opinion by
company auditor Lawful Lawful Lawful Lawful Lawful
(audit committee)
Notes i On [date], [name of company being audited; i.e. the Company] agreed to the terms of the
engagement letter with [name of audit firm] in accordance the Financial Instruments
Exchange Act. The audit firm has audited the Company’s consolidated financial statements
and financial statement as of the period ending on [date].
ii The Company has not undergone any audit in accordance with the Companies Act as it did
not qualify as a large company for the period ending on [date].
iii The Company has undergone audits by the audit committee since [date] in accordance with
the Companies Act.
iv The details of the qualified opinion for the year ending on [date] are as follows…. [insert
details here]
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6. Regarding accounting advisor

Please indicate the basic policies and future policies for the establishment of an
accounting advisor system. If the Applicant has already adopted an accounting advisor
system, please indicate the level of dependence on accounting advisors and their level of
involvement in related departments and divisions.
7. Outsourcing
If the Applicant has outsourced accounting work (including outsourcing of only portions
thereof), please indicate the details of said outsourcing, the reasons therefor, and an
overview of outsourcee.
8. Tax investigations by the National Tax Agency and local tax office in the last 3 years
and the business year to which the application date pertains
Please indicate whether there have been any tax investigations by the National Tax
Agency or local tax office on the Corporate Group in the last 3 years and the business year
to which the application date pertains. Also indicate when said investigations occurred, the
type of violation of laws or regulations, the status of administrative instructions or directives,
measures or actions taken to address said violations thereafter, and any other pertinent
information. (If the Applicant finds it difficult to indicate this information for any company in
the Corporate Group, the Applica can omit said information by stating the reasons therefor.)
9. Regarding development and improvement of system to assess and report internal

audits of financial reports
Please indicate the status of development and improvement of the system to assess and
report internal audits of financial reports (including department in charge of these matters,
preparation schedules, current issues to be addressed, etc.). (If a report on internal control
has been submitted, please also indicate the assessment results therein.) If any discrepancy
has been identified through internal auditing in the last 1 year that does not qualify as
“material” but clearly relates to any deficiency or problem, please indicate the details thereof.
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VII. Regarding Budget Control, etc.
1. Regarding budget control

(1) Nature of medium- and long-medium-term profit plans, specific method and
procedures to develop the plan
If the Applicant has developed a medium- and long-term profit plan, please indicate the
details of the plan and concrete methods and procedures for formulating the plan. (The
Applicant is required to indicate information for both the Applicant and Corporate Group; the
same shall apply hereinafter.)
(2) Concrete methods and procedures for formulating annual profit plans
Please indicate concrete methods and procedures carried out when formulating an
annual profit plan. Please also indicate the management and control methods thereof
(procedures, specific items, names of specific management data, etc.)
Note When indicating the concrete methods for formulating an annual profit plan, focus primarily on
what kind of data are used for forecasting the sales constituting the annual profit plan, cost of
manufacturing, selling and general administrative expenses, and how these are aggregated to
develop the plan.
When indicating the concrete details of the management and control methods for the annual profit
plan, focus primarily on the units used, how often data is compiled, and what kind of data (e.g.,
sales, gross profit or contributing profit, etc.) is taken into account.
(3) Method for revising annual profit plans

Please indicate the concrete details of how the annual profit plan is revised, meaning the
concrete methods and procedures for formulating a revised plan (including methods for
assessing differences between the budget and actual results, as well as criteria for
assessing whether revisions to the annual profit plan are necessary).
2. Regarding policies for procurement of funds and investment thereof, etc.

If the Applicant has established policies that encompass the Corporate Group for the
following items, please indicate said policies. If not, please state the fact and indicate what
policies or procedures have been adopted by the Applicant and subsidiaries that must be
indicated by stating the fact.
(1) Policies and procedures for the procurement of necessary funds, etc.
Please indicate in detail the characteristics of the following items in consideration of the
actual cash flows from operating activities, investment activities, and financial activities.
-393-
a Please indicate the policies for the procurement of required funds by dividing them into
relevant categories such as working capital, capital expenditures for facilities, etc.
b Please indicate the basic policies of the Corporate Group for the procurement of funds
through the issuance of shares, corporate bonds, and corporate bonds with
subscription rights to new shares.
c Please indicate the division responsible for the procurement of funds and its capacity
for procurement (the credit line if available, the amount of assets pledged as collateral,
etc.) in terms of shares, corporate bonds, corporate bonds with warrants, and short-
and long-term borrowings, respectively. If the terms and conditions of borrowing have
recently changed materially, please indicate the details of these changes.
d Please indicate timelines for procurement of funds in consideration of seasonal shifts
to necessary funds.
e Please indicate specific measures taken to increase cash flows from operating
activities, if any.
f Please indicate any other relevant matters, if any.
(2) Basic policies and methods for handling surplus funds

