TOKYO, June 23 (Reuters) – The Japanese government is reviewing stricter regulations for foreign funds holding stakes in domestic companies with key technology in areas such as nuclear power and defense, Yomiuri newspaper reported on Wednesday.
The new rules are intended to prevent foreign funds and companies from making demands on Japanese companies that could weaken their competitive advantage or lead to the leakage of technological know-how, according to the paper without citing the source.
The extent to which the government has the right to intervene in shareholder affairs has been in focus since an independent investigation found that the management of Toshiba Corp (6502.T) worked with the Department of Commerce to pressure foreign investors. Continue reading
Following the investigation, Japan’s Minister of Commerce said it was normal for the government to negotiate with individual companies when national security issues are at stake and the Commerce Department’s policy is “natural”.
The government plans to take concrete action by the end of this year, the paper says.
A Commerce Department official denied the report, saying they were not considering tightening the rules. The Ministry of Finance was initially unavailable for comment.
The Yomiuri said new rules could oblige foreign funds that violate the new rules to sell their stakes in the Japanese firms.
With the new rules, the government would help maintain and develop technology that is considered important even after foreign funds have already made their investments, she added.
Any new measures would follow stricter foreign ownership rules for hundreds of businesses, which have been labeled a core national security business and went into effect last May.
Foreign investors who acquire a stake of 1% or more in such core companies have been subject to a prior check as a matter of principle, compared to the previous threshold of 10%.
Sectors selected as critical to national security include areas such as oil, railways, utilities, defense, aerospace, nuclear power, aviation, telecommunications and cybersecurity.
Reporting by Leika Kihara Editing by Chang-Ran Kim
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