Govt ‘to expand exemptions’ to foreign investment rules

27-Feb-2020 Intellasia | JapanTimes | 6:02 AM Print This Post

The government plans to further loosen restrictions on foreign investors seeking to buy shares in companies related to national security, a person familiar with the matter said.

Japan is working on a new rule that would require foreign investors to report in advance when they plan to buy more than 1 percent of shares in companies in sensitive industries. Portfolio investing by financial institutions such as asset managers and hedge funds were previously reported to be exempt from the rule, but the person familiar with the matter said such investments by family-run funds, university endowments and corporate pension funds will also be granted special dispensation.

The Foreign Exchange and Foreign Trade Law tightening the threshold from 10 percent was passed by the Diet last year and is scheduled to take effect in May. Family-run funds, university endowments and corporate pension funds will still be required to seek approval for investments in such companies that exceed 10%, the person said, asking not to be named as the information is not public.

Early reports on the revision faced strong criticism from the financial industry and some members of the Liberal Democratic Party over concern it could dent foreign interest in local equities. Reports of planned exemptions have somewhat calmed such fears. The new rules will apply to a total of about 400 to 500 companies in 12 specific industries, the person said: weapons, aircraft, space-related, nuclear-related, equipment capable of being used for military purposes, cyber security, electric power, gas, telecommunications, water supply, railways and oil.


Category: Japan

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