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Inward Foreign Direct Investment Screening System in Japan

Economic Security has become a critical issue for many countries. Due to the change of circumstances, “Foreign Exchange and Foreign Trade Act” of Japan was revised in 2020. By the legal revision, the criteria for Inward Foreign Direct Investment Screening has been made stricter.

This legal revision was conducted amid the contraction of the global economy due to the spread of the coronavirus. Therefore, its actual impact may not have been significant. However, as the global economy is gradually recovering, it is necessary to revitalize economic activities in Japan as well.

In response to such changes in the economic environment, we would like to assist foreign-based companies or institutions, and non-residents in their inward direct investment in Japan.

According to the new screening system, when foreign-based companies or institutions, or non-residents, invest in Japanese companies designated as core industries, it is necessary to submit a prior notification to the Minister of Finance and the Minister who is in charge of the matter through Bank of Japan, before making a transaction that is applicable to the inward foreign direct investment.

Examples of Investment and activity requiring a prior notification

a) Acquisition of 1% or more of the stocks of a listed company in core industries

b) Acquisition of one or more stocks of an unlisted company in core industries

c) When a foreign investor agrees at the general meeting of stockholders of a company in core industries that the foreign investor oneself or related parties will assume the position of a member of board of directors or a member of audit & supervisory board

Core industries include Weapons, Aircraft, Space Exploration, and Nuclear Technology, among others. Although high-tech industries are often recognized as core industries, many other industries, such as Agriculture, are also designated as core industries. Please note it.

Industries in which Prior Notifications Required before Foreign Direct Investment in Japan
By Japan External Trade Organization(JETRO)

If you have an interest in investing in Japanese companies, we may be able to assist you in finding an appropriate solution to realize it. Please feel free to contact Our Office.