The March 2025 Cliff: end of transitional measures and the new improvement period

TL;DR - At the April 2022 launch, ~16% of the Prime Market (~295 companies), 14% of Standard, and 10% of Growth were admitted under "transitional measures" — relaxed criteria applied "for the time being" (tōbun no aida / 当分の間) with no fixed end date. - On 30 January 2023, after sustained criticism that the segment relabel had been cosmetic, TSE announced the transitional measures would expire: regular continued-listing criteria apply from any record date on or after 1 March 2025. - Companies that miss the criteria at their first post-March-2025 record date enter a one-year "improvement period" (six months for trading-volume failures), then face a six-month delisting watchlist before being delisted. The improvement period is not a second grandfather — it is a final runway.

What "transitional measures" really meant

The April 2022 restructuring should have produced a Prime Market with around 500 names — the figure most overseas investors had anticipated, given the JPY 10 bn tradable-share-market-cap threshold and the 35% tradable-share-ratio requirement. Instead it produced 1,839 names. The arithmetic gap between the two numbers — roughly 1,300 listings — was made up of two groups: companies that comfortably cleared all Prime criteria, and a controversial cohort admitted under "transitional measures."

The transitional-measures mechanism worked like this. Any company already listed on the 1st Section, 2nd Section, Mothers or JASDAQ as of the cutoff could self-select which new segment it preferred. If the company did not meet the regular continued-listing criteria for its chosen segment, it could nonetheless remain in that segment provided it submitted a "plan to meet the continued listing criteria" — a written commitment to clear the bar within a reasonable period. While that plan was in force, the company was held to relaxed transitional criteria rather than the regular criteria.

The original framing was explicit: the transitional measures applied "for the time being" (tōbun no aida / 当分の間) — Japanese statutory shorthand for "indefinitely, until further notice." No end date was set. No automatic trigger was specified. The Prime label on these companies looked, from outside, identical to the Prime label on companies that fully cleared the criteria.

The headline outcome at launch:

Prime Market: ~295 of 1,839 (16%) admitted under transitional measures. The "239" figure that often appears in commentary refers specifically to the cohort flagged as failing to meet the new rules on day one — roughly 13% of the 1,839.
Standard Market: ~14% of listings admitted under transitional measures.
Growth Market: ~10% of listings admitted under transitional measures.

For a Prime issuer in this cohort, the most common shortfall was the tradable-share market cap (failing the JPY 10 bn bar) or the tradable-share ratio (failing the 35% bar). Both are structural rather than performance-driven — both are addressed by changing the company's capital structure or shareholder base rather than by improving operations.

Why the original design was unsustainable

The 2022 launch produced an instant credibility problem. Janet 2022 commentary in the Nikkei noted that with 1,839 names, the new top market looked "almost the same as the 1st Section" — and overseas investors, who had taken JPX at its word that Prime was for "companies which center their business on constructive dialogue with global investors," felt mis-sold. The Prime label, they argued, was being applied to companies that did not meet Prime criteria, with no committed timeline for them to clear it.

The criticism produced three concrete TSE responses through 2022:

July 2022 — Follow-up Council established. TSE constituted the Council of Experts Concerning the Follow-up of Market Restructuring with a mandate to make the segment criteria "effective" in practice. Discussions began the same month.
30 September – 31 October 2022 — public comment on the proposed amendments. The proposal: terminate the "for the time being" framing, set a hard end-date for transitional measures, and establish a one-year improvement period for companies failing the regular criteria.
30 January 2023 — final rule. TSE announced the amended listing rules, terminating the transitional measures. Regular continued-listing criteria apply from any record date on or after 1 March 2025. The original "for the time being" framing was replaced by a hard deadline.

Three structural choices in that 30 January 2023 announcement are worth flagging. First, the cliff was set at a specific calendar date rather than a fiscal-year-end — record dates on or after 1 March 2025. Most Japanese listed companies have March year-ends, so the first post-deadline record date for a March-year-end issuer is 31 March 2025. Second, the improvement-period concept is procedurally distinct from the old transitional measures: it is not "you may stay listed indefinitely while you submit a plan"; it is "you have one specific year (or six months) to clear the bar, after which you go on the delisting watchlist." Third, the rule applies the same way to all three segments — Prime, Standard, Growth — but with each segment's own criteria.

