On April 15, 2024, the U.S. Treasury Department (Treasury), as the Chair of the Committee on Foreign Investment in the United States (CFIUS or the Committee), published a notice of proposed rulemaking (NPRM) “to enhance certain CFIUS procedures and sharpen its penalty and enforcement authorities.”  In particular, the proposed new measures would expand the authority of CFIUS to gather information related to both notified and non-notified transactions, impose more significant civil penalties on transaction parties, and alter procedures related to the negotiation of mitigation agreements.  The proposed changes to CFIUS’s regulations are meant “to more effectively deter violations, promote compliance, and swiftly address national security risks in connection with CFIUS reviews,” Assistant Secretary for Investment Security Paul Rosen said in a statement on Thursday.  This represents the first significant update to the CFIUS regulations since the enactment and implementation of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which significantly expanded the scope of CFIUS’s jurisdiction. Continue Reading CFIUS Proposes Important Changes to Foreign Investment Rules with Focus on Enforcement

On July 31, 2023, the Committee on Foreign Investment in the United States (CFIUS) released its Annual Report to Congress for Calendar Year 2022.  CFIUS is the inter-agency body charged with conducting national security reviews for certain foreign investments in the United States.  The CFIUS process is generally confidential, but the annual report provides aggregate data on certain CFIUS activities and offers the private sector insight into current Committee trends.Continue Reading Key Takeaways from the 2022 CFIUS Annual Report

On September 15, 2022, President Biden issued a new executive order (EO), entitled “Executive Order on Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States,” that directs CFIUS to consider certain risk factors when reviewing covered transactions.  CFIUS-related executive orders are rare and have typically been used to establish procedures and processes, rather than provide substantive guidance to the Committee.  President Biden’s order is unusual in that it goes beyond process considerations and directs the Committee to consider specific substantive risks as part of its reviews.  According to a White House fact sheet, this is the first EO “since CFIUS was established in 1975 to provide formal Presidential direction on the risks that the Committee should consider when reviewing a covered transaction.”

The EO does not alter the legal powers granted to CFIUS, including the scope of transactions which it can review.  Nor does it contain any provisions regarding outbound investments (sometimes called “reverse CFIUS”), which was recently proposed in Congress and on which the Administration is considering taking executive action in the near term.

However, it provides important insight into the Administration’s thinking with respect to national security issues linked to foreign investment and puts both US businesses and foreign investors involved in certain industries, or engaged in certain activities, on notice that CFIUS may more closely scrutinize their deals.Continue Reading Rare Executive Order Sharpens CFIUS Focus

On August 2, 2022, the Committee on Foreign Investment in the United States (“CFIUS” or “Committee”) released its statutorily required Annual Report to Congress for Calendar Year 2021.  CFIUS is the inter-agency body charged with conducting national security reviews for certain foreign investments in the United States.  While the CFIUS process is generally confidential, the annual report provides aggregate data on certain CFIUS activities and offers industry a window into current Committee trends.
Continue Reading Key Takeaways from the 2021 CFIUS Annual Report

On September 15, 2020, the Committee on Foreign Investment in the United States (CFIUS), the inter-agency U.S. government body responsible for reviewing certain forms of inbound investment for national security risks, published a final rule, effective October 15, making important changes to the rules defining “critical technology” transactions subject to mandatory filing requirements.

CFIUS has traditionally allowed, but not required, parties to “covered transactions” to submit a filing to CFIUS to seek approval of their transaction.  However, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) authorized CFIUS to mandate filings for certain types of transactions.  Transactions subject to mandatory filings under FIRRMA fall into two categories: certain investments involving “critical technology” and certain investments involving foreign governments.  (See our prior International Law Advisory on FIRRMA’s implementing regulations here).

The final rule changes the circumstances in which a “critical technology” investment will trigger a mandatory filing requirement.  The rule ends the use of North American Industry Classification System (NAICS) codes to identify specific industries subject to mandatory “critical technology” filings, in favor of a filing requirement based on U.S. export controls.  A mandatory “critical technology” filing requirement is triggered under the final rule when a “U.S. regulatory authorization” would be required for the export, reexport, or transfer (in country) of the U.S. target company’s goods or technologies to the foreign investor or certain other foreign persons involved in the transaction.  The final rule also makes modest clarifications to the second category of transactions involving foreign government interests.  (See our prior blog post on the proposed version of the rule here).Continue Reading New CFIUS “Critical Technology” Mandatory Filing Rules Increase Importance of Export Controls Analysis

In July 2020, the Committee on Foreign Investment in the United States (“CFIUS”) released its Annual Report to Congress for Calendar Year (“CY”) 2019.  The Annual Report, which fulfills certain statutory reporting requirements, provides information on covered transactions filed with CFIUS during 2019.  Among other things, the 2019 Annual Report provides some initial data and other insights into CFIUS’s administration of the Foreign Investment Risk Review Modernization Act (“FIRRMA”), which expanded the jurisdiction of CFIUS and included new reporting requirements.
Continue Reading Analysis of Annual Report of CFIUS to Congress for Calendar Year 2019

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On February 13, 2020, the final rules implementing changes to the Committee on Foreign Investment in the United States’ (CFIUS) jurisdiction and review process, as required under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), take effect.

CFIUS, the inter-agency body

Click here for the Chinese translation of this post.

On January 13, 2020, the Committee on Foreign Investment in the United States (CFIUS) published final rules implementing changes to the committee’s jurisdiction and review process as required under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The regulations become effective on February 13, 2020.

Under the new rules, CFIUS, which is the inter-agency body charged with reviewing certain inbound foreign investment in the United States for national security-related concerns, will be able to review a variety of new transaction types. Among other changes, the rules allow CFIUS to review so-called “non-controlling” investments in US businesses engaged specific activities related to critical technologies, critical infrastructure, and sensitive personal data of US citizens. The rules also extend CFIUS’s jurisdiction to certain transactions involving real estate located within or functioning as part of an air or maritime port and real estate in close proximity to sensitive US government facilities.Continue Reading CFIUS Publishes Final Rules, Implements Sweeping Changes to US Foreign Investment Reviews

The US Department of the Treasury (“Treasury”) published two proposed rules on September 24, 2019 that would significantly expand the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”) to review inbound U.S. foreign investment for national security risks.  The proposed rules, which have been in the works for months, would implement

In recent weeks, Reuters and other media outlets have reported that Beijing Kunlun Tech Co., Ltd. (Kunlun), the owner of the popular gay dating app Grindr, was seeking to sell the app due to concerns raised by the Committee on Foreign Investment in the United States (CFIUS). CFIUS is the interagency US government committee with authority to review foreign acquisitions of, and certain investments in, US companies that present US national security concerns.

According to these reports, CFIUS initiated a review of Kunlun’s acquisition of the US-based Grindr based on the sensitive nature of the personal data the app collects on US citizen users. The Grindr case has generated headlines due to the odd paring of a dating app owned by a Chinese gaming company and US national security. In our view, the case confirms the continued validity of several recent trends in US government policy and procedures for reviewing foreign investments in the United States.
Continue Reading When Dating Becomes a National Security Concern: CFIUS Forces Sale of Chinese Owned Dating App