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Mar. 26, 2025 TSE Designation of Security on Special Alert and Imposition of Listing Agreement Violation Penalty: Life Intelligent Enterprise Holdings Co.,Ltd.
TSE has designated a stock as a Security on Special Alert and imposed a listing agreement violation penalty as follows.
*This decision is based on the results of the examination by Japan Exchange Regulation.
| １．Issue Name | Life Intelligent Enterprise Holdings Co.,Ltd. stock (Code: 5856, Market Segment: Standard Market) |
| ２．Date of Designation of Security on Special Alert |
Mar. 27, 2025 (Thu.) |
| Reason (Related Clause) |
Due to falling under a case where TSE deems that the listed company has violated the provisions of the matters to be observed in the Code of Corporate Conduct (Development of System and Structure Necessary to Ensure Appropriateness of Business) and that the improvement of the internal management system of such listed company is highly necessary (Securities Listing Regulations, Rule 503, Paragraph 1, Item (4)) |
| ３．Listing Agreement Violation Penalty Total |
JPY 14.4 million |
| Reason (Related Clause) |
Due to falling under a case where TSE deems that the listed company has violated the provisions of the matters to be observed in the Code of Corporate Conduct (Development of System and Structure Necessary to Ensure Appropriateness of Business) and has undermined the confidence of shareholders and investors in the TSE market (Securities Listing Regulations, Rule 509, Paragraph 1, Item (2)) |
| ４．Details of Reason | On Nov. 18, 2024, Life Intelligent Enterprise Holdings Co., Ltd. (hereinafter "the Company") disclosed the results of an investigation by the governance committee, which was established as an advisory committee to the Company's board of directors and is made up of external experts. The investigation concerned the inappropriate actions of the former representative director and president (hereinafter "the Former President"). The inappropriate actions included increasing his own executive compensation without following the proper procedures such as obtaining the approval of the board of directors. They also included transferring money to his personal and other accounts. As a result, it was found that the inappropriate actions had been carried out due to the Former President's significant lack of awareness regarding compliance. It was also found that the company's internal controls had been rendered practically ineffective. For the most part, the following points were identified as the context to these events. - As a manager, the Former President significantly lacked an awareness of compliance. He had acted inappropriately on multiple occasions. For instance, he ordered large increases in his executive compensation and received such payments in spite of the fact that the board of directors had not given him the authority to determine such matters. He also transferred money from the Company’s account to his personal account without obtaining the approval of the board of directors. In addition, in his management capacity the Former President rendered internal controls ineffective. For example, he ordered the execution of the inappropriate acts while engaging in such forms of power harassment as verbally abusing and insulting the executives who opposed his policies. - The current representative director and president also lacked an awareness of compliance. At the time that the inappropriate actions by the Former President were taking place, he held such positions as director and accounting department manager. By executing the inappropriate actions and related orders without reporting them to the board of directors or the audit committee, he failed to exercise appropriate checks on and oversight over the Former President and overlooked and condoned the inappropriate actions. - The board of directors functioned in name only. While board resolutions are required for such matters as business investments and starting new businesses, the board of directors did not actually pass such resolutions. Instead, it had created board meeting minutes after the fact to give the appearance that such resolutions had been passed at extraordinary board meetings. Furthermore, the directors apart from the Former President failed to adequately fulfill their own roles as directors. They were negligent in not demanding that any specific corrections or improvements be made regarding the actual state of the board. - The audit and supervisory committee failed to correct the inappropriate actions by the Former President and his invalidation of internal controls. It did not adequately exercise its audit function in order to ensure the appropriateness of execution of duties by the directors and by the board of directors. In addition, the internal audit system was not adequately developed, and its functions were not being exercised. The internal auditing office was only nominally staffed with sales personnel who were not actually carrying out any work as auditors, and the members of the audit and supervisory committee were going through the motions of formulating an internal audit plan and dealing with internal control reports. - The Company’s board of directors and other bodies did not function properly for an extended period, and there were extremely serious deficiencies in its internal management system. The Company had corrected past financial statements, citing the lack of compliance awareness of the Former President and the other management members at the time as the main reason and the context for doing so. It had also received two requests from TSE for an improvement report. In spite of this, the fundamental causes behind the requests were not resolved, and a series of inappropriate actions occurred as a result of the invalidation of internal controls by the Former President. Considering the above as a whole, TSE has decided to designate the Company’s stock as a Security on Special Alert. This is because it deems that the Company has violated the provisions of the matters to be observed in the Code of Corporate Conduct (Development of System and Structure Necessary to Ensure Appropriateness of Business) by failing to appropriately develop and operate the system and structure necessary to ensure the appropriateness of business and because it also deems that improvements to the Company's internal management system, etc. are highly necessary. Moreover, since TSE deems that this case has undermined the confidence of the Company’s shareholders and investors in its markets, it will impose a listing agreement violation penalty on the Company. This is because, as described above, there were extremely serious deficiencies in the Company’s internal management system for an extended period owing to the fact that inappropriate actions had occurred as a result of the invalidation of internal controls by the Former President and that the Company’s board of directors and other bodies were not functioning properly. |
Current Designations of Securities on Special Alert
Designation History of Designation of Securities on Special Alert
Listing Agreement Violation Penalty
Designation History of Designation of Securities on Special Alert
Listing Agreement Violation Penalty
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