Japan is changing its foreign investment screening rules in 2027. If you plan to invest in a Japanese company, run a software business or acquire an overseas company with a Japanese subsidiary, check how the changes affect your plans.
The reform both expands screening and simplifies some filing requirements. It does not make every foreign investment subject to stricter rules.
日本語版はこちら — Read this article in Japanese
The practical questions: When do the rules change? Does your transaction need a filing? What should you prepare?
This guide explains the main points in plain English.
What is FEFTA?
FEFTA stands for Japan’s Foreign Exchange and Foreign Trade Act. Among other matters, it regulates certain investments by foreign investors in Japanese businesses.
Prior notification means filing before a covered investment or action and completing the required review or waiting process before proceeding. A post-investment report is submitted afterward, where required.
Some transactions qualify for an exemption from prior notification. An exemption may still involve conditions and reporting duties.
When do the changes take effect?
The main provisions of the amended Act take effect on January 4, 2027. Some provisions are already in force.
The Ministry of Finance has announced two dates for the related rules and regulations:
Check the transitional rules against your transaction date, especially for investments planned around the start of 2027.
Will software investments still need a filing?
Some will. The reform is not a blanket exemption for software or AI businesses.
The scope of software-related activities requiring prior notification will be narrowed. Activities important to national security, including cybersecurity, remain covered. The reform also adds coverage for companies holding certain controlled technologies.
Describe what the business actually does: its products, customers, intended uses, data and technology. A label such as “AI company” is not enough to decide.
What changes for director reappointments?
A reappointment means appointing the same director again after their term ends.
Under the reform, a fresh prior notification will generally not be required if the director was initially appointed following prior notification. Exceptions apply, including where the investor cannot use the exemption scheme or relevant circumstances have changed.
Keep the earlier filing and check for changes before arranging the next appointment.
Can an overseas acquisition trigger Japanese rules?
Yes, in certain cases—even if the Japanese subsidiary’s direct shareholder stays the same.
For example, an investor buys an overseas parent company that owns a Japanese subsidiary. The reform brings certain indirect acquisitions like this into the screening system.
Whether a filing is needed depends on the investor, ownership and control structure, acquisition thresholds and the Japanese business. Notify the Japanese team early when planning an overseas acquisition or group restructuring.
What else is changing?
The reform addresses certain domestic investments made under the control or influence of high-risk foreign persons, including foreign governments. It also introduces measures to address national security risks after certain investments in non-designated sectors.
Procedures for risk mitigation measures are clarified. These are commitments to reduce security risks. Changing or not implementing notified commitments can require a further notification.
What should you prepare now?
Start with:
- Details of the investor and overseas parent company
- A group ownership chart
- A clear description of the Japanese business
- Planned investment and appointment dates
- Copies of earlier FEFTA filings, if any
Company registration and FEFTA are separate procedures.
Check both before finalising your investment timetable.
English Support for FEFTA and Company Registration
At Seiwa Legal Office in Tokyo, Emi Suehiro, a Japanese Judicial Scrivener and Administrative Scrivener, communicates directly in English, Chinese and Japanese.
We help clarify the relevant filings and coordinate them with Japanese company formation, capital increases and director changes. You can discuss your plans directly with the professional handling the procedures.
Contact Seiwa Legal OfficeRelated reading: Japan FEFTA Prior Notification and Exemptions
Official sources:
Ministry of Finance: Reforms to Japan’s Investment Screening System (English PDF)
Ministry of Finance: Related Rules and Regulations (September 16, 2026)
Based on official information available as of October 28, 2026. This is a general guide. Filing, exemption and reporting requirements depend on the investor, business, transaction, timing and applicable transitional rules.