The Committee on Foreign Investment in the United States (CFIUS) recently released its 2020 annual report, which provides information and statistics regarding transactions reviewed by CFIUS in 2020. For the first time, the 2020 annual report also includes information regarding so-called non-notified transactions identified and reviewed by CFIUS.
Key takeaways include:
- the number of full CFIUS notices significantly decreased from 231 in 2019 to 187 in 2020;
- the number of CFIUS short-form declarations significantly increased from 94 in 2019 to 126 in 2020 (this, of course, is partially responsible for the decrease in full notices, as is the availability of declarations for all notifiable transactions that began in 2020);
- the percentage of notices that proceeded to a second-stage investigation remained relatively consistent from 2019 (48.9%) to 2020 (47.1%);
- the percentage of notices withdrawn and refiled also remained relatively consistent from 2019 (7.8%) to 2020 (8%) (the CFIUS report notes that some of the notices withdrawn in 2020 were refiled in 2021) (the percentage of notices withdrawn and refiled in 2017 and 2018 was 18.6% and 18.3%, respectively);
- only 3.4% of transactions reviewed by CFIUS during 2020 were abandoned as a result of CFIUS issues, compared to 4.3% in 2019 (and 10.5% and 8.7% in 2017 and 2018, respectively); and
- the CFIUS office dedicated to identifying non-notified transactions, which identified 117 transactions in 2020, was (and we expect will continue to be) very active.
In addition, the 2020 annual report indicates that transactions that received CFIUS clearance subject to mitigation agreements decreased in 2020 compared to prior years (8.6% in 2020, compared to above 12% in the prior three years). CFIUS also imposed mitigation measures to address residual national security concerns with respect to three notices that were voluntarily withdrawn and the transactions abandoned. Interim mitigation measures (i.e., measures imposed while CFIUS conducts its review) were imposed with respect to one notice filed in 2020. Additionally, then President Trump issued an order requiring ByteDance to, among other things, divest itself of assets and property that enabled or supported operation of the TikTok application in the United States. We previously wrote about this development here.
According to the CFIUS report, of the 126 declarations submitted in 2020, 34 (27%) were subject to mandatory filing requirements based on stipulations provided by the parties. At the conclusion of the declaration review period in connection with the declarations reviewed by CFIUS during 2020, CFIUS requested a full notice in response to 28 declarations (22.2%) (this was the outcome 27.7% of the time in 2019), informed the parties to 16 declarations (12.7%) that it could not complete action based only on the declaration and indicated that the parties may submit a full CFIUS notice if they would like to obtain clearance (the percentage was 34% in 2019), and issued clearance for 81 declarations (64.3%) (CFIUS only cleared 37.2% of the declarations it reviewed in 2019). This is a significant shift and may encourage parties to submit declarations instead of full notices.
In 2020, it took CFIUS an average of 7.7 business days (down from 10.6 business days in 2019) to provide comments on draft CFIUS notices and 9.1 business days (up from 7.8 business days in 2019) to accept formal notices after they were filed. Note that these timelines do not include time for revision of the draft notice or for multiple rounds of comments from CFIUS, which is not uncommon, and so the total time from submission of a draft to acceptance of a full notice may well be longer than the timelines indicated. Additionally, in 2020, it took CFIUS an average of 4.7 business days to accept declarations after they were filed (acceptance begins the 30-day declaration review period).
For the first time, the 2020 report provides information regarding so-called non-notified transactions. These are transactions that previously closed without being notified to CFIUS. According to the report, during 2020, CFIUS identified 117 non-notified transactions. Of these, CFIUS requested a filing in connection with 17 transactions. According to the report, CFIUS relied on various methods to identify such transactions, including interagency referrals, tips from the public, media reports, commercial databases, and congressional notifications. We expect the CFIUS office dedicated to identifying non-notified transactions will continue to remain active.
The chart below shows the top ten countries by number of filings during 2020, together with those countries’ numbers of filings in 2018 and 2019. The statistics underscore the fact that CFIUS continues to regularly review investments from jurisdictions that are close U.S. allies. Also, the chart shows that the number of filings by Chinese investors continued to fall during 2020.
|Total Number of Filings (Notices + Declarations)|
|Japan||36 (31N, 5D)||60 (46N, 14D)||37 (19N, 18D)|
|Canada||31 (29N, 2D)||35 (23N, 12D)||31 (11N, 20D)|
|United Kingdom||6 (5N, 1D)||24 (13N, 11D)||26 (14N, 12D)|
|China||55 (55N, 0D)||28 (25N, 3D)||22 (17N, 5D)|
|Germany||14 (12N, 2D)||20 (13N, 7D)||17 (7N, 10D)|
|Sweden||9 (9N, 0D)||9 (7N, 2D)||17 (10N, 7D)|
|France||22 (21N, 1D)||15 (13N, 2D)||16 (11N, 5D)|
|Singapore||6 (5N, 1D)||13 (10N, 3D)||14 (10N, 4D)|
|Australia||4 (4N, 0D)||11 (11N, 0D)||12 (10N, 2D)|
|Israel||5 (5N, 0D)||2 (2N, 0D)||9 (6N, 3D)|
If you have any questions about the above or foreign direct investment issues in the United States and elsewhere generally, please do not hesitate to contact the listed authors, our Foreign Investment Review group, or any of your regular Firm contacts.
 Until February 12, 2020, parties could only file declarations for transactions that fell within the critical technology pilot program. Effective February 13, 2020, any notifiable transaction can be notified to CFIUS by declaration or full notice.
 Conditions also were imposed in letters issued by the Treasury Department granting the withdrawal and abandonment for three notices; however, these did not involve national security agreements.