[Federal Register Volume 82, Number 42 (Monday, March 6, 2017)]
[Rules and Regulations]
[Pages 12512-12521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03990]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[GN Docket No. 15-236; FCC 16-128]


Review of Foreign Ownership Policies for Broadcast, Common 
Carrier and Aeronautical Radio Licensees

AGENCY: Federal Communications Commission.

ACTION: Final rule; technical amendment.

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SUMMARY: The Federal Communications Commission (Commission) published a 
document revising Commission rules applicable to foreign ownership of 
broadcast, common carrier, aeronautical en route and aeronautical fixed 
radio station licensees. Due to an error in the effective date 
language, the Commission's rules were prematurely removed from the CFR. 
This technical amendment restores these rules to the CFR.

DATES: This technical amendment is effective March 6, 2017.

FOR FURTHER INFORMATION CONTACT: Kimberly Cook or Francis Gutierrez, 
Telecommunications and Analysis Division, International Bureau, FCC, 
(202) 418-1460 or via email to [email protected], 
[email protected].

SUPPLEMENTARY INFORMATION: The Federal Communications Commission 
(Commission) published a document in the Federal Register on December 
1, 2016 (81 FR 86586) revising Commission rules applicable to foreign 
ownership of broadcast, common carrier, aeronautical en route and 
aeronautical fixed radio station licensees. Due to an inadvertent 
Commission error in the effective date language in the preamble of the 
document, the Commission's rules applicable to foreign ownership of 
common carrier, aeronautical en route and aeronautical fixed radio 
station licensees (47 CFR 1.990-1.994) were prematurely removed from 
the CFR effective January 30, 2017. This technical amendment restores 
these rules to the CFR. Upon approval of information collection 
requirements by the Office of Management and Budget (OMB), the 
Commission will publish a separate document in the Federal Register to 
remove 47 CFR 1.990 through 1.994 and announce the effective date of 
amendments to 47 CFR 1.5000 through 1.5004, 25.105, 73.1010 and 74.5.

List of Subjects in 47 CFR Part 1

    Communications common carriers, Radio, Reporting and recordkeeping 
requirements, Satellites, Telecommunications.

Federal Communications Commission.

Marlene H. Dortch,
Secretary.

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 1 as follows:

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 15 U.S.C. 79, et seq.; 47 U.S.C. 151, 154(i), 154(j), 
155, 157, 160, 201, 225, 227, 303, 309, 310, 332, 1403, 1404, 1451, 
1452, and 1455.


Sec.  Sec.  1.990 through 1.994   [Added]

0
2. In subpart F, add an undesignated center heading and Sec. Sec.  
1.990 through 1.994 to read as follows:

Foreign Ownership of Common Carrier, Aeronautical en Route, and 
Aeronautical Fixed Radio Station Licensees


Sec.  1.990  Citizenship and filing requirements under the 
Communications Act of 1934.

    These rules establish the requirements and conditions for obtaining 
the Commission's prior approval of foreign ownership in 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 Communications Act of 1934, as 
amended (47 U.S.C. 310(b)(4)). These rules also establish the 
requirements and conditions for obtaining the Commission's prior 
approval of foreign ownership in common carrier (but not 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 (47 U.S.C. 310(b)(3)).
    (a)(1) A 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 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.

    Note to paragraph (a)(1): 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 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 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

[[Page 12513]]

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).

    (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 to paragraph (a)(2): 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 August 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)).

    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 
five 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 Sec.  
1.991(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 five percent of U.S.-organized Corporation 
A's equity and/or voting interests, unless the foreign investment is 
exempt under Sec.  1.991(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 (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 Sec.  1.991(i).

