CFIUS: Putting FIRMMA Into Practice | White & Case LLP

Clicking "I Accept" means than you agree to the Terms and Conditions and Cookie Statement, and that you further acknowledge that the White & Case CFIUS Pilot Program Covered Transaction Analysis Tool is meant for informational purposes only and does not constitute legal advice or a legal opinion. Information in the White & Case CFIUS Pilot Program Covered Transaction Analysis Tool cannot be relied upon when assessing potential Committee on Foreign Investment in the United States (CFIUS) filing obligations or compliance with law. White & Case LLP is not responsible for the information users obtain using this tool and is not liable for users relying on information in this tool. This tool is based upon interim regulations and guidance provided by CFIUS, and therefore remains subject to change based on regulatory changes and further guidance from CFIUS.

 

To obtain legal advice and specific analysis regarding CFIUS-related issues pertaining to contemplated transactions, please contact one of our CFIUS specialists:

Farhad Jalinous
Partner, Washington, DC
+1 202 626 3691
[email protected]

 

Karalyn Mildorf
Counsel, Washington, DC
+1 202 626 6489
[email protected]

 

Keith Schomig
Counsel, Washington, DC
+1 202 729 2330
[email protected]

 

Stacia J. Sowerby
Counsel, Washington, DC
+1 202 729 2417
[email protected]

May Not Be a CFIUS Pilot Program Covered Transaction

It appears that the transaction may not be a CFIUS pilot program covered transaction and therefore it may not be subject to a mandatory declaration requirement. Please note, however, that the jurisdictional analysis under the CFIUS pilot program is highly fact specific. If you have any questions or would like to discuss a particular transaction in detail, please contact one of our CFIUS specialists at White & Case LLP:

 

Farhad Jalinous
Partner, Washington, DC
+1 202 626 3691
[email protected]

 

Karalyn Mildorf
Counsel, Washington, DC
+1 202 626 6489
[email protected]

 

Keith Schomig
Counsel, Washington, DC
+1 202 729 2330
[email protected]

 

Stacia J. Sowerby
Counsel, Washington, DC
+1 202 729 2417
[email protected]

Likely a CFIUS Pilot Program Covered Transaction

It appears that the transaction is likely to be a CFIUS pilot program covered transaction and therefore subject to a mandatory declaration requirement. Please note, however, that the jurisdictional analysis under the CFIUS pilot program is highly fact specific. If you have any questions or would like to discuss a particular transaction in detail, please contact one of our CFIUS specialists at White & Case LLP:

 

Farhad Jalinous
Partner, Washington, DC
+1 202 626 3691
[email protected]

 

Karalyn Mildorf
Counsel, Washington, DC
+1 202 626 6489
[email protected]

 

Keith Schomig
Counsel, Washington, DC
+1 202 729 2330
[email protected]

 

Stacia J. Sowerby
Counsel, Washington, DC
+1 202 729 2417
[email protected]

Possibly a CFIUS Pilot Program Covered Transaction

It appears that the transaction is possibly a CFIUS pilot program covered transaction, and therefore subject to a mandatory declaration requirement, but it is potentially subject to an exemption. Please note that the jurisdictional analysis under the CFIUS pilot program is highly fact specific. If you have any questions or would like to discuss a particular transaction in detail, please contact one of our CFIUS specialists at White & Case LLP:

 

Farhad Jalinous
Partner, Washington, DC
+1 202 626 3691
[email protected]

 

Karalyn Mildorf
Counsel, Washington, DC
+1 202 626 6489
[email protected]

 

Keith Schomig
Counsel, Washington, DC
+1 202 729 2330
[email protected]

 

Stacia J. Sowerby
Counsel, Washington, DC
+1 202 729 2417
[email protected]

 

 

 

 

Are you contemplating an investment, merger, acquisition, or takeover (including through a joint venture)? Any of these will be referred to generally as a "Transaction".

Yes

No

Does the Transaction involve (1) a US business, (2) a foreign entity that has a US business, or (3) an investment fund with an interest in a US business?

Yes

No

A US business is any entity, irrespective of the nationality of the persons that control it, engaged in interstate commerce in the United States, but only to the extent of its activities in interstate commerce.

