The CFIUS Reform Legislation—FIRRMA—Will Become Law on August 13, 2018

Key Points

  • CFIUS will continue to have broad jurisdiction to conduct national security reviews of foreign investments that could result in foreign control of a U.S. business. When regulations implementing FIRRMA become effective within the next 18 months, CFIUS will have additional jurisdiction over (a) real estate transactions near sensitive government locations and ports, and (b) noncontrolling investments in U.S. businesses associated with critical technology, critical infrastructure or sensitive personal data. Certain covered transactions involving foreign government investors and, potentially, U.S. critical technology companies will trigger mandatory CFIUS filings.
  • To address concerns regarding the transfer of uncontrolled critical emerging and foundational technologies to foreign persons, FIRRMA requires an interagency process to identify and, after public notice and comment, control such technologies in the export control regulations. (This identification process has already begun.) Unlike the bill as introduced, FIRRMA does not expand CFIUS’s authority to review outbound investments to address this issue.
  • The timelines for CFIUS review of filings will be extended when the law goes in to effect. The Treasury Department is, however, required to publish regulations to create a quicker short-form “declaration”—“light filing”—process that could be used in place of full filings.
  • FIRRMA leaves many key details and definitions to the Treasury Department to address through implementing regulations. Those potentially affected by the new CFIUS authorities will likely want to monitor and eventually comment on them, particularly:
    • U.S. businesses that might receive noncontrolling foreign investments and that are involved in critical technology, critical infrastructure or sensitive personal data;
    • funds with foreign limited partners that might have access to such information or the ability to influence what is done with it; and
    • those involved, directly or indirectly, with covered investments by foreign governments and involving U.S. critical technology companies because of the mandatory filing requirements that will be created.

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