New Rules for SWFs

The Treasury Department issued proposed regulations that implement the Foreign Investment and National Security Act of 2007 (FINSA). The rules would allow sovereign wealth funds and other foreign investors to buy a passive stake in as much as 10 percent of a U.S. entity without triggering the scrutiny of a group of agencies that are responsible for oversight of mergers and acquisitions by investors outside the United States.

The proposed regulations provide an update to regulations issued in 1991 that govern the Committee on Foreign Investment in the United States (CFIUS) and its process for national security review of certain foreign investments in U.S. businesses. They reflect reforms made to the CFIUS process by FINSA and the CFIUS executive order issued by President Bush on January 23 of this year.

"These regulations reflect America's strong and continued commitment to safeguarding U.S. national security in a manner that reinforces the longstanding U.S. policy of welcoming foreign investment. The proposed regulations increase clarity and make additional improvements based on experience," said Assistant Secretary for International Affairs Clay Lowery.

The Treasury Department is requesting comments on the proposed regulations; a public comment period will extend for 45 days from publication later this week in the Federal Register.

Read the proposed Treasury regulations