On August 9, 2023, President Biden issued an Executive Order (E.O.) ordering the issuance of outbound investment restrictions. This E.O. comes after nearly a year of anticipation (as we have documented on several occasions over the past year). This is the start of the reverse Committee on Foreign Investment in the United States (CFIUS) process that has been mostly speculation (and blog articles) until yesterday. In conjunction, the Treasury Department issued a press release, fact sheet, and Advance Notice of Proposed Rulemaking (ANPRM) seeking comments from the public on the proposed restrictions by September 28.Continue Reading Reverse CFIUS Unveiled: Focus on China, Semiconductors, Artificial Intelligence, and Quantum Computing
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
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
Robotic exoskeletons may augment human strength, endurance, and mobility. The latest CFIUS action has all the makings of a Terminator movie.
This month, the Committee on Foreign Investment in the United States (“CFIUS”) pushed back on a U.S. and Chinese joint venture (“JV”) in the biotech sector. The U.S. party to the JV, Ekso Bionics Holdings, Inc., is developing exoskeleton technology for medical and industrial uses. However, CFIUS required a termination of that JV with facilities in China and investments by Chinese partners.
Continue Reading CFIUS UPDATE ISSUE — CFIUS Scrutiny in Biotech: The Ekso Case and the Eye of the Terminator
The pandemic that has put our world a bit sideways has, as you might expect, set back our publication date. We should have paper copies of the (much anticipated) CFIUS Book: Second Edition available by mid-May 2020. However, because we have the text ready, we will publish a series of preview excerpts for your review and, of course, as teasers for the New York Review of Books.
In this excerpt we discuss a new decision that investors will face as they approach investment in the United States, whether to file a full Joint Voluntary Notice or to file a short-form Declaration, also sometimes referred to as “CFIUS Lite.”
Please don’t hesitate to reach out and tell us what you think.
- On October 10, 2018, the Committee on Foreign Investment in the United States put into effect the first mandatory filing requirement ever imposed by CFIUS. The Department of Treasury’s summary of the Pilot Program is available here.
- Effective November 10, 2018, CFIUS will require reviews of critical technology investments – including certain non-controlling investments – from any country.
- A failure to file notice or a new short form declaration to CFIUS may result in a civil monetary penalty up to the value of the transaction.
- The requirements will not apply to any transaction that is completed prior to November 10, 2018 or any transaction for which the material terms were established prior to October 11, 2018.
On August 13, 2018, President Trump signed FIRRMA into law. FIRRMA is a transformational expansion of the authority of the Committee on Foreign Investment in the United States (CFIUS) to review certain transactions that previously eluded the Committee’s jurisdiction (discussed in our blog, here). Congress left many critical aspects of the FIRRMA framework to be addressed through regulations promulgated by the Department of Treasury. Although we do not expect final rules to be forthcoming until late 2019 or early 2020, Congress empowered the Department of Treasury to “test-drive” parts of FIRRMA through Pilot Programs. Those programs can be implemented simply, taking effect 30 days after publication of the program requirements in the Federal Register. The adoption and implementation of the Pilot Program for critical technologies represents the Department of Treasury’s first attempt to implement substantive parts of FIRRMA prior to issuing formal regulations.
Continue Reading FIRRMA Takes Form as CFIUS Enacts a New Pilot Program Targeting “Critical Technologies”
This week, you have likely heard about FIRRMA, the Foreign Investment Risk Review Modernization Act, the law that will expand CFIUS. We have written about a number of aspects of the new law as it was being made, including the following:
- Expanding CFIUS Jurisdiction
- A CFIUS Focus on Emerging Technology
- Effects on Chinese Investment
- Enhancement of Export Controls
- Potentially CFIUS-Exempt Countries
In this alert, we provide a quick overview of the major points of that law.
Continue Reading Expanding CFIUS: New Law Strengthens And Slows Investment Review
All this past week, you have been hearing about FIRRMA, the new legislation that will increase the powers of the Committee on Foreign Investment in the United States that is expected to be signed into law in the coming weeks. As we predicted here and here, FIRRMA will authorize CFIUS to review non-controlling investments by foreign companies, to enhance restrictions on investment in certain “critical technology,” to target real estate deals in proximity to sensitive U.S. Government sites, and to require mandatory filings for certain investments by foreign government-owned entities.
Continue Reading Life in the Fast Lane: CFIUS-Free Investments, if You’re From the Right Country
This week, there were reports that the Trump Administration would use emergency powers to restrict Chinese investment in the United States. On Wednesday, the White House backed away from that position after the House of Representatives passed a bill on Tuesday expanding and increasing the powers of the Committee on Foreign Investment in the United States (CFIUS). The bill is called the Foreign Investment Risk Review Modernization Act (FIRRMA).
Continue Reading On FIRRMA Ground: Congress to Restrict Foreign Investment and Expand Export Controls
- CFIUS takes an unprecedented step to fend off a potential foreign acquisition
- The threat that China will eclipse the U.S. in telecommunications infrastructure and technology is central to U.S. national security
- Five key takeaways from the most recent CFIUS action
Since late 2017, Singapore-based semiconductor company Broadcom has been pursuing a $117 billion hostile takeover bid for Qualcomm, its U.S.-based rival whose chips are omnipresent in U.S. telecommunications infrastructure, including consumer devices like smartphones and tablets. As part of its hostile bid, Broadcom nominated its own slate of six directors who were to be voted on at Qualcomm’s annual stockholders meeting, originally scheduled for March 6th. However, earlier this week the Committee on Foreign Investment in the United States (CFIUS) announced that it “issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days. This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm.”
Continue Reading Chips on Their Shoulders: CFIUS Intervenes in Broadcom’s Hostile Takeover Bid for Qualcomm
CFIUS is expanding its reach. Where the Committee on Foreign Investment in the United States has generally scrutinized foreign acquisition of U.S. “critical infrastructure,” it has now signaled that it may look closely at any deal where the target collects or maintains sensitive personal information.
Continue Reading In-fo’ a CFIUS Review: The Expanding Power of CFIUS through Data Security Scrutiny