Meaning
An interagency body of the United States government reviews foreign investments in domestic businesses to assess national security risks. The Committee on Foreign Investment in the United States possesses the authority to impose mitigation agreements or recommend that the president block transactions. Its review focuses on critical technology, critical infrastructure, or sensitive personal data.
Regulatory Jurisdiction
Transactions fall within this purview if they result in foreign control or involve a non-controlling investment in sensitive sectors. This oversight applies to asset sales, joint ventures, and stock purchases. The trigger occurs when a foreign entity acquires equity accompanied by specific governance rights.
Transactional Impact
Share purchase agreements often include a condition precedent that requires regulatory clearance before closing. Investors must assess whether to file a voluntary notice or face the possibility of a post-closing divestment order. Filing fees and extended timelines must be budgeted in the transaction documents, as the review can take several months.
If the transaction carries high risk, the parties might structure a carve-out of the sensitive assets to avoid a full block.
National Security
The review examines the country of origin of the investor and the vulnerabilities of the domestic target. A transaction that is not cleared remains permanently subject to divestment.
