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TOKYO: Japan's financial regulator is considering whether to change the rules on out-of-hours stock trading, after such trading paved the way for a surprise takeover battle for Nippon Broadcasting System.
Tatsuya Ito, financial services minister, said late last week the regulator was considering imposing the same tender offer rules on out-of-hours trading on the stock market that apply to the acquisition of shares outside a bourse.
"Depending on how you do it, off-hours trading on a stock exchange can take a form that looks similar to trading conducted outside a stock exchange," Ito said. "We need to study if off-hours trading should be covered by regulations concerning tender offers," he said.
Under Japan's Securities and Exchange law, anyone who aims to acquire more than a third of the shares of a listed company outside a bourse must do so by publicly launching a takeover bid and announcing the number of shares it plans to acquire as well as the purchase price. However, the rule does not apply to trading conducted on a bourse, whether during or after hours.
Ito's comments come in the wake of a controversial bid by Livedoor, an Internet start-up, to take control of NBS, a radio broadcaster. Recently, Livedoor emerged as NBS's largest shareholder, with 35 per cent.
The group, which has since increased its stake to 38 per cent and declared its intention to buy as much of the radio broadcaster as possible, explained that it was able to buy the bulk of the shares unnoticed by those concerned, in out-of-hours trading.
Takafumi Horie, Livedoor's founder, has indicated that his real aim was to gain control of Fuji TV, one of Japan's leading broadcasters. NBS is Fuji TV's largest shareholder, with 22.5 per cent. By acquiring a majority in the former, it is possible to control the latter.
Livedoor's move has been controversial because it was able to acquire such a large stake so quickly, without being noticed. The Livedoor bid for NBS has upset a tender offer by Fuji TV aimed at taking over its radio affiliate, in which it owns a 12.4 per cent stake, and resolving their distorted shareholder structure.
Ito emphasised that Livedoor's trade did not violate any regulations. "We need to closely observe whether the latest case poses any problems in light of reinforcing the securities market," he added.
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