Beginning on May 1, 2020, the Committee on Foreign Investment in the United States (CFIUS) will require a fee for any joint voluntary notice of a “covered transaction” or “covered real estate transaction.” This requirement also applies to (i) voluntary notices filed after CFIUS has completed its assessment of a declaration, (ii) voluntary notices filed for transactions subject to mandatory declarations, and (iii) voluntary notices filed in lieu of a declaration when the transaction is not subject to a mandatory declaration. There is no fee to submit a declaration with CFIUS or if CFIUS initiates a unilateral review.
Parties need to pay the filing fee before CFIUS will accept a notice and begin its review of a transaction. The interim rule, which was issued on April 28, 2020, adopts, without change, the fee structure announced in the proposed rule (discussed here).
Filing Fee Structure
The fees are based on the following tiered, fixed-fee schedule determined by the value of the transaction. Fees are capped at 0.15% of the overall transaction value.
|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|
Fees will be refunded if CFIUS determines that a notified transaction is not a “covered transaction” or a “covered real estate transaction.” Further, 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 CFIUS to consider new information.
Key Takeaways from Comments
Following the proposed rule, CFIUS received comments on several issues, including the amount of the proposed fees, timing of the fee payment, and valuation of the transaction. Key takeaways from these comments are summarized below:
- As noted in the proposed rule, the transaction value for acquisitions of foreign companies with a U.S. subsidiary is the total value of the transaction encompassing both U.S. and non-U.S. businesses rather than the value of only the U.S. business. 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.
- CFIUS confirmed that there is no exemption from fees, or a lower fee structure, for investors from certain foreign partner countries or allies.
- As noted in the proposed rule, the value of a transaction will be the total value of all consideration that has been or will be paid, including cash, assets, shares or other ownership interests, debt forgiveness, services, or other in-kind consideration. CFIUS clarified that this encompasses intangible assets, in whatever form – including, intellectual property.
- In the context of joint venture transactions, the interim rule accounts for the possibility that more than one U.S. business may be contributed to a joint venture, in which case, the value of the transaction is the collective value of each U.S. business contributed. CFIUS noted that it specifically welcomes comments on alternative approaches to valuing a joint venture transaction.
- The interim rule clarifies that the value of a transaction in a multi-phase deal includes the total value of each phase, as may be reasonably determined as of the filing date.
Due to challenges posed by the COVID-19 pandemic, CFIUS is accepting public comments on the interim rule until June 1, 2020.