    (b) The petition for declaratory ruling required by paragraph (a) 
of this section shall be filed electronically on the Internet through 
the International Bureau Filing System (IBFS). For information on 
filing your petition through IBFS, see subpart Y of this part and the 
IBFS homepage at http://www.fcc.gov/ib.
    (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 Sec.  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, 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 Sec.  1.991, such information should be set 
out separately for each joint petitioner, except as otherwise permitted 
in Sec.  1.991(h)(2).
    (i) Each joint petitioner shall certify to the information 
contained in the petition in accordance with the provisions of Sec.  
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

[[Page 12514]]

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 
Sec. Sec.  1.991 through 1.994.
    (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 Sec. Sec.  1.990 through 1.994 of this part 
includes a spectrum lessee as defined in Sec.  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 section 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 section 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 Sec. Sec.  1.990 through 1.994 includes 
equity and/or voting 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 paragraph 
(a)(1) or (2) of this section.


Sec.  1.991  Contents of petitions for declaratory ruling under the 
Communications Act of 1934.

    The petition for declaratory ruling required by Sec.  1.990(a)(1) 
and/or Sec.  1.990(a)(2) shall contain the following information:
    (a) With respect to each petitioning applicant or licensee, provide 
its name; FCC Registration Number (FRN); mailing address; place of 
organization; telephone number; facsimile number (if available); 
electronic mail address (if available); type of business organization 
(e.g., corporation, unincorporated association, trust, general 
partnership, limited partnership, limited liability company, trust, 
other (include description of legal entity)); name and title of officer 
certifying to the information contained in the petition.
    (b) If the petitioning applicant or licensee is represented by a 
third party (e.g., legal counsel), specify that individual's name, the 
name of the firm or company, mailing address and telephone number/
electronic mail address.
    (c)(1) For each named licensee, list the type(s) of radio service 
authorized (e.g., cellular radio telephone service; microwave radio 
service; mobile satellite service; aeronautical fixed service).
    (2) If the petition is filed in connection with an application for 
a radio station license or a spectrum leasing arrangement, or an 
application to acquire a license or spectrum leasing arrangement by 
assignment or transfer of control, specify for each named applicant:
    (i) The File No(s). of the associated application(s), if available 
at the time the petition is filed; otherwise, specify the anticipated 
filing date for each application; and
    (ii) The type(s) of radio services covered by each application 
(e.g., cellular radio telephone service; microwave radio service; 
mobile satellite service; aeronautical fixed service).
    (d) With respect to each petitioner, include a statement as to 
whether the petitioner is requesting a declaratory ruling under Sec.  
1.990(a)(1) and/or Sec.  1.990(a)(2).
    (e)(1) Direct U.S. or foreign interests of ten percent or more or a 
controlling interest. With respect to petitions filed under Sec.  
1.990(a)(1), provide the name of any individual or entity that holds, 
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in the controlling U.S. 
parent of the petitioning common carrier or aeronautical radio station 
applicant(s) or licensee(s) as specified in paragraphs (e)(1)(i) 
through (e)(4)(iv) of this section.
    (2) Direct U.S. or foreign interests of ten percent or more or a 
controlling interest. With respect to petitions filed under Sec.  
1.990(a)(2), provide the name of any individual or entity that holds, 
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in each petitioning 
common carrier applicant or licensee as specified in paragraphs 
(e)(1)(i) through (e)(4)(ii) of this section.
    (3) Where no individual or entity holds, or would hold, directly 10 
percent or more of the equity interests and/or voting interests, or a 
controlling interest, in the controlling U.S. parent (for petitions 
filed under Sec.  1.990(a)(1)) or in the applicant or licensee (for 
petitions filed under Sec.  1.990(a)(2)), the petition shall state that 
no individual or entity holds or would hold directly 10 percent or more 
of the equity interests and/or voting interests, or a controlling 
interest, in the U.S. parent, applicant or licensee.
    (4)(i) Where a named U.S. parent, applicant, or licensee is 
organized as a corporation, provide the name of any individual or 
entity that holds, or would hold, 10 percent or more of the outstanding 
capital stock and/or voting stock, or a controlling interest.
    (ii) Where a named U.S. parent, applicant, or licensee is organized 
as a general partnership, provide the names

