The Japanese government has published a draft law designed to facilitate foreign investment in Japanese companies, including by merger and acquisition. A bill is expected to be submitted to the Diet during 2005.
At present, a foreign company seeking to acquire a Japanese company has first to set up a 100% subsidiary in Japan and use its stock as acquisition currency, diluting ownership by the parent. The government intends the proposed solution to enable the parent company to pay by other means such as cash and stocks of the parent company, so it can maintain its 100% stake in the subsidiary.