January 16, 2020

National Security: Treasury Adopts Final FIRRMA Regs

On January 13, 2020, the Treasury Department issued final regulations implementing the Foreign Investment Risk Review Modernization Act, or FIRRMA.  Here’s an excerpt from this Shearman & Sterling memo summarizing the regulations:

The final regulations implement key provisions of the Foreign Investment Risk Review Modernization Act (FIRRMA) enacted by Congress in August 2018. First, the regulations expand the jurisdiction of CFIUS to review minority, non-controlling investments in U.S. businesses developing or producing critical technologies; owning or operating U.S. critical infrastructure assets; and possessing or collecting sensitive personal data of U.S. citizens.

Second, the regulations mandate CFIUS filings for many foreign investments in U.S. businesses producing or developing certain critical technologies and for transactions in which a foreign government-controlled entity acquires control of certain U.S. businesses. Lastly, the regulations significantly broaden CFIUS’s jurisdiction by providing it with authority to review foreign acquisitions of certain U.S. real estate interests.

The final regulations exempt certain investors from Australia, Canada and Great Britain from the mandatory filing requirements and from CFIUS’s expanded authority to review non-controlling minority investments and acquisitions of certain U.S. real estate interests. These exemptions had been eagerly anticipated as they represent the first blanket exemptions from CFIUS regulation for any category of foreign investors.

The Treasury Department indicated that it may consider exempting investors from other countries in the future.  The key provisions of the final regs generally track those contained in the proposed regs issued last September, and the regulations will go into effect on February 13, 2020.  We’re posting memos in our “National Security Considerations” Practice Area.

John Jenkins