United States: CFIUS Proposes Filing Fee For Voluntary Notices Of Transactions

CFIUS proposed a filing fee for parties submitting for review voluntary notices of transactions. Comments on the proposal must be submitted by April 8, 2020.

In accordance with the Foreign Investment Risk Review Modernization Act, the proposed rule would establish a filing fee based on the value of each transaction and would not exceed the lesser of either (i) one percent of the transaction value or (ii) $300,000. Additionally, CFIUS stated that parties must include in their notice:

• a "good faith" estimate of the transaction's value; and
• a synopsis of the methodology used to calculate the valuation and related filing fee.

The proposed rule also would exempt from filing fees any declarations - including mandatory declarations - filed with CFIUS or any filings resulting from unilateral reviews of a transaction undertaken by CFIUS. In addition, the proposed rule would not require parties to pay any additional fees for any notices that CFIUS allows to be withdrawn and refiled, with the exception of instances where the parties made material inaccuracies or omissions in the original filings.

Commentary Keith Gerver

As the commentary to the proposed rule indicates, Congress's decision to allow CFIUS to collect fees is closely connected with the expansion of CFIUS's jurisdiction under FIRRMA and the concomitant increase in CFIUS's administrative and operating expenses. Once a final rule is implemented, parties to transactions will need to consider how to share the burden of any filing fee, if it will be shared at all. In negotiating who pays, the parties should consider which aspect of the deal likely is to generate interest or concern from CFIUS—is it the nature of the U.S. business or covered real estate, or is it the foreign person involved in the transaction? Given the relatively small fee amount (no more than 0.15 percent of the overall transaction value), and the ability of the parties to file a fee-free declaration, it is possible that the fee will not be a major consideration.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.