Goto Section: 1.5003 | 1.6001 | Table of Contents
FCC 1.5004
Revised as of September 1, 2021
Goto Year:2020 |
2022
§ 1.5004 Routine terms and conditions.
Foreign ownership rulings issued pursuant to § § 1.5000 through 1.5004
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 § 1.5000(a)(1). In
addition to the foreign ownership interests approved specifically in a
licensee's declaratory ruling issued pursuant to § 1.5000(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 5 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 10 percent or less,
provided that the interest is exempt under § 1.5001(i)(3).
(2) Aggregate allowance for rulings issued under § 1.5000(a)(2). In
addition to the foreign ownership interests approved specifically in a
licensee's declaratory ruling issued pursuant to § 1.5000(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 5 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 10 percent or less, provided that the interest is
exempt under § 1.5001(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
§ 1.5000(a)(1)) and/or in the licensee itself (for rulings issued
pursuant to § 1.5000(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 § 1.5000(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 shareholder's 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 § 1.5001(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 5 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 5 percent (because the ten percent
exemption under § 1.5001(i)(3) does not apply to F) or to an increase of
G's or H's interest above 10 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 § 1.5001(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 § 1.5001(i)(3).
Example 2 (for rulings issued under § 1.5000(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
§ 1.5000(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 5 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 10 percent or less, provided that the
interest is exempt under § 1.5001(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 § 1.5001(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 § 1.5000(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 § 1.5000(a)(1) may rely on that ruling for
purposes of filing its own application for an initial broadcast, 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 § 1.5000(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 (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
§ 1.5000(a)(1), or in an intervening U.S.-organized entity that does not
control the licensee, for rulings issued under § 1.5000(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 § 1.5000(a)(1), or above an intervening
U.S.-organized entity that does not control the licensee, for rulings
issued under § 1.5000(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
broadcast service rules, wireless radio service rules or satellite
radio service rules applicable to the licensee.
Note to paragraph (c)(2): For broadcast stations, in order to insert a
previously unapproved foreign-organized entity that is under 100
percent common ownership and control with the foreign investor approved
in the ruling into the vertical ownership chain of the licensee's
controlling U.S.-organized parent, as described in paragraph (c)(1) of
this section, the licensee must always file a pro forma application
requesting prior consent of the FCC pursuant to section 73.3540(f) of
this chapter.
(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 § 1.5000(a)(1)). Licensee of a common
carrier license receives a foreign ownership ruling under § 1.5000(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 § 1.5000(a)(2)). An applicant for a
common carrier license receives a foreign ownership ruling under
§ 1.5000(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
§ 1.5000(a)(1), or in an intervening U.S.-organized entity that does not
control the licensee, for rulings issued under § 1.5000(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 § 1.5000(a)(1), or above an intervening
U.S.-organized entity that does not control the licensee, for rulings
issued under § 1.5000(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 § 1.5000(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 § 1.5000(a)(1)). Licensee receives a
foreign ownership ruling under § 1.5000(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 § 1.5000(a)(2)). Licensee receives a
foreign ownership ruling under § 1.5000(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; or in the case of a
broadcast licensee, the licensee shall file a letter to the attention
of the Chief, Media 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; or, if a broadcast licensee, the
letter must reference the licensee's foreign ownership ruling(s) by
CDBS File No., Docket No., call sign(s), facility identification
number(s), 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 broadcast service,
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 § 1.5000 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) Continuing compliance. (1) Except as specified in paragraph (f)(3)
of this section, 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.
(3) Where the controlling U.S. parent of a broadcast, common carrier,
aeronautical en route, or aeronautical fixed radio station licensee or
common carrier spectrum lessee is an eligible U.S. public company
within the meaning of § 1.5000(e), the licensee may file a remedial
petition for declaratory ruling under § 1.5000(a)(1) seeking approval of
particular foreign equity and/or voting interests that are
non-compliant with the licensee's foreign ownership ruling or the
Commission's rules relating to foreign ownership; or, alternatively,
the licensee may remedy the non-compliance by, for example, redeeming
the foreign interest(s) that rendered the licensee non-compliant with
the licensee's existing foreign ownership ruling. In either case, the
Commission does not expect to take enforcement action related to the
non-compliance subject to the requirements specified in paragraphs
(f)(3)(i) and (ii) of this section and except as otherwise provided in
paragraph (f)(3)(iii) of this section.
(i) The licensee shall notify the relevant Bureau by letter no later
than 10 days after learning of the investment(s) that rendered the
licensee non-compliant with its foreign ownership ruling or the
Commission's rules relating to foreign ownership and specify in the
letter that it will file a petition for declaratory ruling under
§ 1.5000(a)(1) or, alternatively, take remedial action to come into
compliance within 30 days of the date it learned of the non-compliant
foreign interest(s).
(ii) The licensee shall demonstrate in its petition for declaratory
ruling (or in a letter notifying the relevant Bureau that the
non-compliance has been timely remedied) that the licensee's
non-compliance with the terms of the licensee's existing foreign
ownership ruling or the foreign ownership rules was due solely to
circumstances beyond the licensee's control that were not reasonably
foreseeable to or known by the licensee with the exercise of the
required due diligence.
(iii) Where the licensee has opted to file a petition for declaratory
ruling under § 1.5000(a)(1), the Commission will not require that the
licensee's U.S. parent redeem the non-compliant foreign interest(s) or
take other action to remedy the non-compliance during the pendency of
the licensee's petition. If the Commission ultimately declines to
approve the petition, however, the licensee must have a mechanism
available to come into compliance with the terms of its existing ruling
within 30 days following the Commission's decision. The Commission
reserves the right to require immediate remedial action by the licensee
where the Commission finds in a particular case that the public
interest requires such action—for example, where, after consultation
with the relevant Executive Branch agencies, the Commission finds that
the non-compliant foreign interest presents national security or other
significant concerns that require immediate mitigation.
(4) Where a publicly traded common carrier licensee is an eligible U.S.
public company within the meaning of § 1.5000(e), the licensee may file
a remedial petition for declaratory ruling under § 1.5000(a)(2) seeking
approval of particular foreign equity and/or voting interests that are
non-compliant with the licensee's foreign ownership ruling or the
Commission's rules relating to foreign ownership; or, alternatively,
the licensee may remedy the non-compliance by, for example, redeeming
the foreign interest(s) that rendered the licensee non-compliant with
the licensee's existing foreign ownership ruling. In either case, the
Commission does not, as a general rule, expect to take enforcement
action related to the non-compliance subject to the requirements
specified in paragraphs (f)(3)(i) and (f)(3)(ii) of this section and
except as otherwise provided in paragraph (f)(3)(iii) of this section.
Note 1 to paragraph (f)(4): For purposes of this paragraph, the
provisions in paragraphs (f)(3)(i) through (f)(3)(iii) that refer to
petitions for declaratory ruling under § 1.5000(a)(1) shall be read as
referring to petitions for declaratory ruling under § 1.5000(a)(2).
Subpart U—State and Local Government Regulation of the Placement,
Construction, and Modification of Personal Wireless Service Facilities
Source: 83 FR 51884 , Oct. 15, 2018, unless otherwise noted.
Goto Section: 1.5003 | 1.6001
Goto Year: 2020 |
2022
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