TSE News

Imposition of Listing Agreement Violation Penalty and Designation of Security on Alert, etc -OLYMPUS CORPORATION-

Update : Jan. 20, 2012


[Tokyo Stock Exchange, Inc.]

As stated below, in addition to removing the designation as a Security Under Supervision (Examination), TSE has imposed a listing agreement violation penalty and designated the stock as a Security on Alert.

(Code: 7733, Market Division: 1st Section)
2.Date of Removal of Designation of Securities Under Supervision (Examination) Jan. 21, 2012 (Sat.)
Provision Securities Listing Regulations, Rule 601, Paragraph 1, Item 11, Sub-item a
(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.Amount of Listing Agreement Violation Penalty JPY 10 million
Provision Securities Listing Regulations Rule 509, Paragraph 1, Item 1
(Due to falling under a cases where TSE deems that the listed company has been in
violation of the matters to observed when conducting disclosure and that such
listed company has damaged shareholder and investor confidence in the TSE market)
4.Date of Designation of Security on Alert Jan. 21, 2012 (Sat.)
5.Reason OLYMPUS CORPORATION (hereinafter "the Company") disclosed that it would submit amendment reports to Securities Reports, etc. in light of the contents of the investigation report received from the third-party committee on December 6, 2011. In response to this, TSE determined that there is substantial reason that the amended content has a significant impact and that there is a likelihood of falling under the delisting criteria pertaining to false statements. On the same date, TSE conducted an additional designation (*Note) as Securities under Supervision (Examination). Following such, the Company submitted the amendment reports for Securities Reports, etc. on December 14, 2011 for the periods from the fiscal year ended March 2007 to the first quarter of the fiscal year ending March 2012.
This case involves the concealment of large unrealized losses caused by the management of financial assets using methods including the use of multiple funds outside the scope of consolidated accounts, regardless of the fact that they should be included in financial statements, and the continued excessive inclusion of net assets over a long period of time. Furthermore, it has been deemed that the Company used the opportunity of corporation acquisition to make excessive payments for the acquisition value of stocks and fees to intermediaries. In addition to sending such payments to funds to hide losses, losses were cancelled on financial statements through the writing off of "goodwill (noren)". These actions were conducted under the knowledge of past representative directors, with the participation of directors responsible for accounting/financial affairs and/or corporate strategy, and using devious methods with the cooperation of multiple outside parties under the direction of certain members in supervisory positions. As a result, improper accounting was continued and the amendment to consolidated net profits was identified to be JPY 12.35 million.
However, though some of the actions have been deemed to be those of the company organization, the losses from which this situation originated and the subsequent concealing actions were the sole work of a number of participants. Additionally, these actions had no direct relation to the core business of the Company and were conducted in a form that had no effect on the management conditions of such business. The improper accounting practices had generally no effect on sales or operating profit.
Regarding the contents of the false statements, though the impact on the financial statements continued over a long period of time, such cannot be deemed to have caused continuing significant misinterpretation of profit levels or performance trends in consideration of the Company's scale. TSE is unable to deem that the market valuation, upon which forms the basis for the management performance for the Company's primary business, was considerably distorted. As such, TSE cannot deem that investor judgment was considerably distorted to the extent of warranting delisting.
In comprehensive consideration of the significance of the false statements effects as stated above, because TSE cannot deem that delisting is warranted, it has removed the designation as a Security under Supervision (Examination).
However, given that multiple directors, including representative directors, participated in false explanations in order to avoid detection of the concealment of losses when indicated by auditors, and as a result caused a situation requiring large amended figures, etc., TSE deems that investor confidence in the TSE market has been damaged and shall require the Company to pay a listing agreement violation penalty.
Additionally, TSE deems that the board of directors, in its role of supervising the business execution of managers, and the board of auditors, in its role of monitoring, did not function effectively and that there are insufficiencies in corporate governance, including that adequate discussion was not conducted regarding the necessity and propriety of transactions, etc. pertaining to corporate acquisition. Furthermore, in addition to a considerable deficiency in awareness of compliance in a portion of the supervisory positions, insufficiencies have been recognized in the structure and operation of supervisory operations for important assets. As such, TSE has deemed that improvement of the Company's internal control systems is highly necessary and has designated the stock of the Company as a Security on Alert.

(*Note) Because it was disclosed that the Company's submission of quarterly reports by the statutory deadline was unlikely on November 10, 2011, the stock of the Company was designated as a Security under Supervision (Confirmation) on such date. Due to this designation, the above case resulted in additional designation as a Security under Supervision (Examination). Furthermore, because the Company submitted its quarterly reports on December 14, 2011, designation as a Security under Supervision (Confirmation) was removed on December 15, 2011.

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.


Tokyo Stock Exchange, Inc.
Listing Department
Listed Company Services

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