Effective May 1, 2020, the Committee on Foreign Investment in the United States (“CFIUS”) has instituted filing fees on Notices filed for transactions involving investments by foreign persons in US businesses. The fees were instituted pursuant to an interim rule that follows a proposed rule that the Department of the Treasury issued on March 4, 2020 (addressed in our previous Legal Update). Though the rule will apply to Notices filed with CFIUS beginning May 1, 2020, CFIUS will accept public comments on the interim rule through June 1, 2020, and will subsequently finalize the rule.
The new filing fees are authorized by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), the law which expanded CFIUS’s jurisdiction to cover a range of additional investments by foreign persons in the United States. Importantly, the rule does not impose filing fees on Declarations, the short-form submissions to CFIUS recently put into effect; the fees apply only to long-form Notices. In instances in which parties submit a Notice following the assessment of a Declaration by CFIUS, the filing fees will still apply.
The fee amounts remain unchanged from the proposed rule issued in March and vary depending on the value of the transaction. The interim rule defines the value of the transaction as the “total value of all consideration that has been or will be provided in the context of the transaction…including cash, assets, shares or other ownership interests, debt forgiveness, or services or other in-kind consideration.”
|Transaction Value||Filing Fee|
|Less than $500,000||No fee|
|Equal to or greater than $500,000 but less than $5 million||$750|
|Equal to or greater than $5 million but less than $50 million||$7,500|
|Equal to or greater than $50 million but less than $250 million||$75,000|
|Equal to or greater than $250 million but less than $750 million||$150,000|
|Equal to or greater than $750 million||$300,000|
Generally speaking, CFIUS will not accept a Notice that is filed until the filing fee is paid. The interim rule also provides for limited circumstances in which a filing fee may be refunded, including when CFIUS determines that a transaction is not a “covered transaction” or a “covered real estate transaction”—i.e. when CFIUS does not have jurisdiction over a transaction.
CFIUS has stated that it does not believe that the imposition of fees will impact the flow of foreign investment into the United States because each fee represents a small amount of the overall value of a transaction. Nonetheless, the new filing fees represent another factor that foreign investors should consider in the course of their investments in the United States.