Many Latin American venture-backed companies have set up Delaware holding companies to receive investments and operate in the United States, which holding companies own or control significant voting interests in foreign business entities.
Many of these venture-backed companies fail to realize that they must file Form BE-10 with the Bureau of Economic Analysis (“BEA”) of the US Department of Commerce before August 31, 2020. This filing is required every five (5) years to provide the US government information about the activities of US companies abroad.
Who must report?
A BE-10 report is required of any US person or business entity that owned or controlled at least 10 percent (10%) of the voting stock of an incorporated foreign (meaning non-US) business enterprise, or an equivalent interest in an unincorporated foreign business enterprise.
Failure to comply is subject to civil penalties, as well as criminal penalties (for willful violations).
It is important to note that, even if a party receiving a request for a response from the BEA did not, during its 2019 fiscal year, meet the threshold for ownership of a foreign affiliate set forth above, it may still need to file a “BE-10 Claim for Not Filing” if it is directly contacted by the BEA.
The good news is that Form BE-10 can be filed online. That said, filling out the form requires coordination across legal and accounting departments, as well as fairly detailed financial information with respect to both US businesses and their foreign affiliates.
Juan Pablo Cappello can be reached at jp@pag.law