Please indicate in detail the basic policies for handling surplus funds (deposits,
repurchase/resale agreements, stocks, etc.).
(3) Cash management

Please indicate the basic policies and specific methods for cash management.
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VIII. Regarding Financial Results for Recent Years, etc.
1. Regarding consolidated balance sheets and consolidated income statements for the
last 5 years
Please prepare consolidated balance sheets and consolidated income statements that
cover each consolidated accounting year ending anytime within the last 5 years in
accordance with Regulations on Consolidated Financial Statements and present each of
these side-by-side for each consolidated accounting year.
Notes i Please present financial statements for any company that does not prepare consolidated
financial statements or for any business year for which no consolidated financial
statements were made. For any business year when no financial statements were
prepared, please present the balance sheet and income statement with data determined
based on the requirements in “Ordinance on Accounting of Companies”.
ii The Applicant may use multiple pages, but data for the last 3 business years must be
presented side-by-side in a single page (the same shall apply to VIII. 2).
2. Factors giving rise to changes in consolidated profit and loss in the last 5 years
(1) Factors giving rise to changes in sales-related figures. for each of consolidated
accounting year ending within the last 5 years
Please indicate in detail the factors that have given rise to changes (excluding immaterial
changes) in sales-related figures (meaning sales, cost of sales, gross profit, selling and
general administrative expenses, operating income, non-operating revenue, ordinary
income, extraordinary profit, extraordinary loss, current income before tax, etc., income tax,
inhabitant tax and enterprise tax, and current income) in the consolidated financial
statements for each of consolidated accounting year ending anytime within the last 5 years.
Please also indicate the events that triggered or caused said factors.
Notes i Please make reference to financial statements for a company that does not prepare consolidated
financial statements or for a year when no consolidated financial statements were prepared.
The Applicant can omit items for any year for which no financial statements were prepared.
ii Please indicate factors giving rise to changes in selling and general administrative expenses
based on the data determined for each major account. For example, similar items such as
employee salaries and wages, provision for reserves of bonuses, etc. could be combined under
“labor costs”.
iii If there have been any material changes in non-operating revenue and non-operating costs, or
extraordinary profit and extraordinary loss, please indicate the title of major items underlying
such changes and factors giving rise thereto.
iv If the Applicant has carried out a merger, turned a company into subsidiary or acquired a
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business in the last 5 years, and if the effect of such events on the sales and profit as a
percentage of the sales or profit of one or more item is 10% or more, please present the changes
in the profits and losses of the merged company, company that became a subsidiary, or
department that acquired business for each of business year ending within the last 5 years.
Please use relevant charts and indicate in detail the factors that gave rise to changes in the
profits and losses (excluding immaterial ones) and the events that triggered or caused said
factors, provided, however, that if the Applicant finds it difficult to indicate this information, the
Applicant can omit the information by stating the reasons therefor.
(2) Sales by operating segment for each consolidated accounting year ending within the
last 5 years and the factors giving rise to the changes therein
Please indicate the changes in sales and gross profit by operating segment for each
consolidated year ending anytime within the last 5 years and indicate in detail the factors
that have given rise to these changes (excluding immaterial ones). . Please also indicate the
events that triggered or caused said factors.
Notes i Please make reference to financial statements for a company that does not prepare consolidated
financial statements or for a year when no consolidated financial statements were prepared. The
Applicant can omit items for any year for which no financial statements were prepared.
ii In “Sales”, please indicate the percentage of total sales and a year-on-year figure. In “Gross
profit”, indicate the percentage of sales by operating segment and a year-on-year figure.
iii If the Applicant cannot ascertain the gross profit by operating segment, the Applicant can
substitute these figures with pertinent profit figures of the Applicant’s choice, such as profit
figures for management accounting.
iv If the Applicant can ascertain operating income and ordinary income by operating segment,
please also indicate the changes therein and factors that gave rise thereto (excluding immaterial
changes).
3. Factors giving rise to changes in cash flows in the last 5 years

Please indicate the changes in each item in the consolidated cash flow statement (or a cash flow
statement for a company that does not prepare the consolidated cash flow statements or for any business
year for which no consolidated cash flow statement was prepared) for each consolidated accounting year
ending anytime within the last 5 years. Please also indicate in detail the factors that have given rise to the
changes (excluding immaterial changes) events that triggered or caused said factors.
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IX. Regarding Future Prospects
1. Regarding the Corporate Group over the next 2 years

