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Foreign Investments in Certain U.S. Companies Face New Mandatory Filing Requirements

The Committee on Foreign Investment in the United States (CFIUS), is an interagency committee under the U.S. Department of the Treasury, authorized to review certain transactions involving foreign investments in U.S. companies. They have established a new pilot program, based on portions of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), and now require mandatory filings by U.S. companies involved in specified critical technologies with any foreign investment interest of certain levels. If the investment qualifies, the company is required to file at least 45 days prior to the completion of the deal, with steep penalties if the company fails to comply. The pilot program also expands CFIUS’s jurisdiction allowing them to review certain non-controlling investments by foreign persons.

Pilot Program Covered U.S. Businesses

The pilot program covers any U.S. business that produces, designs, tests, manufactures, fabricates, or develops a “critical technology” that is utilized in connection with the U.S. business’s activity in, or is designed by the U.S. business specifically for use in, one of the 27 pilot program industries.

Critical Technology

Under FIRRMA, critical technology includes:

  • Defense articles and defense services subject to the International Traffic in Arms Regulations
  • Certain civilian/military dual-use technologies subject to Export Administration Regulations
  • Nuclear technologies covered by rules relating to foreign atomic energy activities or to the export and import of nuclear equipment and materials
  • Select agents and toxins
  • Emerging and foundational technologies controlled pursuant to the Export Control Reform Act of 2018 (which have not yet been defined, but should be forthcoming from the U.S. Department of Commerce)

Industries Covered by Pilot Program

The 27 pilot program industries, identified by their respective five-digit North American Industry Classification System (NAICS) codes, are listed at the end of this article. According to the U. S. Treasury, the list of pilot program industries was carefully developed to cover industries for which certain strategically motivated foreign investment could pose a threat to U.S. technological superiority and national security.

Pilot Program Covered Transactions

A pilot program covered transaction includes transactions resulting in control of a Pilot Program Covered U.S. Business by a foreign person (generally defined as any foreign national, foreign government or entity organized under the laws of a foreign state if (a) either its principal place of business is outside the United States or its equity securities are primarily traded on one or more foreign exchanges and (b) a majority of the entity’s equity securities are not ultimately owned by U.S. nationals), as well as certain non-controlling and non-passive investments by a foreign person. Direct or indirect non-controlling investments by a foreign person in a Pilot Program Covered U.S. Business now fall within the purview of CFIUS if the foreign person has any of the following rights:

  • Access to any material private technical information in the possession of the Pilot Program Covered U.S. Business (which includes non-public information necessary to design, fabricate, develop, test, produce, or manufacture critical technology)
  • Membership or observer rights on the board of directors or equivalent governing body of the Pilot Program Covered U.S. Business, or the right to nominate an individual to a position on the board of directors or equivalent governing body of the pilot program U.S. business
  • Any involvement, other than through voting of shares, in substantive decision-making of the Pilot Program Covered U.S. Business regarding the use, development, acquisition, or release of critical technology

The term “substantive decision-making” as it relates to the use, development, acquisition, or release of critical technology would include decisions regarding the following:

  • Licensing
  • Pricing, sales, and specific contracts
  • Supply arrangements
  • Corporate strategy and business development
  • Research and product development, including budget allocation
  • Manufacturing locations
  • Access to such technology
  • The storage or protection of such technology
  • Appointment or removal of personnel or management with operational oversight
  • Strategic partnerships

The term “any involvement” captures situations in which the investment gives the foreign person, among other things, any of the following with respect to decision-making regarding the use, development, acquisition, or release of critical technology:

  • The right to consult with or provide advice to a decision-maker
  • Special approval or veto rights
  • The right or ability to participate on a committee with decision-making authority
  • The right to have direct access to directors, managers, officers, and other employees engaged in or with the ability to make decisions
  • The right to appoint officers or employees who have involvement of the type listed above

Mandatory Filing Requirements for Pilot Program Covered Transactions

If a transaction is covered under the pilot program, parties are now required to submit either the traditional, longer-form, joint voluntary notice (“Voluntary Notice”), which triggers a full CFIUS review, or the new short-form declaration (“Declaration”) to CFIUS.


A Declaration, generally not exceeding five pages, is intended to be an abbreviated way of informing CFIUS of a transaction and garners quicker review than does the Voluntary Notice. Declarations must be submitted at least 45 days before completion or closing of the transaction, and parties must use the form and follow the instructions available here.

Unlike the Voluntary Notice, the Declaration does not require the foreign person to provide personally identifiable information of the officers and directors of itself, its ultimate parent, and each intermediate parent. Declarations are required to include the following information:

  • Location data for every facility operated by the U.S. business
  • A description of each critical technology the U.S. business and its subsidiaries produce, design, or test, with the associated NAICS code and a description of the relevant export control classifications
  • A complete organizational chart that includes descriptive information about all parties, parents, and ultimate owners (for ultimate parents that are private companies) or shareholders with an interest of greater than five percent (for ultimate parents that are public companies) in the U. S business, with a description of any foreign government interest in the acquiror’s ownership structure
  • Information on the extent and form of control that the foreign person will obtain in the U.S. business
  • A statement as to whether the parties are stipulating that the transaction is covered by the pilot program and the basis for such stipulation
  • A statement as to whether the transaction could result in control by a foreign person or is a foreign government-controlled transaction and the basis for such stipulation
  • A statement concerning the existence of any contracts the business has held with any U. S. government agency within the past three years, or in the past 10 years if the contract included access to personally identifiable information of U.S. government personnel
  • A statement concerning funding from the Departments of Defense or Energy or participation in defense or energy programs related to critical technologies within the past five years
  • A statement as to whether the Pilot Program Covered U.S. Business participated in a Defense Production Act Title III Program within the past seven years
  • A statement as to whether the Ppilot Program Covered U.S. Business has received or placed priority-rated contracts or orders under the Defense Priorities and Allocations System, and the levels of priority of such contracts or orders within the past three years
  • A statement as to whether any party to the transaction has been party to another transaction previously notified or submitted to CFIUS, and the case number of that previous transaction
  • A statement as to whether the pilot program U.S. business, the foreign person, or any parent or subsidiary of the foreign person has been convicted in the last 10 years of a crime, in any jurisdiction

