Cabinet Order on Related Orders for FEFTA Amendment Act (amends Foreign Exchange Order)

Japan screens certain investments by foreign investors in Japanese companies under the Foreign Exchange and Foreign Trade Act (FEFTA). The Ministry of Finance explained that promoting inward direct investment remains an important goal, but that the scope of national security has expanded rapidly into the economic field, and that the screening system is being upgraded in light of implementation experience and the changed security environment.

According to the Ministry's outline, the amendment does five main things. Risk mitigation measures (steps to remove national-security concerns) become an item of the prior notification, a change to notified measures requires advance notification and review, and recommendations or orders may include such measures. Indirect investments are added: a foreign investor that acquires control (for example 50% or more of the voting rights) of a foreign entity holding shares in a Japanese company in a designated sector may itself need to notify. Domestic investors that invest under the control or strong influence of, and for the benefit of, non-residents are treated as foreign investors.

For investments in non-designated sectors, which currently need only a post-investment report at 10% or more, the authorities may require additional reports from foreign investors in specified higher-risk categories (such as foreign governments and state-owned enterprises) and, where necessary, issue recommendations or orders, including disposal of shares; the Ministry's summary describes a five-year look-back. Finally, the Minister of Finance and the ministers responsible for each sector must seek the views of other relevant government bodies where necessary, giving a statutory basis to the inter-ministerial Japan Foreign Investment Committee.

Sources: [1] [6]

The Cabinet submitted the bill to the Diet in March 2026. It was referred to the Financial Affairs Committee of the House of Representatives, passed by that House on 14 May 2026, and passed by the House of Councillors on 29 May 2026, which enacted it. It was promulgated on 5 June 2026 as Act No. 30 of 2026, and the provision on inter-ministerial consultation took effect that day.

The draft implementing Cabinet Order and related ministerial order and public notices were published for public comment on e-Gov in July 2026. The Cabinet adopted the Cabinet Order on 11 September 2026, and on 16 September 2026 the Order (Cabinet Order No. 296 of 2026), the related ministerial order and public notices were promulgated, and the results of the public comment procedure were published. The Ministry of Finance states that these rules take effect on 4 January 2027 and apply in full from 3 February 2027.

The subordinate rules also review the designated business sectors. According to the Ministry's summary, prior notification for software services is narrowed outside core sectors to services linked to critical infrastructure and critical goods or handling large volumes of personal data or trade secrets; companies holding technologies subject to FEFTA export control become 'core' designations; manufacturing related to magnetic sensors and ship hulls and large electricity and gas retail suppliers become core sectors; and manufacturing of essential medicines for stable supply is added. Reappointment of a director first appointed after prior notification will in principle not need a new notification, and standard information on the investor and its shareholders becomes an attachment to the prior notification.

1. 2026-03-17 — Bill received by the House of Representatives (Cabinet bill) [2]
2. 2026-05-14 — Passed by the House of Representatives [2]
3. 2026-05-29 — Passed by the House of Councillors; enacted [2]
4. 2026-06-05 — Inter-ministerial consultation duty takes effect [3] [6]
5. 2026-06-05 — Promulgated as Act No. 30 of 2026 [2] [3]
6. 2026-09-16 — Cabinet Order No. 296, related ministerial order and public notices promulgated; public comment results published [4] [5]
7. 2027-01-04 — Act and new subordinate rules take effect [3] [4] [5]
8. 2027-02-03 — Full application of the new rules (Ministry of Finance) [5]

The timeline of related official records below lists the records this dashboard has matched.

Sources: [2] [3] [4] [5] [6]

Confirmed next steps

• 2027-01-04 — The amending Act's remaining provisions and the new Cabinet Order, ministerial order and public notices take effect. [4] [5]
• 2027-02-03 — Full application of the new rules, as announced by the Ministry of Finance. Under the Cabinet Order's transitional provisions, several amended notification rules apply to transactions made from this date; earlier transactions remain under the previous rules. [4] [5]

Expected procedural steps

The usual procedure for this kind of instrument; not a forecast for this reform.

• Before new notification rules apply, the Ministry of Finance usually publishes updated notification forms, Q&A and guidance on its inward direct investment pages.

Outstanding uncertainties

• How often and in which situations the new power to request reports on investments in non-designated sectors will be used has not been described beyond the Ministry's summary.
• Whether a specific investment needs prior notification depends on the detailed sector lists and thresholds in the public notices, which this explainer does not reproduce.

The changes mainly concern foreign investors, and groups with foreign shareholders, that invest in Japanese companies in designated sectors. Acquisitions abroad can now trigger a Japanese filing where the target holds shares in a Japanese company in a designated sector, so group restructurings and cross-border M&A timetables around January and February 2027 may need to account for FEFTA.

Commitments made to address national-security concerns become part of the formal notification and can be changed only after advance notification. The revised sector lists may remove some software-service investments from prior notification while adding others, such as companies holding export-controlled technologies, magnetic sensor or ship hull manufacturing, large electricity and gas retailers, and certain medicine manufacturing. Investors in the higher-risk categories should expect closer attention even in non-designated sectors.

Points to check

• Map group structures in which an overseas entity holds shares in Japanese companies in designated sectors, and check planned transactions against the 4 January and 3 February 2027 dates.
• Re-check whether Japanese investee companies fall within the revised designated sectors (software services, export-controlled technologies, new core sectors).
• Review how risk mitigation commitments are documented and how a later change would be notified in advance.
• Review arrangements under which a domestic entity invests for, or under the influence of, a non-resident.
• Monitor Ministry of Finance materials for updated forms, Q&A and guidance.

Sources: [1] [5] [6]