Any Applicant that does not plan to prepare consolidated financial statements for the next
2 years (meaning the business year to which the application date pertains and the following
year) is required to indicate future prospects by using financial statements.
(1) Consolidated profit and loss for the last 1 year and forecasts for the next 2 years
Please indicate the consolidated profit and loss for the last 1 year and forecasts thereof
for the next 2 years.
Notes i Consolidated profit and loss forecasts should include the figures from consolidated financial
statements for sales, cost of sales, gross profit, selling and general administrative expenses,
operating income, non-operating income, non-operating expenses, ordinary income,
extraordinary income, extraordinary loss, current income before taxes, etc., corporate income
tax, inhabitant tax and enterprise tax, profit attributable to minority interests, current net
income, and net income per share.
ii Please indicate group similar figures for major items under selling and administrative
expenses. For example, employee salaries and wages, provision for reserves of bonuses, etc.
can all be combined as “labor costs”.
(2) Sales-related figures by operating segment in consolidated profit and loss forecasts for
the next 2 years
Please indicate the consolidated profit and loss for the last 1 year, as well as sales and
gross profit by operating segment in consolidated profit and loss forecasts for the next 2
years.
Notes i In “Sales”, please indicate the percentage of total sales and a year-on-year figure. In “Gross
profit”, indicate the percentage of sales by operating segment and a year-on-year figure.
ii If the Applicant cannot ascertain the gross profit by operating segment, the Applicant can
substitute these figures with pertinent profit figures of the Applicant’s choice, such as profit
figures for management accounting.
iii If the Applicant can ascertain operating income and ordinary income by operating segment,
please also indicate the operating income or ordinary income (the same shall apply to (3)
below).
(3) Concrete basis for preparing consolidated and segment-based profit and loss plans
Please indicate the concrete basis upon which consolidated profit and loss plans (sales,
cost of sales, selling and general administrative expenses, non-operating profit and loss,
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etc.) and consolidated profit and loss plans for each segment (sales and gross profit) are
prepared, including all underlying assumptions (market conditions, market size, number of
customers, number of shops and outlets, size of personnel, etc.). Please also indicate or
attach any industry data and forecast indicators that were used as reference in developing
any of the plans.
(4) Consolidated cash flows in the last 1 year and forecasts for the next 2 years
Please indicate consolidated cash flows in the last 1 year and the forecasts thereof for the
next 2 years. Be sure to indicate all major items.
(5) Investment plan for the capital expenditures in the next 2 years
Please indicate in detail the investment plan for capital expenditures on facilities and
equipment in the next 2 years for each operating segment.
(Sample)
Name of Scheduled payments
Description Total Procur Month and
company, Amount Amount amounts
of facilities investme ement Month and year year of
Segment or Location already still
and nt metho of project start project
business paid needed
equipment amount d Period Period completion
function
Notes i Label items as “a whole company”, “an indirect department”, or other relevant labels in the event that
these items cannot be classified as segment-based investments.
ii The total investment amount must reflect the amount already procured and that which is still needed.
Indicate these amounts under their respective categories and state how the lacking amount will be
procured under “Procurement method”.
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(6) Consolidated cash flow and investment plans for the next 2 years
Please indicate the consolidated cash flow plan and investment plan for the next 2 years
while fully considering the following items. If the Applicant has developed a basic rationale
and policies specific to each activity (operating activities, investing activities, and financial
activities), please indicate these in this section.
a Operating activities
(a) Relationship between income and cash flow (e.g., relationship between sales and
income from operations)
(b) Material changes in income and expenditure items due to changes in payment terms or
factors giving rise to increases or decreases in monetary profit and loss items
b Investing activities
Correlation between management strategies and investment plans and fund investment
plan, as well as effect on expected investment
c Financial activities
Method to procure lacking funds and redemption plan for borrowing, corporate bonds,
etc.
(7) Matters materially affecting profit and loss, cash flows, or the financial position of the
Company Group
Please indicate the specific details of matters that have or are likely to have a material
effect on profit and loss, cash flows, or the financial position of the Company Group
(mergers, becoming/ceasing to be a subsidiary, acquisition/disposal of other shares,
establishment of a subsidiary or affiliated company, business acquisitions/transfers,
business alliances, etc.).
X. Miscellaneous
(1) Legal disputes and conflicts
Please indicate the background for and details of any incidents that have been settled
within the last 3 years.
If there are currently any pending cases, please indicate the background and details of
said cases, as well as the expected outcome of litigations and their financial impact.
(2) Consulting and advisor contracts

