President Trump signs Foreign Investment Risk Review Modernization Act

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特朗普签署《外国投资风险审查现代化法案》
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US President Donald Trump signed into law on 6 August the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), marking the most significant changes to the law governing the Committee on Foreign Investment in the US (CFIUS or committee) since the creation of the US foreign investment regime in 1988. Although prompted primarily by national security concerns with Chinese investments, the legislation will affect investments by all foreign investors. The changes reflect a trend across advanced markets for greater scrutiny of inbound investments.

While Congress has declared that the US continues to welcome investments from abroad, the FIRRMA grants the administration new tools to regulate foreign direct investments raising national security concerns. The FIRRMA expands the jurisdiction of CFIUS to scrutinize inbound investments and creates mandatory declaration requirements for foreign government-affiliated investors and for other investments designated by CFIUS. The law makes a series of other changes that strengthen CFIUS’s authority, delegates broad rule-making authority to the committee, and authorizes the sharing of information on transactions with allied governments for the first time.

The FIRRMA enactment will launch a major rule-making process at the same time that CFIUS agencies must expand staff numbers significantly. While extended timelines for the CFIUS review process will go into force immediately, most FIRRMA provisions will phase in only after the issuance of regulations and expansion of staff, processes that will likely take over a year. Meanwhile, the administration will initiate a related regulatory process of classifying and imposing licensing requirements for exports of “emerging” and “foundational” technologies. This effort could affect cross-border transactions more broadly, including outbound investments from the US.

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Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at danian.zhang@bakermckenzie.com

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