Daily Management Review

Tighter Rules On Foreign Owners Of Stake In Japanese Firms Being Considered By Government: Reports


Tighter Rules On Foreign Owners Of Stake In Japanese Firms Being Considered By Government: Reports
Regulations on foreign investment funds that have stakes in domestic Japanese companies that have important technologies in the critical fields such as the nuclear industry and defence will likely be tightened by the Japanese government, claimed a report published in the Japanese newspaper Yomiuri on Wednesday.
The report citing information from unnamed sources claimed that the aim of the new tighter regulations would be to prevent demands being slapped by overseas funds and companies on Japanese firms that could weaken their competitive edge or leak technological expertise.
The report claimed that specific measures to that effect can be disclosed by the government by the end of this year and then move towards transforming them into legislations.  
The report was however later denied by a trade ministry official of Japan who reportedly told the news agency Reuters that the government was not considering any further tightening of the related regulations. There were no official comments in the story from the Japan’s finance ministry.
Among the measures that the Japanese government was considering of bring in was one that would mandate any foreign funds that break the new regulations to sell off their stakes in the Japanese companies.
The report added that the new regulations are also aimed at allowing the Japanese government to remain involved in supporting the retention and development of technologies that are considered by it to be important even after investment in Japanese companies have been made by foreign funds.
This latest set of anticipated regulations will be preceded by another set of government regulations that were implemented in May last year that sought to impose tighter foreign ownership rules on hundreds of companies that have been identified to possess in dozens of sector operations that are deemed to be critical for the national security of the country.  
According to the regulations implemented last year, the earlier threshold of foreign firms that hold a stake in the core firms across the dozen sectors deemed crucial to national security was at 10 per cent which has been brought down to foreign investors buying a stake of 1 per cent or more in such firms wherein such take taking processes have been facing pre-screening in principle.
Oil, railways, utilities, arms, space, nuclear power, aviation, telecoms and cyber security are among the 12 sectors that the Japanese government had selected as crucial to national security.