Silviase/jgov_v1.4_full_ann huggingface dataset:
(C) As for the “simplification of the disclosure of non-consolidated (single-entity) financial statements,” the FSA revised the regulations for financial statements on March 26, 2014, which allows for partial exemption from the descriptive obligation of notes to the non-consolidated financial statements under the Financial Instruments and Exchange Act.

(D) The “Working Group for the Endorsement of IFRS” was established in September 2013 with the aim to strengthen Japan’s overall capacity to address IFRS and to achieve a consensus in Japan of opinions regarding IFRS. The working group exchanges views on the achievement status of measures as instructed in the Immediate Policy, as well as the trends in the United States and the international situation of the development status of IFRS standards.

(2) Involvement in the global accounting standard-setting process

As part of strengthening the governance of the IFRS Foundation, the IFRS Foundation Monitoring Board consisting of capital market authorities (hereinafter, “MB”) was established in April 2009. The FSA has long served as the Chair of the MB since October 2010, including the period of Interim Chair from October 2010 to February 2013. Currently, the MB has dedicated efforts to expand its membership in line with the recommendations of the “Final Report on the Review of the IFRS Foundation’s Governance” that was published in February 2012. In May 2013, the MB launched a call for nominations for new members. In January 2014, the MB announced that the Comissão de Valores Mobiliários (CVM) of Brazil and the Financial Services Commission (FSC) of Korea were selected as new members.

The FSA has strengthened cooperation with foreign authorities by taking the opportunities of international conferences such as International Organization of Securities Commissions (IOSCO) that discusses accounting issues arising from securities markets. The FSA has actively conveyed our thoughts to foreign authorities in coordination with domestic stakeholders. In June 2014, the FSA had an experience of hosting a Committee 1 of IOSCO (Committee 1 treats accounting, audit and disclosure issues) in Tokyo.

In March 2013, the Accounting Standards Advisory Forum (ASAF) was established as a communication framework between the International Accounting Standards Board (IASB) and national or regional accounting standard-setters. The ASAF is composed of 12 national or regional standard-setters, including the Accounting Standards Board of Japan (ASBJ), which has actively contributed to the development of IFRS.
41. Response to ISA and international trends

(1) Response to the International Standards on Auditing (ISA)

In July 2013, the International Auditing and Assurance Standards Board (IAASB), developing the International Standards on Auditing (ISA), published an exposure draft on the revisions of the ISA which requires an auditor of a listed company to describe in the audit report the "Key Audit Matters (KAM)" identified as the most significant matters in the audit of financial statements during the business year in the auditor's professional judgment. At the 36th Audit Committee Meeting of the Business Accounting Council held in November 2013, the members of the committee exchanged views on the exposure draft with the member of the IAASB.

(2) Notification system of foreign audit firms

In April 2008, a notification and supervision system for foreign audit firms was introduced to Japan through the revision of the Certified Public Accountants Act. In September 2009, both the FSA and the Certified Public Accountants and Auditing Oversight Board (CPAAOB) published the policies on information gathering and inspections regarding foreign audit firms as a “Framework for Inspection/Supervision of Foreign Audit Firms, etc.”

Both the FSA and the CPAAOB stated in the framework that they will, in principle, rely on information gathering and inspections regarding foreign audit firms by the competent authorities of the firms' home jurisdictions, instead of seeking to obtain information from or conducting inspections on firms themselves, provided that (i) audit and public oversight systems in the firms' home jurisdictions are equivalent to those of Japan; (ii) necessary information can be provided from the foreign competent authorities through appropriate arrangements of information exchange; and (iii) reciprocity is ensured (mutual reliance). Accordingly, the FSA and the CPAAOB exchanged letters relating to the rules of information exchange with the foreign audit oversight authorities overseas $ ^{9} $ .

In addition, the FSA and the CPAAOB summarized the framework regarding the equivalent assessment of a foreign audit oversight system in
the form of “guidance,” which was released on July 10, 2012. $ ^{10} $

Until 2013, the FSA and the CPAAOB established a collaborative relationship (meeting the requirements (i) and (ii) above) with the Netherlands Authority for the Financial Markets (AFM). On June 11, 2014, the FSA and the CPAAOB exchanged letters with AFM to further strengthen cooperation between the authorities by securing the requirement (iii) above (securing reciprocity) and expressing their intentions to mutually rely on the oversight of foreign audit firms in their home countries (information gathering and inspections). Netherlands AFM was the first foreign authority to secure mutual reliance in the area of audit oversight.
### f. Financial Tax System

### 42. Tax reform in fiscal 2014

In FY 2014, the FSA requested the tax authority (Ministry of Finance) to reform the financial tax system. The request was designed to achieve various policy goals, including:

(1) Supporting asset formation for households and promoting supply of the growth capital (Enhancement of convenience of NISA)

(2) Promoting business revitalization and contributing to full-scale local regeneration (Establishment of special measures for a revitalization taxation scheme for self-employed individuals engaging in business)

As a result of screening the requests after discussion between the FSA and the tax authority, the Outline for the FY 2014 Tax Reform (decided by the Cabinet on December 24, 2013) accepted several measures, mainly those of providing support of asset formation for households and promoting supply of the growth capital. The major measures are as follows.

