Mandatory Reporting Requirement Regarding Foreign Direct Investment in the United States

Under a new rule, US business enterprises are required to report certain types of foreign direct investment in the United States to the US Commerce Department's Bureau of Economic Analysis ("BEA"). Reporting is accomplished by completing a variant of BEA Form BE-13. The forms and detailed information regarding the reporting requirement can be accessed at BEA's website. Failure to submit required reports can result in civil penalties, injunctions, and criminal penalties.

As a general matter, the reporting requirement is triggered when a US business enterprise receives new foreign direct investment or when a US affiliate of a foreign parent creates a new legal entity, acquires another US business enterprise, or expands its US operations. More specifically, companies may be required to submit a report when:

• a foreign person directly or indirectly acquires a 10% or greater voting interest in a US business enterprise;
• a US subsidiary or affiliate of a foreign parent creates a new legal entity in the United States;
• a US subsidiary or affiliate of a foreign parent acquires another US business enterprise; or
• a US subsidiary or affiliate of a foreign parent expands its US operations, including the construction or lease of a new facility by an existing US affiliate.

The reporting requirement applies to all current and future transactions, but is also being applied retroactively to January 1, 2014. Reports for transactions completed before November 30, 2014 are currently due. For future transactions, reports are due within 45 days of the completion of the transaction.

• the name of the prospective filer;
• the name of the foreign parent;
• the country in which the foreign parent is organized;
• the date of the reportable transaction;
• the name of the form the filer expects to file; and
• the date the filer reasonably expects to make the filing.

In most cases, extension requests for transactions that occurred prior to November 30, 2014 should not request an extension later than February 27, 2014. BEA has informally indicated that extensions will be automatically granted.

Failure to submit required reports may result in civil fines of up to $25,000. Willful failure to report can result in a $10,000 criminal penalty and up to one year imprisonment. For the time being at least, BEA has informally indicated that it will not assess penalties for missed or late filings, unless an entity persistently fails to file.