CFIUS: Compliance with a National Security Agreement

By Michael Rose and Steve Siemborski, CCEP

Michael Rose (michael.rose@us.gt.com) is a Partner and a leader of Grant Thornton LLP’s National Governance Risk and Compliance practice in Philadelphia, Pennsylvania, USA. Steve Siemborski (ssiemborski@calfeesolutions.com) is Managing Director at Calfee Strategic Solutions in Washington, DC.

This is the second of a three-part series on complying with the new law on foreign investment in the US. In this article, National Security Agreements (NSAs) are discussed. NSAs are the contractual outcome of the rigorous process for having direct foreign investment transactions approved by the US.

The Committee on Foreign Investment in the United States (CFIUS or the Committee) reviews transactions of direct foreign investment in a US entity for national security risks. This review addresses the risk that technology or intellectual property might be transferred outside of the US as a result of being acquired by a foreign entity. Broad and modern powers were granted to CFIUS under the Foreign Investment Risk Review Modernization Act of 2018[1] (FIRRMA or the Act). It expanded CFIUS oversight, nearly doubling the list of national security factors for CFIUS to consider in its risk reviews.

As a result, US companies considering investments from foreign entities and foreign corporations looking to invest in the US should prepare for a significant CFIUS review process. A pilot program became effective on November 10, 2018, specifying North American Industry Classification System (NAICS) codes, industries, and technologies for some transactions dealing with critical technologies. The pilot program does not address critical infrastructure or assembled personal information. It is generally expected that CFIUS annual filings will multiply from hundreds to over a thousand in 2019.

Beyond the 27 industries called out in the Act’s pilot program, many other companies may be affected:

  • Investment funds that invest capital and have a degree of oversight and control.

  • Real estate companies and funds that may have critical infrastructure—including government offices—in their portfolios.

  • Financial institutions and data processing companies that hold assembled personal data on US citizens.

  • Autonomous vehicle manufacturers, designers, and component suppliers.

This document is only available to members. Please log in or become a member.
Become a Member Login
 


Would you like to read this entire article?

If you already subscribe to this publication, just log in. If not, let us send you an email with a link that will allow you to read the entire article for free. Just complete the following form.

* required field

First name field cannot be blank!
Last name field cannot be blank!
We will send you an email that will give you access to this entire article.
Email field cannot be blank!
Enter a valid email!
Company field cannot be blank!
Enter a valid company!
Title field cannot be blank!

We're committed to your privacy. The Society of Corporate Compliance and Ethics (SCCE) & Health Care Compliance Association (HCCA) uses the information you provide us to contact you about our relevant content, products, and services. For more information, check out our Privacy Policy.


About SCCE

The Society of Corporate Compliance and Ethics (SCCE) is a non-profit, member-based professional association. SCCE supports our members' work with education, news, and discussion forums. We are a community of leaders, defining and shaping the corporate compliance environment across a wide range of industries and geographic regions. In developing and maintaining effective ethics and compliance programs, our members strengthen and protect their companies.

952.933.4977

About HCCA

The Health Care Compliance Association (HCCA), is a 501(c)6 non-profit, member-based professional association. HCCA was established in 1996 and is headquartered in Minneapolis, MN. We provide training, certification, and other resources to over 10,000 members. Our members include compliance officers and staff from a wide range of organizations, including hospitals, research facilities, clinics and technology service providers.

952.988.0141

Facebook X LinkedIn
Copyright © 2024 by Society of Corporate Compliance and Ethics (SCCE) & Health Care Compliance Association (HCCA). No claim to original US Government works. All rights reserved. All information provided through this site, including without limitation all information such as the “look and feel” of the site, data files, graphics, text, photographs, drawings, logos, images, sounds, music, video or audio files on this site, is owned and/or licensed by SCCE & HCCA or its suppliers and is subject to United States and international copyright, trademark and other intellectual property laws. Any third party logos and/or content provided herein is owned by such third parties and is used by permission herein. Your use of this site to is subject to our Terms Of Use and Privacy Statement.
Cookie settings