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We give our deepest condolences for people who died in the 2011 Great East Japan Earthquake, and our heartfelt sympathy for the victims who suffered losses.

The FSA is providing “Great East Japan Earthquake - Related Information” in the following places.

1. Great East Japan Earthquake - Related Information: We are putting all efforts into financial countermeasures

The FSA created a Great East Japan Earthquake - Related Information section on its web site, providing information for each of the following items.

• (1) For depositors

  • Even for people who have lost their bank deposit book or hanko, if the depositors present documents that make it possible to identify them, the depositors will get access to their deposits at their financial institutions.
  • Even if one has lost documents which make it possible to identify them, the financial institutions are striving to provide flexible responses: asking the person's name, address, and other personal information, confirming that these match registered details, then providing access to deposits, etc.
  • If family members of deceased or missing immediate relatives provide vital documents, family members can get access to deposits.
  • The Japanese Bankers Association provides information on deposits of deceased or missing people on request of their families.
  • Even if one has been displaced, one can still get access to deposits at financial institutions other than your own.
  • It is very important to support disaster victims by donations from many people, and that victims working to rebuild their lives can smoothly open bank accounts. Therefore, necessary actions are being taken for personal identification procedures.
    Refer here for details. Also, be careful of fraud in donations, etc. (Available in Japanese only)

• (2) For borrowers

  • Financial institutions are working to respond as much as possible when there are requests for grace periods for loan repayments or provisions for stop-gap funds, etc. from borrowers directly and indirectly affected by the disaster.
  • Grace periods will be given for non-payment of drafts and checks which cannot be settled because of the disaster.
  • Financial institutions are also working to handle loan applications flexibly and quickly. For example, financial institutions are considering the situation of disaster victims, and will minimize the required documents for submission for loans.

• (3) For insurance policy holders

  • Life insurance and non-life insurance companies are working on fast and easy procedures of insurance payouts.
  • Even if insurance certificates or documents enabling personal identification are lost, there will be flexible responses to each individual customer's situation. If one does not know which insurance company one has policies with, ask an insurance association or any insurance company.
  • A customer who is a disaster victim can receive a grace period for insurance premium payments, if requested.

2. Great East Japan Earthquake - Related Information: FSA cell phone website

The FSA created cell phone web pages for earthquake disaster related information.

* For details, please go to the FSA web site and access “FSA cell phone website”, or use the QR code (below)

3. FSA Twitter

FSA has used Twitter to provide information to the public on finance related to the Great East Japan Earthquake. As three months have passed since the earthquake, in addition to earthquake-related information, we will now also provide information on various initiatives for finance.

* For details, please go to the FSA web site and access “FSA Twitter” (Available in Japanese only).

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[Earthquake related Topics]

Due to effects of the Great East Japan Earthquake, there arises the possibility of listed companies being unable to submit disclosure documents (annual securities report, quarterly securities report, etc.) based on the Financial Instruments and Exchange Act, by the submission deadline stipulated in the Act. Therefore, as a special measure, the FSA enacted a cabinet order to extend the current new special measure, making it sufficient if the annual securities report, quarterly securities report, etc. are submitted by the end of September 2011, even if they were not submitted by the original submission deadline due to the Great East Japan Earthquake.

Under the “Act on Special Measures concerning Preservation of Rights and Interests of Victims of Specified Disaster (1996 Law No.85)” and “Cabinet Order on Specified Disaster regarding the Great East Japan Earthquake and Specification of Measures which Should be Applied (2011 Cabinet Order No.19),” it was sufficient if these were submitted by June 30, 2011. However, for an annual securities reports etc. for which the original submission deadline arrives after June 30, 2011 (for example, annual securities report of a listed company with March yearend), there is the possibility that submission by that submission deadline is delayed. Therefore, this special measure is a cabinet order enacted to extend the exemption deadline concerning such annual securities reports, etc.

The content of this cabinet order is as follows.

Regarding noncompliance with the duty to submit an annual securities report etc. as stipulated by the Financial Instruments and Exchange Act, due to the Great East Japan Earthquake, based on the stipulations of “Act on Special Measures concerning Preservation of Rights and Interests of Victims of Specified Disaster” Article 4, Paragraph 3, a cabinet order was enacted to extend the deadline of this special measure. The deadline was extended from June 30 to September 30, 2011. This cabinet order was enforced on its promulgation date (June 22, 2011).

The following reports are subject to extension by this cabinet order.

