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*Please note that not all items, including regulations and articles posted on the website, have been translated into English. Therefore some of the items that are mentioned in the following articles may not be translated fully into English.

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Starting with the consolidated financial year that ended on March 31, 2010, the International Financial Reporting Standards (IFRS) may be applied on a voluntary basis to the consolidated financial statements of listed companies which conduct financial or business activities internationally. It has been pointed out that misleading information concerning the IFRS may be circulating. Therefore, on April 23, 2010, the Financial Services Agency (FSA) published “Misunderstandings about the International Financial Reporting Standards (IFRS),” which is a collection of cases of misunderstanding, so as to provide explanations and ensure appropriate understanding of the IFRS.

This reference material lists 11 items concerning general matters related to the application of the IFRS and six items concerning specific matters. It points out mistaken ideas, correct explanations concerning each item and provides other reference information.

Regarding items concerning “general matters,” for example, this reference material points to the mistaken idea that “listed companies must rush to make themselves ready as the IFRS is set to be applied immediately” and explains that, “Starting with the business term that ended in March 2010, the IFRS may be applied on a voluntary basis to the consolidated financial statements of listed companies which meet certain conditions.” This means that a sufficient preparatory period (at least three years) will be secured.

Regarding the mistaken idea that “even unlisted companies (such as small and medium-size enterprises) must apply the IFRS,” the reference material makes it clear that compulsory application of the IFRS is not assumed, even regarding the future, by stating that “unlisted companies will not need to apply the IFRS.”

As for “specific matters,” the reference material points, for example, to the mistaken idea that “under the IFRS, net profit, which is frequently used as a yardstick to grasp the financial results for the relevant business year, will cease to be used, and only comprehensive profit will be used as such a yardstick,” and explains that net profit will be indicated under the IFRS, too, and will be continued to be used as an important yardstick to grasp the financial results.” Thus, it has been made clear that net profit, which is used by many Japanese companies as an important yardstick to grasp the financial results, will continue to be indicated.

It should be noted that this reference material has been prepared with emphasis placed on clarity, rather than exact preciseness, so as to facilitate understanding by people not adept in accounting affairs. In addition, it should be kept in mind that under different assumptions or if the IFRS are revised, the explanations provided by the reference material may not be applicable.

*For further details, please refer to “Misunderstandings about the International Financial Reporting Standards (IFRS)” (April 23, 2010), in the Press Releases section of the FSA website. (In Japanese only)

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In December 2006, the amended Money Lending Act was enacted in the Diet with unanimous support in order to resolve the multiple-debt problem. The amended act includes provisions for reduction of the maximum allowable interest rate and introduction of restrictions on the total amount of loans in order to prevent excessive lending and borrowing. While preventing the burden of multiple debts from being imposed on more people, through appropriate regulation, the amended act has been gradually put into force over a period of three and a half years so as to avoid an acute credit squeeze and other problems. In light of the purpose of this act, which is to prevent people from becoming victims of multiple debts, it has recently been decided that the act will be fully put into force on June 18 this year.

In preparation for the full enforcement of the act, the Project Team on Money-Lending Systems was established last November to conduct deliberations with a view to facilitating the enforcement. This project team is comprised of the Senior Vice Ministers and Parliamentary Secretaries of the FSA, Consumer Affairs Agency and the Ministry of Justice. As a result of the deliberation, “10 Measures to Be Taken from the Standpoint of Borrowers,” which set forth measures to be taken in preparation for the enforcement of this act, was compiled in April this year.

The 10 measures include providing consultations about multiple debts and implementing a campaign to raise awareness about the Amended Money Lending Act in order to “further improve and strengthen counseling and consultations for people suffering from multiple debts” and “enhance public relations activity related to the amended Money Lending Act.” In light of the purpose of these measures, it has recently been decided that the “‘Borrowers, Beware’ Campaign: Money Lending Act Will Undergo Significant Change” will be implemented jointly by the FSA, the Consumer Affairs Agency, the Japan Federation of Bar Associations, the Japan Federation of Shiho-Shoshi Lawyer’s Associations, the Japan Legal Support Center (Houterasu), the Japan Financial Services Association and the Japan Credit Counseling Association from May 1 to June 30.

This campaign is intended as a public relations activity and is aimed at providing consultations about multiple debts.

In addition to public relations activities such as the compilation and distribution of posters and leaflets and the use of newspaper and Internet advertising, prefectural governments will be responsible for making as much effort as possible to raise awareness about the contents of the amended Money Lending Act through local public relations materials in cooperation with the organizations that implement the campaign.

In addition, the system to provide consultations will be strengthened through the distribution of a FAQ concerning the amended Money Lending Act to multiple-debt consultation counters and other measures. Moreover, efforts will be made to raise awareness about the consultation counters, and the campaign-implementing organizations will provide free consultations about multiple debts in cooperation with prefectural and other municipal governments, including cities, towns and villages.

During this campaign, such information as contact information concerning the multiple debt consultation counters and the schedule of free consulting will be available on the FSA web site.

* For further details, please refer to “Regarding ‘“Borrowers, Beware” Campaign: Money Lending Act Will Undergo Significant Change’” (April 30, 2010), in the Press Releases section of the FSA website. (In Japanese only)

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