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Foreign Investment Risk Review Modernization Act

Now in Effect
Congress enacted the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) on August 13, 2018. The legislation became effective on February 13, 2020 after the Department of Treasury issued the final regulations.

Changes to Old CFIUS Rules
Previously, the Committee on Foreign Investment in the United States (CFIUS) had the authority to review certain transactions involving foreign investment in the United States. FIRRMA now:

  • Broadens the scope of transactions subject to CFIUS review;
  • Non-controlling investments are now subject to review if foreign persons:
    • Have access to nonpublic technical information in the possession of the U.S business
    • Membership or observer rights on, or the right to nominate an individual to a position on, the board of directors or equivalent governing body of the U.S. business; or
    • Any involvement, other than through voting of shares, in substantive decision-making of the U.S. business regarding:
      • The use, development, acquisition, safekeeping, or release of sensitive personal data of U.S. citizens maintained or collected by the U.S. business;
      • The use, development, acquisition, or release of critical technologies;
      • The management, operation, manufacture, or supply of critical infrastructure
  • Still voluntary except for transactions
    • Where a foreign government is acquiring a “substantial interest” in U.S. businesses involved in critical technologies, critical infrastructure, or sensitive personal data of U.S. citizens; or
    • foreign investments in companies that produce, design, test, manufacture, fabricate, or develop one or more critical technologies
  • Exceptions to mandatory filings include “excepted investors” based on their ties to countries identified as “excepted foreign states” and their compliance with certain laws. However, CFIUS has jurisdiction to review any and all transactions that can result in foreign control of a U.S. business.
  • FIRRMA now applies to foreign investment in certain real estate.

If you have questions about whether your transaction fits into one of the covered categories and the process involved in filing a voluntary notice or mandatory notice or obtaining a “safe harbor” letter from CFIUS, please contact J. Dino Vasquez at DVasquez@karrtuttle.com or 206-224-8023.