### 43. Enhancement of convenience of NISA (tax-exempt individual investment accounts)

With respect to NISA, the following measures were approved in light of making the system popularized and well established.

(1) The account holders of NISA can change their financial institutions (prior to the revision, during the restriction periods ((i) from January 1, 2014 to December 31, 2017; (ii) from January 1, 2018 to December 31, 2021; and (iii) January 1, 2022 to December 31, 2025), the account holders of NISA could not change their financial institutions once a NISA account was opened).

(2) The account holders of NISA can reopen their account during the restriction periods, even if once they close their accounts.

(3) The following description is included in the Outline for the FY 2014 Tax Reform compiled by the Ruling Parties:

“The treatment of NISA will be continuously discussed based on the verification results and effectiveness of the measures taken in light of expanding the range of investors and promoting supply of the growth capital.”

### 44. Integration of financial income taxation

The scope for offsetting profits and losses between financial instruments will be extended from dividend and capital gains/losses derived from stocks (currently applicable) to interest and capital gains/losses derived from bonds from January 2016.
While derivative transactions are not currently included in the scope for offsetting profits and losses, the Outline for the FY 2014 Tax Reform compiled by the Ruling Parties gives the following description in light of creating an investor-friendly environment for a variety of financial instruments.

“A further integration of financial income taxation, including derivative transactions will be continuously discussed and examined in light of contributing to the realization of comprehensive exchange with the capability of handling securities, financial instruments and commodities in a collective manner, while giving sufficient consideration to preventing intentional tax avoidance.”

45. Taxation measures for the further promotion of business revitalization and contribution to full-scale local regeneration

The following measures were approved in light of supporting the regeneration of small and medium-sized enterprises and private individual businesses.

- Establishment of a revitalization taxation scheme for self-employed individuals engaging in business

With regard to the case where an individual engaging in business is exempt from obligations under a reasonable revitalization plan, special measures were established for individual businesses allowing him/her to include in the necessary expenses the amount equivalent to the write-downs of depreciable assets.

- Expansion of business rehabilitation tax system

The business rehabilitation tax system is applicable to the case where the Regional Economy Vitalization Corporation of Japan (REVIC) makes coordination of the interest of creditors to carry out debt forgiveness for the target corporation when the rehabilitation is based on a reasonable rehabilitation plan.

- Expansion of tax-free deemed capital gain

With regard to turnaround support from the Corporation for Revitalizing Earthquake affected Business, the tax will not be applicable to deemed capital gains from private assets provided by an executive who is a guarantor of the reviving enterprise on the basis of a reasonable rehabilitation plan.

46. Review of international taxation principles (change from aggregation principle to attribution principle)

The following measures were approved as taxation principles applicable to foreign companies in light of removing impediments to investment in Japan by
bringing Japanese taxation system up to global standards.

The taxation principles in regard to foreign companies were revised from the conventional “aggregation principle”-based domestic legislation to “attribution principle” in line with the OECD Model Tax Convention as amended in 2010.

47. Extension of the tax exemption related to the Japanese version of Sukuk (Islamic bonds)

The following measures were approved in light of attracting Islamic investors and issuers to the Japanese market through issuance of Sukuk (a financial instrument for Islamic investors or issuers who cannot deal with interest-bearing bonds) in the Japanese capital market.

(1) With regard to the Japanese version of Sukuk, the exemption from registration and license tax on repurchase of assets of the trust is extended for two years.

48. Initiatives for making NISA (tax-exempt individual investment accounts) popularized and well established

NISA was introduced in January 2014 with the aim of expanding the range of investors as well as providing support of asset formation for households and promoting supply of the growth capital. NISA is a tax-exempt scheme for a small investment, applicable to a new investment in listed shares and publicly-offered investment funds with an amount of up to JPY 1 million per year, making dividend income and capital gains exempt from tax for five years maximum.

As of March 31, 2014, the number of NISA accounts is more than 6.5 million with a total investment value of more than JPY 1 trillion. The FSA promotes a variety of initiatives to expand the range of investors, in light of making the scheme more popularized especially to inexperienced investors and young generations.

In the program year 2013, the FSA implemented the following initiatives:

(1) Revision of Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.

The FSA made a revision of “Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.” in August 2013. Specifically, this revision was to make financial institutions provide financial instruments in line with the design and purpose of the NISA scheme with sufficient description to customers including a commitment to improving the financial literacy of customers, with the aim of ensuring that each financial institution will provide services in light of NISA’s scheme.
and purpose.

