Proposal of Rules and Regulations Regarding Foreign Exchange & Foreign Trade Act Announced

◆On March 14 the Ministry of Finance announced a proposal of an amendment to Rules and Regulations regarding the revised Foreign Exchange & Foreign Trade Act. Revisions were made to the Foreign Exchange & Foreign Trade Act in November last year. The criterion necessitating prior notification when a foreign investor acquires the stock of a listed company in a designated business sector was lowered to 1% of the company’s stock. At the same time, a system of exemption from prior notification was introduced. The revisions are expected to be implemented in May.

◆According to past explanations of the Ministry of Finance, exemption from prior notification was not granted to sovereign wealth funds (SWFs) or public pension funds when they invested in core sectors such as nuclear power and electric power. There was therefore concern that SWFs and other investors would hesitate to invest in any of the core sectors, thereby negatively influencing stock prices.

◆This latest proposal for revision of the Rules and Regulations would provide exemption from prior notification up to a certain limit in the above described situation (however with certain additional conditions). We can therefore assume that the concerns above have been for the most part resolved.