CFIUS Finalizes Inclusion of New Zealand and United Kingdom as “Excepted Foreign States”

CFIUS had previously determined that the United Kingdom was an “eligible foreign state” on February 13, 2020 and New Zealand joined its ranks on January 5, 2022. Although New Zealand and the United Kingdom were already treated as excepted foreign states under the CFIUS regulations, CFIUS had until February 12, 2023 to determine that those states satisfied the full excepted foreign state requirements or their status would have expired. CFIUS has now determined that each of New Zealand and the United Kingdom has established and is “effectively utilizing a robust process to analyze foreign investments for national security risks” and is “facilitat[ing] coordination with the United States on matters relating to investment security” under 31 C.F.R. § 800.1001(a). Coupled with CFIUS’s January 2022 determination that Canada and Australia had each satisfied the 31 C.F.R. § 800.1001(a) criteria, each of the U.S.’s Five Eyes partners is now formally an excepted foreign state (absent further CFIUS action).

Foreign entities that are organized in excepted foreign states may qualify as “excepted investors” or “excepted real estate investors” whose investments, although potentially otherwise subject to CFIUS’s jurisdiction, cannot implicate CFIUS’s mandatory filing programs or CFIUS’s real estate regulations.  Such foreign entities must satisfy several rigorous criteria, including ones related to their share ownership and the composition of their boards of directors or other governing bodies, in order to benefit from the excepted investor status. Our CFIUS team is well prepared to help you assess whether you may qualify as an excepted investor.

Authored by Anne Salladin, Brian Curran, and Zachary V. Alvarez.