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the power to collect data on direct investments to the Bureau of Economic Analysis (“BEA”), a
part of the Department of Commerce, and on portfolio investments to the Department of the
Treasury.

A “foreign person” is any person who resides outside of the U.S. or is subject to the jurisdiction
of a country other than the U.S. A “direct investment” is defined as the ownership or control,
directly or indirectly, by one person of 10% or more of the voting interests in any incorporated
U.S. business enterprise or an equivalent interest in an unincorporated business enterprise.
Because the IITSA further defines “business enterprise” to include any ownership in real estate,
(with some exceptions) any foreign investor’s direct or indirect ownership of U.S. real estate
constitutes a “direct investment” and falls within the requirement that reports be filed with the
BEA.

Unless an exemption applies, a report on Form BE-13 must be filed with the BEA within 45
days of the date on which a direct investment is made. The form collects certain financial and
operating data about the investment, the identity of the acquiring entity and certain information
about the ultimate beneficial owner. In addition, a Form BE-14 must be filed by any U.S.
person assisting in a transaction which is reportable under Form BE-13. The purpose is,
obviously, to ensure that those required to file a Form BE-13 do so.

1.1.5 The Agricultural Foreign Investment Disclosure Act of 1978
The Agricultural Foreign Investment Disclosure Act (“AFlDA” or the “Act”) of 1978 requires all
foreign individuals, corporations and other entities to report holdings, acquisitions and
dispositions of U.S. agricultural land occurring on or after February 1, 1979. The Act contains
no restrictions on foreign investment in U.S. agricultural land and is aimed only at gathering
reliable data from reports filed with the Secretary of Agriculture to determine the nature and
magnitude of this foreign investment. Unlike the reports filed under the International Investment
Security Act of 1976, reports filed under AFIDA are not confidential but are available for public
inspection.

For the purposes of the Act, a “foreign person” is (i) any individual who is not a citizen or
national of the U.S. and who is not lawfully admitted to the U.S.; (ii) a corporation or other legal
entity organized under the laws of a foreign country; and (iii) a corporation or other legal entity
organized in the U.S. in which a foreign entity, either directly or indirectly, holds 5% or more of
an interest. The definition of “agricultural land” is any land in the U.S. which is used for
agricultural, forestry or timber production. AFIDA requires a foreign person to submit a report on
Form ASCS-153 to the Secretary of Agriculture any time he holds, acquires or transfers any
interest, other than a security interest, in agricultural land. The report requires rather detailed
information concerning such matters as the identity and country of organization of the owning
entity, the nature of the interest held, the details of a purchase or transfer and the agricultural
purposes for which the foreign person intends to use the land. In addition, the Secretary of
Agriculture may require the identification of each foreign person holding more than a 5% interest
in the ownership entity.

1.1.6 Export Controls

In general, U.S. export controls are more stringent and restrict a wider array of items than the
export controls of most other countries. (See the Export Administration Act of 1979, as
amended, 50 U.S.C. App. §§ 2401-2420 and the regulations promulgated thereunder, 15
C.F.R. §§ 730-799.) Except for exports to U.S. territories and possessions, and in most

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