CFIUS reforms and their impact on FI into the US

On 10 October 2018, the US Treasury Department, which chairs the Committee on Foreign Investment in the United States (CFIUS), issued an interim rule to implement portions of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The newly implemented interim rule brings big changes to CFIUS reviews by:

(1) Making the CFIUS process mandatory for covered foreign investments; and

(2) Broadening the definition of “covered transaction” under CFIUS.

The CFIUS is a federal multi-agency committee chaired by the treasury secretary and its members include secretaries of homeland security, commerce, defence, state, energy and labour, the attorney general, the directors of national intelligence, the US trade representative, and the director of the office of science and technology policy. The multi-agency committee is charged with protecting US national security by reviewing economic transactions initiated by foreign entities. However, prior to enacting FIRRMA, the CFIUS was only a voluntary process to review the transactions that could result in foreign control of a US business.

Wang Jihong is a senior partner and Zhao Huiqi is an associate at Zhong Lun Law Firm