U.S. Department of the Treasury

The pilot program on critical technologies was in effect through February 12, 2020.  It will continue to apply only to transactions for which specified actions were taken on or after the effective date of the pilot program and prior to February 13, 2020.  Generally speaking, transactions involving critical technologies that occurred on or after February 13, 2020 should be analyzed under the regulations for part 800.

The rule published for part 800 incorporates many of the provisions of the pilot program on critical technologies, including the mandatory filing requirement for certain covered transactions involving critical technologies.  The regulations concerning mandatory declarations for certain critical technology transactions were revised effective October 15, 2020.  Transaction parties should review the CFIUS regulations (including the applicability rule at 31 C.F.R. § 800.104) carefully to determine whether a transaction is subject to the mandatory declaration provisions.     

The regulations provide a short-form declaration as an alternative to CFIUS’s traditional voluntary notice.  Declarations allow parties to submit basic information regarding a transaction that should generally not exceed five pages in length.  Parties use the CMS to file declarations with the Department of the Treasury.  In certain circumstances filing a declaration for a transaction is mandatory.

In particular, the regulations implement FIRRMA’s requirement that certain covered transactions where a foreign government is acquiring a “substantial interest” in specified types of U.S. businesses are subject to a mandatory declaration.  Additionally, the regulations require the filing of a declaration for covered transactions involving certain U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies.  Parties may choose to file a notice instead of a declaration.

“Sensitive personal data” is defined to include ten specified categories of data that may be maintained or collected by U.S. businesses.  The categories of data include types of financial, geolocation, and health data, among others.  Moreover, a U.S. business that maintains or collects these categories of data on U.S. citizens will only be considered to have sensitive personal data to the extent it (i) targets or tailors products or services to certain populations, including U.S. military members and employees of federal agencies with national security responsibilities, (ii) collects or maintains such data on at least one million individuals, or (iii) has a demonstrated business objective to maintain or collect such data on greater than one million individuals and such data is an integrated part of the U.S. business’s primary products or services.  Genetic test information is also included in the definition regardless of whether it meets (i), (ii), or (iii).

Yes.  CFIUS retains the authority to review a transaction that could result in foreign control of any U.S. business, regardless of whether the foreign person is an “excepted investor.”  However, transactions involving excepted investors may be exempt from mandatory filing requirements under 31 C.F.R. § 800.401.

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.