Currently, the Exon-Florio review process permits voluntary notification of foreign investments in U.S. companies to the Committee on Foreign Investment in the United States (“CFIUS”). Upon notification or at its own discretion, CFIUS may initiate a 30-day review period of the transaction for national security issues. Such reviews may be initiated even after a transaction has closed.
FINSA codifies and amends the Exon-Florio review process by requiring CFIUS to report the results of its initial review to Congress. Any of these reports made to Congress are public records to the extent the information is not classified. Additionally, once CFIUS begins its review process, the Director of National Intelligence (“DNI”) has 20 days to provide CFIUS with an analysis of any national security threats that might exist. If CFIUS finds that the transaction is a threat to U.S. national security or involves a foreign government as the ultimate controlling party, a 45-day investigation by CFIUS is triggered. Once the investigation is concluded, CFIUS must provide a report and recommendation to the President, who may suspend or prohibit the transaction.
FINSA provides 11 factors for consideration by CFIUS and the President:
(1) the domestic production needed for projected national defense requirements;
(2) the capability and capacity of domestic agencies to meet national defense requirements;
(3) the control of domestic industries and commercial activity by foreign citizens as it affects
U.S. ability to meet national security requirements;
(4) the potential effects of the acquisition on sales of military goods, equipment, or
technology to countries supporting terrorism or countries of concern regarding missile
or chemical/biological weapons proliferation;
(5) the potential effects on U.S. international technological leadership in areas affecting
national security;
(6) the potential national security-related effects on United States critical infrastructure,
including major energy assets;
(7) the potential national security-related effects on United States critical technologies;
(8) whether the covered transaction is a foreign government-controlled transaction;
(9) as appropriate, a review of the current assessment of (A) the adherence of the subject
country to nonproliferation control regimes, including treaties and multilateral supply
guidelines; (B) the relationship of such country with the United States, specifically on its
record on cooperating in counter-terrorism efforts; and (C) the potential for
transshipment or diversion of technologies with military applications, including an
analysis of national export control laws and regulations;
(10) the long-term projection of United States requirements for sources of energy and other
critical resources and material; and
(11) such other factors as the President or CFIUS may determine to be appropriate,
generally or in connection with a specific review or investigation.
For the text of FINSA, please click here.
