Larry Christensen Comments on CFIUS Regulations in Inside Counsel

“Treasury Department issues final regulations—with some unexpected changes”
Inside Counsel
02.01.09

Larry Christensen discusses the November 2008 regulations and guidance issued by the Committee on Foreign Investment in the United States (CFIUS), the body that has the powers to prohibit foreign acquisitions that threaten national security under FINSA. While it has always been clear that covered transactions reviewed by CFIUS get a safe harbor from further review, according to Christensen, the regulations provide an important clarification. "CFIUS gets only one bite at the  [apple]," he says. "So, for example, an acquirer who is cleared in purchasing a 40 percent interest in a business will not need to go back to CFIUS for approval if it decides to acquire the remaining 60 percent or some part of it in the future. The guidance that followed on the regulations also focuses on national security considerations.  "Although the guidance provides only a minimal set of examples as to what will raise national security considerations, its issuance is good government because it clarifies a lot of things that might not occur to foreign investors," Christensen says. "For example, it isn’t every foreign investor that would think buying into a telecom manufacturing company would be a matter of national security, but it can be."

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