US economy

Exclusive: Japan considers tighter ownership reporting rules to better monitor China, officials say

© Reuters. Exclusive: Japan considers tighter ownership reporting rules to better monitor China, officials say

By Takashi Umekawa

TOKYO (Reuters) – Japan is considering lowering the 10% ownership threshold at which foreigners are required to report stakes in domestic companies, two officials said, as Tokyo looks to better monitor Chinese investment in areas related to security.

Such a move would follow similar steps taken by the United States and European countries in recent years and reflects growing unease in Japan about the possibility that Chinese state-backed companies could gain access to key technology.

“We need to strengthen monitoring for national security but we don’t want to hinder foreign direct investment itself,” said one of the officials, both of whom declined to be identified because the talks have not been made public.

While Japan can’t explicitly target a single country under the reporting rules, the move would in effect enable closer monitoring of Chinese investment, the official said.

Under current rules, a foreign entity is required to report ownership in a Japanese firm once it plans to take at least a 10% stake. The change would see that percentage lowered, although the new threshold is yet to be finalised, the officials said.

“The United States and Germany have taken similar measures aimed at China. Japan is much further behind when it comes to protecting the security of its economy,” the second official said.

The government is taking what appears to be an initial step by changing how the current 10% threshold is calculated, according to a document on the finance ministry’s website.

From October, its 10% threshold would only apply to shares with voting rights, rather than all outstanding shares presently, which means an effective tightening in the reporting criteria.

Japan, the world’s third-largest economy, has been on a push to welcome foreign direct investment since Prime Minister Shinzo Abe took his office in 2012.

The balance of the inward direct investment has steadily increased and reached 30.7 trillion yen ($291.30 billion) at the end of 2018, according to government data.

Chinese mergers and acquisitions in Japan totalled 220 billion yen ($2.1 billion) in 2018, according to Tokyo-based advisory firm Recof Corp.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.