• (1) Annual securities reports (Financial Instruments and Exchange Act, Article 24, Paragraph 1)
• (2) Quarterly securities reports (Financial Instruments and Exchange Act, Article 24-4-7, Paragraph 1)
• (3) Semiannual securities reports (Financial Instruments and Exchange Act, Article 24-5, Paragraph 1)
• (4) Status Report of Parent Company, etc. (Financial Instruments and Exchange Act, Article 24-7, Paragraph 1)

* For details, please go to the FSA web site and access “Promulgation of Cabinet Order on deadline for exemption from responsibility for noncompliance with duty to submit annual securities reports etc., due to the Great East Japan Earthquake” (June 22, 2011) or “Special measure on submission deadlines of annual securities reports etc.” (June 22, 2011) from “To listed companies” of “Great East Japan Earthquake related Information” from the Press Releases section. (Available in Japanese only)

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[Other Topics]

The “Action Plan for the New Growth Strategy” (December 24, 2010, FSA) raised items which should be implemented for restoring confidence in and activating markets for emerging companies, in order to supply appropriate growth funds to growing companies.

Also, towards specifying its content, in addition to the FSA, market participants such as each exchange, the Japan Securities Dealers Association (hereinafter referred to as “JSDA”), and the Japanese Institute of Certified Public Accountants (hereinafter referred to as “JICPA”) have been asked to also proactively study, create and publish a timetable in the first half of 2011to clarify implementation deadlines for specific initiatives.

In response, a timetable was made by the FSA and market participants in the “Discussion Group for Restoring Confidence in and Activating Markets for Emerging Companies.” It was published on June 23. (The timetable's main points are described below.)

Market participants, etc. will work on initiatives according to the timetable. The FSA will provide necessary cooperation for initiatives by market participants, etc., and use the discussion group as a forum to follow up as needed on progress of initiatives in the timetable.

(Main Points of Timetable)

• 1. Encourage Pre-listing Companies to List on Markets for Emerging Companies

  • (1) Encourage use of the Green Sheet

    The JSDA will fundamentally revise the roles and methods of the Green Sheet, considering its history of supporting the fundraising functions of unlisted companies, and the progress on initiatives concerning markets for emerging companies based on this timetable.

    (Aim to do this by March 2012)

  • (2) Create a list of pre-listing companies which ensures a certain level of quality

    In cooperation with the Organization for Small & Medium Enterprises and Regional Innovation, the Ministry of Economy, Trade and Industry is proceeding with preparations to make and publish a list with information on funds operated by venture capitalists, investee companies, etc., and will utilize this list. It will exchange opinions with market participants, based on the status of its utilization in the future.

• 2. Restore Confidence in Listing Examinations and Reduce their Burdens

  • (3) Highly detailed information sharing to prevent false statements in annual securities reports

    The JSDA obtained the cooperation of the JICPA and established a “Liaison Group.” This group will proceed to exchange opinions for working on highly detailed information sharing among lead managing securities companies for underwriting, auditors and exchanges, in order to prevent false statements in annual securities reports, etc. (Aim to do this by September 2011)

  • (4) More proper and clear underwriting examinations

    • It has been pointed out that the JSDA, in cooperation with exchanges and securities companies, etc., should study the handling of people (excluding antisocial forces) who are alleged to be problematic from the view point of market transparency and fairness (so-called “anti-market forces”) promptly after finishing the study for the construction of and access to an antisocial forces database. Considering this, the JSDA will proceed with necessary studies, while working on building a shared understanding among market participants.

    • The JSDA will create an outline of preparation items required for listing (reference model). Together with this, the JSDA and exchanges will use each of their web sites etc. to publicize this outline of preparation items (reference model) and outline of listing examination schedule (reference model). (Aim to do this by March 2012)

    • Work on the following environmental developments regarding “retroactive audits” of the first year audit for companies preparing to list.

      • i) Due to restrictions on audit scope, it is possible that an opinion other than an “unqualified opinion” will be given in a “retroactive audit.” Therefore, the JICPA and auditors will sort out the preparation items required for listing (reference model including outline of audit schedule), etc., so that there will be prior progress on development of the internal controls system of a company preparing to list of the preparation items. Together with this, the JICPA, auditors, exchanges and securities companies, etc. will publicize the list. (Aim to do this by March 2012)

      • ii) Currently, it is very unusual to see the listing of a company which had a “qualified opinion” two periods earlier. There may be a common misunderstanding that listing will not be approved unless an “unqualified opinion” is obtained. Therefore, exchanges will work to publicize that a “qualified opinion” two periods earlier is permissible. (Aim to do this by December 2011)

      • iii) Regarding whether a “disclaimer of opinion” two periods earlier is allowed, the FSA and market participants will continue to exchange opinions on whether the problem of investor protection can somehow be resolved, while considering the execution status of a retroactive audit.

