U.S. businesses with non-U.S. investors may be obligated to report financial and operating data to U.S. Department of Commerce by May 31

May 23, 2016

Private Equity and M&A Alert

Author(s): Alexandra Lopez-Casero

The deadline is quickly approaching for U.S. businesses with foreign investors to submit their annual report to the Bureau of Economic Analysis (BEA). The BEA is an agency of the U.S. Department of Commerce that tracks foreign investment in the United States. U.S. businesses in which a non-U.S. entity or individual owns a 10% or more direct or indirect voting interest should submit their annual report to the BEA prior to May 31, 2016 (or prior to June 30 for reporting companies that use BEA’s eFile system).

The annual BEA form is called Form BE-15. There are different Form BE-15s and which Form BE-15 is required depends on the size of the non-U.S. entity’s or individual’s ownership and whether certain financial thresholds are met. All of the BE-15 forms, along with information on how to determine which form you must file, can be found at http://www.bea.gov/surveys/fdiusurv.htm.

Participation in the annual survey is technically only mandatory for U.S. businesses that BEA has notified. However companies should be careful not to view this as an “out” for the filing obligations. BEA mails notifications to large numbers of companies as it learns of investments by non-U.S. companies and individuals in U.S. businesses through other government agencies, the business press and other sources. BEA views the mere mailing of a letter to an address that BEA deems to be a company’s business address as a “notification,” regardless of whether the address is still current and whether the addressee actually receives the letter. BEA has been notifying companies all along of the BEA filing requirements. But many companies do not realize that they have been notified, either because the letter is lost, misplaced or not properly understood. The best approach, particularly for U.S. companies with a sizeable direct investment, is to proactively file—rather than to risk an enforcement action if BEA later claims that it had in fact notified the company.

You may be exempt from filing a BE-15 if (1) the non-U.S. entity’s or individual’s ownership voting interest in your business is less than 10%; (2) your business is fully consolidated or has merged into another U.S. business; or (3) if your business’s total assets, annual sales or gross operating revenues and annual net income (loss) were each equal to or less than $40 million (positive or negative) for the most recent reporting year.

BEA has indicated that it is willing to grant extensions for filing of Form BE-15, but the extension must be requested prior to the May 31 deadline.

Even if you are exempt, you must file a BE-15 claim for exemption with BEA. The exemption is not automatic. However, following the initial filing of a BE-15 claim for exemption, you will not need to claim the exemption every year as long as your business continues to meet the exemption criteria.

If you think that you may have BEA filing requirements and have not yet filed BEA reports, you should get familiar with all BEA forms and filing requirements. For a complete look at all BEA filings that you may be required to file, please see our alert: http://www.nixonpeabody.com/do_you_know_your_BEA_filing_requirements.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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