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Yomiuri Shimbun file photo Reports are provided to media outlets’ inboxes at the Tokyo Stock Exchange in Chuo Ward, in November 2020.
The Yomiuri Shimbun
17:39 JST, April 14, 2022
A rule requiring companies to report their performance to the government every three months is likely to be scrapped, it has been learned.
Companies that raise funds from investors through the issuance of stocks or bonds are required to submit quarterly reports to the Finance Ministry.
However, the business community has called for a review of the practice, citing the heavy administrative burden as it overlaps with the quarterly financial briefings listed companies have to submit to bourses such as the Tokyo Stock Exchange.
It has also been claimed that quarterly reports might encourage businesses to pursue short-term profits.
Since taking office, Prime Minister Fumio Kishida has vowed to review corporate disclosure rules as one of the pillars of his “new form of capitalism” economic policy, based on his view that the current rules have led to undesirable corporate behavior that prioritizes profit.
The Financial Services Agency plans to submit a bill to revise the Financial Instruments and Exchange Law to the ordinary Diet session next year at the earliest, aiming to scrap the rule on quarterly business disclosure reports by April 2024.
Under the planned revision, listed companies would still submit quarterly financial briefings to stock exchanges, but the government is considering whether to make the reports voluntary.
The quarterly reports companies are currently required to submit to the government are in addition to annual and six-month reports.
For companies whose business year ends in March, the reports include cumulative sales and profits as of the end of June and December, and the status of assets and liabilities. Misstatements are subject to penalties.
The government aims to reduce the burden of information disclosure as companies’ operations are expanding amid efforts to tackle decarbonization and respond to human rights issues.
In Europe, Britain and France have abolished compulsory disclosure for listed companies, and Germany has also narrowed down the companies subject to such obligations.
