On January 13, 2020, the U.S. Department of the Treasury (Treasury) issued final and interim regulations implementing the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to review foreign investments and mitigate any potential national security concerns. While the final regulations largely track the proposed regulations issued on September 17, 2019, Treasury has made refinements and added several clarifying examples. See Sidley’s previous Update on the proposed regulations.
Following the structure of the proposed regulations, the final regulations were issued in two parts: one part covers investments in real estate, available here, while the other covers certain other investments in U.S. businesses, available here. Treasury simultaneously released a number of frequently asked questions on the proposed regulations, available here, and a fact sheet, available here.
The final CFIUS regulations will go into effect on February 13, 2020.
On May 15, 2019, President Donald Trump signed an executive order (EO) declaring a “national emergency” related to certain threats against information and communications technology and services (ICTS) in the United States and authorizing the Department of Commerce to block transactions that involve ICTS with a “foreign adversary.” The EO provides for the possibility of a licensing regime that could allow transactions that would otherwise be blocked. The EO is available here.
The EO itself does not mention any particular countries or companies that would be subject to its prohibitions. However, the EO is widely reported to be aimed at China. Indeed, tensions between the United States and China have intensified over the past week, after negotiations between the two governments to resolve their trade dispute stalled.