PwC | United States

Congress acts on changes to Committee on Foreign Investment in the US (CFIUS)

Congress is considering legislation that would alter the operation of the Committee on Foreign Investment in the United States (CFIUS).

CFIUS is an inter-agency committee authorized to review transactions that could result in control of a US business by a ‘foreign’ person to determine whether the transactions might constitute a risk to national security.

US Senate and House of Representatives bills – both titled the ‘Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018’ – would expand the types of transactions and technologies that CFIUS may review, potentially making some US inbound investments more difficult and costlier. The House approved its bill on June 26, 2018. Provisions of the Senate’s bill were incorporated in the Senate version of the National Defense Authorization Act (NDAA), which the Senate approved on June 18, 2018.

Key Foreign Investment Risk Review Modernization Act (FIRRMA) provisions

CFIUS’s process was last revised by legislation in 2007; since then, there has been growing concern in Congress that CFIUS lacks the authority and resources to adequately conduct its intended function. S. 2098 and H.R. 5841 aim to address some of the perceived shortcomings of the CFIUS process. The bills would expand the number of transactions that CFIUS may review and grant CFIUS additional authority. Key provisions are:

Covered transaction definition
Filing procedures
Definitions and exemptions
National security analysis
Emerging technologies

If legislation reflecting the provisions of the bills is enacted, it will represent significant changes in how many and what types of transactions are reviewed by CFIUS. US inbound companies intent on making significant investments in the United States should familiarize themselves with the provisions and understand how they might affect any contemplated transactions.