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Yesterday, the Treasury Department issued regulations for a pilot program under the “Foreign Investment Risk Review Modernization Act.” The pilot program focuses on controlling & non-controlling investments in U.S. businesses involved with a “critical technology” in any of 27 industry sectors.

Most export-controlled technologies are considered “critical technologies” under the pilot program. Industry sectors covered by the program include a variety of aerospace & defense, infrastructure, industrial, & technology businesses. This Akin Gump memo summarizes the new regulations. Here’s an excerpt addressing the program’s mandatory notification requirement:

The pilot program establishes a mandatory declarations requirement for transactions that (i) could result in control of a Pilot Program U.S. Business by a foreign person or (ii) involve a noncontrolling investment in a Pilot Program U.S. Business. The parties to such transactions may either submit a written notice that triggers a full CFIUS review or a “declaration” (i.e., abbreviated notices that generally should not exceed five pages in length).

If parties file a declaration, CFIUS will have 30 days to either clear the transaction, request a written notice, initiate a CFIUS review or inform the parties that CFIUS did not have enough time to complete its review and that the parties may submit a written notice.

Here’s the Treasury’s Fact Sheet on the pilot program. The program will become effective on November 10, 2018. The memo notes that it doesn’t apply to certain transactions that were under a binding written contract prior to October 11, 2018. We’re posting memos in our “National Security Considerations” Practice Area.

– John Jenkins