FEFTA has kept changing. On January 7, 2026, Council on Customs, Tariff, Foreign Exchange and other Transactions at Japanese Ministry of Finance submitted a report to the Japanese ministers to opine that amendment of Foreign Direct Investment Screening Regine is necessary. On March 17, 2026, the amendment bill was submitted to the House of Representative already.
The amendment is intended to deal with the increasing number of pre-notification filings, clarifying risk mitigation measures for national securities, and changing of alternate parent companies after investment. In this article, I would like to focus on a couple of topics which might be of interest for foreign investors to Japanese companies.
Key Takeaways
The bill is intended to (i) respond to the increasing number of pre-notification filings, (ii) clarify risk-mitigation measures relating to national security, and (iii) address certain post-investment changes (including changes to alternative parent companies). This post highlights selected points that may be particularly relevant for non-Japanese investors considering investments in Japanese companies.
1. Expanding Prior-Notification Obligation
Under the current law, investments in designated industries by Japanese companies in which non-residents hold 50% or more of the voting rights, as well as investments in designated industries made in connection with calculations for non-residents, are generally subject to a prior notification requirement.
While the Ministry of Finance is considering adding pre-notification obligation to an investment which is made as essentially one and the same entity under the control or influence of non-residents, etc.
2. Investment to Non-Designated Industries
Currently, a post reporting is required to investments in Japanese companies operating in non-designated industries if the percentage of shares or voting rights acquired reaches 10 percent or more. While the government’s ability to issue orders in this area has historically been limited, the amendments under consideration would introduce authority to issue orders where national security risks are identified.
3. Japanese CFIUS
CFIUS stands for the Committee on Foreign Investment in the United States. Now, the Japanese government would be planning establish a new Japanese government body to implement pre-screening of foreign investment to Japanese companies.
For the preparation of incorporating the Japanese CFIUS (Committee on Foreign Investment in the United States), the Japanese government is now strengthening relationship between Ministries, led by MOF (Ministry of Finance) and NSS (National Security Secretariat). The primary members of the Japanese CFIUS would be METI (Ministry of Economy, Trade and Industry), MOD (Ministry of Defense, and MOFA (Ministry of Foreign Affairs) in addition to the two leaderships of MOF and NSS.
Given the frequency of changes to the FEFTA FDI screening framework, foreign investors should continue to monitor legislative developments and assess potential impacts on transaction planning and timelines.
Also Read: Compliance and FEFTA Review for Foreign Investors in Japan