Foreign Exchange and Foreign Trade Act

Before a foreign investor conducts a specified acquisition (meaning a specified acquisition as provided in Article 26, paragraph (3), and excluding a specified acquisition as prescribed by Cabinet Order in consideration of inheritance, bequest, merger of a corporation, or any other circumstances; the same applies hereinafter, except in Article 29-2 and Article 69-4) prescribed by Cabinet Order as being likely to constitute a specified acquisition that requires the examination under paragraph (3), the foreign investor must first file a notification of the following matters (limited, as for the matter stated in item (iv), to the case where the foreign investor takes the measure relating to national security provided for in that item) concerning that specified acquisition with the Minister of Finance and the competent minister for the business, pursuant to the provisions of Cabinet Order:

the purpose of the business of the company provided for in Article 26, paragraph (3);

the amount of that specified acquisition;

the timing of the execution of that specified acquisition;

a restriction on the involvement of that foreign investor in the management of the company relating to that specified acquisition, or any other measure to eliminate the risk of that specified acquisition giving rise to a situation that would compromise national security (hereinafter referred to as a "measure relating to national security");

any other matters prescribed by Cabinet Order.

A foreign investor that has filed a notification under the preceding paragraph with regard to a specified acquisition must not undertake the specified acquisition that is subject to that notification during the period until the final day in the 30-day period that starts on the date that the Minister of Finance and the competent minister for the business receive the notification; provided, however, that on finding, before the end of this period, that, based on the purpose of the business provided for in item (i) of that paragraph or any other consideration, the specified acquisition that is subject to that notification does not constitute one necessitating an examination under the following paragraph, the Minister of Finance and the competent minister for the business may shorten this period.

When a notification under paragraph (1) has been filed, on finding it necessary to examine whether the specified acquisition that is subject to the notification constitutes a specified acquisition that is highly likely to cause a situation that would compromise national security (but only a specified acquisition that is undertaken by a foreign investor from a member state of a multilateral treaty or other international agreement on specified acquisition 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 that specified acquisition based on the treaty or other agreement; as well as a specified acquisition that is undertaken by a foreign investor 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 specified acquisition if the state in question were a member state of the treaty or other agreement; hereinafter referred to as a "specified acquisition that is a matter of national security"), the Minister of Finance and the competent minister for the business may, pursuant to the provisions of Cabinet Order, extend the prohibition period (meaning the period prescribed in the main clause of the preceding paragraph that relates to that notification; hereinafter the same applies in this Article and Article 28-3), but only until the final day in the four-month period that starts on the day on which the notification is received.

If the Minister of Finance and the competent minister for the business have extended the prohibition period pursuant to the provisions of the preceding paragraph, but they find, as a result of an examination under that paragraph and before the expiration of the extended prohibition period, that the specified acquisition that is subject to the notification under paragraph (1) does not constitute a specified acquisition that is a matter of national security, the ministers may shorten the extended prohibition period.

If the Minister of Finance and the competent minister for the business have extended the prohibition period pursuant to the provisions of paragraph (3), but they find, as a result of the examination under that paragraph, that the specified acquisition that is subject to the notification under paragraph (1) constitutes a specified acquisition that is a matter of national security, the ministers may recommend the person that filed the notification of the specified acquisition to change the substance of the acquisition, make a modification of a measure relating to national security (meaning to file with the Minister of Finance and the competent minister for the business a notification of a modification relating to the matters set out in paragraph (1), item (iv) that pertain to the notification; the same applies hereinafter), or discontinue the specified acquisition, after hearing the opinions of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions; provided, however, that the period during which the ministers may recommend the change, the modification of a measure relating to national security, or the discontinuance is up until the final day of the prohibition period as extended pursuant to the provisions of paragraph (3) or the following paragraph or Article 28-3, paragraph (2).

If the Minister of Finance and the competent minister for the business hear the opinion of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions pursuant to the preceding paragraph, but the Council makes a filing indicating that, considering the character of the matter in question, it will be difficult for it to state its opinion within the period ending on the day on which four months elapse from the day on which the notification under paragraph (1) was accepted (or, if the prohibition period has been extended beyond that period pursuant to the provisions of Article 28-3, paragraph (2), the period until the final day of the extended prohibition period), the prohibition period is, notwithstanding the provisions of paragraph (3) or paragraph (2) of that Article, the period ending on the day on which five months elapse from the day on which the notification under paragraph (1) was accepted (or, if the prohibition period has been extended pursuant to the provisions of paragraph (2) of that Article beyond the period ending on the day on which four months elapse from the day on which the notification under paragraph (1) was accepted, the period ending on the day on which one month elapses from the day following the final day of the extended prohibition period).

