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Vedder Thinking | Articles Reminder for Investment Managers to Evaluate Form BE-10 Filing Obligations


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U.S. persons meeting the reporting thresholds under the U.S. Department of Commerce Bureau of Economic Analysis's (BEA) Form BE-10 are required to file the five-year benchmark survey of U.S. direct investment abroad with the BEA. While many investment fund managers may recall that the survey was previously voluntary, the BEA now requires all U.S. persons that meet the reporting thresholds, as discussed below, to file. The filing deadline is May 29, 2015 for firms with less than 50 foreign affiliates and June 30, 2015 for firms with more than 50 foreign affiliates.

The BEA recently issued Frequently Asked Questions (FAQs) concerning the application of Form BE-10 to private funds and their managers. This bulletin is designed to assist investment fund managers in determining if they need to file.

If you determine that you need to file and do not believe you will meet the deadline, we have found that the BEA is very accommodating in granting extensions. To request an extension, fill out the extension form and e-mail it to

Who Must File?

If at any time during a U.S. person's 2014 fiscal year, it had direct or indirect ownership or control of at least 10 percent of the voting interests of an incorporated foreign enterprise or an equivalent interest in an unincorporated foreign enterprise (U.S. Reporter), it must file Form BE-10. This includes all U.S. persons that are private funds and their managers. A foreign enterprise includes, among others, offshore private funds, foreign portfolio companies, foreign holding companies and foreign subsidiaries. The filing is required regardless of whether the U.S. person had any financial interest in the foreign enterprise (i.e., economic interest). Unlike certain other BEA or TIC forms, there is no de minimis exception to the filing requirement.

With respect to indirect ownership, a U.S. Reporter must "look through" all intervening foreign enterprises to determine whether it indirectly has a 10 percent or more voting interest in one or more foreign enterprises. Because private funds and private fund managers domiciled in the United States are included in the definition of a U.S. person, their ownership and management of offshore investments and enterprises may trigger Form BE-10 filing requirements.

Reporting Triggers for Private Fund Managers

Set forth below are a number of common situations that can trigger a Form BE-10 filing.

U.S. General Partner to Foreign Limited Partnership

The BEA takes the position that the general partner of a partnership is deemed to control 100 percent of the voting securities of the limited partnership, unless the limited partnership agreement otherwise provides voting rights to the limited partners. Accordingly, limited partners in an offshore limited partnership likely have no reporting obligation because the limited partnership's voting interests are controlled by the general partner. However, if the general partner is a U.S. person, then such U.S. person will likely need to file Form BE-10.

U.S. Feeder Fund Owns More than 10 percent of Offshore Master Fund

If a U.S. feeder fund owns more than 10 percent of the voting shares of an offshore master fund structured as a corporation, then the U.S. feeder fund will likely have a reporting obligation. It should be noted that offshore master funds may use a variety of structures surrounding voting rights (such as management shares), and in certain instances the U.S. feeder fund may not have any voting rights. Firms will need to review the governing documentation of foreign entities to confirm whether investors are vested with voting rights. As noted above, a U.S. feeder fund, as a limited partner, of an offshore master fund structured as a partnership would likely have no obligation to file.

Registered Investment Companies with Foreign Subsidiaries

Certain U.S. registered investment companies maintain foreign subsidiaries for certain investment strategies. Since the registered investment company generally owns all of the outstanding voting interests in the foreign subsidiary, the registered investment company may be required to file Form BE-10. Firms should review the governing documents of the foreign entity to confirm who holds the voting interests.

Investment Manager Owns Management Shares of Foreign Corporate Master Fund

If a foreign master fund structured as a corporation does not provide shareholders' voting rights and instead utilizes management shares, then the U.S. investment manager, if it holds the management shares, is likely required to file Form BE-10.

Ten percent Ownership of an SPV, Foreign Portfolio Company, Foreign Holding Company or Other Foreign Vehicle

If a U.S. person holds more than 10 percent of the voting interests of a foreign special purpose vehicle, foreign portfolio company, foreign holding company or other foreign vehicle, the U.S. person would likely need to file. This applies on both a direct and indirect basis. Accordingly, as noted above, the U.S. person must "look through" all intervening foreign enterprises to determine whether it needs to file.

Sole Shareholder of Foreign General Partner

If a U.S. investment manager or other U.S. person serves as the sole shareholder to a foreign general partner such as a foreign master fund structured as a limited partnership, the U.S. investment manager or other U.S. person will likely need to file Form BE-10.

Offshore Subsidiaries

Many investment managers have offshore subsidiaries that are registered as investment managers with various foreign jurisdictions. To the extent an investment manager has an offshore subsidiary, the U.S. person will likely need to file Form BE-10.

Investors in Offshore Feeder Funds

Depending on the structure of an offshore feeder fund, a U.S. investor in such an entity may be required to file Form BE-10. If the U.S. person owns or controls at least 10 percent of the voting interests of a foreign feeder fund structured as a corporation (e.g., Cayman Islands exempted company), it may be required to file. Investment managers should be prepared to respond to questions from investors on whether a filing is necessary. Investment managers may want to structure their foreign funds such that investors are not vested with voting rights.

A private fund's governing documents should be examined carefully to determine if reporting is necessary.

Which BE-10 Form Must You File?

Form BE-10 is comprised of various reports that cover a U.S. Reporter and its majority- and minority-owned foreign enterprises. Each U.S. Reporter is required to file Form BE-10A. Form BE-10A pertains to the fully consolidated U.S. domestic business enterprise of the U.S. Reporter. Forms BE-10A/B/C/D are intended to cover many different types of foreign affiliates, including traditional operating companies, holding companies and funds (feeder, master and other entities). Not all questions on the forms will apply. U.S. Reporters may mark questions "n.a." if questions do not apply and provide explanations in the "Remarks" areas on the forms, if necessary.

Form BE-10A

A U.S. Reporter must file a complete Form BE-10A if its total assets, sales or gross operating revenues (excluding sales taxes), or net income (after provision for U.S. income taxes), when consolidated with its majority-owned domestic subsidiaries, were greater than $300 million (positive or negative) at any time during the 2014 fiscal year. If this amount is less than $300 million, the U.S. Reporter is only required to respond to Items 1–42 and 97–114 of Form BE-10A. In certain instances, a U.S. investment manager and its majority-owned U.S. funds may need to be consolidated on Form BE-10A. Please see the FAQs for more information.

Forms BE-10B/C/D

Whether the U.S. Reporter files Form BE-10B, 10C or 10D for a majority-owned or minority-owned foreign affiliate depends on (i) whether the foreign affiliate is majority or minority owned by the U.S. Reporter and (ii) the amount of total assets, sales or gross operating revenues, excluding sales taxes or net income after provision for foreign income taxes of such foreign affiliate during 2014 (Threshold).

Form BE-10B—Majority-owned and Threshold was greater than $80 million at any time during 2014 fiscal year.

Form BE-10C—Majority-owned and Threshold was greater than $25 million but less than $80 million; minority-owned and Threshold was greater than $25 million; and any foreign affiliate that did not have in excess of $25 million under the Threshold but was the parent of another foreign affiliate reported on Form BE-10B or Form BE-10C.

Form BE-10D—Foreign affiliate and Threshold was less than $25 million.

The different BE-10 forms and instructions for their completion are available on the BEA website.

If you have any questions or would like more information on the issues discussed in this bulletin, please contact Joseph M. Mannon at +1 (312) 609 7883 or your Vedder Price attorney.


Joseph M. Mannon