Corporate Counsel Quotes Christian Davis on New Treasury Department Rules on Foreign Investment

Corporate Counsel, in the article “Treasury Dept. Enacts Final Rules on Foreign Investment: Key Takeaways for In-House Counsel,” has quoted Akin Gump international trade partner Christian Davis discussing long-awaited rules from the federal government governing national security reviews of foreign investments in U.S. companies. Davis discussed how the rules could affect cross-border dealmaking.

“General counsel and in-house counsel at companies involved in technology, infrastructure and data, which capture a broad spectrum of the economy, should be aware of these changes, particularly the expanded jurisdiction of [the Committee on Foreign Investment in the United States] and mandatory reporting requirements,” said Davis. “The only countries that are initially eligible for exemptions are the U.K., Canada and Australia.  As a result, most investors will be subject to the new expanded jurisdiction of these rules.”

The article reports that the final rules adhere closely to draft rules first proposed last fall. They were enacted under the Foreign Investment Risk Review Modernization Act of 2018 and take effect February 13.

Among other things, the rules increase scrutiny of investments—including minority investments—by foreign entities and persons of the U.S. in critical technology, infrastructure and data businesses in the United States. The article says this includes those handling specific types of sensitive personal data.

“While CFIUS did build in some new exemptions to these filing requirements, parties will need to ensure that they are complying with these rules in the context of transactions going forward.”