Update : Jan. 19, 2012
[Tokyo Stock Exchange, Inc.]
The designation of the following issue as Securities Under Supervision (Examination) has been cancelled. The same issue has been designated as Securities on Alert, and the public announcement measure has been taken.
|1. Issue Name||
KEIOZU HOLDINGS COMPANY stock
(Code: 3731, Market Division: Mothers)
|2. Date of Cancellation of Designation of Securities Under Supervision (Examination)||Jan. 18, 2012 (Wed.)|
Securities Listing Regulations, Rule 603, Paragraph 1, Item 6
(Rule 601, Paragraph 1, Item 11, Sub-item a. of the same regulations are related provisions)
(Due to TSE determining that this case did not fall under a case where a false statement was made in a securities report, etc. and deems that its effect is material)
|3. Date of Designation of Securities on Alert||Jan. 18, 2012 (Wed.)|
Securities Listing Regulations, Rule 501, Paragraph 1, Item 1
(Due to TSE deeming that this case does not fall under the delisting criteria, and that the improvement of the internal management system, etc. of such listed company is highly necessary)
|4. Date of Public Announcement Measure||Jan. 17, 2012 (Tue.)|
Securities Listing Regulations, Rule 508, Paragraph 1, Item 1
(Due to TSE deeming this case to be in violation of Rule 412, Paragraph 1 of the same regulations (matters to be observed when carrying out disclosure), and that a public announcement is necessary.)
KEIOZU HOLDINGS COMPANY (hereinafter "the Company") disclosed on October 4, 2011, that it is scheduled to submit amendments to securities reports, etc. Based on this disclosure, TSE determined that there was substantial reason to deem that the content of such amendments would be material and that there is the likelihood of the stock of the Company falling under the delisting criteria regarding false statements. As such, TSE designated such stock as Securities Under Supervision (Examination) on the same day. Subsequently, on December 22, 2011, the Company submitted amendments to securities reports, etc. for the period from the fiscal year ended October 2006 to the third quarter of the fiscal year ended October 2011.
At the Company, under the instruction of the Representative Director, the standing statutory auditor assumed an executive position, and performed inappropriate fund outflows from around May 2001. In connection with the discovery at the end of the second quarter of the fiscal year ended October 2010 that the large fund outflow amounted to 399 million yen, the Company retrospectively stated this amount as allowance for doubtful accounts. The funds were supposedly used by the Representative Director in his name for activities including long-term stock investments and personal business investments. This series of activities was an extremely inappropriate lack of awareness of the legal obligation to segregate company assets and personal assets. In addition, with regard to the General Managing Director, it was deemed that a simple accounting judgment was made with a lack of knowledge regarding the accounting process and without sufficient awareness of the duties and responsibilities as a director, leading to the situation where the sales performance due to incentives was overstated. Due to such inappropriate fund outflows and overstated sales performance for the fiscal years ended October 2007 and October 2008 the stated operating profits before amendment became operating losses after amendment.
The content of the false statements span a long period and might have been significant to the extent of having a possible effect on its market valuation regarding the operating results of the Company. However, it was not deemed to have the effect to the extent of causing a continued large misjudgment of its business performance trend or business scale. In addition, it was deemed that, with regard to the background to the amendment, the involvement by the management was seen, and with regard to the reasons behind the amendment, the statement of allowance for doubtful accounts pertains to newly revealed loans and a lack of knowledge and awareness regarding the accounting process. As such, in comprehensive consideration of the impact of the false statements, the significance of such impact was not deemed to be material or fall under a delisting. As a result, TSE cancels the designation of the stock of the Company as Securities Under Supervision (Examination).
However, the false statements were deemed to have occurred due to long-term and significant deficiencies in the internal management system and framework such as the inadequacy of directors' supervisory functions and statutory auditors' monitoring functions at the Company, as well as not appropriately improving and operating the accounting organization. Therefore, TSE deems that the improvement of the internal management system, etc. of such listed company is highly necessary, and designates the stock of the Company as Securities on Alert. Furthermore, TSE deems that the Company is in violation of matters to be observed regarding disclosure, and will take the public announcement measure.
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. Tokyo Stock Exchange, Inc., Tokyo Stock Exchange Group, Inc., and/or Tokyo Stock Exchange Regulation shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding with regard to this translation.
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