• 3. Reduce Burdens on Listed Companies and Perform Suitable Listing Management

  • (5) Revision of internal controls system

    • Auditors and exchanges will continue to inform listed companies and companies preparing to list, regarding the content of the recent internal controls reporting system revision and the “Internal Controls Reporting System Casebook.”

    • If disclosure companies and market participants have opinions on specific examples, the FSA will collect these and work to improve the “Internal Controls Reporting System Casebook.”

  • (6) Prioritize support in order to actively create successful examples

    Introduce the status of initiatives of market participants until now.

  • (7) Encourage continuous delivery and disclosure of information, including on risks

    Exchanges will sort out and publish in stages the basic data necessary to classify risk information corresponding to the rough industrial classifications and characteristics of companies listed on markets for growing companies.

• 4. Promote Shift from Markets for Growing Companies to Other Markets

  • (8) Clarify roles of markets for emerging companies

    Each exchange shall study the position of the market for emerging companies and take necessary measures to clarify this, based on the actual status of each exchange and market. (Aim to do this by March 2012)

  • (9) Prepare a place for delisted stocks

    The JSDA shall study the following matters. (Aim to do these by March, 2012)

    • Designation criteria and handling period of Phoenix Issues

    • To prepare for a situation in which there is an increase in delisted shares, use existing systems of exchanges and proprietary trading systems, develop settlement systems, disclosure and trading management systems, etc.

* For details, please go to the FSA web site and access “‘Timetable for restoring confidence in and activating markets for emerging companies’ published” June 23, 2011 from the Press Releases section. (Available in Japanese only)

 

 

 

 

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As part of its ascertaining the actual situations of small and medium enterprise finance, the FSA performed an interview survey via financial bureaus throughout Japan in May 2011, covering 47 chambers of commerce and industry, one for each of Japan's prefectures. Questions included those about the current and future business sentiment and cash flow of member enterprises, currently and in the future. A summary of the survey results is provided below.

The Great East Japan Earthquake struck in March 2011. Accordingly, the survey items concerning negative factors were revised (see Note 4). Therefore, keep in mind that this cannot be simply compared to the previous survey results (February 2011 survey).

1. There was an increase in harsh business sentiment among small and medium enterprises, due to effects of the Great East Japan Earthquake. This had a larger negative current diffusion index for the first time in five quarters, since February 2010.

The largest percent negative factor was “Weak sales,” followed by “Other effects due to the earthquake, etc.”

Note 1: D.I. = (percent of respondents who replied “Good”) - (percent of respondents who replied “Bad”)

Note 2: Multiple replies are possible for negative factors, and ratio is shown with the total of multiple replies as denominator.

Note 3: Figures in parentheses are results of the February 2011 survey.

Note 4: In this May survey, the “negative factor” survey items were revised. “Higher procurement prices” and “Delays in incorporating higher costs into prices” were combined, and “Other effects due to the earthquake, etc.” was added as a new item.

2. There was also an increase in harsh cash flow among small and medium enterprises, due to effects of the Great East Japan Earthquake. This had a larger negative current diffusion index for the first time in five quarters, since February 2010.

The largest percent negative factor was “Small and medium enterprise sales factors,” followed by “Other effects due to the earthquake, etc.”

Note 1: D.I. = (percent of respondents who replied “Good”) - (percent of respondents who replied “Bad”)

Note 2: Multiple replies are possible for negative factors, and ratio is shown with the total of multiple replies as denominator.

Note 3: Figures in parentheses are results of the February 2011 survey.

Note 4: In this May survey, the “negative factor” survey items were revised. “Financial institution lending attitude” and “Financial institution loan conditions” were combined, and “Other effects due to the earthquake, etc.” was added as a new item.

Reference: Below are the main comments related to the Great East Japan Earthquake.