An entity is:

  • any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization (whether or not organized under the laws of any US state or foreign state);
  • assets (whether or not organized as a separate legal entity) operated by any one of the foregoing as a business undertaking in a particular location or for particular products or services; or
  • any government (including a foreign national or subnational government, the United States Government, a subnational government within the United States, and any of their respective departments, agencies, or instrumentalities).

Does the US business produce, design, test, manufacture, fabricate, or develop one or more "critical technologies"?

Yes

No

Critical technologies are any of the following:

Are the critical technologies utilized in connection with the US business's activity in one or more pilot program industries?

Yes

No

A pilot program industry is an industry covered by any of the North American Industry Classification System ("NAICS") codes listed below:

  • Aircraft Manufacturing, NAICS Code: 336411
  • Aircraft Engine and Engine Parts Manufacturing, NAICS Code: 336412
  • Alumina Refining and Primary Aluminum Production, NAICS Code: 331313
  • Ball and Roller Bearing Manufacturing, NAICS Code: 332991
  • Computer Storage Device Manufacturing, NAICS Code: 334112
  • Electronic Computer Manufacturing, NAICS Code: 334111
  • Guided Missile and Space Vehicle Manufacturing, NAICS Code: 336414
  • Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing, NAICS Code: 336415
  • Military Armored Vehicle, Tank, and Tank Component Manufacturing, NAICS Code: 336992
  • Nuclear Electric Power Generation, NAICS Code: 221113
  • Optical Instrument and Lens Manufacturing, NAICS Code: 333314
  • Other Basic Inorganic Chemical Manufacturing, NAICS Code: 325180
  • Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing, NAICS Code: 336419
  • Petrochemical Manufacturing, NAICS Code: 325110
  • Powder Metallurgy Part Manufacturing, NAICS Code: 332117
  • Power, Distribution, and Specialty Transformer Manufacturing, NAICS Code: 335311
  • Primary Battery Manufacturing, NAICS Code: 335912
  • Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing, NAICS Code: 334220
  • Research and Development in Nanotechnology, NAICS Code: 541713
  • Research and Development in Biotechnology (except Nanobiotechnology), NAICS Code: 541714
  • Secondary Smelting and Alloying of Aluminum, NAICS Code: 331314
  • Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing, NAICS Code: 334511
  • Semiconductor and Related Device Manufacturing, NAICS Code: 334413
  • Semiconductor Machinery Manufacturing, NAICS Code: 333242
  • Storage Battery Manufacturing, NAICS Code: 335911
  • Telephone Apparatus Manufacturing, NAICS Code: 334210
  • Turbine and Turbine Generator Set Units Manufacturing, NAICS Code: 333611

Are the critical technologies designed by the US business specifically for use in one or more pilot program industries?

Yes

No

A pilot program industry is an industry covered by any of the North American Industry Classification System ("NAICS") codes listed below:

  • Aircraft Manufacturing, NAICS Code: 336411
  • Aircraft Engine and Engine Parts Manufacturing, NAICS Code: 336412
  • Alumina Refining and Primary Aluminum Production, NAICS Code: 331313
  • Ball and Roller Bearing Manufacturing, NAICS Code: 332991
  • Computer Storage Device Manufacturing, NAICS Code: 334112
  • Electronic Computer Manufacturing, NAICS Code: 334111
  • Guided Missile and Space Vehicle Manufacturing, NAICS Code: 336414
  • Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing, NAICS Code: 336415
  • Military Armored Vehicle, Tank, and Tank Component Manufacturing, NAICS Code: 336992
  • Nuclear Electric Power Generation, NAICS Code: 221113
  • Optical Instrument and Lens Manufacturing, NAICS Code: 333314
  • Other Basic Inorganic Chemical Manufacturing, NAICS Code: 325180
  • Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing, NAICS Code: 336419
  • Petrochemical Manufacturing, NAICS Code: 325110
  • Powder Metallurgy Part Manufacturing, NAICS Code: 332117
  • Power, Distribution, and Specialty Transformer Manufacturing, NAICS Code: 335311
  • Primary Battery Manufacturing, NAICS Code: 335912
  • Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing, NAICS Code: 334220
  • Research and Development in Nanotechnology, NAICS Code: 541713
  • Research and Development in Biotechnology (except Nanobiotechnology), NAICS Code: 541714
  • Secondary Smelting and Alloying of Aluminum, NAICS Code: 331314
  • Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing, NAICS Code: 334511
  • Semiconductor and Related Device Manufacturing, NAICS Code: 334413
  • Semiconductor Machinery Manufacturing, NAICS Code: 333242
  • Storage Battery Manufacturing, NAICS Code: 335911
  • Telephone Apparatus Manufacturing, NAICS Code: 334210
  • Turbine and Turbine Generator Set Units Manufacturing, NAICS Code: 333611

Does the transaction involve an investment fund?

