JSDA Tightens Rules for Capital Procurement
The Japan Securities Dealers Association (JSDA) has firmed up rules for securities firms' underwriting examinations of First Section firms making public offerings. Fifteen new provisions will go into effect in February 2007. The securities firms will be obligated to examine companies' record of achieving its past profit projections as well as the disclosure of appropriate data. The new rules may put a brake on companies' easy ability to raise new capital but will afford greater protections to shareholders. Securities firms will be audited under the rules set by the independent JSDA, and penalties will be prescribed for firms with violations. The rules extend widely to convertible bonds, bonds, and other types of financing.