Impact of FIRRMA on Private Equity Funds: Expanded CFIUS Review of Foreign Investments, New Filing Requirements


CLE Credits earned: 2 GEN

FIRRMA, included as part of the National Defense Authorization Act for Fiscal Year 2019 (NDAA), was signed into law in August 2018. It expands CFIUS oversight beyond controlling transactions to a more nuanced category of non-controlling transactions with foreign entities. Going forward, private equity firms must carefully examine the level and nature of foreign ownership in a broader range of investments in U.S. companies.

CFIUS will have approval authority over non-controlling investments in companies involved with critical technology, critical infrastructure and sensitive data regarding U.S. persons. It will also have authority to review changes in investor rights that could lead to a covered transaction as well as certain real estate transactions and transactions that evade or circumvent CFIUS jurisdiction.

Subject to the satisfaction of specific management control and other criteria, foreign limited partners in private equity, venture capital, and hedge funds can qualify for an exclusion from CFIUS jurisdiction. Counsel must have a thorough understanding of the types of foreign investment that are and will be subject to review, and exemptions available to funds whose foreign investments meet exemption criteria.

In addition, FIRRMA changes the CFIUS regime from a voluntary system to one where filings will be mandatory in certain circumstances. Such filings must be made for transactions where a foreign government acquires a “substantial interest” in a U.S. business. CFIUS may also require mandatory filings for investments in U.S. companies involved in certain critical technologies.

This course is co-sponsored by the Federal Bar Association.

Key topics to be discussed:

•   How does FIRRMA expand CFIUS’s authority to review foreign investment in the United States?
•   What types of investment are of most concern to CFIUS under the new regime?
•   How should investment funds respond to this new law?
•   How does the CFIUS mandatory filing pilot program work?

Date / Time: December 14, 2018

•   10:00 am – 12:00 pm Eastern
•   9:00 am – 11:00 am Central
•   8:00 am – 10:00 am Mountain
•   7:00 am – 9:00 am Pacific

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Original Broadcast Date: December 14, 2018

Justin Huff, Esq. has more than a decade of governmental experience and has negotiated multiple complex agreements for the U.S. government to ensure U.S. national security. Prior to joining Jones Day in February 2018, Justin was the Deputy Director of the Office of Investment Security at the Department of Treasury, where he assisted in the coordination of the office responsible for the Treasury’s role chairing the Committee on Foreign Investment in the United States (CFIUS), an interagency process that reviews proposed mergers and acquisitions for potential national security concerns.

Justin also led the review of dozens of cases before CFIUS, which included in-depth analysis concerning the authority of CFIUS to review transactions, active engagement with counterparts at other CFIUS member agencies to facilitate consensus, and extensive communication with pertinent parties to a transaction to ensure that CFIUS had the information needed to reach a determination.

Prior to the Treasury, Justin served as a senior intelligence analyst for the Office of Homeland Security and Emergency Coordination at the U.S. Department of Agriculture where he managed departmental requirements and successfully advocated for their inclusion in the intelligence community (IC) and briefed White House officials and other federal agencies on best protection efforts to the nation’s food system. He also was a senior intelligence advisor at the Office of the Director of National Intelligence where he worked across federal departments and agencies to rally interagency support for initiatives that enhanced intelligence and information sharing between federal departments and the IC.

Christian C. Davis, Esq. focuses his practice on U.S. law and policy affecting international trade and business.

Mr. Davis advises clients on foreign investment, export controls, sanctions, anticorruption, and customs laws. His practice focuses on representing clients in the merger, acquisition and divestiture process before the Committee on Foreign Investment in the United States (CFIUS) and on accounting for associated risks. He also advises clients in negotiating and implementing CFIUS mitigation agreements, developing and administering international trade compliance programs and conducting internal investigations.

Mr. Davis has counseled clients in a variety of industries, including aerospace, defense, technology, investment funds, engineering, nuclear power, oil and gas, renewable energy, electronics, express consignment, medical research, athletic apparel and agriculture. He has also advised sovereign entities in the formation of law and policy.

Mr. Davis earned his J.D. cum laude in 2008 from the Georgetown University Law Center, where he was an editor of the American Criminal Law Review and served as a policy analyst for the Harrison Institute for Public Law.

Mario Mancuso, Esq., P.C. leads the Kirkland & Ellis’ International Trade and National Security practice. A former senior member of the President’s national security team, Mario provides strategic and legal advice to companies, private equity sponsors, and financial institutions operating or investing across international borders.

Since his return to private practice, Mario has been consistently recognized as a leading international practitioner by Chambers Global: The World’s Leading Lawyers for Business and Chambers USA: America’s Leading Lawyers for Business. Named an “International Trade MVP” by Law 360, he is a leading advisor on matters involving the Committee on Foreign Investment (CFIUS), economic sanctions (OFAC), export controls (ITAR, EAR), and the Foreign Corrupt Practices Act (FCPA), earning praise from boards, CEOs and senior executives for his holistic and “very strategic” approach. Clients say he is “thoughtful, responsive and cuts right to the heart of the issue,” and enthusiastically applaud his work as “a highly skilled technician of the law and commercially savvy advisor.”

During his tenure as Under Secretary of Commerce for Industry and Security, Mario was the lead U.S. official with immediate policy responsibility for matters involving U.S. industry and national security. In particular, he served as a senior CFIUS decision-maker, helped draft and implement regulations for the Foreign Investment and National Security Act of 2007 (FINSA) and reviewed hundreds of CFIUS transactions as a regulator. As Under Secretary, he also participated in National Security Council decisions regarding economic sanctions (OFAC) programs; led the bilateral strategic technology dialogues for the United States, including the U.S.-China High Technology and Strategic Trade Working Group, the U.S.-India High Technology Cooperation Group, and the U.S.-Israel High Technology Forum; and led and managed an agency of approximately 400 career civil servants in offices throughout the United States and in China, India, Hong Kong, the UAE and Russia. Mario’s extensive government experience includes:

• U.S. Under Secretary of Commerce, Industry and Security (confirmed unanimously by the U.S. Senate)
• Deputy Assistant Secretary of Defense, Special Operations and Combating Terrorism
• Special Counsel, Office of the U.S. Secretary of Defense
• Board Member, Global Markets Board, U.S. National Intelligence Council
• Board Member, CFIUS Advisory Board, U.S. National Intelligence Council
• U.S. Chair, U.S.-China High Technology and Strategic Trade Working Group
• U.S. Chair, U.S.-India High Technology Cooperation Group
• U.S. Chair, U.S.-Israel High Technology Forum

With his senior government, enforcement and international experience, he is particularly well-positioned to help clients through crises that involve national security-related regulatory enforcement actions or government investigations by the Office of Foreign Assets Control (OFAC), the Directorate of Defense Trade Controls (DDTC), the Bureau of Industry and Security (BIS), the Financial Crimes Enforcement Network (FinCEN), the Department of Justice (DOJ) and/or the Securities and Exchange Commission (SEC).

Mario has authored many articles and regularly contributes to leading U.S. and international media outlets on the subjects of U.S. national security, international affairs and global business. He is the author of the recently released, A Dealmaker’s Guide to CFIUS, which aims to help buyers, sellers, and other interested parties think through CFIUS within the M&A process.

Prior to his presidential service, he was in private law practice and served as a forward deployed military officer during combat operations.

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Section I. The impact of newly enacted CFIUS reforms on private investment funds

Section II. The regulatory hurdles and filing requirements created under the Foreign Investment Risk Review Modernization Act (FIRRMA)

Section III. How best to structure foreign investments in private equity and other investment funds to minimize CFIUS risk