• Shops and factories, etc. were damaged, so cannot continue with the business, or it is difficult (Fukushima - manufacturing, Ibaraki - retail, and others)

• Our machines were damaged, and our costs are increasing to compensate for this (Fukushima - manufacturing)

• It became impossible or difficult to procure raw materials and products such as parts and construction materials. Thus we could not do business and our sales fell (Nagano - manufacturing, Kagoshima - retail, Yamaguchi - construction, and others)

• We do not feel secure about parts supply suspensions and raw material deliveries, so the future is uncertain (Nagano - manufacturing)

• We are worried that summer electric power shortages and power saving will affect production activities, and predict less consumption (Yamagata - manufacturing, Fukuoka - manufacturing, Oita - retail, Osaka - small and medium enterprises overall, and others)

• There is a tendency of self-restriction in various things, so sales and profits don't rise (Hokkaido - small and medium enterprises overall, Saitama - small and medium enterprises overall, and many others)

• Due to cancellations of overnight stays and events, etc., we see weak sales and fewer orders (Ibaraki - services, Nara - services, Gifu - wholesale, and many others)

• The excessive self-restraint mood is resulting in weak consumption, which we fear will prevent recovery (Kagawa - retail)

• Our earnings situation is harsh, partly because client companies in disaster areas are paying late (Iwate - small and medium enterprises overall)

• It is difficult to collect sales accounts payable from disaster area companies (Yamagata - manufacturing, Iwate - services)

• We fear that shipping restrictions and rumors related to the nuclear problem will reduce economic activities (Fukushima - small and medium enterprises overall)

• We are concerned about a decrease in agricultural and seafood sales and decreased tourist numbers, etc., due to damage caused by rumors (Niigata - retail, Gifu - services, and others)

• We are worried about effects of rumors of radioactive contamination during the transport demand period for specialty agricultural products, etc. (Yamagata - transportation)

• We are uneasy about the future because of nuclear accident rumors, and radiation affecting procurement (Ibaraki - wholesale, Nagano - wholesale)

• Disasters related demand is boosting orders for in-house electricity generation facilities, but we are facing problems such as difficulty of getting parts and supplies (Aichi - manufacturing, Kagawa - manufacturing, Ibaraki - construction)

• Retail and convenience stores have seen disasters related demand for daily necessities. We see many buyers from the Sendai city area (Yamagata - retail)

• We expect some disasters related demand, but we worry it is temporary (Miyagi - real estate, Miyagi - small and medium enterprises overall)

• Financial institutions are positive about new loans and loan condition changes (Kanagawa - small and medium enterprises overall, Ehime - small and medium enterprises overall, and others)

• Financial institutions are meeting demand, for businesses working on planned improvement and reform (Chiba - wholesale)

• Fundraising such as disaster loans from financial institutions is easing our cash flow problems (Miyagi - manufacturing, and others)

• Financial institutions are responding flexibly and quickly for businesses affected by disasters (Chiba - manufacturing, and others)

• We are worried that national public construction work budgets will be reduced, to allocate them to recovery budgets for disaster areas (Yamagata - construction, Shimane - construction, and others)

• It is predicted that Tohoku recovery will have priority in allocation of public construction work budgets, so with an excessive number of businesses, we think there will be harsh competition to get orders, and a continuing worse cash flow situation (Shizuoka - construction, Mie - construction, Aichi - construction)

* For details, please go to the FSA web site and access Business Sentiment etc. of Small and Medium-sized Enterprises - Questionnaire Survey Results Summary (June 22, 2011) from the Press Releases section. (Available in Japanese only)

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The Amended Money Lending Business Act was completely enforced on June 18 last year. The FSA has taken actions such as creating the “Amended Money Lending Business Act Follow-up Team,“ to widely publicize the system, understand the actual enforcement situation and its effects, work on follow-up and inspection of the system, etc.

This Follow-up Team has held hearings with market participants four times. In these hearings, it found excellent examples of initiatives by regional financial institutions for the formation of a sound consumer finance market:

• Initiatives to actively make consumer loans

• Initiatives to solve the multiple debt problem by combining multiple debt consultations with loans.

• etc.

With the hope of further expanding such initiatives, financial institutions which executed especially excellent initiatives received honors from Minister for Financial Services Shozaburo Jimi on June 20. The honored financial institutions and summaries of their initiatives are shown below.

The FSA will continue to thoroughly publicize the multiple debt consultation centers nationwide by prefectures and Financial Bureaus. The FSA will also strongly encourage initiatives by each financial institution for formation of a sound consumer finance market.

* For details, please go to the FSA web site and access Ministerial honors for “Financial institutions which contributed to forming a sound consumer finance market, by their efforts to resolve multiple debt problems“ (June 20, 2011) from the Press Releases section. (Available in Japanese only)

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