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May 02, 2025 TSE Grace Period pertaining to Reexamination due to Violation against a Written Oath, and Imposition of Listing Agreement Violation Penalty: SUNWELS Co.,Ltd.
As set out below, a listed company’s shares will enter into a grace period pertaining to reexamination due to violation against a written oath, and TSE has imposed a listing agreement violation penalty.
*This decision is based on the results of the examination by Japan Exchange Regulation.
| １．Issue Name | SUNWELS Co.,Ltd. stock (Code: 9229, Market Segment: Prime Market) |
| ２．Grace Period Pertaining to Reexamination |
From Apr. 30, 2025 (Wed.) to Apr. 30, 2026 (Thu.) |
| Reason (Related Clause) |
Due to falling under a case where TSE deems a company has violated the matters under the written oath for application for transfer of market segment, and had not met the criteria for segment transfer (Securities Listing Regulations, Rule 601, Paragraph 1, Item (10), b.) |
| ３．Listing Agreement Violation Penalty Total |
JPY 62.4 million |
| Reason (Related Clause) |
Due to being deemed to have violated the timely disclosure rules and the matters sworn in the written oath, thereby undermining the confidence of shareholders and investors in the TSE market (Securities Listing Regulations, Rule 509, Paragraph 1, Item (1) and Item (3) of the same paragraph) |
| ４．Details of Reason | SUNWELS Co.,Ltd. (hereinafter "the Company") disclosed on Feb. 7, 2025 an investigation report prepared by a special investigation committee regarding inappropriate accounting processing at the Company. It subsequently disclosed corrections to its earnings reports, etc. for the fiscal year ended Mar. 2021 to the first quarter of the fiscal year ended Mar. 2025 on Feb. 12, 2025. These disclosures revealed that the Company overstated its sales and profits due to excessive claims for medical fees (hereinafter referred to as “the inappropriate operations”), and that the correction of the past financial results associated with the overstatement would result in a decrease of more than 40% in ordinary income and more than 60% in net income for the fiscal years ended Mar. 2023 and Mar. 2024. In addition, the Company was first listed on the Growth Market in Jun. 2022 and transferred to the Prime Market in Jul. 2024, at which time, despite having submitted written oaths stating that all documents submitted to TSE were true, the management was unaware of the inappropriate operations. As a result, the Company conducted a public offering and secondary distribution at the time of its initial listing and segment transfer having obtained approval on the basis of application documents containing false financial figures. Furthermore, as a result of the corrections to financial results, it was found that the Company did not meet some of the examination criteria for segment transfer to the TSE Prime Market (namely, “profits” under the initial requirements and criteria including “effectiveness of corporate governance and internal management system” under the contents of the listing examination). For the most part, the following points were identified as the context to these events. - The Company had listed the possibility of inappropriate claims for medical fees in the business risks section in its annual securities report; however, due to a lack of risk management awareness and sensitivity to laws and regulations regarding the calculation of medical fees, it did not conduct sufficient analysis or evaluation of the risk of inappropriate claims and had little awareness that incidents such as the inappropriate operations could occur at the Company. - Appropriate measures to prevent the inappropriate operations, such as making staff aware of appropriate practices related to at-home nursing care, conducting training, and establishing a system for checking visit duration and whether the carer was accompanied, were not taken due to the management's lack of awareness of said risks. - The management missed the chance for early correction of the inappropriate operations as, despite multiple opportunities to recognize the presence of inappropriate claims through issues raised by residents and employees, the whistle-blowing system, and in-house investigations, among other things, they failed to take appropriate actions such as conducting detailed investigations. - Internal controls for detecting inappropriate claims were dysfunctional in that, among other things, internal audits were limited to surface-level checks such as the presence of documents, and the whistle-blowing system was not operated in accordance with internal rules. The Company will be subject to an examination to determine whether it meets the criteria equivalent to the initial listing criteria of the Prime Market, and its shares will enter a grace period for the reexamination. This is because, as already described above, TSE deems that the Company violated matters under the written oath for transfer of market segments and does not meet the criteria for its segment transfer, and because the management was unaware of the inappropriate operations that occurred at the Company under the above circumstances, which led to the violation of the written oath. 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 the Company disclosed incorrect financial results, which are highly important for investment decisions, on an ongoing basis from immediately after its initial listing on the TSE Growth Market, and also because in its initial listing examination and segment transfer examination, the Company conducted a public offering and secondary distribution after obtaining approval on the basis of having submitted listing applications containing false statements in violation of the written oath. |
- Note 1:If the Company applies for an examination to determine whether it meets the criteria equivalent to the initial listing criteria for the Prime Market within the grace period, its shares will continue to be listed if it meets the criteria. If it does not meet the criteria, its shares will be delisted.
- Note 2:Notwithstanding the description in Note 1 above, if the Company applies for a segment transfer to the Standard Market or Growth Market during the grace period and receives approval for the segment transfer, the listing of the Company's shares will continue in the new market segment (in which case, it will not be necessary to carry out the examination in Note 1).
Entry into a Grace Period pertaining to Delisting based on re-examination due to Violation of the Written Oath
Designation History - Grace Periods pertaining to Delisting based on Re-examination due to Violation of the Written Oath
Listing Agreement Violation Penalty
Designation History - Grace Periods pertaining to Delisting based on Re-examination due to Violation of the Written Oath
Listing Agreement Violation Penalty
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