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Japan to exempt asset managers from stricter investment rules

  • October 17, 2019
  • , Nikkei Asian Review , 11:21 a.m.
  • English Press

TOKYO — Japan’s government intends to exclude asset management companies, including hedge funds, from tighter foreign investment regulations designed to protect sensitive industries.

 

Tokyo wants to control foreign investment in businesses seen as key to national security, including nuclear power and semiconductor production. Preventing leaks of technology and expertise, especially to China, has become a pressing issue.

 

Under proposed new rules, overseas investors would be obliged to seek approval from regulators when attempting to buy stakes of 1% or more in Japanese companies involved in strategic sectors. Currently, the screening requirement is set at 10%.

 

But after the Ministry of Finance crafted the proposal earlier this month, some raised concerns that the plan was too ambiguous about what types of investors would be affected.

 

The government intends to clarify, through a ministerial ordinance, that investment deals that do not influence the companies’ corporate management will be excluded from the restrictions, and that asset management companies will not have to seek prior approval, in principle.

 

The government hopes the clearer vision will help avoid a decline in foreign investment in Japan. The proposal is to be submitted to the Diet during the current extraordinary session that runs until December.

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