June 6 (Bloomberg) -- Japan may allow companies to use cash or foreign shares when buying other companies, the Nihon Keizai newspaper reported, without saying where it got the information.

A Justice Ministry panel wants to put new rules in place by 2007, the paper said. The regulations would increase foreign companies' options when acquiring Japanese companies, Nikkei said.

Under the current rules, a foreign company cannot use equity to buy a Japanese company if it seeks to merge the target firm with a local subsidiary and cash can be used only in combination with stock, the paper said. New regulations would permit foreign companies to pay cash alone to shareholders of an absorbed company, Nikkei said.

(Nikkei, 6-6, p.1)

To contact the reporter on this story: Lily Nonomiya in Tokyo at lnonomiya@bloomberg.net

Last Updated: June 5, 2004 23:19 EDT