Foreign Exchange and Foreign Trade Control Law. Copyright Roderick Seeman

Article 27 (Screening of the conditions of direct domestic investments, etc., and recommendations of alteration thereof, etc.)

1. Foreign investors who are to make, from among the direct domestic investments, etc of listed in any of the items of Paragraph 2 of the previous Paragraph, direct domestic investments, etc which are determined by Cabinet Order as likely to be classifiable as direct domestic investments, etc which require examination as provided by Paragraph 3, must in advance, as provided by Cabinet Order give notice to the Minister of Finance and the Minister(s) in charge of the industry involved concerning the business objective, the amount of money, the timing of execution and such other matters provided by Cabinet Order.

2. Foreign investors who have made the notification based on the provisions of previous Paragraph concerning direct domestic investments, etc. for 30 days calculated from the date of acceptance of the said notification to the Minister of Finance and the Minister(s) in charge of the industry involved, must not carry out the direct domestic investment related to the said notification. Provided however, that when the Minister of Finance and the Minister(s) in charge of the industry involved, prior to the expiration of that period, deem that the said direct domestic investment, etc. related to the said notification, from the viewpoint of the business objective and other factors, is not classifiable as a direct domestic investment, etc. that requires the examination provided for in the following paragraph, can shorten the said period.

3.When notice has been given to the Minister of Finance and the Minister(s) in charge of the industry involved under the provisions of Paragraph 1, and they deem an examination is necessary as whether or not the direct domestic investment, etc. related to the said notification is classifiable as falling under the provisions of any of the items below (called "direct domestic investments, etc. related to national security, etc. in the next Paragraph, Paragraph 5, and Paragraph 11), they can extend the period during which the said direct domestic investment, etc. related to the said notification can not be carried out, limited to 4 months, calculated from the date that the said notification was accepted.

(i) It might imperil the national security, disturb the maintenance of public order, or hamper the protection of the safety of the general public;

(ii) It might adversely and seriously affect the smooth performance of our national economy;

(2) Because it is made by a foreign investor with whose country no treaties or other international agreements are concluded by our country in regard to direct domestic investments, etc., its particulars are required to be altered, or its execution is required to be suspended, so as to make conditions substantially equal to those allowed to our national's direct investment activities (which mean those corresponding to direct domestic investments, etc., listed in each Item of Paragraph 2 of the preceding Article) in that country; or

(3) When seen from its purpose of the use of funds and others, the said direct domestic investment, in whole or in part, falls under the capital transactions upon which an obligation to obtain a license in imposed under the provisions of Article 21, Paragraph 2, and therefore its particulars are required to be altered, or its execution is required to be suspended.

4. The Minister of Finance and the Minister(s) in charge of the industry involved, when the period during which the said direct domestic investment, etc can not be carried out, based on the provisions of the previous Paragraph, and when, before the expiration of the said extended period, it is recognized that the result of the examination of the same paragraph is that the direct domestic investment, etc related to the notification based on the provisions of Paragraph 1, is not a direct domestic investment, etc. related to national security, can shorten the said extended period.

5. The Minister of Finance and the Minister(s) in charge of the industry involved, when the period during which the direct domestic investment may not be carried out, has been extended, as provided in Paragraph 3, and when the result of the examination based on the provisions of the same Paragraph, is that the direct domestic investment, etc. related to the notification based on the provisions of Paragraph 1, is classifiable as a direct domestic investment, etc related to national security, etc, can ask for the opinion of the Committee of Foreign Exchange and other Transactions, and, as per the provisions of Cabinet Order, recommend to the party making the notification of the said direct domestic investment, etc. to alter the particulars of the said direct domestic investment, etc. or suspend the execution thereof. Provided however, that the period during which the said Recommendation to alter or suspend the direct domestic investment, etc can be made shall be the period calculated from the date that such notification was accepted or up to the last day of the extended period provided in the next Paragraph, or Paragraph 3.

6. When the Committee of Foreign Exchange and Other Transactions is asked for its opinion for the inquiry provided in the previous Paragraph, and it states that to form its opinion with-in the period of four (4) months as provided in Paragraph 3 is difficult due to the nature of the subject matter, the period provided in the same Paragraph during which the execution of the direct domestic investment, etc. is prohibited shall be extended to five (5) months, regardless of the provisions of the same Paragraph.

7. The party who has received the recommendation provided for in Paragraph 5, must inform the Minister of Finance and the Minister(s) in charge of the industry involved whether or not it accedes to the said recommendation within a period of ten (10) days, counting from the day of its receipt of the recommendation.

8. The party giving notice of its accession to the recommendation under the provisions of the preceding Paragraph must execute the direct domestic investment, etc., concerning the recommendation in accordance therewith.

9. The party who, under the provisions of Paragraph 7, has given its notice of its accession to the recommendation, regardless of the provisions of Paragraph3 or 6, even if the 4 months calculated from the date that the said notification of the said direct domestic investment was made (5 months where extensions have been made based on the provisions of the same Paragraph) have not passed, it is possible to carry out the said direct domestic investment, etc.

10. When the party who has received the recommendation under the provisions of Paragraph 5, has either failed to make the notice provided for in Paragraph 7, or gives notice of non-accession to the said recommendation, the Minister of Finance and the Minister(s) in charge of the industry involved can order the party who received the said recommendation to alter the particulars of the relevant direct domestic investment, etc., or to suspend the execution thereof. Provided that the period during which the said Order to alter or suspend the direct domestic investment, etc shall be the period of Paragraph 3 calculated from the date that such notification was accepted or up to the last day of the extended period provided in Paragraph 6.

11.When the Minister of Finance and the Minister(s) in charge of the industry involved deem that, due to the change of economic situations or any other reason, the direct domestic investment, etc. related to the notification provided by Paragraph 1, is no longer a direct domestic investment related to national safety, etc. they may cancel, in whole or in part, their recommendation to alter the particulars of the said direct domestic investment, etc., given to the party who gave notice of his accession thereto under the provisions of Paragraph 7, or their order, under the provisions of the previous Paragraph to alter such particulars.

12. In addition to that provided from Paragraph until the previous Paragraph, the procedures of the recommendation to alter the particulars of the direct domestic investment, etc., or to suspend the execution thereof, and other necessary matters concerning the recommendation, shall be decided by Cabinet Order.