Treasury Finalizes CFIUS Fee Structure, Revises Definition

The Treasury Department finalized the fee structure for filing certain transactions with the Committee on Foreign Investment in the U.S. and made a “clarifying revision” to the definition of “principal place of business,” according to a final rule released July 28. The fee structure was first outlined in March and April (see 2004280027), and the original definition for principal place of business was outlined in a January rule. The rule takes effect Aug. 27.

Treasury said it “considered different approaches to the fee structure” for reporting transactions, but decided the structure in the final rule, which establishes a $300,000 fee ceiling, “is the most appropriate for reasons including proportionality and administrability.” The structure will allow CFIUS to “appropriately generate funding” to support its investigations “but at the same time, keep the cost as a proportion of transaction value low,” Treasury said.

Treasury previously defined principal place of business as “the primary location where an ... [investment fund’s] activities and investments are primarily directed, controlled, or coordinated by or on behalf of the general partner, managing member, or equivalent.” In the final rule, the agency revised the definition to remove the word “investments” from the phrase “activities and investments” because “the word ‘activities’ is inclusive of ‘investments,’” the rule said. “Thus, directing and managing investments made by an investment fund would be captured by the word ‘activities.”

In a July 30 post, Baker McKenzie said Treasury is intending the word “activities” to “capture direction and management of investments made by a fund.” The law firm said this could affect investors’ eligibility for exemptions from CFIUS’s expanded jurisdiction and mandatory filing requirements “on the basis of maintaining their ‘principal place of business’ in an exempted foreign state or in the US,” the law firm said.