Market News
Aug. 29, 2023 TSE Cancellation of Designation of Security on Alert: Agile Media Network 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 | Agile Media Network Inc. stock (Code: 6573, Market Segment: Growth Market) |
2.Date of Cancellation of Designation of Security on Alert | Aug. 30, 2023 (Wed.) |
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 | Agile Media Network Inc. (hereinafter the "Company") disclosed an investigation report of the third-party committee concerning inappropriate accounting processing, etc. at the Company on Apr. 11, 2022, and then corrections to financial results for past fiscal years on May 11, 2022 based on the result of said investigation. These disclosures revealed, among other things, that a director of the Company who was then chief financial officer (hereinafter the "Director & CFO"), had led reporting of fictitious sales immediately after the Company's initial listing and that said Director & CFO had been continuously conducting improper cash outflows even before the initial listing. In addition, while the Company disclosed corrections to financial results for past fiscal years on Jul. 14, 2021 (hereinafter the "Previous Corrections"), it was revealed that the investigation by the third-party committee established before said corrections (hereinafter the "Previous Investigation") was completed without clarifying the full extent of inappropriate accounting processing, due mainly to the dysfunction of the auditors' audit and the deletion of several electronic data that could have served as evidence of the involvement of the then representative director & president, which meant that the Previous Corrections were found to be inaccurate and inadequate. As a background to these violations, the following internal management system deficiencies were identified in addition to the "invalidation of the internal control system by the Director & CFO", "inadequate systems that overlooked the invalidation", "dysfunction of the auditors' audit and internal audit", and "weak employee compliance awareness" which were identified in the Previous Investigation. - The Company's internal management system for early detection and correction of fraud was not functioning, as several officers and employees, including auditors, failed to take necessary corrective actions despite the fact that they were aware of suspicions of fictitious sales led by the Director & CFO, which were not identified in the Previous Investigation, before and after the conclusion of the Previous Investigation, and left the matter until another third-party committee was established based on suggestions from an external organization. - The Company failed to take proactive measures to investigate the facts in order to properly disclose company information after the fraud was discovered, including the deletion by several officers and employees, including the then representative director & president, before and after the Previous Investigation of several electronic data that could have been used as evidence. Based on these facts, TSE deemed that improvements to the Company's internal management system and other aspects were highly necessary. As such, TSE designated the Company’s stock as a Security on Alert on Jun. 16, 2022. TSE has now 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 Company’s internal management system and other aspects have been properly improved as explained below. - The Company is striving to strengthen its supervisory functions through effective operation of the board of directors, based on the renewed management structure, mainly through the following initiatives. (i) Making efforts to enhance the content of reports to the board of directors and to invigorate discussions at board of directors' meetings (ii) Enhancing transparency in the process of selecting candidates for officers through a non-statutory Nomination Committee, and (iii) Ensuring the appropriateness of the decision-making process up to board of directors' meetings by utilizing a Governance Enhancement Committee, which consists of external experts. - In order to ensure the effectiveness of audits by the Audit and Supervisory Committee and internal audits, the Company is strengthening its audit function mainly through the following measures, and is steadily implementing those audits. (i) Strengthening collaboration between the Audit and Supervisory Committee and the Internal Audit Office through mutual information sharing (ii) Expanding the authority of the full-time member of the Audit and Supervisory Committee and the Internal Audit Office to access in-house information (iii) Securing a full-time person in charge of the Internal Audit Office, and (iv) Introducing a system where the Internal Audit Office is supported by an external expert. - The Company is working to improve the compliance awareness of officers and employees mainly through the following measures. (i) Regular compliance training and comprehension tests led by a newly established department specializing in compliance (ii) Formulation of policies and implementation of various measures to establish professional ethics, and (iii) Periodic evaluation of the status of their achievement. Based on the above, TSE deems it appropriate to cancel the designation of the stock of the Company as a Security on Alert since it deems that there are no problems with the internal management system and other aspects of the Company. |
Designation History of Designation of Securities on Alert
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.
Enquiry
Tokyo Stock Exchange, Inc. Listing Department, Corporate Disclosure Office, Planning & Coordination, Listed Company Services
TEL:+81-3-3666-0141(Switchboard)