Briefing

Canadian investors exempted from new tech-focused U.S. security review process

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Starting February 13, the Committee on Foreign Investment in the United States (CFIUS) will have greater powers to examine deals involving companies that develop or hold critical technologies, sensitive personal data or infrastructure. The initial two-year exemption will apply to some real estate deals, as well as to transactions where investors take non-controlling stakes in U.S. companies. Canada, Australia and the U.K. were spared in part because of their governments’ intelligence cooperation with the U.S. (Financial Times)

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Talking point: CFIUS has been ramping up interventions in the technology sector since the passage of a new foreign investment review law in August 2018, particularly targeting Chinese takeovers like ByteDance’s acquisition of Musical.ly and Beijing Kunlun Tech’s for Grindr. But Canadian investor groups expressed concerns that requiring the agency’s clearance in funding deals for U.S. startups would create uncertainty and delays. In a statement to The Logic, Kim Furlong, CEO of the Canadian Venture Capital & Private Equity Association, which lobbied for the exemption, said while it’s still examining the regulations, it’s “pleased with this result.”