Growth Market criteria for 2030: What does ¥10bn market capitalization after five years mean?

Key points

• From March 1, 2030, the market capitalization standard for the growth market will change from “4 billion yen or more after 10 years of listing” to “10 billion yen or more after 5 years of listing”.
• This is not a system that requires a market capitalization of 10 billion yen at the time of initial listing. This is a listing maintenance standard that encourages companies to grow to a size that can become investment targets for institutional investors within five years of being listed.
• If standards are not met, a one-year improvement period will be entered, in principle. However, there is a special provision in place for companies that have disclosed a prescribed compliance plan at the time of transition, to have their delisting postponed until the plan's deadline.

Why revisit the Growth Market?

The Growth Market, which was launched in April 2022, succeeded Mothers and JASDAQ Growth and is positioned as a market for “companies with high growth potential.” On the other hand, many companies remained small for a long time even after being listed, making it difficult for institutional investors to invest a sufficient amount of money.

According to the system outline published by the TSE in September 2025, there are approximately 200 companies with a market capitalization of 4 billion yen or more but less than 10 billion yen, accounting for approximately 30% of the entire growth market. TSE's goal is not to exclude small companies across the board. The idea is to return to listing, not as a destination for growth, but as a starting point for raising growth funds and further increasing business scale and corporate value.

For this reason, at the same time as reviewing the standards, all growth listed companies were requested to take measures to realize "management aimed at high growth." Companies are required to analyze their past growth performance and market valuations and update their growth strategies and disclosures in light of investor expectations.

What will change from 2030?

Comparing the current system and the revised system, the change is not only in the level of market capitalization. The period until judgment begins will also be shortened from 10 years to 5 years.

The system will apply from the first end of the fiscal year that occurs after March 1, 2030. Therefore, for companies whose fiscal year ends in March, March 31, 2030 is, in principle, the first reference date.

Market capitalization is not determined solely by the closing price at one point. Calculated by multiplying the average daily closing price for the three months before the end of the business year by the number of listed shares on the last day of the business year. It is not a system that aims to meet standards based on stock price increases over a short period of time, but is designed to use market evaluation over a certain period of time.

Is “10 billion yen” the same as the prime market standard?

Looking at the numbers alone, this is the same as the total market capitalization of tradable shares in the prime market, which is more than 10 billion yen. However, what is being measured is different.

• The new standard for the growth market is market capitalization of the entire company of 10 billion yen or more.
• The maintenance criteria for the prime market is market capitalization of tradable shares of 10 billion yen or more, based on shares recognized as circulating in the market.

For companies in which the founder or parent company has a large stake, the market capitalization of tradable shares may not reach 10 billion yen even if the total market capitalization exceeds 10 billion yen. Therefore, just because a company meets the new standards in the growth market does not mean that it will immediately meet the maintenance standards in the prime market.

New listing standards will not be raised

This review does not aim to raise the entrance to the growth market to a market capitalization of 10 billion yen. Formal requirements such as a market capitalization of 500 million yen or more at the time of initial listing will be maintained.

What TSE focuses on is not only the size at the time of listing, but also how to achieve high growth after listing. Even if it is less than 10 billion yen at the time of listing, if there is a clear path to allocating the proceeds to growth investments and increasing the business scale and market evaluation within five years after listing, it will fit the purpose of the growth market. On the other hand, it will be more difficult than before for companies to remain small with vague growth strategies after going public.

This point also affects IPO preparations. The company and lead underwriter need to create not only a short-term plan to pass the listing examination, but also a growth plan that foresees business scale, capital needs, capital policy, and shareholder structure five years after listing.

Options if standards are not met

Companies that do not reach a market capitalization of 10 billion yen will not be immediately delisted. The main paths a company can take are:

flowchart TD
    A["Growth market listed company"] --> B{"Is <br/> market capitalization over 10 billion yen after 5 years of listing?"}
    B -->|"yes"| C["Continue to be listed on the growth market"]
    B -->|"No"| D["Improvement period of 1 year in principle"]
    D --> E{"Does it meet standards within the improvement period?"}
    E -->|"yes"| C
    E -->|"Apply for market change"| F["Examination for change to standard market"]
    E -->|"M&A/MBO etc."| G["Becoming a subsidiary of another company or going private"]
    E -->|"Not compliant"| H["Delisting after designation as a Security Under Supervision or Security to Be Delisted"]

1. Aim for 10 billion yen in the growth market

The natural option is to implement growth strategies and increase business value and market valuation. TSE requires companies to analyze past growth performance, market valuation, cost of capital, and future growth investments and update "matters related to business plans and growth potential." Rather than simply setting a numerical target of 10 billion yen, it is necessary to demonstrate the path that will lead to corporate value, such as sales growth, profit margin, customer base, research and development, and M&A.

