📋 Presentation Summary
Speaker: Takushima (Partner at Kimura Takima Yamaguchi Law Firm)
Topic: Foreign Direct Investment Regulation in Japan - The Basics
👤 Speaker Background
- Spent 5 years in the UK as a child
- Became a lawyer after 2000, specializing in cross-border corporate and business transactions
- Founded his firm in 2011
- Joined BYBJ in 2025
📖 Hypothetical Case Study
A startup KK (Kabushiki Kaisha - most common Japanese corporation type) developing an online platform for used housing sales targeting foreigners:
- Founder: Ichiro (Japanese national, invested 10M yen)
- Investor 1: Hideki (Japanese resident, investing for shares)
- Investor 2: Shoi (US resident, investing 5M yen for shares)
- Timeline: Want to complete investment in 2 weeks
🏛️ Foreign Exchange and Foreign Trade Act (FEFTA)
Basic Rules:
- Foreign investors making inbound direct investments must submit a post-transaction report to the Bank of Japan
- Sometimes requires pre-transaction filing with a 30-day waiting period before completing the transaction
🔍 Key Definitions
Foreign Investor:
- Non-Japan resident individuals
- Entities formed under non-Japanese laws
- Japanese companies 50%+ owned by foreign residents or entities
- In the case study: Shoi (US resident) is a foreign investor
Inbound Direct Investment:
- Acquiring shares of a Japanese company
- Acquisition of non-public company shares always qualifies
- In the case study: Shoi's investment qualifies as inbound direct investment
⚠️ Pre-Transaction Filing Requirements
Required if the investment relates to designated business sectors:
Core Business Sectors:
- Weapons, aircraft, space, nuclear
- Infectious disease medicines
- Cyber security-related businesses
Non-Core Designated Business Sectors:
- Electricity, gas, water supply
- Software (this complicates matters)
💻 Software Complexity
Pre-transaction filing required if:
- Software is cyber security-related under FEFTA rules
- Software specifically designed to handle personal information of 1 million+ persons
Exception: Software developed by "List 3 businesses" for their own use is not subject to pre-transaction filing
✅ Case Study Conclusion
In this hypothetical:
- Shoi's investment is an inbound direct investment
- Likely does NOT trigger pre-transaction filing because the platform is only for buying/selling real estate in Japan (considered a List 3 business)
- However, it's Shoi's obligation to verify whether the business is designated
💡 Key Takeaway
When a foreign investor invests in a Japanese company:
- Be aware of FEFTA rules
- Consult a lawyer to determine if pre-transaction filing is required
- The rules are complex and require professional guidance
