Publications | Corporate & Finance Alert | 13 July 2020
Japan's revisions to the Foreign Exchange and Foreign Trade Act mark a significant shift in Japan's oversight of foreign investment
On 7 June 2020 revisions to the Foreign Exchange and Foreign Trade Act (the Forex Act) that tighten the regulatory requirements for foreign direct investment in Japan came into full effect (a 30-day grace period was provided from the amendment's 8 May 2020 effective date).
Amendments to the Forex Act
Under the amendments to the Forex Act, an individual or company that is a nonresident of Japan or a company organized in Japan with 50 percent or more of its voting rights directly or indirectly controlled by a nonresident of Japan (a Foreign Investor) seeking just a 1 percent interest in businesses with importance to national security, public safety, public infrastructure, or Japan's economy will be required to undergo a prior notification and approval process with the Japanese government before consummating the proposed investment. The previous version of the Forex Act requires such prior notification and approval only if foreign investors seek a 10 percent interest in the relevant Japanese companies.
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