JAPAN Law and Practice Contributed by: Raku Raku, Gen Takahashi, Yoshihiro Morisato and Taku Matsumoto, Anderson Mōri & Tomotsune
the following business sectors were added to the category of core business sectors in response to the Economic Security Promotion Act in 2023 and 2024: [2023] • fertilisers (importing business); • permanent magnets (manufacturing and material manufacturing businesses); • machine tools/industrial robots (manufacturing business, etc); • semiconductors (business of manufacturing machines to produce semiconductors and related products); • storage batteries (manufacturing and material manufacturing businesses); • natural gas (wholesaling business); • metals and mineral products (refining business); • marine equipment (engine manufacturing business, etc); and • metal 3D printers (manufacturing and metal pow - der manufacturing businesses). [2024] • equipment related to the manufacture of semicon - ductors (manufacturing business); • advanced electronic components (manufacturing business); • machine-tool components (manufacturing busi - ness); • marine engine (manufacturing business); • fibre optic cables (manufacturing business); and • multifunctional machines (manufacturing business). In addition, the amendment clarifies that drones are included in the business of aircraft manufacturing, which is a core business. Notification of foreign investment in these industries to the Japanese government is given, via the Bank of Japan (the Japanese central bank), prior to the acqui - sition of the Japanese company’s shares (pre-closing FDI notification) at least 30 days prior to the making of such investment. Upon receipt of the pre-closing FDI notification, the government will review, and may recommend changes to, or the cancellation of, the investment. If the foreign investor does not accept
the recommendation, then the government may order a change or cancellation of the investment, which is legally binding. Please also note that many FDIs that are not subject to pre-closing FDI notification are still subject to a post-closing report, depending on the type of transaction. 2. Recent Developments and Market Trends 2.1 Current Economic, Political and Business Climate Outlook and FDI Developments Domestic business activities in Japan have remained buoyant; there was a strong appetite among consum - ers and abundant funds flow from overseas in 2025. On the other hand, business activities have been con - siderably affected by the enduring weakness of the Japanese yen, as well as geopolitical tensions around the globe. Due to the weakness of the yen, a number of international players remain very actively involved in inbound investments in Japan. It will be interesting to observe the possible effects on investment in Japan of the entry into legislation of the Economic Security Promotion Act in May 2022, estab - lishing a new framework for economic security, as it is now in full force and has started to have an impact on relevant domestic and overseas businesses, both in terms of regulations and support. Stock Exchange Reform The TSE was re-categorised from the original four mar - ket divisions into three new divisions in 2022. Since the re-categorisation also accompanied the changes to, or tightening of, the listing standards for each divi - sion, it has encouraged many TSE listed companies to engage in M&A or other restructuring activities to reconsider their current business portfolio and profit - ability, even three years after it took place. Recent Trends in Japan In 2025, the number and value of M&A deals in the Japanese domestic market again showed a signifi - cant increase compared to past years. The number of M&A deals in the first half of 2025 is reported to be
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