Yes

No

An investment fund means any entity that is an "investment company," as defined in section 3(a) of the Investment Company Act of 1940 (15 USC 80a-1 et seq.), or would be an "investment company" but for one or more of the exemptions provided in section 3(b) or 3(c) of that statute.

Is the investor a foreign person?

Yes

No

A foreign person is:

  • Any foreign national, foreign government, or foreign entity; or
  • Any entity over which control is exercised or exercisable by a foreign national, foreign government, or foreign entity.
    • The term foreign entity means any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization organized under the laws of a foreign state if either its principal place of business is outside the United States or its equity securities are primarily traded on one or more foreign exchanges.
    • Note, however, that any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization that demonstrates that a majority of the equity interest in such entity is ultimately owned by US nationals is not a foreign entity.

Could the Transaction result in the investor having control (direct or indirect) over the US business?

Yes

No

Control is the power to determine, direct, or decide important matters affecting the US business, including but not limited to:

  • The sale, lease, mortgage, pledge, or other transfer of any of the tangible or intangible principal assets of the entity, whether or not in the ordinary course of business;
  • The reorganization, merger, or dissolution of the entity;
  • The closing, relocation, or substantial alteration of the production, operational, or research and development facilities of the entity;
  • Major expenditures or investments, issuances of equity or debt, or dividend payments by the entity, or approval of the operating budget of the entity;
  • The selection of new business lines or ventures that the entity will pursue;
  • The entry into, termination, or non-fulfillment by the entity of significant contracts;
  • The policies or procedures of the entity governing the treatment of nonpublic technical, financial, or other proprietary information of the entity;
  • The appointment or dismissal of officers or senior managers;
  • The appointment or dismissal of employees with access to sensitive technology or classified US Government information; or
  • The amendment of the Articles of Incorporation, constituent agreement, or other organizational documents of the entity with respect to the matters described above.

Does the investment provide the investor access to any material non-public technical information in the possession of the US business?

Yes

No

Material non-public technical information means information that is not available in the public domain, and is necessary to design, fabricate, develop, test, produce, or manufacture critical technologies, including processes, techniques, or methods. Material nonpublic technical information does not include financial information regarding the performance of an entity.

Does the investment provide the investor membership or observer rights on, or the right to nominate an individual to a position on, the board of directors (or equivalent governing body) of the US business?

Yes

No

Does the investment provide the investor any involvement, other than through voting of shares, in substantive decision making of the US business regarding critical technologies?

Yes

No

Substantive decision making as it relates to the use, development, acquisition, or release of a critical technology may include, for example, decisions regarding the following:

  • licensing;
  • pricing, sales, and specific contracts;
  • supply arrangements;
  • corporate strategy and business development;
  • research and product development, including budget allocation;
  • manufacturing locations;
  • access to such technology;
  • the storage or protection of such technology;
  • appointment or removal of personnel or management with operational oversight; or
  • strategic partnerships.

As a general matter, substantive decision making does not include strictly administrative decisions.

Is the investor a limited partner (or equivalent), or an investment fund?

Is the investment fund organized outside of the United States?

Yes

No

Is the general partner, managing member, or equivalent a foreign person?

Yes

No

A foreign person is:

  • Any foreign national, foreign government, or foreign entity; or
  • Any entity over which control is exercised or exercisable by a foreign national, foreign government, or foreign entity.
    • The term foreign entity means any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization organized under the laws of a foreign state if either its principal place of business is outside the United States or its equity securities are primarily traded on one or more foreign exchanges.
    • Note, however, that any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization that demonstrates that a majority of the equity interest in such entity is ultimately owned by US nationals is not a foreign entity.

Is the investment fund otherwise controlled by a foreign person (e.g., a limited partner that is a foreign person)?

