1

Timely Disclosure and XBRLTimely Disclosure and XBRLTSE’s Involvement in and Expectations for XBRLTSE’s Involvement in and Expectations for XBRL

Jun NarimatsuJun NarimatsuManager of Listing Department (C.P.A.)Manager of Listing Department (C.P.A.)

TOKYO STOCK EXCHANGE, INC.TOKYO STOCK EXCHANGE, INC.

12th XBRL INTERNATIONAL CONFERENCE12th XBRL INTERNATIONAL CONFERENCE

in TOKYO , JAPANin TOKYO , JAPAN

8 November 2005 8 November 2005

2

Today’s Contents Overview of disclosure system Ensuring reliability of disclosed information

Promotion of development and improvement of timely disclosure system

Introduction of oath and affirmation system Publication of ‘Handbook for Timely Disclosure’ Expectations for XBRL in terms of development and

improvement of timely disclosure system

Ensuring usefulness of disclosed information Promotion of prevalence of XBRL

3

Overview of disclosure system

Statutory disclosure based on the Securities and Exchange Law

Securities report , Semi-annual report , Quarterly report Extraordinary report

Timely disclosure based on the rules of the securities

exchange Preliminary report of business results Semi-annual preliminary report of business results Quarterly report Decisions and event occurrence (promptly)

4

Comparison between statutory disclosure and timely

disclosure

Statutory Disclosure Timely DisclosureSecurities report (within three months subsequent to balance

sheet date)

Semi-annual report (within three months subsequent to semi-annual balance sheet

date)

Quarterly report (under consideration to make the

report statutorily mandatory)

Extraordinary report (without delay)

Preliminary report of business results (average time required:

about 43.5 days)

Semi-annual preliminary report of business results (average time required: about 43.4

days)

Quarterly report (average time required: about 33.9 days)

Decisions and event occurrence (promptly)

5

Keyword of statutory disclosure and timely disclosure

Statutory disclosure Timely disclosure

Accuracy ◎ ○

Promptness △ ◎

Flexibility of disclosure × ○

Comparability ◎ ◎

Means to ensure accuracy

e.g., Criminal penalty,Fine,Civil liability,Audit system

under the premise of accuracy of statutory disclosure

requirements for improvement report

delisting where the third improvement report is required within three years

6

Present situation of electronic disclosurePresent situation of electronic disclosure

Legal Legal disclosuredisclosure

(FSA)(FSA)

Listed Listed companiescompanies

TimelyTimely 　　disclosuredisclosure

(TSE)(TSE)

investorinvestorssMedia institutions, etc.Media institutions, etc.

Web Real-time serviceWeb Real-time service

Database ServiceDatabase Service

TDnetTDnetImmediateImmediateInternetInternet

ImmediateImmediate

31 DAYS , Free31 DAYS , Free

5 YEARS , Fee Charge5 YEARS , Fee Charge

InternetInternet

Internet , TV Internet , TV , , Information Information terminals, terminals, etc.etc.

EDINETEDINET

FSA’s Web siteFSA’s Web site

Reading rooms at Local Reading rooms at Local Finance Bureaus, etcFinance Bureaus, etc

ImmediateImmediateInternetInternet

TTimely imely DDisclosure isclosure netnetworkwork

Electronic Disclosure for Investors' NETwork

7

Improvement of timely disclosure system Changes in circumstances surrounding information disclosure

Frequent occurrences of inappropriate events in relation to corporate information disclosure

Enhanced interest of investors in information disclosure

Introduction of oath and affirmation system (January 2005)

Publication of ‘Guideline for Development and Improvement of Timely Disclosure System and Points in Preparing Oath’ (July 2005)

Research and analysis of each of individual listed companies which have a sufficiently developed disclosure system taking into account the presentation accompanying oath documents

Summary compilation on the basis of the results of the above research and analysis taking into account the views and opinions of academics and specialists inside and outside the TSE and the publication thereof

- Provision of guidelines when individual listed companies develop disclosure systems meeting their own conditions

8

Overview of oath and affirmation system Documents required to be filed: an oath signed by the representative

- Accompanying documents stating the state of internal system concerning timely disclosure

Contents of description: document stating that the company fully acknowledges that timely disclosure of corporate information to investors is fundamental for a sound securities market and that the company is always implementing with integrity the timely disclosure to investors by improving the internal system described in the accompanying documents, so that prompt, accurate and fair disclosure of corporate information can always be attained from the perspective of investors.

