JAPAN Law and Practice Contributed by: Rintaro Hirano, Yutaro Fujimoto, Yurika Masakane and Yutaro Kato, Nagashima Ohno & Tsunematsu
in Japan and their stock is freely traded in the market. Generation As of May 2025, there were more than 1,000 Electricity Generation Business licence holders. The principal Electricity Generation Business operators are the major utilities or their wholly owned subsidiaries and J-Power. As of May 2025, there were also 105 Specified Electricity Wholesale Business licence holders. Transmission and Distribution As of May 2025, there were ten TSOs, three Electricity Transmission Business licence hold- ers and 44 Specified Electricity Transmission and Distribution Business licence holders. At the time of writing, there were no DSOs. The main transmission and/or distribution net- work operators are the major utilities or their wholly owned subsidiaries, as well as J-Power Transmission Network Co, Ltd. Retail The Electricity Retail Business has been gradual- ly liberalised since 1995 and was fully liberalised in 2016. The number of Electricity Retail Busi- ness licences has grown significantly from 57 in August 2015 to 761 in May 2025. Although most Electricity Retail Businesses are investor-owned companies, some retail electricity suppliers are owned by municipal governments. While the major utilities or their wholly owned subsidiaries in aggregate supply most of Japan’s electricity, new entrants are expanding their mar- ket share in the retail sector. As of October 2024, the share by sales volume of the electricity sup-
plied by the new entrants was approximately 19.2%. 1.3 Foreign Investment Review Process The Electricity Business Act does not provide any nationality requirement to obtain an elec- tricity business licence, or any restriction with respect to foreigners owning shares in an elec- tricity business licence holder. Requirements However, under the Foreign Exchange and For- eign Trade Act (Act No 228 of 1949, as amend- ed), a foreign investor may not (i) invest in an unlisted power company; or (ii) own 1% or more of the shares in a listed power company, unless the foreign investor gives prior written notice through the Bank of Japan (BOJ) to the Ministry of Finance (MOF) and the Ministry of Economy, Trade and Industry (METI) of the foreign inves- tor’s intent to do so, or complies with the exemp- tion scheme. Written notice If the foreign investor gives such notice, it may invest only after the required waiting period elapses, assuming the notification is not ques- tioned or objected to by MOF and METI. The required waiting period is usually 30 days but this may be shortened or extended to up to five months at the discretion of MOF and METI. Exemption scheme The exemption scheme is applicable to (i) invest- ments which result in the investor owning less than 10% of the shares in a listed company that operates in the core sectors; and (ii) investments which result in the investor owning any shares in a listed or unlisted company that operates in the non-core sectors. With regard to power compa- nies, “core sectors” means a General Electricity Transmission and Distribution Business, Electric-
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