Listing Examination/Determining Suitability for Listing

Listing Examination Criteria for Mothers

Update : Jan. 31, 2008

4. Listing Examination Criteria for Mothers

Formal Requirements (Relevant to Article 212 of Securities Listing Regulations)

Mothers is a market positioned alongside the TSE 1st and 2nd sections. As opposed to these two sections, where criteria focus on certain levels of past business performance, companies listed on Mothers are expected to show solid growth in the future. As such, this market places more of an emphasis on disclosure and does not have criteria for attributes such as level of profit. In this way, Mothers and the 1st and 2nd sections are two clearly defined markets with different concepts, and accordingly, the formal requirements for each are also different.

Specifically, companies applying to Mothers must conform to Article 212 of the Securities Listing Regulations, as well as fulfill the pre-listing rules regarding IPOs and secondary offerings, etc. as set forth in Article 217 in the same Regulations. An evaluation as to whether or not an applicant company meets these formal requirements will be carried out based on the documents submitted during the time of listing application.

Substance Examination (Relevant to Article 207 of Securities Listing Regulations)

During the substance examination for Mothers, the TSE will review the applicant company's properness of disclosure of corporate and risk information, etc., managerial soundness, effectiveness of corporate governance and internal control framework, and other information deemed by the TSE as necessary from the standpoint of public value or investor protection. Specifically, the TSE will conduct several hearings with the applicant company based on the pre-submitted documents, as well as conduct on-site inspections at factories or stores. During the last phase of the examination, among other things, the TSE will conduct hearings with the Certified Public Accountant auditing the applicant company, hold interviews with the president and auditor of the applicant company, and conduct a briefing with the president of the TSE.