Business Checklist Working With a Japanese Company - May be requested for J-SOX compliance, Suddenly

徳田浩司(Koji Tokuda) 2007-01-23 00:00:00

I received one e-mail from a foreigner. He contacted me after seeing my blog on zdnet below,

“I want to know what is J-SOX”. He is in charge of EDP audit in an auditor. He seems to have some relation with a Japanese company. Even for non-Japanese companies, J-SOX (Japanese SOX regulation, Japanese Sarbanes-Oxley Act) is not other people's affairs either.

What is J-SOX?

J-SOX Act which is similar to US-SOX Act was established by Japanese government in 2006, and it will be in effect from April, 2008. CEOs of Japanese listed companies must prove that internal control is properly acting same as what US-SOX demands for CEOs. The coverage of J-SOX act is not only a Japanese listed company and its subsidiaries in Japan but also their overseas subsidiaries.

An affiliated company (a company which has low investment ratio than a subsidiary) is in principle out of the objects of US-SOX. On the contrary, it is a target in principle in the case of J-SOX. Actually we can omit it from the objects if it does not have so big influence but at any rate we must review it as a target at first in case of J-SOX. It is the difference between US-SOX and J-SOX. Therefore, the coverage of J-SOX is wider than US-SOX and a low investment rate company may become an object of J-SOX.

Besides, a company without capital relation with Japanese listed companies will also be requested to comply with J-SOX, if it has great influence on them.

Outsourcers for Japan may be imposed to comply with J-SOX

We can never say that you will not be asked suddenly by your Japanese client company to comply with J-SOX. At that time, by the reason of that you cannot cope with it, your business with a Japanese company may be reviewed to be continued or not. The procedure for J-SOX compliance is delayed in many companies. It may be too late for you to cope with when you suddenly receive request from the company in 2008 because it takes time to do with it.

So I recommend you to check the possibility immediately. If you have some business with an overseas subsidiary of a Japanese company or with a Japanese company directly, it is necessary for you to check the lisit as follows.

J-SOX Checklist for working with a Japanese company

<> Your Japanese client is a Japanese listed company or a subsidiary of a Japanese listed company?

<> Do you do outsourcing of several parts of business process of your client?

<> Is your job included in system administration, salary calculation, severance pay calculation,asset management, logistics or so?

<> Does your job have importance in business process of a Japanese company?

<> Does your undertaking job have some influences on making financial statements of a Japanese company?

It is necessary for you to ask a Japanese client company if you make at least one check and some questions. The person in charge of business with you may know nothing about the above background. If so, you should request him to ask to the head quarter of your Japanese client company.

You are lucky, if your Japanese cleint company complies with US-SOX, because you can cope with Japanese SOX without difficulty. However, if not so, you must think how to cope with it.

If you are a manager of overseas subsidiary of a Japanese listed company, you should check all of the above list for your partner companies including outsoucers. It will help you to keep your business smooth by avoiding from confusion and trouble in the term of relationship with your parner caused by sudden J-SOX compliance demands.

There are few English articles about J-SOX. But you can see the overview as follows,'J-sox%20f

if you have any comments or questions, please feel free to contact me.

(Koji Tokuda at in Sunnyvale, CA, USA)

日本企業との取引チェックリスト ? 突然、あなたは、日本企業からJ-SOX対応を要請されるかもしれない


















(徳田浩司 koji.tokuda at










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