Goto Section: 1.4000 | 1.5001 | Table of Contents

FCC 1.5000
Revised as of October 22, 2020
Goto Year:2020 | 2022
  §  1.5000   Citizenship and filing requirements under section 310(b) of the
Communications Act of 1934, as amended.

   The rules in this subpart establish the requirements and conditions for
   obtaining the Commission's prior approval of foreign ownership in
   broadcast, common carrier, aeronautical en route, and aeronautical
   fixed radio station licensees and common carrier spectrum lessees that
   would exceed the 25 percent benchmark in section 310(b)(4) of the Act.
   These rules also establish the requirements and conditions for
   obtaining the Commission's prior approval of foreign ownership in
   common carrier (but not broadcast, aeronautical en route or
   aeronautical fixed) radio station licensees and spectrum lessees that
   would exceed the 20 percent limit in section 310(b)(3) of the Act.
   These rules also establish the methodology applicable to eligible U.S.
   public companies for purposes of determining and ensuring their
   compliance with the foreign ownership limitations set forth in sections
   310(b)(3) and 310(b)(4) of the Act.

   (a)(1) A broadcast, common carrier, aeronautical en route or
   aeronautical fixed radio station licensee or common carrier spectrum
   lessee shall file a petition for declaratory ruling to obtain
   Commission approval under section 310(b)(4) of the Act, and obtain such
   approval, before the aggregate foreign ownership of any controlling,
   U.S.-organized parent company exceeds, directly and/or indirectly, 25
   percent of the U.S. parent's equity interests and/or 25 percent of its
   voting interests. An applicant for a broadcast, common carrier,
   aeronautical en route or aeronautical fixed radio station license or
   common carrier spectrum leasing arrangement shall file the petition for
   declaratory ruling required by this paragraph at the same time that it
   files its application.

   (2) A common carrier radio station licensee or spectrum lessee shall
   file a petition for declaratory ruling to obtain approval under the
   Commission's section 310(b)(3) forbearance approach, and obtain such
   approval, before aggregate foreign ownership, held through one or more
   intervening U.S.-organized entities that hold non-controlling equity
   and/or voting interests in the licensee, along with any foreign
   interests held directly in the licensee or spectrum lessee, exceeds 20
   percent of its equity interests and/or 20 percent of its voting
   interests. An applicant for a common carrier radio station license or
   spectrum leasing arrangement shall file the petition for declaratory
   ruling required by this paragraph at the same time that it files its
   application. Foreign interests held directly in a licensee or spectrum
   lessee, or other than through U.S.-organized entities that hold
   non-controlling equity and/or voting interests in the licensee or
   spectrum lessee, shall not be permitted to exceed 20 percent.

   Note 1 to paragraph (a): Paragraph (a)(1) of this section implements
   the Commission's foreign ownership policies under section 310(b)(4) of
   the Act, 47 U.S.C. 310(b)(4), for broadcast, common carrier,
   aeronautical en route, and aeronautical fixed radio station licensees
   and common carrier spectrum lessees. It applies to foreign equity
   and/or voting interests that are held, or would be held, directly
   and/or indirectly in a U.S.-organized entity that itself directly or
   indirectly controls a broadcast, common carrier, aeronautical en route,
   or aeronautical fixed radio station licensee or common carrier spectrum
   lessee. A foreign individual or entity that seeks to hold a controlling
   interest in such a licensee or spectrum lessee must hold its
   controlling interest indirectly, in a U.S.-organized entity that itself
   directly or indirectly controls the licensee or spectrum lessee. Such
   controlling interests are subject to section 310(b)(4) and the
   requirements of paragraph (a)(1) of this section. The Commission
   assesses foreign ownership interests subject to section 310(b)(4)
   separately from foreign ownership interests subject to section
   310(b)(3).

