Impact of Amendments to the Foreign Exchange and Foreign Trade Act on Foreign Capital and Activist Activities
First written in FY2020-Q2. 1 of 3 entries say "Worsened", first in FY2020-Q3. Latest entry: FY2020.
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- FY2020MitigatedAnnual report
「In May this year, the Ministry of Finance published “Factors Considered by the Ministry of Finance and the Competent Ministries and Agencies in Screening Prior Notifications of Inward Direct Investment, etc. under the Foreign Exchange and Foreign Trade Act,” together with a list of companies subject to the rules. The more specific identification of covered companies upon implementation of the amended Foreign Exchange and Foreign Trade Act is expected to facilitate its operation. It has already been made clear that the amendments will not impede the trend toward restricting shareholder rights or strengthening corporate governance, but our Company will continue to closely monitor their operation after implementation.」
The list of covered companies and the screening factors were clarified, and it was also made clear that the system would not impede the trend toward restricting shareholder rights or strengthening corporate governance, helping to address uncertainty surrounding the system. Meanwhile, the operation of the system after implementation will continue to be closely monitored. - FY2020-Q3WorsenedAnnual report
「On 22 November 2019, the Act Partially Amending the Foreign Exchange and Foreign Trade Act (the amended Foreign Exchange and Foreign Trade Act), which strengthens restrictions on investments by foreign capital in Japanese companies important from a national security perspective, was passed by the Diet and enacted. With a view to implementation during fiscal 2020, the threshold for prior screening of investments involving holdings of 10% or more was lowered to 1% or more. For exempt investors, notification became mandatory before taking actions concerning the appointment of officers or business transfers, including after the acquisition of shares.」
The amended Foreign Exchange and Foreign Trade Act was passed and enacted by the Diet. The threshold for investments subject to prior screening was lowered from 10% or more to 1% or more, and notification requirements concerning the appointment of officers and business transfers were indicated. Meanwhile, the Government’s Q&A explained that the amendments were not intended to suppress activist activities or restrict shareholder rights. - FY2020-Q2First statedAnnual report
「Regarding the framework for controlling inward direct investment in Japan, including foreign capital regulations, the Government approved by Cabinet decision on 18 October amendments to the Foreign Exchange and Foreign Trade Act to strengthen restrictions on investments by foreign capital in Japanese companies important from a national security perspective. The amendments are being considered with a view to implementation during fiscal 2020. Reports indicate that the threshold for prior screening of investments, currently set at 10% or more, will be lowered to 1% or more, and that the appointment of officers and the details of business transfers will also become subject to prior screening. The Asia Corporate Governance Association (ACGA), whose members include major institutional shareholders with investment records in Japanese equities worldwide, issued an opinion on 24 October regarding the adverse effects of the draft amendments on Japan’s capital markets and corporate governance. The impact of the new regulations is therefore being closely monitored, particularly by institutional shareholders. Although some activists may be affected by the regulations, our Company will pay close attention to their implementation and operation from the perspective of developing Japan’s capital markets and improving governance.」
The amendments to the Foreign Exchange and Foreign Trade Act indicated that the threshold for prior screening of investments could be lowered from 10% or more to 1% or more, and that the appointment of officers and business transfers could also become subject to screening. Implementation was being considered during fiscal 2020, and the potential impact on some activists was identified as a risk.