Non-notified transactions

The Committee on Foreign Investment in the United States (“CFIUS” or “the Committee) is an interagency body of the U.S. government that plays a critical role in safeguarding national security by reviewing foreign investments in U.S. businesses and assets. Established in 1975 through an Executive Order issued by President Gerald Ford, CFIUS initially served as an advisory committee to monitor and evaluate the impact of foreign investments on the U.S. economy. Over time, its role has evolved significantly to focus on identifying and mitigating risks to national security posed by such investments.

On November 1, 2024, the U.S. Department of Treasury (“the Treasury”), as chair of the Committee on Foreign Investment in the United States (“CFIUS”), published a Final Rule expanding its authority to review certain transactions involving foreign investment in U.S. real estate. CFIUS has jurisdiction to review certain “covered real estate transactions” located within specific degrees of proximity to sensitive government and military sites. The new Final Rule, which becomes effective on December 9, 2024, includes the addition of 59 new military installations and government sites designated as sensitive, ultimately broadening CFIUS jurisdiction. This Final Rule continues the trend of increasing government monitoring authority over foreign investment in U.S. real estate, a trend reflected at both the federal and state level.

On November 17, 2024, the Department of the Treasury (“Treasury”), in its role as chair of the Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”), published a final rule (“Final Rule”) increasing maximum penalties for violations and expanding the Committee’s ability to compel parties to respond to information requests, among other revisions. The final rule becomes effective on December 26, 2024, and is very similar to the proposed rule, dated April 15, 2024, of which we wrote about in our article, Less Bark and More Bite? CFIUS Proposed Rule Enhancing Enforcement Capabilities. 

Much has been written about the Corporate Transparency Act (“CTA”), which was enacted on January 1, 2021, and went into effect on January 1, 2024. Briefly, the CTA requires “reporting companies” to disclose beneficial ownership information (“BOI”) to the federal government. A perhaps overlooked effect of the CTA’s BOI reporting rule is its potential impact on the Department of the Treasury’s continual search for foreign investment transactions that were not notified to the Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”).

On September 14, 2023, the U.S. Department of the Treasury held the annual Committee on Foreign Investment in the United States (“CFIUS”) Conference in Washington, DC.

On August 9, 2023, President Biden issued an Executive Order (“E.O.”) on outbound investment regulation. This long-anticipated action marks the first time the U.S. government has sought to regulate investments made abroad by U.S. firms.

On July 31, 2023, the Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”) released its annual report to Congress of the Committee’s national security reviews and investigations of certain foreign investment transactions from the preceding year. The report offers valuable insight into the CFIUS review process and highlights the various foreign investment transaction elements that are coming under scrutiny. 

As TikTok CEO Shou Zi Chew was facing (often contentious) questions from members of Congress during a four and a half hour hearing on March 23, 2023, many casual observers were learning for the first time about the interagency Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”). 

The Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”), under the U.S. Department of the Treasury (“Treasury”), has the authority to review for national security risks certain foreign investment transactions in U.S. businesses.

For many years, the Committee on Foreign Investment in the United States ("CFIUS") has had the authority to review non-notified transactions – deals which have not been submitted to CFIUS for review and approval – but until recently, resources for such efforts were limited. That changed in 2018, when the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) significantly bolstered resources for CFIUS oversight and enforcement activities.

The U.S. Department of the Treasury Office of Investment Security (“Treasury”) published a final rule on September 15, 2020, significantly changing the mandatory filings administered by the Committee on Foreign Investment in the United States (“CFIUS”). 

On May 21, 2020, the U.S. Department of the Treasury (“Treasury”) published a Proposed Rule that includes two important changes impacting mandatory filings.

On October 10, 2018, the U.S Department of the Treasury issued temporary regulations to conduct pilot programs to implement provisions of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which became effective August 13, 2018, and amended section 721 of the Defense Production Act of 1950 specifically to protect American technology companies and intellectual property. As Torres Law previously discussed in several articles, the Committee on Foreign Investment in the United States (“CFIUS”) reviews foreign investment in U.S. companies for national security considerations, and FIRRMA has significantly expanded CFIUS jurisdiction.