Financial Instruments and Exchange Act

With regard to a balance sheet, profit and loss statement, or other documents on financial accounting specified by Cabinet Office Order that are stated in a securities registration statement under Article 5, paragraph (1) as prescribed in the preceding Article (including its amended statement), an annual securities report (including its amended report), or any other document specified by Cabinet Office Order, which are submitted by a company that is an issuer of securities set forth in Article 24, paragraph (1), item (i), or any other person, specified by Cabinet Order (referred to as a "specified issuer" in this paragraph, Article 26-5, paragraph (6), and Article 26-41; and the documents are referred to as "documents on financial accounting" in paragraphs (4) and (7) and in Article 26-41, paragraph (1) and paragraph (2), item (i)), audit certification must be received from a certified public accountant (including a foreign certified public accountant prescribed in Article 16-2, paragraph (5) of the Certified Public Accountants Act (Act No. 103 of 1948); the same applies hereinafter in this Article, Article 26-41, Article 27-59, Article 43-2, paragraph (3), and Article 43-14, paragraph (3)) or audit corporation (if the specified issuer is a listed company, etc. prescribed in Article 34-34-2 of that Act, limited to a certified public accountant or audit corporation registered under that Article) that has no special interest in that person; provided, however, that the above does not apply in the following cases:

the issuer of the securities set forth in Article 2, paragraph (1), item (xvii) which have the nature of securities set forth in item (ix) of that paragraph or any other securities specified by Cabinet Order, receives certification that is found to be equivalent to audit certification as specified by Cabinet Office Order, from a foreign audit corporation, etc. (meaning a foreign audit corporation, etc. prescribed in Article 1-3, paragraph (7) of the Certified Public Accountants Act; the same applies in item (i) of the following paragraph and paragraph (3));

the issuer set forth in the preceding item receives certification that is found to be equivalent to audit certification as specified by Cabinet Office Order, from a person specified by Cabinet Office Order that is prescribed in the proviso to Article 34-35, paragraph (1) of the Certified Public Accountants Act;

the company or person obtains the approval of the Prime Minister as prescribed by Cabinet Office Order that, even if the company or person does not receive audit certification, this does not damage the public interest or result in insufficient investor protection.

An internal control report that a company that is an issuer of securities listed on a financial instruments exchange or any other person specified by Cabinet Order (referred to as a "listed company, etc." in this paragraph) submits pursuant to the provisions of Article 24-4-4 must receive audit certification by a certified public accountant or an audit corporation (if the listed company, etc. is a listed company, etc. prescribed in Article 34-34-2 of the Certified Public Accountants Act, limited to a certified public accountant or audit corporation registered under that Article) that has no special interest in that company or person; provided, however, that this does not apply in the following cases:

the issuer referred to in item (i) of the preceding paragraph receives certification that is found to be equivalent to audit certification as prescribed by Cabinet Office Order, from a foreign audit corporation, etc.;

the issuer set forth in the preceding item receives certification that is found to be equivalent to audit certification as prescribed by Cabinet Office Order, from a person that is specified by Cabinet Office Order that is prescribed in the proviso to Article 34-35, paragraph (1) of the Certified Public Accountants Act;

the company or person obtains the approval of the Prime Minister as prescribed by Cabinet Office Order that, even if the company or person does not receive audit certification, this does not damage the public interest or result in insufficient investor protection;

a listed company, etc. (limited to a listed company, etc. whose amount of capital or any other operational size falls short of the standard specified by Cabinet Office Order) submits an internal control report within the period from the day on which it first became the issuer of the securities set forth in Article 24, paragraph (1), item (i) or any other day specified by Cabinet Order to the day on which three years have elapsed since that day.

The provisions of paragraph (1), item (i) and item (i) of the preceding paragraph do not apply if the fact that the foreign audit corporation, etc. prescribed in those provisions has failed to follow the instructions referred to in Article 34-38, paragraph (1) of the Certified Public Accountants Act has been publicized pursuant to the provisions of paragraph (2) of that Article, or the fact that the corporation has given a notification under Article 34-39, paragraph (1) of that Act has been publicized pursuant to the provisions of paragraph (2) of that Article (excluding a case in which the publicization under Article 34-38, paragraph (2) of that Act is made, in which the publicization under paragraph (3) of that Article has been made).

The special interest referred to in paragraphs (1) and (2) means an interest from the relationship prescribed in Article 24 of the Certified Public Accountants Act (including as applied mutatis mutandis pursuant to Article 16-2, paragraph (6) of that Act), Article 24-2 of that Act (including as applied mutatis mutandis pursuant to Article 16-2, paragraph (6) of that Act), Article 24-3 of that Act (including as applied mutatis mutandis pursuant to Article 16-2, paragraph (6) of that Act), Article 34-11, paragraph (1), or Article 34-11-2, paragraph (1) or (2) of that Act, which a certified public accountant or audit corporation has to a person submitting a document on financial accounting or to a person submitting an internal control report; the relationship as a shareholder or an equity holder that a certified public accountant or audit corporation has to the person; or the relationship which a certified public accountant or audit corporation has in connection with such a person's business or property accounting; which the Prime Minister specifies in Cabinet Office Order as an interest from a relationship that the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors.

The audit certification referred to in paragraphs (1) and (2) must be done in accordance with the criteria and procedures specified by Cabinet Office Order.

When the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister may order a certified public accountant or audit corporation that conducts an audit certification under paragraph (1) or (2) to report or submit materials that should serve as a reference.

