Foreign investors in certain U.S. businesses (U.S. legal entities, branch offices, and real estate (improved or unimproved), with limited exceptions for certain residential properties) must report their investments pursuant to a Form BE-13 filing (Survey of New Foreign Direct Investment in the United States).

The BE-13 filing is a requirement of the U.S. Department of Commerce’s Bureau of Economic Analysis (the “BEA”).

This is a summary of the required BE-13 filings related to new foreign direct investment in the United States, including the main factors that will determine who needs to file the BE-13 and which form is required, as well as other important points in connection with the BE-13 filing.

BE-13  Summary

The purpose of the BEA survey of new foreign direct investment in the United States is to capture new investment transactions when a foreign direct investment/relationship is created or when an existing U.S. affiliate of a foreign parent (THIS MEANS ANY US COMPANY OWNED 10% OR MORE BY A FOREIGN ENTITY) establishes a new U.S. legal entity, expands its U.S. operations, or acquires a U.S. business enterprise.

The initial report must be filed no later than 45 days after the date of the investment transaction.

A response is required from entities subject to the reporting requirements of the BE–13, whether or not they are contacted by BEA.

The information in this report can be used to measure the amount of new foreign direct investment in the United States. It will also identify new U.S. affiliates that meet the reporting criteria for BEA’s quarterly, annual, and benchmark survey of foreign direct investment in the United States.

Who must file the BE-13?�This is addressed below. It would be the foreign investor’s U.S. affiliate (the U.S. business in which the investment is made), not the foreign investor itself, is subject to the BE-13 reporting requirements. Note that even if the BEA does not contact the foreign investor, the BE-13 filing is required.

The version of the form that must be filed is determined by specified reporting criteria:

1.   Form BE–13A. This form is filed for a U.S. business enterprise when a foreign entity acquires a voting interest (directly or indirectly through an existing U.S. affiliate) in the enterprise, segment, or operating unit, and the acquisition meets the following criteria:

(i) the total cost of the acquisition is more than $3 million;

(ii) the acquired U.S. business enterprise will operate as a separate legal entity;

(iii) and at least 10 percent of the voting interest in the acquired enterprise is now owned, directly or indirectly, by the foreign entity.

EXAMPLE – A new foreign company or person becomes a 10% or more owner of a US company that operates as a separate legal entity in the United States and the cost to acquire the interest in the company is more than $3,000,000.  The reporter is the US company acquired by the foreign person or company and the report is due no later than 45 days after the acquisition.

2. Form BE–13B. This form is filed 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 the establishment of the new entity meets the following criteria:

(i) the projected total cost to establish the new legal entity is more than $3 million; and

(ii) at least 10 percent of the voting interest in the newly established business enterprise is now owned, directly or indirectly, by the foreign entity.

EXAMPLE – A foreign entity or existing US affiliate of a foreign entity establishes a NEW US company in the United States and the cost to establish the new company or project is more than $3,000,000.  Must be filed no later than 45 days after the new US company is established.

3. Form BE–13C. This form is filed for an existing U.S. affiliate of a foreign parent when:

(i) the U.S. affiliate acquires a U.S. business enterprise or a segment of the enterprise that it then merges into its operations, and

(ii) the total cost to acquire the business enterprise is more than $3 million.

EXAMPLE – filing required by ANY U.S. affiliate of a foreign parent (ANY US COMPANY OWNED 10% or more by a foreign person or entity) when that U.S. affiliate acquires a new U.S. business through a merger and the cost of the new acquisition is more than $3,000,000.  This must be filed no later than 45 days after the acquisition through merger.

4.Form BE–13D. This form is filed for an existing U.S. affiliate of a foreign parent when:

(i) it expands its operations to include a new facility where business is conducted, and

(ii) the projected total cost of the expansion is more than $3 million.

EXAMPLE – Required by ANY U.S. affiliate of a foreign parent (Any US Company owned 10% or more by a foreign person or entity) when that U.S. company expands operations to include a new facility and the cost of the expansion is more than $3,000,000.  Must be filed no later than 45 days after the company expands operations to include a new facility.

5. Form BE–13E. This form is filed for a U.S. business enterprise that previously filed form BE–13B or form BE–13D, and the established or expanded entity is still under construction.

Example – required if any U.S. reporter filed Form 13-B or 13-D and the established or expanded entity is still under construction.  Should be filed no later than 45 days after it is known that the established entity or project Is still under construction.   NOTE – I think this form is not filed much.  This is a hard one to figure out and prove.

6.  BE-13 claim for exemption.  In the event of any transaction noted above and the total cost of the deal/acquisition is less than $3,000,000, there is a burden to report an exemption form.  THIS IS THE MOST COMMON FORM.

Which entities of the investor must be included in the report?

The Form BE-13 is filed on a “consolidated domestic basis,” which includes information on the U.S. affiliate, and any U.S. business in which the U.S. affiliate owns more than 50% of the voting interest.

How is the filing made?

The U.S. affiliate of the foreign investor can file the appropriate Form BE-13 in a number of ways – post mail, fax, or electronically via BEA’s electronic filing portal at www.bea.gov/efile. The BEA website (www.bea.gov/fdi) also provides a number of filing resources, including forms, filing instructions, FAQs and even video tutorials.

Next Steps:

If you have any questions or need assistance with the filing of your Form BE-13 or any other US Compliance or Regulatory matters please contact us and our expert US regulatory compliance attorneys will be able to assist.

Jonathan Abrams at [email protected] or UK Tel: +44 (0) 20 8004 7016 /-/ US Tel: +1 (646) 873-7573.