Japan

The Japanese regulatory landscape in 2026 is shifting toward greater inclusivity and stronger protections for those in vulnerable positions. This Legal Update highlights the key amendments set to take effect this year that employers should look out for. Employment of Disabled Workers Under the Act to Facilitate the Employment of Persons with Disabilities, employers of a certain size are required to employ enough disabled workers to meet the statutory quota. Effective July 1, 2026, this statutory quota will be raised from 2.5% to 2.7%, effectively expanding the hiring obligation to employers who employ 37.5 or more employees (previously 40 or more employees). Employers failing to meet the statutory quota could receive administrative guidance from labor authorities and stronger measures like having their names publicized if the employer fails to comply with the guidance. As before, employers who are eligible for this hiring obligation will also be required to submit a “Disability Employment Status Report” to the Public Employment Security Office by July 15th of every year. A failure to submit the report could result in a criminal fine of up to JPY 300,000. Also, employers with more than 100 employees who fail to meet the statutory quota will continue to be subject to a “disability employment levy” of JPY 50,000/month for each person below the statutory quota. Note that payment of the levy will not exempt the employer from its obligation to meet the statutory quota. Promotion of Women’s Participation in the Workplace The Act on the Promotion of Women's Active Engagement in Professional Life requires employers to publish certain types of information regarding their employment of women. This requirement will be expanded in April of this year. Under the Act, there are four types of information that may be published: (1) wage gap between men and women; (2) ratio of women among the employer’s managerial staff; (3) track record of providing career-related opportunities to women (for example, the proportion of female workers among all employees, the record of re-employment or mid‑career hiring by gender, or other types of information stipulated in the MHLW ordinance); and (4) track record of creating an employment environment that enables employees to balance work and family life (for example, the rate that each gender chooses to utilize childcare leave, the average monthly overtime hours of all employees, and other types of information which are stipulated in MHLW ordinance) Currently, employers with at least 301 employees are required to publish “(1) wage gap between men and women”, as well as two other types of information from the list above. Employers with at least 101 employees are currently required to choose just one type of information to publish from the list above. Starting April 1, 2026, employers with at least 301 employees will be required to publish “(1) wage gap between men and women” “(2) ratio of women among the employer’s managerial staff”, as well as two other types of information from the list above. Employers with at least 101 employees will be required to publish “(1) wage gap between men and women” “(2) ratio of women among the employer’s managerial staff”, as well as one other type of information from the list above. Employers in violation of the publishing requirements could receive administrative guidance from labor authorities, and stronger measures like publication if the employer fails to comply with the guidance. Whistleblower Protection Various enhancements to the Whistleblower Protection Act will be made effective December 1, 2026, including the expansion of the protection to “freelancers”, a prohibition on attempting to identify the whistleblower or discouraging the whistleblower from making a report, and a new presumption rule where any dismissal or disciplinary action against the whistleblower within one year of a report is presumed to be retaliatory in civil cases. For detailed information on the changes to the Whistleblower Protection Act, please refer to our June 2025 newsletter.

Colin Passmore, a former senior partner at Simmons & Simmons and who  currently serves as a Special Adviser to TMI Associates (Head Office: Minato-ku, Tokyo; Managing Partner: Katsuro Tanaka), has been awarded the title of Honorary King’s Counsel, one of the highest honours in the legal profession of England and Wales. Honorary King’s Counsel is a prestigious distinction conferred on only a select number of individuals who have made outstanding contributions to the development of the legal system of England and Wales. The title is conferred by the King on the recommendation of the Lord Chancellor. Mr. Passmore played a central role for more than 30 years at the leading UK law firm Simmons & Simmons, with which TMI has maintained a long-standing relationship in the context of its foreign law joint enterprise. He served as Senior Partner of the firm for ten years from 2011 to 2021, making a significant contribution to its growth and development. In addition to his role as Special Adviser to TMI, Mr. Passmore currently serves as Chair of the City of London Law Society, where he oversees 20 specialist committees that work with government bodies, regulators, and businesses on legislative and regulatory matters. He is also the author of Privilege, a definitive legal practitioner work on legal professional privilege in England and Wales, often cited by the courts.   This award recognises not only his academic contributions to advancing the understanding of legal professional privilege, but also his broad efforts to promote diversity within law firms and the legal profession, to foster a more inclusive legal community, and to support the development of the next generation of legal professionals. TMI will continue to draw on Mr. Passmore’s extensive experience and insight in enhancing legal services for clients, particularly in Europe and Africa. Comment from Colin Passmore I am really proud to receive this award. It has been a privilege to contribute to the profession and to work alongside so many talented colleagues over the years. I am grateful for the opportunities I have had to help shape the law and to support the next generation of lawyers. For further details, please see the announcement on the UK Government website. About TMI Associates Since its founding in 1990, TMI Associates has strived to create a law firm which is distinct from any other in Japan and to recast the image of both attorneys and patent/trademark attorneys. During the past 35 years, the firm has experienced rapid organic growth, both numerically and geographically, while maintaining its progressive culture. Starting with 43 personnel, including ten attorneys and one patent attorney, TMI now has 678 attorneys and 101 patent/trademark attorneys among a total of 1,316 personnel as of February 2, 2026, and is one of the five largest law firms in Japan. TMI has numerous branch bases overseas, in Shanghai, Beijing, Yangon, Singapore, Ho Chi Minh City, Hanoi, Phnom Penh, Bangkok, Jakarta*, Kuala Lumpur*, Silicon Valley, London, Paris, and Brussels. TMI is also well positioned to provide a wide range of global legal services through its Chinese service group, French practice group, India and Korea desks, located in its Tokyo office, as well as its joint venture relationships in Japan with Simmons & Simmons LLP, (UK), Morgan, Lewis & Bockius, LLP (US), and ARQIS Foreign Law Office (Germany). TMI provides a comprehensive range of legal services regarding international corporate transactions and international investment and trade business transactions. The firm has an unrelenting focus on supporting the global business development needs of its clients – both Japanese and global companies – with legal services spanning acquisition and protection of patent and intellectual property rights through to licensing, mergers and acquisitions, financing and dispute resolution, among other major areas of law.

