Japan regulator welcomes foreign funds

By David Dolan

TOKYO (Reuters) - Japan is not closed to foreign investors, including funds that press for increased shareholder rights, the head of financial regulation in the world's second-largest economy said on Tuesday.

Takafumi Sato, commissioner of the regulatory Financial Services Agency, also told the Reuters Japan Investment Summit that he was in favor of rules on new share issues, endorsing the Tokyo Stock Exchange's push to protect minority shareholders.

As head of the FSA, the Oxford-educated Sato has been charged with revitalizing Tokyo as a world financial centre, a job that some foreign investors have derided as an impossible mission.

The FSA is particularly worried that Tokyo is falling too far behind more flexible financial centers such as Hong Kong and Singapore.

Western activist funds such as The Children's Investment Fund (TCI) and Steel Partners are pushing hard for higher returns and greater shareholder rights in Japan, although much of their efforts have been so far knocked back.

While Sato declined to comment specifically on TCI and Steel Partners, he did say that Japan is not closed to foreign investors, including those who rally for change.

"The activities of foreign funds would also contribute to improve the so-called corporate governance on the part of Japanese listed companies," Sato said.

"The FSA treats financial firms and investors equally, regardless if they are domestic or foreign," he said.  Continued...