   Note 2 to paragraph (a): Paragraph (a)(2) of this section implements
   the Commission's section 310(b)(3) forbearance approach adopted in the
   First Report and Order in IB Docket No. 11-133, FCC 12-93 (released
   Aug. 17, 2012),  77 FR 50628  (Aug. 22, 2012). The section 310(b)(3)
   forbearance approach applies only to foreign equity and voting
   interests that are held, or would be held, in a common carrier licensee
   or spectrum lessee through one or more intervening U.S.-organized
   entities that do not control the licensee or spectrum lessee. Foreign
   equity and/or voting interests that are held, or would be held,
   directly in a licensee or spectrum lessee, or indirectly other than
   through an intervening U.S.-organized entity, are not subject to the
   Commission's section 310(b)(3) forbearance approach and shall not be
   permitted to exceed the 20 percent limit in section 310(b)(3) of the
   Act, 47 U.S.C. 310(b)(3). The Commission's forbearance approach does
   not apply to broadcast, aeronautical en route or aeronautical fixed
   radio station licenses.
   Example 1. U.S.-organized Corporation A is preparing an application to
   acquire a common carrier radio license by assignment from another
   licensee. U.S.-organized Corporation A is wholly owned and controlled
   by U.S.-organized Corporation B. U.S.-organized Corporation B is 51
   percent owned and controlled by U.S.-organized Corporation C, which is,
   in turn, wholly owned and controlled by foreign-organized Corporation
   D. The remaining non-controlling 49 percent equity and voting interests
   in U.S.-organized Corporation B are held by U.S.-organized Corporation
   X, which is, in turn, wholly owned and controlled by U.S. citizens.
   Paragraph (a)(1) of this section requires that U.S.-organized
   Corporation A file a petition for declaratory ruling to obtain
   Commission approval of the 51 percent foreign ownership of its
   controlling, U.S.-organized parent, Corporation B, by foreign-organized
   Corporation D, which exceeds the 25 percent benchmark in section
   310(b)(4) of the Act for both equity interests and voting interests.
   Corporation A is also required to identify and request specific
   approval in its petition for any foreign individual or entity, or
   “group,” as defined in paragraph (d) of this section, that holds
   directly and/or indirectly more than 5 percent of Corporation B's total
   outstanding capital stock (equity) and/or voting stock, or a
   controlling interest in Corporation B, unless the foreign investment is
   exempt under § 1.5001(i)(3).
   Example 2. U.S.-organized Corporation A is preparing an application to
   acquire a common carrier radio license by assignment from another
   licensee. U.S.-organized Corporation A is 51 percent owned and
   controlled by U.S.-organized Corporation B, which is, in turn, wholly
   owned and controlled by U.S. citizens. The remaining non-controlling 49
   percent equity and voting interests in U.S.-organized Corporation A are
   held by U.S.-organized Corporation X, which is, in turn, wholly owned
   and controlled by foreign-organized Corporation Y. Paragraph (a)(2) of
   this section requires that U.S.-organized Corporation A file a petition
   for declaratory ruling to obtain Commission approval of the
   non-controlling 49 percent foreign ownership of U.S.-organized
   Corporation A by foreign-organized Corporation Y through U.S.-organized
   Corporation X, which exceeds the 20 percent limit in section 310(b)(3)
   of the Act for both equity interests and voting interests.
   U.S.-organized Corporation A is also required to identify and request
   specific approval in its petition for any foreign individual or entity,
   or “group,” as defined in paragraph (d) of this section, that holds an
   equity and/or voting interest in foreign-organized Corporation Y that,
   when multiplied by 49 percent, would exceed 5 percent of U.S.-organized
   Corporation A's equity and/or voting interests, unless the foreign
   investment is exempt under § 1.5001(i)(3).
   Example 3. U.S.-organized Corporation A is preparing an application to
   acquire a common carrier radio license by assignment from another
   licensee. U.S.-organized Corporation A is 51 percent owned and
   controlled by U.S.-organized Corporation B, which is, in turn, wholly
   owned and controlled by foreign-organized Corporation C. The remaining
   non-controlling 49 percent equity and voting interests in
   U.S.-organized Corporation A are held by U.S.-organized Corporation X,
   which is, in turn, wholly owned and controlled by foreign-organized
   Corporation Y. Paragraphs (a)(1) and (a)(2) of this section require
   that U.S.-organized Corporation A file a petition for declaratory
   ruling to obtain Commission approval of foreign-organized Corporation
   C's 100 percent ownership interest in U.S.-organized parent,
   Corporation B, and of foreign-organized Corporation Y's
   non-controlling, 49 percent foreign ownership interest in
   U.S.-organized Corporation A through U.S-organized Corporation X, which
   exceed the 25 percent benchmark and 20 percent limit in sections
   310(b)(4) and 310(b)(3) of the Act, respectively, for both equity
   interests and voting interests. U.S-organized Corporation A's petition
   also must identify and request specific approval for ownership
   interests held by any foreign individual, entity, or “group,” as
   defined in paragraph (d) of this section, to the extent required by
   § 1.5001(i).

