Disclosure Requirements – Japan


Disclosure Category: 1

Clearstream Banking S.A. (Clearstream Banking) may fall under an obligation, under the multiple Japanese regulations, to disclose the identity and holdings of its clients.


To comply with the legislation, clients entering into transactions in the Japanese domestic market must consent and are hereby deemed to consent to the required amendments entered into force after legal disclosure. Such consent includes the appointment of the requestor (for example, the Japanese Securities Depository Centre, the issuer or its agent) as attorney-in-fact of such clients, under power of attorney to collect the required information to be disclosed from Clearstream Banking.

Clients not willing to give this consent cannot hold such securities and/or financial instruments in their account with Clearstream Banking.

Disclosure requirements

Quarterly report

The Bank of Japan requires a quarterly reporting of information about settlement activities for Japanese Government Bonds (JGBs) at the Clearstream Banking account level.

The following information must be provided by Clearstream Banking to the Bank of Japan:

  • The total number of institutions holding JGBs with Clearstream Banking (Designated Financial Institution (DFI), Foreign Indirect Participant (FIP) and non- Foreign Indirect Participant (non-FIP));
  • The number of each type of institution (DFI, FIP and non-FIP);
  • The total outstanding value of JGBs held with Clearstream Banking;
  • The total outstanding value of JGBs held with Clearstream Banking by each type of institution (DFI, FIP and non-FIP);
  • The total volume and value of JGB settlements;
  • The volume and value of each type of JGB settlement (external, internal and Bridge settlements; against payment and free of payment settlements related to securities lending and borrowing and settlements by Japanese participants).

Shareholder’s notification

Based on BRCBETS, Article 25, paragraph 11, the Japan Securities Depository Center, Inc. (JASDEC) as central securities depository has the right to request disclosure of shareholder information from Clearstream Banking’s local depository.

The disclosure obligation falls on the account holder (in this case, Clearstream Banking) and therefore disclosure will not be made at Clearstream Banking client level.

Tax disclosure requirement

Clearstream Banking is required to disclose information about the beneficial owners who have received tax benefits on income payments from Japanese Government Bonds (JGBs), Japanese Corporate Bonds (JCBs), Japanese Municipal Bonds (JMBs), Japanese Convertible Bonds (JVBs) and listed equities to the local tax authorities (Nihonbashi Tax Office – NTO).

a) Special Notification Report (Tokurei hokoku)

According to Article 2 paragraph 17 of the Ministerial Ordinance, Clearstream Banking must disclose to the NTO, on a monthly basis, the following information in relation to beneficial owners who achieved Double Taxation Treaty benefits on dividend payments arising from listed equities: 

  1. Name of end-investor (including classification of individual or corporate);
  2. Address of end-investor;
  3. Payment date;
  4. Security name or ISIN (including the issuer's address);
  5. Gross amount;
  6. Tax amount;
  7. Tax ID (if any);
  8. Country name of the DTT, article and paragraph for tax reduction or tax exemption;
  9. Tax rate.

b) Income Payment report (Shiharai chosyo)

According to Article 225 paragraph 1-1 and 1-8 of the Tax law, Clearstream Banking must disclose to the NTO, on a monthly basis for listed equities and on an annual basis for JGBs, JMBs, JCBs and JVBs, the following information in relation to beneficial owners who have received income payments (regardless of their tax status) on income payments from the above mentioned Japanese securities:

  1. Name of end-investor (including classification of individual or corporate);
  2. Address of end-investor;
  3. Payment date;
  4. Security name or ISIN;
  5. Gross amount;
  6. Tax amount;
  7. Tax status (whether DTT rates should apply or not – only required for interest payments). However, if BO disclosure is not made for payments for which no reduced tax rate is applied for, Clearstream Banking's information is reported to the NTO.

Background and legal basis

There are several types of requested disclosure to be borne by different categories of persons under the following Japanese legal basis:

  • Operational Rules Regarding Book-Entry Transfer of Shares, etc., enacted on 15 August 2008 (BRCBETS);
  • Operational Rules Regarding Corporate Bonds, etc., enacted on
    5 January 2009 (BRRCB);
  • Bank of Japan Regulations Concerning the JGB Book-Entry System, enacted on 27 January 2003 (BOJ JGB);
  • The Foreign Exchange and Foreign Trade Law, enacted on 1 December 1949 (FEFTA);
  • The Financial Instruments and Exchange Law, enacted on 13 April 1948 (FIEL);
  • Act on Special Measures concerning Taxation, enacted on 31 March 1957 (ASMCT);
  • The Ministerial Ordinance for the Implementation of the Law concerning the Special Measures of Income Tax Law, the Corporation Tax Act and the Local Tax Act for the Enforcement of Income Tax Conventions and the Ministerial Ordinance concerning Special Income Tax for Reconstruction, enacted on 17 June 1969 (the Ministerial Ordinance);
  • The Income Tax Law, enacted on 31 March 1965 (Tax law).


