On August 13, President Trump signed into law the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The new law expands the jurisdiction and powers of the Committee on Foreign Investment in the United States (CFIUS) and will have material implications for investments made in US businesses by foreign investors. Certain provisions of the new law went into effect immediately. Others will become effective after implementing regulations are adopted.

The most significant provisions of FIRRMA:

  • expand the scope of CFIUS jurisdiction to cover a wider range of transactions, including certain transactions where the foreign investor will not “control” a US business;
  • establish that the parties file mandatory “declarations” describing certain transactions before closing;
  • extend the time period for CFIUS to review notifications;
  • provide some relief from CFIUS to foreign investors who make indirect, non-controlling investments in US businesses through US investment funds; and
  • impose a filing fee of up to $300,000 for notified transactions.

For foreign investors seeking to acquire US businesses or assets, CFIUS is now an increasingly important regulatory hurdle to consider in evaluating US investments and in setting a timeline for closing.