The 2012 Report underscores the continued imperative for foreign investors to consider CFIUS issues when contemplating relevant US acquisitions.

The Committee on Foreign Investment in the United States (CFIUS) recently released the public version of its 2012 Annual Report. The Annual Report details how many notices were submitted to CFIUS in connection with investments by foreign investors in US businesses in 2012 and how many of those filings triggered investigations or were withdrawn. (CFIUS regularly publishes its annual reports almost a full year after the period for which the report is made. Thus, the 2012 Report was published at the very end of 2013 and does not include information about transactions filed in the past year.) Although the public version of the report does not include specific information about the transactions at issue, it does offer various insights into foreign investment trends, as well as factors CFIUS considers during national security deliberations.

Background -

Through power delegated by the President under the Exon-Florio Amendment to the Defense Production Act of 1950, as amended, CFIUS considers the impact on US national security of “any merger, acquisition, or takeover ...by or with a foreign person which could result in foreign control of any person engaged in interstate commerce in the United States.” “Control” is broadly defined to include “the power, direct or indirect, whether or not exercised, through the ownership of a majority or a dominant minority of the total outstanding voting interest in an entity, board representation, proxy voting, a special share, contractual arrangements, formal or informal arrangements to act in concert or other means, to determine, direct or decide important matters affecting an entity.” Negative controls or “veto rights” over important matters can and often do give CFIUS jurisdiction over a transaction.