Memo To CGCC Members: Reminder of Deadline to File BE-13 Form for Mandatory FDI Reporting
MEMORANDUM
To: CGCC Members
From: Xiaomin Chen, General Counsel of CGCC
Date: December 29, 2014
Re: Reminder of Deadline to File BE-13 Form for Mandatory FDI Reporting
Summary
On November 26, 2014, the United States Bureau of Economic Analysis (“BEA”) retroactively reinstated the data collection requirements of Form BE-13, Survey of New Foreign Direct Investment (“FDI”), which had previously been discontinued in 2009. This mandatory survey collects data on new investments made when a foreign investor establishes or acquires a U.S. business or expands an existing U.S. affiliate of a foreign company. The reporting requirements will be retroactively applied to FDI dating back to January 1, 2014.
Reporting Entity & Requirement
According to BEA’s notice, a U.S. entity is required to report in the event of the following:
1) a FDI in the United States relationship is created or
2) an existing U.S. affiliate of a foreign parent establishes a new U.S. legal entity, expands its U.S. operations, or acquires a U.S. business enterprise.
FDI is defined as the ownership or control, directly or indirectly, by one foreign person of 10 percent or more of the voting securities of an incorporated U.S. business enterprise, or an equivalent interest in an unincorporated U.S. business enterprise, including a branch. 15 CFR 806.15(a)(1). This includes foreign ownership of real estate (improved and unimproved), but does not include residential real estate held exclusively for personal use or for not-for-profit making purposes. Reporting is required if the investment cost (e.g., cost of acquisition, cost of establishment of a new legal entity, cost of expansion) exceeds a $3 million filing threshold.
Entities subject to the reporting requirements above must file Form BE-13, whether or not they are contacted by BEA. Companies contacted by BEA that do not meet the reporting requirements must file a Form BE-13 Claim for Exemption. In addition, entities subject to the reporting requirements may also need to file BEA’s related benchmark (Form BE-12 Five Year Benchmark Survey), annual (Form BE-15), and quarterly (Form BE-605) surveys of FDI.
Reporting Timeline
Relevant reporting forms are due no later than 45 days after the acquisition is completed, the new legal entity is established, or the expansion is initiated. As previously noted, the reporting requirements apply to all FDI conducted on or after January 1, 2014. Therefore, investments made before November 26, 2014 must be reported by January 12, 2015.
Penalties
Entities and individuals that fail to report are subject to civil and criminal penalties ranging from fines of $2,500 to $32,500 per violation, injunctive relief compelling compliance, and imprisonment of up to one year.