(Bloomberg) -- Prime Minister Shinzo Abe’s cabinet on Friday approved draft legislation to impose tougher rules on foreign investment in stocks related to national security despite opposition from market participants.

The planned rules will require overseas investors to report in advance when they plan to buy more than 1% of shares in companies related to Japan’s national security, compared with the current 10% threshold, according to the finance ministry. The government aims to gain passage of the revised bill outlining the rules during the current parliamentary session.

To reduce the potential negative impact of the rules, the government plans to exempt foreign investors from reporting in advance provided they have no intention of influencing corporate decisions and that the investment sectors aren’t linked to the nation’s security.

Some market participants have complained that the planned rules could serve as an impediment to investment. They have also criticized the lack of clarity on how, if enforced, the new rules will be implemented and which investments would be subject to exemptions.

To contact the reporters on this story: Emi Urabe in Tokyo at eurabe@bloomberg.net;Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Paul Jackson, Jon Herskovitz

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