Foreign Exchange and Foreign Trade Act

If the Minister of Finance and the competent minister for the business find it particularly necessary, with regard to an inward direct investment or equivalent action undertaken by a foreign investor (meaning an inward direct investment or equivalent action prescribed in Article 27, paragraph (1), limited to one that falls under an act stated in Article 26, paragraph (2), items (i) through (iv) or (viii), or an act stated in item (xi) of that paragraph (limited to an act prescribed by Cabinet Order as being equivalent to the acts stated in items (i) through (iv) and (viii) of that paragraph), and excluding one for which a notification has been filed, or should have been filed, pursuant to Article 27, paragraph (1) in undertaking that inward direct investment or equivalent action and one for which filing a notification was not required pursuant to Article 27-2, paragraph (1); the same applies hereinafter in this Article) or a specified acquisition (meaning a specified acquisition prescribed in Article 28, paragraph (1), excluding one for which a notification has been filed, or should have been filed, pursuant to that paragraph in undertaking that specified acquisition and one for which filing a notification was not required pursuant to Article 28-2, paragraph (1); the same applies hereinafter in this Article) that falls under an inward direct investment or equivalent action or a specified acquisition prescribed by Cabinet Order as being highly likely to come to fall under an inward direct investment or equivalent action that is a matter of national security (meaning an inward direct investment or equivalent action that is a matter of national security or a similar concern and is highly likely to give rise to the situation stated in Article 27, paragraph (3), item (i), (a) (limited to a situation that compromises national security); the same applies hereinafter in this Article and Article 69-4, item (iii)) or a specified acquisition that is a matter of national security, in the future due to a change in the international situation or any other reason, they may, pursuant to Cabinet Order, request the foreign investor to report, with regard to that inward direct investment or equivalent action or specified acquisition, the purpose of the business prescribed in Article 27, paragraph (1), item (i) or Article 28, paragraph (1), item (i), the number of shares relating to that inward direct investment or equivalent action or specified acquisition that the foreign investor owns, and other matters prescribed by Cabinet Order.

If the Minister of Finance and the competent minister for the business find that the inward direct investment or equivalent action or the specified acquisition that is subject to the report under the preceding paragraph constitutes an inward direct investment or equivalent action that is a matter of national security or a specified acquisition that is a matter of national security, the ministers, after hearing the opinions of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions, may recommend the person that made the report to dispose of all or part of the shares or equity acquired through the inward direct investment or equivalent action or the specified acquisition that is subject to the report, or to take other necessary measures.

If, in response to a request for a report under paragraph (1), a foreign investor fails without justifiable grounds to comply with the request or makes a false report, the Minister of Finance and the competent minister for the business, after hearing the opinions of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions, may recommend the foreign investor to dispose of all or part of the shares or equity acquired through the inward direct investment or equivalent action or the specified acquisition relating to the request, or to take other necessary measures.

A person that has received a recommendation under the preceding two paragraphs must, within 10 days from the day of receiving the recommendation, notify the Minister of Finance and the competent minister for the business whether the person accepts the recommendation or not.

A person that has given notice of acceptance of a recommendation pursuant to the preceding paragraph must take the measures relating to the recommendation in accordance with what was recommended.

If a person that has received a recommendation under paragraph (2) or (3) has failed to give the notice under paragraph (4) or has given notice that the person does not accept the recommendation, the Minister of Finance and the competent minister for the business may order the person that has received the recommendation to dispose of all or part of the shares or equity acquired through the inward direct investment or equivalent action or the specified acquisition relating to the recommendation, or to take other necessary measures.

If the Minister of Finance and the competent minister for the business find, due to a change in the international situation or any other reason, that the inward direct investment or equivalent action or the specified acquisition relating to the request for a report under paragraph (1) has ceased to fall under an inward direct investment or equivalent action that is a matter of national security or a specified acquisition that is a matter of national security, or find that it has become clear that it does not so fall, they may rescind all or part of the recommendation or order with respect to a person that has given notice of acceptance of the recommendation pursuant to paragraph (4) or a person that has received an order under the preceding paragraph.

