§  1.994   Routine terms and conditions.

   Foreign ownership rulings issued pursuant to § §  1.990 et seq. shall
   be subject to the following terms and conditions, except as otherwise
   specified in a particular ruling:

   (a)(1) Aggregate allowance for rulings issued under §  1.990(a)(1). In
   addition to the foreign ownership interests approved specifically in a
   licensee's declaratory ruling issued pursuant to §  1.990(a)(1), the
   controlling U.S.-organized parent named in the ruling (or a
   U.S.-organized successor-in-interest formed as part of a pro forma
   reorganization) may be 100 percent owned, directly and/or indirectly
   through one or more U.S- or foreign-organized entities, on a
   going-forward basis ( i.e., after issuance of the ruling) by other
   foreign investors without prior Commission approval. This "100 percent
   aggregate allowance" is subject to the requirement that the licensee
   seek and obtain Commission approval before any foreign individual,
   entity, or "group" not previously approved acquires, directly and/or
   indirectly, more than five percent of the U.S. parent's outstanding
   capital stock (equity) and/or voting stock, or a controlling interest,
   with the exception of any foreign individual, entity, or "group" that
   acquires an equity and/or voting interest of ten percent or less,
   provided that the interest is exempt under §  1.991(i)(3).

   (2) Aggregate allowance for rulings issued under §  1.990(a)(2). In
   addition to the foreign ownership interests approved specifically in a
   licensee's declaratory ruling issued pursuant to §  1.990(a)(2), the
   licensee(s) named in the ruling (or a U.S.-organized
   successor-in-interest formed as part of a pro forma reorganization) may
   be 100 percent owned on a going forward basis ( i.e., after issuance of
   the ruling) by other foreign investors holding interests in the
   licensee indirectly through U.S.-organized entities that do not control
   the licensee, without prior Commission approval. This "100 percent
   aggregate allowance" is subject to the requirement that the licensee
   seek and obtain Commission approval before any foreign individual,
   entity, or "group" not previously approved acquires directly and/or
   indirectly, through one or more U.S.-organized entities that do not
   control the licensee, more than five percent of the licensee's
   outstanding capital stock (equity) and/or voting stock, with the
   exception of any foreign individual, entity, or "group" that acquires
   an equity and/or voting interest of ten percent or less, provided that
   the interest is exempt under §  1.991(i)(3). Foreign ownership
   interests held directly in a licensee shall not be permitted to exceed
   an aggregate 20 percent of the licensee's equity and/or voting
   interests.

   Note to paragraph ( a ): Licensees have an obligation to monitor and
   stay ahead of changes in foreign ownership of their controlling
   U.S.-organized parent companies (for rulings issued pursuant to
   §  1.990(a)(1)) and/or in the licensee itself (for rulings issued
   pursuant to §  1.990(a)(2)), to ensure that the licensee obtains
   Commission approval before a change in foreign ownership renders the
   licensee out of compliance with the terms and conditions of its
   declaratory ruling(s) or the Commission's rules. Licensees, their
   controlling parent companies, and other entities in the licensee's
   vertical ownership chain may need to place restrictions in their bylaws
   or other organizational documents to enable the licensee to ensure
   compliance with the terms and conditions of its declaratory ruling(s)
   and the Commission's rules.

   Example 1 (for rulings issued under §  1.990(a)(1)). U.S. Corp. files
   an application for a common carrier license. U.S. Corp. is wholly owned
   and controlled by U.S. Parent, which is a newly formed, privately held
   Delaware corporation in which no single shareholder has de jure or de
   facto control. A shareholders' agreement provides that a five-member
   board of directors shall govern the affairs of the company; five named
   shareholders shall be entitled to one seat and one vote on the board;
   and all decisions of the board shall be determined by majority vote.
   The five named shareholders and their respective equity interests are
   as follows: Foreign Entity A, which is wholly owned and controlled by a
   foreign citizen (5 percent); Foreign Entity B, which is wholly owned
   and controlled by a foreign citizen (10 percent); Foreign Entity C, a
   foreign public company with no controlling shareholder (20 percent);
   Foreign Entity D, a foreign pension fund that is controlled by a
   foreign citizen and in which no individual or entity has a pecuniary
   interest exceeding one percent (21 percent); and U.S. Entity E, a U.S.
   public company with no controlling shareholder (25 percent). The
   remaining 19 percent of U.S. Parent's shares are held by three
   foreign-organized entities as follows: F (4 percent), G (6 percent),
   and H (9 percent). Under the shareholders' agreement, voting rights of
   F, G, and H are limited to the minority shareholder protections listed
   in §  1.991(i)(5). Further, the agreement expressly prohibits G and H
   from becoming actively involved in the management or operation of U.S.
   Parent and U.S. Corp.

