TSE revises procedures for company disclosures on “Cost of Capital and Stock Price”

The Tokyo Stock Exchange (TSE) is revising its list of companies that have disclosed information regarding “Action to Implement Management That Is Conscious of Cost of Capital and Stock Price”. The revised list aims to provide better support for listed companies and enhance communication between companies and investors.

These changes will be effective from January 15, 2025. To be included in the revised list, companies need to update their CG reports by December 31, 2024, incorporating the required information.

1. Date of Disclosure Update

A new column will be added to indicate the date when a company last updated its disclosures regarding cost of capital and stock price.

• Purpose: This change aims to provide investors with greater transparency about a company’s commitment to managing its cost of capital and stock price. By seeing when a company last updated its disclosures, investors can gauge how actively the company is engaging with these concepts.
• Mechanism: Companies are requested to include a specific keyword in their Corporate Governance (CG) reports along with the date of the update. This allows TSE to automatically extract and include the information in the list.
• Impact: This new column encourages companies to regularly review and update their initiatives, demonstrating a continuous effort to improve shareholder value.

2. Institutional Investor Contact

New columns will be added for companies that wish to be contacted by institutional investors. Companies can apply to be included in this section if they are seeking more active dialogue with investors.

• Purpose: Many listed companies struggle to connect with interested institutional investors, while some investors find it challenging to identify companies receptive to engaging in dialogue. This change aims to bridge this gap by facilitating more direct communication between the two parties.
• Mechanism: Companies can choose to be listed in a specific section of the TSE’s list dedicated to companies seeking more active contact with institutional investors. They need to apply and provide contact information through a dedicated application form.
• Impact: This facilitates more proactive engagement between companies and investors, potentially leading to more informed investment decisions and better alignment on corporate strategy.

3. Time Limit for “Under Consideration”

The status “Under Consideration” will have a time limit of up to six months. Companies with this status will be required to describe their process of consideration and provide an expected timeframe for disclosing specific initiatives.

• Purpose: Previously, some companies remained in the “Under Consideration” status for extended periods, creating uncertainty for investors about their commitment to implementing relevant management practices. The time limit and additional disclosure requirements aim to address this issue.
• Mechanism: Companies now have up to six months after entering the “Under Consideration” status to provide a concrete plan with an expected timeframe for disclosing specific initiatives in their CG reports.
• Impact: This encourages companies to approach the process with greater urgency and transparency, providing investors with a clearer understanding of their commitment to incorporating cost of capital and stock price considerations into their management strategies.

4. Other

Furthermore, TSE has established a Listed Company Support Group to assist companies in enhancing corporate value and improving IR activities. The group offers various support services, including:

• Follow-up with Listed Company Management: Explaining the background behind TSE’s request and providing guidance on initiatives to management.
• Support for Those in Charge of Practical Operations: Providing insights into institutional investors’ expectations and offering consultation on IR-related challenges.
• Promoting Constructive Dialogue Between Listed Companies and Investors: Improving IR skills through online seminars, creating opportunities for dialogue, and providing case studies.

The TSE’s efforts aim to encourage companies to adopt management practices that prioritize cost of capital and stock price, ultimately enhancing corporate value and attracting investors.

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