Key Takeaways: The Treasury Department is seeking to equip CFIUS with greater enforcement and oversight authority. These new powers include the ability to request more information from transaction parties and also to assess more significant penalties—in some cases, potentially greater than the transaction value—against companies who fail to comply with mandatory filing requirements or violate mitigation agreements.Continue Reading Treasury Department Proposes to Sharpen the Teeth of CFIUS Enforcement
Committee on Foreign Investment in the United States
Formalizing Team Telecom
Earlier this month, the FCC adopted a Report & Order (“R&O”) streamlining the application review process for transactions involving foreign investment or participation in U.S. telecommunications companies (commonly known as “Team Telecom” but also referred to as “the Committee” in the R&O). Team Telecom is comprised of a committee of Executive Branch agencies (including the Department of Defense, the Department of Homeland Security, and the Department of Justice) tasked with assessing the national security, law enforcement, foreign policy, and trade policy concerns in these cross-border M&A transactions involving U.S. telecom companies. The FCC issued the R&O to formalize a decades-long practice and update its rules governing Team Telecom review consistent with the President’s April 4, 2020 Executive Order No. 13913 (the “EO”). The FCC builds upon the initial procedural requirements set by the EO to add certainty and transparency to the Team Telecom review process in a manner that protects national security interests without discouraging foreign investment.
Continue Reading Formalizing Team Telecom
UPDATE: National Security Meets Teenage Dance Battles: U.S. Increases Pressure on ByteDance Sale of TikTok
The Takeaway: Severe restrictions on ByteDance’s Sale of TikTok should be a warning to media and tech companies with foreign ownership, particularly Chinese investment, to know your risks and mitigate them before the government comes knocking.
Continue Reading UPDATE: National Security Meets Teenage Dance Battles: U.S. Increases Pressure on ByteDance Sale of TikTok
FIRRMA Takes Form as CFIUS Enacts a New Pilot Program Targeting “Critical Technologies”
- On October 10, 2018, the Committee on Foreign Investment in the United States put into effect the first mandatory filing requirement ever imposed by CFIUS. The Department of Treasury’s summary of the Pilot Program is available here.
- Effective November 10, 2018, CFIUS will require reviews of critical technology investments – including certain non-controlling investments – from any country.
- A failure to file notice or a new short form declaration to CFIUS may result in a civil monetary penalty up to the value of the transaction.
- The requirements will not apply to any transaction that is completed prior to November 10, 2018 or any transaction for which the material terms were established prior to October 11, 2018.
Background
On August 13, 2018, President Trump signed FIRRMA into law. FIRRMA is a transformational expansion of the authority of the Committee on Foreign Investment in the United States (CFIUS) to review certain transactions that previously eluded the Committee’s jurisdiction (discussed in our blog, here). Congress left many critical aspects of the FIRRMA framework to be addressed through regulations promulgated by the Department of Treasury. Although we do not expect final rules to be forthcoming until late 2019 or early 2020, Congress empowered the Department of Treasury to “test-drive” parts of FIRRMA through Pilot Programs. Those programs can be implemented simply, taking effect 30 days after publication of the program requirements in the Federal Register. The adoption and implementation of the Pilot Program for critical technologies represents the Department of Treasury’s first attempt to implement substantive parts of FIRRMA prior to issuing formal regulations.
Continue Reading FIRRMA Takes Form as CFIUS Enacts a New Pilot Program Targeting “Critical Technologies”