LDP panel to peg firms’ stock buybacks to earned surplus

LDP panel to peg firms’ stock buybacks to earned surplus

TOKYO, Jan. 25 Kyodo

A ruling party panel working on measures to bolster the sagging stock market plans to seek a legal amendment to allow companies to buy back shares up to an amount equivalent to their earned surplus, a senior panel official said Thursday.

The Liberal Democratic Party (LDP) panel wants the amendment made by the end of March, he said.

But the Justice Ministry wants to prepare legal amendments for submission to the Diet this fall to lift curbs on companies buying back their own shares and holding them as treasury stock.

The LDP panel also plans to ask the LDP’s tax council to meet at an early date to work out measures to revise the taxation of securities, the official said.

The LDP stock panel agreed last week to seek removal of legal curbs on treasury stock.

Under the Commercial Code, firms are allowed to buy back their shares only for certain purposes — usually to feed stock option schemes or to cancel shares.

Politicians and companies are hoping the lifting of the legal curb will be instrumental in jacking up share prices, as it will lead to a reduction in the number of shares available in the market.

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