   (b) Except for petitions involving broadcast stations only, the
   petition for declaratory ruling required by paragraph (a) of this
   section shall be filed electronically through the International Bureau
   Filing System (IBFS) or any successor system thereto. For information
   on filing a petition through IBFS, see part 1, subpart Y and the IBFS
   homepage at http://www.fcc.gov/ib. Petitions for declaratory ruling
   required by paragraph (a) of this section involving broadcast stations
   only shall be filed electronically on the Internet through the Media
   Bureau's Consolidated Database System (CDBS) or any successor system
   thereto when submitted to the Commission as part of an application for
   a construction permit, assignment, or transfer of control of a
   broadcast license; if there is no associated construction permit,
   assignment or transfer of control application, petitions for
   declaratory ruling should be filed with the Office of the Secretary via
   the Commission's Electronic Comment Filing System (ECFS).

   (c)(1) Each applicant, licensee, or spectrum lessee filing a petition
   for declaratory ruling required by paragraph (a) of this section shall
   certify to the information contained in the petition in accordance with
   the provisions of § 1.16 and the requirements of this paragraph. The
   certification shall include a statement that the applicant, licensee
   and/or spectrum lessee has calculated the ownership interests disclosed
   in its petition based upon its review of the Commission's rules and
   that the interests disclosed satisfy each of the pertinent standards
   and criteria set forth in the rules.

   (2) Multiple applicants and/or licensees shall file jointly the
   petition for declaratory ruling required by paragraph (a) of this
   section where the entities are under common control and
   contemporaneously hold, or are contemporaneously filing applications
   for, broadcast, common carrier licenses, common carrier spectrum
   leasing arrangements, or aeronautical en route or aeronautical fixed
   radio station licenses. Where joint petitioners have different
   responses to the information required by § 1.5001, such information
   should be set out separately for each joint petitioner, except as
   otherwise permitted in § 1.5001(h)(2).

   (i) Each joint petitioner shall certify to the information contained in
   the petition in accordance with the provisions of § 1.16 with respect to
   the information that is pertinent to that petitioner. Alternatively,
   the controlling parent of the joint petitioners may certify to the
   information contained in the petition.

   (ii) Where the petition is being filed in connection with an
   application for consent to transfer control of licenses or spectrum
   leasing arrangements, the transferee or its ultimate controlling parent
   may file the petition on behalf of the licensees or spectrum lessees
   that would be acquired as a result of the proposed transfer of control
   and certify to the information contained in the petition.

   (3) Multiple applicants and licensees shall not be permitted to file a
   petition for declaratory ruling jointly unless they are under common
   control.

   (d) The following definitions shall apply to this section and § § 1.5001
   through 1.5004.

   (1) Aeronautical radio licenses refers to aeronautical en route and
   aeronautical fixed radio station licenses only. It does not refer to
   other types of aeronautical radio station licenses.

   (2) Affiliate refers to any entity that is under common control with a
   licensee, defined by reference to the holder, directly and/or
   indirectly, of more than 50 percent of total voting power, where no
   other individual or entity has de facto control.