In addition to what is provided for in paragraph (2) through the preceding paragraph, the procedures for recommendations and orders to dispose of all or part of shares or equity acquired through an inward direct investment or equivalent action or a specified acquisition under these provisions, or to take other necessary measures, and other particulars necessary for these recommendations and orders are prescribed by Cabinet Order.

If, having requested a foreign investor to report pursuant to paragraph (1), the Minister of Finance and the competent minister for the business find that the inward direct investment or equivalent action or the specified acquisition relating to the request is extremely highly likely to give rise to a situation that compromises national security and that it is therefore necessary to take urgent measures, they may, notwithstanding paragraph (2) through the preceding paragraph, after hearing the opinions of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions, order the foreign investor, pursuant to Cabinet Order, to take measures prescribed by Cabinet Order as measures necessary to prevent the occurrence of a situation that compromises national security, such as not newly undertaking an inward direct investment or equivalent action or a specified acquisition.

If the Minister of Finance and the competent minister for the business find that it has become unnecessary to take the measures ordered pursuant to the preceding paragraph due to a change in the international situation or any other reason, they may, pursuant to Cabinet Order, rescind all or part of the order with respect to a person that has received an order under that paragraph.

The period during which a report may be requested under paragraph (1) regarding an inward direct investment or equivalent action or a specified acquisition is until the day on which five years have elapsed from the day on which the inward direct investment or equivalent action or specified acquisition was undertaken.

Assets and rights that a partner of a specified partnership or similar organization acquires through an action that is comparable to an inward direct investment or equivalent action or a specified acquisition that the specified partnership or similar organization conducts are deemed to be acquired, owned, or held by the specified partnership or similar organization, and the provisions of the preceding paragraphs apply.

A person (including a corporation or any other organization) not constituting a foreign investor is deemed to be a foreign investor in connection with any of the following actions comparable to an inward direct investment or equivalent action or a specified acquisition which that person conducts on behalf of a non-resident, etc. but not in the name of that non-resident, etc., and the provisions of paragraphs (1) through (11) apply.

that is carried out for the account of the non-resident, etc.;

that is carried out based on a contract, the laws and regulations of a foreign country, or anything similar to these (limited to those specified by Cabinet Order, and excluding those set out in the preceding item);

that is carried out by a person that has a permanent economic relationship based on ownership of shares, a familial relationship, an employment relationship, or any other special relationship specified by Cabinet Order with the non-resident, etc. (limited to those specified by Cabinet Order, and excluding those set out in the preceding two items).

If a resident intends to conduct the conclusion or renewal of, or modification of the terms of, a contract with a non-resident (including a non-resident's branch office or other such place of business in Japan; hereinafter the same applies in this Article) with regard to the transfer of industrial property rights or any other rights related to technology, the establishment of rights to use these rights, or the guidance on technology for business management conducted by the non-resident (hereinafter referred to as the "entry into, renewal, or modification of a technology introduction contract"), which is prescribed by Cabinet Order as being likely to constitute the entry into, renewal, or modification of a technology introduction contract that requires the examination under paragraph (3), the resident, pursuant to the provisions of Cabinet Order, must first file a notification with the Minister of Finance and the competent minister for the business, for the clauses of the contract and other information that Cabinet Order prescribes with regard to the entry into, renewal, or modification of a technology introduction contract.

A resident that has filed a notification under the preceding paragraph with regard to the entry into, renewal, or modification of a technology introduction contract must not conduct the entry into, renewal, or modification of a technology introduction contract stated in the notification until 30 days have passed from the day on which the Minister of Finance and the competent minister for the business receive the notification; provided, however, that the Minister of Finance and the competent minister for the business may shorten the 30-day period when they find, before the expiration of the period, that the entry into, renewal, or modification of a technology introduction contract stated in the notification does not constitute entry into, renewal, or modification of a technology introduction contract that requires the examination under the following paragraph, in light of the type of the technology and other circumstances.