The decision logic post-March 2025

The flowchart below maps the four practical paths a transitional-measures company can take into March 2025 and beyond:

flowchart TD
    A["Company under transitional measures<br/>(end-2024)"] --> B{"Strategic review:<br/>Can the company<br/>meet regular Prime criteria<br/>by post-March 2025<br/>record date?"}
    B -->|"Yes — by buybacks,<br/>share consolidations,<br/>secondary offering"| C["Clear bar at next record date"]
    C --> D["**Prime maintained**<br/>Regular criteria"]

    B -->|"No — and Standard<br/>criteria are achievable"| E["**Voluntary transfer**<br/>to Standard or Growth<br/>(procedure published by TSE)"]
    E --> F["**Demoted by choice**<br/>Standard / Growth listing"]

    B -->|"No — and not worth<br/>defending listing"| G["**TOB / MBO / sponsor-led<br/>take-private**"]
    G --> H["**Delisted, private**"]

    B -->|"No — and try to fix<br/>within one year"| I["First post-March 2025<br/>record date: criteria failed"]
    I --> J["**Improvement Period**<br/>1 year (6 months for<br/>trading-volume failures)"]
    J --> K{"Met criteria<br/>by end of<br/>improvement period?"}
    K -->|"Yes"| L["Listing maintained"]
    K -->|"No"| M["**Security Under Supervision<br/>(Maintenance)**<br/>~6 months on<br/>delisting watchlist"]
    M --> N["**Delisted**"]

    classDef pass fill:#e6efe1,stroke:#3d6b3a,color:#1f3a1d
    classDef warn fill:#f9eecc,stroke:#a07e3a,color:#3a2d10
    classDef fail fill:#f4d5d0,stroke:#8a3f3a,color:#3a1614
    classDef decision fill:#f4f1ea,stroke:#7a6d4a,color:#3a3320
    class D,L pass
    class F warn
    class H,N fail
    class B,K decision

The four paths in summary:

(a) Clear the bar at the post-March 2025 record date. This is the "win" path — the company does the structural work (buybacks, share consolidations, strategic-holder dispositions, secondary offerings, capital raises) before its first post-deadline record date and clears the regular criteria when measured.
(b) Voluntary transfer. A company chooses to move from Prime to Standard, or from Standard to Growth, before the deadline. This is treated procedurally as a normal segment-change application and is not a delisting event. Done well — disclosed as a deliberate capital-allocation choice — it has minimal reputational cost.
(c) TOB / MBO / take-private. For companies where the listing constraint outweighs the listing benefit, founder-led MBOs (often PE-financed) or strategic-acquirer TOBs are an exit. The 2024-2025 deal calendar has been dominated by this pattern.
(d) Improvement Period. The company misses criteria at its post-March 2025 record date but tries to clear the bar within one year (six months for trading-volume tests). Failure triggers the Security-Under-Supervision designation, a six-month watchlist, and then delisting.

The improvement period is the procedural innovation worth understanding in detail.

The improvement period — how it actually works

The post-March 2025 regime works on record-date measurement. For continued-listing criteria, TSE measures each company at a designated record date — typically the last trading day of its fiscal year. If the company misses one or more criteria at that record date, TSE notifies the company and a one-year improvement period begins.

Key features:

Default length: one year. Twelve months from the record-date determination to demonstrate compliance.
Trading-volume failures: six months. Because trading-volume tests are calculated on a rolling daily-average basis, the relevant measurement window is shorter.
Single window per failure type. A company cannot serially extend the improvement period by clearing one criterion and then failing another at the next measurement.
Failure at end of period: Security Under Supervision (Maintenance). The company is designated and placed on a delisting watchlist. After ~six months on the watchlist, the listing is terminated.
No discretionary extension. The improvement period is procedural, not discretionary. TSE cannot waive or extend it for individual companies.

That last point matters. The improvement period is not a "for the time being" regime. It is a defined runway, set at one year, after which the rule operates automatically. Companies cannot count on regulatory forbearance.

The 2025 record-delisting year

By end-2024, 66 Prime-listed companies remained under transitional measures (down from the ~295 cohort at launch — a meaningful reduction through self-help over 2022-2024, but with a hard core still failing). Across all three segments, Nikkei Asia reported "200-plus companies on TSE's chopping block" as the deadline approached.

The result, by the second half of 2025, was a confluence of:

Forced segment demotions — companies failing Prime criteria and migrating (voluntarily or involuntarily) to Standard.
MBO-driven delistings — particularly among smaller Prime issuers targeted by activists, where management chose take-private over defending the Prime listing.
Consolidation transactions — strategic mergers and tender offers designed to convert two sub-threshold companies into one comfortably above the bar.
Share-consolidation and buyback activity — driving down share count to lift the tradable-share market-cap and ratio metrics.

By June 2025, the Prime Market count was projected to fall to ~1,624, down approximately 215 from the launch number of 1,839 — a 12% reduction over 39 months. The Japan Times reported in December 2025 that 2025 was on track to be a record delisting year at TSE.

