By virtue of the Foreign Exchange and Foreign Trade Act (FEFTA) and its implementing regulations, inward foreign direct investment is generally subject to an ex post reporting obligation. Submitting a prior notification is required for certain foreign investments in specified business areas or involving foreign nationals from specified countries. The specified business sectors include aircraft,  arms,  dual-use  technologies,  nuclear  energy,  space, electricity  utility,  gas  utility,  vaccine,  security  guard  and  telecommunications  and broadcasting services. Specific investment plans of non-residents and foreign-controlled enterprises in these sectors can be altered or suspended on the grounds of threat to national security, public order or public safety. 
On 8 May 2020, amendments to FEFTA and its implementing regulations came into effect. Among others, the amendment lowers the trigger threshold for acquisitions in certain companies to 1%, down from 10% previously, and introduces notification requirements for some acquisitions. In the meantime, the exemption scheme for prior-notification requirement for stock purchases is newly introduced. Investors who comply with certain conditions are exempted from the requirement of prior notification. The lower threshold and notification requirements apply to assets operating in certain sectors, as clarified in a press realease on 8 May 2020 and complemented by a list of around 3800 listed Japanese companies with individual classifications for the purpose of the rules as of the time of release on the same day. 
On 15 June 2020, the Japanese authorities publicly announced that starting on 15 July 2020, "manufacturing industries related to pharmaceuticals" and "manufacturing [industries] related to highly-controlled medical devices" will also be listed as companies subject to specific notification requirements. 
On 5 October 2021, the Japanese authorities announced that starting on 4 November 2021, some additional business sectors relating to the supply of critical minerals (including activities pertaining to 34 critical minerals including rare earths and the construction service business etc. which improves or maintains port facilities on Designated Remote Islands ( to secure smooth activities by mineral exploration vessels) would be added to the list of specified business sectors subject to notification requirement.
On 24 April 2023, revised FEFTA Public Notices were promulgated. The revised Notices apply to inward direct investment and equivalent actions to be made on or after 24 May 2023 to expand the sectors that require prior notification. These measures are taken in order to secure stable supply chains and address the risk of technology leakage and diversion of commercial technologies into military use.
On 16 August 2024, changes to the Foreign Exchange and Foreign Trade Act (FEFTA) Regulatory Notices entered into force. Additional sectors related to "specified critical products" were added to the list of "core business sectors" in which foreign investments are subject to prior notification requirements (for which the exemption for stock purchases is, as a general rule, not available) under the FEFTA for national security purposes. These additional sectors concern the manufacture of equipment (machinery, appliances, parts, supplies and materials) used mainly for the manufacture of semiconductors, the manufacture of advanced electronic components, machine tool components and of marine engines. The changes aim at securing stable supply chains and preserving economic security. The amendments apply to foreign investments made on or after 15 September 2024.
"Pursuant to the provisions of Article 3, paragraph (4) of the Order on Inward Direct Investment (Order No. 1 [...] of 1980), business types specified by the Minister of Finance and the competent minister for the business are business types falling under those listed in Appended Table 1 and Appended Table 2 and business types (other than business types listed in Appended Table 1 and Appended Table 2) not falling under those listed in Appended Table 3 (other than business types listed in Appended Table 1). [...] [please consult the legal source for the appendices]" (Public Notice Specifying Business Types to Be Specified by the Minister of Finance and the Competent Minister for the Business Pursuant to the Provisions of Article 3, Paragraph (4) of the Order on Inward Direct Investment [unofficial translation])
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"(Definitions)
Article 26 (1) The term "foreign investor" means any of the following persons that conducts inward direct investment, etc. set forth in the items of the following paragraph or specified acquisition prescribed in paragraph (3):
(i)　an individual who is a non-resident;
(ii)　a corporation or any other organization established under foreign laws and regulations, or a corporation or any other organization that has its principal office in a foreign country (excluding the specified partnership, etc. prescribed in item (iv));
(iii)　a company in which the ratio of the number of voting rights obtained by aggregating the number of voting rights directly held by the persons set forth in the preceding two items [...] and the number of voting rights specified by Cabinet Order as those indirectly held by them via another company, to the number of voting rights held by all shareholders or all members of the company (referred to as the "total voting rights" in the following paragraph), is 50 percent or more;
(iv)　a partnership, etc. [...] under which the parties agree to engage in the business of investment in companies [...], an investment limited partnership (LPS) [...], or an organization established based on the laws and regulations of a foreign country which is similar to any of these partnerships [...], in which the ratio of the total of the amounts of capital contributions by the persons set forth in item (i) and other persons specified by Cabinet Order, to the total amount of capital contributions by all partners of the partnership, etc. (or all members of an organization similar to a specified partnership) is 50 percent or more, or the persons set forth in that item and other persons specified by Cabinet Order account for the majority of executive partners of the partnership, etc. [...]; or
(v)　beyond what is set forth in the preceding three items, a corporation or any other organization in which the persons set forth in item (i) account for the majority of its officers (meaning a member who executes the business, a director, an executive officer, a representative, an administrator, or any other person equivalent thereto, and including a person, irrespective of their title such as advisor or consultant, who is found to have control over a corporation or any other organization that is equal to or greater than that of a member who executes the business, a director, an executive officer, a representative, an administrator, or any other person equivalent thereto; hereinafter the same applies in this item) or the majority of its officers having the authority to represent.
