CFIUS Fast-Track Will Benefit Investors, Although Conditions Unclear, Law Firms Say
An upcoming fast-track process for certain deals filed with the Committee on Foreign Investment in the U.S. could apply to a broad range of American allies and transactions, although key questions remain about what foreign investors will need to do to qualify, law firms said this month.
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The new CFIUS fast lane, which the Treasury Department announced May 8 (see 2505080040), could be an “important step toward reducing regulatory burdens and delays associated with the CFIUS review process,” Steptoe said in a client alert. “Investors from eligible allied countries, particularly repeat filers with a history of successful CFIUS clearances, are expected to benefit significantly from this streamlined review.”
Treasury said it plans to launch a pilot program for the new fast track to encourage more investments from close U.S. allies by “increasing efficiencies in the CFIUS process.” Holland & Knight noted that CFIUS reviews can take anywhere from 30 days for short-form declarations to as long as several months for full notice filings, which “has been a consistent concern for transaction parties due to the uncertainty surrounding both timing of the review against the transaction life cycle and possible mitigation terms required to close a deal.”
Steptoe said the new fast track could help “reduce the burden associated with certain types of lower-risk investment.” It also could have “broad applicability,” the firm said, referencing the Trump administration's America-first investment policy, which “outlined a broad desire” to fast track investments in advanced technologies (see 2502240051).
But, Steptoe said, it’s possible that investments in “certain more sensitive sectors or technologies” won’t be eligible. Akin noted that the administration hasn’t specified which countries will benefit from the new fast track, saying Treasury has “announced very little other potential aspects of the fast-track pilot program.” The firm said CFIUS is likely to “continue to closely scrutinize” investments from China.
Treasury said allied countries participating in the fast-track process would have to agree to “avoid partnering” with certain U.S. adversaries, likely including China. Herbert Smith said it’s not yet clear how foreign investors or nations will be able to demonstrate their “verifiable distance and independence” from those U.S. adversaries, or whether the administration will require investor nations to take specific steps to “emphasize a more fundamental de-coupling from adversaries.”
Steptoe said this requirement could “prove to limit the availability of the pilot, depending on how it is ultimately scoped.”
Some law firms said it may be possible to predict which countries will immediately benefit from quicker CFIUS reviews. Holland & Knight noted that the fast-track process was publicized just after the U.S. announced an initial trade agreement framework with the U.K. (see 2505140036), “one of the closest U.S. allies and top investors, promising increased U.K. investment in the U.S.” It was also announced ahead of President Donald Trump’s visit to Saudi Arabia, the United Arab Emirates and Qatar (see 2505190041), which agreed to more investments in U.S. technology industries and “advocated for the reduction of perceived burdensome administrative requirements,” Holland & Knight said.
Herbert Smith said it’s clear the fast-track program will have “immediate appeal” to foreign investors that are “frequently before" CFIUS or are planning future U.S. investments, but it’s not yet known whether it will be attractive to investors with only sporadic deals in the U.S. or those that may prefer to wait for a filing to provide information to CFIUS.
“Despite these unknowns, the Known Investor fast track program, like the America First Investment Policy from which it emanates, is clearly designed to increase the level of foreign capital inflow from US allies by increasing the efficiency of CFIUS reviews,” Herbert Smith said. “Therefore, we expect that certain US-allied acquirers and investors will benefit from the program.”