On 22 November 2019, the Japanese Diet passed an amendment to the Foreign Exchange and Foreign Trade Act (FEFTA), introducing new controls on foreign investment. The bill was passed as proposed by the government and without substantial amendment.

New rules

As reported in our previous publication, the key amendments to the FEFTA include:

  1. the threshold for foreign investments in Japanese listed companies subject to prior notification requirements is lowered from 10% to 1%;
  2. consents with regard to certain items having significant impact on the operation of Japanese companies will be subject to prior notification requirements;
  3. the introduction of certain exemptions to prior notification;
  4. amendments to the prior notification requirements for foreign investments through partnerships; and
  5. the introduction of prior notification requirements on the acquisition of a business or succession of a business by way of a merger or demerger from Japanese companies by foreign investors.

Next steps

The new rules will enter into force in the first half of 2020. Before that, a cabinet order implementing the new rules will be published, which should provide a clearer picture of the details. The government will also publish a list of specific Japanese listed companies that will note for which of those specific companies an investment into may be subject to prior notification under the FEFTA.

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