Market News
May 19, 2023 TSE Cancellation of Designation of Security on Alert: EduLab,Inc.
TSE has cancelled the designation of Security on Alert as follows.
*This decision is based on the results of the examination by Japan Exchange Regulation.
| １．Issue Name | EduLab,Inc. stock (Code:4427, Market Segment: Growth Market) |
| ２．Date of Cancellation of Designation of Security on Alert | May 20, 2023 (Sat.) |
| Provision | Securities Listing Regulations, Rule 503, Paragraph 4, Item (1) (Due to TSE not deeming there to be any problems in the internal management system, etc. based on the Written Confirmation of Internal Management System submitted by a listed company) |
| ３．Reason | EduLab, Inc. (hereinafter "the Company") disclosed, on Oct. 15, 2021, the receipt of an interim report from the committee concerning inappropriate accounting by the Company and the continuation of additional investigations, in addition to corrections to financial results for past fiscal years. In response to the completion of the investigation by the special investigation committee, on Feb. 28, 2022, the Company disclosed the final report of the committee and corrections to the financial results for the past fiscal years again. These disclosures revealed such facts as that provisions for business losses in joint operations with a business partner were not recorded, sales figures from an affiliate of the Company were overstated, and the scope of consolidation of subsidiaries was adjusted by the Company and its subsidiaries. In addition to such revelations, it was newly found that the Company brought forward the sales recognition for transactions relating to software requirements definition for the Company's proprietary software, email delivery, among other things. The following three points were found to be the reasons for this: - Directors of the Company, including the former President and Chief Executive Officer were lacking in compliance awareness, attention to appropriate financial reporting, and knowledge about accounting as a corporate manager of a listed company, because, for instance, they could have noticed the beginnings of the inappropriate accounting and prevented it, but there were no traces of questions being raised. - The Company has yet to develop and operate its internal control system to prevent and detect inappropriate accounting and the functions of the administrative units and internal audit unit were insufficient, as instanced by the fact that many sales transactions were corrected. - The contract process undergone by the Company to consider economic rationality, price terms, among other things was inaccurate, as demonstrated by the fact that the Company group set prices unreasonable to actual transactions and backdated contracts in transactions between affiliated companies, with business partners, and others. Based on these facts, TSE deems that improvements to the Company's internal management system, etc. are highly necessary. As such, TSE designated the Company's stock as a Security on Alert on Apr. 1, 2022. TSE checked the Written Confirmation of Internal Management System and other documents submitted by the Company one year after the designation. As a result, it deems that the internal management system, etc. have been improved and are being operated accordingly as explained below. - All directors involved in the series of accounting problems have resigned, a new management structure has been put in place, and training and has been continuously provided to officers and employees to promote understanding of internal controls and internal rules so as to foster awareness of compliance and proper accounting procedures, and to use case studies of cases where accounting questions have arisen. - As internal control systems to prevent and detect inappropriate accounting, review of the internal approval process and other internal controls have been established an increase in the number of personnel in the management and internal audit units and enhanced monitoring by the internal audit department. - As a system and framework to monitor the proper execution of contracts and transactions, rules and workflows related to transactions among affiliates and with parties such as a business partner are reviewed, and monitoring processes, etc. to detect abnormal values are in place and in operation. Besides the above, TSE deems that the Company has established an appropriate internal management system and is operating it accordingly. Based on the above, TSE has decided to cancel the designation of the Company's stock as a Security on Alert, since there are no problems with the internal management system, etc. of the Company. |
Current Designations of Securities on Alert
Designation History of Designation of Securities on Alert
Designation History of Designation of Securities on Alert
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