Tokyo’s readiness to intervene in shareholder matters has been in focus since it was discovered Toshiba Corp’s management colluded with the trade ministry to pressure foreign investors – now they want to formalise and extend their powers
Japan is looking at bringing in tighter investment rules to curb the threat of foreign influence on its key industries.
Tokyo is considering stricter regulations on foreign funds that hold stakes in domestic firms with important technology in areas such as nuclear power and defence, it was reported on Wednesday.
The new rules will aim to prevent overseas funds and companies from making demands on Japanese companies that could weaken their competitive edge or lead to the leaking of technological expertise, it’s claimed.
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The sectors seen as crucial to national security would include areas such as oil, railways, utilities, arms, space, nuclear power, aviation, telecoms and cybersecurity.
The question over just how far the government has the right to intervene in shareholder matters has been in focus since an independent investigation found Toshiba Corp’s management colluded with the trade ministry to pressure foreign investors.
In the wake of the probe, Japan’s trade minister said it is normal for government to deal with individual companies when matters of national security are at stake and the policies the trade ministry implemented were “natural”.
It’s believed the government plans to come up with specific measures by the end of this year.
MINISTRY DENIAL
However, a trade ministry official denied the reports, saying they were not considering tightening regulations.
But the Yomiuri newspaper said new rules could require foreign funds that break the regulations to sell their holdings of the Japanese firms.
Any new measures would follow tighter foreign ownership rules on hundreds of firms designated as having operations core to national security that took effect in May last year.
Foreign investors buying a stake of 1% or more in such core firms have since faced pre-screening in principle, compared with the previous threshold of 10%.
- Reporting by Reuters
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