(2)　The term "inward direct investment, etc." means any of the following acts:
(i)　the acquisition of shares or equity in a company (excluding the acquisition through the transfer from any of the persons set forth in the items of the preceding paragraph, and the acquisition of shares of a company that has issued shares listed on a financial instruments exchange prescribed in Article 2, paragraph (16) of the Financial Instruments and Exchange Act or shares specified by Cabinet Order as those equivalent thereto (hereinafter referred to as a "listed company, etc." in this Article));
(ii)　the transfer of shares or equity in a company other than a listed company, etc. that a person has continued to own since before becoming a non-resident (limited to the transfer from an individual who is a non-resident to any of the persons set forth in the items of the preceding paragraph);
(iii)　the acquisition of shares of a listed company, etc. (limited to the acquisition as a result of which the ratio of the number of shares obtained by aggregating the number of shares of the listed company, etc. that the person that has acquired the shares (hereinafter referred to as the "acquirer of shares" in this item and paragraph (4)) is to own after the acquisition, the number of shares of the listed company, etc. owned by a person closely related to the acquirer of shares, and the number of shares of the listed company, etc. that are subject to the investment in shares if the acquirer of shares and the person closely related to the acquirer of shares make investment in shares (including giving instructions to do so, and limited to investment in shares that satisfies the requirements specified by Cabinet Order) as entrusted by another person based on a discretionary investment contract or any other contract (on the basis of the net total calculated by deducting the number of duplicate shares among these shares, if any), to the total number of issued shares of the listed company, etc., is not less than the ratio specified by Cabinet Order which does not fall below 1 percent);
(iv)　the acquisition of voting rights in a listed company, etc. (limited to the acquisition as a result of which the ratio of the net number of voting rights obtained by aggregating the number of voting rights held or otherwise exercisable under contract (meaning voting rights held in one's own name or in another person's name and voting rights specified by Cabinet Order as those exercisable based on a discretionary investment contract or any other contract; hereinafter the same applies in this item and the following item) in the listed company, etc. that the person that has acquired the voting rights (hereinafter referred to as the "acquirer of voting rights" in this item and paragraph (4)) is to hold after the acquisition, and the number of voting rights held or otherwise exercisable under contract in the listed company, etc. by a person closely related to the acquirer of voting rights (on the basis of the net total calculated by deducting the number of duplicate voting rights among these voting rights, if any; the same applies in the following item), to the total voting rights in the listed company, etc., is not less than the ratio specified by Cabinet Order which does not fall below 1 percent, and excluding the acquisition involving the act set forth in the preceding item); [...]
(vi)　the establishment of a branch office, etc. in Japan, or a substantial change of the type or business purpose of a branch office, etc. in Japan (limited to the establishment or change specified by Cabinet Order that is conducted by the person set forth in item (i) or (ii) of the preceding paragraph); [...]
(viii)　the business succession from a resident (limited to a corporation) as a result of the acquisition of a business, an absorption-type company split, and a merger (excluding the business succession involving any of the acts set forth in items (i) through (iii)); or
(ix)　an act specified by Cabinet Order as being equivalent to any of the acts set forth in the preceding items.
(3)　The term "specified acquisition" means the acquisition of shares or equity in a company other than a listed company, etc. from any of the persons set forth in the items of paragraph (1).