[[Page 12515]]

of the partnership's constituent general partners.
    (iii) Where a named U.S. parent, applicant, or licensee is 
organized as a limited partnership or limited liability partnership, 
provide the name(s) of the general partner(s) (in the case of a limited 
partnership), any uninsulated partner(s), and any insulated partner(s) 
with an equity interest in the partnership of at least 10 percent 
(calculated according to the percentage of the partner's capital 
contribution). With respect to each named partner (other than a named 
general partner), the petitioner shall state whether the partnership 
interest is insulated or uninsulated, based on the insulation criteria 
specified in Sec.  1.993.
    (iv) Where a named U.S. parent, applicant, or licensee is organized 
as a limited liability company, provide the name(s) of each uninsulated 
member, regardless of its equity interest, any insulated member with an 
equity interest of at least 10 percent (calculated according to the 
percentage of its capital contribution), and any non-equity manager(s). 
With respect to each named member, the petitioner shall state whether 
the interest is insulated or uninsulated, based on the insulation 
criteria specified in Sec.  1.993, and whether the member is a manager.

    Note to paragraph (e): The Commission presumes that a general 
partner of a general partnership or limited partnership has a 
controlling interest in the partnership. A general partner shall in 
all cases be deemed to hold an uninsulated interest in the 
partnership.

    (f)(1) Indirect U.S. or foreign interests of ten percent or more or 
a controlling interest. With respect to petitions filed under Sec.  
1.990(a)(1), provide the name of any individual or entity that holds, 
or would hold, indirectly, through one or more intervening entities, 10 
percent or more of the equity interests and/or voting interests, or a 
controlling interest, in the controlling U.S. parent of the petitioning 
common carrier or aeronautical radio station applicant(s) or 
licensee(s). Equity interests and voting interests held indirectly 
shall be calculated in accordance with the principles set forth in 
Sec.  1.992.
    (2) Indirect U.S. or foreign interests of ten percent or more or a 
controlling interest. With respect to petitions filed under Sec.  
1.990(a)(2), provide the name of any individual or entity that holds, 
or would hold, indirectly, through one or more intervening entities, 10 
percent or more of the equity interests and/or voting interests, or a 
controlling interest, in the petitioning common carrier radio station 
applicant(s) or licensee(s). Equity interests and voting interests held 
indirectly shall be calculated in accordance with the principles set 
forth in Sec.  1.992.
    (3) Where no individual or entity holds, or would hold, indirectly 
10 percent or more of the equity interests and/or voting interests, or 
a controlling interest, in the controlling U.S. parent (for petitions 
filed under Sec.  1.990(a)(1)) or in the petitioning applicant(s) or 
licensee(s) (for petitions filed under Sec.  1.990(a)(2)), the petition 
shall specify that no individual or entity holds indirectly 10 percent 
or more of the equity interests and/or voting interests, or a 
controlling interest, in the U.S. parent, applicant(s), or licensee(s).

    Note to paragraph (f): The Commission presumes that a general 
partner of a general partnership or limited partnership has a 
controlling interest in the partnership. A general partner shall in 
all cases be deemed to hold an uninsulated interest in the 
partnership.

