Two years ago, regulations implementing the Foreign Investment Risk Review Modernization Act (FIRRMA) came into effect, significantly expanding the jurisdiction of the Committee on Foreign Investment in the United States ( CFIUS) and introducing other notable changes. To help navigate this complex regulatory framework, we have introduced the CFIUS FIRRMA tool, which provides a step-by-step analysis of a proposed transaction to help users determine how FIRRMA would apply to their transaction. We are now pleased to present to you the CFIUS FIRRMA 2.0 Toolwhich has a refreshed look and adds standalone features to greatly enhance the usefulness of the tool for investors and the industry.
White & Case CFIUS FIRRMA Tool 2.0
Like us Previously reported, FIRRMA’s implementing regulations came into effect on February 13, 2020 and significantly expanded the jurisdiction of CFIUS. Since then, CFIUS has seen an unprecedented increase in filings as FIRRMA has captured more transactions, with many investors and companies finding their transactions within CFIUS jurisdiction. Moreover, as we reported last yearCFIUS has significantly increased its efforts to identify and review unnotified transactions of interest, raising the stakes for investors whose investments fall under CFIUS jurisdiction.
To help investors and the industry manage this significant risk, the White & Case CFIUS 2.0 tool provides an online, step-by-step analysis of a proposed transaction to help users determine whether the transaction could be subject to the jurisdiction of CFIUS under FIRRMA and whether any mandatory filing requirements would apply. Additionally, the tool now offers standalone functions to determine whether a target company is considered a US TID company (i.e. a US company specializing in critical technologies, critical infrastructure or sensitive personal data) and to determine whether a foreign investor is considered a US business. an excluded investor (meaning an investor subject to certain nationality requirements who may be exempt from CFIUS extended jurisdiction or mandatory filing requirements). As before, the tool’s comprehensive jurisdictional assessment includes an integrated U.S. TID business assessment and helps determine whether CFIUS may have jurisdiction to review a voluntary filing or if a filing may be mandatory. TID US’ stand-alone business function focuses solely on the key jurisdictional issue of whether the target business is a TID US business, which has significant implications as to whether parties to a transaction must or should submit a CFIUS filing. . The stand-alone excepted investor function focuses only on whether the foreign investor is an excepted investor, which may exempt the transaction from certain parts of CFIUS regulation.
The potential penalties for non-compliance with FIRRMA are significant, including potentially up to the value of the trade for non-compliance with mandatory deposit requirements. Therefore, an accurate and thorough jurisdictional analysis is essential for any transaction that may potentially fall within the scope of FIRRMA. To that end, our CFIUS FIRRMA Tool 2.0 continues to guide the user through the essential elements of CFIUS jurisdiction under both FIRRMA’s investment regulations and its real estate regulations to help the user to determine if the transaction could fall under the jurisdiction of CFIUS. , and its enhanced functionality offers quick guidance on key jurisdictional threshold issues. Please note that the CFIUS FIRRMA 2.0 Tool is intended as a guide for informational purposes only – it does not replace legal advice, does not constitute legal advice, or provide a final decision. Additionally, this tool is subject to change based on regulatory changes and additional guidance from CFIUS. Users should engage CFIUS counsel to discuss regulatory compliance with specific transactions.
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Brittany Henderson (White & Case, Law Clerk, Americas Competition – Trade, Washington DC) contributed to the development of this publication.