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Listing

Background to TSE Listing System

Under the old Commercial Code prior to the enactment of the Companies Act, the transfer of subscription rights allotted to shareholders was permitted, and at the time of issuing new shares, a company could issue subscription right certificates to shareholders by passing a resolution granting the right to subscribe for the new shares to shareholders and allowing the transfer of said subscription rights. Tokyo Stock Exchange (TSE) also established a listing system for new share subscription right certificates, under which subscription right certificates that met certain listing criteria could be listed based on an application.

When the Companies Act came into effect in 2006, it abolished the subscription rights system, which meant that the listing system for subscription right certificates was also abolished. A new listing system for subscription warrants was established to succeed the previous listing system.
After the implementation of this system, 22 subscription warrants were listed on TSE by September 2014, and based on these listings, the rules for listing subscription warrants were revised in October 2014.

New Listing

Listing Criteria
  • Subscription warrants have a listed stock, etc. as its underlying
  • Subscription warrant securities are issued by a gratis allotment of subscription warrants
  • The exercise period expires within two (2) months of the record date, etc. of the allotment
  • It has not been judged that the distribution status, etc. after listing is significantly unsatisfactory
  • The number of the subscription warrant securities is not less than 2,000 units
  • The subscription warrants are eligible for handling by a designated book-entry transfer institution in its book-entry transfer operation or it is expected that they will become so eligible by the time of listing
  • The listing is not deemed inappropriate from the perspective of the public interest or investor protection

    • (The following requirements shall apply only to non-commitment-type rights offerings*)
  • Issuance shall involve either of the processes in the following Ⅰ. and Ⅱ.:
    1. Examination by a securities company (limited to trading participants) to justify the capital increase
    2. Confirmation of the intent of shareholders by means such as a resolution of a general shareholders meeting
  • The business results and financial conditions of the listed company issuing the subscription warrant securities shall not fall under any of the following Ⅰ. and Ⅱ.:
    1. No business years recording ordinary income during the most recent two (2)years
    2. Liabilities in excess of assets as of the end of the most recent business year or quarterly accounting period
(note)
  • ･Rights offerings that do not have underwriters committed to unexercised portions are known as non-commitment-type rights offerings.

Listing Period

The period during which subscription warrant securities are listed shall be from a day on or after the effective date of the gratis allotment to a day determined by TSE that is before the end of the exercise period of the subscription warrants. In general, the delisting day for subscription warrants is 3 business days before the end of the exercise period.

In the case of subscription warrants with acquisition clauses, TSE specifies the last trading day in order to complete the settlement of all transactions by the day before the acquisition day and makes the next day the delisting day.
In addition, the listing period may be shortened in cases such as where all subscription warrants are exercised before the end of the exercise period.

Listing Supervision

Holders of subscription warrants become shareholders when they exercise the warrant. Therefore, TSE monitors and manages the exercise of subscription warrants because it is assumed that the residual number of subscription warrants will decrease rapidly during the listing period.

Specifically, the issuer reports to TSE immediately when the residual number of subscription warrants falls below 1,000 trading units and 1 trading unit.

Delisting Period
  • As a general rule, the delisting date of a subscription warrant security is three business days before the final day of the exercise period of the subscription warrant.
  • The listing period may be shortened if the subscription warrants are subject to an acquisition clause, if all the subscription warrants are exercised, or for similar reasons.