    (g) For each 10 percent interest holder named in response to 
paragraphs (e) and (f) of this section, specify the equity interest 
held and the voting interest held (each to the nearest one percent); in 
the case of an individual, his or her citizenship; and in the case of a 
business organization, its place of organization, type of business 
organization (e.g., corporation, unincorporated association, trust, 
general partnership, limited partnership, limited liability company, 
trust, other (include description of legal entity)), and principal 
business(es).
    (h)(1) Estimate of aggregate foreign ownership. For petitions filed 
under Sec.  1.990(a)(1), attach an exhibit that provides a percentage 
estimate of the controlling U.S. parent's aggregate direct and/or 
indirect foreign equity interests and its aggregate direct and/or 
indirect foreign voting interests. For petitions filed under Sec.  
1.990(a)(2), attach an exhibit that provides a percentage estimate of 
the aggregate foreign equity interests and aggregate foreign voting 
interests held directly in the petitioning applicant(s) and/or 
licensee(s), if any, and the aggregate foreign equity interests and 
aggregate foreign voting interests held indirectly in the petitioning 
applicant(s) and/or licensee(s). The exhibit required by this paragraph 
must also provide a general description of the methods used to 
determine the percentages; and a statement addressing the circumstances 
that prompted the filing of the petition and demonstrating that the 
public interest would be served by grant of the petition.
    (2) Ownership and control structure. Attach an exhibit that 
describes the ownership and control structure of the applicant(s) and/
or licensee(s) that are the subject of the petition, including an 
ownership diagram and identification of the real party-in-interest 
disclosed in any companion applications. The ownership diagram should 
illustrate the petitioner's vertical ownership structure, including the 
controlling U.S. parent named in the petition (for petitions filed 
under Sec.  1.990(a)(1)) and the direct and indirect ownership (equity 
and voting) interests held by the individual(s) and/or entity(ies) 
named in response to paragraphs (e) and (f) of this section. Each such 
individual or entity shall be depicted in the ownership diagram and all 
controlling interests labeled as such. Where the petition includes 
multiple petitioners, the ownership of all petitioners may be depicted 
in a single ownership diagram or in multiple diagrams.
    (i) Requests for specific approval. Provide, as required or 
permitted by this paragraph, the name of each foreign individual and/or 
entity for which each petitioner requests specific approval, if any, 
and the respective percentages of equity and/or voting interests (to 
the nearest one percent) that each such foreign individual or entity 
holds, or would hold, directly and/or indirectly, in the controlling 
U.S. parent of the petitioning common carrier or aeronautical radio 
station applicant(s) or licensee(s) for petitions filed under Sec.  
1.990(a)(1), and in each petitioning common carrier applicant or 
licensee for petitions filed under Sec.  1.990(a)(2).
    (1) Each petitioning common carrier or aeronautical radio station 
applicant or licensee filing under Sec.  1.990(a)(1) shall identify and 
request specific approval for any foreign individual, entity, or group 
of such individuals or entities that holds, or would hold, directly 
and/or indirectly, more than 5 percent of the equity and/or voting 
interests, or a controlling interest, in the petitioner's controlling 
U.S. parent unless the foreign investment is exempt under paragraph 
(i)(3) of this section. Equity and voting interests shall be calculated 
in accordance with the principles set forth in paragraphs (e) and (f) 
of this section and in Sec.  1.992.
    (2) Each petitioning common carrier radio station applicant or 
licensee filing under Sec.  1.990(a)(2) shall identify and request 
specific approval for any foreign individual, entity, or group of such 
individuals or entities that holds, or would hold, directly, and/or 
indirectly through one or more intervening U.S.-organized entities that 
do not control the applicant or licensee, more than 5 percent of the 
equity and/or voting interests in the applicant or licensee unless the 
foreign investment is exempt

[[Page 12516]]

under paragraph (i)(3) of this section. Equity and voting interests 
shall be calculated in accordance with the principles set forth in 
paragraphs (e) and (f) of this section and in Sec.  1.992.

    Note to paragraphs (i)(1) and (2): Two or more individuals or 
entities will be treated as a ``group'' when they have agreed to act 
together for the purpose of acquiring, holding, voting, or disposing 
of their equity and/or voting interests in the licensee and/or 
controlling U.S. parent of the licensee or in any intermediate 
company(ies) through which any of the individuals or entities holds 
its interests in the licensee and/or controlling U.S. parent of the 
licensee.

