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Focus on Regulation

Commerce Department Reinstates Mandatory Reporting Requirements for Certain Foreign Direct Investments in U.S. Companies and Real Estate

On November 24, 2014, the Department of Commerce’s Bureau of Economic Analysis (BEA) reinstated mandatory Form BE-13 (Survey of New Foreign Direct Investment in the United States), which collects new foreign direct investment (FDI) data on the acquisition, establishment, or expansion of U.S. businesses by foreign investors. FDI is defined as a foreign person’s ownership or control, directly or indirectly, of a 10% or greater voting interest in a U.S. business, which includes U.S. legal entities, branch offices, and real estate (improved or unimproved), except for residential real estate held exclusively for personal use and not for profit-making purposes. The obligation to submit the required filing applies to the U.S. business in which the investment is made (not the foreign investor), and the filing also must include information on certain of the U.S. business’s subsidiaries.

Form BE-13 was discontinued in 2009 due to budget constraints, but BEA now has created five BE-13 forms to collect the FDI survey data (each form specific to a particular type of FDI), plus a BE-13 exemption form. Certain exemptions are available, including one for FDI transactions valued at $3 million or less, but the U.S. business must file a report claiming the exemption.

As of November 24, 2014, U.S. companies must file the BE-13 within 45 days of the effective date of the reportable transaction. Significantly, the BE-13 filing requirement also applies retroactively to any transaction completed in 2014. For transactions completed on or before November 24, 2014, the filing is due by January 12, 2015. Failure to file Form BE-13 could result in the assessment of civil penalties; if the failure to file is willful, criminal penalties or imprisonment could apply.

For more information on the Form BE-13 reporting requirements click here.