19 May 2020

60-second CFIUS: CFIUS Filing Fees Are Here, But Calculation Can Be Complicated

As of May 1, 2020, parties making a voluntary notice filing with CFIUS will have to pay a filing fee. There is no fee for declarations under the mandatory filing regime.

The Treasury Department’s April 29, 2020 interim rulemaking establishes a step-function fee schedule based on the “value” of the transaction. There is no fee where the value is less than $500,000. The maximum fee is $300,000 for transaction values of $750,000,000 or more. In between the fees go from 0.15% in smaller deals, to 0.04% for larger deals.

There is more complexity than you might think. For example, in most cases the “value” of a transaction is determined by the amount paid by the foreign party, not the value of what is acquired—unless the consideration is contingent on milestones, in which case the parties look at the value of the target assets or equity. If there are multiple foreign parties, each may have a different transaction “value”. A filing may be made by the lead investor but not by smaller investors, so the value of the transaction for purposes of setting the filing fee may be less than the total deal size. If there are foreign and US buyers/investors, you would look only to the foreign parties.

If the target is a multinational with US operations, the “value” for purposes of setting the fee is the overall consideration paid, not the portion attributed to the US business. In a large multinational acquisition including a modest US component, the filing fee could max out at $300,000 even if the US business represented less than 1% of the deal.

If the consideration includes public securities, the value is the closing price on the day before filing, not the volume-weighted (VWAP) or trailing average price. Deals that include warrants, options or other contingent equity interests include the exercise or conversion price if the conversion is “imminent,” but not otherwise. In-kind contributions, services, intangibles such as intellectual property or knowhow, or services are valued at “fair market value,” but this is often difficult to determine, as is the value of a “US business” contributed to a joint venture. If CFIUS disagrees with the calculation of the fee, it can reject the filing.

The 60-second takeaway is that parties should start thinking early about how to set a value on a transaction involving a voluntary filing with CFIUS.

Belt and Road Hub

We explore the opportunities the Belt and Road Initiative brings for your business, and provide our comprehensive, professional services to help.

Belt and Road

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    With a large increase in fees proposed in the FIRB reform package, investors will be thinking twice about investing in Australia and when to make their approach to FIRB.

    02 October 2020

    This article was written by Edwina Kwan (关凯丽) and Jay Tseng (曾誌輝). In the midst of the COVID-19 pandemic, the NSW Supreme Court (Court) vacated the hearing dates for an 8-day trial due to...

    30 June 2020

    This article was written by Patric McGonigal and Ramon Garcia-Gallardo. At a virtual ceremony on 11 June 2020, Singapore's Minister for Home Affairs and Law, K Shanmugam SC and the President of the...

    22 June 2020

    As of May 1, 2020, parties making a voluntary notice filing with CFIUS will have to pay a filing fee. There is no fee for declarations under the mandatory filing regime. The Treasury Department’s...

    26 May 2020

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.