The US Treasury Department has temporarily expanded the authority of the Committee on Foreign Investment in the US (CFIUS) to include several new areas of technology, ranging from aircraft manufacturing to nanotechnology R&D to computer storage devices. The pilot project will also scrutinise minority stakes, joint ventures and transactions in which the foreign investor would get critical, non-public technical information or place on the board of directors, or have some level of decision-making in the company. Prior to this, CFIUS focused primarily on takeovers and controlling stakes by foreign investors.

Under the new rules, foreign investors will be required to submit declarations of their plans when making such a bid. The declaration requires a great deal of information including a complete organisational chart of the bidder, the immediate parent, the ultimate parent and each intermediate parent of each foreign person that is part of the transaction. If the bidding company is privately held, CFIUS wants to know the ultimate owner; and if that owner is public, it wants to know about any shareholder that has an interest of greater than 5%.


If the bidder fails to provide a complete declaration, it could be fined up to the value of the transaction. CFIUS has the power to deny the bid.

These provisions come into effect from November 10, 2018.

This pilot project falls under the recently enacted Foreign Investment Risk Review Modernisation Act of 2018 (FIRRMA), only parts of which will be implemented. Full implementation will happen no later than February 2020 and in the meantime the legislation allows for specific pilot projects, such as this one. “These temporary regulations address specific risks to US critical technology while informing the development of final regulations that will fully implement FIRRMA,” said US treasury secretary Steven Mnuchin.

The list of industries covered under this pilot project are: aircraft manufacturing; aircraft engine and engine parts manufacturing; alumina refining and primary aluminium production; ball and roller bearing manufacturing; computer storage device manufacturing; electronic computer manufacturing; guided missile and space vehicle manufacturing;  guided missile and space vehicle propulsion unit and propulsion unit parts manufacturing; military armoured vehicle, tank, and tank component manufacturing; nuclear electric power generation; optical instrument and lens manufacturing; other basic inorganic chemical manufacturing; other guided missile and space vehicle parts and auxiliary equipment manufacturing; petrochemical manufacturing; powder metallurgy part manufacturing; power, distribution, and speciality transformer manufacturing; primary battery manufacturing; radio and television broadcasting and wireless communications equipment manufacturing; R&D in nanotechnology; R&D in biotechnology (except nanobiotechnology); secondary smelting and alloying of aluminium; search, detection, navigation, guidance, aeronautical, and nautical system and instrument manufacturing; semiconductor and related device manufacturing; semiconductor machinery manufacturing; storage battery manufacturing; telephone apparatus manufacturing; and turbine and turbine generator set units manufacturing.