TOKYO – Tokyo Stock Exchange’s upcoming reorganization will set stricter standards for its new blue chip market, according to details of the plan released on Friday, in a move that the hope is both reassuring to global investors and encouraging businesses to take shape.
The April 2022 refurbishment will replace the existing four-segment structure – the first and second segments, the mother market for start-ups, and technology-focused Jasdaq – with “key” markets. , ”“ Normal ”and“ growth ”.
The plan comes at the end of a year in which the TSE suffered its worst-ever spending, caused by a combination of systemic movement and poorly contingent design, leaving the exchange with the challenge of renewed investor confidence -news.
The new main board is intended as a place for large companies of the type sought after by foreign institutional investors, so criteria will be stricter than the current first section. In addition to still needing a minimum market capitalization of 25 billion yen ($ 241 million), for example, companies need to demonstrate a high level of corporate governance. Around 600 businesses on the first conventional sector do not meet the new requirements.
Major market companies will be subject to Japan’s corporate governance code, which is expected to be reviewed next spring. The new code requires boards with at least one-third of external supervisors and will encourage the motivation of women, foreign workers and mid-care professionals. Steps are also being considered to improve the publication of information and the transparency of a study.
New big board members will also be pushed to cut down on cross-sections, which have long been seen as a symbol of Japanese corporate inefficiency.
The typical market will target midsize companies like the ones now listed in the second category. The growth market is expected to be made up of small but well-regarded start-ups that outline plans to achieve rapid growth and guarantee continued publication of progress.
The reorganization aims to set clearer roles for the various departments. The TSE now has two markets to start with, with little difference between them. And the current first segment, expected for large established enterprises, is now spanning around 2,200 companies – about 60% of the listings on the course. Many have low valuations or scarce employment.
The changes will take effect after a period of public comment ending in February.
Along with the update, the TSE will retain the scope of its Topix index, which now covers the entire first segment. The pressure on companies with at least 10 billion yen in commercial shares will be gradually reduced and some are expected to be dropped from the index entirely by 2025.
Such investors as index-linked assets automatically buy shares in new Topix shares, which can raise valuations higher than company foundations deserve. Making the Topix stand-alone from the big board’s work will allow investors to be more selective.