FIRRMA Pilot Program Decision Tree

FIRRMA Pilot Program Decision Tree
Mandatory CFIUS Declaration
Under the new FIRRMA Pilot Program, certain transactions are required to be notified to CFIUS. Penalties for failure to file may be up to the value of the transaction. Here are a few simple questions to determine if your transaction triggers a mandatory declaration.
Yes
No
No to All
Could the transaction result in foreign control of a U.S. business?
Was the transaction completed prior to November 10, 2018, or did any of the following occur prior to October 11, 2018?
• Binding transaction agreement;
• Request to convert convertible voting securities of the U.S. business;
• Tender offer for voting securities of U.S. business; OR
• Solicitation of proxies relating to election of board of directors of U.S. business
Yes to Any
Would a foreign investment in a U.S. business of any size afford the investor:
• access to material nonpublic technical information possessed by the U.S. business;
• board membership (including the right
to appoint) or observer rights on the U.S. board of directors or equivalent governing body; OR
• involvement (other than through voting of shares) in substantive decision-making of the U.S. business regarding the use, development, acquisition, or release of critical technology?
Is the foreign investment being made through an investment fund in which the investor
can serve on an advisory board or similar committee, and;
• a general partner, managing member or equivalent is not a foreign person;
• the advisory board or committee cannot approve, disapprove or otherwise control the fund’s investment decisions or decisions of the fund manager relating to the fund’s portfolio companies;
• the investor may not unilaterally dismiss, prevent the dismissal of, select or determine the compensation of the fund manager; AND
• participation on the advisory board or committee does not afford the foreign investor access to material nonpublic technical information?
No mandatory CFIUS declaration required. CFIUS notice may still be appropriate.
No
No to Any
Does the U.S. business produce, design, test, manufacture, fabricate or develop critical technologies for use in one of the 27 Pilot Program Industries listed in Attachment A hereto?
Yes
The transaction is subject to the Pilot Program. The parties must submit to CFIUS either:
• a mandatory, short-form declaration; or • a full-form notice of the transaction.
Yes to All
No to All
For More Information Contact:
Brian Weimer
T: 202.747.1930 (Washington, DC) bweimer@sheppardmullin.com
Reid Whitten
T: +44 203.178.7831 (London)
T: 202.747.2314 (Washington, DC) rwhitten@sheppardmullin.com
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