The U.S. Department of Commerce’s Bureau of Economic Analysis (“BEA”) administers a five-year benchmark survey to collect information from U.S. businesses in which a foreign person holds, directly or indirectly, at least 10% of the voting interest. This BE-12 Benchmark Survey of Foreign Direct Investment in the United States is mandatory and due by May 31, 2023. U.S. companies within its scope are required to respond (regardless of whether they are individually contacted by BEA) and provide certain financial and operating data and information on their foreign ownership. Like other BEA cross-border investment surveys, the BE-12 may cover U.S. portfolio companies of foreign-domiciled private equity funds and other U.S. entities with foreign general partners, managing members, or controlling shareholders. Given the broad scope of the potential respondent universe, U.S. and foreign asset managers and companies should carefully evaluate the reporting requirements, even if they do not routinely file BEA survey responses.

The BE-12 Survey and Reporting Requirements

The BE-12 survey gathers comprehensive information on U.S. businesses with foreign ownership in order to evaluate the magnitude and impact of foreign direct investment in the United States. The requested information includes details on the U.S. business’s ownership, subsidiaries, industry classification, total sales, employment figures, exports, imports, and certain financial information. For the first time, the survey requires filers to provide sales data related to cloud computing and data storage and digital intermediation services.

Reporting firms include any U.S. business in which a foreign person held, directly or indirectly, at least 10% of the voting interest at the end of the U.S. business’s 2022 fiscal year. BEA considers 100% of the voting interest in a limited partnership to be held by its general partner (and the same for a managing member of an LLC), unless the LP/LLC agreement specifies otherwise. The reporting period for the BE-12 is the company’s 2022 fiscal year. There are several types of BE-12 forms, and each reporting company must select the appropriate form.

  • BE-12A: Report for a majority-owned U.S. business with, on a fully consolidated basis, total assets, sales, or net income greater than $300 million (positive or negative). A U.S. business is "majority-owned" if the combined direct and/or indirect voting ownership interests of all foreign parent exceed 50%.
  • BE-12B: Report for (i) a majority-owned U.S. business with total assets, sales, or net income greater than $60 million and less than $300 million (positive or negative), and (ii) a minority-owned U.S. business with total assets, sales, or net income greater than $60 million (positive or negative).
  • BE-12C: Report for a U.S. business with total assets, sales, and net income less than or equal to $60 million (positive or negative).
  • BE-12 Claim for Not Filing: A brief exemption report for companies that are specifically contacted by BEA, but do not meet the reporting criteria.

BEA considers a company to be U.S. or foreign based on where it is incorporated or organized. For example, a Cayman-domiciled private fund and Bermuda-domiciled corporation would be considered foreign entities, regardless of the location of their operations or nationality of their shareholders. Like other BEA surveys, the BE-12 includes a limited exemption for certain private funds. Inbound investments by foreign persons in U.S. private funds do not have to be reported unless the foreign parent holds 10% or more of the voting interest in a U.S. operating company indirectly through the U.S. private fund.

Responses to the BE-12 survey are due by May 31, 2023 (or by June 30, 2023 for reporters using BEA’s eFile system), although BEA accepts reasonable extension requests if submitted prior to the due data. The BE-12 survey forms, instructions, and related guidance are available on BEA’s website at https://www.bea.gov/surveys/be12. U.S. businesses that filed a BE-13 form for new foreign direct investment in the United States will likely fall within the scope of the mandatory BE-12 survey, as will other U.S. businesses that may not necessarily be required to file quarterly or annual BEA forms.

Key Takeaways

The scope of the BE-12 survey is quite broad, and requires responses from many entities that conduct cross-border investment. U.S. companies that are owned by foreign-domiciled parents or controlled by foreign-domiciled general partners or managing members should review the survey, and fund managers in particular should assess whether their U.S. portfolio companies meet the reporting requirements. If you have any questions about the contents of this client alert, please call your regular Fried Frank contact or an attorney listed above.