Impact of FIRRMA on M&A: New Pilot Program Notice Requirements, Expanded CFIUS Review of Foreign Investments

The FIRRMA was signed into law in August 2018, and CFIUS followed up with interim rules under a "pilot program" which went into effect Nov. 10, 2018. FIRRMA expands the scope of CFIUS coverage to include certain non-controlling investments in U.S. businesses that implicate critical technologies, critical infrastructure and sensitive data regarding U.S. persons. The pilot program fundamentally changes the framework for CFIUS notification and review.

The interim rules require short-form filings from parties to certain types of "covered" transactions that fall within an enumerated set of industry sectors and which involve "critical technologies." CFIUS retains the right to require a longer-form filing concerning any matter, and the rule increases the review period from 30 days to 45 days. Ignoring the CFIUS review process could result in significant financial penalties and unwinding an entire acquisition.

Counsel in M&A transactions involving foreign parties must pay careful attention to whether a CFIUS notification filing is required and evaluate the risk that a covered transaction could be denied before significant resources are committed to consummating a transaction. Counsel in M&A transactions should likewise assess whether acquisition documents include appropriate provisions addressing potential CFIUS review, including the notice and reporting obligations of the parties and the consequences should the deal be denied.

Listen as our authoritative panel discusses these and other issues associated with FIRRMA, and the implications of these reforms for the structuring of M&A deals involving foreign investors.

1. CFIUS and FIRRMA
2. Expanded review of covered transactions
   1. Foreign parties impacted
   2. Industries impacted
3. Notice and approval process under pilot program
4. Considerations for M&A
   1. Due diligence of parties to a transaction, analysis of industry and location
   2. Provisions to address CFIUS review acquisition documents

The panel will review these and other important issues:

• How has FIRRMA expanded on the CFIUS authority to review M&A transactions?
• What are the new notification requirements under the pilot program and how should they be addressed in acquisition agreements?
• How should the parties address the risk that a proposed deal will be denied between contract and closing?
• What is the appropriate level of due diligence that sellers should conduct on potential buyers?