If the Applicant has entered into any consulting and advisor contracts or agreements with
view to receiving instruction on the management for the immediately preceding business
year and the business year to which the listing application date pertains (including those
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currently valid), please indicate the specific details thereof (year and month of conclusion,
counterparty to the contract, title of contract, outline of the contract (period, remuneration,
performance results, etc.) ).
(3) Timeframe and other matters pertaining to the selection of a lead underwriter, etc.
Please indicate the timeframes for approaching and entering into a contract with a
Financial Instruments Business Operator in reference to advisory agreements, etc. (*) that
encompass relevant instructions and advice to be provided by the public offering
underwriting department of the operator ahead of listing application. Please also indicate the
details and reasons for changes if the Applicant has changed the Operator with which the
Applicant concluded advisory contracts, etc. over the last 5 years, along with the main
instructions therefrom and the Applicants responses.
(*) This also applies to cases where substantive advisory services have been provided in absence of
an agreement.
(4) Application for listing on another financial instruments exchange

If the Applicant has filed a listing application with another financial instruments exchange
in the past and was not permitted to list its stock on said exchange, please indicate the
background and reasons therefor.
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XI. Appendix
(1) Copies of financial statements for the last 5 years (including consolidated financial
statements if available) for any consolidated subsidiary whose degree of impact on the
earnings for the immediately preceding year was 20% or more as a percentage of the
total earnings of the Applicant (and a copy of the securities report, if available)
Notes i In this case “degree of impact” means the degree of impact determined by the formula specified in this
guide (Terms of Definitions) (9) in terms of the amounts of total assets, net assets, sales, and profit.
ii If any consolidated subsidiary operates in a foreign country, please submit a document certifying the
year-end foreign exchange rates for each of the last 5 years.
(2) Copies of any amended securities registration statement, etc. and amended shelf
registration statement or amended report, as well as an amendment request form
thereof (excluding amended reports attached to “Part II Embedded information”, which
are not required if already posted on EDINET as statutory disclosure documents) in
cases where the information indicated in “IV Management System 6.(2)
…Amendments to securities report, etc….” has been amended
(3) A copy of consolidated financial statements included in the securities report if securities
reports have been prepared in the last 5 years (excluding consolidated financial
statements included in the securities report (Part I), which are not required if already
posted on EDINET as statutory disclosure documents).
Notes i Please submit a copy of the consolidated financial statements, if available, for any period for
which no securities report has been prepared.
ii The consolidated financial statements to be attached shall include the items specified in Articles
13 to15-24 of Regulations on Consolidated Financial Statements.
(4) A copy of financial documents and supplementary schedule thereof for any business
year in the past 5 years when no consolidated financial statements have been prepared
(5) A copy of the minutes of meetings of the Board of Directors for the last 2 years
(6) A copy of the minutes of meetings of the Board of Company Auditors (Audit Committee)
for the last 1 year and the business year to which the application date pertains
(7) Copies of materials and data relating to the Board of Company Auditors (Audit
Committee) for the last 1 year and the business year to which the application date
pertains (data relating to the flow required in IV.4.c)
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(8) Copies of materials and data relating to internal audits for the last 1 year and the
business year to which the application date pertains (data relating to the flow required in
IV.3.d)
(9) Copies of income tax returns and schedule of breakdown by account title attached
thereto for the past 2 years (for the Applicant and subsidiaries that must be indicated)
(10) A copy of the management data of monthly performance results for the business
year to which the application date pertains
(11) Copies of the series of documents used for annual budget plan for the business
year to which the application date pertains, mid-term management plan, and developing
plans (data and inputs relating to the flow indicated in VII.1.(1) and (2) )
(12) Copies of material contracts for management purposes
(13) Catalogues, pamphlets, etc. for products, goods, and services
(14) Draft of registration statement of Independent Directors/Auditors
(15) Draft of corporate governance report
(16) Materials documenting the information required in IV.5.(1)d “d Management

conditions of data, etc. pertaining to timely disclosures (internal regulations, manuals,
etc.)
(17) Work flow

