Japan Strengthens Foreign Investment Regulations in Security-Related Industries: "Prior Notification Required for Acquiring 1% or More Shares"

[Asia Economy Reporter Jeong Hyunjin] The Japanese government is preparing measures to strengthen foreign investment regulations on 12 industries deemed important for security, including railways and electricity. The criteria for prior notification for foreign investors acquiring shares in related Japanese companies have also been raised.

On the 21st, Nihon Keizai Shimbun reported that discussions are underway regarding the detailed contents of the revised Foreign Exchange Act, which will be enforced in May. This law passed the extraordinary Diet session in November last year, and the Japanese government is currently preparing related enforcement ordinances.

According to the report, the Japanese government plans to designate 12 industries considered important for security. These industries include weapons, aircraft, space, nuclear power, electricity, gas, telecommunications, water supply, railways, and petroleum. The specific industries will be announced in April. Nihon Keizai estimated that 400 to 500 listed companies will be affected within these 12 industries.

Additionally, the Japanese government will strengthen the prior notification requirement for foreign investors acquiring shares in Japanese companies important for security, lowering the threshold from a 10% shareholding to 1% or more. However, a system will be established to exempt prior notification for foreign investors who meet certain conditions. Investments by overseas state-owned enterprises in Japanese companies will be excluded from the exemption.

Nihon Keizai stated, "This is intended to monitor foreign investors' participation in Japan's security-related companies with China in mind," and added, "The purpose of introducing this law is to align with the US and Europe, which are also strengthening foreign investment regulations." According to the Tokyo Stock Exchange, foreign investors held 29.1% of Japanese stocks as of the end of 2018 and accounted for 70.9% of total trading volume last year.

This content was produced with the assistance of AI translation services.