Tokyo Stock Exchange measures and a reported SESC inspection of NIDEC

analysisOn 27 October 2025 the Tokyo Stock Exchange announced that it had designated NIDEC's shares (code 6594, Prime Market) as Securities on Special Alert with effect from 28 October 2025, under Rule 503(1)(ii)(b) of its Securities Listing Regulations. It gave two grounds: the audit report attached to NIDEC's financial statements stated a disclaimer of opinion, and the exchange found a high need to improve NIDEC's internal management system. The decision was based on the results of an examination by Japan Exchange Regulation. It is a listing measure concerning NIDEC's internal management system and disclosure, and does not itself decide the accounting questions then under investigation or any individual's responsibility. NIDEC's annual securities report for the year ended 31 March 2026 records that it was notified of the designation on 27 October 2025, states that it is working to improve its internal management system with a view to having the designation lifted, and states that NIDEC remains designated. ^{1 2}

analysisThe exchange's notice traced the designation to two NIDEC disclosures. On 27 June 2025 NIDEC had announced that the deadline for its annual securities report for the fiscal year ended March 2025 had been extended to 26 September 2025 to investigate trade-related problems at an Italian subsidiary. On 3 September 2025 it announced that a third-party committee had been set up to investigate newly discovered suspected improper accounting for lump-sum purchase payments at a Chinese subsidiary, and suspicions that the timing of asset write-downs had been arbitrarily considered with the involvement or awareness of management at NIDEC and at group companies. On 26 September 2025 NIDEC filed the report, without reflecting the effects of the continuing investigation, with an audit report stating that no opinion was expressed, and disclosed a material deficiency in internal control. The notice summarises NIDEC's own disclosures, does not name the subsidiaries, and describes matters that were at that stage suspicions under investigation. ¹

analysisIn its reasons the exchange said that, despite an extension of about three months, NIDEC had filed the report with an audit report disclaiming an opinion, so that appropriate financial results, including a possible restatement of prior years, were still not disclosed. Investigations had repeatedly been expanded, the end of the Third-Party Committee's work was still unknown, and NIDEC could not show investors when its reporting schedule would return to normal. Deficiencies in company-level internal control (information and communication) and in the financial closing process had already been detected, which NIDEC itself judged to be a material weakness. Japan Exchange Regulation would continue its review of NIDEC's corporate disclosure, and additional measures could be taken if new problems emerged. These reasons were issued while the committee's investigation was continuing and rest on NIDEC's own disclosures and the auditor's disclaimer. ¹

analysisWith the stated aim of fundamentally improving its internal management system so that the designation could be lifted, NIDEC submitted an Improvement Plan and Status Report on 28 January 2026 and a revised version on 27 April 2026. Its annual securities report says both went to the Tokyo Stock Exchange, while NIDEC's timeline page records them as submitted to Japan Exchange Regulation, after a policy for formulating the plan on 14 November 2025 and a draft on 12 December 2025. According to the annual report, the revised plan re-examined the causes in light of hearings by the Nidec Corporate Reform Committee and the Third-Party Committee's reports received on 27 February and 17 April 2026. The plans are remediation documents prepared by NIDEC itself; according to NIDEC, the exchange assesses its internal management system in an examination after the one-year designation period. ^{1 2 3}

analysisThree days after the revised plan, on 30 April 2026, the Tokyo Stock Exchange decided to require NIDEC to pay a listing agreement violation penalty of ¥91.2 million under Rule 509(1)(ii) of its Securities Listing Regulations. It stated that NIDEC had violated the provision of the Code of Corporate Conduct requiring the systems necessary to ensure appropriate business operations and had damaged shareholders' and investors' trust in the exchange's market; the decision was again based on an examination by Japan Exchange Regulation. The penalty is imposed by the exchange for breach of the listing agreement and is separate from any measure by the securities regulator. NIDEC announced on 1 May 2026 that it had received the notification on 30 April, said it would complete its revised improvement plan of 27 April and carry out fundamental improvement measures toward a 'new NIDEC', and apologised to shareholders, investors and others. ^{4 5}

