Introduction and Relevant Legislation
The U.S. has traditionally provided a friendly environment for inbound foreign investments. With the exception of a few sensitive areas (described below) where restrictions apply, foreign investors are generally subject to no greater substantive regulation than those imposed on U.S. persons.
Nevertheless, foreign investors may be subject to reporting and disclosure obligations that are not applicable to U.S. persons. The pertinent statutes discussed in this chapter that impose such reporting and disclosure obligations investors are the International Investment and Trade in Services Survey Act (IITSSA); the Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA); the Exon-Florio Amendment to the Defense Production Act of 1950 (Exon-Florio) and Foreign Investment and National Security Act of 2007 (FINSA); and the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).
Foreign investors should be aware that other reporting requirements not discussed in this chapter may also apply to their activities in the U.S. For example, the Foreign Agents Registration Act of 1938 generally requires that persons and firms that are agents of a foreign principal must disclose their connections with the principal, as well as any political and propaganda activities undertaken on the principal’s behalf. Tax and currency transactions are also areas where foreign investors may encounter special reporting requirements, although, as a general matter, these are no more onerous than those imposed on U.S. persons.
Finally, it should be noted that the federal government, through its powers under the Commerce Clause of the Constitution, has authority to regulate and restrict foreign investment in the areas of aviation, banking, communications, energy resources, shipping and maritime industries, defense industries, mining and ownership of federal real property. Some of these regulations and restrictions may be touched upon in other chapters.
Nevertheless, foreign investors may be subject to reporting and disclosure obligations that are not applicable to U.S. persons. The pertinent statutes discussed in this chapter that impose such reporting and disclosure obligations investors are the International Investment and Trade in Services Survey Act (IITSSA); the Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA); the Exon-Florio Amendment to the Defense Production Act of 1950 (Exon-Florio) and Foreign Investment and National Security Act of 2007 (FINSA); and the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).
Foreign investors should be aware that other reporting requirements not discussed in this chapter may also apply to their activities in the U.S. For example, the Foreign Agents Registration Act of 1938 generally requires that persons and firms that are agents of a foreign principal must disclose their connections with the principal, as well as any political and propaganda activities undertaken on the principal’s behalf. Tax and currency transactions are also areas where foreign investors may encounter special reporting requirements, although, as a general matter, these are no more onerous than those imposed on U.S. persons.
Finally, it should be noted that the federal government, through its powers under the Commerce Clause of the Constitution, has authority to regulate and restrict foreign investment in the areas of aviation, banking, communications, energy resources, shipping and maritime industries, defense industries, mining and ownership of federal real property. Some of these regulations and restrictions may be touched upon in other chapters.