On January 17, 2020, the Treasury Department’s Office of Investment Security (Treasury) released two final rules requiring some foreign entities acquiring an interest in a US business with a national security nexus (Transaction Rule)^[1] or real estate near air or sea ports or near US military installations (Real Estate Rule or, collectively, Rules)^[2] to be approved by the Committee on Foreign Investment in the United States (CFIUS) before the transaction can be completed.  The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) required Treasury to expand the Transaction Rule—which previously required CFIUS review over only foreign investments that could result in foreign control of a US business—to include non-passive but non-controlling investments and to adopt the Real Estate Rule.^[3]

The Treasury implemented a version of the Transaction Rule under a 2018 interim final rule and through a pilot program requiring mandatory declarations of certain transactions involving investments by foreign entities in US businesses beginning November 10, 2018.^[4]  On September 24, 2019, the Treasury issued notices of proposed rulemaking for the Transaction Rule^[5] and the Real Estate Rule.^[6]  The Transaction Rule replaced the pilot program beginning February 13, 2020.  The Real Estate Rule also took effect that day.

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