TOKYO: A total of 1,841 companies, including Toyota Motor Corp., will be listed on the new Prime section following the Tokyo Stock Exchange’s market realignment, set for April 4, the exchange said Tuesday.

The number of companies in the top-tier section is more than 80 pct of that on the TSE first section under the current market system.

Of the total, 296 companies including Z Holdings Corp., the parent of internet service provider Yahoo Japan Corp., have not yet met the requirements to be listed on the Prime section but have qualified after submitting plans for meeting them during a transition period.

The existing four sections of the TSE–the first and second sections and the Mothers and Jasdaq markets–will be reorganized into the Prime section for internationally active companies, the Standard section for midsize firms and the Growth section for startups.

By clarifying each section’s characteristics, the TSE aims to encourage robust investments in listed companies from Japan and abroad. Each listed company needs to boost earnings to meet the goal.

“We’ll offer a market that supports companies’ sustainable growth and has the backing of domestic and foreign investors,” Tokyo Stock Exchange Inc. President and CEO Hiromi Yamaji said in a speech.

The Standard section will have 1,477 firms. Of them, 344 companies, including Nagano Bank, will be from the current first section. The bank said that it chose to be listed in the Standard section as a “decision befitting our status as a financial institution serving the local community.”

A total of 459 firms will be traded on the Growth section, including online flea market operator Mercari Inc., which hopes to join the Prime section in the future.

Companies on the Prime section will need to have a minimum required market capitalization of 10 billion yen in free-floating shares and at least 35 pct of all outstanding shares in freely tradable shares, a stricter requirement than for the existing first section.

The market capitalization requirement was the most common reason for firms not being able to qualify for a listing on the Prime section. While most companies drew up plans for meeting the requirements in two to three years, some set 10-year plans.

Prime section companies will also be required to select at least one-third of their board members from independent outsiders and disclose risks related to climate change, in accordance with the corporate governance code.

Companies on the Standard section must have a minimum market capitalization of 1 billion yen in free-floating shares and at least 25 pct of all outstanding shares in freely tradable shares, while the figures are 500 million yen and 25 pct for companies on the Growth section.

The TOPIX index, which is currently based on all TSE first-section issues, will be gradually revised with the market realignment. Companies with market capitalization of less than 10 billion yen in free-floating shares will be excluded from the index.

JIJI Press