Expanded reviews of US in-bound investments
The US government will vet more foreign investments in US companies and assets starting February 13.
Foreigners taking controlling interests in US companies had to consider in the past whether to make a filing with the Committee on Foreign Investment in the United States — CFIUS, for short. The filings were voluntary, but failure to file could lead later to an order to unwind the investment. CFIUS is an inter-agency committee of 16 federal agencies that reviews foreign acquisitions for any national security issues. (For data on how often acquisitions run into issues in practice, see “CFIUS” in the December 2019 edition of the Project Finance NewsWire.)
CFIUS now has broader authority to review acquisitions of non-controlling interests in US businesses, and certain filings are mandatory for acquisitions closing on or after February 13, 2020.
Legislation enacted in the summer 2018 called the Foreign Investment Risk Review Modernization Act (FIRRMA) expanded the committee’s authority. However, many key changes to existing law did not become effective until final regulations were issued. The final regulations were released in January with a February 13 effective date.