The US Department of Treasury published a final rule on September 15, 2020, that, effective October 15, 2020, revises the current mandatory filing requirements for transactions involving US businesses that deal in critical technologies. The final rule largely adopts the modifications as advanced in the May 21, 2020, proposed rule which we detailed in a previous update.
Thus, as of October 15, 2020 (except with regard to certain transactions that are largely finalized prior to that date), parties are required to submit a short form declaration to CFIUS at least 30 days prior to the transaction's completion date where the foreign person is: (i) obtaining a controlling, or non-controlling interest, in a US business that produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies; and (ii) a US regulatory authorization (defined to include ITAR, EAR, DOE, or NRC export authorizations) would be required for the export, re-export, or transfer of such critical technology to certain foreign persons that are a party to the transaction or in the foreign person's ownership chain. Specific rules are set forth regarding which parties in the transaction or ownership chain would need to be considered.
Whether a US regulatory authorization would be required is predicated on the foreign person's principal place of business (for entities) and the foreign person's nationality or nationalities (for individuals). Moreover, the analysis would be conducted without giving effect to any license exemption under the ITAR or under the EAR, other than license exceptions TSU, ENC, and STA.
No changes were proposed to the mandatory filing requirements for transactions involving foreign governments or foreign government entities, other than a relatively minor clarification regarding the definition of "substantial interest" in 31 CFR 800.244(b).
We will continue to monitor these, and related, developments closely and publish additional updates, as appropriate.