Page 61 - The CFIUS Book
P. 61

 3.5. The Response: Risk Mitigation Imposition
If CFIUS concludes that a transaction threatens to impair the security of the United States, as described in Section 1.2.1, the Committee may either seek to block the transaction (Section 3.6) or, alternatively, may seek to negotiate an agreement with the parties to mitigate the risks to national security it identifies in the transaction.
3.5.1. Mitigation agreements
Agreements to mitigate national security risks, which commonly take the form of a Letter of Assurance (LOA), are negotiated between the parties and CFIUS and typically provide for measures that CFIUS believes mitigate any potential risk to the transaction. Also called “mitigation agreements”, these LOAs may include a mix of enhanced governance measures (such as an independent outside director), imposition of certain security policies, restriction of the activities of one or more subsidiaries (particularly for those operations in the United States), and a series of verification measures (such as an annual compliance audit).
A typical mitigation agreement, for example, may require measures such as:
l The operations of a U.S. subsidiary are restricted to the United States
l An independent director of the subsidiary has authority to oversee the conduct of the subsidiary and to report concerns within and outside of the company

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