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Shareholders may seek damages over Seibu Railway stock delisting.

TOKYO, Nov. 12 Kyodo

Corporate and individual holders of Seibu Railway Co. shares may file damages suits against the railway operator and its parent Kokudo Corp. as the Tokyo Stock Exchange is expected to delist Seibu shares over the firm's falsification of financial statements.

The railway company's shares can be traded over the counter even after delisting, but their value could fall significantly as transactions would become difficult with trading volume expected to become thin, industry observers say.

A daily commodity maker says it bought Seibu Railway shares for 1,100 yen per share in September at the request of Kokudo. The stock price sank to 405 yen on Friday.

A finance official at the commodity maker estimated Seibu Railway's net assets would be only about 100 yen per share if the stock is delisted.

Even with an addition of value expected in the future, the stock's total value would amount to a maximum 200 yen.

''We may have to report special losses in the financial statement'' for the current year, the official said.

Kokudo sold Seibu Railway shares it had held off-market in August and September to a dozen companies with which it had business relationships, without telling them of the equity ownership conditions in the railway company.

After Seibu Railway admitted to falsifying its financial statements and the price of its shares subsequently plunged, some of those companies urged Kokudo to buy back the shares. They may file damages suits, according to industry analysts.

A lawyer well versed in corporate legal affairs pointed out that individuals who hold Seibu Railway shares can also seek damages from the railway operator.
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Publication:Japan Weekly Monitor
Date:Nov 15, 2004
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