Update : Dec. 16, 2011
[Tokyo Stock Exchange, Inc.]
TSE has cancelled the designation of Securities Under Supervision (Confirmation), as well as taken the Public Announcement Measure and requested an Improvement Report as follows.
|1. Issue Name||
Daio Paper Corporation stock
(Code: 3880, Market Division: 1st Section)
|2. Cancellation of Designation of Securities Under Supervision (Confirmation)|
|(1) Date of Cancellation of Designation of Securities Under Supervision (Confirmation)||Dec. 15, 2011 (Thu.)|
Securities Listing Regulations, Rule 601, Paragraph 1, Item 10
(due to deeming as not falling under a delay in submission of the quarterly report)
TSE designated the stock of Daio Paper Corporation (hereinafter, the "Company") as Securities Under Supervision (Confirmation) because the Company had disclosed on Nov. 10, 2011 (Thu.) that the quarterly report would not be submitted by the deadline (Nov. 14, 2011 (Mon.)).
Today, TSE confirmed the submission of the report by the Company. As such, the designation of Securities Under Supervision (Confirmation) will be cancelled for the Company's stock as of Dec. 15, 2011 (Thu.).
|3. Public Announcement Measure and Request for Improvement Report|
|(1) Date of Public Announcement Measure||Dec. 14, 2011 (Wed.)|
Securities Listing Regulations, Rule 508, Paragraph 1, Item 1
(Due to a public announcement being deemed necessary in cases where TSE has recognized a violation of the matters to be observed when conducting disclosure)
|(2) Improvement Report Submission Deadline||Dec. 29, 2011 (Thu.)|
Securities Listing Regulations, Rule 502, Paragraph 1, Item 1
(Due to improvements being deemed highly necessary in cases where TSE has recognized a violation of the matters to be observed when conducting disclosure)
Daio Paper Corporation (hereinafter "the Company") disclosed that it plans to amend past earnings reports, etc., as well as a summary of such amendment on December 12, 2011 and today. The Company announced that it had disclosed earnings results that contained material corrections due to its acts such as (i) neglecting to post an allowance for doubtful loans required in its accounting in relation to loans from 7 consolidated subsidiaries of JPY 10,680 million to a former chairman of the board of directors (hereinafter "the former chairman") for personal use, as well as (ii) executing incorrect processing related to the posting of past deferred tax assets and the posting of impairment loss of stocks of unlisted affiliated companies.
The former chairman, who was the highest level of the internal control, silenced the representatives of the consolidated subsidiaries in relation to the loans and took actions to override internal controls. Additionally, the consolidated subsidiaries acted for the loans without conducting the appropriate procedures, such as a board of directors meeting, or the required deliberations on matters such as the purpose and the necessity of the loans and the assurance of repayment. Separately from the accounting of such loans, in relation to the posting of the impairment loss, accounting systems/operations were not properly conducted in relation to the accounting/financial report process, including accounting operations without adequate understanding of the accounting process for the impairment of assets.
This case is deemed to (i) be in violation of matters to be observed related to timely disclosure, (ii) have considerable influence on investment decisions and (iii) require public announcement. Thus, TSE shall implement public announcement measures.
Moreover, this is a case of improper disclosure caused by deficiencies in the timely disclosure system of the Company, and improvement of the Company's timely disclosure system has been deemed highly necessary. As such, TSE requires submission of a report containing the background and improvement measures.
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