Pending Texas Bill Could Lead to CFIUS Risks, Law Firm Says

A bill recently passed by a Texas Senate committee could allow the Texas attorney general to submit information about non-notified investment transactions to the Committee on Foreign Investment in the U.S., Squire Patton said in a May 12 client alert. SB-2142, passed unanimously by the Texas Senate Committee on State Affairs April 25, is the “first of its kind creating a monitoring mechanism at the state level” for foreign direct investments, the firm said.

The bill allows any person in Texas to report a foreign investment concern to the attorney general’s office, increasing risks that “local politicization creates CFIUS obstacles to the transaction,” the firm said. It said foreign investors in Texas and Texas businesses “should take such risk into account when formulating both a regulatory and policy strategy, at the federal and state level, for proposed investments, ideally as early as possible” in their proposed merger or acquisition.