August 22, 2022
CFIUS Releases 2021 Annual Report
What Happened: On August 3, 2022, the Committee on Foreign Investment in the United States (CFIUS) released its annual report for calendar year 2021 (the Report). The Report provides to the public the first full year of data regarding CFIUS activities since the implementation of the 2020 rule changes mandated by the Foreign Investment Risk Review Modernization Act (FIRRMA).
The Bottom Line: The Report discloses a number of trends and developments regarding submissions to, and the activities of, CFIUS including:
- Filing parties – particularly those based in countries that are close political and military allies of the United States – appear to be increasingly willing to file using the short-form “declaration” rather than the longer-form “notification.”
- The number of notices filed in 2021 increased significantly from 2020. At the same time, the Report shows a significant increase in 2021 relative to 2020 in the number of notices withdrawn and re-filed. About half of the increase in notice filings appears to have resulted from the notice withdrawals followed by re-filings.
- There was a significant uptick in the aggregate number of declaration and notice submissions to CFIUS (declarations and notices totaled 313 and 436 respectively in 2020 and 2021). While China remains a significant acquirer of US assets and a significant participant in the CFIUS clearance process, the aggregate number of declaration and notice filings by each of Japan and Canada surpassed those by China in 2021.
- The Report gives us the most detailed look yet into CFIUS activities regarding “critical technologies.” Insofar as mitigation is concerned, the sizeable increase in withdrawals and re-filings suggests that, where parties have identified serious potential national security issues, there is a substantial risk that the time to complete CFIUS review and negotiate a mitigation agreement will not be accomplished within the standard time periods contemplated by FIRRMA.
- Submissions to CFIUS regarding “covered real estate transactions” – which were given their own set of CFIUS rules in connection with FIRRMA implementation – appear to be few and far between.
We discuss these highlights further below.