Toshiba taken off delisting watch list by Tokyo Stock Exchange on improved internal controls

Embattled Japanese conglomerate agrees to sell its flash memory chip business to plug the hole in its finances after the collapse of its US nuclear unit

PUBLISHED : Wednesday, 11 October, 2017, 8:47pm
UPDATED : Wednesday, 11 October, 2017, 8:47pm

Toshiba Corp, the Japanese electronics conglomerate, has been removed from the “Securities on Alert” and “Securities under Supervision (examination)” lists, both of which could lead to a delisting, after it improved its internal controls, according to the Tokyo Stock Exchange (TSE) on Wednesday.

The company’s stock, however, is still in the grace period of delisting criteria and could be forced to exit the market if it fails to clear excessive debt by the end of March 2018, the bourse warned.

The TSE received a submission about internal control conditions from Toshiba earlier this year and recognised that “appropriate improvements” had been made, the statement said.

Toshiba agreed in September to sell its prized memory chip business for 2 trillion yen (US$18 billion) to a group of international investors that includes US private equity firm Bain Capital and Apple.

It is hoped the deal, which is still subject to regulatory approval and a potential legal dispute with the company’s semiconductor partner, will let the company avoid reporting a second straight year of negative shareholder equity.

Earlier this year, Toshiba reported multibillion-dollar losses for its US nuclear business Westinghouse Electric, which sank its shareholder equity into negative territory for the financial year ending March.

According to the TSE, any company that reports two consecutive years of negative shareholder equity could be delisted, although the exchange can also exercise discretion.

Toshiba was first put on the “Securities on Alert” in September 2015 following a US$1.2 billion accounting scandal that led to the resignation of its top executives.

A company on the “Securities on Alert” will have to file a report in a year on internal control conditions. If it fails to improve the corporate governance, the stock will be delisted.

TSE placed Toshiba under “Securities under Supervision (examination)” in March 2017, citing its failure to address concerns arising from the 2015 accounting irregularities.

Shares in Toshiba rose 0.3 per cent to close at 318 Japanese yen on Wednesday.