(a) Exemption. Subparts C, D, J, and K (other than § 202.1102 and § 202.1104) of this part do not apply to data transactions to the extent that they involve an investment agreement that is subject to a CFIUS action.
(b) Examples—(1) Example 1. A U.S. software provider is acquired in a CFIUS covered transaction by a foreign entity in which the transaction parties sign a mitigation agreement with CFIUS. The agreement has provisions governing the acquirer's ability to access the data of the U.S. software provider and their customers. The mitigation agreement contains a provision stating that it is a CFIUS action for purposes of this part. Before the effective date of the CFIUS mitigation agreement, the investment agreement is not subject to a CFIUS action and remains subject to these regulations to the extent otherwise applicable. Beginning on the effective date of the CFIUS mitigation agreement, the investment agreement is subject to a CFIUS action and exempt from this part.
(2) Example 2. Same as Example 1, but CFIUS issues an interim order before entering a mitigation agreement. The interim order states that it constitutes a CFIUS action for purposes of this part. Before the effective date of the interim order, the investment agreement is not subject to a CFIUS action and remains subject to these regulations to the extent otherwise applicable. Beginning on the effective date of the interim order, the investment agreement is subject to a CFIUS action and is exempt from this part. The mitigation agreement also states that it constitutes a CFIUS action for purposes of this part. After the effective date of the mitigation agreement, the investment agreement remains subject to a CFIUS action and is exempt from this part.
(3) Example 3. A U.S. biotechnology company is acquired by a foreign multinational corporation. CFIUS reviews this acquisition and concludes action without mitigation. This acquisition is not subject to a CFIUS action, and the acquisition remains subject to this part to the extent otherwise applicable.
(4) Example 4. A U.S. manufacturer is acquired by a foreign owner in which the transaction parties sign a mitigation agreement with CFIUS. The mitigation agreement provides for supply assurances and physical access restrictions but does not address data security, and it does not contain a provision explicitly designating that it is a CFIUS action. This acquisition is not subject to a CFIUS action, and the acquisition remains subject to this part to the extent otherwise applicable.
(5) Example 5. As a result of CFIUS's review and investigation of a U.S. human genomic company's acquisition by a foreign healthcare company, CFIUS refers the transaction to the President with a recommendation to require the foreign acquirer to divest its interest in the U.S. company. The President issues an order prohibiting the transaction and requiring divestment of the foreign healthcare company's interests and rights in the human genomic company. The presidential order itself does not constitute a CFIUS action. Unless CFIUS takes action, such as by entering into an agreement or imposing conditions to address risk prior to completion of the divestment, the transaction remains subject to this part to the extent otherwise applicable for as long as the investment agreement remains in existence following the presidential order and prior to divestment.
(6) Example 6. A U.S. healthcare company and foreign acquirer announce a transaction that they believe will be subject to CFIUS jurisdiction and disclose that they intend to file a joint voluntary notice soon. No CFIUS action has occurred yet, and the transaction remains subject to this part to the extent otherwise applicable.
(7) Example 7. Same as Example 6, but the transaction parties file a joint voluntary notice with CFIUS. No CFIUS action has occurred yet, and the transaction remains subject to this part to the extent otherwise applicable.
(8) Example 8. Company A, a covered person, acquires 100% of the equity and voting interest of Company B, a U.S. business that maintains bulk U.S. sensitive personal data of U.S. persons. After completing the transaction, the parties fail to implement the security requirements and other conditions required under this part. Company A and Company B later submit a joint voluntary notice to CFIUS with respect to the transaction. Upon accepting the notice, CFIUS determines that the transaction is a covered transaction and takes measures to mitigate interim risk that may arise as a result of the transaction until such time that the Committee has completed action, pursuant to 50 U.S.C. 4565(l)(3)(A)(iii). The interim order states that it constitutes a CFIUS action for purposes of this part. Beginning on the effective date of these measures imposed by the interim order, the security requirements and other applicable conditions under this part no longer apply to the transaction. The Department of Justice, however, may take enforcement action under this part, in coordination with CFIUS, with respect to the violations that occurred before the effective date of the interim order issued by CFIUS.
(9) Example 9. Same as Example 8, but before engaging in the investment agreement for the acquisition, Company A and Company B submit the joint voluntary notice to CFIUS, CFIUS determines that the transaction is a CFIUS covered transaction, CFIUS identifies a risk related to data security arising from the transaction, and CFIUS negotiates and enters into a mitigation agreement with the parties to resolve that risk. The mitigation agreement contains a provision stating that it is a CFIUS action for purposes of this part. Because a CFIUS action has occurred before the parties engage in the investment agreement, the acquisition is exempt from this part.
(10) Example 10. Same as Example 8, but before engaging in the investment agreement for the acquisition, the parties implement the security requirements and other conditions required under these regulations. Company A and Company B then submit a joint voluntary notice to CFIUS, which determines that the transaction is a CFIUS covered transaction. CFIUS identifies a risk related to data security arising from the transaction but determines that the regulations in this part adequately resolve the risk. CFIUS concludes action with respect to the transaction without taking any CFIUS action. Because no CFIUS action has occurred, the transaction remains subject to this part.
(11) Example 11. Same facts as Example 10, but CFIUS determines that the security requirements and other conditions applicable under this part are inadequate to resolve the national security risk identified by CFIUS. CFIUS negotiates a mitigation agreement with the parties to resolve the risk, which contains a provision stating that it is a CFIUS action for purposes of this part. The transaction is exempt from this part beginning on the effective date of the CFIUS mitigation agreement.