    (3) A foreign investment is exempt from the specific approval 
requirements of paragraphs (i)(1) and (2) of this section where:
    (i) The foreign individual or entity holds, or would hold, directly 
and/or indirectly, no more than 10 percent of the equity and/or voting 
interests of the U.S. parent (for petitions filed under Sec.  
1.990(a)(1)) or the petitioning applicant or licensee (for petitions 
filed under Sec.  1.990(a)(2)); and
    (ii) The foreign individual or entity does not hold, and would not 
hold, a controlling interest in the petitioner or any controlling 
parent company, does not plan or intend to change or influence control 
of the petitioner or any controlling parent company, does not possess 
or develop any such purpose, and does not take any action having such 
purpose or effect. The Commission will presume, in the absence of 
evidence to the contrary, that the following interests satisfy this 
criterion for exemption from the specific approval requirements in 
paragraphs (i)(1) and (2) of this section:
    (A) Where the relevant licensee, controlling U.S. parent, or entity 
holding a direct or indirect equity and/or voting interest in the 
licensee or U.S. parent is a ``public company,'' as defined in Sec.  
1.990(d)(9), provided that the foreign holder is an institutional 
investor that is eligible to report its beneficial ownership interests 
in the company's voting, equity securities in excess of 5 percent (not 
to exceed 10 percent) pursuant to Exchange Act Rule 13d-1(b), 17 CFR 
240.13d-1(b), or a substantially comparable foreign law or regulation. 
This presumption shall not apply if the foreign individual, entity or 
group holding such interests is obligated to report its holdings in the 
company pursuant to Exchange Act Rule 13d-1(a), 17 CFR 240.13d-1(a), or 
a substantially comparable foreign law or regulation.

    Example.  Common carrier applicant (``Applicant'') is preparing 
a petition for declaratory ruling to request Commission approval for 
foreign ownership of its controlling, U.S.-organized parent (``U.S. 
Parent'') to exceed the 25 percent benchmark in section 310(b)(4) of 
the Act. Applicant does not currently hold any FCC licenses. Shares 
of U.S. Parent trade publicly on the New York Stock Exchange. Based 
on a shareholder survey and a review of its shareholder records, 
U.S. Parent has determined that its aggregate foreign ownership on 
any given day may exceed an aggregate 25 percent, including a six 
percent common stock interest held by a foreign-organized mutual 
fund (``Foreign Fund''). U.S. Parent has confirmed that Foreign Fund 
is not currently required to report its interest pursuant to 
Exchange Act Rule 13d-1(a) and instead is eligible to report its 
interest pursuant to Exchange Act Rule 13d-1(b). U.S. Parent also 
has confirmed that Foreign Fund does not hold any other interests in 
U.S. Parent's equity securities, whether of a class of voting or 
non-voting securities. Applicant may, but is not required to, 
request specific approval of Foreign Fund's six percent interest in 
U.S. Parent.

    Note to paragraph (i)(3)(ii)(A):  Where an institutional 
investor holds voting, equity securities that are subject to 
reporting under Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a 
substantially comparable foreign law or regulation, and equity 
securities that are not subject to such reporting the investor's 
total capital stock interests may be aggregated and treated as 
exempt from the 5 percent specific approval requirement in 
paragraphs (i)(1) and (2) of this section so long as the aggregate 
amount of the institutional investor's holdings does not exceed ten 
percent of the company's total capital stock or voting rights and 
the investor is eligible to certify under Exchange Act Rule 13d-
1(b), 17 CFR 240.13d-1(b), or a substantially comparable foreign law 
or regulation that it has acquired its capital stock interests in 
the ordinary course of business and not with the purpose nor with 
the effect of changing or influencing the control of the company. In 
calculating foreign equity and voting interests, the Commission does 
not consider convertible interests such as options, warrants and 
convertible debentures until converted, unless specifically 
requested by the petitioner, i.e., where the petitioner is 
requesting approval so those rights can be exercised in a particular 
case without further Commission approval.

