CFIUS Unwinding Years-Old Deals Becomes 'Increasingly Frequent,' Law Firm Says
The Trump administration's executive order last month to unwind the years-old purchase of audiovisual technology equipment supplier Jupiter Systems by China-based Suirui Group (see 2507100058) is the latest sign that the Committee on Foreign Investment in the U.S. is digging far back to find transactions that could hurt U.S. national security, ArentFox said Aug. 7 in a client alert.
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"While prohibitions of transactions long after the fact were once vanishingly rare," the law firm said, "they have become increasingly frequent as CFIUS has become more muscular and aggressive."
The firm added that the Jupiter Systems order is a "clear example of the importance of conducting a thorough review of CFIUS considerations" for any deals, especially those that involve parties from China or companies working with sensitive personal data, critical technology or critical infrastructure. "Investors must be sure to understand the risks of declining to seek and obtain CFIUS clearance for such transactions."
Just because a CFIUS filing isn't mandatory doesn't "mean you are off the hook," the firm noted. In every case, companies should think about whether to submit a CFIUS filing "to protect themselves from future CFIUS scrutiny in the event of future US policy changes" or changes to technology.
"Technology that may appear benign at the time of a transaction may in [the] future be more closely scrutinized," ArentFox said. "When in doubt, especially with transactions involving sensitive jurisdictions, a CFIUS filing is often advisable."