Reed Smith Client Alerts

The most recent annual report from the Committee on Foreign Investment in the United States (CFIUS or the Committee) to Congress covers the 229 notices and 21 declarations that were filed for CFIUS’s review in the 2018 calendar year. The report also provides initial insight on the effects of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) and recent regulatory changes, while confirming the continuation of other trends in CFIUS practice.

Authors: Michael J. Lowell Sarah S. Wronsky Lizbeth Rodriguez-Johnson Paula A. Salamoun Manasi Venkatesh Courtney E. Fisher

CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States and the effect of those transactions on U.S. national security. The Committee is required under Section 721(m) of the Defense Production Act of 1950, as amended by FIRRMA, to provide an annual report to Congress containing, among other things, specific, cumulative, and trend information related to transaction filings. In addition to the recent release of its 2018 Annual Report, CFIUS also separately released a summary of data for covered transactions for the years 2015-2019, providing the first glimpse into statistics surrounding CFIUS filings for the 2019 calendar year. A summary of the filing data provided in these reports is set forth in the following table:

CFIUS table summarizing filing data from 2015 to 2019

 
 
 
 
 
 
 
 

We discuss five takeaways and trends from the 2018 Annual Report below.

1. FIRRMA’s extension of the review period allowed CFIUS to clear more transactions without investigation and to continue this trend into 2019.

FIRRMA, the long-overdue legislative overhaul designed to strengthen and modernize the ability of CFIUS to protect national security, was enacted on Aug. 13, 2018. Some provisions of the legislation took effect immediately, while others were implemented at later dates. (The implementation of FIRRMA was completed on Feb. 13, 2020 – read more at reedsmith.com). Not surprisingly, this mid-year change in regulations and procedures had some immediate impact on filings, as reflected in the 2018 Annual Report data.