Roadmap for National Security Reviews of Foreign Investment

Treasury issued proposed regulations on Monday of this week implementing the Foreign Investment and National Security Act of 2007 (FINSA). The regs were very well done and provide investors from abroad a clear roadmap as to when, if and how they may need to submit a transaction for review by the Committee on Foreign Investment in the U.S. They also debunked a myth furthered by some in the media that investments under 10% enjoyed some sort of safe harbor from review in the past. 10% was never and is not now a magic number in regard to CFIUS reviews. Investments under 10% with some level of control (rights not otherwise granted to other shareholders) were always subject to CFIUS review. Passive investments under 10%, with no special rights other than similarly situated shareholders, should not have to seek review from CFIUS under FINSA. Kudos to Treasury for implementing one of the few pieces of bipartisan legislation passed by this Congress. And for getting rid of a few red herrings...