On January 5, 2022, the multi-agency Committee on Foreign Investment in the United States (CFIUS) announced its determination that two countries – Australia and Canada – “have made significant progress toward establishing and effectively utilizing a robust process to analyze foreign investments for national security risks and to facilitate coordination with the United States on matters relating to investment security.”  As such, both countries will remain excepted foreign states and excepted real estate foreign states for the purpose of CFIUS’ jurisdiction over non-controlling “covered investments” and certain real estate transactions by certain foreign persons.  In addition, New Zealand has been identified as an eligible excepted foreign state under the CFIUS regulations.

Pursuant to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), CFIUS established the concept of “excepted foreign state[s],” defined as those states with compliance laws, orders and regulations similar to those of the United States concerning foreign investments assessed for national security purposes. See Update of January 22, 2020.  Under such a designation, an excepted foreign state qualifies, in certain circumstances, for an exemption from the two mandatory CFIUS filings established under the FIRRMA (i.e., non-controlling covered investments and certain real estate transactions).  In early 2020, CFIUS initially identified Australia, Canada, and the United Kingdom (including Northern Ireland) as excepted foreign states due to their “robust intelligence sharing and defense industrial base integration mechanisms with the United States.”  Such a designation, however, also required that within a two-year period, CFIUS make a determination that these foreign states had satisfied the criteria reflecting they had established and were effectively utilizing a robust process to analyze foreign investments for national security risks.  CFIUS’s determinations for Australia and Canada formally establish that these countries “are and will remain” excepted foreign states under applicable regulations absent further CFIUS action.

In addition, the period for the United Kingdom and now also New Zealand to fulfill the necessary criteria in order to remain excepted foreign states has been extended until February 13, 2023.  They remain excepted foreign states during the interim.

See also, CFIUS’ Excepted Foreign States web page.