CFIUS Lawyer in Seattle, WA

Are you a foreign entity and acquiring a U.S. business? Are you a U.S. business that is seeking foreign investment or being acquired by a foreign entity?  Are you merging with a foreign entity? If so, you should talk to the attorneys at CMM to determine if your transaction falls under the CFIUS regulations.  If it does, we can help you file your disclosures to CFIUS and guide you through the Committee’s review process and request for additional information.  If on the rare occasion CFIUS determines your transaction does present a national security risk, then let us help you draft an appropriate mitigation agreement to ensure your business can both comply with the requirements but also continue to function most effectively. Significant civil penalties up to $250,000 are imposed if at any time a company is found to have made intentionally false or grossly negligent actions.

In 2007, Congress passed the Foreign Investment and National Security Act of 2007 (Act) that was subsequently implemented by President George W. Bush via Executive Order 13456 on January 23, 2008.  The United States Department of Treasury, on behalf of the Committee on Foreign Investment in the United States (CFIUS), issues regulations implementing Section 721 of the Act. Section 721 gives the President of the United States authority, subsequently delegated to the Committee, to suspend or prohibit a transaction, by or with any foreign person that may result in control of a U.S. business by a foreign person. The primary concern of the Committee is to ensure U.S. national security is not threatened in any way by the transaction.

Therefore, any foreign or domestic entity engaged in a “covered transaction” is subject to CFIUS review under Section 721.  A “covered transaction” is any transaction (merger, acquisition or takeover) by or with any foreign entity, which could result in control of a US business by a foreign individual or company.  Foreign control is the “power, direct or indirect, whether or not exercised…to determine, direct, or decide important matters affecting an entity.” A “covered transaction” does not include, for example, a start-up investment, asset acquisition if assets acquired are not a “U.S. business”, or a lending transaction unless the foreign person has governance rights like an equity investment.  In determining foreign control, CFIUS focuses on the foreign person’s powers not the transaction form.

Should you be an international individual or company considering acquiring, merging with, or establishing a business anywhere in the United States, you should ensure you are compliant with CFIUS regulations.  Please contact the attorneys at CMM to assist you in your efforts.