Implementing FIRRMA: CFIUS Finalizes Filing Fee Rule for Voluntary Transaction Notices

Background

CFIUS, an interagency committee principally comprising nine members and chaired by the Secretary of the Treasury, has broad powers to review foreign investments in and acquisitions of U.S. businesses to determine the potential impact on U.S. national security. CFIUS has the authority to impose mitigation measures, suspend transactions and, where appropriate, recommend that the President block or unwind transactions.

This Final Rule implements one of the last remaining changes to the CFIUS process initiated by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”). In January, we wrote about two other major implementations under FIRRMA, the final regulations for transactions involving critical technology, critical infrastructure, and sensitive personal data (“TID Final Regulations”) and the final regulations pertaining to provisions of FIRRMA that expand CFIUS jurisdiction over certain real estate transactions (“Real Estate Final Regulations”). Please find our coverage of the TID Final Regulations and the Real Estate Final Regulations here and here.

As we discussed in our previous OnPoint covering the Proposed Rule, filing fees will impact not only the timing but also the type of transaction notices filed with CFIUS. Please find our coverage of the Proposed Rule here.

Filling Fee Structure

Parties must pay the filing fee prior to CFIUS accepting a notice for review except when the Committee determines that extraordinary circumstances relating to national security warrant a waiver of the filing fee. The filing fee covers both voluntary notices to CFIUS and notices filed in lieu of declarations for mandatory review requirements. CFIUS will not begin formal review of a notice until the filing fee is received. A filing fee is not required when submitting a draft notice for informal review by the Committee or for a short-form declaration filed with the Committee.

The Committee does not mandate which party to a transaction must pay the filing fee; who should do so is an additional CFIUS issue that parties should consider, and negotiate, during the transaction process. In addition, although there is no filing fee for the submission of a short-form declaration, parties should be aware that a filing fee will be required if the Committee requests the submission of a full formal notice after review of the declaration (or if, as a result of an inconclusive CFIUS response to a declaration, the parties elect to file a full formal notice).

Conclusion

The Final Rule is an important change in the CFIUS process: CFIUS reviews of transaction notices are no longer free. Although the Final Rule provides guidance on how filing fees will be assessed and how transaction value should be calculated, it adds yet another level of complexity to the calculus of the CFIUS review process. The changes reinforce the importance of considering CFIUS implications early in the development of plans to pursue investments in and acquisitions of U.S. businesses.