2. Change to standard market

Depending on the company's growth stage and business characteristics, the standard market may be more suitable. However, a market change is not an automatic "downgrade," but is a procedure in which a company applies and is examined against standard market change criteria. In addition to requirements such as a market capitalization of 1 billion yen, a 25% share ratio, and 400 shareholders, companies will also need to comply with all the principles of the Corporate Governance Code.

In the 2025 system review, standards for changing from the growth market to the standard market were also set so that companies that continue to invest in growth do not give up on changing markets solely due to profit requirements. When actually applying, it is necessary to check the latest regulations at that time.

3. Choose M&A or going private

Merging with another company or acquisition by an operating company provides options for incorporating a company's technology, talent, and customer base into a larger business infrastructure. In some cases, a company is taken private through an MBO by its founder or private equity, aiming for regrowth away from short-term valuations on the listed market.

The TSE has clearly stated that the purpose of the system review is not only to quickly grow to a scale that institutional investors can invest in, but also to encourage intercompany M&A and entrepreneurs to start their own businesses. M&A is not seen as a punishment for companies that do not meet standards, but as an option to realize business value in another form.

Special provisions during transition

In principle, companies that fail to meet the standards on the last day of the first business year after March 1, 2030 will enter a one-year improvement period. However, companies that set a compliance plan that is disclosed within three months of the reference date and set a plan period that exceeds the end of the first business year that comes after March 1, 2031 will have their delisting suspended until the plan deadline.

This special provision is a mechanism that requires companies to disclose specific deadlines and plans while avoiding a sudden exit due to simultaneous implementation in 2030. It is not an indefinite grace period. Companies need to demonstrate their plan period, measures, and progress to the market, and achieve compliance with standards by the deadline.

What to prepare from 2025 to 2030

Although there are several years left until the system comes into effect, market capitalization is not a number that can be directly managed in the short term. It is formed as a result of the accumulation of sales, profits, growth rate, capital policy, and investor trust. For this reason, it is realistic to proceed with preparations in the following order.

1. Analyze the current situation. Compare sales growth, profit margin, market capitalization, trading volume, and capital raising results after listing with initial plans.
2. Create a business path to reach 10 billion yen. Clarify sales growth rate, profit margin, required investment, financing, and M&A assumptions.
3. Consider alternatives at the same time. Decide on the conditions for starting consideration regarding changes to the standard market, capital alliances, business sales, M&A, and going private.
4. Update disclosure. "Matters related to business plans and growth potential" will be updated along with analysis of differences from past plans.
5. Reviewed regularly by the Board of Directors. Continue to discuss the formation of business value and the discrepancy in market evaluation, rather than short-term fluctuations in stock prices.

Implications for growth market IR

1. Do not independently set 10 billion yen as a stock price target. Market capitalization is the result of market valuation. Show business path including sales, profits, cash flow, growth investments and dilution.
2. Understand the determination method accurately. Because the average stock price for the three months before the end of the fiscal year is used, suitability cannot be determined solely by the closing price on the end of the fiscal year.
3. Do not confuse initial listing criteria and continued listing criteria. The explanation that "IPO is not possible for less than 10 billion yen" is incorrect.
4. Consider market changes early. Changes to the standard market require review, and it takes time to prepare the application and comply with the code. Don't wait until the end of the improvement period.
5. Do not consider the 2030 special provision as a permanent reprieve. A compliance plan must have a deadline, and you will be responsible for demonstrating progress and results by that deadline.

Source/reference materials

• JPX “Review of growth market continued listing criteria” (September 26, 2025) https://www.jpx.co.jp/news/1020/20250926-01.html
• JPX “Responses to demonstrate the functions of the growth market” https://www.jpx.co.jp/equities/follow-up/03.html
• JPX “Listing Maintenance Standards (Growth Market)” https://www.jpx.co.jp/equities/listing/continue/outline/03.html
• JPX “Market Capitalization – Details of Listing Maintenance Criteria” https://www.jpx.co.jp/equities/listing/continue/details/04.html
• JPX “Frequently Asked Questions (Stocks/Listed Companies) – Review of Growth Market Listing Maintenance Standards” https://www.jpx.co.jp/faq/stock_listed_company.html
• Ministry of Economy, Trade and Industry “Guidelines for Corporate Takeovers” (August 2023) https://www.meti.go.jp/press/2023/08/20230831003/20230831003.html
• Ministry of Economy, Trade and Industry “Guidelines for Fair M&A” (June 2019) https://www.meti.go.jp/press/2019/06/20190628003/20190628003.html

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• 3.3—Rules for maintaining listing after completion of transitional measures: Improvement period, market change, and procedures up to delisting.
• 3.4――TOPIX reform: A system that selects index stocks based on liquidity, independent of market segment.
• 5.4—How to handle unsolicited acquisitions: Principles of board conduct when considering M&A.
• 5.3 - Review of listed subsidiaries and affiliated companies: A perspective to consider the significance of continuing to be listed and the protection of minority shareholders.