Form BE-12 is the Benchmark Survey of Foreign Direct Investment in the United States. If a foreign person owns, directly or indirectly, 10 percent or more of the voting securities of an incorporated U.S. business enterprise (or an equivalent interest for an unincorporated U.S. business enterprise), the U.S. business enterprise may have a Form BE-12 filing obligation; provided, however that the Bureau of Economic Analysis (the “BEA”) has introduced an exemption for certain private funds. A U.S. business enterprise that operates as a private fund and that would otherwise be required to report is not required to do so as long as (i) it does not own, directly or indirectly through another business enterprise, an operating company (i.e., a business enterprise that is not a private fund or a holding company) in which the foreign parent owns at least 10% of the operating company’s voting interest, and (ii) if the foreign parent indirectly owns a private fund through other U.S. business enterprises, there are no operating companies between the foreign parent and the U.S. domiciled private fund.

• The following circumstances (among others) will likely lead to a Form BE-12 filing requirement:
• A non-U.S. general partner or non-U.S. managing member of a U.S. fund structured as a limited partnership or limited liability company, respectively, in which the U.S. fund holds 10% or more of the voting interest in an operating company; and

A non-U.S. person or entity (such as an investment manager) that holds 10% or more of the voting interest in a U.S. affiliate (such a U.S. investment manager).

A non-U.S. general partner of a U.S. private fund that does not make “direct investments” will not have a Form BE-12 filing obligation with respect to that private fund. “Direct investment” means the ownership or control, directly or indirectly, by one person of 10 percent or more of the voting securities of an incorporated business enterprise or an equivalent interest in an unincorporated business enterprise. In addition, a non-U.S. general partner to multiple U.S. private funds will not need to consolidate those private funds for purposes of the filing; provided, however that the Form BE-12 should be filed on a consolidated basis by the top U.S. affiliate of a foreign parent, including in the full consolidation all U.S. business enterprises proceeding down each ownership chain whose voting securities are more than 50 percent owned by the U.S. business enterprise above.

Form BE-12 is due May 31, 2018, or by June 30, 2018 for reporting companies that use BEA’s eFile system. The Form BE-12 is a quinquennial filing that is due every 5 years.

______________________________________________________

If you have any questions regarding the matters covered in this memo, please contact any of the partners and counsel listed below or your primary attorney in Seward & Kissel’s Investment Management Group.