   As required by the rules, U.S. Corp. files a section 310(b)(4) petition
   concurrently with its application. The petition identifies and requests
   specific approval for the ownership interests held in U.S. Parent by
   Foreign Entity A and its sole shareholder (5 percent equity and 20
   percent voting interest); Foreign Entity B and its sole shareholder (10
   percent equity and 20 percent voting interest), Foreign Entity C (20
   percent equity and 20 percent voting interest), and Foreign Entity D
   (21 percent equity and 20 percent voting interest) and its fund manager
   (20 percent voting interest). The Commission's ruling specifically
   approves these foreign interests. The ruling also provides that, on a
   going-forward basis, U.S. Parent may be 100 percent owned in the
   aggregate, directly and/or indirectly, by other foreign investors,
   subject to the requirement that U.S. Corp. seek and obtain Commission
   approval before any previously unapproved foreign investor acquires
   more than five percent of U.S. Parent's equity and/or voting interests,
   or a controlling interest, with the exception of any foreign investor
   that acquires an equity and/or voting interest of ten percent or less,
   provided that the interest is exempt under §  1.991(i)(3).

   In this case, foreign entities F, G, and H would each be considered a
   previously unapproved foreign investor (along with any new foreign
   investors). However, prior approval for F, G and H would only apply to
   an increase of F's interest above five percent (because the ten percent
   exemption under §  1.991(i)(3) does not apply to F) or to an increase
   of G's or H's interest above ten percent (because G and H do qualify
   for this exemption). U.S. Corp. would also need Commission approval
   before Foreign Entity D appoints a new fund manager that is a non-U.S.
   citizen and before Foreign Entities A, B, C, or D increase their
   respective equity and/or voting interests in U.S. Parent, unless the
   petition previously sought and obtained Commission approval for such
   increases (up to non-controlling 49.99 percent interests). ( See
   §  1.991(k)(2).) Foreign shareholders of Foreign Entity C and U.S.
   Entity E would also be considered previously unapproved foreign
   investors. Thus, Commission approval would be required before any
   foreign shareholder of Foreign Entity C or U.S. Entity E acquires (1) a
   controlling interest in either company; or (2) a non-controlling equity
   and/or voting interest in either company that, when multiplied by the
   company's equity and/or voting interests in U.S. Parent, would exceed 5
   percent of U.S. Parent's equity and/or voting interests, unless the
   interest is exempt under §  1.991(i)(3).

   Example 2 (for rulings issued under §  1.990(a)(2)). Assume that the
   following three U.S.-organized entities hold non-controlling equity and
   voting interests in common carrier Licensee, which is a privately held
   corporation organized in Delaware: U.S. corporation A (30 percent);
   U.S. corporation B (30 percent); and U.S. corporation C (40 percent).
   Licensee's shareholders are wholly owned by foreign individuals X, Y,
   and Z, respectively. Licensee has received a declaratory ruling under
   §  1.990(a)(2) specifically approving the 30 percent foreign ownership
   interests held in Licensee by each of X and Y (through U.S. corporation
   A and U.S. corporation B, respectively) and the 40 percent foreign
   ownership interest held in Licensee by Z (through U.S. corporation C).
   On a going-forward basis, Licensee may be 100 percent owned in the
   aggregate by X, Y, Z, and other foreign investors holding interests in
   Licensee indirectly, through U.S.-organized entities that do not
   control Licensee, subject to the requirement that Licensee obtain
   Commission approval before any previously unapproved foreign investor
   acquires more than five percent of Licensee's equity and/or voting
   interests, with the exception of any foreign investor that acquires an
   equity and/or voting interest of ten percent or less, provided that the
   interest is exempt under §  1.991(i)(3). In this case, any foreign
   investor other than X, Y, and Z would be considered a previously
   unapproved foreign investor. Licensee would also need Commission
   approval before X, Y, or Z increases its equity and/or voting interests
   in Licensee unless the petition previously sought and obtained
   Commission approval for such increases (up to non-controlling 49.99
   percent interests). ( See §  1.991(k)(2).)