If a certified public accountant or audit corporation conducts an audit certification for documents on financial accounting or for an internal control report provided for in paragraph (2), and the audit certification falls under the provisions of Article 30 or Article 34-21, paragraph (2), item (i) or (ii) of the Certified Public Accountants Act, or is otherwise wrongful, the Prime Minister may issue a decision not to accept all or part of any securities registration statement under Article 5, paragraph (1) (including any amended statement in connection with the same), annual securities report (including any amended report in connection with the same), or internal control report (including any amended report in connection with the same) connected with an audit certification by that certified public accountant or audit corporation, which is submitted within a fixed period of no longer than one year. In such a case, irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, the Prime Minister must conduct a hearing.

If the Prime Minister issues the decision referred to in the preceding paragraph, the Prime Minister must notify the certified public accountant or audit corporation of this and must publicly announce that decision.

Specified non-financial information to be stated in a covered disclosure document submitted by a specified submitter prescribed in paragraph (1) of the following Article or any other person specified by Cabinet Order must be prepared in accordance with the standards for preparation specified by Cabinet Office Order as being generally accepted as fair and proper.

In this Article, the meanings of the terms set forth in the following items are as prescribed respectively in those items.

Covered disclosure document: a securities registration statement under Article 5, paragraph (1) (including its amended statement), an annual securities report under Article 24, paragraph (1) (including its amended report), or any other document specified by Cabinet Office Order; and

Specified non-financial information: information on matters specified by Cabinet Office Order as matters concerning the status of efforts to address challenges in business activities, such as climate change, that may affect future finance or fund procurement, and indicators related thereto.

With regard to the specified non-financial information prescribed in paragraph (2), item (ii) of the preceding Article (excluding information specified by Cabinet Office Order as being unlikely to affect investors' investment decisions) that is stated in a covered disclosure document (meaning the covered disclosure document prescribed in paragraph (2), item (i) of the preceding Article; the same applies hereinafter) submitted by a company specified by Cabinet Order from among companies that are issuers of securities set forth in Article 24, paragraph (1), item (i) (referred to as a "specified submitter" in this Chapter and Chapter VI-2), audit certification must be received from a specified non-financial information audit certification provider that has no special interest in that person; provided, however, that this does not apply if approval of the Prime Minister has been obtained, as prescribed by Cabinet Office Order, that, even if the company does not receive audit certification, this does not damage the public interest or result in insufficient investor protection.

The special interest referred to in the preceding paragraph means any of the relationships set forth in the following items that a specified non-financial information audit certification provider has with a specified submitter.

a relationship in which a specified non-financial information audit certification provider owns shares of a specified submitter or has made a capital contribution to a specified submitter;

a relationship in which a specified submitter owns shares of a specified non-financial information audit certification provider or has made a capital contribution to a specified non-financial information audit certification provider;

a relationship in which an officer or person in charge of business execution (meaning a person in charge of business execution prescribed in Article 26-7, paragraph (1), item (iv); the same applies hereinafter in this paragraph) of a specified non-financial information audit certification provider is an officer of a specified submitter or a person with responsibility for the work of preparing specified non-financial information (meaning the specified non-financial information prescribed in paragraph (2), item (ii) of the preceding Article; the same applies hereinafter except in paragraph (4)), or was any of those persons within the past one year;

a relationship in which a person who was involved as a person in charge of business execution in the specified non-financial information audit certification received by a specified submitter has become an officer of the specified submitter, or of a person specified by Cabinet Office Order as one that has a close relationship with the specified submitter, such as another company a majority of whose voting rights the specified submitter owns (referred to as a "subsidiary company, etc." in Article 26-18), within the business year pertaining to the covered disclosure document in which the specified non-financial information pertaining to that specified non-financial information audit certification is stated (in the case of a securities registration statement under Article 5, paragraph (1) (including its amended statement), the business year pertaining to the documents on financial accounting to be stated therein; the same applies in Article 26-18, Article 172-4-2, paragraph (1), item (i), and Article 185-7, paragraphs (8) and (9)) or the following business year (referred to as the "business year of involvement" in this item) (limited to within the period of that business year of involvement);

a relationship in which a specified non-financial information audit certification provider (including its officers or persons in charge of business execution), or a juridical person or other organization having a relationship specified by Cabinet Office Order as one recognized as being substantially controlled by that specified non-financial information audit certification provider, continuously receives remuneration from a specified submitter for work related to the preparation of the specified non-financial information to be stated in a covered disclosure document or other work specified by Cabinet Office Order; or

in addition to those set forth in the preceding items, a relationship specified by Cabinet Order as one for which it is necessary and appropriate to impose a restriction on services in order to ensure the fairness of the audit certification referred to in the preceding paragraph.

The audit certification referred to in paragraph (1) must be done in accordance with the criteria and procedures specified by Cabinet Office Order.

If a specified non-financial information audit certification provider conducts an audit certification of the specified non-financial information prescribed in paragraph (1) that is stated in a covered disclosure document, and the audit certification falls under the provisions of Article 26-24, paragraph (1), item (i) or (ii), or is otherwise wrongful, the Prime Minister may issue a decision not to accept all or part of any covered disclosure document connected with an audit certification by that specified non-financial information audit certification provider, which is submitted within a fixed period of no longer than one year. In such a case, irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, the Prime Minister must conduct a hearing.

If the Prime Minister has issued a decision under the preceding paragraph, the Prime Minister must give notice to that effect to the specified non-financial information audit certification provider concerned and make it public.

A company that is a specified issuer but not a specified submitter may voluntarily receive the audit certification referred to in paragraph (1) with regard to the specified non-financial information stated in a covered disclosure document it submits. In such a case, a company that is a specified issuer but not a specified submitter is deemed to be a specified submitter, and the provisions of this Chapter and the provisions of Chapter VI-2 and Chapter VIII relating thereto apply.