1. Securities Identification Code Committee
  2. Sector Classifications
  3. FAQ

Sector Classifications

Q1. How is the sector classification of a listed company decided?
A1. The Securities Identification Code Committee refers to the "Japan Standard Industrial Classification" established by the Ministry of Internal Affairs and Communications as the standard for sector classifications. However, in determining the sector classification of individual issues, the standard is applied in accordance with the "Guidelines for Sector Classifications" established by the SICC.
Q2. When does the sector classification of a listed company change?
Are there criteria for changes in sector classification?
A2. A change in a company's sector classification is made when the company's business is deemed to have changed to a substantial degree from what was determined at the time of initial listing. The criteria as stipulated in the "Guidelines for Sector Classifications" are that the sales revenue of the current main line of business (sales in the new sector) is at least twice the sales revenue of the current sector, and that this has been the case for two consecutive years. In addition, if a merger or transfer of business takes place and the nature of the business changes significantly, an examination will be conducted, and if the company falls under the criteria, the company's sector may be changed within two years of its Annual Securities Report.
Q3. What is the relationship between the securities code of a stock and its sector classification?
A3. In the past, each sector had its own securities code range, such as xxxx to yyyy, so that the sector could be identified by looking at the code. However, depending on the sector, there may be too many stocks for the allocated range of numbers, so a completely different number is assigned in some cases. In addition, since a company's code is not changed even if its sector classification is changed after the company is listed, there is no relationship between the code and the sector classification.
Q4. What are the specific procedures for changing sector classifications?
A4. The Securities Identification Code Committee checks and reviews the company’s Annual Securities Report for details of the company's business, and the company is notified accordingly if it falls under any of the change criteria. The change is implemented on the first business day of April or October depending on the company's fiscal year end. Please note that we also accept inquiries from listed companies and securities companies on examinations regarding change in sector classification, so please contact the SICC office. (There is no application form, but we may request some information during the examination process.)