Japan's securities watchdog is considering recommending that a levy be imposed on Olympus Corp for false financial reports in a move that could prevent its delisting, but may seek criminal charges against former executives and others over dubious M&A deals, a source familiar with the case said on Sunday.

Japanese authorities are investigating Olympus after the company admitted last week that it hid investment losses for decades using funds from M&A payments. Media reports have said police, prosecutors and regulators were joining forces in a rare collaborative effort to examine the cover-up.

The Olympus scandal has rekindled concerns about corporate governance in Japan and worries that other firms may have engaged in similar misdeeds, and politicians have begun considering legal revisions to tighten controls.

(Reporting by Noriyuki Hirata; Writing by Linda Sieg; Editing by Edmund Klamann)