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Foreign investment review bill gains final OK from Congress

The Senate joined the House by giving final approval Wednesday to legislation updating the authority of the Committee on Foreign Investment in the United States to review — and potentially block — foreign investments that could raise national security considerations.

The Foreign Investment Risk Review Modernization Act of 2018, part of a must-pass defense authorization package, is expected to be signed shortly by President Donald Trump.

Rules governing the interagency CFIUS process for reviewing potential foreign investments in the U.S. were last updated in 2007. The new bipartisan bill is aimed at expanding the U.S. government's ability to look not just at foreign investments in U.S. firms, but also foreign minority-position investments through venture capital and private equity funds, and at streamlining the review process.

Chris Hayes, director of industry affairs for the Institutional Limited Partners Association in Washington, said changes made in the final version of the bill avoid imposing blanket requirements on foreign limited partners.

Jason Mulvihill, general counsel for the private equity industry group American Investment Council, said that despite the expanded review process, the final bill should not discourage passive foreign investments in U.S. investor-controlled private equity funds.

Once the bill is signed into law, the next critical step is the rulemaking proposal for implementing its provisions, which so far are broad strokes. "This is something that's going to require a lot of attention going forward," said Jeff Farrah, general counsel of the National Venture Capital Association.