Regulations have been recently issued under the recently passed Foreign Investment Risk Review Modernization Act (FIRRMA) to implement a pilot program that expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) and imposes filing requirements on certain transactions in the U.S. technology sector.
Parties must file a declaration with CFIUS at least 45 days in advance of certain foreign-person investments in unaffiliated U.S. businesses if involved with critical technologies used in specified industry sectors. 27 U.S. industry sectors are involved.
The program will end by March 5, 2020, but permanent reporting requirements may have been put in place by then. It applies to transactions completed on November 10, 2018 or later, although there are other effective date provisions that may apply.
After filing, CFIUS has 30 days to review the declaration and then undertake certain requests for a long-form notice form, initiate a unilateral review, or clear the transaction – or the parties can file the long-form notice initially.
Parties failing to file a required declaration may be subject to a civil penalty up to the amount of the transaction value.
Businesses and professionals involved in assisting with and/or the reporting of inbound investments should add these new reporting requirements to their checklists and lists of reporting requirements.
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