a) Direct investment report

According to the FEFTA, non-compliance with this requirement can result in up to three (3) years imprisonment and/or a fine of up to JPY 3 million.

b) Substantial shareholding disclosure requirements

  • Criminal penalty under the FIEL
    The criminal penalty for non-compliance is a fine of up to JPY 5 million and/or five (5) years imprisonment for a non-corporate substantial shareholder and up to JPY 0.5 billion for a corporate substantial shareholder.
  • Administrative penalty under the FIEL
    In addition, the following administrative penalty is applicable for breach of the substantial shareholder's reporting: Market capitalisation of the subject issuer in JPY/JPY 100,000.
    The market capitalisation is determined by the closing price on the business day immediately after the deadline for submission of the substantial shareholder's report (that is, the closing price six (6) business days after the trade date). The above administrative penalty is applied to both non-corporate substantial shareholder and corporate substantial shareholder.

If the person self-declares the non-compliance to the authorities, the above administrative penalty may be reduced by half. On the other hand, if the person repeats the non-compliance, the administrative penalty will be increased up to 150% of the standard penalty.

Obligation to report threshold crossings

a) Direct investment reporting

Under Articles 27 and 55-5 of the FEFTA (amended effective 8 May 2020 with full implementation from 7 June 2020), a foreign investor (see definition and illustration below) who acquires 1% or more of outstanding shares or voting rights1 of a Japanese listed company of Designated Industry by Japanese authorities, must file a report. However, no threshold applies to acquiring shares of unlisted companies.

Even if the shareholding per beneficial owner does not exceed the threshold, foreign discretionary investment managers must file the report when an aggregate shareholding exceeds 1% of the issued shares or voting rights of a listed company.

In principle, this report can be filed after the event, within 45 days from the transaction settlement date. However, if the company is in a certain industry (for example, the “Core Designated Industry” such as defence and nuclear) or has investments from some countries (such as Iraq or North Korea), prior approval from the competent authorities is required one (1) month prior to the actual investment (the report can be accepted by the Bank of Japan six (6) months before the actual investment).

Notwithstanding, prior-approval is exempted for investment that is deemed to pose no risks to national security and meet certain conditions, while post-reporting is required and the government may issue a recommendation or an order if they find it does not meet the conditions.

Furthermore, a post-investment report for non-designated industries is also required when acquiring 10% or more of outstanding shares or the voting rights of Japanese listed or unlisted companies.

Reports must be submitted to the Minister of Finance and other competent ministers via the Bank of Japan, normally through the local representative of the underlying investor.

Summary of exemption scheme for prior-notification of stock purchase (PN-SP)

Types of investors


Foreign financial institutions

Blanket exemption

Designated Industry

  • PN-SP will be exempted with no upper limit for investors that comply with exemption conditions (a,b,c).
  • Post-investment report – from 10%.

Core Designated Industry

General investors

(including Sovereign Wealth Funds and public pension funds (SWFs) accredited by the authorities)

Regular exemption

Designated Industry

  • PN-SP will be exempted with no upper limit for investors that comply with exemption conditions (a,b,c).
  • Post-investment report – from 1%.

Core Designated Industry

  • PN-SP will be exempted when the acquired shares remain less than or under 10% for investors that also comply with exemption conditions on Core Designated Industry business activities (d,e).
  • Post-investment report – from 1%.
  • Investors with a record of sanction due to violation of the FEFTA.
  • State-owned enterprises (except those who are accredited by the authorities).

No exemption

Exemption conditions

  • Investors or closely-related persons will not become board members of the investee company.
  • Investors will not propose to the general shareholders’ meeting transfer or disposition of investee company’s business activities in the Designated Industry.
  • Investors will not access non-public information about the investee company’s technology in relation to business activities in the Designated Industry.

Exemption conditions on Core Designated Industry business activities

  • Regarding business activities in Core Designated Industry, investors will not become members of the investee companies’ committees that make important decisions in these activities.
  • Regarding business activities in Core Designated Industry, investors will not make proposals, in a written form, to the executive board of the investee companies or board members requiring their responses and/or actions by certain deadlines.

Prior-notification of stock purchases (PN-SP)

PN-SP should be made at least 30 calendar days prior to the actual investment.

After clearance by the authorities on PN-SP, foreign investors can purchase stocks up to the notified amount anytime within six (6) months after submission of the PN-SP. Additional PN-SP will not be required for individual transactions up to the notified amount.

