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By Mario Mancuso and Lucille Hague
As Washington swelters in the summer heat, Members of Congress have been hard at work progressing legislation to reform the Committee on Foreign Investment in the United States (“CFIUS”). Since its introduction in November 2017, the Foreign Investment Risk Review Modernization Act (“FIRRMA”) has been the subject of no fewer than seven Congressional hearings. Today, it enjoys White House support and broad bipartisan support in the U.S. Congress. Absent a major policy shift, its near-term passage—likely in August—now seems virtually inevitable.
Congress has made significant progress in refining FIRRMA since its initial introduction in November 2017, including removing certain provisions that would have given CFIUS jurisdiction to review certain non-U.S. joint ventures and licensing arrangements.
In June, the House and Senate passed their respective versions of FIRRMA with overwhelming bipartisan support:
While some differences remain in the versions passed by the House and Senate, the bills are conceptually aligned and point to the establishment of a stronger, more far-reaching, and well-resourced CFIUS apparatus.
Here are six key potential impacts that FIRRMA would have on the CFIUS process, and some remaining important differences between the House and Senate bills.
More Transactions Will Be Subject to CFIUS’ Jurisdiction as “Covered Transactions.” Both versions of FIRRMA expand CFIUS’ authority to review different types of transactions that are currently outside of its jurisdictional ambit.
“Emerging” and “Foundational” Technologies Will Be Subject to Greater Scrutiny. Both the House and Senate bills require the establishment of an interagency process to identify and control “emerging” and “foundational” technologies that are considered essential for U.S. national security, but are so new that they have not yet been formally classified under U.S. export controls (e.g., under the U.S. Export Administration Regulations).
Mario Mancuso leads Kirkland & Ellis’ International Trade and National Security practice. A former member of the President’s national security team, Mario specializes in advising clients on cross-border M&A matters in regulated or sensitive industries, guiding clients through the CFIUS and other national security investment clearance processes, and resolving crises involving national security-related investigations by the U.S. government. Luci Hague, an associate in Kirkland’s ITNS practice, counsels U.S. and foreign clients on CFIUS and international risk matters across transaction scenarios, including fundraising, M&A, lending transactions, minority investments, and exit.
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
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