CFIUS: Recent Developments and Topics to Monitor

Key Takeaways

• Foreign investment in the United States is on a multi-year growth trend as dealmaking surges to its highest level on record.
• New foreign investment is encountering a less public and more traditional Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) under President Biden as it works to maintain a balance between economic interests and national security concerns.
• Investments in strategically important U.S. sectors by non-U.S. investors remain subject to meaningful scrutiny; dealmakers should evaluate CFIUS considerations early in the transaction process to identify and manage potential impediments to closing.
• Proposals under consideration in Congress and the Administration to create a review mechanism for outbound capital flows from the United States are also worth monitoring.

Background

CFIUS is an interagency committee, principally comprising nine members and chaired by the Secretary of the Treasury, that has broad powers to review foreign investments in and acquisitions of U.S. businesses to determine the potential impact on U.S. national security. The Committee has the authority to impose mitigation measures, suspend transactions and, where appropriate, recommend that the President block or unwind transactions. 

CFIUS has broad authority (expanded in recent years as a result of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”)) to review transactions involving U.S. businesses and non-U.S. investors, including:

• Mergers, acquisitions and takeovers that could result in a non-U.S. person acquiring control (defined broadly) of a U.S. business;
• Certain non-controlling investments by non-U.S. persons in U.S. businesses associated with critical technology, critical infrastructure and sensitive personal data (with mandatory filing requirements for transactions involving certain U.S. businesses dealing in critical technologies or non-U.S. persons affiliated with non-U.S. governments); and
• Transactions involving the purchase or lease by, or concession to, a non-U.S. person of certain U.S. real estate that might raise national security concerns.

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