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Article 20
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The company shall review and analyze its financial position and financial performance, and shall assess its risks. In this regard, the annual report shall cover the following points:
- financial position: The annual report shall list the main reasons for any material change in the company's assets, liabilities, or equity during the past 2 fiscal years, and describe the effect thereof. Where the effect is of material significance, the annual report shall describe the measures to be taken in response.
- financial performance: The annual report shall list the main reasons for any material change in operating revenues, operating income, or income before tax during the past 2 fiscal years, provide a sales volume forecast and the basis therefor, and describe the effect upon the company's financial operations as well as measures to be taken in response.
- cash flow: The annual report shall describe and analyze any cash flow changes during the most recent fiscal year, describe corrective measures to be taken in response to illiquidity, and provide a liquidity analysis for the coming year.
- The annual report shall describe the effect upon financial operations of any major capital expenditures during the most recent fiscal year.
- The annual report shall describe the company's reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year.
- The section on risks shall analyze and assess the following matters during the most recent fiscal year and as they stood on the date of publication of the annual report:
- The effect upon the company's profits (losses) of interest and exchange rate fluctuations and changes in the inflation rate, and response measures to be taken in the future.
- The company's policy regarding high-risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future.
- Research and development work to be carried out in the future, and further expenditures expected for research and development work.
- Effect on the company's financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response.
- Effect on the company's financial operations of developments in science and technology (including cyber security risks) as well as industrial change, and measures to be taken in response.
- Effect on the company's crisis management of changes in the company's corporate image, and measures to be taken in response.
- Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken.
- Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken.
- Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken.
- Effect upon and risk to the company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken.
- Effect upon and risk to company associated with any change in governance personnel or top management, and mitigation measures being or to be taken.
- Litigious and non-litigious matters. List major litigious, non-litigious or administrative disputes that: (1) involve the company and/or any company director, any company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappealable judgment, or are still under litigation. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the annual report shall disclose the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of publication of the annual report.
- Other important risks, and mitigation measures being or to be taken.
- Other important matters.
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