President signs bill expanding review of foreign investment

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 was signed Monday by President Donald Trump as part of a defense authorization package.

The CFIUS reform provision expands the committee's focus from not just whether a foreign investor could "control" a U.S. business but to include determining whether a foreign investor is "non-passive," said Kirkland & Ellis partner Mario Mancuso, a former national security official.

The first major CFIUS update in more than a decade, the bipartisan bill called the Foreign Investment Risk Review Modernization Act of 2018 allows a deeper look into foreign minority-position investments made through U.S. venture capital and private equity funds.

"Every board, banker and investor should take careful note of FIRRMA. Once implemented, FIRRMA's regulations will broadly reshape the deal (and competitive) landscape for transactions in infrastructure, technology and many other sectors," Mr. Mancuso said in an email.