The Securities and Exchange Law of Japan does not generally require any company to report quarterly business results and financial condition. Although certain listed companies voluntarily disclose financial results on a quarterly basis, only companies with their securities listed on certain markets for emerging companies, such as Mothers on the Tokyo Stock Exchange (TSE), are required to file quarterly disclosure statements under the regulations of the relevant stock exchanges.
In most capital markets of the world there is a growing recognition that publicly-listed companies should be required to report their business results and financial condition more frequently and in a clear uniform manner. This enables the investing public to assess a company's profitability and financial health more regularly. To compete with foreign capital markets, many of which require listed companies to disclose such information, each Japanese stock exchange as well as the Japan Securities Dealers Association is expected to require companies listed on any Japanese stock markets to file quarterly disclosure statements.
The TSE requirements are expected to be divided in two stages. First, each listed company would be required to file a management summary of business results on a quarterly basis commencing no later than April 2003. The information contained in the management summary would only provide a general overview. Secondly, each listed company would be required to file quarterly financial statements, in addition to the management summary. However, since preparing financial statements is costly and requires preparation time, the TSE expects that the requirement to file quarterly financial statements will not come into effect until April 2004.
With quarterly disclosure requirements being imposed by each Japanese stock exchange and the Japan Securities Dealers Association, it may not be long until these requirements are also included in the Securities and Exchange Law.