Welcome to the Sarbanes Oxley Compliance
J-SOX is Japan's Financial Instruments and
Exchange Law, enacted in response to corporate scandals.
The Internal Control
Committee of the Business Accounting Council of the Japanese
companies in Japan must:
Document internal processes
Test / evaluate the design
of internal processes and control procedures
evaluate the operation
of internal processes and control procedures
about the design and effectiveness of internal controls and
certify as to the accuracy of the report
External auditors must issue
an attestation repors
Financial Instruments and Exchange Law is effective (since April
2008) for 3,800 companies
listed in Japan, along with their foreign subsidiaries.
Definition of Internal
Internal control is defined as a
process performed by everyone in an organization and
incorporated in its operating activities in order to provide
reasonable assurance of achieving four objectives:
1. Effectiveness and efficiency of
Reliability of financial reporting,
Compliance with applicable laws and regulations relevant to
Safeguarding of assets.
Internal control consists of
2. Risk assessment
3. Control activities
4. Information and
6. Response to IT
Effectiveness and efficiency of business operations means
promoting effective and efficient operations in order to achieve
the objectives of business activities.
Reliability of financial reporting
means ensuring the reliability of financial statements and the
information that could have a material effect on financial
Compliance with applicable laws and regulations
relevant to business activities means promoting
compliance with laws, ordinances and other codes relevant to
Safeguarding of assets
means to ensure that assets are acquired, used and disposed of
in accordance with proper procedures and approvals.
Receive the New Member Orientation
You will have the
opportunity lo learn what members registered before you have
already learned. Understand better the Sarbanes Oxley environment,
projects, careers, challenges and opportunities.
Certified JSOX Expert (CJSOXE)
Distance Learning and Online Certification Program
The all-inclusive cost is $297
What is included in
A. The official
presentations we use in our Japanese Sarbanes Oxley (J-SOX)
B. The official presentations we
use in our US Sarbanes Oxley Act (CSOE) instructor-led classes
A good understanding of the US Sarbanes Oxley Act and
implementation is necessary for a good understanding of the
The CSOE exam is NOT included in the
above cost. Only the CJSOXE exam is included
C. Up to 3 Online Exams
There is only one exam you need to pass, in order to become
a Certified Japanese Sarbanes-Oxley Expert (CJSOXE).
you fail, you must study again the official presentations, but
you do not need to spend money to try again.
Up to 3
exams are included in the price.
Personalized Certificate printed in
Processing, printing, packing and
posting to your office or home
To learn more:
From the "Securities and Exchange Law" to the "Financial
Instruments and Exchange Law"
In the Financial Instruments and Exchange Law, it is stipulated
that financial instruments firms should comply with the
following rules of conducts (rules for sales and solicitation)
in conducting sales or solicitation of securities or derivative
Obligation on presenting signs
- All branch offices and business offices of financial
instruments firms must present signs in places noticeable for
Regulation on advertisements
- An advertisement must indicate a registration number and that
the advertiser is a financial instruments firm.- Concerning profit prospects, an advertisement shall not
portray things in a way that is significantly different from the
truth or in a way this may mislead people.
Obligation to deliver documents in a written format before
making a contract
- Documents must indicate a registration number and that the
company is a financial instruments firm.
- Documents must
state the outlines of the contract and the fees.
- If there
is a "possibility of incurring loss" or "possibility that the
loss may exceed the value of deposits received from customers,"
the documents must state as such.
Obligation to deliver document in a written format at the time
of a contract
Various prohibited conducts
- It is prohibited to engage in "the delivery of false
information" or "solicitation by providing decisive judgments on
- Solicitation of customers who have not
requested such solicitation by making visits or phone calls is
prohibited (a ban on unwanted solicitation).
* It is intended that, for the time being, this will apply
to over-the-counter financial futures transactions (foreign
exchange margin transactions, etc.).
- Continued solicitation
of customers who have once indicated that they do not wish to
enter into a contract is prohibited (a ban on re-solicitation).
* It is intended that, for the time being, this will apply
to financial futures transactions in general (foreign exchange
margin transactions, etc.).
Prohibitation of loss compensation
Principle of appropriateness
- In light of customer knowledge, experience, and assets, as
well as the purpose for concluding a contract, firms must not
engage in inappropriate solicitation that may result in
insufficient investor protection.
