Last Updated July 22, 2019

Law and Practice

Authors



Nagashima Ohno & Tsunematsu is one of the foremost providers of international and commercial legal services based in Tokyo. The firm has over 450 lawyers, including over 30 experienced foreign attorneys from various jurisdictions, and its overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms throughout Asia and other regions. The firm regularly advises leading power utilities, trading companies and investors on their energy projects as well as regulatory matters, and financial institutions on financing on those projects. The firm has dealt with a number of renewable power projects since the introduction of the feed-in tariff in Japan. The firm represented Tokyo Electric Power Company Group on establishing an alliance platform with Chubu Electric Power Co, Ltd in the fuel and power business (including the establishment of a joint venture company, JERA).

The Electricity Business Act  (as of 1 October 2017 and further amendments are not reflected) does not provide any nationality requirement on a licence of electricity business or any restriction with respect to foreigners holding a share in an operator of an electricity business.

Under the Foreign Exchange and Foreign Trade Act (Act No 228 of 1949, as amended), however, a foreign investor may not invest in an unlisted power company or own 10% or more of the shares of a listed power company unless he makes an ex ante notification and the required waiting period elapses. In principle, the length of the waiting period is 30 days, but it may be shortened to two weeks or extended up to five months, at the discretion of the government.

In the meantime, the waiting period is shortened to five business days if an investment falls within one of the following categories:

  • to incorporate a wholly-owned subsidiary in Japan or acquire equity in or debt of such subsidiary, or to open a branch in Japan ('greenfield investment');
  • to acquire additional equity in a Japanese company without changing its shareholding therein and with no change in the management structure thereof, within six months from the most recent acquisition of equity therein for which the ex ante notification was made ('rollover investment'); and
  • to acquire equity in or debt of a Japanese company as a passive investor having no voting right on material management matters ('passive investment').

In reality, approximately 90% of ex ante notifications made in 2015 with respect to investments over which the Ministry of Economy, Trade and Industry (METI) holds jurisdiction (including investments in the energy sector) fell into one of those three categories and thus were cleared within five business days.

If, during the waiting period, the Ministry of Finance (MOF) or METI has decided that the investment may undermine national security, public order, or public safety, or adversely affect the national economy, MOF and METI may issue a warning to change the terms of, or surrender, the investment, and if the investor does not respond to the warning or expresses his intention to disobey the warning, MOF and METI may issue an order to change the terms of, or surrender, the investment.

At the time of writing, the only precedents are the warning to surrender investment and the order to surrender investment, each of which was issued in 2008 against the Children’s Investment Fund, which intended to increase its shareholding in J-Power from 9.9% to 20% by acquiring additional shares.

Nagashima Ohno & Tsunematsu

JP Tower
2-7-2 Marunouchi
Chiyoda-ku
Tokyo
Japan
100-7036

+81 3 6889 7000

+81 3 6889 8000

info@noandt.com www.noandt.com
Author Business Card

Authors



Nagashima Ohno & Tsunematsu is one of the foremost providers of international and commercial legal services based in Tokyo. The firm has over 450 lawyers, including over 30 experienced foreign attorneys from various jurisdictions, and its overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms throughout Asia and other regions. The firm regularly advises leading power utilities, trading companies and investors on their energy projects as well as regulatory matters, and financial institutions on financing on those projects. The firm has dealt with a number of renewable power projects since the introduction of the feed-in tariff in Japan. The firm represented Tokyo Electric Power Company Group on establishing an alliance platform with Chubu Electric Power Co, Ltd in the fuel and power business (including the establishment of a joint venture company, JERA).

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.