CFIUS Proposes Filing Fees

CFIUS拟议新规——对美大额投资的CFIUS申报费用最高可达30万美元

To further implement the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), the Committee on Foreign Investment in the United States (“CFIUS”) has issued proposed regulations that would require parties to pay fees in connection with filing notices with CFIUS regarding transactions.

CFIUS administers requirements that authorize the President to block or otherwise disturb foreign investment in the United States for national security reasons. The proposed regulations follow the issuance of CFIUS final regulations with respect to covered foreign investment transactions and covered real estate transactions that became effective on February 13, 2020, as described in our prior client alert. The proposed regulations to mandate fee payments for transaction party filings with CFIUS would:

• create a tiered fee structure for voluntary submission of full-form “notices” to CFIUS; but
• exempt from a filing fee both short-form “declarations” and self-initiated reviews of transactions based on agency notices filed by a member of the Committee.

Proposed regulations would permit the CFIUS Staff Chairperson to waive the filing fee in whole or in part if warranted by “extraordinary circumstances” relating to national security.

Public comments on the proposed filing fees are due by April 8, 2020.

Background

FIRRMA directed CFIUS to establish notice filing fees based on transaction value. FIRRMA required that the Committee consider the effect of a filing fee on small businesses, the anticipated growing expenses of the Committee in connection with expansion of CFIUS’s jurisdiction as mandated by FIRRMA, and the broad effect that a filing fee would have on foreign investment. Under FIRRMA, the filing fee cannot exceed the lesser of one percent of the total value of the transaction or $300,000, adjusted annually for inflation.

Proposed Fixed-Fee Tiered Structure

CFIUS proposes to implement FIRRMA’s required filing fee through the below tiered structure:¹

 
In general, parties would be required to pay the filing fee prior to CFIUS accepting the notice for review.

Determining the Value of Transaction

Generally, for covered transactions and for purchases of covered real estate, the transaction value would be the total value of consideration paid by the foreign investor(s), including cash, assets, shares, debt forgiveness, services, or other payments. In situations where the transaction involves acquisition of or investment in one or more non-U.S. businesses, the transaction value would generally be the full global value of the transaction. However, when the total global value of the transaction is equal to or greater than $5,000,000 but the value of the interests acquired in the U.S. business is less than $5,000,000, the transaction value would be assumed to be equal to or greater than $500,000 but less than $5,000,000, resulting in a filing fee of $750.

For transactions involving payment in securities, through non-cash assets, by services, or by other means, the proposed regulation sets forth the following guidelines for determining transaction value for purposes of the filing fee:

• For securities traded on a national exchange, the transaction value would be determined by the last published closing price of the securities prior to the date of filing of the CFIUS notice;
• For non-cash assets, interests, services, or other means, the transaction value would be the fair market value of those items as of the date of notice filing with CFIUS;
• For a loan or financing agreement, the transaction value would be the cash value of the loan or financing agreement;
• For conversions of a contingent equity interest previously acquired by a foreign person, the value of the transaction would include the initial purchase by or on behalf of the foreign person to obtain the equity interest in addition to any other payments made; and
• With respect to covered real estate transactions, for leases and concessions, the value of the transaction would be the sum of the consideration, including lease inducements, fixed payments, certain variable lease payments, and other types of identifiable consideration applicable to real estate transactions.

Parties submitting a notice to CFIUS would be required to include a short explanation of how they determined the reported transaction value. As a general matter, CFIUS would not refund filing fees unless CFIUS determines that a notified transaction is not a covered transaction or a covered real estate transaction.

¹In general, no additional filing fee would be required if the parties withdraw and re-file a notice.