The Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), discussed in our memorandum to clients dated August 7, 2018, amended the statute governing the authority of and process for national security reviews of foreign investment conducted by the Committee on Foreign Investment in the United States (“CFIUS”). A number of FIRRMA’s provisions were not immediately effective, but required implementation through regulations. FIRRMA also provided CFIUS with authority to issue interim regulations and to conduct “pilot programs” to help inform the permanent rulemaking process.
In an exercise of its pilot program authority, the Department of the Treasury has proposed implementing certain FIRRMA provisions through new interim regulations that will become effective on November 10, 2018 without notice and comment. The interim regulations require that any transaction by or with any foreign person that could result in foreign control of a specified U.S. critical technologies business, or any covered non-control investment by a foreign person in such a U.S. business, is subject to mandatory notification to CFIUS. Failure to comply with this requirement may result in a civil penalty in an amount up to the value of the transaction in question.