(4)　The term "person closely related" prescribed in paragraph (2), items (iii) through (v) means any of the persons set forth in the items of paragraph (1) and specified by Cabinet Order as a person having a permanent economic relationship based on ownership of shares, a family relationship, or any other special relationship with the acquirer of shares, acquirer of voting rights, or consenter.
[...]
(Notification and Recommendation of Modification Regarding Inward Direct Investment, etc.)
Article 27　(1)　If a foreign investor [...] intends to conduct inward direct investment, etc. [...] specified by Cabinet Order as being likely to constitute inward direct investment, etc. that requires the examination under the provisions of paragraph (3), the foreign investor must, pursuant to the provisions of Cabinet Order, notify the Minister of Finance and the competent minister for the business, in advance, of matters specified by Cabinet Order, such as the business purpose, the amount, and the time of execution regarding the inward direct investment, etc.
(2)　A foreign investor that has made a notification under the provisions of the preceding paragraph regarding inward direct investment, etc. must not conduct the inward direct investment, etc. stated in the notification until 30 days have passed from the day on which the Minister of Finance and the competent minister for the business receive the notification; [...].
(3)　If the notification under the provisions of paragraph (1) has been made, when the Minister of Finance and the competent minister for the business find it to be necessary to examine whether the inward direct investment, etc. stated in the notification falls within any of the following categories of inward direct investment, etc. (hereinafter referred to as "inward direct investment, etc. involving national security, etc."), they may extend the period during which the inward direct investment, etc. stated in the notification must not be conducted, only for four months from the day on which they receive the notification:
(i)　inward direct investment, etc. which is likely to cause the situation set forth in (a) or (b) [...]:
(a)　it would undermine national security, disturb the maintenance of public order, or interfere with the protection of public safety; or
(b)　it would have a significant adverse effect on the smooth operation of the Japanese economy;
(ii)　inward direct investment, etc. which is to be conducted by a foreign investor of a country with which Japan does not have a treaty or any other international agreement concerning inward direct investment, etc., [...]; or
(iii)　inward direct investment, etc. regarding which it is found necessary to modify the substance or discontinue because the whole or part of the inward direct investment, etc. constitutes a capital transaction for which the obligation to obtain permission is imposed pursuant to the provisions of Article 21, paragraph (1) or (2) in light of the use of funds and other circumstances [...]
(14)　With regard to any act equivalent to inward direct investment, etc. conducted by a person (including a corporation or any other organization) other than a foreign investor on behalf of the foreign investor but not in the name of the foreign investor, the person other than a foreign investor is deemed to be a foreign investor, and the provisions of paragraphs (1) through (12) and Article 29, paragraphs (1) through (4) apply thereto.
(Notification and Recommendation of Modification Regarding Specified Acquisition)
Article 28　(1)　If a foreign investor intends to conduct specified acquisition [...] specified by Cabinet Order as being likely to constitute specified acquisition that requires the examination under the provisions of paragraph (3), the foreign investor must, pursuant to the provisions of Cabinet Order, notify the Minister of Finance and the competent minister for the business, in advance, of matters specified by Cabinet Order, such as the business purpose, the amount, and the time of execution regarding the specified acquisition.
(2)　A foreign investor that has made a notification under the provisions of the preceding paragraph regarding specified acquisition must not conduct the specified acquisition in the notification until 30 days have passed from the day on which the Minister of Finance and the competent minister for the business receive the notification;[...].
(9)　With regard to any act equivalent to specified acquisition conducted by a person (including a corporation or any other organization) other than a foreign investor on behalf of the foreign investor but not in the name of the foreign investor, the person other than a foreign investor is deemed to be a foreign investor, and the provisions of paragraphs (1) through (7) and Article 29, paragraphs (1) through (4) apply thereto.
(Order for Measures)
Article 29　(1)　In the following cases, when the Minister of Finance and the competent minister for the business find that inward direct investment, etc. or specified acquisition falls within the category of inward direct investment, etc. involving national security, etc. or the category of specified acquisition involving national security, the ministers may, pursuant to the provisions of Cabinet Order, after hearing opinions from the Council on Customs, Tariff, Foreign Exchange and Other Transactions, order the foreign investor that has conducted the inward direct investment, etc. or specified acquisition to dispose of all or part of the shares or equity acquired through the inward direct investment, etc. or specified acquisition or take any other necessary measures:
(i)　if a foreign investor that must make a notification under the provisions of Article 27, paragraph (1) or Article 28, paragraph (1) conducts inward direct investment, etc. or specified acquisition without making the notification; or
(ii)　if a foreign investor that has made a notification under the provisions of Article 27, paragraph (1) or Article 28, paragraph (1) conducts the inward direct investment, etc. or specified acquisition stated in the notification before the expiration of the prohibition period.