   (3) Control includes actual working control in whatever manner
   exercised and is not limited to majority stock ownership. Control also
   includes direct or indirect control, such as through intervening
   subsidiaries.

   (4) Entity includes a partnership, association, estate, trust,
   corporation, limited liability company, governmental authority or other
   organization.

   (5) Group refers to two or more individuals or entities that have
   agreed to act together for the purpose of acquiring, holding, voting,
   or disposing of their equity and/or voting interests in the relevant
   licensee, controlling U.S. parent, or entity holding a direct and/or
   indirect equity and/or voting interest in the licensee or U.S. parent.

   (6) Individual refers to a natural person as distinguished from a
   partnership, association, corporation, or other organization.

   (7) Licensee as used in § § 1.5000 through 1.5004 includes a spectrum
   lessee as defined in § 1.9003.

   (8) Privately held company refers to a U.S.- or foreign-organized
   company that has not issued a class of equity securities for which
   beneficial ownership reporting is required by security holders and
   other beneficial owners under sections 13(d) or 13(g) of the Securities
   Exchange Act of 1934, as amended, 15 U.S.C. 78a et seq. (Exchange Act),
   and corresponding Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a
   substantially comparable foreign law or regulation.

   (9) Public company refers to a U.S.- or foreign-organized company that
   has issued a class of equity securities for which beneficial ownership
   reporting is required by security holders and other beneficial owners
   under sections 13(d) or 13(g) of the Securities Exchange Act of 1934,
   as amended, 15 U.S.C. 78a et seq. (Exchange Act) and corresponding
   Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a substantially
   comparable foreign law or regulation.

   (10) Subsidiary refers to any entity in which a licensee owns or
   controls, directly and/or indirectly, more than 50 percent of the total
   voting power of the outstanding voting stock of the entity, where no
   other individual or entity has de facto control.

   (11) Voting stock refers to an entity's corporate stock, partnership or
   membership interests, or other equivalents of corporate stock that,
   under ordinary circumstances, entitles the holders thereof to elect the
   entity's board of directors, management committee, or other equivalent
   of a corporate board of directors.

   (12) Would hold as used in § § 1.5000 through 1.5004 includes interests
   that an individual or entity proposes to hold in an applicant,
   licensee, or spectrum lessee, or their controlling U.S. parent, upon
   consummation of any transactions described in the petition for
   declaratory ruling filed under paragraphs (a)(1) or (2) of this
   section.

   (e)(1) This section sets forth the methodology applicable to broadcast,
   common carrier, aeronautical en route, and aeronautical fixed radio
   station licensees and common carrier spectrum lessees that are, or are
   directly or indirectly controlled by, an eligible U.S. public company
   for purposes of monitoring the licensee's or spectrum lessee's
   compliance with the foreign ownership limits set forth in sections
   310(b)(3) and 310(b)(4) of the Act and with the terms and conditions of
   a licensee's or spectrum lessee's foreign ownership ruling issued
   pursuant to paragraph (a)(1) or (2) of this section. For purposes of
   this section:

   (i) An “eligible U.S. public company” is a company that is organized in
   the United States; whose stock is traded on a stock exchange in the
   United States; and that has issued a class of equity securities for
   which beneficial ownership reporting is required by security holders
   and other beneficial owners under sections 13(d) or 13(g) of the
   Securities Exchange Act of 1934, as amended, 15 U.S.C. 78a et seq.
   (Exchange Act) and corresponding Exchange Act Rule 13d-1, 17 CFR
   240.13d-1;

   (ii) A “beneficial owner” of a security refers to any person who,
   directly or indirectly, through any contract, arrangement,
   understanding, relationship, or otherwise has or shares voting power,
   which includes the power to vote, or to direct the voting of, such
   security; and

   (iii) An “equity interest holder” refers to any person or entity that
   has the right to receive or the power to direct the receipt of
   dividends from, or the proceeds from the sale of, a share.