    (B) Where 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 is a ``privately held'' corporation, as defined 
in Sec.  1.990(d)(8), provided that a shareholders' agreement, or 
similar voting agreement, prohibits the foreign holder from becoming 
actively involved in the management or operation of the corporation and 
limits the foreign holder's voting and consent rights, if any, to the 
minority shareholder protections listed in paragraph (i)(5) of this 
section.
    (C) Where 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 is ``privately held,'' as defined in Sec.  
1.990(d)(8), and is organized as a limited partnership, limited 
liability company (``LLC''), or limited liability partnership 
(``LLP''), provided that the foreign holder is ``insulated'' in 
accordance with the criteria specified in Sec.  1.993.
    (4) A petitioner may, but is not required to, request specific 
approval for any other foreign individual or entity that holds, or 
would hold, a direct and/or indirect equity and/or voting interest in 
the controlling U.S. parent (for petitions filed under Sec.  
1.990(a)(1)) or in the petitioning applicant or licensee (for petitions 
filed under Sec.  1.990(a)(2)).
    (5) The minority shareholder protections referenced in paragraph 
(i)(3)(ii)(B) of this section consist of the following rights:
    (i) The power to prevent the sale or pledge of all or substantially 
all of the assets of the corporation or a voluntary filing for 
bankruptcy or liquidation;
    (ii) The power to prevent the corporation from entering into 
contracts with majority shareholders or their affiliates;
    (iii) The power to prevent the corporation from guaranteeing the 
obligations of majority shareholders or their affiliates;
    (iv) The power to purchase an additional interest in the 
corporation to prevent the dilution of the shareholder's pro rata 
interest in the event that the corporation issues additional 
instruments conveying shares in the company;
    (v) The power to prevent the change of existing legal rights or 
preferences of the shareholders, as provided in the charter, by-laws or 
other operative governance documents;
    (vi) The power to prevent the amendment of the charter, by-laws or 
other operative governance documents of the company with respect to the 
matters described in paragraphs (i)(5)(i) through (v) of this section.
    (6) 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 (i)(5) of this section shall be considered 
permissible minority shareholder protections in a particular case.
    (j) For each foreign individual or entity named in response to 
paragraph (i) of this section, provide the following information:

[[Page 12517]]

    (1) In the case of an individual, his or her citizenship and 
principal business(es);
    (2) In the case of a business organization:
    (i) Its place of organization, type of business organization (e.g., 
corporation, unincorporated association, trust, general partnership, 
limited partnership, limited liability company, trust, other (include 
description of legal entity)), and principal business(es);
    (ii) The name of any individual or entity that holds, or would 
hold, directly and/or indirectly, through one or more intervening 
entities, 10 percent or more of the equity interests and/or voting 
interests, or a controlling interest, in the foreign entity for which 
the petitioner requests specific approval. Specify for each such 
interest holder, his or her citizenship (for individuals) or place of 
legal organization (for entities). Equity interests and voting 
interests held indirectly shall be calculated in accordance with the 
principles set forth in Sec.  1.992.
    (iii) Where no individual or entity holds, or would hold, directly 
and/or indirectly, 10 percent or more of the equity interests and/or 
voting interests, or a controlling interest, the petition shall specify 
that no individual or entity holds, or would hold, directly and/or 
indirectly, 10 percent or more of the equity interests and/or voting 
interests, or a controlling interest, in the foreign entity for which 
the petitioner requests specific approval.
    (k) Requests for advance approval. The petitioner may, but is not 
required to, request advance approval in its petition for any foreign 
individual or entity named in response to paragraph (i) of this section 
to increase its direct and/or indirect equity and/or voting interests 
in the controlling U.S. parent of the common carrier or aeronautical 
radio station licensee, for petitions filed under Sec.  1.990(a)(1), 
and/or in the common carrier licensee, for petitions filed under Sec.  
1.990(a)(2), above the percentages specified in response to paragraph 
(i) of this section. Requests for advance approval shall be made as 
follows:
    (1) Petitions filed under Sec.  1.990(a)(1). Where a foreign 
individual or entity named in response to paragraph (i) of this section 
holds, or would hold upon consummation of any transactions described in 
the petition, a de jure or de facto controlling interest in the 
controlling U.S. parent, the petitioner may request advance approval in 
its petition for the foreign individual or entity to increase its 
interests, at some future time, up to any amount, including 100 percent 
of the direct and/or indirect equity and/or voting interests in the 
U.S. parent. The petitioner shall specify for the named controlling 
foreign individual(s) or entity(ies) the maximum percentages of equity 
and/or voting interests for which advance approval is sought or, in 
lieu of a specific amount, state that the petitioner requests advance 
approval for the named controlling foreign individual or entity to 
increase its interests up to and including 100 percent of the U.S. 
parent's direct and/or indirect equity and/or voting interests.
    (2) Petitions filed under Sec.  1.990(a)(1) and/or Sec.  
1.990(a)(2). Where a foreign individual or entity named in response to 
paragraph (i) of this section holds, or would hold upon consummation of 
any transactions described in the petition, a non-controlling interest 
in the controlling U.S. parent of the licensee, for petitions filed 
under Sec.  1.990(a)(1), or in the licensee, for petitions filed under 
Sec.  1.990(a)(2), the petitioner may request advance approval in its 
petition for the foreign individual or entity to increase its 
interests, at some future time, up to any non-controlling amount not to 
exceed 49.99 percent. The petitioner shall specify for the named 
foreign individual(s) or entity(ies) the maximum percentages of equity 
and/or voting interests for which advance approval is sought or, in 
lieu of a specific amount, shall state that the petitioner requests 
advance approval for the named foreign individual(s) or entity(ies) to 
increase their interests up to and including a non-controlling 49.99 
percent equity and/or voting interest in the licensee, for petitions 
filed under Sec.  1.990(a)(2), or in the controlling U.S. parent of the 
licensee, for petitions filed under Sec.  1.990(a)(1).


