JAPAN Trends and Developments Contributed by: Raku Raku, Gen Takahashi, Yoshihiro Morisato and Taku Matsumoto, Anderson Mōri & Tomotsune
Anderson Mōri & Tomotsune Otemachi Park Building 1-1-1 Otemachi Chiyoda-ku Tokyo 100-8136 Japan
Tel: +81 3 6775 1163 Fax: +81 3 6775 2163 Email: raku.raku@amt-law.com Web: www.amt-law.com
Overall, the Japanese M&A market saw substan - tial activity once again in 2025. A record number of M&A deals were reported for the first half, and the aggregate value of deals involving Japanese buyers hit JPY30 trillion yen for the first time in history in the same period, according to some sources. Recent leg - islative amendments, stock exchange reforms, and current practices relating to such amendments or reforms, as well as investment trends in the Japanese market, are set out below. Current Practice Under the Reformed Foreign Direct Investment Framework Inbound foreign direct investment regulations saw significant amendment from 2020. The amendments to the Foreign Exchange and Foreign Trade Act (“the FEFTA”), which took effect on 7 June 2020, strength - ened the screening of proposed foreign inward invest - ments, mainly from a national security viewpoint. This was facilitated by, among other things, requiring foreign investors to follow stringent, pre-transaction review procedures enforced by the Japanese authori - ties when 1% or more of the shares or voting rights of a Japanese listed companies were to be acquired (versus the original, much higher threshold of 10%), with certain exemptions. Also, the need to protect domestic companies engaging in healthcare/medical activities related to COVID-19 prompted the govern - ment to add relevant sensitive business areas requir - ing pre-transaction scrutiny in July 2020. The govern - ment also added certain sensitive business areas to the list of “Core Business Sectors” where pre-transac - tion scrutiny is required to address vulnerability issues
in the supply chain. The newly added business areas include manufacturing of machine tools/industrial robots, storage batteries, permanent magnets, and semiconductors. Further, on 10 February 2025, the Ministry of Finance announced the revision of the exemption scheme for prior notification in the FDI screening system under FEFTA. The revision primarily restricts the use of the exemption scheme for prior notification within the context of the following. • Investments made by investors who are obliged to cooperate with foreign governments in collect - ing information based on agreements with foreign governments or foreign laws and regulations or the equivalent. • Certain investments in the business entities among those designated as Specified Essential Infrastruc - ture Service providers under the Economic Secu - rity Promotion Act (see below), and which require screening with particular attention. The revision appears to be based on the view that investors who are obliged to cooperate with foreign govern - ments in collecting information (so-called “intelli - gence activities”) should, in principle, be subject to the same prior notification screening requirements as foreign governments. While the amendments of the FEFTA have been in effect for more than five years and the filing process for foreign direct investments has become more onerous and time consuming in terms of paperwork,
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