Changes to the rules governing the US agency that vets foreign investment could have a chilling effect on US-based private equity and venture capital firms who are using overseas capital to finance domestic deals.

The proposed shake-up of the Committee on Foreign Investment in the US (Cfius) has broad support from Republican and Democratic lawmakers, and is part of an initiative meant to increase scrutiny of cross-border transactions and to heighten protection of US intellectual property.

Key provisions in the legislation, known as The Foreign Investment Risk Review Modernization Act, could affect investment firms that have foreign investors — particularly Chinese investors— even when that money is a small part of the total and the foreign investors have no say in operations, lawyers and executives at these companies say.