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Timely Disclosure and XBRL TSE ’ s Involvement in and Expectations for XBRL. 12th XBRL INTERNATIONAL CONFERENCE in TOKYO , JAPAN 8 November 2005 . Jun Narimatsu Manager of Listing Department (C.P.A.) TOKYO STOCK EXCHANGE, INC. Today ’ s Contents. Overview of disclosure system

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timely disclosure and xbrl tse s involvement in and expectations for xbrl

Timely Disclosure and XBRLTSE’s Involvement in and Expectations for XBRL

12th XBRL INTERNATIONAL CONFERENCE

in TOKYO , JAPAN

8 November 2005

Jun Narimatsu

Manager of Listing Department (C.P.A.)

TOKYO STOCK EXCHANGE, INC.

today s contents
Today’s Contents
  • Overview of disclosure system
  • Ensuring reliability of disclosed information
    • Promotion of development and improvement of timely disclosure system
      • Introduction of oath and affirmation system
      • Publication of ‘Handbook for Timely Disclosure’
      • Expectations for XBRL in terms of development and improvement of timely disclosure system
  • Ensuring usefulness of disclosed information
    • Promotion of prevalence of XBRL
overview of disclosure system
Overview of disclosure system
  • Statutory disclosure
    • based on the Securities and Exchange Law
      • Securities report , Semi-annual report , Quarterly report Extraordinary report
  • Timely disclosure
    • based on the rules of the securities exchange
      • Preliminary report of business results
      • Semi-annual preliminary report of business results
      • Quarterly report
      • Decisions and event occurrence (promptly)
comparison between statutory disclosure and timely disclosure
Comparison between statutory disclosure and timely disclosure

Statutory Disclosure

Timely Disclosure

Preliminary report of business results (average time required: about 43.5 days)

Semi-annual preliminary report of business results (average time required: about 43.4 days)

Quarterly report (average time required: about 33.9 days)

Decisions and event occurrence (promptly)

Securities report (within three months subsequent to balance sheet date)

Semi-annual report (within three months subsequent to semi-annual balance sheet date)

Quarterly report (under consideration to make the report statutorily mandatory)

Extraordinary report (without delay)

present situation of electronic disclosure
Present situation of electronic disclosure

Reading rooms at Local

Finance Bureaus, etc

Legal disclosure

(FSA)

EDINET

Internet

Immediate

FSA’s Web site

Electronic Disclosure for Investors\' NETwork

investors

Internet , TV , Information terminals, etc.

Listed companies

Media institutions, etc.

Timelydisclosure

(TSE)

Internet

Immediate

Web Real-time service

TDnet

31 DAYS , Free

Timely Disclosure network

Internet

Immediate

Database Service

5 YEARS , Fee Charge

improvement of timely disclosure system
Improvement of timely disclosure system
  • Changes in circumstances surrounding information disclosure
    • Frequent occurrences of inappropriate events in relation to corporate information disclosure
    • Enhanced interest of investors in information disclosure
  • Introduction of oath and affirmation system (January 2005)
  • Publication of ‘Guideline for Development and Improvement of Timely Disclosure System and Points in Preparing Oath’ (July 2005)
    • Research and analysis of each of individual listed companies which have a sufficiently developed disclosure system taking into account the presentation accompanying oath documents
    • Summary compilation on the basis of the results of the above research and analysis taking into account the views and opinions of academics and specialists inside and outside the TSE and the publication thereof
    • - Provision of guidelines when individual listed companies develop disclosure systems meeting their own conditions
slide8

