On July 28, 2020, the Department of the Treasury issued a final rule formally implementing filing fees for formal notices of transactions submitted to the Committee on Foreign Investment in the United States (“CFIUS”). CFIUS filing fees were previously established in an interim rule on April 29, 2020, and are assessed on a sliding scale between $0 and $300,000, depending on the value of the transaction.
In addition, the final rule also narrows the definition of “principal place of business” applicable in the CFIUS context, which had previously been set out in two interim rules on January 17, 2020. The amended definition is as follows:
“the primary location where an entity’s management directs, controls, or coordinates the entity’s activities, or, in the case of an investment fund, where the fund’s activities are primarily directed, controlled, or coordinated by or on behalf of the general partner, managing member, or equivalent.”
The original definition included the language “where the fund’s activities and investments,” rather than the shortened “where the fund’s activities” which appears in the amended definition. The final rule indicates that the Treasury intends that the world “activities” be inclusive of “investments,” and therefore to capture direction and management of investments made by a fund. The amended definition may impact certain investors’ eligibility for exemption from expanded CFIUS jurisdiction and the mandatory CFIUS filing requirements on the basis of maintaining their “principal place of business” in an exempted foreign state or in the US.
The final rule will take effect on August 27, 2020. Our blog post covering the earlier final and interim rules implementing the Foreign Investment Risk Review Modernization Act is available here.