Treasury Issues Final Rule Updating CFIUS Regulations and Modifying the Threshold Analysis for Mandatory Declarations
On September 15, 2020, the Office of Investment Security of the U.S. Department of the Treasury (“Treasury”) published a final rule modifying the Committee on Foreign Investment in the United States’ (“CFIUS” or the “Committee”) regulations relating to its mandatory declaration provisions. The most significant amendments pertain to the mandatory filing requirements for certain foreign investments in U.S. businesses that engage in activities relating to critical technologies, a regime referred to previously as the “Pilot Program.” Under prior iterations of the regulations, a mandatory declaration for an investment in a U.S. business engaged in activities concerning critical technologies was only triggered when those activities were related to one of 27 sensitive industries specified by North American Industry Classification System (“NAICS”) code. The final rule abandons the industry-specific inquiry entirely, and instead adopts a new threshold analysis that focuses on the particular export controls that may be applicable to the critical technology utilized by the U.S. business. The rule does not, however, modify the definition of “critical technologies,” which is defined by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) and is, in part, subject to a separate ongoing rulemaking process by the Department of Commerce as explained in further detail in the following memorandum.