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Promulgation of the Cabinet and Ministerial Orders and the Public Notices for the Enforcement of the Revised Foreign Exchange and Foreign Trade Act

Concerning the Act for Partial Revision of the Foreign Exchange and Foreign Trade Act (hereinafter referred to as the “Revised Act”), which was established at the ordinary session of the Diet in 2017, the Cabinet and Ministerial Orders and the Public Notices required for the enforcement of the Revised Act were promulgated and publicized in the official gazette on July 14, 2017.

1. Outline of the Revised Act

Aiming to exercise the strict control of critical technologies and goods and enhance the effectiveness of sanctions related to any illegal acts concerning imports and exports, the Revised Act is to increase the severity of penalties and tighten administrative sanctions imposed on import/export regulation violators and to strengthen the regulations concerning inward direct investment related security.

The Revised Act was discussed at the ordinary session of the Diet in 2017 and established in May 2017.

2. Outline of the promulgated Cabinet and Ministerial Orders and Public Notices

(1)Provision related to the effective date

The Cabinet Order is to stipulate the effective date of the Revised Act as October 1, 2017. (Enactment of the Cabinet Order)

(2)Provision related to the tightening of administrative sanctions

Aiming to address businesses that evade sanctions under the import/export prohibition order by using distinct companies, the Revised Act is to introduce a new system in which Japan is allowed to issue a prohibition order to board members or employees of a company on which an import/export prohibition order has been imposed, preventing them from taking board member or other positions in charge of import/export operations in another company.

Regarding this system, the Cabinet and Ministerial Orders are to stipulate the definition of the term “employee” subject to the order above, as “personnel who supervise business conducted in the business offices” and/or “personnel who substantially act for any other business equivalent to the former business including those who routinely supervise business.” (Revision of the Cabinet and Ministerial orders)

(3)Provision related to the strengthening of the regulations concerning inward direct investment related security

[ⅰ] Provisions related to specified acquisition

Concerning inward direct investment regulation, the Revised Act is to newly add specified acquisition (a transfer of shares issued by non-listed companies between foreign investors) into the coverage of controlled targets under the system in which foreign investors are required to submit a prior notification and receive an examination.

Regarding this, the Cabinet and Ministerial Orders and the Public Notice are to stipulate the following provisions.

  1. Specified acquisition for which foreign investors are not required to submit a prior notification:
    The Cabinet and Ministerial Orders are to stipulate the specified acquisition through inheritance or as a testamentary gift as specified acquisition for which foreign investors are not required to submit a prior notification. (Revision of the Cabinet and Ministerial Orders)
  2. Specification business types subject to the submission of prior notifications:
    The Cabinet and Ministerial Orders and the Public Notice are to designate the types of industries subject to the submission of prior notifications, e.g., weapon manufacturing industries. (Revision of the Cabinet and Ministerial Orders and enactment of the Public Notice)

[ⅱ] Provision related to government orders to take corrective measures

The Revised Act is to establish a system in which government orders to take corrective measures (e.g., orders to sell stock) are imposed on a foreign investor who has made an illegal inward direct investment (e.g., without submitting a notification).

Regarding this system, the Cabinet and Ministerial Orders are to stipulate specific methods for advancing necessary measures and communicating orders, e.g., delivery of a document describing the details of such orders by mail, or by personal service, while returning the document by making service by publication effective in the case that recipient’s address is unknown. (Revision of the Cabinet and Ministerial Orders)

Release date

July 14, 2017

Division in Charge

Security Export Control Policy Division, Trade Control Department, Trade and Economic Cooperation Bureau

Related website

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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