   (2) An eligible U.S. public company shall use information that is known
   or reasonably should be known by the company in the ordinary course of
   business, as described in this paragraph, to identify the beneficial
   owners and equity interest holders of its voting and non-voting stock:

   (i) Information recorded in the company's share register;

   (ii) Information as to shares held by officers, directors, and
   employees;

   (iii) Information reported to the Securities and Exchange Commission
   (SEC) in Schedule 13D (17 CFR 240.13d-101) and in Schedule 13G (17 CFR
   240.13d-102), including amendments filed by or on behalf of a reporting
   person, and company-specific information derived from SEC Form 13F (17
   CFR 249.325);

   (iv) Information as to beneficial owners of shares required to be
   identified in a company's annual reports (or proxy statements) and
   quarterly reports;

   (v) Information as to the identify and citizenship of a beneficial
   owner and/or equity interest holder where such information is actually
   known to the public company as a result of shareholder litigation,
   financing transactions, and proxies voted at annual or other meetings;
   and

   (vi) Information as to the identity and citizenship of a beneficial
   owner and/or equity interest holder where such information is actually
   known to the company by whatever source.

   (3) An eligible U.S. public company shall use information that is known
   or reasonably should be known by the company in the ordinary course of
   business to determine the citizenship of the beneficial owners and
   equity interest holders, identified pursuant to paragraph (e)(2) of
   this section, including information recorded in the company's
   shareholder register, information required to be disclosed pursuant to
   rules of the Securities and Exchange Commission, other information that
   is publicly available to the company, and information received by the
   company through direct inquiries with the beneficial owners and equity
   interest holders where the company determines that direct inquiries are
   necessary to its compliance efforts.

   (4) A licensee or spectrum lessee that is, or is directly or indirectly
   controlled by, an eligible U.S. public company, shall exercise due
   diligence in identifying and determining the citizenship of such public
   company's beneficial owners and equity interest holders.

   (5) To calculate aggregate levels of foreign ownership, a licensee or
   spectrum lessee that is, or is directly or indirectly controlled by, an
   eligible U.S. public company, shall base its foreign ownership
   calculations on such public company's known or reasonably should be
   known foreign equity and voting interests as described in paragraphs
   (e)(2) and (3) of this section. The licensee shall aggregate the public
   company's known or reasonably should be known foreign voting interests
   and separately aggregate the public company's known or reasonably
   should be known foreign equity interests. If the public company's known
   or reasonably should be known foreign voting interests and its known or
   reasonably should be known foreign equity interests do not exceed 25
   percent (20 percent in the case of an eligible publicly traded licensee
   subject to section 310(b)(3)) of the company's total outstanding voting
   shares or 25 percent (20 percent in the case of an eligible publicly
   traded licensee subject to Section 310(b)(3)) of the company's total
   outstanding shares (whether voting or non-voting), respectively, the
   company shall be deemed compliant, under this section, with the
   applicable statutory limit.
   Example. Assume that a licensee's controlling U.S. parent is an
   eligible U.S. public company. The publicly traded U.S. parent has one
   class of stock consisting of 100 total outstanding shares of common
   voting stock. The licensee (and/or the U.S. parent on its behalf) has
   exercised the required due diligence in following the above-described
   methodology for identifying and determining the citizenship of the U.S.
   parent's “known or reasonably should be known” interest holders and has
   identified one foreign shareholder that owns 6 shares (i.e., 6 percent
   of the total outstanding shares) and another foreign shareholder that
   owns 4 shares (i.e., 4 percent of the total outstanding shares). The
   licensee would add the U.S. parent's known foreign shares and divide
   the sum by the number of the U.S. parent's total outstanding shares. In
   this example, the licensee's U.S. parent would be calculated as having
   an aggregate 10 percent foreign equity interests and 10 percent foreign
   voting interests (6 + 4 foreign shares = 10 foreign shares; 10 foreign
   shares divided by 100 total outstanding shares = 10 percent). Thus, in
   this example, the licensee would be deemed compliant with Section
   310(b)(4).

   


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Goto Year: 2020 | 2022
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