Once a notification under paragraph (1) has been filed, if the Minister of Finance and the competent minister for the business find that it is necessary to examine whether the entry into, renewal, or modification of a technology introduction contract that is the subject of that notification constitutes the entry into, renewal, or modification of a technology introduction contract that is likely to cause one of the following situations (but only the entry into, renewal, or modification of a technology introduction contract with a non-resident from a member state of a multilateral treaty or other international agreement on the entry into, renewal, or modification of a technology introduction contract that Cabinet Order prescribes and to which Japan has acceded (hereinafter referred to as a "treaty or other agreement" in this paragraph), if there is no obligation to remove restrictions on the entry into, renewal, or modification of that technology introduction contract based on the treaty or other agreement; as well as the entry into, renewal, or modification of a technology introduction contract with a non-resident from a state other than the member state of such a treaty or other agreement, if there would be no obligation to remove restrictions on the entry into, renewal, or modification of that technology introduction contract if the state were a member state of the treaty or other agreement (referred to as the "entry into, renewal, or modification of a technology introduction contract that is a matter of national security or a similar concern" in paragraphs (4) and (5))), the Minister of Finance and the competent minister for the business may extend the period in which the entry into, renewal, or modification of a technology introduction contract that is subject to that notification must not be conducted, but only to a period of four months starting on the day on which the notification is received:

it would compromise national security, interfere with the maintenance of public order, or create an obstacle to the preservation of public safety; or

it would have a significant adverse effect on the smooth operation of the Japanese economy.

If the Minister of Finance and the competent minister for the business have extended the period during which the entry into, renewal, or modification of a technology introduction contract must not be conducted pursuant to the provisions of the preceding paragraph, and they find, as a result of the examination under that paragraph and before the expiration of the extended period, that the entry into, renewal, or modification of a technology introduction contract stated in the notification made under paragraph (1) does not constitute the entry into, renewal, or modification of a technology introduction contract that is a matter of national security or a similar concern, the ministers may shorten the extended period.

If the Minister of Finance and the competent minister for the business have extended the period during which the entry into, renewal, or modification of a technology introduction contract must not be conducted pursuant to the provisions of paragraph (3), and they find, as a result of the examination under that paragraph, that the entry into, renewal, or modification of a technology introduction contract stated in the notification made under paragraph (1) falls within the category of the entry into, renewal, or modification of a technology introduction contract that is a matter of national security or a similar concern, the ministers, pursuant to the provisions of Cabinet Order and after hearing the opinions of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions, may recommend the person that filed the notification of the entry into, renewal, or modification of the technology introduction contract to fully or partially modify the clauses of the contract or to discontinue it; provided, however, that the period during which the ministers may recommend the modification or discontinuance starts from the day on which they receive the notification, and ends on the day on which the period extended under paragraph (3) or the following paragraph expires.

Notwithstanding the provisions of paragraph (3), if the Minister of Finance and the competent minister for the business hear the opinions of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions, but the Council informs them that, in light of the nature of the case, it would be difficult for the Council to state its opinions within the four-month period prescribed in paragraph (3), the period during which the entry into, renewal, or modification of a technology introduction contract must not be conducted as prescribed in that paragraph is five months.

The provisions of Article 27, paragraphs (7) through (12) apply mutatis mutandis if the recommendation under paragraph (5) is issued. In this case, Cabinet Order prescribes any necessary technical replacement of terms.

The provisions of the preceding paragraphs do not apply to the entry into, renewal, or modification of a technology introduction contract involving technology developed independently by a non-resident's branch office or other such place of business in Japan or any other case of the entry into, renewal, or modification of a technology introduction contract prescribed by Cabinet Order.