Introduction Semiconductors are a critical foundation of the modern economy, evolving from conventional electronic components into indispensable technologies supporting AI, robotics, smartphones, cloud computing, and advanced manufacturing. The global semiconductor market reached USD 630.5 billion in 2024 and is projected to exceed USD 1 trillion by 2030. As digitalization becomes a key source of national power, countries worldwide are pursuing unprecedented policies to secure semiconductor supply chains and technology. The US, through the CHIPS and Science Act, provides subsidies, tax incentives, and export controls targeting China for sensitive semiconductors and advanced manufacturing equipment. China, Europe, and Taiwan have similarly launched large-scale strategic initiatives. Japan has followed this trend by implementing substantial policy measures, including subsidies and other financial support to expand domestic manufacturing capacity under the 2022 Economic Security Promotion Act (“ESPA”), large-scale backing through the NEDO (New Energy and Industrial Technology Development Organization) framework, and funding from the Post-5G Fund to develop advanced semiconductor technologies for post-5G information and communication systems. Learning from past shortcomings - such as insufficient strategic support and underinvestment in R&D, which caused Japan’s global market share to fall from nearly 50% in 1990 to around 10% today - the government has shown a strong commitment to strengthening domestic supply chains and R&D. To enhance domestic capabilities and competitiveness, large-scale programs now address specific “weaknesses” in Japan’s semiconductor industry based on detailed assessments of supply chains and technology. Given such strategic importance, foreign direct investments (“FDIs”) in Japan’s semiconductor industry are increasingly subject to close scrutiny under the Foreign Exchange and Foreign Trade Act (“FEFTA”). While such investments are not categorically prohibited – as illustrated by the acquisition of Kioxia Corporation (formerly Toshiba Memory) by a consortium led by Bain Capital – foreign investors must carefully assess the likelihood of a strict and long duration government review and any potential restrictions on post-investment activities. In doing so, they should consider factors such as their own profile, the strategic importance of the target company, the government’s interest, and the nature of the investment, including the intended level of post-investment management involvement. For investment funds, it is also critical to evaluate any exit-related restrictions, including limits on future buyers, when making investment decisions. Osawa brings extensive experience in the Japanese government, having worked on both FEFTA policymaking and FDI screenings - reviewing over 2,000 investment cases as a regulator – along with broader semiconductor-related policy initiatives. He leverages his dual expertise in M&A and economic security to advise foreign corporations and investment funds. Together with his colleague Takamura, an M&A lawyer experienced in economic security–related cases, they provide an overview of recent trends in Japan’s semiconductor M&A market, highlight key regulatory developments, and offer practical insights for foreign investors navigating this strategic sector. View original article here. [Author] Oki Osawa (Partner) Mayuko Takamura

Introduction In recent years, the international environment surrounding companies has rapidly shifted from an era in which free cross-border economic activity was taken for granted to one in which companies must design their business operations taking into account geo-economic risks. For Japanese companies that may be affected by such changes in the environment, it has become increasingly important to assess developments in economic security policies across jurisdictions and to develop management strategies, together with detailed initiatives based on these strategies, to enhance their autonomy and indispensability. At the same time, many companies express concerns that such initiatives will increase costs in the short term and that it is difficult to determine the appropriate level of compliance. However, corporate efforts to address economic security and enhance autonomy and indispensability, including diversifying procurement sources to ensure supply stability, delivering products and services incorporating robust cybersecurity, or implementing measures to prevent the leakage of critical technical information, represent more than mere risk management. Over the medium- to long- term, these efforts enhance corporate value and create new business opportunities. In light of these developments, on November 20, 2025, the Ministry of Economy, Trade and Industry (METI), following deliberations by the “Study Group on Economic Security Management Guidelines” comprising private-sector experts and other stakeholders, released a draft “Economic Security Management Guideline” (the “Guideline”). The Guideline outlines the principles of which management should be aware and directions for initiatives when companies address economic security. The Guideline is open for public comment until December 26, 2025, after which METI intends to release a finalized version. METI also anticipates that Guidelines will be reviewed and updated on an ongoing basis in response to changes in the international environment, policy trends, and other developments. Since the renewed focus on economic security, driven by factors such as intensifying U.S.-China strategic competition, the expanded use of economic statecraft to exert influence through economic measures, and the COVID-19 pandemic, there has been extensive debate from various standpoints, perspectives, and angles regarding how companies should approach economic security. The Guideline is based on this accumulated body of discussions, and does not substantively introduce new arguments or perspectives. Nevertheless, it has significant value in that METI has distilled the key points of what had previously been somewhat fragmented discussions and presented, in relatively general terms, principles of which management should be aware and directions for initiatives. In this newsletter, attorney-at-law Mr. Osawa, who handles numerous matters related to economic security, together with Mr. Kitani and Ms. Morishita, as well as attorney-at-law Mr. Yuasa, who was involved in developing the Guideline as a member of the aforementioned study group and is familiar with its outline and drafting background, summarize the Guideline’s key points and discuss practical considerations for companies contemplating economic security responses tailored to their specific circumstances. View original article here. [Author] Oki Osawa (Partner) Yu Yuasa Tatsuyoshi Kitani Maya Morishita