On January 13, 2020, the Committee on Foreign Investment in the United States (CFIUS) published final rules implementing changes to the committee’s jurisdiction and review process as required under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The regulations become effective on February 13, 2020.

Under the new rules, CFIUS, which is the inter-agency body charged with reviewing certain inbound foreign investment in the United States for national security-related concerns, will be able to review a variety of new transaction types. Among other changes, the rules allow CFIUS to review so-called “non-controlling” investments in U.S. businesses engaged specific activities related to critical technologies, critical infrastructure, and sensitive personal data of U.S. citizens. The rules also extend CFIUS’s jurisdiction to certain transactions involving real estate located within or functioning as part of an air or maritime port and real estate in close proximity to sensitive U.S. government facilities.

While submission of CFIUS filings remains a largely voluntary process (parties who believe their transaction may implicate national security often elect to file with the Committee in order to receive a “safe harbor” from later review and associated action), the rules do require mandatory filings for certain transactions involving foreign governments and continue the mandatory filing requirements for certain covered transactions involving critical technologies currently subject to the CFIUS pilot program.

The final rules appear to track fairly closely to the proposed rules published by CFIUS in September 2019 (see our previous advisory here). However, they also contain a number of important changes based on the Committee’s review of public comments. As explained in a Department of the Treasury summary, these changes include:

  • adding a definition for “principal place of business”;
  • modifying certain criteria to qualify as an “excepted investor”;
  • clarifying the application of the “incremental acquisition rule”;
  • adjusting the treatment of genetic data within the definition of “sensitive personal data”;
  • refining the application to investment funds, including by amending the definition of “substantial interest”;
  • modifying the exceptions for certain real estate transactions in airports and maritime ports; and
  • refining the geographic coverage relating to certain military installations on appendix A to the real estate regulations.