The government added Seven & I Holdings to a list of "core" designated companies, a potential hurdle for Alimentation Couche-Tard’s proposal to buy out the convenience-store operator.

Last month, the Japanese retailer filed for the new designation under the Foreign Exchange and Foreign Trade Act to change its "noncore” status under the law, people with knowledge of the matter said. The new category requires any foreign entity to give prior notification of share purchases in a core company of more than 10%.

While the filing was made in response to a routine query by the Finance Ministry, it was seen as an extra step for the Canadian owner of Circle K stores to proceed with a potential takeover of Seven & I. The 7-Eleven operator’s efforts reflect its wariness toward the approach, which comes after years of activist investor criticism that its assets are undervalued.

In the case of an investment of more than 1%, but below 10%, prior notification can be waived if the investor and others can meet certain conditions, such as not appointing directors to the company’s board, according to ministry rules.

The Canadian company hasn’t indicated whether it seeks a waiver on prior notification.

The Finance Ministry vets any entity seeking to acquire more than 10% of a company considered part of a core industry, which includes sectors such as aerospace, nuclear energy and rare earths. The law was designed to protect the country from security risks, such as the outflow of military technology.

The ministry says its screening of foreign firms is the same, regardless of whether the target company is core or non-core.

In its application to become a "core" company, Seven & I argued that its convenience stores play a critical role in supplying food and supplies in the event of natural disasters, the people said. They also provide municipal services, allowing residents to obtain official documents.

There has only been one case in the past where the Foreign Exchange and Foreign Trade Act had foiled a deal. In 2008, concerns over power supply and nuclear energy led Japan to block the London-based Children’s Investment Fund from buying shares in Electric Power Development, known as J-Power.