Market News
May 19, 2023 TSE Cancellation of Designation of Security on Alert: G Three Holdings CORPORATION
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 | G Three Holdings CORPORATION stock (Code: 3647, Market Segment: Standard 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 | G Three Holdings CORPORATION (hereinafter "the Company") disclosed an investigation report of a special investigation committee concerning inappropriate accounting processing on Feb. 2, 2022 and corrections to its past earnings reports on Feb. 18, 2022. These disclosures revealed that the former representative director and president had neglected to ensure the appropriateness of accounting processing for business related to the solar power which he was actively involved in. For example, without appropriately reporting background information and funding flows to the board of directors, sales were recorded despite the transactions not satisfying requirements for revenue recognition. It was deemed that the following contributed to the situation. - In 2015, it came to light that the accounting for a transaction during business related to solar power had been inappropriately processed, and that although the Company had disclosed preventive measures against recurrence based on the recommendations of the investigation report of a third-party committee on Nov. 2, 2015 and Jan. 29, 2016, the Company failed to implement these measures appropriately. - The former representative director and president was the only person that was aware of the entire situation regarding the business related to solar power but he failed to report the situation appropriately to the board of directors. - The Company's board of directors should have carried out careful deliberations based on the preventive measures against recurrence that were mentioned above; however, as a summary of discussion points was not distributed in advance, the agenda was approved without adequate deliberation. - The audit committee verified evidence related to the board of directors' agenda and carried out deliberations despite not having gathered adequate internal information as all members were part-time members and no full-time assistant had been assigned. - The business process was unclear and the division of duties for business related to solar power had not been well established. - The Company had not put a system in place to appropriately keep track of information on related parties and prevent conflicts of interests when executing business transactions. 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. - The information sharing system has been improved mainly by reporting on the progress of business at management meetings, by sharing and discussing materials related to matters to be discussed at the board of directors in advance, and by holding study sessions on the Company's business for officers and employees. - The board of directors has established a system to stimulate its deliberations, which previously had been treated as a mere formality, mainly by ensuring distribution of materials in advance, deliberating agenda items based on discussions at management meetings, and by appointing candidates for outside directors based on newly clarified appointment criteria. - The audit committee's information gathering system has been improved, for example, by the establishment of a secretariat for the audit committee, the appointment of a standing audit committee member, and the participation of the standing audit committee member in management meetings. - After the overall business processes were reviewed, its internal rules were developed, and the business processes are being operated in accordance with the rules. - Regarding business transactions with related parties, systems have been established to keep track of information on related parties and to prevent conflicts of interest when executing business transactions, for instance, systems for requesting advice from or hearing opinions from the compliance committee that consists of outside directors and outside experts. In addition, related-party management rules have been developed and a list of related parties is regularly updated. 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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