Market News
Jul. 04, 2023 TSE 【Updated】Decision on Delisting, etc.: DDS,Inc.
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 | DDS,Inc. stock (Code: 3782, Market Segment: Growth Market) |
| （２）Period of Designation as Securities to Be Delisted | From Jul. 3, 2023 (Mon.) to Aug. 3, 2023 (Thu.) |
| （３）Delisting Date | Aug. 4, 2023 (Fri.) (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 b (Due to falling under a case where the Exchange deems that improvement can no longer be expected in the internal management system, etc. of a listed company before the listed company submits the Written Confirmation of Internal Management System.) |
| （５） Reason （updated on 7/4/2023） |
Previously, DDS, Inc. (hereinafter "the Company") disclosed an investigation report of a third party committee concerning inappropriate accounting processing at the Company on Aug. 8, 2022, amendments to its financial statements for previous fiscal years on Aug. 12, 2022, and further amendments to its financial statements for previous fiscal years on Sep. 2, 2022. These revealed that the Company conducted inappropriate accounting processing mainly on the initiative of the former Representative Director and Chairperson. 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. 29, 2022. Then, on May 15, 2023 the Company submitted a further amendment report to revise the reason for submission and other information included in the report regarding amendments to its Annual Securities Report and other reports that had been submitted on Sep. 2, 2022. The further amendment report revealed that the Company conducted acts such as the submission of an amendment report to its securities report and other reports on Aug. 12, 2022 and its quarterly securities report for the first quarter of the fiscal year ended Dec. 2022 knowing that there was a reasonably high risk of these containing false information. Also, TSE deemed that the Company did not mention or give comment on these acts in its improvement plan/status report (published on Feb. 28, 2023; hereinafter the "Improvement Plan"). Therefore, TSE designated the stock as a Security Under Supervision (Examination) on May 15, 2023. Progress of improvement of the internal management system, etc.: The Company sent responses to Japan Exchange Regulation (JPX-R) regarding the contents of the further amendment report and the progress of the Improvement Plan, among other things. Based on these, TSE examined the progress of improvement of the internal management system, etc. and found the following: ・ The Company has significantly fallen behind in advancing the Improvement Plan, including the development of internal rules that will serve as a premise for its implementation. In addition, there is no evidence of sufficient discussion at the board of directors regarding measures to eliminate such delays, nor is there any indication of policies to deal with them, such as expanding the personnel involved. ・ While the Improvement Plan includes sufficient discussion and investigation at the board of directors and other management, there is no evidence that the aforementioned acts are regarded by said management as a serious matter that may affect the continuation of the listing or that sufficient discussion is taking place. ・ There are several departments where employees do not even know how to access the internal rules, and combined with the aforementioned delay in the development of the internal rules, it is deemed that it will take considerable time to foster a corporate culture that would give compliance and governance top priority as stated in the Improvement Plan. ・ Despite the fact that the Improvement Plan stated that the Company would develop a workflow for the Compliance Management Committee, an internal committee of the Company, by the end of Feb. 2023, it not only failed to do so but also did not improve the existing formulaic functions of the committee, which meant that it did not recognize the acts as compliance issues, and took a long time to submit the further amendment report. Likelihood of improvement: Although less than one year has passed since the designation as a Security on Alert, after considering the possibility of improvement in the internal management system, etc. of the Company in light of its designation as Security on Alert (Examination) and the following factors, among others, TSE has deemed that this possibility no longer exists. ・ The Improvement Plan does not mention or give comment on the aforementioned acts, and the Company has not discussed how to prevent such acts. Even after the acts were discovered, the Company has not indicated even an intention to start an objective investigation into the facts and causes, which are indispensable for reviewing the Improvement Plan. ・ It is deemed that the recurrence prevention measures that the Company included in its responses to JPX-R in light of the submission of the further amendment report were not formulated based on an objective review of the acts and lacked reasonable supporting evidence. ・ The Company does not fully understand what the problems are in its internal management system, etc. As a result, it continues to be unaware of the necessity of improvements until the specific individual issues are pointed out in the course of examination, and has not taken measures that can sufficiently make up for the delay in and failure of implementing the Improvement Plan. ・ In addition, the Company has announced that the president and other management will continue to take the lead in developing the Improvement Plan, despite having not clarified the management responsibility of the same president and other management who led the acts, or taken effective recurrence prevention measures. Conclusion: In overall consideration of the above situation, TSE deems that there are significant deficiencies in a substantial proportion of the Improvement Plan and that there are serious problems in the improvement status of the internal management system, etc. In addition, it deems that there is no effective and reasonable plan to improve the internal management system, etc. during the improvement period even if the designation as a Security on Alert continues. Therefore, TSE deems that improvement in the internal management system, etc. of the Company can no longer be expected and has decided to delist its stock and designate it 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 Jul. 4,
2023 (Tue.) 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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