1. What Is Cfius and What Transactions Does It Cover?
CFIUS has jurisdiction over covered transactions, meaning any acquisition of control of a US business by a foreign person and certain non-controlling investments in TID businesses.
What Is Cfius and What Authority Does It Have over Foreign Investments?
CFIUS is an interagency committee that reviews foreign investments in US businesses and real property for national security risks, and its decisions can result in approving the transaction, approving it subject to conditions in a mitigation agreement, or recommending that the President prohibit or unwind the transaction. Both the foreign investor and the US business must satisfy the applicable definitions for a transaction to constitute a covered transaction.
FIRRMA compliance and foreign direct investment counsel can advise on the scope of CFIUS jurisdiction and develop the pre-filing strategy.
What Is a Covered Transaction and How Is a Tid Business Defined?
A covered transaction includes any transaction by which a foreign person acquires control of a US business, and certain non-controlling investments in TID businesses, meaning US businesses that produce, design, or manufacture critical technology, own or operate critical infrastructure, or collect sensitive personal data. A covered real estate transaction includes real estate within certain distances of sensitive government facilities, military installations, or airports.
| Transaction Type | Description | Filing Obligation |
|---|---|---|
| Acquisition of control | Foreign person acquires control of a US business | Voluntary notice; mandatory declaration if government investor + TID |
| TID investment (non-controlling) | Foreign person acquires access rights, board seat, or equity in a TID business | Mandatory declaration or voluntary notice depending on investor nationality |
| Real estate near sensitive facilities | Property near US military installations, government facilities, or airports | Mandatory or voluntary depending on proximity and investor |
| Excepted investor | Investor from FIRRMA-excepted state (Australia, Canada, New Zealand, UK) | Voluntary notice typically sufficient |
FIRRMA compliance and deal structuring counsel can advise on the transaction structure that best manages CFIUS risk and develop the pre-filing analysis and structuring strategy.
Foreign direct investment and national security counsel can advise on whether the specific US business qualifies as a TID business and develop the TID analysis and jurisdiction strategy.
2. Mandatory and Voluntary Filings under Firrma
FIRRMA introduced mandatory filing requirements for certain covered transactions, and parties who fail to submit a required filing before closing face civil penalties of up to the value of the transaction.
When Is a Mandatory Declaration or Notice Required under Firrma?
FIRRMA requires a mandatory declaration for covered transactions in which a foreign government holds a substantial interest in the foreign investor and the transaction involves a TID business, and for transactions involving US businesses that produce, design, test, or develop critical technologies in a covered industry sector. A party may also submit a voluntary notice in lieu of a mandatory declaration.
FIRRMA compliance and international trade law counsel can advise on whether the specific transaction triggers a mandatory declaration or full notice and develop the filing strategy.
What Is the Cfius Review Process and How Long Does It Take?
The CFIUS review process begins when the parties submit a declaration or notice, and for a voluntary notice CFIUS has an initial 30-day review period that may be extended to 45 days if an investigation is warranted, followed by a 45-day investigation period, giving CFIUS up to 90 days total. CFIUS may request that the parties refile, and many transactions are resolved through negotiations during the pre-filing consultation period.
FIRRMA compliance and corporate compliance and risk management counsel can advise on the CFIUS review process, assess the likely timeline and review risk, and develop the submission and response strategy.
3. National Security Risk Factors and Mitigation
CFIUS evaluates national security risks by examining the foreign investor's ties to foreign governments, the sensitivity of the US business's technology or data, and the potential for the investment to give the foreign investor access to information that could harm US security.
What National Security Risks Does Cfius Evaluate and What Raises Red Flags?
The primary national security risk factors include the foreign investor's ties to a foreign government, military, or intelligence service, whether the foreign investor has significant operations in a country of concern such as China, Russia, Iran, or North Korea, the sensitivity of the US business's technology or data, and the proximity of any real estate to sensitive US government facilities.
National security and export control law counsel can advise on the national security risk factors and develop the risk management and mitigation strategy.
What Are Mitigation Agreements and How Are They Negotiated?
A mitigation agreement is a legally binding contract between CFIUS and the parties that imposes conditions designed to address identified national security risks, and common conditions include requirements to establish security protocols, restrictions on board representation, requirements to maintain US persons in key positions, and requirements to divest a specific business unit or technology. CFIUS has a dedicated enforcement function that can impose civil penalties for violations.
FIRRMA compliance and international sanctions and trade tariffs counsel can advise on the mitigation conditions most likely to be required and develop the mitigation negotiation and compliance strategy.
4. Divestment Orders, Outbound Screening, and Judicial Review
CFIUS has the authority to recommend that the President block or unwind a covered transaction, and CFIUS decisions are generally not subject to judicial review.
Can Cfius Force Divestment and What Happens When a Deal Is Blocked?
If CFIUS is unable to resolve national security concerns through mitigation, the President may issue an order prohibiting a pending transaction from closing or requiring the parties to unwind a completed transaction. CFIUS decisions are generally not subject to judicial review on the merits.
National security and federal court trial counsel can advise on the options available to a party facing a CFIUS recommendation for prohibition or divestment and develop the response strategy.
How Does Outbound Investment Screening Interact with Cfius Review?
The US government has implemented an outbound investment screening program that restricts certain US investments in Chinese companies in the semiconductor, quantum information technology, and artificial intelligence sectors, and US persons who make covered outbound investments must provide notification or are prohibited from proceeding. The outbound investment program and CFIUS together represent a framework for managing the national security risks of cross-border capital flows.
Outbound investment screening and foreign direct investment counsel can advise on the outbound investment restrictions applicable to the specific transaction and develop the compliance strategy.
27 Mar, 2026
