We believe compliance should be simple.SM

®

QUARTERLYANNUALQUINQUENNIAL(5-YEAR)TRANSACTIONAL

QUARTERLYANNUALQUINQUENNIAL(5-YEAR)

U.S. DIRECT INVESTMENT ABROAD

FOREIGN DIRECT INVESTMENT IN THE U.S.

2

PorzioCS® Regulatory Compliance Program for U.S. Bureau of Economic Analysis Mandatory

Reporting Obligations

The U.S. Bureau of Economic Analysis (“BEA”), an agency of the U.S. Department of Commerce, monitors inbound and outbound U.S. investments as part of its regulatory mission of tracking international commerce and publishing leading economic indicators such as GDP. To fulfill this mission, the BEA imposes mandatory reporting obligations upon, and collects data from:

• U.S. persons and businesses holding a 10% or greater interest in a foreign business;

• Foreign persons and businesses holding a 10% or greater interest in a U.S. business;

• U.S. subsidiaries of foreign businesses;

• Foreign subsidiaries of U.S. businesses; and

• U.S. service sector businesses that transact with foreign parties, whether U.S. or foreign owned.

Importantly, both direct and indirect ownership interests in cross-border investments can trigger reporting obligations. Failure to comply with BEA reporting

obligations is subject to both civil and criminal penalties pursuant to section 3105 of title 22 of the United States Code (22 U.S.C. 3105).

The BEA now requires transactional reporting for all foreign persons making investments in the U.S., which are due within 45 days of certain acquisitions, expansions, and business formations, whether or not contacted by the BEA.

BEA regulatory compliance includes quarterly, annual and 5-year reporting obligations. The BEA 5-year reports, referred to as “benchmark” reports, are the most comprehensive of the BEA reporting obligations and are estimated to take up to several hundred hours to complete. These benchmark reports are mandatory and must be filed when U.S. persons hold an interest in a foreign business and foreign persons hold an interest in a U.S. business. These reports are typically due within 150 days of year end.

©2016 Porzio Compliance Services, LLC. All Rights Reserved.

®

Transactional Survey of Foreign Direct

Investment in the U.S.

Acquisitions, Formations and Expansions of U.S.

Businesses

Must be Filed within 45 days of Transaction

Exemption Filing RequiredEven if Transactionis Below $3 Million

Threshold

Quarterly Survey of Foreign Direct Investment in U.S.

Foreign Persons Owning 10% or More of a U.S.

Business Enterprise

Must be Filed, Upon Request From the BEA, 30 Days After

Each Quarter or 45 days After Year-end

3

IF YOU ARE A NON-U.S. PERSON OR BUSINESS THAT OWNS A U.S. BUSINESS, REPORTING

OBLIGATIONS EXIST

®

Annual Survey of Foreign Direct

Investment in U.S.

Foreign Persons Owning 10% or More of a U.S. Business

Enterprise

Must be Filed, Upon Request From the BEA, 150 Days

After Year-end

5 Year Benchmark Survey of Foreign Direct Investment in U.S.

Most Comprehensive Survey – Required of All

Parties

Foreign Persons Owning 10% or More of a U.S. Business

Enterprise

Parties Must Typically File Within 150 Days After

Year-end

4

IF YOU ARE A NON-U.S. PERSON OR BUSINESS THAT OWNS A U.S. BUSINESS, REPORTING

OBLIGATIONS EXIST

®

Must be Filed, Upon Request From

the BEA, 30 Days After Each Quarter or 45 Days After

Year-end

U.S. Persons Owning 10% or

More of a Foreign Business Enterprise

U.S. Persons Owning 10% or

More of a Foreign Business Enterprise

Must be Filed, Upon Request From the BEA, 150 Days After

Year-end

U.S. Persons Owning 10% or

More of a Foreign Business

Enterprise

Most Comprehensive

Survey – Required of All Parties

Parties Must Typically

File Within 150 Days After

Year-end

Quarterly Survey ofU.S. Direct Investment

Abroad

AnnualSurvey ofU.S. Direct Investment

Abroad

5 YearBenchmark Survey ofU.S. Direct Investment

Abroad

5

IF YOU ARE A U.S. PERSON OR BUSINESS WITH AN OWNERSHIP INTEREST IN A FOREIGN BUSINESS,

REPORTING OBLIGATIONS EXIST

®

BEA Services Surveys

Tracks Foreign Trade in Services by U.S.

Companies

Applies to U.S. Service Sector Companies, Whether or not

Foreign Owned

Quarterly Surveys

U.S. and Foreign Airline Operators

U.S. Ocean Carriers

Annual Surveys

BenchmarkSurveys

Financial Services

Insurance Services

Selected Services and Intellectual

Property

Foreign Ocean Carriers

FinancialServices

Insurance Services

Intellectual Property Trade

Services Including, Among Others:

Telecommunications, Advertising, andConsulting, etc.

6

IF YOU ARE A U.S. SERVICE SECTOR BUSINESS TRANSACTING WITH NON-U.S. PARTIES, REPORTING OBLIGATIONS EXIST

REGARDLESS OF U.S. OR FOREIGN OWNERSHIP

®

U.S. Business Ownership Abroad Requiring BEA

Reporting

U.S. Corp.

≥ 10% Owner

Foreign Business Ownership in the U.S.

Requiring BEA Reporting

BrazilS.A.

Japan K.K.

≥ 10% Owner

U.S. Corp.

Ireland LTD.

British Virgin Islands Inc.

≥ 10% Owner

≥ 10% Owner

U.S. Corp.

U.K. LTD.

U.S. LLC

> 50% Owner of U.S. Inc. or ≥ 10%

Indirect Owner of German

A.G.

≥ 10% Owner

German A.G.

U.S. Inc.

INDIRECT CROSS BORDER INVESTMENT AND BUSINESS OWNERSHIP TRIGGERS BEA REPORTING OBLIGATIONS

SAMPLE ORGANIZATION STRUCTURES, PARENT/SUBSIDIARY RELATIONSHIPS AND BUSINESS OWNERSHIP

INTERESTS REQUIRING U.S. BUREAU OF ECONOMIC ANALYSIS COMPLIANCE

7

®

PorzioCS U.S. Bureau of Economic Analysis (BEA) Compliance Services

8

Software tools that make BEA compliance simple and efficient

Identify BEA reporting obligations and perform gap analysis

Navigate through broad BEA data requests

BEA report completion and filing

Implement efficiencies and procedures for routine monitoring, collection, maintenance and reporting of data to the BEA

Minimize risk of BEA compliance failures, which may result in significant civil and criminal penalties

®

PorzioCS156 West 56th Street Suite 803 New York, NY 10019-3800TEL: (646) 348-6770 FAX: (212) 957-3983www.porziocomplianceservices.com

About PorzioCS

Porzio Compliance Services (“PorzioCS”) has developed software tools that make BEA compliance simple and efficient. PorzioCS assists clients in identifying BEA reporting obligations, navigating through highly detailed data requests, report completion and filing assistance, and implementation of efficiencies and procedures for routine collection, maintenance and reporting of data to the BEA.

For additional information regarding PorzioCS BEA services, please contact:

Robert Schechter Chris Schultz (609) 524-1838 (646) 348-6755 rschechter@porziocs.com cschultz@porziocs.com

Porzio Compliance Services, LLC is a wholly-owned subsidiary of the law firm of Porzio, Bromberg & Newman, P.C.

®