A largely unknown U.S. government statistical reporting bureau – the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) – has reinstituted a reporting requirement originally dating back to the late 1970s that requires U.S. entities to submit a report when they take on or are created as a result of foreign direct investment in the U.S. Civil and/or criminal penalties are authorized for those failing to comply.
In a little noticed action, the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) revived a requirement that U.S. businesses involved in foreign direct investment report those investments to the BEA. The rule became effective on September 15, 2014, and requires that reports be submitted using a BE-13 Survey form. Unlike other surveys administered by the BEA, these reports are mandatory, with the Department of Commerce having the authority to levy civil and criminal penalties for failing to report.
The BE-13 Survey was originally created by the BEA in 1977 for purposes of collecting information on how foreign investment impacts the U.S. economy. Due to budget constraints, the program was discontinued in 2009.
The new BE-13 Survey reporting requirement is triggered in the following circumstances, among others:
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The creation of a foreign direct investment in the U.S. (defined as the ownership or control, directly or indirectly, by a foreign party of 10% 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), where the total investment is greater than $3 million; or
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The establishment by an existing U.S. affiliate of a foreign party of a new U.S. legal entity, expansion of U.S. operations, or acquisition of a U.S. business enterprise, where the total investment is greater than $3 million.
The BEA has indicated that it plans to contact potential filers. Nevertheless, it is important to note that a report is mandatory if a reporting threshold is met, regardless of whether or not the BEA has made contact. The filing must be completed by the U.S. party that receives the foreign investment, not the foreign investor. A total of 6 varieties of the BE-13 Survey form have been created, with use of a particular form dictated by the nature of the investment situation.
The BE-13 Survey is distinct from the Committee on Foreign Investment in the United States (CFIUS) review process. When preparing a BE-13 Survey form, U.S. parties should carefully consider whether the foreign investment transaction may qualify as a transaction covered by CFIUS, such that a CFIUS filing is advisable.
