CFIUS, FIRRMA Attorney and Legal Compliance with Foreign Investments

Navigating FIRRMA and CFIUS – Legal Compliance With AttorneyAssistance

As part of our international legal compliance services, the Law Firm of Arcadier, Biggie, and Wood, PLLC can also assist companies and individuals who seek international investments and funds to stay legally compliant within the legal framework of the United States.

On August 13, 2018, The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) was signed into law.

The governing regulatory body which enforces FIRRMA is known as Committee on Foreign Investment in the United States (CFIUS). CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States. CFIUS operates pursuant to section 721 of the Defense Production Act of 1950, as amended (section 721), and as implemented by Executive Order 11858, as amended, and regulations at 31 C.F.R. Part 800 and 31 C.F.R. Part 801, as amended.

The key provisions of The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) include:

1. An expansion of the scope of covered transactions to broadens the purview of the Committee on Foreign Investment in the United States (CFIUS) by explicitly adding four new types of covered transactions:

(a) a purchase, lease, or concession by or to a foreign person of real estate located in proximity to sensitive government facilities;

(b) “other investments” in certain  types of U.S. businesses that provides a foreign person or entity to access of material nonpublic technical information in the possession or control of the U.S. business, membership or control of the board of directors, or other decision-making rights, other than through voting of shares;

(c) any change or modification of a foreign investor’s rights resulting in foreign control of a U.S. business or an “other investment” in certain U.S. businesses; and

(d) any other transaction, transfer, agreement, or arrangement designed to circumvent CFIUS jurisdiction.

2. A new type of an abbreviated filling or “light filing” process has been implemented which permits shorter review timelines through an expressed, expedited process.  Moreover, the Declaration Process allows CFIUS some discretion to require parties to file with CFIUS before closing a transaction.
3. CFIUS’s timelines have been expanded. CFIUS’s review period is now from 30 to 45 days and permits an investigation to be extended for an additional 15-day period under extraordinary circumstances.
4. Mitigation Review. Strengthens the requirements on the use of mitigation agreements, including the addition of compliance plans to inform the use of such agreements.
5. Special hiring authority and funding. FIRRMA now Grants special hiring authority for CFIUS and establishes a fund for collection of new CFIUS filing fees.
6. Delayed effective date and pilot programs. Delays the applicability of some of the bill’s most significant provisions until 18 months following enactment of FIRRMA or 30 days after the Secretary of the Treasury publishes in the Federal Register a determination that the necessary regulations, organizational structure, personnel, and other resources are in place to administer those provisions, whichever is sooner. This section also authorizes CFIUS to conduct pilot programs to implement any authority provided under this bill.

Staying compliant in international transactions is esoteric and should be addressed with legal counsel. Laws extend a wide spectrum of enforcement potentials, including Civil, Criminal, and significant pecuniary/monetary penalties. The Law Firm of Arcadier, Biggie, and Wood, through its Managing Partner, Maurice Arcadier, has over 20 years of experience in litigation and compliance issues. Mr. Arcadier Esq.’s experience includes helping individuals and corporations to stay compliant with ITAR, EAR, OFAC, FCPA, and FIRRMA.