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 JASDEC holds stock certificates in a collective form. Certificates of participant firms, or of their individual customers, are not held separately. Participant firms and their customers are legally regarded as having co-ownership of certificates in the proportions recorded in their respective accounts at JASDEC. Depositors' holdings are thus fully protected under the CSD Law.  
JASDEC provides separate accounting for shares held by participant firms and their customers. This provides customers with legal
protection for their certificates in the event that a participant firm goes into bankruptcy.
In the unlikely event of a shortfall in certificates held by JASDEC, responsibility for replacing the
certificates lies with both JASDEC and the participant firm representing the customer(s), as is prescribed
in the CSD Law. JASDEC maintains insurance coverage to provide for such events.
The number of shares held in JASDEC's custody grown steadily since JASDEC's inception, amounting to over 305.3 billion shares at the end of July 2007. The balance held accounted for 81.2% of the total outstanding shares issued by publicly-owned companies in Japan as of end of June 2007. Considering the large volume of corporate cross-shareholdings in Japan, this figure is more significant than it might appear. JASDEC is promoting the dematerialization of certificates, based on fixed standards, that eliminates the need to hold physical certificates. This is in response to the rising balance of shares held in custody. Fewer certificates means lower storage costs for JASDEC as well as a drop in the associated risk. This paperless system also cuts expenses for issuing companies, such as the case when a stock split is conducted. As of the end of July 2007, approximately 64.2% of the shares in JASDEC accounts were held in uncertificated form.  |
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