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Principles and process of stock listing

Stocks can be publicly listed and traded on the stock exchange withapproval by the relevant departments.

In stock trading, to effectively protect the interests of investors and the public, the following principles aregenerally followed:


1 Principle of openness

The principle of opennessrequires that stocks must be publicly issued, and listed companies need to continuously and timely disclose the company’s financial statements, operating conditions, and other relevant information so that investors can havesufficient information for stock analysis and selection.


2 Principle of impartiality

Every person, institution,or department involved in securities trading activities must report the situation from a fair and objective standpoint. They shouldnot have any misbehaving behaviors to conceal, deceive,or misleadothers.


3 Principle of fairness

All partiesincluded in trading activities, such assecurities firms, brokers,and investors, must haveequalconditions and opportunities.


4 Principle of voluntariness

Stock trading must be voluntary and cannot be rigidly apportioned, arbitrarily blocked, or subject to any conditions.


(1) The amount of capital. The paid-in capital of listed companies shall not be lower than a certain value.

(2) Profitability. Profitability equals after-tax net income over total capital.This ratio is generally not lower than a certain value.

(3) Basic structure. Capital structure is the ratio of net assetvalue to total assets in the most recent year. This ratio is generally not lower than a certain value.

(4) Solvency. Generally, the ratio of current assets to current liabilities in the most recent year (current ratio) is used to reflect the debt solvency, and this ratio is generally not lower than a certain value.

(5) Equity dispersion. The number of shareholders of a listed company shall not be lower than a certain value.


Its profit last year must be no less than $2.5 million, and annual profit in the first two years must be no less than $2 million.

Or, Its profit last year must be no less than $4.5 million, and the cumulative profits in the last 3 yearsmust beno less than $6.5 million;

(2) The company's net tangible assets shall not be less than $100 million;

(3) The total value of common stock held by the public is$16 million;

(4) At least 2.5 million shares are held by the public;

(5) At least 5,000 shareholders with more than 100 shares;

(6) Regularly and timely publish all the company's financial reports.


(1) Listed equityand capital. The shares of companies near Tokyo should be more than 10 million shares and the capital should be more than 500 million yen; the shares of companies outside Tokyo should be more than 20 million shares and the capital should be more than 1 billion yen;

(2) The number of small and medium shareholders should be more than 2,000;

(3) Has been in operation for more than five years;

(4) The net worthof more than 1.5 billion yen, or more than 100 yen per share;

(5) Net income before tax for the last three years: 200 million yen or more each year, 300 million yen or more in the second year, and 400 million yen or more in the third year;

(6) Dividend distribution: 5 yen or more per share for the last three years, which is expected to be maintained after listing.


(1) Application for listing.

(2) A listing report, which shall contain the principal business conditions, the principal financial conditions, the status of issuance and transfer of shares, matters that may affect the fluctuation of share prices and the avoidance of abnormal market conditions.

(3) A document authorizing the issuance of shares.

(4) Articles of Incorporation.

(5) The resolution of the Board of Directors applying for listing.

(6) Documents certifying the registration of the company.

(7) A register of shareholders.

(8) The company's balance sheet and profit/loss statement for the last two years and for the period from January of the current year to one month before the application date, as registered by the accounting firm and attested by the accountant.

(9) A written recommendation from an Exchange member.

(10) A description of the transfer of shares.

(11) Explanation of the matters to be announced in the business status announcement


(1) The listed company has undergone a major restructuring or there is a significant change in the scope of business of the listed company that does not meet the listing standards.

(2) Failure of the listed company to comply with its legal disclosure obligations or financial reports, or other documents submitted to the stock exchange contain inaccurate information.

(3) Actions of directors, supervisors, management personnel and shareholders holding more than 5% of the listed company's issued share capital that are detrimental to the public interest.

(4) The average monthly trading volume of the listed company's shares during the past year is less than 100 shares or there is no trading record in the past three months.

(5) The listed company's business performance is poor, with continuous losses in the last two years, or the listed company is facing bankruptcy.

(6)The listed company has been stopped from doing business with banks due to its credit problems.

(7)The listed company fails to pay the listing fee for one consecutive quarter.

(8) Other reasons make it necessary for the listed company to suspend its listing.

In addition, the listed company's shares will also be automatically suspended during the period when it issues additional shares or dividends.

When the problems of a listed company are serious, or in one of the following cases, the stock exchange will report to the relevant securities authority for approval and may make a decision to terminate the listing of the company in question.

(1) The listed company's listed condition of suspension has caused serious consequences.

(2) The listed company has failed to effectively eliminate the cause of the suspension during the period of the suspension.

(3)The listed company will be dissolved and undergo liquidation.

(4) The listing of the listed company must be terminated for other reasons.


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