The U.S. Department of the Treasury Issues Final Rules on CFIUS Mandatory Declarations.

On September 15, 2020, the U.S. Department of the Treasury issued a final rule ("Final Rule") that will take effect on October 15, 2020. This Final Rule refines the requirements for mandatory declarations to the Committee on Foreign Investment in the United States ("CFIUS") for certain transactions, particularly those involving foreign investments in U.S. businesses engaged in activities related to "critical technologies."

The Final Rule eliminates the requirement that "critical technologies" be used (or designed to be used) in one of the 27 sensitive industries identified by CFIUS. Instead, the Final Rule aligns CFIUS's mandatory declaration requirements for critical technology transactions with established U.S. export control regulations. However, the Final Rule does not modify the definition of "critical technologies."

Specifically, under the Final Rule, a declaration to CFIUS is required when the following conditions are met:

(i) The U.S. business involved in the transaction is engaged in the production, design, testing, manufacturing, fabrication, or development of a type of "critical technology";

(ii) A license or other authorization from the relevant U.S. export control agency is required to provide such "critical technology" to the following parties, based on their principal place of business, nationality of individuals, or other reasons:

(a) The foreign investor who will gain direct control over the U.S. business upon completion of the transaction,

(b) The foreign investor who will directly acquire a "covered investment" interest in the U.S. business,

(c) The foreign investor who has already made a direct investment in the U.S. business but whose rights will change upon completion of the transaction, resulting in foreign control or a "covered investment,"

(d) The foreign investor who is a party to a transaction intended to evade CFIUS jurisdiction,

(e) The foreign investor who, individually or collectively with other foreign investors, directly or indirectly holds at least 25% of the voting interest in another foreign entity that constitutes one of the above types.