ACGA Letter to MOF Japan on FEFTA Bill

On 24 October 2019, ACGA submitted a letter to the Ministry of Finance (MOF) Japan to express our deep concerns about the direction and substance of recently proposed amendments to the Foreign Exchange and Foreign Trade Act (FEFTA). If passed, this would cut the threshold for mandatory pre-reporting of foreign investments in restricted sectors from 10% to 1%, and will add a further restriction on foreign asset managers who wish to engage with such companies on various governance and business issues.

ACGA has undertaken a survey of its investor members around the world and found a high degree of consensus that the FEFTA amendments will be detrimental to the Japanese capital market and corporate governance. Major concerns include the wide range of sectors included in the list of restricted sectors, a lack of clarity around many aspects of the proposed amendments, and apparent restrictions on normal investor engagement and stewardship. Indeed, the proposed bill is very much at odds with the spirit of Japanese government CG policy in recent years.

We strongly urge the MOF to reconsider some of the amendments and to consult widely among market participants before finalising them.

Our letter has also been sent to METI, FSA, JPX and the regional & Japanese press.