Corporate Alert: Commerce Department Requires US Companies to Submit Filings Regarding Certain Foreign Affiliates

Persons Covered

Any US person that had a foreign affiliate at any time during the US person’s 2014 fiscal year, including any foreign affiliate that was established, acquired, seized, liquidated, sold, expropriated or inactivated during the fiscal year, must file a BE-10 report. Such US persons are referred to for purposes of the survey as “US Reporters.” If a US business enterprise had no foreign affiliates during its 2014 fiscal year but is contacted by the BEA with respect to the BE-10 survey, it must still file a BE-10 Claim for Not Filing—though no other forms in the survey will be required in that case. Notably, filing is required even for foreign-owned US persons with foreign affiliates.

Key Definitions

• “Business enterprise” means any organization, association, branch or venture that exists for profit-making purposes or to otherwise secure economic advantage, and any ownership of any real estate.
• “Foreign affiliate” means an affiliate located outside of the United States in which a US person has a direct investment, which is defined as the ownership or control, directly or indirectly, of 10 percent or more of the voting securities of an incorporated foreign business enterprise or an equivalent interest in an unincorporated foreign business enterprise, including a branch.^[1]
• “Person” means any individual, branch, partnership, associated group, association, estate, trust, corporation or other organization (whether or not organized under the laws of any state), and any government (including a foreign government, the US government, a state or local government and any agency, corporation, financial institution or other entity or instrumentality thereof, including a government-sponsored agency).
• “US person” means any person resident in the United States (defined as “the several states, the District of Columbia, the Commonwealth of Puerto Rico, and all territories and possessions of the United States”) or subject to the jurisdiction of the United States.

BE-10 Reporting

As noted above, all US persons with foreign affiliates during 2014 are required to respond to the BE-10 survey. The types of forms submitted, however, will vary based upon the specific facts and circumstances. The following summarizes the various BE-10 forms and the situations in which they apply:

• Form BE-10A—This report is required for all US Reporters.
• Form BE-10B—This report must be submitted for each majority-owned foreign affiliate with assets, sales, net income or net loss (each, an “economic benchmark”) greater than $80 million at any time during or for the 2014 fiscal year. 

• Form BE-10C—This report is required for (i) each majority-owned foreign affiliate where any one of the economic benchmarks exceeded $25 million but no economic benchmark exceeded $80 million at any time during or for fiscal year 2014; (ii) for each minority-owned foreign affiliate where any one of the economic benchmarks was greater than $25 million at any time during or for fiscal year 2014; and (iii) for each foreign affiliate for which none of the economic benchmarks was greater than $25 million during or for fiscal year 2014 and that is a parent company of another foreign affiliate being reported on Form BE-10B or BE-10C.
• Form BE-10D—This report is required for each foreign affiliate (regardless of whether majority- or minority-owned) for which no economic benchmark exceeded $25 million during or for fiscal year 2014 and that is not a parent company of another foreign affiliate being reported on Form BE-10B or BE-10C.

Content of the Reports

Form BE-10A requires, among other things, identifying information, sales and employment information, contract manufacturing services information, financial and operating data of the US Reporter, and import and export information. The foreign affiliate forms (i.e., Forms BE-10B-D) generally require, among other things, identifying information, financial and operating data, investments and transactions between the US Reporter and the foreign affiliate, and import and export information. The US Reporter submits the Form BE-10A for itself and Form BE-10B, C or D, as applicable, for each foreign affiliate.

The BEA may only use the information provided for analytical and statistical purposes; it may not publish or make available the information in a manner that can specifically identify the person to which the information relates. Reports are confidential and their disclosure will not be compelled without the prior written consent of the person filing the report and of the customer of such person, where the information supplied is identifiable as being derived from the records of such customer. BE-10 filings will be required every five years.

Due Dates

US Reporters filing fewer than 50 foreign affiliate forms (i.e., BE-10B, C and/or D) must file by May 29, 2015. US Reporters filing 50 or more foreign affiliate forms must file them by June 30, 2015. The BE-10 Claim for Not Filing is due by May 29, 2015.

Penalties

Failure to make the required filings may result in civil penalties of up to $25,000 and/or injunctive relief commanding the US person to comply, as well as fines for willful violations of up to $10,000 and/or imprisonment for up to one year (for individuals). Any officer, director, employee or agent of any corporation who knowingly participates in such violations may be punished by a like fine, imprisonment or both.