For main products, goods and services, please illustrate the main work flow from the
receipt of orders, procurement, production and delivery to the collection of payment by
using a diagram or chart (flow charts prepared for the internal audit reports section suffice).
The Applicant is free to determine the format of the diagram or chart. If a subsidiary that
must be indicated pertains to the work flow of the Applicant, it can also be illustrated.
-402-
B Documents, etc. to be Filed for Assignment to the First Section Market Application
B Documents, etc. to be Filed for Assignment to

the First Section Market Application
List of Documents, etc. to be Filed for Assignment to the
First Section Market Application (Japanese Stocks)
The documents to be filed for the purpose of application are described below in “Documents
to be Filed for Assignment to the First Section Market Application”. They must be filed at the
time of the Assignment to the First Section Market application or in a manner otherwise
specified by the filing requirements.
(Marks and legend)
Must be submitted in the form designated by TSE for the form, please refer to: “Forms
※
of Documents to be Filed for Assignment to the First Section Market
Application”(Japanese only)

◇
would be accepted.
-403-
Preliminary
application form for
Assignment Application for assignment of a Assignment of a
Rule 307② of the
application listed stock to the first section Listed Stock, etc. to One
Regulations
date market※◆ the
First Section Market
of securities ※
Written oath pertaining to

Same as Rule 307② of the
application for assignment to One copy
above Regulations
the first section market※◆
For the First

Section Market
Application, when a
listed stock is
expected to meet
the criteria for the
Table of distribution status of
number of
stocks, etc. concerning the
Same as shareholders or the Rule 309②(1)a of the
criteria for assignment of One
above number of tradable Regulations
stocks to the first section
shares through
market※◇
public or secondary
offering or through
limited distribution,
etc., the document
is not required to be
submitted.
Securities reports for each

business year ending anytime
Same as within last two Rule 309②(1)b of the
One
above years and documents attached Regulations
to the securities report for the
most recent business year ◇
-404-
Statement of answers
concerning examination for
Same as Rule 309②(1)c of the
assignment of stocks to the Two
above Regulations
first section market
※◇
Book of rules (copy)◆ Including

regulations on
Same as Regulations
handling of One
above Rule 309②(1)f of the
shareholder
Regulations
services (copy)
Written documents stating the Rule 204①(12) of the

Same as matters of the assumption of Regulations
One
above the principal business activities Rule 309②(1)f of the
◆ Regulations
Written confirmation certifying

Same as Rule 309②(1)g of the
that the applicant has no ties to One
above Regulations
anti-social forces※◆
Same as Written confirmation※◎◆ Rule 309②(1)h of the

One
above Regulations
Quarterly report (balance Not required when

sheet) for period ending the financial statements
most recent quarter◆ (stand alone) is
include in the
“Quarterly Report
for Initial Listing Rule 206①(9)-2 of
Application.” the Regulations
Same as
As a quarter period One
above
ends during the Rule 309②(1)i of the
examination period, Regulations
its must be
submitted every
end of a quarterly
period.
By Computation document for One Rule 308(4) of the
-405-
assignment market capitalization required Regulations

approval to be listed in first section
The documents
shall be required
Financial statements of the only if the Written reply
consolidated subsidiary for the consolidated regarding the
Assignment
last five years (including subsidiary had an Designation to the
application One
consolidated financial impact of twenty First Section
date
statements when it has percent (20%) or Procedures for
prepared them) (copy) more on earnings Description XI(1)
for the recent one
year.
Amended registration Written reply

statement, amended shelf regarding the
Same as registration statement or Designation to the
One
above amended report for the last five First Section
years and application year Procedures for
(copy) Description XI(2)
Excluding
consolidated and
non-consolidated
financial statements Written reply
Consolidated and included in regarding the
Same as unconsolidated financial securities reports Designation to the
One
above statements for the last five for each business First Section
years (copy) year and Procedures for
consolidated Description XI(3)
business year
ended during the
recent two years
Written reply
regarding the
Same as directors meetings for the last
One Designation to the
above two years and application year
First Section
(copy)
Procedures for
-406-
Description XI(4)
Minutes of the meetings of the Written reply

board of the statutory auditors regarding the
Same as (audit committee) for the last Designation to the
One
above one year and the business year First Section
in which the assignment Procedures for
application is filed (copy)◆ Description XI(5)
Materials related to audit by the Vouchers in relation Written reply

board of the statutory auditors to IV.4.c regarding the
Same as (by audit committee) for the Designation to the
One
above last one year and the business First Section
year in which the assignment Procedures for
application is filed (copy)◆ Description XI(6)
Materials related to internal Vouchers in relation Written reply

management for the last one to IV.3.d regarding the
Same as year and the business year in Designation to the
One
above which the assignment First Section
application is filed (copy)◆ Procedures for
Description XI(7)
Corporate tax return and Applicant and Written reply

breakdown of the item of subsidiaries to be regarding the
Same as accounts attached thereto for described Designation to the
One
above the last two years(copy)◆ First Section
Procedures for
Description XI(8)
Monthly performance Written reply

management data for each regarding the
Same as month of the fiscal year in Designation to the
One
above which the assignment First Section
application is filed (copy)◆ Procedures for
Description XI(9)
Annual budget plan and Vouchers in relation Written reply

