One of the Criteria for Adoption by New TOPIX Will Be the Level of Governance

Selection standards include qualitative factors as well as market capitalization of tradable shares


July 28, 2020

  • Atsushi Kamio


◆When the Tokyo Stock Exchange is migrated to the new market segment in April 2022, TOPIX will also be reviewed accordingly. Currently, TOPIX is for all companies listed on the 1st Section of the TSE, but the new TOPIX is expected to use selection criteria based on liquidity and governance conditions. In addition, there is a strong likelihood that the selection process will take place once or twice a year, with some issues being replaced.

◆The detailed definition of the liquidity criterion to be adopted for the new TOPIX has not been disclosed at this time, but market capitalization of ¥10 billion in market capitalization of tradable shares is being targeted. As for governance, items such as the number and percentage of independent outside directors may be used.

◆According to the screening of companies currently listed on the First and Second Sections of the Market, approximately 1500 companies will be selected with market capitalization of at least ¥10 billion in market capitalization of tradable shares and two or more independent outside directors. If the ratio of independent outside directors is set at one-third or more and the same totals are used, about 900 companies will be selected.

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