REFILE-UPDATE 1-Japan may halve time for rights issues -sources

(Corrects final paragraph to …Justice Ministry … instead of
… Finance Ministry)

* Faster procedure may be available in 2 years – sources

* Fund-raising could be shortened to 6 weeks -sources

* Firms may favour rights issues because of less dilution
(Adds details)

By Noriyuki Hirata

TOKYO, Dec 22 (BestGrowthStock) – Japan may halve the procedure time
for companies to raise funds through rights issues to make it
easier for corporations to raise capital from existing
shareholders, sources familiar with the matter said on Wednesday.

Rights issues, in which all existing shareholders are given
an option to buy newly issued shares, have rarely been used in
Japan because it can take as long as three months to process
applications.

The government is considering making changes to laws and
rules governing rights issue to shorten fund-raising to about a
month and half, said two sources who declined to be identified
because they were not authorised to talk about the matter
publicly.

The new faster procedure may be available to companies in the
next two years, they said.

Compared with public offerings, corporations, which have been
urging a review of existing rules since the global credit crunch
in 2008, may favour fast-tracked rights issues because they
result in less dilution for existing shareholders, who are given
an option either to buy new shares or to sell the rights to
others.

“If we can’t use in Japan what is easily available abroad, it
might be huge loss of opportunity. We are hoping for a rule
change,” the chief financial officer of Japanese company said on
condition he was not identified.

Of 107 companies which have raised 5.2 trillion yen ($62
billion) in Japan this year, only one of them, Takara Leben
(8897.T: ), opted for a rights issue to garner 5 billion yen in
cash.

Japan’s Financial Services Agency made changes in the law
earlier this year to quicken the process, but “it should be much
shorter if they want to make rights issues a viable option,” a
source at a securities brokerage said.

Those changes, which would require lawmakers’ approval, may
include allowing issuers to put their prospectus and notice of
allocation online instead of mailing them to every shareholder,
which for major companies could amount to hundreds of thousands
of packages.

Other tweaks being mulled include shortening the two-week
notice period required before corporations can activate an issue,
they said. Combined, the changes would save about a month, the
sources said, although they said Japan’s Justice Ministry is
still cautious about providing notices and other documents
electronically.
($1=83.73 Yen)
(Reporting by Noriyuki Hirata, Writing by Taiga Uranaka and Tim
Kelly; Editing by Michael Watson)

REFILE-UPDATE 1-Japan may halve time for rights issues -sources