Shares in scandal-hit Olympus nosedived 21 percent on Thursday amid fears of a possible dilution if the company moves to a new issue to raise much-needed fresh capital.
The stock fell 20.77 percent to 1,041 yen, as investors ran for cover following Wednesday's delayed submission of second quarter earnings and the correction of five years worth of crooked balance sheets.
Current earnings, revealing a 32.3 billion yen ($414 million) first half loss, were filed with just hours to spare before a deadline that if missed would have seen the company delisted from the Tokyo Stock Exchange, all but wiping out its value.
Despite the 11th-hour filing, Olympus is not yet in the clear, with the Tokyo bourse keeping it on a watch list as it investigates the company over a huge cover-up scandal.
"Even if the company remains listed, the assumed next step is a capital increase," said a senior strategist at a Japanese brokerage, hinting at a move that typically involves a dilutive common share offer.
The company could boost its capital by using several measures such as forming a business alliance and taking investment from other companies.
The camera and medical equipment maker corrected its books for the past five years after it admitted an accounting dodge to cover up at least 134.9 billion yen ($1.73 billion) in losses dating back to the 1990s.
In fixing its books, Olympus said its capital adequacy ratio has plunged to 4.5 percent, less than a half of the declared 11.0 percent of March.
The level of the company's debts had never exceeded the worth of its assets during the five years for which Olympus corrected its financial books.
But company officials admitted Thursday that the firm illegally distributed dividends when Olympus did not make enough profit.
"In recent periods, there were times when we did not have sufficient profit available for dividend. We are aware that it in effect resulted in illegal dividend," an Olympus official told reporters.
Company president Shuichi Takayama told a news conference there would be an extraordinary shareholders meeting some time in March or April 2012.
But he added that he had no plans to meet ousted whistleblower Michael Woodford, who on Wednesday said he had reached out to the embattled company seeking a consensus on reform.
The firm has seen around 58 percent of its value disappear in the two months since Woodford, the first ever non-Japanese president and chief executive of Olympus, was sacked.