The Committee on Foreign Investment in the United States (CFIUS), the US foreign direct investment regulator, issues a report each year to the US Congress, detailing CFIUS's reviews and investigations of foreign acquisitions of, and certain non-controlling foreign covered investments in, US businesses during the prior calendar year. The 2024 CFIUS Annual Report (the 2024 Report), an unclassified version of CFIUS's latest Congressional report, was recently released. The 2024 Report shows that while overall filings were down in 2024, CFIUS continues to require second-stage fact investigations for over half the notices filed to it, and remains fully committed to its monitoring and enforcement functions.
Key points from the 2024 Report include the following:
- Notice filings are down again.The traditional,
and still most common, way to notify a transaction to CFIUS is via
a written notice. CFIUS can conclude action on a transaction (i.e.,
"clear" the transaction) filed by way of notice after an
initial 45-day review period. If national security concerns are
still, in CFIUS parlance, "unresolved" at the end of that
initial review, CFIUS can undertake a second-stage investigation
over a further 45 days. In some cases, parties may withdraw a
filing to reset these statutory deadlines and allow time for
further CFIUS review and in some cases for the negotiation of
mitigation remedies (discussed below), though sometimes commercial
reasons will cause parties to withdraw a deal. CFIUS can refer a
matter to the President for disposition, in rare (but increasing)
cases. As the 2024 Report acknowledges, CFIUS considers each
transaction on a case-by-case basis, and the disposition of any
particular case "depends on the particular facts and
circumstances of that case." That said, a few points can be
gleaned from the 2024 Report:
-- In 2024, transaction parties filed 209 notices to CFIUS, which continued the downward trend seen in 2023 (233 notices) following the high-water mark of 286 notice filings in 2022. This may be a reflection of a softer M&A market generally in 2024.
- CFIUS undertook investigations in 116 cases (around 56% of total notice filings), on par with 2023 (128 investigations, or 55%) and 2022 (163 investigations, or 57%). Thus, despite reviewing fewer transactions, CFIUS continued to subject slightly more than half to a second-stage investigation.
- CFIUS approved the withdrawal of 49 notices in 2024 (compared to 57 in 2023, and 87 in 2022), all during the investigation period. In most cases, these 2024 withdrawals were undertaken to give the deal parties more time to consider CFIUS mitigation terms. All but seven of the 2024 withdrawn notices were eventually refiled.
- Presidential decisions were issued in two transactions for which CFIUS initiated a review in 2024. While such decisions have been seen more in the past few years, they still remain relatively rare when compared to overall filing resolutions.
- Continuing recent trends, in 2024 a majority of the notices filed (109, or 53%) were in the finance, information and services sectors (which includes telecom, data processing, web hosting, computing infrastructure, scientific and technical services, among others), following by the manufacturing (68 notices, or 33%), mining, utilities and construction (15, or 7%), and transport/retail trade (14, or 7%). Certain sectors experienced declines in notifications relative to 2022's record notice filings. For example, notice filings in the pharmaceutical and medicine manufacturing sectors declined from 3 in 2022 to zero in 2024, while computing infrastructure/related services declined from 6 notices in 2022 to zero 2024 filings.
- The top three investor countries of origin for 2024 distinct notice filings were France (25), Japan (24), and the United Arab Emirates (21), though Chinese investors accounted for 26 total filings in 2024 (this may reflect that more Chinese-investor transactions were subject to withdrawal and refiling to give CFIUS and the deal parties more time to address national security issues). Over the past three years (2022 – 2024), the highest number of total notices filed were from investors from China (95 notices, or 13% of total notices), Singapore (73 notices, or 10%), and the UAE (54 notices, or 7%).
- Mitigation remedies required less frequently, but should not be discounted. CFIUS concluded action (i.e., cleared a transaction) after entering into mitigation agreements in 2024 for 16 notice filings (approximately 8% of overall 2024 notices). This is a considerable decline in comparison to 2023, where CFIUS adopted mitigation agreements for 35 notices (around 21% of the distinct 2023 notices), and 2022, where mitigation agreements were required with respect to 41 notices (or 23%). In 2024, CFIUS continued to impose mitigation measures even where transactions were abandoned or blocked, and required the following with respect to nine transactions filed in 2024: a full mitigation agreement to address "residual national security concerns" in one transaction that was withdrawn and abandoned by the parties; conditions, though not a formal mitigation agreement, on six transactions that were withdrawn and abandoned; interim mitigation measures in one case while the notice was under review; and divestment (via a Presidential order) of a real estate transaction.