[...]
(Report of Inward Direct Investment, etc. and Specified Acquisition)
Article 55-5　(1)　When a foreign investor has conducted inward direct investment, etc. or specified acquisition (limited to specified acquisition for which a notification is required pursuant to the provisions of Article 28, paragraph (1); hereinafter the same applies in this Article), the foreign investor must, pursuant to the provisions of Cabinet Order, report matters specified by Cabinet Order, such as the details of the inward direct investment, etc. or specified acquisition and the time of execution, to the Minister of Finance and the competent minister for the business; provided, however, that this does not apply to the inward direct investment, etc. or specified acquisition for which a notification has been made pursuant to the provisions of Article 27, paragraph (1) or Article 28, paragraph (1). [...]" (Foreign Exchange and Foreign Trade Act (No. 228 of 1949), last amended by Law No. 60 of 2019, Articles 26, 27, 28, 29 and 55-5 [unofficial translation])
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"Article 3 [...]
(2)　Inward direct investment, etc. specified by Cabinet Order as being likely to constitute inward direct investment, etc. that requires the examination as prescribed in Article 27, paragraph (1) of the Act is inward direct investment, etc. that falls under any of the following items:
(i)　inward direct investment, etc. involved in a business type specified by order of the competent ministry as a business type that falls under either (a) or (b) (with regard to inward direct investment, etc. set forth in Article 26, paragraph (2), items (i) through (v) of the Act and paragraph (16), items (i) and (iii) through (vii) of the preceding Article: including the case where a subsidiary company of a listed company, etc. or any other company prescribed in these provisions, and a company specified by order of the competent ministry as another company on which the relevant company has a material influence in terms of decisions on its financial and operational or business policies (excluding a subsidiary company) operate a business of any of the business types specified by order of the competent ministry):
(a)　a business type involving inward direct investment, etc. that is likely to undermine national security, disturb the maintenance of public order, or interfere with the protection of public safety; or
(b)　a business type involving inward direct investment, etc. for which Japan has lodged a reservation pursuant to Article 2-b of the Code of Liberalisation of Capital Movements of the Organization for Economic Cooperation and Development;
[...]
(Matters Concerning Special Provisions for Notification of Inward Direct Investment, etc.)
Article 3-2 [...]
(2)　Inward direct investment, etc. specified by Cabinet Order as being highly likely to constitute inward direct investment, etc. involving national security, etc. prescribed in Article 27-2, paragraph (1) of the Act is any of the following: [...]
(iii)　inward direct investment, etc. involved in any of the business types specified by order of the competent ministry as business types involving inward direct investment, etc. that is highly likely to constitute inward direct investment, etc. involving national security, etc. among the business types specified by order of the competent ministry as prescribed in paragraph (2), item (i) of the preceding Article [...], other than those set forth in the following (excluding those set forth in the preceding two items):
(a)　any of the acts set forth in Article 26, paragraph (2), items (iii) and (iv) of the Act and the acts set forth in Article 2, paragraph (16), items (iii) and (v) which are conducted in the course of trade by a financial instruments business operator [...] that engages in the Type-I financial instruments business prescribed in Article 28, paragraph (1) of that Act [...], or any other person specified by order of the competent ministry as being similar thereto;
(b)　any of the acts set forth in Article 26, paragraph (2), items (iii) and (iv) of the Act and the acts set forth in Article 2, paragraph (16), items (iii) and (v), as a result of which the ratio of the net number of shares obtained by aggregating the number of substantial shares of a listed company, etc. that the person that has conducted the act is to own after the act, the number of substantial shares of the listed company, etc. that are owned by an individual or corporation, etc. that is a non-resident and that would fall under any of the items of Article 2, paragraph (19) if the person that has conducted the act is deemed to be the acquirer of shares, etc. prescribed in item (i) of that paragraph [...], and the number of shares of the listed company, etc. subject to discretionary investment management targeting shares if the person that has conducted the act and the person closely related to the person that has conducted the act make discretionary investment management targeting shares, to the total number of issued shares of the listed company, etc., comes to less than 10 percent, and any of those acts as a result of which the ratio of the net number of voting rights obtained by aggregating the number of voting rights substantially held or otherwise exercisable under contract by the person that has conducted the act and the number of voting rights substantially held or otherwise exercisable under contract by the person closely related to the person that has conducted the act, to the total voting rights in the listed company, etc., comes to less than 10 percent (excluding those set forth in (a)); [...]" (Cabinet Order on Inward Direct Investment (No. 261 of 1980), as amended by Cabinet Order No. 154 of 2020, Articles 3 and 3-2 [unofficial translation])
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"(Notification of Inward Direct Investment, etc.)
