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Foreign Investment: Committee on Foreign Investment in the United States (CFIUS)
Advising investors and companies as they navigate national security reviews, foreign investment controls, and cross-border transactions subject to CFIUS oversight.
The Committee on Foreign Investment in the United States, known as CFIUS, plays an essential role in reviewing transactions involving foreign investment that could affect national security. As global supply chains, digital infrastructure, advanced technologies, and data-driven industries expand, CFIUS has significantly broadened its scope and enforcement approach. Modern transactions require a sophisticated understanding of mandatory filing rules, voluntary submissions, mitigation agreements, enforcement risk, and sector-specific sensitivity. Companies and investors must analyze ownership structures, evaluate national security exposure, and integrate CFIUS considerations early in transaction planning. Effective counsel helps organizations prepare compliant filings, manage regulatory inquiries, and structure deals that reduce review risk without undermining commercial objectives.
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1. CFIUS Legal Framework, Authority, and National Security Jurisdiction
CFIUS authority derives from statutory and regulatory frameworks that govern how foreign investment is reviewed and evaluated for national security risk.
The Foreign Investment Risk Review Modernization Act (FIRRMA), its implementing regulations, and related executive authorities expand CFIUS jurisdiction over a wide range of covered transactions. These include controlling investments, minority stakes with certain rights, real estate acquisitions near sensitive sites, and joint ventures involving critical technologies, critical infrastructure, or sensitive personal data. National security risk evaluations consider foreign ownership, supply chain relationships, sector sensitivity, technology transfer exposure, and potential for foreign government influence. Companies must understand CFIUS jurisdictional triggers to determine filing obligations and evaluate review risk.
Statutory Authority, Regulatory Scope, and Covered Transaction Categories
CFIUS evaluates transactions involving change of control, sensitive investment rights, real estate acquisitions, and technology transfer exposures. Companies must analyze whether the transaction grants access to information, involvement in decision making, or operational influence that could implicate national security.
National Security Factors, Sector Sensitivities, and Foreign Government Influence Review
CFIUS assesses risks related to critical technologies, infrastructure vulnerabilities, cybersecurity issues, and data sensitivity. Foreign government ownership or direction increases scrutiny and may lead to mitigation requirements or prohibition.
2. Mandatory Filings, Voluntary Submissions, and CFIUS Review Procedures
Investors must determine whether a transaction triggers mandatory filings or whether voluntary submissions are advisable to mitigate regulatory uncertainty.
Mandatory filings apply to certain investments in critical technology sectors and acquisitions that involve foreign government substantial interest. Voluntary filings allow parties to seek certainty where national security exposure is possible but not automatically triggered. Review procedures include acceptance, a 45-day review period, a possible 45-day investigation period, mitigation negotiations, and presidential review in rare cases. Failure to file can result in penalties, unwinding orders, or post-closing enforcement.
Mandatory Declaration Requirements, Triggering Events, and Filing Criteria
Mandatory declarations apply when transactions involve critical technologies requiring export controls or where foreign government ownership meets statutory thresholds. Parties must evaluate supply chain roles, licensing obligations, and technology classifications.
Voluntary Filings, Review Timelines, and Post-Closing Submission Considerations
Voluntary filings provide a safe harbor and reduce enforcement risk. Counsel must analyze ownership structures, sensitive data access, and national security implications to determine whether proactive filing is strategically beneficial.
3. Critical Technologies, Sensitive Personal Data, and National Security Classification Issues
CFIUS prioritizes industries and assets that could impact national security, supply chain resilience, or sensitive data protection.
Critical technologies include advanced semiconductors, AI systems, quantum computing, satellite technologies, hypersonics, biotechnology, and other emerging sectors subject to export controls. Sensitive personal data refers to information about U.S. persons that can create national security vulnerabilities such as health data, geolocation history, financial records, or genetic information. Companies must evaluate classification rules, export control categories, and data sensitivity to determine whether CFIUS jurisdiction applies.
Technology Classification, Export Control Review, and Emerging Sector Analysis
Companies must classify technology under EAR, ITAR, and regulated emerging technology frameworks to determine whether transactions involve critical technologies that increase CFIUS scrutiny.
Data Sensitivity Review, Access Controls, and Safeguards for Personal Information
Transactions involving consumer platforms, health applications, financial technology, or geospatial systems require detailed evaluation of whether foreign parties may gain access to sensitive U.S. personal data.
4. Mitigation Agreements, Compliance Obligations, and Enforcement Risks
CFIUS may require mitigation measures to address perceived national security risks associated with foreign investment.
Mitigation agreements may impose operational restrictions, security controls, data access limitations, board governance requirements, supply chain protections, or restrictions on technology transfers. Companies must develop internal procedures to ensure compliance with mitigation conditions and maintain documentation for government audits. Violations can result in penalties, forced divestitures, or operational prohibitions. Companies must evaluate how mitigation affects commercial operations and negotiate terms that allow sustainable business performance.
Mitigation Structures, Operational Restrictions, and Governance Requirements
Mitigation measures may include data localization, compliance monitoring, third-party audits, cybersecurity commitments, or segregation of sensitive operations. Governance requirements may limit foreign influence in decision making.
Compliance Monitoring, Recordkeeping, and Enforcement Exposure
Companies must establish systems that monitor compliance, maintain records, and report deviations promptly. CFIUS may investigate alleged violations and impose penalties or unwind transactions if necessary.
5. Cross-Border Transactions, Deal Structuring, and CFIUS Risk Management
Effective deal planning requires integrating CFIUS analysis into early transaction stages to avoid delays, enforceability issues, or regulatory intervention.
Companies must evaluate ownership chains, investor backgrounds, technology classifications, supply chain exposure, and data access implications before finalizing deal terms. Transaction documents often include CFIUS-related conditions precedent, termination rights, reverse break fees, mitigation obligations, and representations regarding export controls and national security. Corporate governance and post-closing structures must also reflect compliance expectations.
Deal Documentation, CFIUS Conditions, and Contractual Protections
Purchase agreements and investment documents must include provisions addressing filing obligations, cooperation duties, allocation of mitigation responsibilities, and rights to withdraw if national security concerns arise.
Pre-Closing Planning, Post-Closing Integration, and Risk Mitigation Strategy
Strategic planning helps ensure deals proceed smoothly, including coordinating with regulators, preparing for due diligence inquiries, and developing operational safeguards to support compliance.
6. Why Choose SJKP LLP for CFIUS Legal Counsel
Sophisticated guidance for cross-border investments, national security compliance, regulatory strategy, and transaction execution.
SJKP LLP advises private equity firms, sovereign investors, multinational corporations, technology companies, and financial institutions on CFIUS filings, risk evaluations, mitigation negotiations, and enforcement matters. Our attorneys help clients evaluate national security exposure, prepare compliant submissions, structure transactions, and respond effectively to regulatory inquiries. Whether conducting pre-transaction assessments, coordinating multi-agency reviews, or negotiating complex mitigation agreements, we deliver legal strategies that protect commercial interests while supporting regulatory compliance.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Reading or relying on the contents of this article does not create an attorney-client relationship with our firm. For advice regarding your specific situation, please consult a qualified attorney licensed in your jurisdiction.
Certain informational content on this website may utilize technology-assisted drafting tools and is subject to attorney review.
