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April 29, 2020

Stroock Special Bulletin

By: Chris Griner, Shannon Reaves, Gregory Jaeger, Christopher R. Brewster, Erin Bruce Iacobucci

The Committee on Foreign Investment in the United States (CFIUS) published an interim final rule regarding filing fees, effective May 1, 2020, amending and finalizing the language from the March 2020 proposed rule.[1] The 2018 Foreign Investment Risk Review Modernization Act (FIRRMA) authorizes CFIUS to collect fees for CFIUS filings, provided that such fees may not exceed an amount equal to the lesser of 1% of the value of the transaction or $300,000, adjusted annually for inflation.

The interim final rule (which can be read in full at the link here) implements the following fee structure for parties planning to submit formal notice of a transaction to CFIUS on or after May 1, 2020:[2]

Total transaction value amount: Fee amount:
Less than $500,000 No fee
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

 

Parties should note that the interim final rule applies to transactions for which a full filing is submitted to CFIUS, including controlling transactions as well as transactions subject to new CFIUS jurisdiction over real estate and non-controlling investments. CFIUS has not proposed a filing fee if the parties submit a short-form declaration instead of a full filing. However, the fee would be assessed for full filings requested by CFIUS at the conclusion of a declaration process and full filings submitted by the parties in lieu of a mandatory declaration.

The interim final rule introduces notable additions to the proposed rule language regarding fees due for two specific types of transactions:

1. If a transaction is to be implemented in multiple phases, the value of the transaction includes the total value of the multiple phases, as may be reasonably determined as of the date the parties file the formal written notice;

2. If a transaction is or includes the acquisition of contingent equity interest, the value of the transaction includes the consideration that was paid by or on behalf of the foreign person to acquire the contingent equity interest, subject to certain factors.

Parties who are planning to submit a formal filing to CFIUS should closely review the filing fee requirements, in particular: (i) the filing fee manner of payment (electronic, U.S. dollar payment only);[3] (ii) rules for any refund of a filing fee amount (filing fees are generally non-refundable, unless CFIUS determines that the transaction is not a covered transaction, or in situations where a party is found to have overpaid the fee amount); (iii) rules for a waiver of the filing fee (only occurring in cases of “extraordinary circumstances relating to national security”); (iv) fees due when CFIUS instructs parties to refile their formal notice (additional fee payments are generally not applicable unless there is a material change to the transaction or a material inaccuracy or omission in the notice that affects the fee structure); and (v) rejections of formal notices (notices may be rejected by CFIUS for failure to pay part or all of the filing fee, but parties are given three business days to remit payment before the notice is rejected).

The interim final rule is effective May 1 and will remain in place during the interim final rule public comment period, which begins on the date of the interim final rule’s publication in the Federal Register, (April 29, 2020), and extends through the deadline for submitting comments on June 1, 2020. Treasury is allowing this additional comment period to the interim final rule to accommodate for complications that may have affected potential commenters during the proposed rule comment period; however, CFIUS will begin collecting filing fees on May 1.

Please contact any of us if you have any questions or if you are interested in submitting comments to CFIUS.

______________________________

For more information:

Chris Griner

Shannon Reaves

Gregory Jaeger

Tatiana O. Sullivan

Christopher R. Brewster

Erin Bruce Iacobucci

[1] See Stroock Special Bulletin - CFIUS Filing Fees: Proposed Rule Announced, Mar. 5, 2020, available at: http://stroocknew.oo/publication/cfius-filing-fees-proposed-rule-announced/.

[2] Treasury encourages parties to “consult Subpart K of 31 C.F.R. part 800 and 31 C.F.R. part 802, as relevant, to determine the applicable filing fee.”  Treasury indicates that it is the parties who are responsible for determining the fee amount for their transaction before filing their formal notice.

[3] Treasury also notes, in their “Instructions for Payment of CFIUS Filing Fee,” that the “required fee must be received by the Treasury Department prior to the CFIUS Staff Chairperson accepting a formal written notice for review, with limited exceptions,” available at: https://home.treasury.gov/system/files/206/CFIUS-Filing-Fee-Payment-Instructions.pdf.

This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.