The misconduct in question and inappropriate accounting treatment relating to disclosure documents and other materials
eMnet Japan.co.ltd. (the perpetrator was the former CFO, who was an executive director at the time)
Bank accounts in the company's name, safes, cash cards in the company's name, the bank transaction system, and the accounting system
The former CFO incurred mounting substantial losses in personal FX trading, leaving the company's cash flow under extreme pressure. In addition, authority was concentrated in the former CFO, checks and balances within the Corporate Administration Division were lacking, the organizational culture was oppressive, the internal whistleblowing system was defective, internal audits and Audit and Supervisory Committee audits had become merely formal, and monitoring of the bank transaction system was insufficient.
Company response
At an extraordinary meeting of the Board of Directors held on 11 January 2026, the company resolved to establish a third-party committee and appointed its members on 19 January 2026. The committee comprises 2 attorneys, 1 certified public accountant, and investigative assistants.
①Strengthening the Board of Directors' oversight function; ②enhancing independent monitoring functions; ③revitalizing and ensuring the effectiveness of the internal whistleblowing system (compliance consultation hotline); and ④implementing monitoring and management of the bank transaction system. Specific measures include strengthening coordination within the three-pronged audit framework, monthly reporting to the Board of Directors, establishing a risk-reporting checklist, introducing dual reporting lines, granting the Audit and Supervisory Committee access to system and financial results data, appointing a head of the Internal Audit Office, using external specialist organizations, accepting specialist personnel from the parent company, establishing an external hotline handled exclusively by outside attorneys, providing compliance training, removing privileged approver authority, monitoring system usage logs, reviewing the list of authorities, and transitioning to a dual-control system using large and small safes.
The former CFO was suspended from performing duties as of 11 January 2026 and advised to resign. On the same date, the company received and accepted the former CFO's letter of resignation as a director.
The impact of correcting prior-period financial results was as follows: quarterly net income of negative ¥4,686 thousand for the third quarter of the fiscal year ended December 2023; net income of negative ¥7,402 thousand for the full fiscal year ended December 2023; quarterly net income of positive ¥3,542 thousand for the first quarter of the fiscal year ended December 2024; interim net income of positive ¥897 thousand for the second quarter; quarterly net income of negative ¥12,857 thousand for the third quarter; quarterly net income of negative ¥188,483 thousand for the first quarter of the fiscal year ended December 2025; interim net income of negative ¥223,442 thousand for the second quarter; and quarterly net income of negative ¥252,102 thousand for the third quarter. The classification for recording extraordinary losses and other items is Not disclosed.
Third quarter and full fiscal year ended December 2023; first, second, third quarters and full fiscal year ended December 2024; and first, second and third quarters of the fiscal year ending December 2025
Related procedures
Submission of an Improvement Report pursuant to Article 504, Paragraph 3 of the Securities Listing Regulations
Tokyo Stock Exchange, Inc.
Around July 2026, the company will revise its Board of Directors Regulations, Compliance Management Regulations, Internal Audit Regulations, Internal Audit Manual, and Accounting Regulations, and begin operating measures to improve oversight, audits, internal whistleblowing, and bank transaction system management. From November 2026, the company will hold compliance training, including case studies, at least once a year.
| Item | Details |
|---|---|
| Event name | The misconduct in question and inappropriate accounting treatment relating to disclosure documents and other materials |
| Date of occurrence | Around August 2021 to December 2025 (period during which the former CFO committed the misconduct) |
| Date recognized / date notice received | 5 January 2026 (the date on which the company president became aware of the matter through an email from the manager in charge of finance) |
| Subject Entity | eMnet Japan.co.ltd. (the perpetrator was the former CFO, who was an executive director at the time) |
| Target Locations / Products | Bank accounts in the company's name, safes, cash cards in the company's name, the bank transaction system, and the accounting system |
| Cause | The former CFO incurred mounting substantial losses in personal FX trading, leaving the company's cash flow under extreme pressure. In addition, authority was concentrated in the former CFO, checks and balances within the Corporate Administration Division were lacking, the organizational culture was oppressive, the internal whistleblowing system was defective, internal audits and Audit and Supervisory Committee audits had become merely formal, and monitoring of the bank transaction system was insufficient. |
| Amount of Impact on Business Performance | The impact of correcting prior-period financial results was as follows: quarterly net income of negative ¥4,686 thousand for the third quarter of the fiscal year ended December 2023; net income of negative ¥7,402 thousand for the full fiscal year ended December 2023; quarterly net income of positive ¥3,542 thousand for the first quarter of the fiscal year ended December 2024; interim net income of positive ¥897 thousand for the second quarter; quarterly net income of negative ¥12,857 thousand for the third quarter; quarterly net income of negative ¥188,483 thousand for the first quarter of the fiscal year ended December 2025; interim net income of negative ¥223,442 thousand for the second quarter; and quarterly net income of negative ¥252,102 thousand for the third quarter. The classification for recording extraordinary losses and other items is Not disclosed. |
| Accounting period in which recognized | Third quarter and full fiscal year ended December 2023; first, second, third quarters and full fiscal year ended December 2024; and first, second and third quarters of the fiscal year ending December 2025 |
| Type of litigation or proceeding | Submission of an Improvement Report pursuant to Article 504, Paragraph 3 of the Securities Listing Regulations |
| Court or authority | Tokyo Stock Exchange, Inc. |
| Investigation structure | At an extraordinary meeting of the Board of Directors held on 11 January 2026, the company resolved to establish a third-party committee and appointed its members on 19 January 2026. The committee comprises 2 attorneys, 1 certified public accountant, and investigative assistants. |
| Measures to prevent recurrence | ①Strengthening the Board of Directors' oversight function; ②enhancing independent monitoring functions; ③revitalizing and ensuring the effectiveness of the internal whistleblowing system (compliance consultation hotline); and ④implementing monitoring and management of the bank transaction system. Specific measures include strengthening coordination within the three-pronged audit framework, monthly reporting to the Board of Directors, establishing a risk-reporting checklist, introducing dual reporting lines, granting the Audit and Supervisory Committee access to system and financial results data, appointing a head of the Internal Audit Office, using external specialist organizations, accepting specialist personnel from the parent company, establishing an external hotline handled exclusively by outside attorneys, providing compliance training, removing privileged approver authority, monitoring system usage logs, reviewing the list of authorities, and transitioning to a dual-control system using large and small safes. |
| Directors' and officers' liability | The former CFO was suspended from performing duties as of 11 January 2026 and advised to resign. On the same date, the company received and accepted the former CFO's letter of resignation as a director. |
| Outlook | Around July 2026, the company will revise its Board of Directors Regulations, Compliance Management Regulations, Internal Audit Regulations, Internal Audit Manual, and Accounting Regulations, and begin operating measures to improve oversight, audits, internal whistleblowing, and bank transaction system management. From November 2026, the company will hold compliance training, including case studies, at least once a year. |
Items this document does not state (11)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.The former CFO misappropriated company funds for personal use after incurring substantial losses in personal FX trading, which placed severe pressure on cash flow. The concentration of authority in the former CFO, together with the failure of checks and balances within the Corporate Administration Division, internal audits, Audit and Supervisory Committee audits, the internal whistleblowing system, and monitoring of the bank transaction system, is considered to have contributed to the continuation of the misconduct and expansion of the losses.