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Foreign Investment and National Security Act of 2007
Overview
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 Public Law 110-49, 121 Stat. 246
- Amended section 721 of the Defense Production Act
of
1950 (50 U.S.C. App. Sec. 2170 et seq.)
- Section 721 authorizes the President
of the United States to review and, when appropriate, to block acquisitions of
and mergers with U.S. companies by foreign interests for national security
reasons
- Section 721, which is administered by the interagency Committee on Foreign
Investment in the United States (CFIUS),
also authorizes the President to undo completed mergers and acquisitions
retroactively, as well as apply conditions to the approval of an acquisition
- FINSA was adopted following public outcry over
politically sensitive transactions, most notably the Dubai World Ports
deal
Legislative
history
- FINSA was passed by Congress as H.R. 556, which
adopted the language of S. 1610
- S. Rep. 110-80, accompanying S. 1610, provides a useful history of the various bills
leading to the enactment of FINSA
- President Bush signed FINSA into law on July 26,
2007, and it became effective on October 24, 2007
Effective
date for FINSA
- Per Section 12 of FINSA, the changes it made to
Section 721, became effective 10.24.07
- For the pre-FINSA version of section 721,
see CFIUS: Archive
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Statute
Effective Date
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FINSA,
and the changes it made to Section 721, became effective 10.24.07
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Legislative History
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Legislative
history
- FINSA was passed by Congress as H.R. 556, which
adopted the language of S. 1610
- S. Rep. 110-80, accompanying S. 1610, provides a useful history of the various bills
leading to the enactment of FINSA
- President Bush signed FINSA into law on July 26,
2007, and it became effective on October 24, 2007
HR
556
Legislative history--H.R.
556 (S. 1610)
- HOUSE REPORTS: No. 110-24, Pt. 1 (Comm.
Financial Services).
- SENATE REPORTS: No. 110-80 accompanying S. 1610
(Comm. on Banking,
Housing, and Urban Affairs).
- CONGRESSIONAL RECORD, Vol. 153 (2007):
Feb. 28, considered and passed House.
June 29, considered and passed Senate, amended, in lieu of S. 1610.
June 10, 11, House considered and concurred in Senate
amendment.
Commentary
House
and Senate have pending legislative proposals
- Many bills were introduced following US ports
controversy
- HR 5337 and S 3549 have garnered support
HR
5337
- National Security Foreign Investment Reform
and Strengthened Transparency Act of 2006
National Security FIRST Act
- Unanimously approved by Financial Services
Committee 6.14.06
- National Security FIRST Act would:
- Require congressional notification of completed
investigations, with a process for the request of a detailed classified briefing
on a completed investigation, and extensive semi-annual reporting by CFIUS to
Congress
- Maintain the current 30-day review and 45-day
investigation, with certainty of any potential extensions
- Ensure the protection of classified and
proprietary business information
- Add the Department of Homeland Security as
vice-chair of CFIUS
- Require transactions involving a company
controlled by a foreign government to undergo an additional 45-day review
- Establish CFIUS in statute
- would restore accountability in the CFIUS review
process by: requiring signatures by the secretary of the Treasury and the
secretary of Homeland Security or their deputy secretaries on all transactions;
requiring an analysis of any potential threat on each transaction by the
director of National Intelligence; and establishing a process to monitor and
enforce post transaction compliance with mitigation agreements
S
3549
- Foreign Investment and National Security Act
of 2006
Commentary
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Summary of Changes Made by FINSA
SEC_CODE_REF_0090001192884
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CFIUS
organization and membership
- FINSA codified aspects of the structure, role,
process, and responsibilities of the Committee on Foreign Investment in the
United States (CFIUS) and the role of executive branch departments, agencies,
and offices in CFIUS's review of transactions for national security concerns
See CFIUS: Committee Organization
CFIUS
procedures for national security reviews
- FINSA formalized the process by which CFIUS
conducts national security reviews of "covered transactions"
See
CFIUS: Committee Procedures
Who has to file
- Where a covered transaction does present
national security
concerns, FINSA authorizes the use of mitigation agreements to address such
concerns
CFIUS: Mitigation Agremeents
- FINSA
provides that CFIUS may reopen its review of a transaction on which it
previously concluded action under section 721 if a party to the transaction
submitted false or misleading material information or omitted material
information. CFIUS may also reopen a review where a party to a transaction
intentionally and materially breaches a mitigation agreement or condition, and
there are no other remedies available to address the breach.
- Any decision by CFIUS to reopen a review must be
made at the Under Secretary level or above
- FINSA provides CFIUS with authority to impose
civil penalties for violations of section 721, including violations of any
mitigation agreement
See CFIUS: Penalties
- FINSA increases CFIUS's reporting to Congress
concerning the work it has undertaken pursuant to section 721
- FINSA directed the adoption of amendments to
CFIUS regulations
See CFIUS: Regulations
- Finally, FINSA increases CFIUS's reporting to
Congress concerning the work it has undertaken pursuant to section 721
- In addition to the certifications described previously, which CFIUS
must provide to Congress after concluding action on a transaction under
section 721, CFIUS must also provide annual reports on its work,
including a list of the transactions it has reviewed or investigated in
the preceding 12 months, analysis related to foreign direct investment
and critical technologies, and a report on foreign direct investment
from certain countries.
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Commentary
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Law
firms
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