Same as mid-term management plan to flow in VII 1.(1) regarding the
One
above and a series of internal data and (2) Designation to the
used for the preparation First Section
-407-
thereof for the fiscal year in Procedures for

which the assignment Description XI(10
application is filed (copy)◆
Contract which is important for Written reply

management (copy)◆ regarding the
Same as Designation to the
One
above First Section
Procedures for
Description XI(11)
-408-
Catalogs and pamphlets for Written reply

products, goods and services, regarding the
Same as etc.◆ Designation to the
One
above First Section
Procedures for
Description XI(12)
Written reply
regarding the
Audit report and quarterly
review report for the last five One
above First Section
years (copy)
Procedures for
Description XI(13)
Written reply
regarding the
Same as Internal management report Designation to the
One
above within the latest year (copy) First Section
Procedures for
Description XI(14)
Written reply
regarding the
Work flow ◇ One
above First Section
Procedures for
Description XI(15)
By Computation document for net

Rule 308(5) of the
assignment assets※ One
Regulations
approval
In cases where there was a merger in the recent two years (excluding the cases of mergers
between a listed company and its subsidiary(ies) or between or among its subsidiaries)
Financial statements, etc. of all

Assignment
the merging companies Rule 309②d of the
application One
(excluding the listed company Regulations
date
and its subsidiaries) for each
-409-
business year and accounting

year ending on a day that falls
within such period
-410-
Written statement of Not required if the Guidelines IV 1

Assignment
assurance of parent applicant submits it
application One
company's timely disclosure, at the new listing
date
etc.
When a public or secondary offering is made for designation to the First Section
Without delay Scheduled plan of public Rule 310①(5) of the

after offering or secondary offering One Regulations
assignment ※◎
By the Notice of execution of public

second offering or secondary offering
business day ※◎
following the
end of One
Regulations
application
period
(excluding
holidays)
When a limited distribution is implemented for designation to the First Section
Without delay A schedule of distribution with

after a quantitative limit※◎ One
Regulations
assignment
By two A table of distribution of

business stocks, etc. subsequent to
days distribution with a quantitative
following the limit※◎ Rule 310①(6) of the
One
distribution Regulations
date
(excluding
holiday)
When accounting for “net assets” is applied when accounting for retirement benefits is adopted.
Assignment Document stating the amount

Rule 705 of the
application of net assets and the process One
Regulations
date of such calculation when the
-411-
accounting standards for

◇
-412-
In cases where it takes not more than two (2) years from the date when a company became a
holding company to the end of the recent business year
If there are several

Consolidated financial subsidiaries,
statements of the subsidiary consolidated
(limited to an entity that statements of
became a subsidiary on the income,
date when the holding non-consolidated
company was incorporated) statements of
during the consolidated income, quarterly
business year immediately consolidated
Assignment
before the holding company statements of Rule 309②(1)e of the
application One
was incorporated shall be income, or income Regulations
date
attached (in cases where the statements
company was not an entity combined with
subject to consolidated quarterly
financial statements, its statements of
non-consolidated financial income shall be
statements shall be attached). attached. In
In addition, audit report shall be addition, audit
attached. report shall be
attached.
-413-
C Documents, etc. to be Filed for Alteration of Markets Application
C Documents, etc. to be Filed for Alteration of

Markets Application
List of Documents, etc. to be Filed for Alteration of Markets
The documents to be filed for the purpose of application are described below in “Documents,
etc. to be Filed for Alteration of Markets Application”. They must be filed at the time of the
alteration application or in a manner otherwise specified by the filing requirements.
(Marks and legend)
Must be submitted in the form designated by TSE for the form, please refer to: “Forms
※
of Documents to be Filed for Alteration Application”(Japanese only)

◇
would be accepted.
-414-
In case of preliminary
Securities report for application,
Alteration application Rule 312③of the
application for alternation preliminary One
date Regulations
of a listing market※◆ application form for
alteration ※
Minutes of the board of Rule 204①(1) of

directors meeting the Rules
Same as above One
concerning the resolution Rule 313②(1)b
on alteration (copy) of the Rules
Written application for Audit report attached

alternation of a listing In cases of
Rule 312④ of
market (part I)◇ companies making
the Regulations
continuous
Rule 204①(4)b-2
disclosures, financial
of the Rules
Same as above statements and Two
Rule 313②(1)a
of the Rules
statements for the
Rule 313③ of
previous year of the
the Rules
previous year, with
audit report attached.
Written application for Rule 312④ of

