Form BE-13 Filing Obligation on Foreign Direct Investment

February 17, 2015

The Bureau of Economic Analysis (the “BEA”) recently announced the reintroduction of Form BE-13, Survey of New Foreign Direct Investment in the United States, which was discontinued in 2009. A U.S. business enterprise will have a filing obligation when (1) a new “foreign direct investment” in the U.S. is made, or (2) an existing U.S. affiliate of a foreign parent establishes a new U.S. legal entity, expands its U.S. operations, or acquires a U.S. business enterprise. A “foreign direct investment” is defined as ownership or control, directly or indirectly, by one foreign investor 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 or partnership. For example, a non-U.S. based investment manager that forms or establishes a new U.S. limited partnership or limited liability company will have a Form BE-13 filing obligation. In addition, a non-U.S. person that acquires a 10% or greater stake in a U.S. person may also have a filing obligation, depending on whether their interest qualifies as voting securities.

General partners are presumed to control a limited partnership and to hold 100% of the voting interests, with the limited partners owning no voting interests, unless otherwise specified in the partnership agreement. As a result, investments by non-U.S. limited partners will not result in a Form BE-13 filing obligation for the U.S. limited partnership unless the investment grants a non-U.S. limited partner voting powers, and such non-U.S. limited partner owns or controls 10% or more of the outstanding voting securities of the U.S. limited partnership.1 Investments by non-U.S. investors in limited liability companies with a managing member will not have a Form BE-13 obligation, unless the managing member is required to seek approval from other members on business items such as an annual budget.

The BEA is requiring retroactive reporting of the Form BE-13 dating back to January 1, 2014. Going forward, the Form BE-13 will be due no later than 45 days from the date the legal entity is established, the acquisition is finalized, or the expansion is begun. If you have any questions concerning any information contained in this Memorandum, please contact your primary attorney in Seward & Kissel’s Investment Management Group.


1 This type of investment may be reportable on a Treasury International Capital (“TIC”) form, such as the TIC Form S, the TIC Form SLT or the TIC Form SHL(A), among others.