This is the moment the segment label finally started to mean something. By end-2026, the Prime Market is expected to look materially different from the 1st Section it succeeded — not in name, but in composition.

Why the improvement-period regime matters beyond 2025

The procedural shift from "for the time being" to "improvement period" is not just a one-time cleanup of the 2022 grandfather. It is the enforcement model TSE has adopted for continued listing maintenance generally. Going forward, any failure of any continued-listing criterion — whether in Prime, Standard, or Growth — will trigger the same procedural sequence: improvement period, then Security-Under-Supervision designation, then delisting.

That has three implications:

First, continued listing has become a continuous monitoring exercise, not a one-time qualification. IR and Treasury teams should expect annual record-date measurement, with internal monitoring quarterly or more frequently for any criterion the company is close to.

Second, the regime is transparently asymmetric: it is much easier to demote or delist a Prime company that fails criteria than it ever was to admit one. JPX has institutionalised "rules in, rules out" — the same body that approved the soft 2022 admission has built the procedural machinery to be strict about exits.

Third, the improvement period is now the template for other TSE continuous-improvement programs — including the cost-of-capital disclosure list and the English-disclosure rollout. The pattern is: published expectation → grace period with public encouragement → defined deadline → procedural consequence. Theme 4 and Theme 5 both rest on this template.

What this means for IR

Know your record date and your headroom. The fundamental operational task is to identify your company's first post-March-2025 record date (typically your fiscal year-end) and calculate the headroom on each continued-listing criterion at that date. Build a monthly or quarterly internal dashboard.
The improvement period is not negotiable. If your company enters the improvement period, you have one year (six months for trading-volume tests). Plan corporate actions — buybacks, secondary offerings, share consolidations — well before that deadline. There is no regulatory forbearance.
Voluntary transfer is a respectable option. A Standard listing is not a stigma. Companies that have transferred from Prime to Standard with a clear capital-allocation rationale have generally been received well. Frame the choice as a strategic decision, not a defeat.
MBO / take-private has become a credible exit. The 2024-2025 deal flow has normalised founder-led MBOs as an alternative to defending a listing whose constraints outweigh its benefits. If your company is structurally challenged on Prime criteria, the board's strategic-alternatives review should include a take-private analysis.
The disclosure tone has changed. Investors no longer treat continued listing as a static fact. Expect questions on your tradable-share-ratio trajectory, your strategic-holder unwind plans, and your record-date headroom — in every 1-on-1 meeting, on every results call.

Sources & further reading

JPX, "Expiration of Transitional Measures Regarding Continued Listing Criteria," https://www.jpx.co.jp/english/equities/follow-up/04.html
JPX, "Summary of Discussions of the Follow-up Council Regarding the Market Restructuring and TSE's Future Actions in Response" (30 Jan 2023), https://www.jpx.co.jp/english/news/1020/e20230130-01.html
JPX, "Status of Companies Subject to Transitional Measures" (PDF), https://www.jpx.co.jp/english/equities/follow-up/b5b4pj000004yqcc-att/vk0khi00000151mn.pdf
JPX, "Council of Experts Concerning the Follow-up of Market Restructuring," https://www.jpx.co.jp/english/equities/follow-up/index.html
Nagashima Ohno & Tsunematsu, "TSE's market restructuring — Transitional measures for the continued listing criteria will end in March 2025," https://www.noandt.com/en/publications/publication20230209-2/
Nikkei Asia, "200-plus companies on TSE's chopping block as reform period ends," https://asia.nikkei.com/business/markets/200-plus-companies-on-tse-s-chopping-block-as-reform-period-ends
The Japan Times, "In fourth year of TSE reform, listed firms face pivotal choices" (25 Sept 2025), https://www.japantimes.co.jp/business/2025/09/25/markets/tokyo-stock-exchange-reform/
The Japan Times, "Companies delisted from TSE to hit record high in 2025" (30 Dec 2025), https://www.japantimes.co.jp/business/2025/12/30/markets/tse-2025-delisting-record/

Cross-references

Theme 3.1 — From Four Segments to Three. The original 2022 launch that produced the transitional-measures cohort.
Theme 3.2 — The Tradable-Share Ratio. The criterion that most transitional-measures companies fail.
Theme 3.4 — TOPIX 2.0. How index reform reinforces the segment-criteria regime.
Theme 4.3 — The Shame-and-Showcase List. The procedural template the improvement-period regime exemplifies.
Theme 5.4 — Hostile Is No Longer a Slur. The MBO / takeover landscape that has absorbed many transitional-measures exits.