The Japanese government plans to require screening by an intelligence body for foreign companies and investors before they invest in Japanese firms if national security risks are high. In 2026, it will establish a new organization equivalent to the U.S. Committee on Foreign Investment in the United States (CFIUS) to participate in these reviews. The goal is to prevent the leakage of technologies and information held by Japanese companies overseas.
The Japanese government intends to submit a bill to revise the Foreign Exchange and Foreign Trade Law to the ordinary Diet session in 2026, aiming to more rigorously monitor the impact of foreign investments on national security. The revision will clarify the involvement of intelligence organizations, particularly for high-risk investments in designated business sectors such as space development and nuclear energy.
Currently, foreign entities must file prior notifications and undergo screening when acquiring 1% or more of shares in listed Japanese companies or even a single share in unlisted ones in these sectors. Screenings are handled by administrative bodies like the Finance Ministry and the Ministry of Economy, Trade and Industry, but the role of intelligence organizations has remained unclear until now. The government notes that there were 2,903 screening applications in fiscal 2024, about eight times the number in the United States.
The new organization, akin to CFIUS, is expected to include officials from the Finance Ministry, the Ministry of Economy, Trade and Industry, the National Security Secretariat, and the Cabinet Intelligence and Research Office. The number of screening officials will double from around 70 to about 140. This initiative is a key policy pledge of Prime Minister Sanae Takaichi and is included in the coalition agreement between the Liberal Democratic Party and the Japan Innovation Party.
In contrast, the U.S. CFIUS has issued 10 prohibition orders on acquisitions, most involving Chinese companies or funds, excluding cases like Nippon Steel's bid for U.S. Steel. Japan aims to strengthen checks, including on foreign acquisitions of other foreign firms holding Japanese shares.