In addition, various regulations on conduct of businesses
are being reorganized regarding
"investment advisory," "investment management" and "customer
activities and the like.
More flexible regulation on conduct of businesses according to
the attributes of customers
- Differentiation between
professional investors and general investors -
In the Financial Instruments and Exchange Law, under the
premise of user protection and with a perspective towards the
smoother provision of risk capital, if a customer is a
"professional investor," certain regulations regarding conduct
of businesses, such as "obligation to deliver documents before
making a contract," will not be applied.
All customers for financial instruments firms are
categorized into "professional investors" or "general
investors," some of them may apply for a change of status from
one to the other.
Enhancing disclosure by listed companiesIntroducing the statutory quarterly reporting system
In order to ensure timely and prompt disclosure of financial and
corporate information, "quarterly reporting" will become a
mandatory requirement for listed companies, and it will be
subject to audits by certified public accountants or auditing
(Submission of false quarterly report will be subject to
criminal or civil money penalties.)
Enhancing internal control over financial reporting
In order to ensure appropriate disclosure of financial and
corporate information, "internal control reports" which provide
an evaluation of the validity of internal control of financial
reporting (a system to ensure appropriate information on
financial matters) for each fiscal year will become a mandatory
requirement for listed companies and will be subject to audits
by certified public accountants or auditing firms.
In addition, listed companies will be obliged to submit
"certification" by management stating that descriptions in
financial statements are appropriate and in compliance with laws
Reviewing the Tender Offer System
The number of corporate mergers and acquisitions has been
accelerating rapidly in Japan along with increasing numbers of
"tender offer (TOB)," one way to exercise M&A. The types of
tender offers are also becoming more diversified.
Given these circumstances, the tender offer (TOB) system
under the Securities and Exchange Law has been reviewed in this
Reviewing the reporting system for Large Shareholdings
increasing incidence of high volume share acquisitions, this
legislative revision will also amend "the reporting system for
large shareholdings" under the Securities and Exchange Law.
For reference: The "reporting system for large
"The reporting system for large shareholdings" is a system
to promptly disclose the status of large shareholdings to
If total shareholdings in a listed company reach
the shareholder must submit a "report on large shareholdings"
within 5 business days from the date of the purchase.
(If the holdings increase or decrease by 1% or more at a later
date, a "report on changes" must also be submitted within 5
However, in consideration of the administrative workload for
institutional investors engaged in a large volume of trading as
part of their daily business activities, a lower frequency of
reporting will be required (special reporting system).
For instance, the followings will be reviewed.
the "special reporting system" for institutional investors, the
deadline will be shortened and the frequency for reporting will
be increased to "roughly every 2 weeks, within 5 business days."
Under the current "special reporting system," for example,
if shareholdings in a listed company reach above 5%, a report
must be provided "once every 3 months by the 15th of the
To facilitate rapid publication through
EDINET (an electronic disclosure system), "reports on large
shareholdings" must be submitted electronically.
Ensuring appropriate management of self-regulatory
operations by exchangesUnder current regulation, stock exchanges are allowed to be
Regarding incorporated stock exchanges, some concerns regarding
possible conflicts of interest
between the following two have been raised:
· "Profitability" as a stock corporation, and
· "Self-regulatory operation" aimed at ensuring fairness and
transparency of transactions on the exchange.
Under the Financial Instruments and Exchange Law, in order
to ensure appropriate management of self-regulatory operations
by financial exchanges, systems are being organized to allow:
(1) The entrustment of self-regulatory operations to a
(2) The establishment of a "self-regulatory committee" to
make decisions on matters concerning self-regulatory operations
(for incorporated stock exchanges).Strict countermeasures against unfair trading
Increase in maximum criminal penalty
In order to ensure user protection, secure fairness and
transparency in transactions, and establish public confidence in
the markets, the current level of penalties under the Securities
and Exchange Law will be increased concerning violation of
disclosure requirements and unfair tradings.
For example, penalties against the following malfeasance are
spreading of rumors, resorting to deceptive devices, market
· Submission of false registration statement
regarding material information
Maximum imprisonment of 10 years
Individuals: Maximum fine of JPY 10 million
Corporations: Maximum fine of JPY 700