Japan amends Foreign Exchange Order (外国為替令) to implement 2026 FEFTA inward direct investment screening upgrade (Cabinet Order No. 296 of Reiwa 8)

Mechanism

The Foreign Exchange Order is the Cabinet-level implementing instrument for FEFTA's inward direct investment and service/technology-transaction controls. Cabinet Order No. 296 aligns it with the 2026 statutory amendment. Per the MOF announcement the amendment covers: (1) risk-mitigation measures as notifiable matters; (2) indirect acquisition via control of a foreign entity that holds Japanese shares; (3) pre-notification for investment under control/influence of typologically high-risk non-residents; (4) response measures for high-risk investment outside designated sectors; (5) mandatory inter-agency consultation on security concerns.

Downstream implications

• Foreign acquirers of offshore holding companies with Japanese subsidiaries may newly need FEFTA filings.
• Raises screening exposure for investors linked to high-risk jurisdictions across Core Business Sectors.

Open questions

• Which articles/annexes of the Order changed, and any numeric thresholds — amending text not read; verify against the e-Gov amending instrument (508CO0000000296).
• Promulgation date of the parent Act (MOF page indicates 2026-06-05; not independently confirmed from the Gazette).