U.S. companies that owned 10% or more of the voting securities of a foreign business enterprise at any time during the U.S. company’s 2014 fiscal year must submit a report to the U.S. Commerce Department’s Bureau of Economic Analysis as early as May 29, 2015. The BE-10 benchmark survey—conducted every five years—applies to all U.S. companies that own, directly or indirectly, 10% or more of the voting securities of an incorporated “foreign affiliate” or an equivalent interest in an unincorporated foreign business, including a branch. A “foreign affiliate” is any company located outside the United States. Investments by U.S. businesses in foreign companies of under 10% are not reportable on the BE-10 survey.
The BE-10 survey requires basic information about the U.S. company and its foreign affiliates, including contact information, financial details, industry classification, and employee data. It is used for statistical purposes only. Information submitted in the BE-10 survey is confidential and “may only be used for analytical and statistical purposes,” and not for “purposes of taxation, investigation, or regulation.”
The failure to file the BE-10 survey report is subject to a civil penalty of between $2500 and $25,000, with willful noncompliance punishable by criminal penalties.
The BE-10A form collects information about the U.S. domestic business enterprise that is the parent company of the foreign affiliates. If a U.S. business’s assets, sales, or net income are greater than $300 million at any time during the business’s 2014 fiscal year, the U.S. business must complete the entire BE-10A form; and, if less than $300 million, the U.S. business need only complete items 1–42 and 97–114 of the BE-10A form. Public companies should also provide a copy of their most recent stockholder report.
The U.S. entity filing the BE-10A form—the “U.S. Reporter” in BEA’s parlance—should be the fully consolidated U.S. domestic business enterprise, defined as the U.S. business whose voting securities are not owned more than 50% by another U.S. business and, proceeding down each ownership chain from that U.S. business, any U.S. business whose voting securities are more than 50% owned by the U.S. business above it. If a U.S. business enterprise cannot consolidate all of its domestic subsidiaries in its BE-10A form, it must request permission to file on an unconsolidated basis prior to filing the BE-10 report.
BE-10B, BE-10C, and BE-10D Forms
The other forms that complete the BE-10 survey report require information about the U.S. business’s foreign affiliates. Which form to file depends on the ownership share of the U.S. business and the size of the foreign affiliate during the foreign affiliate’s 2014 fiscal year:
- The BE-10B form must be filed for each foreign affiliate that is, directly or indirectly, majority-owned by the U.S. business where the foreign affiliate’s assets, sales, or net income in its FY 2014 were greater than $80 million.
- The BE-10C form must be filed for a foreign affiliate:
- majority-owned by the U.S. business and having assets, sales, or net income in its FY 2014 between $25 million and $80 million;
- minority-owned by the U.S. business and having assets, sales, or net income in its FY 2014 greater than $25 million; or
- having assets, sales, and net income in its FY 2014 each less than $25 million that owns another foreign affiliate that itself filed a BE-10B or BE-10C form.
- The BE-10D form must be filed for a foreign affiliate having assets, sales, and net income in its FY 2014 each less than $25 million that does not own another foreign affiliate.
The final due date of the BE-10 report is:
- May 29, 2015, if the U.S. company is filing fewer than 50 forms BE-10B, BE-10C, and BE-10D.
- June 30, 2015, if the U.S. company is filing 50 or more forms BE-10B, BE-10C, and BE-10D.
Note that the BEA estimates that the reporting burden for completing the BE-10 report is 144 hours per response, so U.S. businesses should not wait until the last minute to evaluate their potential compliance burden. The BE-10 survey will likely be particularly burdensome for private equity firms and similar investors with significant overseas holdings.
BEA will consider reasonable requests for extensions of the BE-10 filing deadline, which must be received prior to the original due date of the report and enumerate substantive reasons necessitating the extension. Requests for extensions can be submitted via BEA’s secure messaging system, fax, or telephone at 202.606.5566, as described here.
The BE-10 report can be filed via the BEA eFile system (accessible here), or by mail.
The BE-10 staff can be reached at 202.606.5566 or firstname.lastname@example.org. BEA has posted additional information about the BE-10 survey, including detailed instructions on preparing and filing the BE-10 report.
If you would like additional information about the issues addressed in this Client Alert, please contact Rich Matheny, who chairs Goodwin Procter’s National Security & Foreign Trade Regulation Practice, or the Goodwin Procter attorney with whom you typically consult.