   (b) Subsidiaries and affiliates. A foreign ownership ruling issued to a
   licensee shall cover it and any U.S.-organized subsidiary or affiliate,
   as defined in §  1.990(d), whether the subsidiary or affiliate existed
   at the time the ruling was issued or was formed or acquired
   subsequently, provided that the foreign ownership of the licensee named
   in the ruling, and of the subsidiary and/or affiliate, remains in
   compliance with the terms and conditions of the licensee's ruling and
   the Commission's rules.

   (1) The subsidiary or affiliate of a licensee named in a foreign
   ownership ruling issued under §  1.990(a)(1) may rely on that ruling
   for purposes of filing its own application for an initial common
   carrier or aeronautical license or spectrum leasing arrangement, or an
   application to acquire such license or spectrum leasing arrangement by
   assignment or transfer of control provided that the subsidiary or
   affiliate, and the licensee named in the ruling, each certifies in the
   application that its foreign ownership is in compliance with the terms
   and conditions of the foreign ownership ruling and the Commission's
   rules.

   (2) The subsidiary or affiliate of a licensee named in a foreign
   ownership ruling issued under §  1.990(a)(2) may rely on that ruling
   for purposes of filing its own application for an initial common
   carrier radio station license or spectrum leasing arrangement, or an
   application to acquire such license or spectrum leasing arrangement by
   assignment or transfer of control provided that the subsidiary or
   affiliate, and the licensee named in the ruling, each certifies in the
   application that its foreign ownership is in compliance with the terms
   and conditions of the foreign ownership ruling and the Commission's
   rules.

   (3) The certifications required by paragraphs (b)(1) and (b)(2) of this
   section shall also include the citation(s) of the relevant ruling(s) (
   i.e., the DA or FCC Number, FCC Record citation when available, and
   release date).

   (c) Insertion of new controlling foreign-organized companies. (1) Where
   a licensee's foreign ownership ruling specifically authorizes a named,
   foreign investor to hold a controlling interest in the licensee's
   controlling U.S.-organized parent, for rulings issued under
   §  1.990(a)(1), or in an intervening U.S.-organized entity that does
   not control the licensee, for rulings issued under §  1.990(a)(2), the
   ruling shall permit the insertion of new, controlling foreign-organized
   companies in the vertical ownership chain above the controlling U.S.
   parent, for rulings issued under §  1.990(a)(1), or above an
   intervening U.S.-organized entity that does not control the licensee,
   for rulings issued under §  1.990(a)(2), without prior Commission
   approval provided that any new foreign-organized company(ies) are under
   100 percent common ownership and control with the foreign investor
   approved in the ruling.

   (2) Where a previously unapproved foreign-organized entity is inserted
   into the vertical ownership chain of a licensee, or its controlling
   U.S.-organized parent, without prior Commission approval pursuant to
   paragraph (c)(1) of this section, the licensee shall file a letter to
   the attention of the Chief, International Bureau, within 30 days after
   the insertion of the new, foreign-organized entity. The letter must
   include the name of the new, foreign-organized entity and a
   certification by the licensee that the entity complies with the 100
   percent common ownership and control requirement in paragraph (c)(1) of
   this section. The letter must also reference the licensee's foreign
   ownership ruling(s) by IBFS File No. and FCC Record citation, if
   available. This letter notification need not be filed if the ownership
   change is instead the subject of a pro forma application or pro forma
   notification already filed with the Commission pursuant to the relevant
   wireless radio service rules or satellite radio service rules
   applicable to the licensee.

   (3) Nothing in this section is intended to affect any requirements for
   prior approval under 47 U.S.C. 310(d) or conditions for forbearance
   from the requirements of 47 U.S.C. 310(d) pursuant to 47 U.S.C. 160.

