TOKYO (ANN/JAPAN NEWS) – The Japanese government plans to broaden the scope of overseas investors who must undergo screening before investing in Japanese companies, Japan News has learned.
A new category of “specified foreign investors” will be created for foreign companies and individuals who might transfer information obtained through investments to foreign governments. Under the new measures, these investors will be required to report to the Japanese government before investing in listed companies within industries deemed critical to national security.
The government’s goal is to safeguard sensitive technologies and information held by Japanese companies from potential foreign exposure.
Revisions to government and ministerial ordinances under the Foreign Exchange and Foreign Trade Law are expected as early as spring. The changes will label foreign investors as “specified foreign investors” if they are compelled by espionage laws or other legal frameworks to share information with foreign governments.
Investors classified as specified foreign investors will need to report to the Japanese government before investing in high-risk industries such as nuclear power and telecommunications, among others. These investments will be treated similarly to direct investments from foreign governments.
The revision is believed to be aimed at addressing concerns over Chinese influence, as Chinese companies and individuals are obligated under China’s National Intelligence Law to cooperate with intelligence-gathering activities. Consequently, Chinese investors are likely to be among those affected by the new requirements.
Currently, foreign investors must report to the Japanese government before acquiring at least 1 per cent of a listed company’s shares in a designated industry. However, this reporting requirement is waived under certain conditions, such as when the investor does not seek a board position in the target company.
