An LDP panel that wants to do away with restrictions on so-called treasury stocks will consider ways to prevent stock-price manipulation in an effort to secure support from coalition ally New Komeito, LDP officials said Friday.
The Commercial Code currently bans companies from reacquiring their own shares -- treasury stocks -- unless the shares are retired or used for employee stock-option plans. The ban is designed to prevent insider trading.
Whether to repeal the ban has become a contentious point between the Liberal Democratic Party and new Komeito as they discuss ways to stoke the stock market ahead of the March 31 end to the fiscal year. The LDP is in favor of doing so, arguing that companies who increase their share value through buybacks under current rules are penalized with the resulting hit in their capital bases.