(Provisional Translation)

December 24, 2004
Financial Services Agency

Further Measures for Ensuring Confidence in the Disclosure System

The Financial Services Agency (''FSA'') announced the ''Measures for Ensuring Confidence in the Disclosure System'' on November 16, 2004, as some issuers had been found to be engaged in improper handling of the disclosure requirements stipulated in the Securities and Exchange Law (''SEL'') since the middle of October 2004. Considering that approximately one month has passed since the announcement of the first measures, the FSA has decided to announce the ''Further Measures for Ensuring Confidence in the Disclosure System'' in order to actively carry out the following measures continuously.

1. Measures to Address the Results of Voluntary Reviews of the Disclosure Documents by All Issuers with Continuous Disclosure Requirements

(1)	The FSA, through the local finance bureaus, is to inquire about the results of the voluntary reviews of the disclosure documents of any issuer who have not submitted correction reports or have not reported that corrections are not necessary in their disclosure documents. Based on the facts of inquiries and referring to the information sent through the ''Disclosure Hotline'', the FSA is to require submission of reports or to conduct on-site inspections etc., if necessary.
	(Note) The ''Disclosure Hotline'' was established on November 16, 2004, in line with the ''Measures for Ensuring Confidence in the Disclosure System''.
(2)	The FSA is to analyze corrected disclosure information in the correction reports. Based on the analysis, the FSA is to take necessary measures, such as clarification of ''notes to statement'' stipulated in the relevant cabinet ordinance, etc.
(3)	Based on the analysis above, the FSA is to send a letter to all the issuers with continuous disclosure requirements to remind them to ensure necessary points on disclosure and to request the management of each issuer to take continuous measures for proper disclosure.
(4)	The FSA is to strengthen publicity activities and to promote training programs for proper disclosure documents. For this purpose, the FSA, in cooperation with relevant parties, is to hold seminars for preparation of disclosure documents, in time for when disclosure documents of FY2004 ending March 2005 are prepared.

2. Framework for Reviewing Statutory Disclosure Documents

(1)	The Office of Investigation for Administrative Civil Money Penalties and Examinations for Disclosure Documents with a staff of 40 is to be established in the Executive Bureau of the Securities and Exchange Surveillance Commission (''SESC'') in April 2005, and the Corporate Accounting and Disclosure Division of the FSA is to be established for further enhancement of the current Office for Corporate Accounting and Disclosure.
(2)	The SESC is to promote development and research of analytical skills in analysis of materials and information regarding disclosure documents, in order to carry out efficient and focused examinations of false statements in disclosure documents from July 2005.
(3)	The FSA is to request the ''Council for the Advancement of the EDINET'', which is composed of the relevant parties involved in the EDINET system, to discuss and conclude, by about spring 2005, the schedule for the enhancement of the Electronic Disclosure for Investors' NETwork (''EDINET''), especially the introduction of the Extensible Business Reporting Language (''XBRL''), in order to improve the FSA's abilities to analyze statutory disclosure documents.
	(Note) The ''Council for the Advancement of the EDINET'' was established on November 24, 2004, in line with the ''Measures for Ensuring Confidence in the Disclosure System''.

3. Further Development of the Disclosure System

Based on the report of the First Subcommittee of the Financial System Council, an important third-party advisory council to the FSA, which was announced today, the following measures are to be taken.

(1)	Introduction of the following requirements regarding internal control over financial reporting: an assessment by management of the effectiveness of internal control over financial reporting, and auditing by CPA or audit firm of the above assessment by management. The FSA is to encourage practical use of the certification system by management, which is currently voluntary, and to request the Business Accounting Council, which is also an important third-party advisory council to the FSA, to clarify standards of assessment by management and of its verification by CPAs. The FSA is to consider whether assessment and verification should be mandatory, looking into practical effectiveness of assessment and verification based on the standards.
(2)	Introduction of an administrative civil money penalty system against breaches of the continuous disclosure requirements After considering legal issues regarding an administrative civil money penalty system against breaches of the continuous disclosure requirements, the FSA is to aim at submitting a necessary bill to revise the SEL to the next regular session of the Diet, which will start in January 2005.
	(Note) The administrative civil money penalty system against registration statements is to be introduced in April 2005 after the amendment of the SEL in June 2004.
(3)	Enhancement of disclosure of governance-related information The FSA is to revise the relevant cabinet ordinance to require disclosure of the following items in annual reports from FY 2004 ending March 2005:
	(i) organization, number of staff and procedures of internal audits and audits by corporate statutory auditors (or audit committees), and any co-operation among internal audits, audits by corporate statutory auditors (or audit committees) and financial auditing by external financial auditors, (ii) personal, capital, transactional or other interests between outside directors/outside corporate statutory auditors and the issuers, and (iii) names of CPAs involved in external financial auditing, audit firms to which such CPAs belong, and their consecutive periods of audits of issuers; number of assistants involved in audits; reviewing process in the case that individual CPAs are involved in auditing
(4)	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 The FSA is to revise the relevant cabinet ordinance and to require disclosure of the following information on the parent company in annual reports of the public subsidiary with continuous disclosure requirements:
	(i) information about shareholders and major shareholders, (ii) information about officers and directors, and (iii) balance sheet, profit and loss statement, business reports and supplementary statement based on the Commercial Code (and audit report, if audited by the external financial auditor)

4. Enhancing Auditor Oversight

(1)	Considering recent improper financial auditing, the Certified Public Accountants and Auditing Oversight Board (''CPAAOB'') is to monitor the quality control review by the Japanese Institute of Certified Public Accountants (''JICPA'') and to conduct on-site inspections, paying special attention to internal controls of audit firms. Furthermore, the CPAAOB is to pay special attention to the following aspects when monitoring: whether individual accountants are conducting thorough and proper audits in accordance with the relevant laws and standards from the viewpoint of audit quality control, and whether auditors that audit the same issuers on a consecutive basis for a long period are conducting independent and proper audits.
	(Note) The CPAAOB was established in April 2004 as the new independent auditor oversight body, through the comprehensive revision of the Certified Public Accountants Law in Japan.
(2)	Considering the result of monitoring and recent improper financial auditing, the FSA is to request the Business Accounting Council and the JICPA to consider necessary measures, such as revision of auditing standards and practical statements and guidelines, etc., in order to strengthen internal controls and improve quality controls of audit firms.

5. Request to Stock Exchanges

Based on the request by the FSA, each stock exchange is to amend listing rules, etc. to ensure appropriate and timely disclosure of corporate information. The FSA is to request stock exchanges to ensure steady implementation of such measures and to take further appropriate measures, as necessary.

(Note)

The Tokyo Stock Exchange amended listing rules on January 1, 2005. JASDAQ is to amend them in January 2005 and other stock exchanges, such as those in Osaka, Nagoya, Sapporo and Fukuoka, are to amend them in February 2005.