CFIUS Treatment of Excepted Countries and Investors
The Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) was enacted 18 months ago, expanding the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”) and mandating CFIUS filings for certain transactions. When reviewing the new legislation, countries and investors around the world seized on language in FIRRMA authorizing CFIUS to limit the application of some of these new provisions to “investments of certain categories of foreign persons.”
On January 13, 2020, CFIUS released final regulations implementing FIRRMA, including the awaited exemptions, which will be applicable to certain investors from CFIUS-approved countries. These regulations will take effect on February 13, 2020. This note explains which investors will qualify as “excepted investors” and “excepted real estate investors” under the new regulations and the benefits and limitations of receiving those designations.
FIRRMA’s expansion of CFIUS jurisdiction and new filing requirements are particularly complex; understanding these new rules and the application of the exemptions described in this note will require transaction-specific analysis. We strongly recommend that prospective parties consult with experienced counsel to better understand changes to the CFIUS regulatory regime.