Timing of filing: when the representative changes Elapse of 5 years from the previous oath

Affirmation concerning fairness of securities report and the like Documents required to be filed: an affirmation signed by the representative (or copy

of statutory documents voluntarily attached) Contents of description: documents stating that the representative believes that

there are no false statements contained in securities reports and semi-annual reports and the supporting reason why the representative believes so

Timing of filing: at the time of filing of the securities report and semi-annual report

9

Points for improving timely disclosure 1 Extracts from the ‘Handbook for Development and Improvement

of Timely Disclosure System and Points in Preparing Oath’

Risks pertinent to timely disclosure and recognition and analysis of causes giving rise to the risks

Recognition and analysis of the characteristics of the company’s own timely disclosure

Recognition and analysis of the characteristics and risks of the company’s own timely disclosure

Corporate governance taking timely disclosure into account

Management commitment: implementation of policy

Management commitment: thorough dissemination of policy, enlightenment and training

Management commitment: explicit announcement of policyManagement

commitment: through dissemination of policy, enlightenment and training, etc.

Issues to be considered in improving the system to fulfill the timely disclosure activities

ContentsPointsDivision

10

Points for improving timely disclosure 2

Monitoring by corporate auditors (corporate auditors committee)

Monitoring by internal audit departmentImproving monitoring system covering timely disclosure system

Correlation with other internal procedures to which the timely disclosure procedures closely relate

Points for timely disclosure procedures

Thorough dissemination of the established procedures within the company

Categories of information subject to disclosure

Disclosure procedures and disclosure process

Improvement of timely disclosure system

Extent to which disclosure system is developed and improved

Education concerning disclosure

Overall responsiveness to disclosure of the company as a whole

Development and improvement of department responsible for disclosureDevelopment and

improvement of organization responsible for disclosure

System to fulfill timely disclosure activities

ContentsPointsDivision

11

Issues to be considered in developing and improving disclosure

system

The system should be established to appropriately recognize and analyze risks arising from disclosure (possibility of false disclosure) and to mitigate or avoid such risks.

Risks pertinent to timely disclosure and recognition and analysis of causes giving rise to the risks

On the basis of recognition and analysis of the company’s own characteristics, the disclosure system should be established to meet the characteristics.

Recognition and analysis of the characteristics of timely disclosure

Recognition and analysis of the characteristics of the company’s own timely disclosure

In considering governance, the importance of disclosure should be taken into account.

Corporate governance taking timely disclosure into account

The management should not only have appropriate commitment and policy, but should also implement it by itself.

Management commitment: implementation of policy

All the employees should be aware of and enlightened on the management commitment and policy explicitly announced through the internal training and seminars.

Management commitment: thorough dissemination of policy, enlightenment and training

Management should have appropriate commitment and policy towards the disclosure and explicitly announce them in writing.

Management commitment: explicit announcement of policyManagement

commitment: thorough dissemination of policy, enlightenment

RemarksContentsPoints

12

Organization to implement timely disclosure activities 1

In addition to listed companies, the disclosure system should be developed to cover subsidiaries and unlisted parent companies subject to disclosure.

Extent to which disclosure system is developed and improved

In addition to the establishment of the organization, the necessary number and quality of staff members for disclosure activities should be secured.

Education concerning disclosure

Analysis of and judgment on information: Organizations other than the disclosure department responsible for the disclosure should be involved in disclosure activities, in particular by establishing a disclosure committee.

At the time of information collection: Overall internal and cooperative networks should be established so that any necessary information can be obtained extensively and promptly from all the departments concerned.

Overall responsiveness to disclosure of the company as a whole

It is critical to develop an appropriate organization according to situations (e.g., characteristics, risks and efficiency) specific to the company.

Development and improvement of organization responsible for disclosure

Development and improvement of organization responsible for disclosure

RemarksContentsPoints

13

Monitoring should be effected independent of the department responsible for disclosure and business execution organs.

Monitoring by corporate auditors (corporate auditors committee)

Monitoring should be effected independent of the department responsible for disclosure.

Monitoring by internal audit department

Improving monitoring system covering timely disclosure system

The objective of IR activities and prevention of insider trading is primarily different from that of disclosure, but the objective of disclosure should be achieved taking into account the relation with IR activities and prevention of insider trading.

Correlation with other internal procedures to which the timely disclosure procedures closely relate

Goals to be attained in order to meet the required standards① Information collection process: promptness and extensiveness② Analysis and judgment process: timeliness, compliance, accuracy and formalness③ Announcement process: activeness and fairness

Points for timely disclosure procedures

Written procedures are critical for thorough dissemination and monitoring.

Thorough dissemination of the established procedures within the company

Necessity of establishing respective procedures by disclosure information category:① Occurrence② Decision③ Performance results

Categories of information subject to disclosure

Subject to the disclosure procedures, the work should be divided into the following processes:① Information collection process② Analysis and judgment process③ Announcement process

Disclosure procedures and disclosure process

Improvement of timely disclosure system

Organization to implement timely disclosure activities 2

14

Points for timely disclosure procedures Goals to be attained in order to meet the required standards

Disclosure materials should be actively published.h) Activeness

Fairness should be considered in publishing disclosure materials.g) FairnessAnnouncement process

In addition to accuracy and compliance of information, the company should make a formal approval or decision on the disclosure after verifying the adequateness and clarity of the contents of disclosed information.

f) Formalness

The accuracy of information to be disclosed in a timely manner should be ensured.

e) Accuracy

Timely disclosure activities should be effected in compliance with timely disclosure rules, applicable laws and regulations, etc.d) Compliance

Disclosure activities should be managed in order to implement timely disclosure.

c) Timeliness

Analysis and judgment process

Information to be disclosed in a timely manner should be collected extensively.

b) Extensiveness

Information to be disclosed in a timely manner should be collected promptly.

a) PromptnessInformation collection process

DescriptionPointsProcess

15

Expectations for XBRL in developing and improving

disclosure system

Expected effects are: more prompt and efficient preparation of disclosure materials; more prompt and efficient response to revised laws and

regulations and amendments to accounting standards; more prompt and efficient settlements of consolidated accounts;

and more prompt and efficient audits by auditors

As a result, the following points in the disclosure procedures can be fully obtained in a compatible manner at a higher level:

promptness and timeliness accuracy and formalness

16

Input by Input by XBRLXBRL

Timely Disclosure ( by XBRL )Timely Disclosure ( by XBRL )

Listed companies

Tokyo Stock Exchange

Future image centering on the TSEFuture image centering on the TSE XBRL technologies will be consecutively utilized to receive and deliver timely disclosure XBRL technologies will be consecutively utilized to receive and deliver timely disclosure

information.information. XBRL technologies will be consecutively utilized to provide timely disclosure information.XBRL technologies will be consecutively utilized to provide timely disclosure information. In particular, the taxonomy for statutory disclosure operated by the Financial Services In particular, the taxonomy for statutory disclosure operated by the Financial Services

Agency (FSA) and the taxonomy for timely disclosure will be made consistent.Agency (FSA) and the taxonomy for timely disclosure will be made consistent.

Web Service

Media institutions,

etc.

Investors

Output Output by XBRLby XBRL

17

TSE’s enlightenment activities on XBRL １．１． Trial opening of XBRL data (within this fiscal year)Trial opening of XBRL data (within this fiscal year) TSE plans to TSE plans to open the XBRL data as a trial,open the XBRL data as a trial, hopefully by the end of this fiscal year.hopefully by the end of this fiscal year.

Issues incorporated into data: issues used in the TOPIX core 30Issues incorporated into data: issues used in the TOPIX core 30 Information incorporated into data: preliminary report of business results cInformation incorporated into data: preliminary report of business results c

oncerning final settlement of accounts (on a consolidated basis)oncerning final settlement of accounts (on a consolidated basis) Expected time of opening: Within fiscal 2005Expected time of opening: Within fiscal 2005

２．２． Opening of XBRL enlightenment websiteOpening of XBRL enlightenment website A website for providing information on XBRL was set up in November.A website for providing information on XBRL was set up in November.

http://www.tse.or.jp/listing/xbrl/

18

TOKYO STOCK EXCHANGE, INC.TOKYO STOCK EXCHANGE, INC.

http://www.tse.or.jp