Improving Our Internal Management System, Etc.
Outline of Nidec’s Suspected Inappropriate Accounting Practices
On September 03, 2025, Nidec Corporation (“Nidec” or the “Company”) launched an independent third-party committee (the “Third-Party Committee”) to thoroughly investigate and identify root causes of the Nidec Group’s suspected inappropriate accounting practices.
Due to, among other reasons, the ongoing nature of the Third-Party Committee’s investigation and its possible significant and extensive impact on its consolidated financial statements, the Company received from its accounting auditor an audit report with a disclaimer of opinion for the Company’s consolidated financial statements of the securities report for the fiscal year ended March 2025. Accordingly, on October 28, 2025, the Tokyo Stock Exchange, where the Company’s stock is listed, designated the stock as a security on special alert, citing a substantial need for improving the Company’s internal management system among others matters.
On February 27, 2026, the Third-Party Committee delivered to the Company its investigation report, which revealed a number of accounting misconduct occurrences in the Nidec Group.
The investigation report by the Third-Party Committee is a summary of specific investigation results, including the cause analysis and recommendations for recurrence prevention as of the issuance of the report. With the Third-Party Committee’s investigation continues, Nidec will disclose the final report upon receipt of it.
Main accounting misconducts identified
Misconduct and errors employing the following schemes were confirmed at many Nidec Group business bases:
- Inventories: Avoidance of recognizing valuation losses on obsolete raw materials and finished goods (deferral of expense recognition)
- Fixed assets: Improper avoidance of impairment losses based on sales plans with low probability of achievement
- Capitalization of expenses: Improper capitalization of personnel costs that should have been expensed, delaying expense recognition through depreciation
- Revenue recognition: Improper reversal of provisions for the refund of subsidies, and fictitious recognition of subsidies as revenue that do not qualify for revenue recognition
- Accounts receivable: Understatement of allowance for doubtful accounts for bad debts
Impact on the Company’s financial performance and dividends
- Impact on net assets: The impact on the consolidated net assets as of the end of the first quarter of fiscal year 2025, resulting from the correction of misconduct and errors identified to date, is approximately 139.7 billion yen*.
- Derivative impairment risks: There is a possibility that additional impairment losses may need to be recognized as derivative impacts of downward revisions to past fiscal years’ profits and losses based on the findings of the Third-Party Committee, primarily goodwill and fixed assets related to the automotive business (scope： approximately 250 billion yen*). Such additional impairment losses, should they materialize, may affect individual fiscal years’ depreciation/amortization and tax expenses, etc.
- Year-end dividend: Due to, among other reasons, the ongoing nature of the investigation, and its material impact expected on the Company’s financial closing for past fiscal years, the Company has determined that it has no choice but to forgo the year-end dividend for the fiscal year ending March 2026.
*The specific amount of impact may fluctuate subject to investigative proceedings going forward.
Timeline of events so far
| June 27, 2025: | Nidec postpones the submission of its securities report. |
|---|---|
| September 03, 2025: | Nidec launches a third-party committee. |
| September 26, 2025: | Nidec submits its securities report and internal control report. |
| October 23, 2025: | Nidec revises its performance forecast and expected year-end dividend, and decides not to provide any interim dividend. |
| October 28, 2025: | The Tokyo Stock Exchange places Nidec’s stock on special alert. |
| October 30, 2025: | Nidec launches Nidec Corporate Reform Committee. |
| November 04, 2025: | Nidec issues a release of "Dear Valued Business Partners" and executes a commitment line agreement. |
| November 14, 2025: | Nidec submits a policy for its improvement plan (to Japan Exchange Regulation), a financial statements summaries, and a semi-annual report. |
| December 12, 2025: | Nidec submits a draft Improvement Plan and Status Report (to Japan Exchange Regulation). |
| January 28, 2026: | Nidec submits the Improvement Plan and Status Report (to the Japan Exchange Regulation) and Disclosure of the Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2026, Exceeding 45 Days After the Quarter-End. |
| February 27, 2026: | Nidec receives an investigation report from the Third-Party Committee. The Third-Party Committee’s investigation is ongoing, and the Company expects to receive the final report from the Committee in the future. |
| March 03, 2026: | Nidec discloses the Third-Party Committee’s Investigation Report and revamps its management team |