Article 3 [...]
(4)　The company specified by order of the competent ministry as prescribed in Article 3, paragraph (2), item (i) of the Cabinet Order and Article 3-2, paragraph (2), item (iii) of the Cabinet Order is, in the case where a company (including its subsidiary companies) holds voting rights in a number equivalent to 50 percent of the total voting rights in another company (excluding a corporation or any other organization established based on laws and regulations of a foreign country, and a corporation or any other organization which has its principal office in a foreign country), that other company. [...]" (Order on Inward Direct Investment (No. 1 of 1980), as amended by Order No. 1 of 2020, Article 3 [unofficial translation])
Foreign Exchange and Foreign Trade Act (No. 228 of 1949), Articles 26, 27, 28, 29 and 55-5
Cabinet Order on Inward Direct Investment (No. 261 of 1980), as amended by Cabinet Order No. 154 of 2020, Articles 3 and 3-2
Order on Inward Direct Investment (No. 1 of 1980), as amended by Order No. 1 of 2020, Article 3
Public Notice Specifying Business Types to Be Specified by the Minister of Finance and the Competent Minister for the Business Pursuant to the Provisions of Article 3, Paragraph (4) of the Order on Inward Direct Investment
Amendment of Public Notice Specifying Designated Business Sectors pertaining to Inward Direct Investment, etc., Ministry of Finance, 24 April 2023
Amendment of Public Notice Specifying Core Business Sectors pertaining to Inward Direct Investment, etc., Ministry of Finance, 24 April 2023
Amendment of Public Notice Specifying Designated Business Sectors pertaining to Specified Acquisition, Ministry of Finance, 24 April 2023
Amendment of Public Notice Specifying Core Business Sectors pertaining to Specified Acquisition, Ministry of Finance, 24 April 2023
[<a href="https://www.japaneselawtranslation.go.jp/en/notices/view/109">Notice</a>],[<a href="https://www.mof.go.jp/policy/international_policy/gaitame_kawase/press_release/relateddocument_20230424_2.pdf">Amendment of Notice</a>],[<a href="https://www.mof.go.jp/policy/international_policy/gaitame_kawase/press_release/relateddocument_20230424_3.pdf">Amendment of Notice</a>],[<a href="https://www.mof.go.jp/policy/international_policy/gaitame_kawase/press_release/relateddocument_20230424_4.pdf">Amendment of Notice</a>],[<a href="https://www.mof.go.jp/policy/international_policy/gaitame_kawase/press_release/relateddocument_20230424_5.pdf">Amendment of Notice</a>],[<a href="https://laws.e-gov.go.jp/law/324AC0000000228#Mp-Ch_6_2-At_55_3-Pr_3">Act</a>],[<a href="https://www.japaneselawtranslation.go.jp/ja/laws/view/3701">Order</a>],[<a href="https://www.japaneselawtranslation.go.jp/ja/laws/view/3702">Order</a>],[<a href="https://www.mof.go.jp/english/policy/international_policy/fdi/gaitamehou_20200508.htm">Other</a>],[<a href="https://www.mof.go.jp/english/policy/international_policy/fdi/20211102.html">Other</a>],[<a href="https://www.mof.go.jp/english/policy/international_policy/fdi/20211005.html">Other</a>],[<a href="https://www.mof.go.jp/english/policy/international_policy/fdi/20230424.html">Other</a>],[<a href="https://www.mof.go.jp/english/policy/international_policy/fdi/20240814091417.html">Other</a>],[<a href="https://www.mof.go.jp/english/policy/international_policy/fdi/relateddocument_20240816_1.pdf">Other</a>]