Same as above alternation of a listing Two the Regulations
market (part II)◇
Written confirmation Rule 204①(6) of

certifying that the applicant the Rules
Same as above One
has no ties to any Rule 313②(1)b
anti-social forces※◆ of the Rules
Rule 204①(7)b
Same as above Written confirmation※◎◆ One of the Rules
Rule 313②(1)b
-415-
of the Rules
A document describing
matters which were given
Rule 204①(7)c of
particular attention or were
the Rules
Same as above the focus of confirmation One
Rule 313②(1)b
in the course of public
of the Rules
guidance and underwriting
examination◎◇
Book of rules (copy)◆ Including regulations Rule 204①(10)

on handling of of the Rules
Same as above One
shareholder services Rule 313②(1)b
(copy) of the Rules
Written documents stating Rule 204①(12)

the matters of the of the Rules
Same as above One
assumption of the principal Rule 313②(1)b
business activities◆ of the Rules
Table of distribution status Not required when

of stocks, etc.※◇ the criteria for the
number of
shareholders or the
number of publicly Rule 204①(21)
traded shares are of the Rules
Same as above One
expected to be met Rule 313②(1)b
through public of the Rules
offering or secondary
offering or limited
distribution of shares
before alteration
Written oath pertaining to

Rule 312③ of
Same as above application for alteration of One
the Rules
a listing market※◆
Quarterly report (balance Not required when Rule 206②(9)-2

sheet) for period ending the financial statements of the Rules
Same as above One
most recent quarter◆ (stand alone) is Rule 313②(1)c of
include in the the Rules
-416-
“Quarterly Report.
As a quarter period
ends during the
examination period,
its must be submitted
every end of a
quarterly period.
However, when such
document has been
already submitted
through the Electronic
Disclosure for
Investors' NETwork
(EDINET), it is not
required to be
submitted.
Consolidated and Limited to cases

unconsolidated financial where securities
statements for the last five reports have been
years (copy)◇ prepared for the
recent five years
(including
statements when
securities reports Part II
Same as above have not been One Procedures for
prepared but Description XI(3)
statements have
been prepared).
Periods described in
“Securities Report for
Application for
Alteration of Listing
Market (“Part I”
-417-
documents”) will be
excluded.

directors meeting for the Part II
One
Same as above last two years and the Procedures for
copy
business year in which the Description XI(4)
Minutes of board of Part II

auditors (audit committee) Procedures for
One
Same as above meeting for the business Description XI(5)
copy
year ending within the
latest year (copy)◆
Materials related to the Vouchers in relation Procedures for

Board of the Statutory to IV.4.c Description XI(6)
Auditors (Audit Committee)
One
Same as above for the recent one year and
copy
the business year in which
the alteration application is
filed (copy)◆
Materials related to internal Vouchers in relation Part II

management for the last to IV.3.d Procedures for
One
Same as above one year and the business Description XI(7)
copy
year in which the alteration
-418-
Corporate tax return and Applicant and Part II

breakdown of the item of subsidiaries to be Procedures for
One
Same as above accounts attached thereto described Description XI(8)
copy
for the last two years(copy)
◆
Monthly performance Part II

management data for each Procedures for
One
Same as above month of the fiscal year in Description XI(9)
copy
which the alteration
-419-
Annual budget plan and Vouchers in relation Part II

mid-term management to flow in VII 1.(1) and Procedures for
plan and a series of internal (2) Description
data used for the One XI(10)
Same as above
preparation thereof for the copy
fiscal year in which the
alteration application is
filed (copy)◆
Contract which is important Part II

for management (copy)◆ One Procedures for
Same as above
copy Description
XI(11)
Catalogs and pamphlets for Part II

products, goods and Procedures for
Same as above One
services, etc.◆ Description
XI(12)
Audit report and quarterly

review report attached to
Part II
the financial statements of
Procedures for
Same as above each business year and One
Description
consolidated business year
XI(13)
ended during the last five
years (copy)
Internal management Part II

report for the business year Procedures for
Same as above One
ended in the within the Description
latest year (copy) XI(14)
Work flow ◇ Part II

Procedures for
Same as above One
Description
XI(15)
Written recommendation※ Rule 204①(*) of

◎ the Rules(7)a
By alteration approval One
Rule 313②(1)b
of the Rules
-420-
Computation document for Rule 205 (2) b of

market capitalization the Regulations
Rule 205 (3) of
Same as above One
the Regulations
Rule 205 (6) b of
the Regulations
Computation document of Rule 212⑤(12)of

