Unofficial and Provisional Translation
Readers are advised to refer to the original Japanese
text before quoting from this document.


Outline of the Amendment of the Securities and Exchange Law 
and the Financial Futures Trading Law 

- Introducing the joint-stock company form as an organizational structure of stock exchanges and financial futures exchanges
  => speed up decision-making and diversify fund-raising methods
  => respond to the varied needs of market users, enhance the market efficiency and convenience, and improve international standings of Japanese securities markets 
 

-

 

Introduction of electronic disclosure of corporate data

  => enable swift and easy access to corporate data by investors and others
  => improve the efficiency of securities markets
 

(Part of the efforts to develop an infrastructure for financial services in the 21st century)

 


Introducing the joint-stock company form as an organizational structure of Stock Exchanges and Financial Futures Exchanges 

1. Introducing the joint-stock company form as an organizational structure of stock exchanges and financial futures exchanges (hereinafter referred to simply as "stock exchanges").
    Stock exchanges will be allowed to be organized in the form of joint-stock companies as well as in the form of membership organizations as at present. Due to the fact that joint-stock companies are established under the Commercial Code, the licensing arrangements will be changed from a system of licensing the establishment of securities exchanges to a system of licensing the opening of markets. 
    (Before amendment)
Financial Reconstruction Commission => Stock exchanges (membership organizations)
                          <License to the establishment of stock exchanges>
    Stock exchanges will be allowed to be organized in the form of joint-stock companies as well as in the form of membership organizations as at present. Due to the fact that joint-stock companies are established under the Commercial Code, the licensing arrangements will be changed from a system of licensing the establishment of securities exchanges to a system of licensing the opening of markets. 
    (After amendment)
Financial Reconstruction Commission => Stock exchanges (membership organizations or joint-stock companies)
                          <License to the opening of markets>
Disciplinary measures to stock exchanges as well as the authorizing system of self-established rules such as articles of association, both of which currently apply to membership stock exchanges, will also apply to stock exchanges in the form of joint-stock companies.
2. Measures to make sure that stock exchanges serve public interest properly
  (1) Regulations applicable to stock exchanges in the form of joint-stock companies
- Capital must not be less than a certain amount specified by government ordinance.
- No entity may hold more than 5% of a stock exchange's outstanding shares.
(2) Regulations applicable to stock exchanges in the form of joint-stock companies as well as membership stock exchanges
- The scope of business of stock exchanges will be limited to opening of markets and business incidental to it.
- The articles of association must stipulate that (a) members or participants in transactions (hereinafter referred to simply as "members") have to comply with laws and rules set forth by the exchanges, and (b) sanctions have to be imposed on members who violate the laws and the rules.  (Clarification of the self-regulatory function.)
- Regarding supervision, the authority will be able to order (a) amendment of self-established rules such as articles of association, and (b) measures necessary for supervisory reasons in respect of business management and conditions of assets.
3. An approval system for own stocks listing
A stock exchange that intends to list stocks issued by itself or its subsidiary on its own market will have to obtain the approval of the Financial Reconstruction Commission (FRC).  (The same applies in the case of de-listing.)
4. Establishment of rules governing the procedures for conversion from a membership organization to a joint-stock company
The necessary rules will be established concerning (1) approval of conversion plans at general meetings, (2) allocation of shares to members, and (3) authorization of conversion by the FRC, etc.
5. Provisions for the above mentioned measures will take effect on December 1, 2000

 


Electronic Disclosure of Corporate Affairs 

1. Use of electronic data for the procedures relating to filing and receipt of disclosure documents such as securities reports (financial reports)
Filing of securities reports and other procedural matters will be allowed to be processed online. Filing of reports by paper will be allowed for a certain transitional period, but from June 1, 2004, online filing will become mandatory unless otherwise specified.
   
Note: Timetable for use of electronic data
- Securities reports and semi-annual reports: Effective from June 1, 2001
          (Mandatory from June 1, 2004, unless otherwise specified)
- Securities registration statements: Effective from a date between June 1, 2001 and June 1, 2002, specified by government ordinance
          (Mandatory from June 1, 2004, unless otherwise specified)
- Large shareholding reports: Effective from a date between June 1, 2002 and June 1, 2003, specified by government ordinance
          (Online submission is optional)
  Securities reports and other documents submitted online will be available to the public on-screen at Local Finance Bureaus and stock exchanges.  They will be made available likewise also at the submitting company.
   
Note: The authorities will also provide information in the disclosed documents via the Internet.
2. Use of electronic data for delivering prospectuses
Securities firms will be allowed to deliver online prospectuses and others, which provide information on the businesses of securities issuers to investors.  (Effective from a date between June 1, 2001 and June 1, 2002, specified by government ordinance.)

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