FSA to make takeover bids via off-hours trading transparent: report.
The Financial Services Agency will require firms trying to acquire more than a third of shares in listed firms via off-hours trading to disclose in advance how many shares they want to buy, the purchasing price and the period in which they will buy them, the Nihon Keizai Shimbun said Sunday.
The FSA intends to submit the proposals to revise the Securities and Exchange Law possibly during the current Diet session, the business daily said, adding that violators of the new rules would be fined up to 5 million yen.
The move was spurred by Livedoor Co.'s surprise acquisition of a 35 percent stake in Nippon Broadcasting System Inc., most of it via premarket trading at the Tokyo Stock Exchange on Feb. 8.
Under the current securities law, those who intend to acquire more than a third of shares in a listed firm in transactions outside a bourse must publicly launch a takeover bid, announcing in advance the number of shares it plans to acquire, the purchasing price and other details of the bid.
The requirement is intended to give shareholders of the firm targeted in the takeover bid a chance to fend off the bid or sell their shares in response.
Livedoor skirted the requirement by using the off-hours trading system at the TSE, which is regarded as part of on-market trading, leading to criticism by some politicians and business leaders that Livedoor took advantage of a loophole in the law.
Off-hours trading is usually utilized by firms buying back their own shares or institutional investors engaging in basket trading of multiple issues. It is designed to prevent wild fluctuations in stock prices even when a large amount of shares are traded.