Executive Order Providing Guidance to CFIUS on Evolving National Security Risks: President Biden Provides Formal Direction to CFIUS on Supply Chains, Investment Trends, and Other Risk Factors

Sullivan & Cromwell LLP - September 20, 2022
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On September 15, 2022, President Biden issued an Executive Order stressing the importance of ensuring that the foreign investment review process in the United States remains responsive to an evolving national security landscape, while at the same time reaffirming that the United States welcomes and supports foreign investment – consistent with the protection of national security. To that end, the EO directs the Committee on Foreign Investment in the United States to consider five specific risk factors when it reviews a transaction: (i) a transaction’s effect on the resilience of critical U.S. supply chains that may have national security implications; (ii) a transaction’s effect on U.S. technological leadership; (iii) aggregate industry investment trends that may be relevant for the proper evaluation of an individual transaction’s impact on U.S. national security; (iv) certain cybersecurity risks; and (v) risks associated with sensitive personal data. Even though the EO does not necessarily break new ground, as CFIUS already considers most, if not all, of these factors in its review of covered transactions, the EO approach is novel in its recognition of the need to stay ahead of evolving risks and in its express and public recognition of these factors. 

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