The government is preparing to tighten regulations on foreign investment in Japanese companies that do work in areas sensitive to national security, including space development and nuclear energy, government sources said Thursday.
The government will revise the foreign-exchange law to require that foreign investors seek approval before acquiring stakes of 1 percent or higher, slashing the threshold from 10 percent, the sources said. A bill to that effect will be submitted to the extraordinary Diet session that began Friday.
The stricter rules will cover arms production and aeronautics, they said, noting that the government will also simplify procedures to encourage foreign investment in sectors unrelated to national security.
The move comes as the United States and European nations tighten controls on investment amid growing concern that sensitive technologies are being linked to countries such as China.
The government will also require foreign stakeholders to give prior notification before making changes in management, such as by dispatching board members and selling core businesses, the sources said. Violators will be ordered to divest.