By alteration approval One
net assets※ the Rules
When there is a consolidated subsidiary which has a degree of influence of 20% or more of
influence over the group for the previous year.
Financial statements of the Copy of securities Part II

consolidated subsidiary for report, if any Procedures for
the recent five years Description XI(1)
Alteration application One
(including consolidated
date copy
financial statements when
it has prepared them)
(copy)
When securities reports, etc. for the recent five years and application year have been amended
(submission of amended registration statement, amended shelf registration statement or
amended report)
A revision notice, Excluding amended

registration statement of report attached to
II Part Attached
issuing revision or revision “Section II
Alteration application One data
statement (copy) Information” of
date each Procedures for
“Securities Report for
Description Ⅺ(2)
Initial Listing (art I)”
Written statement of Not required if the Guidelines IV 2

Alteration application assurance of parent applicant submits it at
One
date company's timely the new listing
disclosure, etc.
-421-
Documents to be submitted in relation to public offering and secondary offering,

determination of offering prices, etc.
Submission time Documents to be submitted Remarks Number Basis
When a public or secondary offering is implemented for alteration of the markets
Scheduled plan of public

Without delay after Rule 212①(6)of the
offering or secondary One
alteration Rules
offering※◎
By the second Notice of execution of public

business day offering or secondary
following the end of offering※◎ One
Rules
application period
(excluding a holiday)
When an off-floor distribution of shares is implemented for alteration of the markets
Without delay after A schedule of distribution Rule 212①(6)b(a) of

One
alteration with a quantitative limit※◎ the Rules
By two business Table of distribution of

days following the stocks, etc. subsequent to Rule 212①(6)b(c) of
One
distribution date distribution with a the Rules
(excluding holiday) quantitative limit※◎
-422-
2017 New Listing Guidebook - 1st and 2nd sections
Date of issue: August 31, 2017
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.

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New Listing Guidebook

2017 1st and 2nd sections

Tokyo Stock Exchange

1. Receipt or Transfer of Shares, etc. before Listing ...............................................194

k. False Statement or Adverse Opinion, etc. ·············································· 255

TSE: Tokyo Stock Exchange

By listing on Tokyo Stock Exchange (TSE), your company can:

(1) Smooth and Diversified Fundraising

(2) Enhance Corporate Value

(3) Improve its Internal Management System and Enhance the

2. Mechanism for Initial Listing

(1) Mechanism for Initial Listing

Various rules concerning initial listing comprise “Securities Listing Regulations,”

(2) Composition of Market

1) First Section and Second Section

Assignment to the First Section or alteration thereto requires an application by a listed

3. Parties Involved in Listing and Their Roles

(1) Securities Companies

(2) Certified Public Accountants (Auditing Firms) (CPAs)

(3) Shareholder Services Agent

A shareholder services agent is an entity which is required to be appointed in order to

4. Steps to be Taken Before Listing

Model schedule from listing application entry to listing approval

13 Fri 13 Mon First presentation of questions

16 Mon Holiday 16 Thu

18 Wed Listing application entry 18 Sat

23 Mon 23 Thu Receipt of answers to the first questions

Preliminary review related to

29 Sun 29 Wed First interview

4 Tue Physical inspection 4 Thu

At five business days interval

11 Tue Receipt of answers to the second questions 11 Thu

18 Tue Second interview 18 Thu

19 Wed Third presentation of questions 19 Fri

(1) Before the Listing Application

applicant or environment surrounding the applicant, including any revision to the

(2) Preliminary Review

1) Report on the Contents of Instructions on Going Public and Underwriting

2) Ties with Anti-Social Forces

criminal organizations (attached separately).

3) Review of Listing Schedule

(3) Listing Application

[Questions at the time of acceptance of application]

1) Reasons for listing application

2) History and lines of business

4) Status of officers, directors and shareholders

Preliminary application practices represent an approach designed to mitigate adverse

(4) Listing Examination

Actual listing examination will be implemented as follows:

c. Attending e-learning courses

d. Interviews with Certified Public Accountants (CPAs)

industry and lines of business of the applicant.

f. Presentation by the President

Note: A listed company is required to appoint an “officer in charge of information

f. Internal Discussions in JPXR

(5) After TSE’s Listing Approval

a. Announcements of the Approval of Listing

c. Public Offering and Secondary Offering

(6) Follow-ups after Listing

Items to be monitored after listing may include:

[Material business activities after listing (examples)]

[Timely disclosures after listing (examples)]

[Model Schedule form the Listing Approval to the Listing]