CFIUS has 30 days to respond to a declaration in one of the following ways:

  1. requesting that the parties file a Voluntary Notice so that CFIUS can conduct a thorough review of the transaction,
  2. initiating a unilateral review of the transaction through an agency notice if the parties are uncooperative, or
  3. notifying the parties that it has concluded all action—clearing the transaction

Voluntary Notice

The Voluntary Notice must contain more detailed information describing the transaction, including a detailed description of the assets of the U.S. business being acquired and net valuation of the interest.

U.S. businesses are also required to provide market-share information, furnish contact information for government contracts, and describe any products or services they supply to U.S. government agencies, whether directly or through third parties. The foreign person must provide personally identifiable information for the directors and officers of itself, its parent, each intervening parent, and its ultimate parent; disclose relationships with foreign governments; and describe certain plans for the U.S. business.

If CFIUS finds that the Voluntary Notice satisfies the requirements for completeness, a 45-day review period commences in which CFIUS members examine the transaction in order to identify and address, as appropriate, any national security concerns that arise as a result of the transaction. During the review period, CFIUS members may request additional information from the parties.

In certain circumstances, CFIUS may initiate a subsequent investigation, which also must be completed within 45 days. CFIUS may also refer a transaction to the President for decision. In that case, the President is required to announce a decision with respect to a transaction within 15 days of CFIUS’s completion of the investigation.

If CFIUS finds that a covered transaction presents national security risks and that other provisions of law do not provide adequate authority to address the risks, then CFIUS may enter into an agreement with, or impose conditions on, the parties to mitigate such risks or may refer the case to the President for action.

If the parties know the transaction qualifies as a pilot program covered transaction that is likely to require a thorough review of the transaction (based on the complexity of the transaction, timing considerations, and other relevant factors), filing a Voluntary Notice at the outset may be more appropriate and lead to a faster review by CFIUS.

Steep Penalties

Parties who fail to comply with the mandatory filing requirement of the new pilot program may be liable for a civil penalty up to the value of the transaction.

Exemption for Certain Foreign Person Investments in U.S.-managed Investment Funds

FIRRMA provides an exemption for an investment by a foreign person as a limited partner in an investment fund managed by a U.S. general partner, as long as the foreign person does participate in investment decisions or otherwise control the investment fund and such investment meets several other requirements.


In light of the steep penalties for failure to comply with the pilot program’s filing requirements, U.S. sellers and foreign buyers should consult their advisers at the outset of any potential transaction involving a foreign buyer, to determine the applicability of the pilot program regulations and whether the requirements in the pilot program regulations could affect the feasibility or timing of such potential transaction.


  • Aircraft Engine and Engine Parts Manufacturing, NAICS Code: 336412
  • Aircraft Manufacturing, NAICS Code: 336411
  • Alumina Refining and Primary Aluminum Production, NAICS Code: 331313
  • Ball and Roller Bearing Manufacturing, NAICS Code: 332991
  • Computer Storage Device Manufacturing, NAICS Code: 334112
  • Electronic Computer Manufacturing, NAICS Code: 334111
  • Guided Missile and Space Vehicle Manufacturing, NAICS Code: 336414
  • Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing, NAICS Code: 336415
  • Military Armored Vehicle, Tank, and Tank Component Manufacturing, NAICS Code: 336992
  • Nuclear Electric Power Generation, NAICS Code: 221113
  • Optical Instrument and Lens Manufacturing, NAICS Code: 333314
  • Other Basic Inorganic Chemical Manufacturing, NAICS Code: 325180
  • Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing, NAICS Code: 336419
  • Petrochemical Manufacturing, NAICS Code: 325110
  • Powder Metallurgy Part Manufacturing, NAICS Code: 332117
  • Power, Distribution, and Specialty Transformer Manufacturing, NAICS Code: 335311
  • Primary Battery Manufacturing, NAICS Code: 335912
  • Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing, NAICS Code: 334220
  • Research and Development in Biotechnology (except Nanobiotechnology), NAICS Code: 541714
  • Research and Development in Nanotechnology (including Nanobiotechnology), NAICS Code: 541713
  • Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing, NAICS Code: 334511
  • Secondary Smelting and Alloying of Aluminum, NAICS Code: 331314
  • Semiconductor and Related Device Manufacturing, NAICS Code: 334413
  • Semiconductor Machinery Manufacturing, NAICS Code: 333242
  • Storage Battery Manufacturing, NAICS Code: 335911
  • Telephone Apparatus Manufacturing, NAICS Code: 334210
  • Turbine and Turbine Generator Set Units Manufacturing, NAICS Code: 333611

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