CFIUS Extends Time To Become "Excepted Foreign State" And "Excepted Real Estate Foreign State"

The Committee on Foreign Investment in the United States ("CFIUS") extended by one year the effective date for one of the criteria under the definitions of "Excepted Foreign State" and "Excepted Real Estate Foreign State." This final rule extends the effectiveness from February 13, 2022, until February 13, 2023, providing countries with additional time to qualify as excepted foreign states.

Under the rule, both terms are defined using a two-part conjunctive test. The time extension applies to the second criterion of this test, which is composed of the following determinations for both definitions:

1. Under 31 C.F.R.  800.1001(a), which pertains to excepted foreign states, a foreign state has "established and is 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."
2. Under 31 C.F.R.  802.1001(a), which pertains to excepted real estate foreign states, a foreign state has completed "'significant progress' toward establishing and effectively utilizing the robust process that is described in § 800.1001."

Additionally, CFIUS issued a notice of action determining that both Australia and Canada have satisfied the second criterion of the test for excepted foreign states. In a separate notice, CFIUS also determined that Australia and Canada have satisfied the second criterion for excepted real estate foreign states. As a result, both countries will remain excepted foreign states and excepted real estate foreign states.

Primary Sources

1. Office of Investment Security, Department of the Treasury Final Rule: Certain Investments in the United States by Foreign Persons and Certain Transactions by Foreign Persons Involving Real Estate in the United States
2. Office of Investment Security, Department of the Treasury: Determination Regarding Excepted Foreign States

3. Office of Investment Security, Department of the Treasury: Determination Regarding Excepted Real Estate Foreign States

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