Goto Section: 1.992 | 1.994 | Table of Contents
FCC 1.993
Revised as of October 2, 2015
Goto Year:2014 |
2016
§ 1.993 Insulation criteria for interests in limited partnerships, limited
liability partnerships, and limited liability companies.
(a) A limited partner of a limited partnership and a partner of a limited
liability partnership shall be treated as uninsulated within the meaning of
§ 1.992(b)(2)(ii)(A) unless the partner is prohibited by the limited
partnership agreement, limited liability partnership agreement, or other
operative agreement from, and in fact is not engaged in, active involvement
in the management or operation of the partnership and only the usual and
customary investor protections are contained in the partnership agreement or
other operative agreement. These criteria apply to any relevant limited
partnership or limited liability partnership, whether it is the licensee, a
controlling U.S.-organized parent, or any partnership situated above them in
the vertical chain of ownership.
(b) A member of a limited liability company shall be treated as uninsulated
for purposes of § 1.992(b)(2)(iii)(A) unless the member is prohibited by the
limited liability company agreement from, and in fact is not engaged in,
active involvement in the management or operation of the company and only
the usual and customary investor protections are contained in the agreement.
These criteria apply to any relevant limited liability company, whether it
is the licensee, a controlling U.S.-organized parent, or any limited
liability company situated above them in the vertical chain of ownership.
(c) The usual and customary investor protections referred to in paragraphs
(a) and (b) of this section shall consist of:
(1) The power to prevent the sale or pledge of all or substantially all of
the assets of the limited partnership, limited liability partnership, or
limited liability company or a voluntary filing for bankruptcy or
liquidation;
(2) The power to prevent the limited partnership, limited liability
partnership, or limited liability company from entering into contracts with
majority investors or their affiliates;
(3) The power to prevent the limited partnership, limited liability
partnership, or limited liability company from guaranteeing the obligations
of majority investors or their affiliates;
(4) The power to purchase an additional interest in the limited partnership,
limited liability partnership, or limited liability company to prevent the
dilution of the partner's or member's pro rata interest in the event that
the limited partnership, limited liability partnership, or limited liability
company issues additional instruments conveying interests in the partnership
or company;
(5) The power to prevent the change of existing legal rights or preferences
of the partners, members, or managers as provided in the limited partnership
agreement, limited liability partnership agreement, or limited liability
company agreement, or other operative agreement;
(6) The power to vote on the removal of a general partner, managing partner,
managing member, or other manager in situations where such individual or
entity is subject to bankruptcy, insolvency, reorganization, or other
proceedings relating to the relief of debtors; adjudicated insane or
incompetent by a court of competent jurisdiction (in the case of a natural
person); convicted of a felony; or otherwise removed for cause, as
determined by an independent party;
(7) The power to prevent the amendment of the limited partnership agreement,
limited liability partnership agreement, or limited liability company
agreement, or other organizational documents of the partnership or limited
liability company with respect to the matters described in paragraphs (c)(1)
through (6) of this section.
(d) The Commission reserves the right to consider, on a case-by-case basis,
whether voting or consent rights over matters other than those listed in
paragraph (c) of this section shall be considered usual and customary
investor protections in a particular case.
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Goto Section: 1.992 | 1.994
Goto Year: 2014 |
2016
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