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Category of Inward Direct Investment Act, etc to be Revised and Modified

September 26, 2019

On September 26, 2019, the government of Japan promulgated two orders: the Cabinet Order for the Partial Revision of the Cabinet Order on Inward Direct Investment, etc. and the Order for the Partial Revision of the Order on Inward Direct Investment.

1. Outline of the revision of the Cabinet Order on Inward Direct Investment, etc.

(1) Revising the actions falling under the category of inward direct investment, etc.

Concerning the actions falling under the category of inward direct investment, etc. (hereinafter referred to as “inward direct investment, etc.”) about which foreign investors are required to file: a prior notification under the provisions of Article 27 (1) of the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949; hereinafter referred to as the “Act”); and an ex post facto report on inward direct investment, etc. under the provisions of Article 55-5 of the Act, the government of Japan revised the actions falling under the category of inward direct investment, etc., taking into consideration the advancing diversity in the forms of investment.

Specifically, in addition to the acquisition or an equivalent action by a foreign investor of 10% or more of the total number of issued shares of a Japanese company running specified business, which is subject to the notification under the Act, the revised Cabinet Order is also to add two actions to those equivalent to inward direct investment, etc. under the Act: [i] an action for acquiring 10% or more of the total voting rights and [ii] an action for: undertaking proxy voting of a voting right held by another shareholder; and holding 10% or more of the total voting rights, and it is to stipulate a measure for newly covering these actions as those subject to the notification, etc.

(2) Extending the time limit for filing an ex post facto report on the conclusion of a technology introduction contract

Concerning the conclusion, etc. of a technology introduction contract under Article 30 of the Act, the revised Cabinet Order is to change the time limit for filing an ex post facto report on the conclusion, etc. of a technology introduction contract from within 15 days from the date on which the conclusion, etc. of the contract was effected to within 45 days from the date.

2. Outline of the revision of the Order on Inward Direct Investment

In line with the partial revision of the Cabinet Order on Inward Direct Investment, etc. above, the government of Japan also improved the provisions of the Order on Inward Direct Investment and revised those of the related notification and reporting, as necessary.

3. Future schedule

Out of the provisions and orders of the revised Cabinet Order and the revised Ministerial Order, those related to the revision of the actions falling under the category of direct inward investment, etc. under the revised Cabinet Order will come into force on October 26 (Sat.), 2019. Accordingly, if a foreign investor intends to conduct an action falling under the category of inward direct investment, etc. newly subject to the Act on or after the date, he/she is to be required to file a prior notification. However, such investor is permitted to file the prior notification before the enforcement date.

Moreover, the provisions of the revised Cabinet Order concerning extension of the time limit for filing an ex post facto report on the conclusion of a technology introduction contract are to come into force on September 26, 2019, and the new time limit for filing such report on inward direct investment, etc. will be introduced from the date.

Related Documents

For further details, see the Japanese language press release (in Japanese)

Division in Charge

Institution Policy Office, Security Trade Control Policy Division, Trade Control Department, Trade and Economic Cooperation Bureau

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