The Financial Services Agency plans to apply public tender offer rules, which require public announcement of details of the offers, to acquisitions of a one-third or greater stake in a firm through off-hours trading in Japan, FSA sources said Tuesday.
The plan comes after Internet firm Livedoor Co. surprised the Japanese business world by legally boosting its stake to some 35 percent in Nippon Broadcasting System Inc. through off-hours trading in early February.
Public tender offer regulations require that a company wishing to acquire a major stake in another firm make public the amount of shares it aims to buy, the purchase price and other details of its bid in advance. Violators of the requirement may be fined.
The regulations are designed to give all investors a fair opportunity to trade in their shares.
Business leaders and politicians have criticized Livedoor for taking advantage of what they perceive is a loophole in the tender offer rules to buy shares beyond the one-third stake required to veto key measures at Nippon Broadcasting System.
At present, no prior announcement is required for off-hours trading.
Such trading could make the tender offer regulations meaningless and affect the credibility of the Japanese stock market, the FSA officials said.
The Financial System Council, an FSA advisory panel, will consider the matter Thursday before including the restriction in a Securities and Exchange Law revision bill the agency plans to submit to the Diet during its current session, which lasts until June, they said.