   Example (for rulings issued under §  1.990(a)(1)). Licensee receives a
   foreign ownership ruling under §  1.990(a)(1) that authorizes its
   controlling, U.S.-organized parent ("U.S. Parent A") to be wholly owned
   and controlled by a foreign-organized company ("Foreign Company").
   Foreign Company is minority owned (20 percent) by U.S.-organized
   Corporation B, with the remaining 80 percent controlling interest held
   by Foreign Citizen C. After issuance of the ruling, Foreign Company
   forms a wholly-owned, foreign-organized subsidiary ("Foreign
   Subsidiary") to hold all of Foreign Company's shares in U.S. Parent A.
   There are no other changes in the direct or indirect foreign ownership
   of U.S. Parent A. The insertion of Foreign Subsidiary into the vertical
   ownership chain between Foreign Company and U.S. Parent A would not
   require prior Commission approval, except for any approval otherwise
   required pursuant to section 310(d) of the Communications Act and not
   exempt therefrom as a pro forma transfer of control under
   §  1.948(c)(1).

   Example (for rulings issued under §  1.990(a)(2)). An applicant for a
   common carrier license receives a foreign ownership ruling under
   §  1.990(a)(2) that authorizes a foreign-organized company ("Foreign
   Company") to hold a non-controlling 44 percent equity and voting
   interest in the applicant through Foreign Company's wholly-owned,
   U.S.-organized subsidiary, U.S. Corporation A, which holds the
   non-controlling 44 percent interest directly in the applicant. The
   remaining 56 percent of the applicant's equity and voting interests are
   held by its controlling U.S.-organized parent, which has no foreign
   ownership. After issuance of the ruling, Foreign Company forms a
   wholly-owned, foreign-organized subsidiary to hold all of Foreign
   Company's shares in U.S. Corporation A. There are no other changes in
   the direct or indirect foreign ownership of U.S. Corporation A. The
   insertion of the foreign-organized subsidiary into the vertical
   ownership chain between Foreign Company and U.S. Corporation A would
   not require prior Commission approval.

   (d) Insertion of new non-controlling foreign-organized companies. (1)
   Where a licensee's foreign ownership ruling specifically authorizes a
   named, foreign investor to hold a non-controlling interest in the
   licensee's controlling U.S.-organized parent, for rulings issued under
   §  1.990(a)(1), or in an intervening U.S.-organized entity that does
   not control the licensee, for rulings issued under §  1.990(a)(2), the
   ruling shall permit the insertion of new, foreign-organized companies
   in the vertical ownership chain above the controlling U.S. parent, for
   rulings issued under §  1.990(a)(1), or above an intervening
   U.S.-organized entity that does not control the licensee, for rulings
   issued under §  1.990(a)(2), without prior Commission approval provided
   that any new foreign-organized company(ies) are under 100 percent
   common ownership and control with the foreign investor approved in the
   ruling.

   Note to paragraph ( d )(1): Where a licensee has received a foreign
   ownership ruling under §  1.990(a)(2) and the ruling specifically
   authorizes a named, foreign investor to hold a non-controlling interest
   directly in the licensee (subject to the 20 percent aggregate limit on
   direct foreign investment), the ruling shall permit the insertion of
   new, foreign-organized companies in the vertical ownership chain of the
   approved foreign investor without prior Commission approval provided
   that any new foreign-organized companies are under 100 percent common
   ownership and control with the approved foreign investor.

   Example (for rulings issued under §  1.990(a)(1)). Licensee receives a
   foreign ownership ruling under §  1.990(a)(1) that authorizes a
   foreign-organized company ("Foreign Company") to hold a non-controlling
   30 percent equity and voting interest in Licensee's controlling,
   U.S.-organized parent ("U.S. Parent A"). The remaining 70 percent
   equity and voting interests in U.S. Parent A are held by U.S.-organized
   entities which have no foreign ownership. After issuance of the ruling,
   Foreign Company forms a wholly-owned, foreign-organized subsidiary
   ("Foreign Subsidiary") to hold all of Foreign Company's shares in U.S.
   Parent A. There are no other changes in the direct or indirect foreign
   ownership of U.S. Parent A. The insertion of Foreign Subsidiary into
   the vertical ownership chain between Foreign Company and U.S. Parent A
   would not require prior Commission approval.