Post-investment reports after stock purchases must be submitted within 45 days from the transaction settlement date.

Post-investment report under regular exemption

Post-investment reports will be required when the investor’s total shareholding reaches:

  • 1% for the first time2;
  • 3% for the first time2;
  • 10% or more for each transaction (no change to this requirement).

Post-investment reports must be submitted within 45 days from the transaction settlement date.

For the following transactions, investors are not required to specify ministers responsible for business sectors in the post-investment report:

  • Stock purchases (under 10%) with exemption in Designated Industry; and
  • Stock purchases in non-Designated Industry.

Definition of “Foreign Financial Institutions” eligible for blanket exemption

The following foreign financial institutions subject to regulations/supervisions under financial regulatory laws in Japan or other jurisdictions are eligible for blanket exemption:

  • Securities firms;
  • Banks;
  • Insurance companies;
  • Asset management companies;
  • Trust companies;
  • Registered corporate-type investment trusts;
  • High-frequency traders3.

Exemption for Sovereign Wealth Funds and Public Pension Funds (SWFs)

In principle, state-owned enterprises are not eligible for exemption from PN-SP.

However, SWFs that are deemed to pose no risk to national security are eligible for regular exemption if accredited by the authorities.

For the accreditation, the MOF will review the below points and will sign a Memorandum of Understanding (MOU) with the SWFs:

  • Investment activities of the SWFs are only for economic returns; and
  • Investment decisions by the SWFs are made independently of their governments.

The decision of an accreditation and signing of MOU will not be made public.

Please note the authorities will issue a list of companies (including securities code, name and category) that fall into the following categories of companies by promulgation of the amended Act. Please ensure checks are made against Japan’s Ministry of Finance’s website for the most updated list since regular updates are anticipated:

  • Companies subject to post-investment report only (for instance, non-Designated Industry);
  • Companies applicable to Designated Industry;
  • Companies applicable to Core Designated Industry.

An overview of the listed companies can be found on the website of the Japanese Ministry of Finance.

Prior-notification for Certain Actions (PN-CA)

Under the amended Act, the following actions by foreign investors are added to the definition of FDI subject to prior-notification. Foreign investors who intend to take these actions are required to file prior-notification and obtain clearance from the authorities.

  • Voting at the shareholder’s meeting for nomination of the foreign investor itself or its closely related person as a board member of the investee company; and
  • Voting at the shareholder’s meeting for a proposal, made by those foreign investors, to transfer or dispose the investee company’s business activities in the designated business sectors.

PN-CA screening will only be conducted from the objective of the Act to prevent leakage of information and technology related to national security and disposition of business activities in the designated business sectors. If the PN-CA is not of concern to national security perspectives, the authorities will notify the investor of clearance of the screening within five (5) business days.

Definition of “Foreign Investor”: Using the below illustration, under the amended rule, all companies that own 50% or more of voting shares of Company A and/or Company A’s subsidiary companies, are regarded as foreign investors. The scope of “subsidiary companies” corresponds to the definition under Japanʼs Companies Act.

b) Substantial shareholding disclosure

Under Article 27-23 of the FIEL, investors who beneficially and solely or jointly acquire more than 5% of the issued and outstanding shares (including any potential shares such as convertible bonds or bonds with warrants to subscribe for shares) of a domestic company listed on any of the Japanese stock exchanges (Tokyo, Nagoya, Fukuoka and Sapporo) must file a substantial shareholding report to the Financial Services Agency (FSA), via a local financial bureau, using the Electronic Disclosure for Investors' NETwork (EDINET) within five (5) business days of the subject acquisition (that is, trade date). A copy of the report should also be delivered to the issuing company.

The report should include the following:

  • The percentage of shares owned;
  • The purpose of ownership;
  • The source and amount of the fund used for acquisition.

The substantial owner must also file an amendment report to the FSA, via a local financial bureau, using EDINET when its share ownership increases or decreases by 1% or any material changes in the disclosures made in the substantial shareholding report. Such amendment reports must be submitted within five (5) days of the occurrence (that is, from the trade date).

The responsibility for reporting lies with the underlying investor.


1. Actions equivalent to the acquisition of 1% or more of the total voting rights by undertaking proxy voting of a voting right held by another shareholder, is also subject to reporting.

2. Post-investment reports will not be required at the second and subsequent transactions reaching 1% or 3%; if shareholding goes down below 1% or 3% by stock sales, and subsequently returns to or beyond 1% or 3% by stock purchases, post-investment reports will not be required).

3. Those who are registered with Japan’s Financial Services Agency (FSA) are eligible for “blanket exemption”. Other high-frequency traders are eligible for “regular exemption”).