- CFIUS continues to investigate non-notified transactions and "advances" its approach to identifying them. The 2024 Report notes that CFIUS "continues to advance its targeted approach for identifying and actioning non-notified and non-declared transactions, including through hiring additional staff, evaluating new tools and datasets, and regularly coordinating across CFIUS member agencies." Using a combination of interagency referrals, public tips, intelligence information, media reports, voluntary self-disclosures, congressional notifications, and various commercial databases, in 2024 CFIUS "identified and preliminarily considered thousands of potential non-notified transactions," of which CFIUS investigated 98 transactions and ultimately requested a filing for 12 non-notified transactions, with a further five filings arising following CFIUS outreach but before a formal request to file was made. (These figures are generally in line with the numbers for 2022 and 2023.) CFIUS's public tip line should not be discounted, especially by deal parties in a particularly competitive bid scenario, since in 2024 one non-notified transaction, initially brought to CFIUS's attention by a public tip, eventually was prohibited by presidential order.
- Declaration filings, and clearance rates, up slightly. Parties continue to make use of the shorter-form declaration filing process, which can result in CFIUS clearance in 30 days (a welcome development where CFIUS approval is a closing condition), but which can also result in a CFIUS request for a full notice, which extends a transaction's overall CFIUS timeline. In 2024, 116 declarations were filed, with CFIUS clearing 91 transactions on the basis of the declaration (around 78% of all declarations filed), and requesting a notice in 17 transactions (around 15%), with CFIUS unable to conclude action in 7 transactions (roughly 6%) (this reflects the CFIUS "shrug" scenario where CFIUS does not clear the transaction nor request a notice filing, but advises the parties that they "may" file a notice). These numbers are on par with 2023, where of 109 transactions notified to CFIUS via a declaration, 83 (or 76%) cleared within the 30-day review period, with 20 (roughly 18%) resulting in a request for a notice and 6 (or around 6%) receiving the CFIUS "shrug." Compared to 2022, where 154 declarations ended in clearance on 90 cases (58%), with notices requested in 50 instances (or 32%) and a no action "shrug" in 14 cases (around 9%), the 2024 (and 2023) statistics indicate CFIUS is becoming more comfortable in clearing transactions based on a declaration alone. This may also reflect, at least in part, that transaction parties, and their CFIUS counsel, are getting better at identifying transactions with national security risk profiles that may make them more amenable to a successful declaration filing. Not surprisingly, from 2022 to 2024, the most declaration filings were made by investors from US ally and partner nations, led by Canada (46 declaration filings), Japan (45 filings), and France, Germany and the UK (each with 29 filings).
- Monitoring and enforcement tools and penalties are up.In December 2024, CFIUS regulations took effect that served to "sharpen and enhance" CFIUS's penalty and enforcement authorities, including with respect to a failure to file a transaction subject to CFIUS mandatory filing requirements and to violations of mitigation agreements. Our overview of those enforcement regulations can be found here. Over the course of 2024, in addition to identifying and investigating non-notified transactions (discussed above), CFIUS imposed four penalties for breaches of material provisions of mitigation agreements (including a record $60 million fine), and assessed one penalty for submission of a notice and supplemental information that contained "material misstatements." We reported on penalty developments here. CFIUS also completed two investigations in 2024 regarding compliance with CFIUS's mandatory filing requirements, and issued a "formal determination of noncompliance."The 2024 Report emphasizes that "CFIUS continues to assess noncompliance on a case-by-case basis as it evaluates whether civil penalties should be assessed and/or if other measures to address national security risk should be implemented," and deal parties do well to take CFIUS, and in particular the US Treasury's Monitoring & Enforcement team, at their word.
- Potential impacts of the "America First Investment Policy" on CFIUS.We reported on the "America First Investment Policy," a February 2025 National Security Presidential Memorandum outlining the Trump Administration's views on inbound foreign investment, which signaled future changes to the US Government's approach to both inbound and outbound investments, including calls for CFIUS to restrict "PRC-affiliated persons" from investing in US strategic sectors while developing a "fast track" process (still under Treasury review) to expedite CFIUS reviews of investments from ally and partner sources. The 2024 Report noted that in response to the Policy, CFIUS is reviewing its "processes, practices, and authorities to ensure [CFIUS is] positioned to address new and evolving threats that can accompany foreign investment, while maintaining the United States' strong, open investment environment." Of particular interest is how the Policy's direction to end "overly bureaucratic, complex, and open-ended 'mitigation' agreements" for US investments from foreign adversaries in favor of mitigation agreements that consist of "concrete actions that companies can complete within a specified time," may impact CFIUS reviews going forward, noting that CFIUS's requirement of fewer mitigation agreements in 2024 (see above) took place before the Policy issued.
As reiterated in the 2024 Report, each transaction filed to and/or considered by CFIUS is assessed on its own unique facts and circumstances, which in turn can make it difficult to assess how some of the potential trends noted above might be applied in a given case. That said, we think the overarching takeaway from the 2024 Report is that as CFIUS itself states, it remains fully committed to its mission "to address and resolve national security risks arising from covered transactions in an efficient manner."
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