Hogan Lovells comments on U.S. Treasury Department's new rules for CFIUS
Washington, 15 January 2020 - The U.S. Department of the Treasury this week issued final regulations to implement the Foreign Investment Risk Review Modernization Act, which expands the Committee on Foreign Investment in the United States’ jurisdiction over foreign investments into U.S. companies.
Hogan Lovells partner Anne Salladin said: "The new regulations represent the first major overhaul of the CFIUS regime in years, ushering in a new era of foreign investment reviews. Although there will no doubt be greater scrutiny of foreign investors and U.S. companies of all sizes and across all industries, the new law also presents the opportunity for expedited treatment for certain investors where the assets are relatively benign. There will clearly be a period of time necessary to adjust to the new regulations, but over time, it is likely that greater clarity in this important area will be a welcome development."
Hogan Lovells partner Brian Curran said: "CFIUS-related headlines almost always focus on Chinese investment in the high-tech sector, but what U.S. companies and foreign investors alike have to recognize is that these new CFIUS regulations might have a much broader impact than they realize. Essentially, now every foreign investment in a U.S. company must be examined to determine whether it falls within CFIUS’s jurisdiction and, more importantly, whether a filing is legally required."
"Early-stage and start-up tech companies seeking foreign investors have to adjust to the new CFIUS reality – that they have to budget time and resources to CFIUS due diligence, even for tiny foreign investments," Curran added. "Understandably, these companies are laser-focused on developing their products, but if they want to avoid penalties for non-compliance, they have to give CFIUS some attention."