Criteria for Delisting

Criteria for the Number of Shareholders (Share Distribution)

Update : Aug. 18, 2006

Summary of Criteria for the Number of Shareholders

Criteria for Reassignment from the 1st Section to the 2nd Section (hereinafter referred to as "criteria for reassignment")

If the number of shareholders falls below the required number (2,000 shareholders)

Criteria for Delisting

If the number of shareholders falls below the required number (400 shareholders)

Delisting Criteria for Mothers

If the number of shareholders falls below the required number (150 shareholders)
Note: The relevant action will be taken if the number of shareholders does not meet the minimum required for a period of one year (grace period).

• The number of shareholders to be used for examinations is the number of shareholders who own shares of one trading unit or more (excluding the ten largest shareholders, officers who own shares of one trading unit or more, and the relevant company if it owns treasury stock (equivalent to one person)).
• Required number of shareholders is described in the next section.
• TSE conducts examinations based upon the "share distribution table" and the "securities report".
• TSE conducts examinations on the status of the business as of the last day of each business year (usually, TSE conducts examinations once a year, not at the end of the first half of the business year).

Calculation Method for Required Number of Shareholders (Criteria for Reassignment)

The required number of shareholders varies according to the number of listed shares (including treasury shares).

Quick Reference Table for the Number of Shareholders (Criteria for Reassignment)

TSE has established the following rules for preferential treatment with regards to the required number of shareholders.

1. If the investment unit is JPY 100,000 or more but less than JPY 500,000 - the required number of shareholders is halved (minimum of 2,000 shareholders).
2. If the requirement for (1) is fulfilled, and the issue has an average monthly trading volume of 10,000 units or more - the required number of shareholders is 2,000.
3. If the investment unit is less than JPY 100,000 - the required number of shareholders is 2,000.

• "Investment unit" is either i or ii, whichever is lower.
  • The average value of the issue's closing price for each day for the year preceding the last day of the business year under examination multiplied by one trading unit.
  • The closing price on the last day of the business year to be examined multiplied by one trading unit.
• "Average monthly trading volume" is each month's share of the total trading volume on the TSE market during the one year period preceding the last day of the business year under examination.
  • Calculated by adding together the trading volume of each day during the one year period and dividing by 12.
  • "Trading at the TSE market" includes off-auction trading (ToSTNeT and off-auction distribution of shares).

Calculation Method for the Required Number of Shareholders (Criteria for Delisting)

The required number of shareholders varies according to the number of listed shares (including treasury shares).

Quick Reference Table for the Number of Shareholders (Criteria for Delisting)

TSE has established the following rules for preferential treatment with regards to the required number of shareholders.

1. If the investment unit is JPY100,000 or more, but less than JPY500,000 - the required number of shareholders is halved (minimum of 400 shareholders).
2. If the requirement for (1) is fulfilled, and the issue has an average monthly trading volume of 1,000 trading units or more - the required number of shareholders is 400.
3. If the investment unit is less than JPY100,000 - the required number of shareholders is 400.

Mothers-listed companies are required to have a minimum of 150 shareholders regardless of the number of listed shares.

• "The definitions of the "investment unit" and the "average monthly trading volume" are the same as those for "Criteria for Reassignment" (please refer to the previous section).

Example of Grace Period Schedule (Reassignment)

Example of time schedule for a company whose business year ends on March 31st.

Example of Grace Period Schedule (Delisting)

Example of time schedule for a company whose business year ends on March 31st.

Criteria for Returning Issues from Grace Period

The number of shareholders as of the record date, etc. reaches or exceeds the required number of shareholders.

* "Record date, etc." refers to the record date for the end of the first half of the business year, stock splits, etc.

If it can be evidently deemed that the number of shareholders has reached or exceeded the required number of shareholders by public offering, etc., or a distribution of shares with quantitative restrictions.

* "Public offering, etc." refers to public or secondary offering.
* "Evidently deemed" refers to cases in which the number of shareholders is 1.5 times the required number of shareholders or more.

If the number of shareholders reaches or exceeds the deemed required number of shareholders when the company decides on a stock split or a change in the number of shares in one basic lot.

* The deemed required number of shareholders is calculated using the number of listed shares (trading unit) and investment unit (using the closing price of the business day before the decision) after the company has conducted the stock split or the change in the number of shares of one basic lot.

For details, please refer to Criteria for Reassignment from the 1st Section to the 2nd Section of Listed Shares.

• Supplementary Rules to Criteria for Reassignment from the 1st Section to the 2nd Section of Listed Shares