Fund managers have long had to address the risk of acquiring U.S. businesses in certain sectors subject to review by the Committee on Foreign Investment in the U.S. (CFIUS). The risks associated therewith increased, however, when then-President Trump signed the Foreign Investment Risk Review Modernization Act of 2018 into law in August 2018. Notably, the new legislation introduced requirements for mandatory filings to be made 30 days pre-completion by non‑U.S. private funds that invest in certain critical U.S. sectors and sometimes by their foreign LPs. The new filing requirements are significant because the time consumed by preparing and submitting a detailed filing to CFIUS is contrary to the rapid deal execution demanded by private funds. Given a choice, U.S. vendors and investees will favor dealing with funds and LPs that do not need to make pre-completion filings with CFIUS. Therefore, foreign LPs have an interest in understanding when they may need to make a mandatory filing and whether their funds are exempted from that requirement. In a guest article, Thomas Dick, partner at Veale Wasbrough Vizards LLP, describes the types of U.S. businesses that give rise to mandatory filings with CFIUS; examines the rights to information and governance that can subject a foreign private fund or a foreign LP to the filing requirement; and explains how foreign LPs can avoid U.S.‑oriented funds that will suffer delayed deal execution from a mandatory CFIUS filing due to how they are structured or who is controlling them. See “Breakdown of Final CFIUS Regulations; Key Exemptions and Process Issues; and Important Considerations Specific to PE Sponsors
” (Sep. 15, 2020).