Foreign investors closing deals in the United States now face tighter pre-closing notification obligations. Expanded rules administered by the Committee on Foreign Investment in the United States (CFIUS) came into effect in early 2025. Failing to notify – or notifying incorrectly – can expose a transaction to unwinding orders, civil penalties, and reputational damage that no investment fund or corporate acquirer can easily absorb.
The updated rules introduce mandatory declarations for a broader set of transactions involving foreign persons acquiring interests in US businesses operating in critical technology, critical infrastructure, and sensitive personal data sectors. Covered transactions that meet defined thresholds must submit a declaration to CFIUS before closing. Non-compliance can result in penalties and, in serious cases, forced divestiture.
This alert explains what changed, which businesses are directly affected, and the five immediate actions international companies should take before their next US investment.
What changed – the regulatory development and effective date
CFIUS operates under US investment legislation that grants the federal government authority to review, condition, or block foreign acquisitions of US businesses. The 2025 updates expanded the scope of that legislation in three material ways.
First, the list of industries subject to mandatory declaration was widened. Transactions in advanced semiconductors, artificial intelligence infrastructure, biotechnology, and certain energy assets now trigger a filing obligation regardless of deal size. Previously, some of these sectors fell only under voluntary notice procedures.
Second, the thresholds for "covered investments" – meaning minority positions that do not confer control but still grant access to material non-public technical information, board observation rights, or involvement in substantive decisions – were lowered. An investor acquiring even a limited stake in a qualifying US business through a Delaware LLC structure or via a securities offering must now assess whether a declaration is required.
Third, the rules introduced enhanced disclosure obligations for investors from a defined list of countries of special concern. Those investors must provide additional documentary evidence of their ownership chain, beneficial control, and financing sources at the time of declaration. This applies whether the investment is structured as a direct acquisition, a participation in an IPO, or a secondary market purchase that crosses the relevant threshold.
The effective date for the expanded mandatory declaration regime is March 1, 2025. Transactions signed or closed on or after that date are subject to the new rules. Transactions signed before that date but not yet closed may also fall within scope if they were not fully completed under the prior regime.
Who is affected – threshold criteria and business categories
The expanded rules affect a wide range of international market participants. The following business categories face the highest exposure.
- Foreign strategic acquirers targeting US technology, defence-adjacent, or data-intensive businesses – including those structured as a Delaware LLC or a US corporation with listing requirements on a US exchange.
- Private equity and investment fund managers with non-US limited partners from countries of special concern, even where the fund itself is US-domiciled.
- Venture capital investors participating in securities offerings, IPO processes, or pre-IPO rounds in covered sectors.
- Joint venture partners contributing technology, IP licences, or data access rights to a US entity, where those contributions grant the foreign partner governance rights.
- Sovereign wealth vehicles and state-linked entities from jurisdictions identified in the rules, regardless of deal structure.
The threshold for mandatory declaration is not tied solely to percentage ownership. CFIUS applies a functional test. Regulators examine whether the foreign investor gains access to material non-public technical information. Has the ability to direct or influence substantive decisions. Alternatively, sits on or observes the board of a US business in a covered sector. A minority investor who negotiates board observer rights or receives a prospectus containing sensitive technical data may meet the threshold even at a sub-ten-percent stake.
Companies whose US counterparty operates in sectors adjacent to critical infrastructure – such as cloud computing, telecommunications relay services, or health data processing – should not assume they fall outside the rules. The Securities and Exchange Commission (SEC) and CFIUS interact in certain disclosure contexts, and a transaction that triggers SEC-level disclosure obligations may simultaneously trigger a CFIUS declaration requirement.
For international companies with US operations structured through banking or finance vehicles, the interaction between CFIUS rules and US banking legislation deserves specific attention. Our analysis of banking and finance law in the United States covers the parallel regulatory clearance landscape that financial investors must manage alongside CFIUS.
To receive an expert assessment of your transaction's exposure under the new CFIUS notification rules, contact us at info@ferrazwhitmore.com.
What to do now – immediate actions and compliance timeline
International companies should treat the following as a pre-closing checklist for any US transaction signed after March 1, 2025.
1. Conduct a covered-transaction analysis immediately. Do not wait until closing is near. Identify whether the US target operates in a covered sector and whether the foreign investor's profile – nationality, ownership chain, financing source – places the deal within mandatory declaration scope. This analysis should be completed before term sheets are finalised, since the outcome may affect deal structure and timeline.
2. Map beneficial ownership and funding sources. CFIUS now requires detailed documentation of the investor's full ownership chain. Investors from countries of special concern must disclose all intermediate holding entities. If the investment fund's limited partners include state-linked capital, that must be identified and documented. Gaps in this mapping are among the most common reasons declarations are rejected or returned as incomplete.
3. File the mandatory declaration at least 30 days before closing. The statutory window for CFIUS to assess a declaration is 30 days from the date of acceptance. Filing late – or filing an incomplete declaration that is returned – resets that clock. Transactions in the most sensitive sectors should allow additional time, since CFIUS may request a full notice following a declaration review, extending the process by a further 45 days or more.
4. Review your transaction documents for CFIUS conditions. Purchase agreements, subscription documents, and shareholder agreements should include CFIUS conditions precedent and termination rights calibrated to the anticipated review timeline. A federal court in the United States can enforce CFIUS mitigation agreements and divestiture orders; contractual protections that assume a smooth clearance process are not a substitute for proper CFIUS preparation. Where disputes arise from CFIUS-conditioned deals, parties frequently turn to AAA arbitration (American Arbitration Association) or JAMS for commercial resolution of ancillary contract claims, though the CFIUS determination itself is not arbitrable.
5. Assess whether parallel state-level review applies. Certain US states have enacted their own investment screening measures, particularly for real estate and agricultural land near sensitive federal facilities. A transaction cleared at federal level through CFIUS may still face review under state-level investment legislation. Investors using a US District Court to enforce related contractual rights should be aware that state and federal jurisdiction can overlap in these scenarios.
For a tailored strategy on managing CFIUS notification requirements in the United States, reach out to info@ferrazwhitmore.com.
International companies already active in US capital markets will find additional context in our overview of capital markets law in the United States. This addresses listing requirements. SEC disclosure obligations. Additionally, the regulatory environment for cross-border securities transactions. Clients monitoring investment screening developments across the Americas may also find our parallel alert on foreign investment screening in Brazil useful for comparative reference.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our team combines Portuguese civil law expertise with English common law tradition to deliver cross-border legal solutions in capital markets transactions, foreign investment screening, and cross-border deal structuring in the United States and beyond. Our attorneys have advised on CFIUS-adjacent matters and securities offering transactions across both civil law and common law systems. The firm's Lisbon base provides direct access to Portuguese and EU regulatory systems, while our common law expertise supports enforcement and arbitration strategies in English-speaking jurisdictions including the United States. As an international law firm advising on US matters, we work with investment fund managers, institutional investors, and in-house legal teams who require a lawyer in the United States context with cross-border capabilities. To discuss your CFIUS exposure or upcoming US transaction, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.
Published: March 17, 2026
Author: Edward Whitmore, Senior Partner, Dispute Resolution
Edward Whitmore is a Senior Partner at Ferraz & Whitmore specialising in international commercial arbitration, enforcement of foreign judgments, and complex litigation. With a background spanning English common law and civil law systems, he represents multinational clients in high-value cross-border disputes.