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Sep 2018


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Protecting Critical U.S. Businesses

One of the ways that other countries (including adversaries) gain access to key U.S. technology and know-how is through investment in U.S. businesses (including startups).  There has been an ongoing effort to address this issue with the establishment of the Committee on Foreign Investment in the United States (CFIUS).  However, more changes were needed in order to close loop holes.

On August 3, 2018 a new law was implemented to strengthen CFIUS.  The new law is called Foreign Investment Risk Review Modernization Act (FIRRMA).


 FIRRMA significantly expands CFIUS jurisdiction.  It extends CFIUS jurisdiction to non-passive investment by a foreign person in any U.S. business involved in critical infrastructure or the production of critical technologies or that maintains sensitive personal data that, if exploited, could threaten national security.

The CFIUS jurisdiction further extends to the purchase, lease or concession by or to a foreign person of certain real estate in close proximity to military or other sensitive national security facilities. FIRRMA also provides CFIUS with additional time to review transactions and requires mandatory declarations (a short-form notification of a transaction) in certain cases.

CFIUS has jurisdiction to review any transaction, by or with any foreign person, that could result in control of a U.S. business by a foreign person, in order to identify and address any national security concerns that may be presented as a result of the transaction.


Such threats include, in particular, those presented by foreign-government investment that is part of a strategy to neutralize or surpass the United States’ advantages in technology and gain access to technologies with current or future military applications, including developing commercial technologies that may also have defense or intelligence applications, such as robotics, artificial intelligence and automation.

Upon enactment, certain provisions of FIRRMA will go into effect immediately.  CFIUS will have to develop regulations to implement other provisions. 

FIRRMA added the following transactions that to be covered by CFIUS:


-Real Estate Transactions


-Non-controlling Investments in Companies that Deal in Critical Technology, Critical Infrastructure and Personal Data of U.S. Citizens.


-Changes in Rights of a Foreign Person with Respect to its Investment in a U.S. Business.


-Transactions Structured to Evade CFIUS Review.

Another potentially significant jurisdictional expansion relates to the definition of “U.S. business.” FIRRMA defines “U.S. business” to mean “a person engaged in interstate commerce in the United States.”

Any party or parties to any covered transaction may initiate a CFIUS review of the transaction by submitting a written notice of the transaction to the CFIUS chairperson.

The CFIUS review process currently consists of a 30-day review period, potentially followed by a 45-day investigation period.  The core CFIUS review process currently lasts for up to 75 days.  FIRRMA extends the initial review period to 45 days and authorizes CFIUS to extend the investigation period by an additional 15 days in “extraordinary circumstances,” With these modifications, the CFIUS review process could take as long as 105 days, as opposed to 75 days under current law.

Filing Fee:  Currently, there is no filing fee associated with any notification to CFIUS. FIRRMA authorizes CFIUS to impose a fee of no more than one percent of the value of the transaction or $300,000 (adjusted annually for inflation pursuant to regulations prescribed by the Committee), whichever is less.

FIRRMA retains CFIUS’s authority to initiate a review of a transaction for which action had been completed if any party to the transaction submitted false or misleading material information to the Committee.

The Foreign Investment Risk Review Modernization Act of 2018 [FIRRMA]


By Bill Williams













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