analysisIn the penalty notice the exchange drew on the final report of the company-appointed Third-Party Committee, disclosed by NIDEC on 17 April 2026, which it said had shown numerous accounting irregularities at multiple group sites, mainly because of excessive performance pressure, with a cumulative impact on consolidated net assets at the end of the first quarter of the fiscal year ending March 2026 of ¥160.7 billion on the committee's calculation alone. As background it cited unrealistic targets set by a former representative director who held personnel authority and pressure passed down through senior management; information to the Audit and Supervisory Committee that did not convey the essence of the problems; the CFO and the accounting department themselves taking part in accounting misconduct while internal audit and whistleblowing functions avoided the root cause; weak management of acquired group companies; and officers and employees giving the auditor inaccurate information. The notice names neither the former representative director nor the CFO. ⁴

analysisAccording to NIDEC's annual securities report for the year ended 31 March 2026, the designation period is in principle one year from 28 October 2025. NIDEC then submits a written confirmation of its internal management system and the exchange examines it: if no problem is found the designation is lifted; if problems are found the shares are in principle delisted; and if the system is found properly established but not yet properly operated, the designation can be continued for a further review. The report states that NIDEC planned to submit its Written Confirmation of Internal Management System at the end of October 2026 and that, depending on the exchange's examination, the designation could continue or the shares could be delisted. This is NIDEC's own account of the exchange's rules and of its own timetable, given in a report that describes the submission as still planned. ^{1 2}

analysisThe exchange's 2026 list of listed companies whose audit reports state an adverse opinion, a disclaimer of opinion or a qualified opinion, published on the Japan Exchange Group website to alert investors, includes NIDEC (code 6594) with a disclaimer of opinion on its annual securities report for the fiscal year ended March 2026, covering the consolidated and non-consolidated financial statements, with an audit report dated 30 September 2026. The page warns that, where an adverse opinion or a disclaimer is stated, a company is delisted if the exchange finds that market order cannot otherwise be maintained, and becomes subject to designation as Securities on Special Alert if the exchange finds a high need to improve its internal management system. The list records the audit opinion as filed; the warning describes the general listing rules and is not a new decision about NIDEC. ³

analysisNo announcement, recommendation or order of the Securities and Exchange Surveillance Commission (SESC) or the Financial Services Agency is in the record; what is known of an inquiry comes from press reports citing unnamed sources. According to press reports of 25 and 26 May 2026, the SESC had decided to begin an inspection of NIDEC under the Financial Instruments and Exchange Act, examining among other things whether its annual securities reports contained false statements, with a view to recommending that the Financial Services Agency issue an administrative monetary penalty payment order. One report said preliminary inquiries had already begun and that a criminal complaint would be considered if the conduct were judged highly egregious. NIDEC's own position, stated as a general disclosure in its annual securities report for the year ended 31 March 2026 rather than as a reply to the reports, is that in connection with the correction of the misstatements it may become subject to investigation by the authorities and to such an order, and that it will respond appropriately, including by cooperating, if an investigation is conducted. ^{1 2 3}

analysisPress reports of 12 June 2026, again citing unnamed sources, said the SESC had ordered NIDEC to submit materials under the Financial Instruments and Exchange Act and was examining possible violations with a view to recommending to the Financial Services Agency an administrative monetary penalty payment order. One said the SESC had asked NIDEC to have the confidentiality of the Third-Party Committee's investigation lifted and would move to a full investigation once NIDEC's corrected figures were available. Another said a criminal complaint would be considered if the violation were judged egregious; its headline stated that NIDEC had also reported the violation, and its text, retained only in truncated form, referred to the system under which a penalty reduction can be sought for a violation reported before an investigation. No SESC order and no NIDEC statement confirming a self-report are in the record; NIDEC's annual securities report says only that it may become subject to investigation and to such an order and will respond appropriately, including by cooperating, if investigated. ^{4 5 3}

analysisIn full, NIDEC's statement on a possible penalty is a risk disclosure in the notes to its consolidated financial statements for the year ended 31 March 2026. There NIDEC states that, in connection with the correction of the misstatements, it may be treated as having violated disclosure regulations under the Financial Instruments and Exchange Act and become subject to investigation by the authorities and to an administrative monetary penalty payment order; that it will respond appropriately, including by cooperating, if an investigation is conducted; and that, because the effect cannot yet be reasonably estimated, it is not reflected in the consolidated financial statements. This is NIDEC's own risk disclosure; it does not state that an investigation has been opened or that an order has been made. ³