We are pleased to share the March 2025 issue of Japan Corporate & Finance Insights. This newsletter is designed to keep you current on what we consider to be important recent legal developments involving Japanese corporate and finance matters.

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Proposed Revision to the Exemption from Making Prior Notification in connection with Foreign Direct Investment (By Hikocho Irie and Yuki Sato)

Between February 10 and March 11, 2025, the Ministry of Finance of Japan solicited public comment on proposed revisions to the exemption currently available to certain foreign investors from submitting prior notification regarding their foreign direct investment (“FDI”) in Japan. The upcoming revisions to the existing regulations related to the Cabinet Order and Ministerial Ordinances, etc. under the Foreign Exchange and Foreign Trade Act are expected to impose stricter regulations on FDI in Japan by narrowing the scope of the exemption from making such prior notification.
Under the proposed revision, new categories of foreign investors—namely, "Specified Foreign Investors" and "Quasi-Specified Foreign Investors"—will be added.
As currently in place, the exemption is available when foreign investors which engage in certain FDI comply with specified conditions, including that these investors (or their closely-related persons) not become board members or corporate auditors of the investee company. However, if the proposed revision is adopted, even if these new categories of foreign investors comply with these existing conditions, the exemption will not be available to them and prior notification will be required in certain FDI transactions.

Furthermore, the proposed revision plans to add “Designated Core Business Entities” as a new category of Japanese companies subject to this FDI oversight.
This article provides an overview of the proposed revisions and practical points to be considered.