THE government plans to require that foreign companies and investors be screened by an intelligence body before investing in Japanese companies, if there are high-level risks for national security.

In 2026, the government will establish a new organization equivalent to the Committee on Foreign Investment (CFIUS) in the United States, and this organization will then participate in the screenings.

The aim is to prevent technologies and information held by Japanese companies from being leaked overseas.

CFIUS is an inter-departmental organization that, for national security purposes, screens foreign companies attempting to obtain shares in US companies. It is chaired by the US treasury secretary. If CFIUS believes there is a national security risk, it can recommend that the president block the acquisition of the US company.

Currently in Japan, the Foreign Exchange and Foreign Trade Law regulates capital contributions to Japanese companies by foreign companies and investors.

If foreign companies or investors obtain 1pc or more of the shares of a listed Japanese company or even a single share in an unlisted Japanese company in “designated business sectors,” such as space development or nuclear energy, viewed as key to national security by the government, they must rep­ort their investment plans to the government befor­ehand and be screened.

The law also regulates foreign nationals taking posts on boards of directors and proposals or agreements on the transfer of businesses.

If the screenings unco­ver problems, the government can recommend or order that the investment be changed or stopped. If foreign companies or investors ignore the recommendations or orders, the government can order them to sell the Japanese company’s stock.

Published in Dawn, December 29th, 2025