The provisions of Article 27, paragraphs (7) through (12) apply mutatis mutandis if the recommendation under paragraph (5) is issued. In this case, the phrase "modification of a measure relating to national security or a similar concern" in paragraph (8) of that Article is deemed to be replaced with "modification of a measure relating to national security prescribed in Article 28, paragraph (5) (hereinafter referred to as "modification of a measure relating to national security" in this Article)", and the phrase "modification of a measure relating to national security or a similar concern" in paragraphs (10) through (12) of that Article is deemed to be replaced with "modification of a measure relating to national security", and Cabinet Order prescribes any other necessary technical replacement of terms.

Assets and rights that a partner of a specified partnership or similar organization acquires through an action that is comparable to the specified acquisitions that the specified partnership or similar organization undertakes are deemed to be acquired, owned, or held by the specified partnership or similar organization, and the provisions of the preceding paragraphs, Article 28-3, Article 28-4, and Article 29, paragraphs (1) through (6) 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 action comparable to a specified acquisition which that person conducts on behalf of a non-resident, etc. but not in the name of that non-resident, etc. that falls under any of the following items, and the provisions of paragraphs (1) through (7), Article 28-3, Article 28-4, and Article 29, paragraphs (1) through (6) apply thereto.

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

Notwithstanding the provisions of paragraph (1) of the preceding Article, if a foreign investor (meaning a foreign investor as provided in Article 26, paragraph (1); excluding a foreign investor that has violated this Act, an Order based on this Act, or an administrative disposition based on either of these, or any other foreign investor prescribed by Cabinet Order as one for which there is a high need to carry out an examination under paragraph (3) of the preceding Article; hereinafter the same applies in this Article) seeks to conduct a specified acquisition other than one prescribed by Cabinet Order as being highly likely to constitute a specified acquisition that is a matter of national security, the foreign investor is not required to file the notification under paragraph (1) of the preceding Article. In such a case, the foreign investor must comply with the criteria that must be met in order for a specified acquisition not to constitute a specified acquisition that is a matter of national security, which the Minister of Finance and the competent minister for the business establish.

Before the Minister of Finance and the competent minister for the business propose the establishment, revision, or repeal of the criteria provided for in the preceding paragraph, they must hear the opinions of the Council on Customs, Tariffs, Foreign Exchange, and Other Transactions.

If the Minister of Finance and the competent minister for the business find that a foreign investor that, pursuant to the provisions of paragraph (1), has conducted a specified acquisition without filing a notification under paragraph (1) of the preceding Article, has violated the criteria provided for in paragraph (1), they may issue a recommendation for the foreign investor to take the necessary measures to comply with those criteria.

If a foreign investor that has been issued a recommendation under the preceding paragraph fails to follow this, the Minister of Finance and the competent minister for the business may order the foreign investor that has been issued the recommendation to take the recommended measures.

Beyond what is provided for in the preceding two paragraphs, Cabinet Order prescribes the procedures for issuing recommendations and orders under these provisions, and provides for other necessary particulars in connection with these recommendations and orders.

Assets and rights that a partner of a specified partnership or similar organization acquires through an action that is comparable to the specified acquisitions that the specified partnership or similar organization undertakes are deemed to be acquired, owned, or held by the specified partnership or similar organization, and the provisions of the preceding paragraphs and Article 29, paragraph (7) 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 action comparable to a specified acquisition which that person undertakes on behalf of a non-resident, etc. but not in the name of that non-resident, etc. that falls under any of the following items, and the provisions of paragraphs (1) through (5) and Article 29, paragraph (7) 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 special relationship with the non-resident, etc. specified by Cabinet Order, such as a permanent economic relationship based on ownership of shares, a familial relationship, or an employment relationship (limited to those specified by Cabinet Order, and excluding those set out in the preceding two items).

A foreign investor that has filed a notification under Article 28, paragraph (1) may, when it intends to make a modification relating to the matters set out in Article 28, paragraph (1), item (iv) that pertain to the notification during the prohibition period (if the prohibition period has been extended pursuant to the provisions of paragraph (3) of that Article or shortened pursuant to the provisions of the proviso to paragraph (2) or paragraph (4) of that Article, the prohibition period as so extended or shortened), notify the Minister of Finance and the competent minister for the business of the modification, pursuant to the provisions of Cabinet Order.

If a notification under the preceding paragraph has been made, and the final day of the prohibition period (if the prohibition period has been extended pursuant to the provisions of Article 28, paragraph (3) or shortened pursuant to the provisions of the proviso to paragraph (2) or paragraph (4) of that Article, the prohibition period as so extended or shortened) is before the day on which 14 days elapse from the day on which the notification under the preceding paragraph was accepted, the prohibition period is, notwithstanding the provisions of paragraphs (2) through (4) of that Article, the period until the day on which those 14 days elapse.