Market News
Apr. 04, 2023 TSE Decision on Delisting, etc.: Asia Development Capital Co.Ltd.
TSE has decided on delisting and designation as Securities to Be Delisted as follows.
* This decision is based on the results of the examination by Japan Exchange Regulation.
１．Delisting and Designation as Securities to Be Delisted
| （１）Issue Name | Asia Development Capital Co.Ltd. stock (Code: 9318, Market Segment: Standard Market) |
| （２）Period of Designation as Securities to Be Delisted | From Mar. 29, 2023 (Wed.) to Apr. 29, 2023 (Sat.) |
| （３）Delisting Date | Apr. 30, 2023 (Sun.) (Note) In cases where circumstances in which the company should be promptly delisted occur, TSE may change the period of designation as Securities to Be Delisted and the delisting date. |
| （４）Provision | Securities Listing Regulations, Rule 601, Paragraph 1, Item (9), Sub-item e (Due to falling under the case where the Exchange deems that the internal management system, etc. of a listed company has not improved on the basis of the written confirmation of the internal management system resubmitted by the listed company.) |
| （５）Reason | Asia Development Capital Co. Ltd. (hereinafter "the Company") disclosed an investigation report of the special investigation committee concerning inappropriate accounting processing on Jun. 22, 2021, and disclosed corrections to the financial results for past fiscal years on Jun. 30, 2021. These disclosures revealed that, in sale and purchase transactions of storage batteries in which a subsidiary of the Company participated as part of its commercial distributions, storage batteries had not been physically delivered and money had been routed back to buyers, which led to significant corrections to its financial results, including the cancellation of sales, purchases, and accounts receivable related to transactions conducted Nov. 2017 through Apr. 2019. It is also deemed that these corrections to the financial results were caused mainly by the following facts: (a)There were deficiencies in the system for sharing, consulting, and examining information when stating transactions. (b)Awareness of the risk of errors in accounting processing and financial reporting errors lacked and research to mitigate the risk was insufficient. (c)The Company's director in charge of the storage battery business concurrently held the position of director of the finance and accounting department of the Company and the position of the director of the subsidiary that conducted the storage battery business, resulting in a concentration of information and authority that caused a dysfunctional check and balance system among the Company's board members and statutory auditor. (d)There was a deficiency of exempting important matters concerning subsidiaries from approval resolution at the Company's board of directors meetings. (e)Although the Company's statutory auditor had concerns about the commercial distributions, he did not conduct sufficient investigation to identify facts. Based on the above, TSE deemed that improvements to the Company's internal management system, etc. were highly necessary. Accordingly, it designated the Company's stock as a Security on Alert on Aug. 7, 2021. TSE examined the Company's internal management system, etc., based on the written confirmation of internal management system submitted by the Company one year after said designation, and found mainly the following facts: (a)Although some improvements were made to the internal management system in accordance with the improvement plan disclosed by the Company on Mar. 31, 2022, based on the findings of the third-party committee established by the Company on Aug. 10, 2021, there is still insufficient awareness of compliance among officers and employees, as evidenced by the fact that loan certificates are easily prepared with the representative's seal affixed. (b)There are still deficiencies in the Company's system of information sharing, discussion, review, and checks and balances among officers. (c)A number of unorganized decision-making authorities, inconsistencies in internal regulations, and operational deficiencies were found. (d)Internal approval procedures are not being followed by the full-time statutory auditor to identify deficiencies and corrective actions. (e)Insufficient internal audits of the subsidiary, which were limited to formal hearings without a full understanding of the actual business conditions, etc. As such, the Company still has problems in its internal management system, etc., and TSE continued the designation of the Company's stock as a Security on Alert on Sep. 28, 2022. Based on the written confirmation of the internal management system resubmitted by the Company one year and six months after the designation as a Security on Alert, TSE have examined the internal management system, etc., and found the following situations: ‐The Company was not aware of its securities subsidiary's regulations regarding the exchange of information among the Company and its group companies, and therefore did not require its securities subsidiaries to exchange information in accordance with the Company's regulations, and its securities subsidiaries did not share sufficient and timely information necessary for the Company's business management. Also, due to tenuous cooperation between the Company's statutory auditor office and the department in charge of internal audits at the securities subsidiary and lack of cooperation between the board of statutory auditors and the auditor of the securities subsidiary, the Company was not fully aware of the situations of the securities subsidiary pointed out by internal audits and the performance of duties by the auditors of the securities subsidiary. Accordingly, the Company did not have an effective system in place to obtain necessary information on the actual business conditions of its securities subsidiary and other necessary information in a timely and appropriate manner. ‐The Company did not properly understand actual conditions of risk factors and risk management of advances that could arise from margin transactions of listed stocks for which the securities subsidiary accepts orders, nor did it consider the impact on its Company's entire corporate group if the risk were to materialize. ‐The Company's responsible department is not sufficiently aware of the details of the operations of its overseas subsidiaries, and the Company's management of said subsidiaries is not functioning. ‐There are deficiencies in the operation of the board of directors meetings. For example, procedures for deliberations at meetings of the board of managing directors and executive officers, which are supposed to be held prior to the board of directors meetings and procedures for written resolutions of the board of directors are not being implemented in accordance with the relevant internal rules and regulations. ‐There are still deficiencies in information sharing, consultation, review, and checks and balances among officers, such as that outsourcing contracts for the purpose of supporting the Company's board of statutory auditors were concluded without information sharing with or consultation with the board of statutry auditors. ‐Compliance awareness among officers and employees is still inadequate, such as that the storage of contracts concluded by the Company and other documents is inadequate and the Company has not yet corrected inconsistencies in internal rules and regulations. Taking all of the above into comprehensive consideration, TSE deems that the Company's internal management system still has problems for which improvements have not been made. Therefore, TSE has decided to delist the stock of the Company and shall designate the stock as a Security to Be Delisted. |
２．Exclusion from Securities in Lieu of Money
The stock of the Company will be excluded from securities in lieu of money for the following items from Mar. 30, 2023 (Thu.) inclusive.
- Customer margin for margin transactions and when-issued transactions
- Trading margin for when-issued transactions
- Trading participant security money
- Participant bonds
Note: TSE has withdrawn the designation of the above issue as Securities on Alert in connection with the decision on delisting, etc.
Current Designations of Securities Under Supervision & Securities to Be Delisted
Designation History of Securities Under Supervision & Securities to Be Delisted
Designation History of Securities Under Supervision & Securities to Be Delisted
DISCLAIMER: This translation may be used for reference purposes only. This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. This translation is subject to change without notice. Tokyo Stock Exchange, Inc. and/or Japan Exchange Regulation shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with regard to this translation.
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