Japan’s Foreign Investment Law: National Security Reforms and Inbound M&A

Short summary

Japan's amended Foreign Exchange and Foreign Trade Act, effective by mid-2027, expands foreign investment screening to indirect acquisitions with stricter thresholds for high-risk investors (1% vs. 50% ownership), formalizes inter-agency security reviews (a "Japanese CFIUS"), and codifies post-closing compliance enforcement including mandatory share disposition for non-compliance.

• •FEFTA amendments extend screening to indirect acquisitions of Japanese companies with asymmetric thresholds for high-risk foreign investors
• •New framework formalizes "amendment filing" procedures and inter-agency coordination (MOF, NSS, Foreign Affairs, Defense) for national security reviews
• •Post-closing non-compliance faces statutory penalties including corrective orders and forced share disposition

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