On August 13, President Trump signed into law The Foreign Investment Risk Review Modernization Act (the “Act”). The Act significantly defines the scope of what was previously extremely vague—that is, how the U.S. government may review and restrict foreign investment in the U.S. Prior to the Act, the President had virtually unlimited authority to review a foreign company or person’s acquisition of control of U.S. companies through a review by the Committee on Foreign Investment in the United States (CFIUS). Although CFIUS very seldom intervened to prevent foreign acquisitions of U.S. companies, it did so in highly visible and controversial instances. The Act represents Congress’ imprint on this process and both clarifies and expands the types of foreign investment that fall within CFIUS’ jurisdiction. Any international company that considers investing in the U.S. should be aware of the requirements under the Act.
CFIUS, an inter-agency committee, is charged with reviewing foreign investment in the U.S. that may threaten to impair national security. Historically, CFIUS has primarily focused on acquisition by a foreign person that may result in a foreign person’s obtaining “control” over a U.S. business. The Act authorizes CFIUS to expand its scope of review to include several other types of transactions, in addition to those traditionally involving a foreign person’s control over a U.S. business: