According to its website, the number of foreign companies listed on the Tokyo Stock Exchange (the TSE) has fallen to its lowest level since 1985. The highest number of foreign listed corporates was 127 in April 1991, although this has now dropped to 12 (ten of which only on the First Section of the TSE), with the recent de-listings in 2010 by Aegon N.V. from the Netherlands, UBS from Switzerland, and Deutsche Telekom AG from Germany.
De-listings have been falling steadily since the early 1990s, while new listings have been scarce and infrequent – just three in 2000, one in 2001, one in each of 2004, 2005 and 2006 and only three in 2007. No new listings of foreign companies have taken place since.
Most de-listings took place without reasons being specified at the time of application, although these are thought to have included low trading volumes achieved in Japan through a secondary listing, and the associated costs of ongoing disclosure, since all disclosure documents must be submitted in Japanese.
Listed foreign companies whose main market is the TSE are required to appoint an “Officer Responsible for Handling Information (ORHI)” in Japan. The ORHI, who plays the role of liaison for investors in Japan as well as with the TSE, must be selected among executives or officers fluent in Japanese. The TSE requests foreign listed companies whose main market is not the TSE to designate a “Corporate Information Handling Officer” to remain in contact with the TSE and enhance timely disclosure. The Corporate Information Handling Officer can communicate with the TSE in Japanese or English, and is also in charge of corporate disclosure in the home country.
Several criteria must be met in order to qualify for a de-listing in Japan. These include either a low free float, low trading volumes or a low market capitalization. It is also possible for companies facing acute financial difficulties.
Companies can also de-list from the TSE if the number of their shareholders residing in Japan totals less than 400 at the end of the fiscal year, and does not exceed 400 in the next one-year period (for companies not listed in countries other than Japan, all shareholders rather than Japanese residents are taken into account).
The companies currently listed on the first section of the TSE are China Boqi Environmental Solutions Technology of China (incorporated in the Cayman Islands and whose main market is the TSE), YTL of Malaysia, POSCO of South Korea (listed by way of depositary receipts), Telefónica of Spain, and Dow Chemical, Citi, JP Morgan, Bank of America, and insurance companies AIG and Aflac from the US.
China’s Xinhua Finance (incorporated in the Cayman Islands) and UK securities research group Japaninvest are listed on the Mothers second board.