## (2) Implementation of dissemination and publication activities

The FSA decided to engage in aggressive publicity activities with the aim of facilitating the correct understanding of the scheme and improving the financial literacy of investors as well as making the scheme more popularized and steadily well established. For example, the FSA published the outline and purpose of the scheme through the website of the Public Relations Office and the FSA's website. The FSA also prepared leaflets, and sent information via Twitter (on a weekly basis for six months from July 2013 to the commencement of the scheme, and as needed after the introduction). In addition, the FSA held a “NISA Day” Symposium (in Tokyo on February 13, 2014, in Nagoya on February 18, 2014, and in Osaka on February 19, 2014).

The FSA also conducted the following measures as publicity opportunities.

• Cooperation on “Asset formation support project” (sponsored by Nihon Keizai Shimbun)

- Acceptance of media interviews and requests for lecturers in seminars as necessary.
### g. Approach toward Regulatory and Institutional Reforms

49. The “Regulatory Reform Council” and its “Implementation Plan for Regulatory Reform”

The “Regulatory Reform Council” (a council consisting of members from the private sector) was newly set up in January 2013 and launched five working groups thereunder. As a result, the government’s policy was compiled as the “Implementation Plan for Regulatory Reform” (Cabinet decision: June 24, 2014) $ ^{11} $ .

Approach toward Regulatory and Institutional Reforms in the program year 2013

Year/Month	Development of Action
2013 July	▼ WG on Health and Medical established (First Meeting held on July 31)
August	▼ WG on Employment established (First Meeting held on August 29)
September	▼ WG on Trade and Investment (First Meeting held on September 4)
▼ WG on Business Creation and IT (First Meeting held on September 6)
▼ WG on Agriculture (First Meeting held on September 10)
▼ Discussion forums open to public (September 28)
November	▼ Discussion forums open to public (November 25)
2014 March	▼ Publication of the follow-up survey on regulatory and institutional reforms (March 1)
April	▼ Publication of the follow-up report on the Implementation Plan for Regulatory Reforms (Cabinet decision: June 14, 2013) (April 13)
June	▼ Submission of “Second Report of Recommendations on Regulatory Reform” to the Prime Minister by the Regulatory Reform Council (June 13)
• The Council compiled the results of the consideration focusing on regulatory reforms leading to growth strategy and diverse options to the public.
▼ “Implementation Plan for Regulatory Reform” approved by the Cabinet (June 24)
• In accordance with the “Second Report of Recommendations on Regulatory Reform,” this plan including timeframes was formulated so that the government will undertake and realize the reforms.

50. The FSA’s main policy correspondences on the basis of the “Implementation Plan for Regulatory Reform” (Cabinet decision: June 14, 2013)

(1) Review of the regulations included in the “Implementation Plan for
Regulatory Reform”

The FSA formulated the relevant Cabinet Orders and Cabinet Office Ordinances related to comprehensive exchange included in the Act for Partial Revision of the Financial Instruments and Exchange Act, etc. (established on September 6, 2012 and promulgated on September 12, 2012). The FSA also reviewed the regulations pertaining to the supply of risk money to new and growing companies as specified in the Implementation Plan.

(2) Review of the regulations related to the proposals received through the “Hotline on Regulatory Reform”

Based on the proposals received through the Hotline, the FSA submitted to the Diet a bill for amendment of the Insurance Business Act to introduce a special treatment regarding the restriction of the scope of business operated by insurer’s subsidiaries through M&A of foreign financial institutions. This bill was established on May 23, 2014 and promulgated on May 30, 2014.

In addition, the FSA also revised the Order for Enforcement of the Money Lending Business Act and the Ordinance for Enforcement of the Money Lending Business Act with respect to lending executed between group companies consisting of subsidiaries based on a parent company and its subsidiary under the effective control criteria (parent company, subsidiary company or fellow subsidiary), allowing for exemption from Moneylending Control Regulations under certain requirements (enforced on April 1, 2014).

51. The FSA’s policy measures on the basis of the “Implementation Plan for Regulatory Reform (Cabinet decision: June 24, 2014)”

The “Regulatory Reform Council” placed the focus on regulatory reforms leading to a growth strategy and broader public options. The Council submitted the “Second Report of Recommendations on Regulatory Reform” to the Prime Minister on June 13, 2014. In accordance with the report, the Cabinet decided the “Implementation Plan for Regulatory Reform” composed of five fields: “Health and Medical,” “Employment,” “Business Creation and IT,” “Agriculture” and “Trade and Investment.”

The Cabinet Office conducts follow up on the status of implementation on the measures incorporated in the Implementation Plan at the end of each program year, and reports the results to the Regulatory Reform Council. The results are also published.

