On January 13, 2020, the US Department of the Treasury released two sets of new regulations that comprehensively implement the Foreign Investment Risk Review Modernization Act (FIRRMA) – a law that strengthens the authority of the Committee on Foreign Investment in the United States (CFIUS). CFIUS is an interagency committee chaired by the Secretary of the Treasury and is responsible for screening foreign investments into the United States to determine if they could impair US national security. The new CFIUS regulations will become effective on February 13, 2020 and are titled (i) Provisions Pertaining to Certain Investments in the United States by Foreign Persons (31 CFR Parts 800 and 801) and (ii) Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States (31 CFR Part 802). These CFIUS regulations reflect the Treasury Department’s response to comments provided after its issuance of certain proposed rules in September 2019, as described in our previous alert. Among various developments, the new regulations:

  • strengthen CFIUS’s jurisdiction over certain types of non-controlling investments involving critical technology, critical infrastructure, and sensitive data
  • expand the requirement for parties to file a mandatory declaration with CFIUS in certain instances involving foreign governments
  • create limited exemptions to CFIUS jurisdiction, including for certain non-controlling transactions involving investors from Australia, Canada, and the United Kingdom in defined circumstances
  • introduce a new option for transaction parties to submit a short-form voluntary declaration to CFIUS instead of the more substantial notice and
  • enable CFIUS to review foreign investments in or acquisitions of US real estate that previously fell outside CFIUS’s purview because they did not involve US businesses.
  • The recent regulations do not implement CFIUS’s authority under FIRRMA to assess and collect fees in connection with filings. This is expected to be addressed separately in the future.

To learn more about CFIUS continue reading here.