CFIUS Unveils Proposed Rule to Impose Filing Fees

On March 5, 2020, the U.S. Department of the Treasury issued a proposed rule establishing filing fees for parties submitting a voluntary notice to the Committee on Foreign Investment in the United States (CFIUS) for “covered transactions” under Part 800 (which includes covered investments) and “covered real estate” under Part 802. The proposed rule implements the filing fee provision contained in section 1723 of the Foreign Investment Risk Review Modernization Act (FIRRMA).

Under the proposed rule, there is no filing fee for parties submitting a declaration or for any unilateral review initiated by the Committee. However, the filing fee does apply to (i) voluntary notices filed after CFIUS has completed its assessment of a declaration and has either requested the parties to file a written notice or is unable to conclude action and states that the parties may file a written notice, (ii) when parties choose to notify CFIUS of a transaction subject to a mandatory declaration requirement through a notice, and (iii) voluntary notices filed in lieu of a declaration when the transaction is not subject to a mandatory declaration requirement.

Proposed Fee Schedule
The proposed fees are based on the following tiered, fixed-fee schedule determined by the value of the transaction. Fees will represent no more than 0.15% of the overall transaction value.

Transaction Value	Proposed Fee
Less than $500,000	$0
Equal to or greater than $500,000 but less than $5,000,000	$750
Equal to or greater than $5,000,000 but less than $50,000,000	$7,500
Equal to or greater than $50,000,000 but less than $250,000,000	$75,000
Equal to or greater than $250,000,000 but less than $750,000,000	$150,000
Equal to or greater than $750,000,000	$300,000

Transaction Value
The proposed rule also contemplates scenarios where a foreign person acquires a non-U.S. company with a U.S. subsidiary. In most cases, CFIUS will look to the global value of the transaction in determining the appropriate filing fee. However, for transactions valued at $5 million or more where the U.S. business being acquired is less than $5 million, the fee will be $750, regardless of the overall transaction value.

The proposed rule provides further details in connection with how transactions should be valued. In general, the transaction value for “covered transactions” and “covered real estate” will be the total consideration paid by the foreign person with certain unique situations addressed as follows:

Consideration	Value of Transaction
Security traded on a national securities exchange	Closing price on the national securities exchange on which the securities are primarily listed on the trading day immediately prior to the date the parties file a notice with the Committee *If the security was not traded that day, the last published closing price would be used
Other non-cash assets, interests or services or other in-kind consideration	Fair market value as of the date the parties file the notice
Lending transaction	Cash value of the loan or similar financing arrangement
Transaction arises from the conversion of a contingent equity interest previously acquired by a foreign person	Includes the consideration that was paid by or on behalf of the foreign person to initially acquire the contingent equity interest in addition to any other consideration
Has not been determined	Fair market value of the assets or real estate being acquired in the transaction as of the date the parties file the notice, or the fair market value of the U.S. business being merged or contributed

Under the proposed rule, leases and concessions under Part 802 would be valued according to 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.

The proposed rule also provides:

• Parties must pay the filing fee at the time they file the notice; otherwise CFIUS will not initiate its review.
• Fees will be refunded if CFIUS determines that a notified transaction is not a covered transaction or a covered real estate transaction.
• The fee may be waived in whole or in part, if the Staff Chairperson determines that “extraordinary circumstances relating to national security” warrant a waiver.
• There is no additional fee when CFIUS allows the parties to withdraw and re-file a notice, unless there is a material change to the transaction or a material inaccuracy or omission that requires the Committee to consider new information.

The proposed rule will be published in the Federal Register on March 9, 2020.