Overview of oath and affirmation system

  • Documents required to be filed: an oath signed by the representative
    • - Accompanying documents stating the state of internal system concerning timely disclosure
    • Contents of description: document stating that the company fully acknowledges that timely disclosure of corporate information to investors is fundamental for a sound securities market and that the company is always implementing with integrity the timely disclosure to investors by improving the internal system described in the accompanying documents, so that prompt, accurate and fair disclosure of corporate information can always be attained from the perspective of investors.
    • Timing of filing: when the representative changes
    • Elapse of 5 years from the previous oath
  • Affirmation concerning fairness of securities report and the like
    • Documents required to be filed: an affirmation signed by the representative (or copy of statutory documents voluntarily attached)
    • Contents of description: documents stating that the representative believes that there are no false statements contained in securities reports and semi-annual reports and the supporting reason why the representative believes so
    • Timing of filing: at the time of filing of the securities report and semi-annual report
points for improving timely disclosure 1

Division

Points

Contents

Issues to be considered in improving the system to fulfill the timely disclosure activities

Management commitment: through dissemination of policy, enlightenment and training, etc.

Management commitment: explicit announcement of policy

Management commitment: thorough dissemination of policy, enlightenment and training

Management commitment: implementation of policy

Corporate governance taking timely disclosure into account

Recognition and analysis of the characteristics and risks of the company’s own timely disclosure

Recognition and analysis of the characteristics of the company’s own timely disclosure

Risks pertinent to timely disclosure and recognition and analysis of causes giving rise to the risks

Points for improving timely disclosure 1
  • Extracts from the ‘Handbook for Development and Improvement of Timely Disclosure System and Points in Preparing Oath’
points for improving timely disclosure 2
Points for improving timely disclosure 2

Division

Points

Contents

System to fulfill timely disclosure activities

Development and improvement of organization responsible for disclosure

Development and improvement of department responsible for disclosure

Overall responsiveness to disclosure of the company as a whole

Education concerning disclosure

Extent to which disclosure system is developed and improved

Improvement of timely disclosure system

Disclosure procedures and disclosure process

Categories of information subject to disclosure

Thorough dissemination of the established procedures within the company

Points for timely disclosure procedures

Correlation with other internal procedures to which the timely disclosure procedures closely relate

Improving monitoring system covering timely disclosure system

Monitoring by internal audit department

Monitoring by corporate auditors (corporate auditors committee)

issues to be considered in developing and improving disclosure system

Points

Contents

Remarks

Management commitment: thorough dissemination of policy, enlightenment

Management commitment: explicit announcement of policy

Management should have appropriate commitment and policy towards the disclosure and explicitly announce them in writing.

Management commitment: thorough dissemination of policy, enlightenment and training

All the employees should be aware of and enlightened on the management commitment and policy explicitly announced through the internal training and seminars.

Management commitment: implementation of policy

The management should not only have appropriate commitment and policy, but should also implement it by itself.

Corporate governance taking timely disclosure into account

In considering governance, the importance of disclosure should be taken into account.

Recognition and analysis of the characteristics of the company’s own timely disclosure

Recognition and analysis of the characteristics of timely disclosure

On the basis of recognition and analysis of the company’s own characteristics, the disclosure system should be established to meet the characteristics.

Risks pertinent to timely disclosure and recognition and analysis of causes giving rise to the risks

The system should be established to appropriately recognize and analyze risks arising from disclosure (possibility of false disclosure) and to mitigate or avoid such risks.

Issues to be considered in developing and improving disclosure system
organization to implement timely disclosure activities 1

Points

Contents

Remarks

Development and improvement of organization responsible for disclosure

Development and improvement of organization responsible for disclosure

It is critical to develop an appropriate organization according to situations (e.g., characteristics, risks and efficiency) specific to the company.

Overall responsiveness to disclosure of the company as a whole

At the time of information collection: Overall internal and cooperative networks should be established so that any necessary information can be obtained extensively and promptly from all the departments concerned.

Analysis of and judgment on information: Organizations other than the disclosure department responsible for the disclosure should be involved in disclosure activities, in particular by establishing a disclosure committee.

Education concerning disclosure

In addition to the establishment of the organization, the necessary number and quality of staff members for disclosure activities should be secured.

Extent to which disclosure system is developed and improved

In addition to listed companies, the disclosure system should be developed to cover subsidiaries and unlisted parent companies subject to disclosure.

