FOREIGN INVESTMENT – FIRRMA Extends CFIUS Jurisdiction
March 01, 2019
The Committee of Foreign Investment in United States (CFIUS) was established in 1975, chaired by the US Secretary of the Treasury and composed of 16 representatives from different agencies and departments in the US government. CFIUS screens foreign investment for national security implications.
The US is the largest beneficiary of foreign direct investment (FDI) and CFIUS’s primary focus is to scrutinize the merger and acquisition of US businesses of critical infrastructure. Critical infrastructure is a term coined by the Department of Homeland Security to describe assets that are essential for the functioning of US society and economy. Initially CFIUS focus was to monitor acquisitions of US businesses believed to have major implications for US national interest (i.e., the public health sector, telecommunications, sensitive technologies).
Most recently, CFIUS jurisdiction expanded under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) that was signed into law in August 2018. In effect, CFIUS’ jurisdiction now extends beyond mergers, acquisitions and takeovers that could result in a foreign person or body controlling critical US infrastructure and includes four additional covered transactions. The following four transactions are also subject to CFIUS screening:
A summary of FIRRMA can be found at the US Department of the Treasury website: https://www.treasury.gov/resource-center/international/Documents/Summary-of-FIRRMA.pdf
In sum, foreign investors need to carefully consider their business ventures or activities prior to making any direct foreign investments in the US. For anyone considering a foreign investment in the US we invite your to contact our offices at 619-432-5145 for a free consultation with one of our experienced investment attorneys.