Christopher Wall, of Pillsbury, Winthrop, Shaw and Pittman, explains the changes in the CFIUS process: United States: Congress Approves CFIUS Reform Legislation Clearing The Way For Less Political Foreign Investment Reviews (July 25).
This is a very helpful review of the changes and their implications. The bottom line for foreign investors:
Although foreign investors will not see dramatic changes in the way CFIUS reviews transactions, there will be an increased level of scrutiny and, with the expanded concept of national security, more transactions will be subject to CFIUS review. Even when an acquired U.S. company does not have any U.S. government contracts or does not export sensitive technology, the transaction may still raise issues from the standpoint of critical infrastructure or homeland security. Also, as a result of the new legislation, there will likely be more 45-day investigations, particularly if the acquiring company is controlled by a foreign government.
These changes will make foreign investment more difficult, but for most transactions probably only marginally so. Transactions involving companies from countries where the United States may perceive a threat or those that involve the acquisition of assets that could be characterized as "critical infrastructure" will still face political risks. For those transactions, government relations will continue to play an important role in the CFIUS review process, apart from compliance with the purely regulatory aspects of the review. In general, however, with the enactment of the new law, Congress should have greater confidence in CFIUS and the politicization of foreign investment reviews that has been so pronounced during the last year should begin to subside.
Comments