The step was among a raft of proposals for revisions to the Foreign Exchange and Foreign Trade Act submitted on Wednesday by a finance ministry panel to relevant ministers
Japan plans to amend its foreign investment screening law to give authorities the power to retrospectively order foreign investors to divest acquisitions deemed to pose economic security risks.
The step was among a raft of proposals for revisions to the Foreign Exchange and Foreign Trade Act submitted on Wednesday by a finance ministry panel to relevant ministers, as Japan moves to tighten foreign investment oversight, joining a global trend amid rising geopolitical tensions.
The government plans to send draft amendments to parliament later this year, marking what would, if approved, be the first major update to the law since 2019.
At present, foreign investors acquiring stakes in Japanese companies outside sectors deemed critical to economic or national security are not required to notify the government in advance, leaving officials with no authority to intervene.
For acquisitions by investors that are categorised as particularly high risk, the panel said authorities should be allowed to order risk-mitigation measures or the disposal of shares if necessary.
FIVE-YEAR CAP FOR RETROSPECTIVE REVIEWS PROPOSED
The panel added that the period during which transactions can be reviewed retrospectively should be capped at around five years, citing the need to ensure legal stability for investment assets.
About half of roughly 4,000 listed Japanese firms classify themselves as operating outside sectors deemed critical to economic or national security, according to a finance ministry list.
Other proposals include subjecting domestic investors to screening if they were under the control or influence of high-risk non-residents, such as foreign governments.
The panel also said prior notifications should be required when a foreign investor indirectly acquired shares in a Japanese company critical to economic or national security.
It further called for expanding the screening team, which currently has more than 60 members, and for improving coordination among relevant ministries as the government moves to establish a Japanese equivalent of the U.S. Committee on Foreign Investment.
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