Sec.  1.992  How to calculate indirect equity and voting interests.

    (a) The criteria specified in this section shall be used for 
purposes of calculating indirect equity and voting interests under 
Sec.  1.991.
    (b)(1) Equity interests held indirectly in the licensee and/or 
controlling U.S. parent. Equity interests that are held by an 
individual or entity indirectly through one or more intervening 
entities shall be calculated by successive multiplication of the equity 
percentages for each link in the vertical ownership chain, regardless 
of whether any particular link in the chain represents a controlling 
interest in the company positioned in the next lower tier.

    Example. Assume that a foreign individual holds a non-
controlling 30 percent equity and voting interest in U.S.-organized 
Corporation A which, in turn, holds a non-controlling 40 percent 
equity and voting interest in U.S.-organized Parent Corporation B. 
The foreign individual's equity interest in U.S.-organized Parent 
Corporation B would be calculated by multiplying the foreign 
individual's equity interest in U.S.-organized Corporation A by that 
entity's equity interest in U.S.-organized Parent Corporation B. The 
foreign individual's equity interest in U.S.-organized Parent 
Corporation B would be calculated as 12 percent (30% x 40% = 12%). 
The result would be the same even if U.S.-organized Corporation A 
held a de facto controlling interest in U.S.-organized Parent 
Corporation B.

    (2) Voting interests held indirectly in the licensee and/or 
controlling U.S. parent. Voting interests that are held by any 
individual or entity indirectly through one or more intervening 
entities will be determined depending upon the type of business 
organization(s) in which the individual or entity holds a voting 
interest as follows:
    (i) Voting interests that are held through one or more intervening 
corporations shall be calculated by successive multiplication of the 
voting percentages for each link in the vertical ownership chain, 
except that wherever the voting interest for any link in the chain is 
equal to or exceeds 50 percent or represents actual control, it shall 
be treated as if it were a 100 percent interest.

    Example. Assume that a foreign individual holds a non-
controlling 30 percent equity and voting interest in U.S.-organized 
Corporation A which, in turn, holds a controlling 70 percent equity 
and voting interest in U.S.-organized Parent Corporation B. Because 
U.S.-organized Corporation A's 70 percent voting interest in U.S.-
organized Parent Corporation B constitutes a controlling interest, 
it is treated as a 100 percent interest. The foreign individual's 30 
percent voting interest in U.S.-organized Corporation A would flow 
through in its entirety to U.S. Parent Corporation B and thus be 
calculated as 30 percent (30% x 100% = 30%).

    (ii) Voting interests that are held through one or more intervening 
partnerships shall be calculated depending upon whether the individual 
or entity holds a general partnership interest, an uninsulated 
partnership interest, or an insulated partnership interest as specified 
in paragraphs (b)(2)(ii)(A) and (B) of this section.
    (A) General partnership and other uninsulated partnership 
interests. A general partner and uninsulated partner shall be deemed to 
hold the same voting interest as the partnership holds in the company 
situated in the next lower tier of the vertical ownership chain. A 
partner shall be treated as uninsulated unless the limited partnership 
agreement, limited liability partnership agreement, or other operative 
agreement

[[Page 12518]]

satisfies the insulation criteria specified in Sec.  1.993.

