The U.S. Department of the Treasury’s Commitee on Foreign Investment in the United States (known as “CFIUS”) issued final regulations governing national security reviews of foreign investments in U.S. companies on November 14, 2008. 

Only “covered transactions”, generally meaning transactions by or with any foreign investor that could result in control of a U.S. business by a foreign investor, are subject to CFIUS review.

Among the foreign investment transactions that are typically not ”covered transactions” are:

  • Investments by a foreign investor in a start-up companies;
  • Asset acquisitions if the assets acquired by a foreign investor are not a “U.S. business”; and
  • Lending transactions unless a foreign investor acquires financial or governance rights characteristic of an equity investment.

Mexican and other foreign investors should consult with an attorney before making an investment in a U.S. company to determine whether the investment is a “covered transaction” subject to CFIUS review.  Civil penalties of US$250,000 per violation can be levied against investors who violate the regulations.