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Welcome to the Sarbanes Oxley Compliance
Portal
Japanese Sarbanes
Oxley
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 Financial Services.
Listed
companies in Japan must:
• Document internal processes and controls
• Test / evaluate the
design
of internal processes and control procedures
• Test / evaluate the
operation
of internal processes and control procedures
• Certify about the design and effectiveness of internal controls
and certify as to the accuracy of the report
• External auditors must issue an attestation repors
Looks familiar?
The 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 Control
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:
-
Effectiveness and efficiency of business operations,
-
Reliability of financial reporting,
-
Compliance with applicable laws and regulations relevant to
business activities,
-
Safeguarding of assets.
Internal control consists of
six basic components:
-
Control environment
-
Risk assessment and response
-
Control activities
-
Information and communication
-
Monitoring
-
Response to IT (Information Technology)
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 statements.
Compliance with applicable laws and regulations relevant to
business activities means promoting compliance with laws,
ordinances and other codes relevant to business activities.
Safeguarding of assets means to ensure that assets are acquired,
used and disposed of in accordance with proper procedures and
approvals.
Certified JSOX Expert (CJSOXE)
Distance
Learning and Online Certification Program
The
Cost:
US$
297
What is included in this
price:
A. The
official presentations we use in our
Japanese Sarbanes Oxley (J-SOX) instructor-led classes (892 slides)
Course Synopsis:
www.sarbanes-oxley-association.com/CJSOXE_Course_Synopsis.htm
B. The
official presentations we use in our
US Sarbanes Oxley Act (CSOE) instructor-led classes (1015 slides)
We will send you the official presentations
for the CSOE exam because we strongly believe that a good
understanding of the US Sarbanes Oxley Act and implementation,
is necessary for a good understanding of the J-SOX framework.
The CSOE exam is NOT included in the above cost. Only the CJSOXE
exam is included
Course Synopsis:
www.sarbanes-oxley-association.com/CSOE_Course_Synopsis.htm
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).
If 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.
D.
Personalized Certificate printed in full colour
Processing, printing,
packing and posting to
your office or home.
To learn more:
www.sarbanes-oxley-association.com/CJSOXE_Distance_Learning_and_Certification.htm
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
transactions.
·
Obligation on presenting signs
- All branch offices and business offices of financial
instruments firms must present signs in places noticeable for
the public.
·
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
uncertain matters."
- 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
asset administration"
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 companies
Introducing 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
firms. (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
and regulations.
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
legislative revision.
Reviewing the reporting system for Large Shareholdings
Given the
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
shareholdings"
"The reporting system for large shareholdings" is a system
to promptly disclose the status of large shareholdings to
investors. If total shareholdings in a listed company reach
above 5%,
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
business days.)
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.
Concerning
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
following month."
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 exchanges
Under current regulation, stock exchanges are allowed to be
demutualized.
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
"self-regulatory corporation";
(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
increased:
General unfair
trading,
spreading of rumors, resorting to deceptive devices, market
manipulation
· 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
million
Join the Sarbanes Oxley Compliance Professionals Association
(SOXCPA). Membership is Free:
www.sarbanes-oxley-association.com/How_to_become_member.htm
Member Benefits:
www.sarbanes-oxley-association.com/Member_Benefits.htm
Reading Room
www.sarbanes-oxley-association.com/Reading_Room.htm
Certified Sarbanes Oxley Expert - Distance Learning and
Online Certification Program
www.sarbanes-oxley-association.com/Distance_Learning_and_Certification.htm
Certified EU Sarbanes Oxley Expert - Distance Learning and
Online Certification Program
www.sarbanes-oxley-association.com/CEUSOE_Distance_Learning_and_Certification.htm
Privacy and Compliance with the Federal Trade Commission
Fair, the California Online Privacy Protection Act, the Children
Online Privacy Protection Act, the Privacy Alliance, the
Controlling the Assault of Non-Solicited Pornography and
Marketing Act
www.sarbanes-oxley-association.com/Privacy.htm
Become a member of the Sarbanes Oxley Compliance
Professionals Association (SOXCPA). Membership is Free. You will
receive a monthly newsletter with risk and compliance management
news, alerts and opportunities. You can register below:
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