Market News
Apr. 15, 2025 TSE Request for Improvement Report and Public Announcement Measure: TOSHIN HOLDINGS CO.,LTD
TSE has requested an Improvement Report and taken the Public Announcement Measure as follows.
*This decision is based on the results of the examination by Japan Exchange Regulation.
| １．Company Name | TOSHIN HOLDINGS CO.,LTD (Code: 9444, Market Segment: Standard Market) |
| ２．Improvement Report Submission Deadline |
May. 16, 2025 (Fri.) |
| Reason (Related Clause) |
Due to disclosed information containing false statements and improvements being deemed highly necessary (Securities Listing Regulations, Rule 504, Paragraph 1, Item (1)) |
| ３．Date of Public Announcement Measure |
Apr. 15, 2025 (Tue.) |
| Reason (Related Clause) |
Due to disclosed information containing false statements and public announcement being deemed necessary (Securities Listing Regulations, Rule 508, Paragraph 1, Item (1)) |
| ４．Details of Reason | TOSHIN HOLDINGS CO.,LTD (hereinafter "the Company") disclosed an investigation report of a third party committee concerning inappropriate accounting processing in the Company group on Feb. 14, 2025 and disclosed corrections to past earnings reports on the same day. These disclosures revealed that, among other things, in the Company’s mobile telecommunications business (hereinafter referred to as the "Mobile Sales Business") which the Company group conducts as a primary agent for mobile carriers, the obligation amounts for cash payments primarily made to end-users who have concluded line contracts (hereinafter referred to as "cashbacks") should have been recorded at the time the payment was promised to the end-user, but instead the Company had been recording cashbacks as an expense at the time of actual payment. Such inappropriate processing was found on examination of the coverage of the obligations and the accounting processing of cashbacks. As a result, the Company was found to have made false disclosures in violation of the listing rules for earnings reports, etc. from the fiscal year ended Apr. 2023 to the first quarter of the fiscal year ended Apr. 2025. As a result of the consequent corrections to past earnings reports, it became clear that the Company's operating income, ordinary income and net income attributable to owners of the parent company for the fiscal year ended Apr. 2023 were actually at least 30% less than those previously disclosed, among other matters. The following points were identified as the main reasons for these disclosures. - The Company's Representative Chairman, President & CEO (hereinafter referred to as "Chairman and President") held significant influence within the Company, creating an environment where other executives and employees found it difficult to express candid opinions to him. In this context, employees in the Mobile Sales Business and the director in charge of accounting faced intense pressure over how to secure the Chairman and President's approval for achieving targets and submitting cashback payment requests. As a result, over an extended period, they allowed portions of the cashback payments to be deferred to subsequent months. - The supervisory and oversight functions of the Company's board of directors regarding accounting and financial matters were not adequately exercised, as instanced by the fact that it did not sufficiently investigate or deliberate on the business strategy, risk management, and significant accounting processing of the Mobile Sales Business. - The Company's board of auditors primarily received reports on the results of internal audits and showed no evidence of conducting audits aimed at early detection and correction of management issues, including cashbacks. Consequently, the audit function was not adequately exercised to ensure the proper execution of duties by directors and the board of directors. - The Company lacked established rules including for scope of duties and approval authority, resulting in the de facto concentration of power in the hands of the Chairman and President. - The Company's internal audit office primarily focused on verifying the items on a predetermined checklist and, as a result, did not have a detailed understanding of this matter and was unable to conduct a thorough investigation. As described above, the Company made disclosures that were found to be false and were recognized as having a substantial impact on investors' investment decisions, caused mainly by the influence of the Chairman and President, a results-oriented corporate culture, dysfunction in governance, lack of established rules including for scope of duties, and insufficient monitoring by the internal auditing office. TSE has decided to require the Company to submit a report that includes the circumstances behind the incident and the Company's measures for improvement in order to encourage the Company to thoroughly implement such measures for timely disclosure. In addition, as this case is deemed to require public announcement, TSE has decided to implement the Public Announcement Measure. |
Companies Requested to Submit Improvement Reports/Improvement Status Reports
Public Announcement Measure
Public Announcement Measure
- After submission of the Improvement Report by the Company, it will be made available on the JPX website (https://www.jpx.co.jp/listing/measures/improvement-reports/index.html) and through the TDnet database service (both available only in Japanese).
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