The House of Representatives passed a bill Tuesday to use public funds for recapitalization of nonfinancial private companies and sent it to the House of Councilors.
The government will seek to have the bill passed by the upper chamber this month before most companies announce their earnings for fiscal 2008, which ended last month.
Under the bill to revise the industrial revitalization law, the government-controlled Development Bank of Japan will invest in companies meeting certain requirements on condition the government covers 50 percent to 80 percent of possible investment losses on their failure.
The maximum loss coverage is set at ¥1.5 trillion.
Firms eligible to receive capital injections from the bank would have to meet specific requirements, including a year-on-year decline of at least 20 percent in quarterly sales, a return on equity at 2 percent or more to be achieved within three years, and 5,000 or more employees.