Organization to implement timely disclosure activities 1
slide13

Organization to implement timely disclosure activities 2

Improvement of timely disclosure system

Disclosure procedures and disclosure process

Subject to the disclosure procedures, the work should be divided into the following processes:① Information collection process② Analysis and judgment process③ Announcement process

Categories of information subject to disclosure

Necessity of establishing respective procedures by disclosure information category:① Occurrence② Decision③ Performance results

Thorough dissemination of the established procedures within the company

Written procedures are critical for thorough dissemination and monitoring.

Points for timely disclosure procedures

Goals to be attained in order to meet the required standards① Information collection process: promptness and extensiveness② Analysis and judgment process: timeliness, compliance, accuracy and formalness③ Announcement process: activeness and fairness

Correlation with other internal procedures to which the timely disclosure procedures closely relate

The objective of IR activities and prevention of insider trading is primarily different from that of disclosure, but the objective of disclosure should be achieved taking into account the relation with IR activities and prevention of insider trading.

Improving monitoring system covering timely disclosure system

Monitoring by internal audit department

Monitoring should be effected independent of the department responsible for disclosure.

Monitoring by corporate auditors (corporate auditors committee)

Monitoring should be effected independent of the department responsible for disclosure and business execution organs.

points for timely disclosure procedures
Points for timely disclosure procedures
  • Goals to be attained in order to meet the required standards

Process

Points

Description

Information collection process

a) Promptness

Information to be disclosed in a timely manner should be collected promptly.

b) Extensiveness

Information to be disclosed in a timely manner should be collected extensively.

Analysis and judgment process

c) Timeliness

Disclosure activities should be managed in order to implement timely disclosure.

d) Compliance

Timely disclosure activities should be effected in compliance with timely disclosure rules, applicable laws and regulations, etc.

e) Accuracy

The accuracy of information to be disclosed in a timely manner should be ensured.

f) Formalness

In addition to accuracy and compliance of information, the company should make a formal approval or decision on the disclosure after verifying the adequateness and clarity of the contents of disclosed information.

Announcement process

g) Fairness

Fairness should be considered in publishing disclosure materials.

h) Activeness

Disclosure materials should be actively published.

expectations for xbrl in developing and improving disclosure system
Expectations for XBRL in developing and improving disclosure system
  • Expected effects are:
    • more prompt and efficient preparation of disclosure materials;
    • more prompt and efficient response to revised laws and regulations and amendments to accounting standards;
    • more prompt and efficient settlements of consolidated accounts; and
    • more prompt and efficient audits by auditors
  • As a result, the following points in the disclosure procedures can be fully obtained in a compatible manner at a higher level:
    • promptness and timeliness
    • accuracy and formalness
future image centering on the tse
Future image centering on the TSE
  • XBRL technologies will be consecutively utilized to receive and deliver timely disclosure information.
  • XBRL technologies will be consecutively utilized to provide timely disclosure information.
  • In particular, the taxonomy for statutory disclosure operated by the Financial Services Agency (FSA) and the taxonomy for timely disclosure will be made consistent.

Timely Disclosure ( by XBRL )

Tokyo Stock Exchange

Web Service

Listed companies

Investors

Output by XBRL

Input by XBRL

Media institutions, etc.

tse s enlightenment activities on xbrl
TSE’s enlightenment activities on XBRL

1.Trial opening of XBRL data (within this fiscal year)

TSE plans to open the XBRL data as a trial,

hopefully by the end of this fiscal year.

Issues incorporated into data: issues used in the TOPIX core 30

Information incorporated into data: preliminary report of business results concerning final settlement of accounts (on a consolidated basis)

Expected time of opening: Within fiscal 2005

2.Opening of XBRL enlightenment website

A website for providing information on XBRL was set up in November.

http://www.tse.or.jp/listing/xbrl/

tokyo stock exchange inc http www tse or jp
TOKYO STOCK EXCHANGE, INC.

http://www.tse.or.jp

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