Yes

No

Control is the power to determine, direct, or decide important matters affecting the US business, including but not limited to:

  • The sale, lease, mortgage, pledge, or other transfer of any of the tangible or intangible principal assets of the entity, whether or not in the ordinary course of business;
  • The reorganization, merger, or dissolution of the entity;
  • The closing, relocation, or substantial alteration of the production, operational, or research and development facilities of the entity;
  • Major expenditures or investments, issuances of equity or debt, or dividend payments by the entity, or approval of the operating budget of the entity;
  • The selection of new business lines or ventures that the entity will pursue;
  • The entry into, termination, or non-fulfillment by the entity of significant contracts;
  • The policies or procedures of the entity governing the treatment of nonpublic technical, financial, or other proprietary information of the entity;
  • The appointment or dismissal of officers or senior managers;
  • The appointment or dismissal of employees with access to sensitive technology or classified US Government information; or
  • The amendment of the Articles of Incorporation, constituent agreement, or other organizational documents of the entity with respect to the matters described above.

Is the investor a foreign person?

Yes

No

A foreign person is:

  • Any foreign national, foreign government, or foreign entity; or
  • Any entity over which control is exercised or exercisable by a foreign national, foreign government, or foreign entity.
    • The term foreign entity means any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization organized under the laws of a foreign state if either its principal place of business is outside the United States or its equity securities are primarily traded on one or more foreign exchanges.
    • Note, however, that any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization that demonstrates that a majority of the equity interest in such entity is ultimately owned by US nationals is not a foreign entity.

Is the investor entitled to membership as a limited partner (or equivalent) on an advisory board or committee of the fund?

Yes

No

Does the investor control the fund?

Yes

No

Is the fund managed exclusively by a general partner, managing member, or equivalent who is not the investor?

Yes

No

Does the fund's advisory board or committee have the ability to approve, disapprove, or otherwise control investment decisions of the fund or decisions made by the general partner, managing member, or equivalent related to entities in which the fund is invested?

Yes

No

Does the investor have the ability to control the fund, including the authority to (i) approve, disapprove, or otherwise control investment decisions of the investment fund; (ii) approve, disapprove, or otherwise control decisions made by the general partner or managing member related to entities in which the investment fund is invested; or (iii) unilaterally dismiss, prevent the dismissal of, select, or determine the compensation of the general partner or managing member?

Yes

No

Does the investor have access to material nonpublic technical information as a result of its participation on the advisory board or committee?

Yes

No

Material non-public technical information means information that is not available in the public domain, and is necessary to design, fabricate, develop, test, produce, or manufacture critical technologies, including processes, techniques, or methods. Material nonpublic technical information does not include financial information regarding the performance of an entity.

Does the investment provide the investor access to any material non-public technical information in the possession of the US business?

Yes

No

Material non-public technical information means information that is not available in the public domain, and is necessary to design, fabricate, develop, test, produce, or manufacture critical technologies, including processes, techniques, or methods. Material nonpublic technical information does not include financial information regarding the performance of an entity.

Does the investment provide the investor membership or observer rights on, or the right to nominate an individual to a position on, the board of directors (or equivalent governing body) of the US business?

Yes

No

Does the investment provide the investor any involvement, other than through voting of shares, in substantive decision making of the US business regarding critical technologies?

Yes

No

Substantive decision making as it relates to the use, development, acquisition, or release of a critical technology may include, for example, decisions regarding the following:

  • licensing;
  • pricing, sales, and specific contracts;
  • supply arrangements;
  • corporate strategy and business development;
  • research and product development, including budget allocation;
  • manufacturing locations;
  • access to such technology;
  • the storage or protection of such technology;
  • appointment or removal of personnel or management with operational oversight; or
  • strategic partnerships.

As a general matter, substantive decision making does not include strictly administrative decisions.

 

 

 

 

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White & Case CFIUS Pilot Program Covered Transaction Analysis Tool is meant for informational purposes only and does not constitute legal advice or a legal opinion. Information in the White & Case CFIUS Pilot Program Covered Transaction Analysis Tool cannot be relied upon when assessing potential Committee on Foreign Investment in the United States (CFIUS) filing obligations or compliance with law. White & Case LLP is not responsible for the information users obtain using this tool and is not liable for users relying on information in this tool. This tool is based upon interim regulations and guidance provided by CFIUS, and therefore remains subject to change based on regulatory changes and further guidance from CFIUS.