CFIUS Releases Final FIRRMA Regulations
January 22, 2020
On January 13, 2020, the U.S. Department of the Treasury (“Treasury”) released final regulations (the “Final Regulations”) implementing the updates to the foreign investment review process of the Committee on Foreign Investment in the United States (“CFIUS”) contained in the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”).
The Final Regulations, effective February 13, 2020, largely track the September 2019 proposed regulations (the “Proposed Regulations”) to implement FIRRMA’s expansion of CFIUS’s jurisdiction. FIRRMA in turn codified existing CFIUS practice as it has evolved in recent years, particularly with respect to a focus on U.S. businesses involving critical technologies, critical infrastructure, and sensitive personal data, and added a limited mandatory filing regime. The Final Regulations continue this incremental path by incorporating revisions to address issues arising from public comments on the Proposed Regulations and the sunset of the CFIUS pilot program rules (the “Pilot Program”).
The Final Regulations apply to all transactions entered into (binding agreement signed, public offer launched, proxies solicited, or options exercised) after February 13, 2020. An interim rule defining an entity’s “principal place of business” is concurrently effective and open for comment until February 18, 2020. Treasury further delayed implementation of the filing fees called for by FIRRMA, which will be separately addressed in a future rulemaking. Treasury also indicated that future rules will narrow the scope of the critical technologies filing requirements.