On September 15, President Biden signed the first-ever Executive Order (E.O.) on CFIUS – the Committee on Foreign Investment in the United States. While the E.O. does not substantively change CFIUS’s jurisdiction or the legal process, the Biden Administration provides some explicit guidance on certain national security priorities and factors for CFIUS to consider when evaluating transactions – focusing in on protecting U.S. technological advantage, supply chain resiliency, and sensitive data from U.S. adversaries. No doubt, the E.O. will impact certain cross-border transactions and investments as CFIUS develops strategies to incorporate the E.O. into practice and align national security priorities with other national security tools.
So you’d like to build a new fabrication facility in China, or just add some capabilities to your existing plant? Well, the U.S. Government may want to have a look at that transaction—and may soon have the authority to stop that transaction.…
A new framework for foreign direct investments in the United Kingdom
- The United Kingdom Government has adopted a CFIUS-style National Security and Investment Act (“the Act”).
- The new law takes effect in later in 2021, but UK Government may look back at deals from November 2020 onward.
- The Act is considered one of the most far-reaching systems in the world, carrying civil and criminal penalties for a failure to notify.
- A notifiable acquisition completed without the approval of the Secretary of State is void (of no legal effect).
- The UK Government has stated that it will work closely with investors to help ease the market into the new framework of investment rules.
On January 19, 2021, the U.S. Department of Commerce (“DOC”) issued an interim final rule governing transactions in Information and Communication Technology or Services (“ICTS”) involving “foreign adversaries.” Although the rule takes effect on March 22, 2021, it allows DOC to review covered transactions initiated, pending, or completed on or after January 19, 2021.
Continue Reading Friend or Foe? The DOC Issues New Interim Rule on Transactions Involving Information and Communication Technology or Services (“ICTS”) and Foreign Adversaries
→ The new National Security and Investment Bill expands the UK government’s powers to intercede in acquisitions of UK companies where it determines there is a potential national security threat.
→ The Bill creates a new government agency, the Investment Security Unit (ISU) to oversee foreign direct investment review, removing the power from the competition/antitrust regulator, the CMA.
→ Regulators will be able to “call in” transactions that were not notified but that the Secretary of State determines may pose a national security risk.
→ A mandatory notification will be introduced for certain sectors, including penalties for failure to notify, but the details of those requirements have not been completed.
Continue Reading CFIUK: The United Kingdom Introduces a New Mechanism for Foreign Direct Investment Screening
Over the past few weeks, we have been speculating on the international trends and tides we expect to see in the next four years under a new U.S. presidential administration. So that you can enjoy our prognostications (before our program gets greenlighted as a Netflix special) we provide here:
- A recording of our webinar, entitled “The Four Years in International Business Webinar”
(for those playing along at home, see if you can spot the part where Scott’s power goes out while we’re discussing tariff reductions!)
- A bulleted summary of the key takeaways of our webinar.
On October 15, 2020, CFIUS will officially tie mandatory filings to U.S. export control regimes, including the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). While that change may draw a clearer line of what constitutes a mandatory filing, it also pulls your CFIUS review into the complex (and somewhat nerdy) world of export regulations.
Continue Reading Lend Me Your EARs: CFIUS Makes Export Controls a Trigger for Mandatory Filings
The UK government has now made a show of force in its foreign direct investment (FDI) reviews.
For the first time, the UK Secretary of State issued an order to prevent a transaction for raising public interest considerations. Specifically, the UK Government blocked the prospective deal on national security grounds. In the September 5, 2020 notice, the UK Government accepted commitments from Gardner Aerospace Holdings Limited (Gardner) to not proceed with its proposed acquisition of Impcross Limited (Impcross), a UK-based manufacturer of components for the aerospace and military aircraft industry.
Continue Reading CFIUK? The UK Brings Heavier Scrutiny to Its Foreign Investment Reviews
The Takeaway: Severe restrictions on ByteDance’s Sale of TikTok should be a warning to media and tech companies with foreign ownership, particularly Chinese investment, to know your risks and mitigate them before the government comes knocking.…
Continue Reading UPDATE: National Security Meets Teenage Dance Battles: U.S. Increases Pressure on ByteDance Sale of TikTok
On August 6, 2020, Trump issued two separate executive orders that will severely restrict TikTok and WeChat’s business in the United States. For weeks, the media has reported on Trump’s desire to “ban” TikTok with speculation about the legal authority to do so. We break down the impact of the Orders below.
Continue Reading National Security Meets Teenage Dance Battles: Trump Issues Executive Orders Impacting TikTok and WeChat Business in the U.S.
On May 21, 2020, a proposed rule change brought the threat of a mandatory CFIUS filing to investments across all U.S. industries. The U.S. Department of Treasury proposed a rule that removes a restriction formerly in the Foreign Risk Review Modernization Act’s (FIRRMA) that limited mandatory filings with the Committee on Foreign Investment in the United States (CFIUS) to only 27 industries.
The proposed rule is consistent with a series of changes by the Trump Administration aimed at decreasing Chinese access to U.S. technology (through export controls, FDI review, and other restrictions). However, the rule change may create complications for investments from a wide range of countries.
Continue Reading CFIUS UPDATE ISSUE — Well I Do Declare: Mandatory Declarations Everywhere