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15 February 20235 minute read

Understanding CFIUS’s exemption of New Zealand and the UK

On February 10, 2023, the US Department of the Treasury (Treasury), which chairs the Committee on Foreign Investment in the United States (CFIUS), determined that the UK and New Zealand will indefinitely remain “excepted foreign states” (EFS).  Although CFIUS designated the UK and New Zealand as EFS in early 2020, the designation required CFIUS to determine, within a two-year period, that these foreign states had established, and were effectively utilizing, a robust process to analyze foreign investments for national security risks. 

Treasury’s recent determination suggests that, in the future, CFIUS may have greater levels of information exchange, collaboration and cooperation with the UK and New Zealand, as well as the other EFS countries, Canada and Australia. 


CFIUS is a powerful interagency committee responsible for reviewing foreign investments for national security implications in the US.  Under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), CFIUS expanded its jurisdiction, enabling it to review a wider range of foreign investments in US businesses, including non-controlling investments in US businesses involved in critical technology, critical infrastructure or sensitive personal data (TID US Business) and real estate transactions, and requiring mandatory filings for certain types of transactions involving TID US Businesses.

With respect to foreign engagement, FIRRMA authorized Treasury to (i) share information with US allies and partners for national security purposes, (ii) establish a formal process to exchange information with US allies and partners, and (iii) carve out certain categories of foreign persons from CFIUS jurisdiction.[1]  As a result, CFIUS promulgated regulations that exempt EFS investors from mandatory filing requirements and CFIUS jurisdiction for non‑controlling investments (CFIUS retains jurisdiction for controlling investments) and real estate transactions.[2]

Requirements for EFS status

When determining whether a country qualifies as an EFS, CFIUS considers whether the foreign state has established and is effectively utilizing a “robust process” to assess foreign investments for national security risks and to facilitate coordination with the US on matters relating to investment security, including the following factors:

  • The legal authority to review, obtain information and take action pertaining to foreign investment transactions
  • The extent to which the foreign state monitors and enforces compliance with conditions imposed for such transactions
  • Whether the foreign state has an arrangement with the US government to share and safeguard confidential and classified information exchanged with one another and
  • The extent to which non-notified transactions are monitored and identified.[3]

To qualify as an EFS, CFIUS must identify the country as eligible for the EFS status and, beginning on February 13, 2023, make a formal determination that the country met the robust process requirement described above.[4]  Australia and Canada met both requirements on January 5, 2022.[5]  The UK was unable to meet this criteria since, at the time, it had just implemented a new investment review authority; New Zealand similarly lacked the opportunity because it was only identified in January 2022 as an eligible country due to “its intelligence-sharing relationship with the United States and its collective defense arrangement and cooperation with the United States[.]”[6] 

Since the initial grace period ended on February 13, 2023, interested foreign states will need to establish and “effectively utilize” a foreign direct investment (FDI) screening mechanism deemed acceptable to CFIUS before they are designated as an EFS.

Considering the requirements for the EFS determination, the recent EFS inclusion of the UK and New Zealand suggests that, in the future, CFIUS may have greater levels of information exchange, collaboration and cooperation with the Five Eyes[7] intelligence alliance members on investment screening matters.  As CFIUS builds partnerships through its EFS incentive, we expect FDI screening regimes around the world to continue to strengthen and align with the CFIUS’s objectives.

Key takeaways

As CFIUS and its partners and allies collaborate and cooperate in addressing perceived national security risks, investors are encouraged to thoroughly understand CFIUS and its cross-border partnerships, as exemplified by the EFS requirements.  For example, prudent investment funds will closely examine their ownership and control structures to determine whether they may qualify as EFS investors and avoid unnecessary filings in both the US and abroad.  Investors who are capable of planning ahead and effectively navigating CFIUS and the other FDI regimes will have a significant advantage as FDI screening strengthens globally.

DLA Piper, with offices in over 40 countries throughout the world, maintains robust, cross-disciplinary CFIUS and Global FDI practices consisting of corporate, regulatory and government affairs professionals.  Please contact any of our CFIUS or Global FDI attorneys to learn more.

[1] Section 721(c)(2)-(3), (a)(4)(E) of the Defense Production Act.

[2] 85 Fed. Reg. 3124 (2020); see also 31 C.F.R. §§ 800.219 (defining excepted investor); 800.304 (exempting such investors for non-controlling investments); 800.401(e)(1) (exempting such investors from mandatory filings).

[3] Foreign State Factors for Determinations, U.S. Dep’t. of the Treasury (2020),

[4] 31 C.F.R. § 800.218(a).

[6] Fact Sheet: Final Regulations Modifying the Definitions of Excepted Foreign State and Excepted Real Estate Foreign State and Related Actions, U.S. Dep't of the Treasury (Jan. 5, 2022),

[7] The Five Eyes is an intelligence alliance between Australia, Canada, New Zealand, the UK and the United States.