JAPAN Law and Practice Contributed by: Raku Raku, Gen Takahashi, Yoshihiro Morisato and Taku Matsumoto, Anderson Mōri & Tomotsune
• the investor’s intention to be involved in manage - ment of the target; • the business scale and content of the investor; and • matters concerning the information management system of the investor. The government does not clearly explain whether its criteria, considerations and analyses of review are dif - ferent for: • partnerships and joint ventures; • acquisitions by foreign governments or govern - ment-affiliated entities; or • non-controlling minority investments. However, since the FEFTA treats foreign governmen - tal entities and other entities differently, and certain forms of minority investment are not subject to the pre-closing FDI notification, it is reasonable to expect that the government may see the three types differ - ently in its review process. 7.3 Remedies and Commitments The government may recommend a change to the details, or the cancellation, of the investment upon its review of the pre-closing FDI notification. A for - eign investor who receives such a recommendation may either accept or reject it. However, if the foreign investor does not accept the recommendation(s), the government may order a change to the details, or the cancellation, of the investment, which is legally bind - ing. During the history of the FEFTA, there has only been one publicly available case where the government issued an order to cancel the investment to a foreign investor. This does not mean, however, that the gov - ernment accepted all other investments. Rather than issuing an order, the government tends to, officially or unofficially, recommend that an investor voluntarily withdraw its notification in cases where the govern - ment is of the view that the investment should not be implemented. As a condition for clearance, the government occa - sionally requests that the investor make certain com - mitments in connection with the target company and/
or the designated business (eg, not proposing the company to dispose of the designated business). As described in 7.1 Applicable Regulator and Pro- cess Overview , if an exemption is applied to a foreign investor, the foreign investor shall comply with the general restrictions and additional restrictions where applicable. 7.4 National Security Review Enforcement Violation of the FEFTA and/or an order made by the government may be subject to criminal sanctions such as imprisonment and/or fines. Such criminal sanctions may be disputed through criminal litigation before the relevant courts. There had, until recently, been no enforceable legal restrictions for a foreign investor in real estate trans - actions in Japan. However, in June 2021, the Act on Review and Regulation of Real Estate Usage was enacted and purchases of land near defence force bases or other areas with national security implica - tions have been restricted since the autumn of 2022. Under the FEFTA, cross-border transfer of a certain amount of funds is subject to post-facto reporting; however, such filing is generally handled by financial institutions in Japan involved in these transactions. Industry-Specific Regulation With regard to industries such as telecommunications, broadcasting and aircraft, which are related to public infrastructure, there are cases where foreign invest - ment regulations are included in the laws regulating the relevant industry. For example, the Civil Aeronautics Act provides that if one third or more of the voting rights of a corpora - tion are held by foreign entities, the aircraft owned by the corporation may not be registered (Article 4 of the Civil Aeronautics Act). This means that if one third or more of the shares of a Japanese airline company are acquired by foreign entities, the airline company will be unable to continue its business operations. In order 8. Other Review/Approvals 8.1 Other Regimes
348 CHAMBERS.COM
Powered by FlippingBook