   Example (for rulings issued under §  1.990(a)(2)). Licensee receives a
   foreign ownership ruling under §  1.990(a)(2) that authorizes a
   foreign-organized entity ("Foreign Company") to hold approximately 24
   percent of Licensee's equity and voting interests, through Foreign
   Company's non-controlling 48 percent equity and voting interest in a
   U.S.-organized entity, U.S. Corporation A, which holds a
   non-controlling 49 percent equity and voting interest directly in
   Licensee. A U.S. citizen holds the remaining 52 percent equity and
   voting interests in U.S. Corporation A, and the remaining 51 percent
   equity and voting interests in Licensee are held by its U.S.-organized
   parent, which has no foreign ownership. After issuance of the ruling,
   Foreign Company forms a wholly-owned, foreign-organized subsidiary
   ("Foreign Subsidiary") to hold all of Foreign Company's shares in U.S.
   Corporation A. There are no other changes in the direct or indirect
   foreign ownership of U.S. Corporation A. The insertion of Foreign
   Subsidiary into the vertical ownership chain between Foreign Company
   and U.S. Corporation A would not require prior Commission approval.

   (2) Where a previously unapproved foreign-organized entity is inserted
   into the vertical ownership chain of a licensee, or its controlling
   U.S.-organized parent, without prior Commission approval pursuant to
   paragraph (d)(1) of this section, the licensee shall file a letter to
   the attention of the Chief, International Bureau, within 30 days after
   the insertion of the new, foreign-organized entity. The letter must
   include the name of the new, foreign-organized entity and a
   certification by the licensee that the entity complies with the 100
   percent common ownership and control requirement in paragraph (d)(1) of
   this section. The letter must also reference the licensee's foreign
   ownership ruling(s) by IBFS File No. and FCC Record citation, if
   available. This letter notification need not be filed if the ownership
   change is instead the subject of a pro forma application or pro forma
   notification already filed with the Commission pursuant to the relevant
   wireless radio service rules or satellite radio service rules
   applicable to the licensee.

   (e) New petition for declaratory ruling required. A licensee that has
   received a foreign ownership ruling, including a U.S.-organized
   successor-in-interest to such licensee formed as part of a pro forma
   reorganization, or any subsidiary or affiliate relying on such
   licensee's ruling pursuant to paragraph (b) of this section, shall file
   a new petition for declaratory ruling under §  1.990 to obtain
   Commission approval before its foreign ownership exceeds the routine
   terms and conditions of this section, and/or any specific terms or
   conditions of its ruling.

   (f)(1) Continuing compliance. If at any time the licensee, including
   any successor-in-interest and any subsidiary or affiliate as described
   in paragraph (b) of this section, knows, or has reason to know, that it
   is no longer in compliance with its foreign ownership ruling or the
   Commission's rules relating to foreign ownership, it shall file a
   statement with the Commission explaining the circumstances within 30
   days of the date it knew, or had reason to know, that it was no longer
   in compliance therewith. Subsequent actions taken by or on behalf of
   the licensee to remedy its non-compliance shall not relieve it of the
   obligation to notify the Commission of the circumstances (including
   duration) of non-compliance. Such licensee and any controlling
   companies, whether U.S.- or foreign-organized, shall be subject to
   enforcement action by the Commission for such non-compliance, including
   an order requiring divestiture of the investor's direct and/or indirect
   interests in such entities.

   (2) Any individual or entity that, directly or indirectly, creates or
   uses a trust, proxy, power of attorney, or any other contract,
   arrangement, or device with the purpose or effect of divesting itself,
   or preventing the vesting, of an equity interest or voting interest in
   the licensee, or in a controlling U.S. parent company, as part of a
   plan or scheme to evade the application of the Commission's rules or
   policies under section 310(b) shall be subject to enforcement action by
   the Commission, including an order requiring divestiture of the
   investor's direct and/or indirect interests in such entities.

   [ 78 FR 41321 , July 10, 2013, as amended at  78 FR 44029 , July 23, 2013]

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Subpart G--Schedule of Statutory Charges and Procedures for Payment

   Source:  52 FR 5289 , Feb. 20, 1987, unless otherwise noted.

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