The Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which was signed into law by President Trump on Aug. 13 as part of the omnibus John S. McCain National Defense Authorization Act for Fiscal Year 2019 (“NDAA”), expands the jurisdiction and ability of the Committee on Foreign Investment in the United States (“CFIUS”) to review and restrict “covered” transactions on national security grounds. For an overview of the NDAA, please see Part 1 of this series.
Parties that engage in transactions pursuant to which a foreign entity would invest, directly or indirectly, in a U.S. business need to be cognizant of how such a transaction might be viewed by CFIUS following the implementation of FIRRMA. This includes private equity and venture capital funds, startup companies contemplating a financing, sovereign wealth funds, and real estate investors. In particular, companies and funds that operate in industries likely to be impacted by FIRRMA, such as technology and life sciences, prepare for the implementation of FIRRMA.