DEFINITION of 'Committee on Foreign Investment in the United States - CFIUS'

An inter-agency committee of the United States government that reviews financial transactions to determine if they will result in a foreign person controlling a U.S. business. CFIUS specifically focuses on transactions where foreign control will result in a threat to national security.  It is chaired by the U.S. Treasury Department, and draws members from notable agencies such as the Department of State and Department of Defense.

CFIUS has its roots in the Defense Production Act of 1950, but became more active after President Gerald Ford signed Executive Order 11858 in 1975.

BREAKING DOWN 'Committee on Foreign Investment in the United States - CFIUS'

The U.S. government considers several industries as vital to the nation’s security, including many relating to defense technologies and advanced computing. CFIUS is used to review acquisitions of American firms to determine if a foreign country can negatively impact the ability of the nation to defend itself.

While foreign companies interested in purchasing a U.S.-based firm are not required to submit plans to CFIUS, the committee can review any transaction regardless of submission. CFIUS is required to investigate any potential merger or acquisition in which the firm seeking to take over is acting on behalf of a foreign government, especially if the U.S. firm operates in a sensitive industry.

The agencies involved in CFIUS have changed over time, following legislative adjustments. The President of the United States is the only CFIUS officer with the ability to suspend transactions, and can order foreign companies to divest holdings in U.S. companies. 

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