The US Department of Commerce (“Commerce”) has announced that foreign direct investments in the United States made after January 1, 2014 will be subject to a reporting requirement. Foreign direct investors will be required to file the Form BE–13, Survey of New Foreign Direct Investment in the United States.1 A prior BE-13 reporting requirement was discontinued in 2009 due to budgetary restrictions. Under the new rule announced on November 26, 2014, a response is required from persons subject to the BE-13 reporting requirement, whether or not they are contacted by BEA.
BEA publishes comprehensive statistics on the US economy. The new BE-13 reporting requirement collects data retroactively, covering subject foreign investments made since January 1, 2014. The final rule provides that the BE–13 forms are due no later than 45 days after the acquisition is completed, the new legal entity is established, the expansion is begun, or certain other reportable circumstances arise. For those investments completed prior to November 26, 2014, the due date is January 12, 2015.
The BE-13 collects information on the acquisition or establishment of US business enterprises by foreign investors, as well as expansions by existing US affiliates of foreign companies (which had not been a triggering event under the previous rule). The final rule defines “foreign direct investment in the United States” as the direct or indirect ownership or control by one foreign person (foreign parent) of 10 percent or more of the voting securities of an incorporated US business enterprise, or an equivalent interest of an unincorporated US business enterprise, including a branch. BEA issued six distinct versions of the Form BE-13, distinguishing among different types of investment transactions:
I. Form BE–13A—Report for a U.S. business enterprise when a foreign entity acquires a voting interest (directly, or indirectly through an existing U.S. affiliate) in that enterprise, segment, or operating unit and (i) the total cost of the acquisition is greater than $3 million, (ii) the U.S. business enterprise will operate as a separate legal entity, and (iii) by this acquisition, at least 10 percent of the voting interest in the acquired entity is now held (directly or indirectly) by the foreign entity.
II. Form BE–13B—Report for a U.S. business enterprise when a foreign entity, or an existing U.S. affiliate of a foreign entity, establishes a new legal entity in the United States and (i) the projected total cost to establish the new legal entity is greater than $3 million, and (ii) the foreign entity owns 10 percent or more of the new business enterprise’s voting interest (directly or indirectly).
III. Form BE–13C—Report for an existing U.S. affiliate of a foreign parent when it acquires a U.S. business enterprise or segment that it then merges into its operations and the total cost to acquire the business enterprise is greater than $3 million.
IV. Form BE–13D—Report for an existing U.S. affiliate of a foreign parent when it expands its operations to include a new facility where business is conducted and the projected total cost of the expansion is greater than $3 million.
V. Form BE–13E—Report for a U.S. business enterprise that previously filed a BE–13B or BE–13D indicating that the established or expanded entity is still under construction.
VI. Form BE–13 Claim for Exemption—Report for a U.S. business enterprise that (i) was contacted by BEA but does not meet the requirements for filing forms BE–13A, BE–13B, BE–13C, or BE–13D, or (ii) whether or not contacted by BEA, met all requirements for filing on Forms BE–13A, BE–13B, BE–13C, or E–13D except the $3 million reporting threshold.
The data collected on the BE-13 surveys are used to quantify new foreign direct investment in the United States, assess the impact on the US economy, and, based on this assessment, make informed policy decisions regarding foreign direct investment in the United States. The BE-13 was prescribed as a mandatory reporting requirement in order to ensure that BEA obtains a comprehensive view of the source, scope, and focus of foreign direct investments in the United States. Foreign parties engaged in investment transactions that potentially meet the definition for “foreign direct investment in the United States” should be mindful of this newly reinstated reporting obligation.2
1 Direct Investment Surveys: BE–13, Survey of New Foreign Direct Investment in the United States; Announcing OMB Approval of Information Collection, 79 Fed. Reg. 69759 (Nov. 24, 2014). See also, Direct Investment Surveys: BE–13, Survey of New Foreign Direct Investment in the United States, 79 Fed. Reg. 47573 (Aug. 14, 2014).
2 Copies of the various Forms BE-13 are available at the BEA website, https://www.bea.gov/surveys/respondent_be13.htm.