    Note to paragraph (b)(2)(ii)(A):  The Commission presumes that a 
general partner of a general partnership or limited partnership has 
a controlling interest in the partnership. A general partner shall 
in all cases be deemed to hold an uninsulated interest in the 
partnership.

    (B) Insulated partnership interests. A partner of a limited 
partnership (other than a general partner) or partner of a limited 
liability partnership that satisfies the insulation criteria specified 
in Sec.  1.993 shall be treated as an insulated partner and shall be 
deemed to hold a voting interest in the partnership that is equal to 
the partner's equity interest.
    (iii) Voting interests that are held through one or more 
intervening limited liability companies shall be calculated depending 
upon whether the individual or entity is a non-member manager, an 
uninsulated member or an insulated member as specified in paragraphs 
(b)(2)(iii)(A) and (B) of this section.
    (A) Non-member managers and uninsulated membership interests. A 
non-member manager and an uninsulated member of a limited liability 
company shall be deemed to hold the same voting interest as the limited 
liability company holds in the company situated in the next lower tier 
of the vertical ownership chain. A member shall be treated as 
uninsulated unless the limited liability company agreement satisfies 
the insulation criteria specified in Sec.  1.993.
    (B) Insulated membership interests. A member of a limited liability 
company that satisfies the insulation criteria specified in Sec.  1.993 
shall be treated as an insulated member and shall be deemed to hold a 
voting interest in the limited liability company that is equal to the 
member's equity interest.


Sec.  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 Sec.  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 Sec.  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.


Sec.  1.994  Routine terms and conditions.

    Foreign ownership rulings issued pursuant to Sec. Sec.  1.990 
through 1.993 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 Sec.  
1.990(a)(1). In addition to the foreign ownership interests approved 
specifically in a licensee's declaratory ruling issued pursuant to 
Sec.  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 Sec.  1.991(i)(3).
    (2) Aggregate allowance for rulings issued under Sec.  1.990(a)(2). 
In addition to the foreign ownership interests approved specifically in 
a licensee's declaratory ruling issued pursuant to Sec.  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

[[Page 12519]]

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 Sec.  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 
Sec.  1.990(a)(1)) and/or in the licensee itself (for rulings issued 
pursuant to Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 
Sec.  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 Sec.  1.991(i)(3).

    Example 2 (for rulings issued under Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 12520]]

ruling issued under Sec.  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 Sec.  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 (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 
Sec.  1.990(a)(1), or in an intervening U.S.-organized entity that does 
not control the licensee, for rulings issued under Sec.  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 Sec.  1.990(a)(1), or 
above an intervening U.S.-organized entity that does not control the 
licensee, for rulings issued under Sec.  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 Sec.  1.990(a)(1)). Licensee 
receives a foreign ownership ruling under Sec.  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 Sec.  
1.948(c)(1).
    Example (for rulings issued under Sec.  1.990(a)(2)). An 
applicant for a common carrier license receives a foreign ownership 
ruling under Sec.  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 
Sec.  1.990(a)(1), or in an intervening U.S.-organized entity that does 
not control the licensee, for rulings issued under Sec.  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 Sec.  1.990(a)(1), or above an 
intervening U.S.-organized entity that does not control the licensee, 
for rulings issued under Sec.  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 Sec.  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 Sec.  1.990(a)(1)). Licensee 
receives a foreign ownership ruling under Sec.  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 Sec.  1.990(a)(2)). Licensee 
receives a foreign ownership ruling under Sec.  1.990(a)(2) that 
authorizes a foreign-organized entity (``Foreign Company'') to hold 
approximately

[[Page 12521]]

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 Sec.  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.

[FR Doc. 2017-03990 Filed 3-3-17; 8:45 am]
BILLING CODE 6712-01-P