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,  telecommunications  and broadcasting services and critical mineral resources such as rare earths. 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 5 October 2021,  the Japanese authorities publicly announced that starting on 4 November 2021, "The business sectors 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." will also be listed as companies subject to specific notification requirements.
"(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. [...]" (Foreign Exchange and Foreign Trade Act (No. 228 of 1949), last amended by Law No. 60 of 2019, Articles 26, 27, 28 and 29 [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; [...]" (Cabinet Order on Inward Direct Investment (No. 261 of 1980), as amended by Cabinet Order No. 154 of 2020, Article 3 [unofficial translation])
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"(Notification of Inward Direct Investment, etc.)
Article 3 [...]
(3)　The business types specified by order of the competent ministry as prescribed in Article 3, paragraph (2), item (i) of the Cabinet Order are the business types specified by the Minister of Finance and the competent minister for the business. [...]" (Order on Inward Direct Investment (No. 1 of 1980), as amended by Order No. 1 of 2020, Article 3 [unofficial translation])
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"Pursuant to the provisions of Article 3, paragraph (3) of the Order on Inward Direct Investment, etc. (Order No. 1 [...] of 1980), business types specified by the Minister of Finance and the minister having jurisdiction over 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 Table2) 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 Minister Having Jurisdiction over the Business Pursuant to the Provisions of Article 3, Paragraph (3) of the Order on Inward Direct Investment, etc. (No. 1 of 2014) [unofficial translation])
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"Summary
Since securing a stable supply of critical mineral resources such as rare earths is an important issue for economic security, The Ministry of Finance, the Ministry of Education, Culture, Sports, Science and Technology, the Ministry of Economy, Trade and Industry, and the Ministry of Land, Infrastructure, Transport and Tourism have reviewed the scope of industries and added the following two categories to the Core Business Sectors (Note 1) of Foreign Exchange and Foreign Trade Act (hereinafter "FEFTA") from the perspective of appropriately maintaining and securing the exploration capability of critical mineral resources.
1. The following business sectors pertaining to 34 critical minerals including rare earths.
- Metal mining (including the operation of mineral exploration vessels or land/underwater surveys for mining)
- Manufacturing, repair/maintenance or software for devices or products used for metal mining (including mineral exploration vessels, marine equipment, excavators and drilling machines)
- Component analysis services of minerals
2. The construction service business etc. which improves or maintains port facilities on Designated Remote Islands (Note2) to secure smooth activities by mineral exploration vessels.
(Note 1) "core business sector(s)" is a business sector which requires foreign investors (e.g. non-residents, foreign corporations) to file a prior-notification when the foreign investor conducts inward direct investment, etc. (e.g. acquiring 1% voting rights of a listed company, acquiring a share of an unlisted company) ("designated business sector") and which foreign investors are not, as a general rule, exempt from the requirement for prior notification for stock purchases etc. as being highly likely to undermine national security etc.
(Note 2) "Designated remote islands" are islands remote from the mainland and are specified by a Cabinet Order under the Low Tide Line Protection Law as being important as a base of operations in light of the existence of natural resources, etc., and for which it is particularly necessary to develop facilities to serve as a base of operations (Okino-Tori-shima, Minami-Torishima). [...]" (Publication of the Amendments to the Regulatory Notices adding the Core Business Sectors of the Foreign Exchange and Foreign Trade Act to Secure the Stable Supply of Critical Minerals, 5 October 2021)
Foreign Exchange and Foreign Trade Act (No. 228 of 1949), Articles 26, 27, 28 and 29
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
[<a href="https://www.japaneselawtranslation.go.jp/ja/laws/view/3700">Act</a>],[<a href="https://www.japaneselawtranslation.go.jp/ja/laws/view/3701">Cabinet Order</a>],[<a href="https://www.japaneselawtranslation.go.jp/ja/laws/view/3702">Order</a>],[<a href="http://www.mof.go.jp/policy/international_policy/gaitame_kawase/press_release/20211005.html">Other</a>]