CFIUS Determines the UK and New Zealand Will Remain "Excepted Foreign States"

The Committee on Foreign Investment in the United States ("CFIUS") determined that the United Kingdom and New Zealand meet the criteria under CFIUS regulations to remain as excepted foreign states ("EFS") and excepted real estate foreign states ("EREFS"). As a result of the determination, qualifying investors from all Five Eyes countries (i.e., Australia, Canada, New Zealand, the UK and the U.S.) will continue to be excepted from CFIUS jurisdiction over certain "noncontrolling transactions, real estate transactions, and mandatory filing requirements."

Background

Regulations implementing the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA") (which went into effect on February 13, 2020) expanded CFIUS's review of transactions to include certain nonpassive minority investments and real estate transactions. FIRRMA also introduced mandatory declaration requirements for certain types of covered transactions, including those in which a foreign government has a "substantial interest."

Recent Actions

Treasury stated that the UK and New Zealand, by virtue of the establishment and use of their own foreign investment screening programs, have met the requirements for EFS determination under the CFIUS regulations. The actions taken by the UK and New Zealand reflect ongoing efforts by the Five Eyes countries to implement investment screening authorities that address national security risks stemming from foreign investment while ensuring open investment. Pursuant to CFIUS determinations, qualifying investors in the UK and New Zealand will remain exempt from CFIUS jurisdiction over covered investments (e.g., certain nonpassive minority investments) and covered real estate transactions, as well as mandatory filing requirements.