Treasury Publishes Long-Awaited Proposed Regulations to Implement CFIUS Reform Legislation (FIRRMA)
On September 17, 2019, the Office of Investment Security of the U.S. Department of the Treasury issued two proposed regulations intended to fully implement the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”). FIRRMA was enacted to expand the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS” or “Committee”) and modernize its procedures. Long-awaited by foreign investors, U.S. companies and investment firms, the proposed regulations offer a great deal of color on the means by which CFIUS expects to exercise its new jurisdictional authorities. However, the proposed regulations leave open a number of key issues that have been the focus of debate since FIRRMA’s passage, including the identification of specific countries that may be exempted from CFIUS’s expanded jurisdiction over non-controlling “covered investments” and “covered real estate transactions.” They also do not suggest how the Committee’s “Pilot Program” requiring mandatory declarations for investments in critical technology companies may be amended in the final rules. Nevertheless, with the publication of these proposed rules CFIUS has taken a major step towards fully implementing its new powers by February 2020.