U.S. Department of the Treasury

Not necessarily.  The regulations identify criteria that a foreign person must meet in order to qualify as an “excepted investor” or “excepted real estate investor” regarding, for example, its principal place of business, place of incorporation, and ownership.  The regulations also identify criteria that would preclude a foreign person from qualifying as an excepted investor, such as non-compliance with the law.

A list of factors posted here outlines what the Committee will consider when making a determination regarding an eligible foreign state’s national security-based foreign investment review processes and bilateral cooperation with the United States on national security-based investment reviews.

As detailed in the regulations, from February 13, 2020 to February 13, 2023, the countries identified as eligible foreign states are considered “excepted foreign states” and “excepted real estate foreign states” unless the Committee changes a foreign state's eligibility.  For each of these countries to remain excepted after the end of the three-year delayed effectiveness period (i.e., February 13, 2023), a Committee determination under 31 C.F.R. §§ 800.1001(a) or 802.1001(a), as applicable, is necessary.  This three-year period is intended to provide these initial eligible foreign states time to ensure that their national security-based foreign investment review processes and coordination with the United States on national security-based investment review meet the requirements under 31 C.F.R. §§ 800.1001(a) and 802.1001(a). 

In January 2022, the Committee determined that Australia and Canada have met these requirements.  Australia and Canada will remain excepted foreign states and excepted real estate foreign states unless the Committee rescinds a determination. 

CFIUS has identified Australia, Canada, and the United Kingdom as the initial excepted foreign states and excepted real estate foreign states.  CFIUS identified these countries due to certain aspects of their robust intelligence-sharing and defense industrial base integration mechanisms with the United States. 

In January 2022, CFIUS identified New Zealand as an eligible foreign state for the purposes of the excepted foreign state and excepted real estate foreign state definitions for reasons including New Zealand's intelligence-sharing relationship with the United States and its collective defense arrangement and cooperation with the United States.

As the excepted foreign state concept has significant implications for the national security of the United States, the Committee continues to identify a limited number of eligible foreign states and may expand the list in the future.

FIRRMA does not prohibit investments from any country, and investments from all foreign persons remain subject to CFIUS jurisdiction over transactions that could result in foreign control of a U.S. business.  As required by FIRRMA, however, the regulations limit the application of CFIUS’s jurisdiction over non-controlling “covered investments” and certain real estate transactions by certain foreign persons, defined as “excepted investors,” from certain “excepted foreign states.”  Any such eligible investor and foreign state must meet specific criteria to qualify for this status.

No.  CFIUS maintains its authority to review the potential national security effects of any transaction that could result in foreign control of any U.S. business.  The regulations expand CFIUS’s jurisdiction over certain “non-controlling” transactions and certain real estate transactions.

Given the specificity of certain provisions of the rule, Treasury anticipates that it will periodically review, and when necessary amend, the regulations to address changes in technology and data use, as well as the evolving national security landscape more generally.

The Department of the Treasury published proposed versions of the regulations in September 2019 and received comments from the public.  Treasury made a number of revisions in response to the comments submitted during the comment period.  The preambles to the final rules summarize these changes.

In response to written comments, the final rules update a number of provisions including by:

• adding a definition for “principal place of business;”
• modifying certain criteria to qualify as an “excepted investor;”
• clarifying the application of the “incremental acquisition rule;”
• adjusting the treatment of genetic data within the definition of “sensitive personal data;”
• refining the application to investment funds, including by amending the definition of “substantial interest;”
• modifying the exceptions for certain real estate transactions in airports and maritime ports; and
• refining the geographic coverage relating to certain military installations on appendix A to the real estate regulations.

The rules also include a number of additional illustrative examples and provide clarifying edits in the text of the provisions.  Finally, the rule amending the part 800 regulations incorporates many of the provisions of the pilot program regarding critical technologies (published in October 2018), including the mandatory declaration requirement for certain covered transactions involving certain U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies.  The mandatory declaration requirement for certain critical technology related transactions was further revised by regulations effective October 15, 2020.

The specificity provided in the regulations gives clarity to the business and investment communities with respect to the types of transactions that are covered by the Committee’s new authority under FIRRMA.  The CFIUS process, as modernized and strengthened by FIRRMA and these regulations, should enhance confidence in the nation’s longstanding open investment policy.

Final regulations implementing FIRRMA took effect on February 13, 2020.  Regulations implementing a CFIUS filing fee took effect on May 1, 2020.  A revision to the regulations concerning mandatory declarations was made effective October 15, 2020.  Additional information on CFIUS’s legal authorities and regulations can be found on the CFIUS Laws and Guidance page.