Foreign direct investors with voting interest in U.S. businesses: Did you file your BE-13?

As of November 2014, the United States Bureau of Economic Analysis (“BEA”) has reintroduced mandatory survey reports for foreign direct investors who recently acquired or established a U.S. business, or expanded an existing one.

Foreign direct investors (individual or company) owning directly and/or indirectly a 10% or more voting interest in a U.S. business are subject to these reporting requirements. Any person (or company) living or existing outside of the U.S. (disregarding any nationality, even U.S. nationality) subject to these reporting requirements is hereinafter referred to as a foreign direct investor. These investors must provide the report(s) whether or not they are contacted by the BEA. The BEA has issued six versions of the BE-13 report for different transactions. For example, there are distinct BE-13s for mergers, acquisitions and expansions. The reporting threshold for all transactions is US $3 million. However, even if an investment transaction does not exceed US $3 million, you still have to file the BE-13 Claim for Exemption.

The report requirement has been reinstated retroactively for any activity that took place from January 1, 2014 to November 26, 2014 inclusively, with a due date of January 12, 2015. Any activity going forward is subject to these reporting requirements, with reports required to be filed within 45 days of completion of the investment transaction.

Whoever fails to report is subject to a civil penalty ranging from US $2,500 to US $32,500, and an injunctive order enjoining such person to file the report. If the failure to report is willful, individual(s) and/or company can be fined up to US $10,000 and individuals may be imprisoned up to one year. In each scenario, both penalties can be applied.

The purpose of the survey reports is to gather information regarding new investment transactions, measure the amount of new foreign direct investment in the U.S., and identify new U.S. affiliates that meet reporting criteria for BEA’s related surveys of foreign direct investment. Reports can be filed electronically through BEA’s eFile system at www.bea.gov/efile.

For more information or assistance on the above, contact info@hazlolaw.com.