Japanese companies may not be able to use a national security designation to stop takeovers by foreign countries according to a senior finance ministry official, reported Reuters.

Japanese retailer Seven & i Holdings, which operates 7-Eleven, requested the designation change from the Japanese government after Alimentation Couche-Tard Inc.’s $38 billion buyout proposal in August.

Seven & i sought designation as a “core” company under the Foreign Exchange and Foreign Trade Act, an upgrade from its current “non-core” status under the law. Core companies include sectors such as aerospace, nuclear energy, and rare earths. The law was designed to protect the country from security risks, such as the outflow of military technology. Under a core designation, Japan’s Ministry of Finance would have to vet any entity seeking to acquire more than 10% of a company, while under the company’s current non-core category, a takeover effort would require approval only after an agreed deal.

“In its application to become a ‘core’ company, Seven & i is arguing that its convenience stores play a critical role in supplying food and supplies in the event of natural disasters. ... They also provide municipal services, allowing residents to obtain official documents,” reported Bloomberg.

Reuters wrote that a “senior official, who declined to comment on individual deals, told Reuters the issue of ‘core’ classification doesn't change the process of the government’s security review in cases of foreign bids for companies designated as significant to Japan’s economy or security. The official added that the classification doesn’t affect the degree of scrutiny during its review on national security, saying that the government ‘will examine whether the transaction would pose risks to national security.’”

Seven & i said the request to become a core company is “not related to Couche-Tard's buyout proposal” and that the pursuit of the core designation was in response to the ministry’s latest survey due August 23 detailing the company’s current structure and businesses.