US officials get tougher on data disclosures

The Bureau of Economic Analysis (BEA), the US Department of Commerce’s economic statistics team, said it plans to be stricter with firms required by law to disclose their cross-border holdings, according to a client memo from law firm Ropes & Gray.

Form BE-11 must be filed by GPs (and others) that own 10 percent or more of the voting securities of a foreign entity (or US entity for foreign firms) that has total assets, sales or gross operating revenues or has net income exceeding $25 million. 

Reporting is mandatory and carries a fine of up to $25,000 and criminal penalties of up to a year imprisonment for non-compliance. The BEA said that firms which failed to meet their past reporting obligations will not be penalised, according to the memo. 

Not all foreign entities need to be reported and certain factors are used to determine whether an entity qualifies for exemption. The criterion is nuanced, but in general foreign entities must have a physical presence outside the US and be engaged in a business separate from the US entity to trigger reporting.

Form BE-11 requires a description of the foreign entities balance sheet, exports and imports of goods, sales or gross operating revenues and its costs and expenses. This also includes employment agreements, compensation, property and equipment as well as any research and development operations conducted by the foreign entity.

The due date for the 2011 financial year report is 31 May unless an extension is granted by the BEA.