Japan’s finance ministry has opened consultation on draft Foreign Exchange and Foreign Trade Act, or FEFTA, rules that would do more than tidy definitions. The package would change how indirect voting rights are counted for foreign investors and bring some acquisitions of overseas entities into Japan’s inward-investment screening when those entities already own Japanese company shares above the applicable threshold. The ministry says the amended FEFTA was promulgated on June 5 and is intended to strengthen screening while still promoting inward investment that supports the economy.
| Area | What the draft says |
|---|---|
| Indirect voting rights | Adjusts the scope of voting rights counted when a foreign investor holds them indirectly through other companies. |
| Overseas entity acquisitions | Treats acquisition of voting rights in an overseas entity that owns Japanese company shares above the applicable threshold as regulated inward direct investment. |
| Closely related parties | Adjusts the scope of parties treated as "closely related" under the FEFTA regime. |
| Sensitive sectors | The draft notice text spells out unmanned aircraft, artificial satellites, rockets, and specially designed equipment or propellant-related items. |
| Comment window | Public comments are open from July 3 to Aug. 2, 2026. |
Foreign-entity acquisitions move closer to the filing line
One practical shift for cross-border M&A teams is the draft’s reach to foreign entities that sit above Japanese assets. The draft overview says acquisitions of voting rights in overseas companies that own Japanese shares above the threshold would be added to regulated inward direct investment, and it also specifies related acts that will be treated in a similar way under the implementing order. In plain English, a buyer does not have to purchase a Japanese company directly for FEFTA questions to arise.
Ownership chains become part of the file
The draft also refines the scope of voting rights counted when a foreign investor holds them indirectly through other companies, and adjusts the scope of parties treated as “closely related”. The public summary does not spell out the full mechanics, which matters because small drafting choices decide who must notify and when. Still, the policy message is fairly plain: the ownership chart matters, not just the name on the purchase agreement. In other words, the org chart is edging closer to the legal checklist.
Sector annexes deserve a close read
The notice package also revises the designated sector lists used in the regime. In the published notice text, the categories spell out unmanned aircraft, artificial satellites, rockets, and specially designed equipment or propellant-related items for launch, tracking and control, or use. Those annexes are where aerospace, drone and space-system investors will need to test whether a deal sits inside the screening perimeter.
Comments are open from July 3 to Aug. 2. The important caveat is the obvious one: this is draft text, not law in force, and the packet extract does not include the numerical threshold for the overseas-entity rule or every detail of the revised voting-rights calculation.