LEGISLATION REFORMS COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES (CFIUS)
September 11, 2018
On August 13, 2018, President Trump signed into law the National Defense Authorization Act of 2019 and the Foreign Investment Risk Review Modernization Act (FIRRMA). FIRRMA contains a series of reforms to the Committee on Foreign Investment in the United States (CFIUS).
Before FIRRMA, CFIUS reviewed only transactions that would give foreign entities control over or access to a sensitive U.S. asset. With FIRRMA now signed into law, the definition of control now includes the concept of influence. CFIUS will now have the ability to review non-control investments in the critical infrastructure or technology sectors as well as those that give a foreign person influence over a U.S. entity or access to nonpublic information. Examples include the right to be on the board of a company, nominate a board member or even just observe the board.
Ultimately, however, FIRRMA’s reforms to CFIUS will not change the process for how the interagency committee assesses national security risks or the process for assessing individual transactions. While CFIUS will now focus on a broader range of transactions after FIRRMA, the reforms do not necessarily guarantee that fewer transactions will be approved. Since FIRRMA was signed into law, several leading CFIUS experts have stated publicly that the legislation will not fundamentally change how CFIUS assesses transactions.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
Share This Post
Authors