The following were incorporated as the main measures related to the FSA.
Box: Business Creation and IT Field
• Clarification of the supervisory viewpoints on outsourcing contractors
• Review of the scope of specified business activities on products regarding a special subsidiary company under the Banking Act
• Expansion of business matching services as business incidental to insurer’s inherent business
• Simplification of portfolio transfer procedure of insurance contracts
• Alternative use of electronic means for public notice obligations to a daily newspaper at the time of discontinuance of application (with prepaid payment instruments)
• Lifting of the prohibition of banks from owning a subsidiary engaging in asset management advisory services including real estate investment advisory services
• Replacement authorization with notification regarding the concurrent holding of positions by director engaging in the day-to-day business of an insurer (inter-group only)
• Expansion of intended company regarding the income dependency requirement for incidental business carried out by insurer
• Review of the scope of “special provision of same content” at the time of automatic renewal of foreign currency time deposits (one year)
• Relaxation of display of resumption of business after the temporary close
• Relaxation of deadline for submission of consolidated operating results
• Review of calculation method for ownership ratio of shares in Tender Offer Regulation
• Omission of affixing a seal by offeror on the “Notification of Tender Offer”
• Relaxation of publication method in the special case for the omission of delivery of amended prospectus at the time of pricing

Box: Trade and Investment Field
• Enabling banks to be involved in credit transactions falling under Islamic finance having no heterogeneous risk
• Expansion of special treatment regarding the restriction of the scope of business operated by insurer’s subsidiaries through M&A of foreign non-insurers by an insurer

52. Overview of systems for requests and inquiries regarding regulations based on the Industrial Competitiveness Enhancement Act

In order to securely implement the measures that are included in “Japan Revitalization Strategy” (Cabinet decision: June 14, 2013) for the purpose of enhancing the industrial competitiveness of Japanese business sector, “the Industrial Competitiveness Enhancement Act” was established on December 4, 2013 and promulgated on December 11, 2013 (enforced on January 21, 2014).

The Act stipulates the establishment of an implementation protocol for the “Japan Revitalization Strategy,” and the creation of the menu for promoting regulatory reforms, and promoting approaches to renovation of industries.
Among them, “System of Special Arrangements for Corporate Field Tests” and “System to Remove the Gray Zone Areas” were newly created as a breakthrough to realize accelerated regulatory reforms. The System of Special Arrangements for Corporate Field Tests provides preferential regulatory flexibility to individual enterprises satisfying certain requirements. The System to Remove the Gray Zone Areas is a system in which enterprises planning to develop new businesses can confirm whether their businesses satisfy related regulations in advance based on their concrete business plan.

In both systems, an enterprise planning to develop new businesses may request or inquire to the ministry and/or agency having jurisdiction over the businesses, and any ministry and/or agency receiving requests /inquiries is required to coordinate with the related ministry and/or agency to give an answer within a month as a general rule.

### 53. Results of these systems

In the program year 2013, there was one inquiry using the System to Remove the Gray Zone Areas from an enterprise to another ministry/agency and the FSA replied to the ministry/agency which received the inquiry. There was no request using the System of Special Arrangement for Corporate Field Tests, or inquiry to the FSA using the System to Remove the Gray Zone Areas.

### 54. Overview of efforts on local regeneration

Pursuant to Article 4, paragraph 1 of the Local Revitalization Act (Law No. 24, 2005), the government set the Basic Policy for Local Regeneration (Cabinet decision: April 22, 2005; Final revision: April 25, 2014) to promote the implementation of the measures by the government. The Basic Policy aims at realizing local revitalization in a comprehensive and effective manner by creating an environment in which unique, autonomous and independent efforts are promoted by local governments to vitalize regional economy as well as by creating employment opportunities in localities.

The Basic Policy describes measures to be implemented by each ministry/agency in conjunction with the local revitalization plan. The Regional Revitalization Bureau of the Cabinet Secretariat aggregates and posts on its website measures related to the local revitalization implemented either collectively or independently by each ministry/agency.

### 55. Certification of regional revitalization plan

In the program year 2013, out of the applications for certification of regional revitalization plans received by the Office for Promotion of Regional Revitalization of the Cabinet Office from local governments (26th
13 2013- September 27, 2013>; 27th ; and 28th , there were no plans under the jurisdiction of the FSA.
### iii. Inspection and Supervision

### a. Financial Monitoring Report

### 56. Summary

Based on the Financial Monitoring Policy announced in 2013, the FSA published the results and challenges of financial monitoring as “Financial Monitoring Report” for the first time $ ^{12} $ .

This report not only contains the results and challenges of financial sectors (megabank, regional bank, etc.) through financial monitoring, but also covers the cross-sectorial monitoring results of horizontal review carried out across multiple financial institutions.

The FSA expects that this report will enhance further discussions among financial institutions, market participants as well as financial services users and support better financial services.