| ３．Reason |
TOSHIBA CORPORATION (hereinafter "the Company") disclosed an investigation report of the Independent Investigation Committee concerning inappropriate accounting processing on Jul. 20, 2015 and disclosed corrections to past earnings reports, etc. on Sep. 8, 2015.
These disclosures revealed that, among others, the management demanded profit improvement, which was considered difficult to achieve in the course of ordinary business activities, from business divisions, to which the business divisions responded by conducting inappropriate accounting; the board of directors and the audit committee, which were respectively supposed to supervise business execution and audit, did not make the business divisions rectify the inappropriate accounting, showing insufficient understanding of the actual situation in the business and inadequate sharing of information with the business divisions; divisions that should have monitoring functions, such as the finance division and the corporate audit department, did not function adequately; and there was scant awareness of conducting appropriate accounting processing throughout the Company.
As such, TSE deemed that improvement of the internal management system, etc. of the Company was highly necessary and designated its stock as a security on alert on Sep. 15, 2015.
TSE has checked the written confirmation of internal management system submitted by the Company after one (1) year elapsed since the designation as a security on alert and deemed that the Company has enacted measures toward improvement, including reviewing a management policy that excessively pursues short-term profit; reviewing the composition and changing how the board of directors and the audit committee are operated, etc.; and reorganizing and enhancing the functionality of divisions that are supposed to exercise monitoring functions.
However, some problems related to the accounting processing, etc. were still found in the Company after the designation as a security on alert, which show that the Company needs to implement further measures on matters such as ensuring compliance and affiliate company management. Therefore, TSE deems that it still needs to verify the implementation and progress of such measures.
Based on the above, TSE deems the situation at the Company to fall under a case where there is a problem in the internal management system, etc. As such, TSE has decided to continue the stock's designation as a security on alert.
If one (1) year and six (6) months elapse from the date of designation as a security on alert (Mar. 15, 2017), and TSE deems that the internal management system, etc. of the Company have not improved after reviewing the situation, including the content of the written confirmation of internal management system to be resubmitted by the Company, the stock of the Company shall be delisted. |
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