Japanese Prime Minister Sanae Takaichi’s new government is considering creating its own version of the U.S. committee that vets acquisitions by foreigners for national security concerns.
The move to create a Japanese version of the Committee on Foreign Investment in the United States (CFIUS) comes as Takaichi, a hardline conservative, looks to beef up such screenings.
The ruling coalition is aiming to pass necessary legislation for such a panel in next year’s regular parliamentary session.
It is likely to be a panel that brings in members from ministries and agencies involved in investment screening to enhance their coordination, a source familiar with the thinking said.
During the ruling party’s leadership race last month, Takaichi said she “keenly felt that among the ministries overseeing investment cases, some have a strong awareness of economic security and national defense, but others do not.”
“That’s why I believe we need to establish a Japanese version of CFIUS for security clearance,” she said.
In a related move, Takaichi instructed new Finance Minister Satsuki Katayama last week to examine how to further enhance the foreign investment screening framework under the Foreign Exchange and Foreign Trade Act (FEFTA).
“We are currently examining ways to improve the effectiveness and strengthen the screening framework. This is a very important and weighty issue,” Katayama said in an interview with Reuters and other media on Friday.
She declined to comment further on the new framework or the Japanese version of CFIUS.
These steps coincide with a scheduled review of FEFTA, which underwent a major overhaul in 2020 that lowered the threshold for prior review of share purchases to 1% from 10%. A supplementary provision of the revised law calls for a review five years after its enforcement.
It is not clear how those potential changes could affect the strictness of review for foreign acquisitions.
To date, Japan has rejected only one deal under FEFTA – an attempted acquisition by the London-based Children’s Investment Fund of Electric Power Development in 2008.
But there are a number of cases where plans have been withdrawn during reviews. In the last financial year through March, Japan received 1,638 prior notifications for stock purchases, excluding 363 withdrawals.
When Minebea Mitsumi launched a white-knight bid for Shibaura Electronics to counter an unsolicited buyout offer from Taiwan’s Yageo, its CEO Yoshihisa Kainuma expressed concern that the criteria for screenings are unclear.
Yageo won the $740 million deal after obtaining security clearance, in what was the first successful unsolicited foreign buyout of a major Japanese firm.
Reuters
