A practical scenario: a Vietnamese fund buys 15% of a California AI company — non-controlling, purely financial. It files nothing — 6 months later a CFIUS letter arrives: the deal needed a mandatory declaration (critical technology + foreign access rights), facing fines up to the deal value. “Just 15%?” — since FIRRMA 2018, CFIUS screens not only control deals but minority stakes in sensitive sectors.
1. CFIUS and FIRRMA 2018: the widened net
CFIUS (Committee on Foreign Investment in the United States) reviews foreign investment for national security. FIRRMA 2018 (Foreign Investment Risk Review Modernization Act) widened it substantially: CFIUS now covers TID US businesses — non-controlling investments in US companies dealing in critical technology, critical infrastructure, sensitive personal data — where the investor gains information access, appointment rights, or decision participation. Some transactions need mandatory declarations — filed before closing. CFIUS may review already-closed deals (non-notified transactions) — and force divestment (unwind) on risk findings.
2. Vietnamese investors: when CFIUS bites
- Buying US tech companies: AI, semiconductors, cybersecurity, dual-use tech — CFIUS “red zones”.
- Real estate near sensitive sites: land near military bases, airports, national labs — reviewable.
- Sensitive personal data: companies holding 1M+ Americans’ data — TID US businesses.
- Minority stakes count: no control needed — technical information access suffices.
- Vietnamese state links: state-influenced investors face higher scrutiny.
3. A CFIUS checklist for US deals
- Assess early: CFIUS analysis when the target is identified — before signing, not after closing.
- Mandatory vs voluntary: determine mandatory-declaration scope; otherwise consider a voluntary notice to “buy” certainty (safe harbor).
- Timeline: CFIUS takes 45 days to months — build into deal schedules.
- Contract terms: CFIUS condition precedent, risk allocation if blocked.
- No circumvention: structuring around CFIUS counts as violation — fines up to deal value.
CFIUS: assess before signing, file before closing
This article is general information. Each transaction needs individual assessment. FLAT Law Firm supports Vietnamese investors in US transactions. Contact us for advice.
This article is general information only and does not replace legal advice for any specific case. Regulations may change; please check the current texts.
Frequently asked questions
1. What is CFIUS?
The Committee on Foreign Investment in the United States — national-security review of foreign investment.
2. What did FIRRMA 2018 change?
Extended CFIUS to non-controlling investments in critical tech/infrastructure/data (TID US businesses).
3. When is declaration mandatory?
Certain sensitive-sector transactions — mandatory declarations filed before closing.
4. What happens without filing?
Fines up to deal value; CFIUS may review closed deals and force divestment.
5. Do minority stakes trigger CFIUS?
Yes — no control needed; technical information access suffices.
This article is pending review by the QA Council.
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