August 2, 2021

National Security: 2020 CFIUS Annual Report

The Committee on Foreign Investment in the United States recently published its Annual Report to Congress on all notices and declarations filed with CFIUS in 2020 and all reviews or investigations completed during the year.  This Fried Frank memo summarizes the results of the report and discusses emerging trends.  This excerpt discusses CFIUS’s 2020 investigations:

In 2020, 47% (88) of the 187 notices went into the 45-day investigation phase, following the 45-day review phase. This is consistent with 2019, when 49% of notices went into the investigation phase. The clearance rate during the review period has increased considerably since the August 13, 2018 effective date of FIRRMA, which extended the statutory review period from 30 to 45 days.

In 2017, prior to the implementation of FIRRMA, 73% of notices proceeded to the investigation phase. Similarly, 76% of notices filed in 2018 before FIRRMA’s effective date proceeded to investigation. The rate of investigation in 2020 may reflect not only CFIUS’s time pressure easing as a result of the additional time in the review period, but also the decrease in inbound sensitive Chinese investment that often triggered a CFIUS investigation.

Transaction notices were filed from 40 different countries in 2020. Japan was the largest filer with 19. China was second with 17 notices, which the memo points out continued a 3 year downward trend in filings by Chinese acquirers, which peaked at 60 in 2017.

John Jenkins