Press Conference by the Minister for Financial Services

(Excerpt)

November 16 , 2004

Let me talk about the efforts being made to ensure the confidence of the disclosure system.

Since mid-October, there have been a series of improper practices regarding disclosure under the Securities and Exchange Law. We acknowledge that this situation may undermine the confidence in the disclosure system, and in turn, the Japanese securities market, so we will aggressively promote the following measures to ensure the confidence of the disclosure system.

The measures consist of four key components. The first is to review and reinforce the framework for reviewing statutory disclosure documents. The second is to enhance auditor oversight. The third is to develop a disclosure system. And the fourth is to request the stock exchanges and the Japan Securities Dealers Association to ensure appropriate and timely disclosure of corporate information.

Let me provide a brief explanation of these measures.

This first measure, which relates to the framework for reviewing statutory disclosure documents, will involve: (1) transferring the authority to inspect and demand submission of reports regarding statutory disclosure documents such as annual reports from the Kanto Local Finance Bureau to the Securities and Exchange Surveillance Commission; (2) opening the ''Disclosure Hotline'' available to the public; (3) enhancing the functions of the Electronic Disclosure for Investors' NETwork (''EDINET'') in order to improve the FSA's ability to analyze statutory disclosure documents; and (4) instructing all the issuers with continuous disclosure requirements to voluntarily review the information in their disclosure documents, and to submit correction reports as soon as possible if necessary.

The second measure, which is related to the auditor oversight, will involve: (1) examining disclosures regarding their auditor lineup and the length of time that their auditors have been auditing them on a consecutive basis; and (2) monitoring by the Certified Public Accountants and Auditing Oversight Board in consideration of audits conducted by individual accountants and audits conducted by the same auditor continuously for a long period of time.

The third measure, which relates to the further development of a disclosure system, will involve requesting the Disclosure Working Group of the First Subcommittee of the Financial System Council ,the third party advisory body to the FSA, to consider: (1) an assessment by management of the effectiveness of internal control over financial reporting; (2) an expansion of the scope of the administrative civil money penalty system to include breaches of the continuous disclosure requirements; (3) an enhancement of disclosure of governance-related information; and (4) an enhancement of disclosure about a parent company by a public subsidiary, in cases in which the parent company is not under the continuous disclosure requirements.

Our administration office has requested the Disclosure Working Group, which convened this morning, to examine these matters.

As for the fourth measure, which relates to Stock Exchanges and the Japan Securities Dealers Association, we have already requested the stock exchanges and the Japan Securities Dealers Association to take necessary measures, such as the amendment of listing rules, to ensure appropriate and timely disclosure of corporate information.

That is the outline of the measures. As explained in the beginning, we acknowledge that the current situation may undermine the confidence in the disclosure system and in turn, the Japanese securities market. Having such a strong awareness of the problem, the Financial Services Agency (FSA) intends to aggressively promote these measures which have just been compiled.

We urge all market players to take the current situation seriously and make the utmost effort to ensure the confidence of the disclosure system, which serves as the cornerstone of the securities market, from their respective standpoints.