Almost 100 companies were delisted from the Tokyo Stock Exchange in 2024, the most in a decade, as standards were tightened and investors became more demanding.

The high number of delistings was also related to the desire to avoid activist investors.

According to TSE data, 94 companies were delisted from the Tokyo exchange last year, the highest number since it merged with the Osaka Securities Exchange in 2013. A total of 61 companies were delisted in 2023, and 77 in 2022.

Analysts say that the latest figure reflects recent trends in the market. Listed companies have been under pressure to improve governance and capital efficiency, while some have chosen to go private to seek more flexibility in their business strategies.

“The bar has been continuously raised for companies seeking or maintaining a listing,” said Chisa Kobayashi, UBS SuMi Trust Wealth Management's Japan equities strategist in Tokyo.

Some companies may have chosen to go private to evade activist investors, which have been more active in Japan in recent years, analysts say.

Others have delisted after ownership changes. Lawson went private in July after KDDI raised its stake to 50% through a tender offer.

Along with demands to strengthen corporate governance, the TSE has rolled out some reforms to put more pressure on underperforming companies to improve their value to attract more investors.

In 2022, the exchange restructured into three market levels — Prime, Standard and Growth — as too many companies, including some with weak capitalization and anemic earnings, were concentrated in its First Section, its top tier before the restructure.

The TSE made the criteria to remain in the top section stricter and offered a grace period to companies that did not meet the new standards, with March 2026 as the deadline.

Last March, the TSE told all companies listed on the Prime and Standard sections to increase corporate value in the medium-to-long term and draft specific plans to do so.

In particular, the TSE pushed companies with price-to-book ratios of under 1.0 to show improvement. The price-to-book ratio is an indicator that compares a company's market value to its book value.

Starting in April, all Prime market-listed companies are also required to release quarterly financial statements and other key information in both English and Japanese simultaneously.

Given that the standards are getting higher, “the number of delisted companies or those going private will likely continue to increase,” Kobayashi said.

“The situation may seem harsh for some companies, but I believe that looking at this from an index-level perspective, it will lead to greater market efficiency, which in turn will contribute to an overall increase in corporate value in the medium term.”

Others may also withdraw from the market to defend themselves from unexpected buyouts following Alimentation Couche-Tard’s attempt to acquire Seven & I Holdings, the parent company of the 7-Eleven chain of convenience stores.

Seven & I is considering a massive management buyout that would take it private to fend off the takeover.