On Monday, March 9, 2020, the Department of the Treasury, which leads the Committee on Foreign Investment in the United States (CFIUS or Committee), published the anticipated proposed new rules governing a filing fee process for notices filed with the Committee. The same filing fee structure and rules would apply to covered transactions and investments, including mergers and acquisitions, governed by Part 800 Treasury Rules, as well as to covered real estate transactions, such as leases and concessions, governed by Part 802 Treasury Rules. For additional background on the new CFIUS regulations implemented by the Treasury Department following the passage of the Foreign Investment Risk Review Modernization Act (FIRRMA), please review our prior alerts from this past October and February.
Pursuant to FIRRMA, CFIUS is authorized to assess a filing fee for notifications submitted for the Committee's review, which must be based on the value of the transaction and are capped at the lesser of one percent (1%) of the value of the transaction or $300,000 (adjusted annually for inflation). In practice, however, filing fees under the Treasury Department's proposed fee structure would actually amount to much less. The Treasury Department has proposed a tiered fee structure based on the value of the proposed transaction submitted to the Committee for review, as follows:
Tier |
Filing Fee |
|
Value of the transaction is less than $500,000 |
$0 |
|
Value of the transaction is equal to or greater than $500,000 but less than $5 million |
$750 |
|
Value of the transaction is equal to or greater than $5 million but less than $50 million |
$7,500 |
|
Value of the transaction is equal to or greater than $50 million but less than $250 million |
$75,000 |
|
Value of the transaction is equal to or greater than $250 million but less than $750 million |
$150,000 |
|
Value of the transaction is equal to or greater than $750 million |
$300,000 |
The filing party (or, if filing jointly, the filing parties) would need to pay the filing fee to the Treasury Department prior to the CFIUS Staff Chairperson's acceptance of a notice for review. The Staff Chairperson may waive the filing fee, in whole or in part, if warranted by "extraordinary circumstances" relating to national security – a scenario not further defined by the proposed rules. No filing fees would be assessed for declarations to the Committee, which are truncated submissions now authorized as part of FIRRMA.
For a typical stock acquisition transaction, the value of the transaction would be the total value of all consideration to be paid by the foreign party to the transaction, including cash, assets, securities, shares or other ownership interests, debt forgiveness, services, or other in-kind consideration.
The Treasury Department will be accepting comments on the proposed filing fees between now and Wednesday, April 8, 2020. For assistance in submitting comments in response to the Treasury Department's new rules, or for other issues involving potential acquisitions or other deals that may be subject to CFIUS jurisdiction, please reach out to Venable's International Trade Group to discuss.