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distributable to such person at the close individual shall be considered a single of the most recent annual accounting person within the United States. period of the organization.

(b) A family group shall file reports (c) If the rules set forth in para- under $ 1000.602 in the manner provided graphs (a) or (b) of this section are not in g 1000.907. applicable to a particular corporation, § 1000.905 Associated groups. partnership, trust or business venture in which such person owns an interest, the

(a) An “associated group” consists of amount of the interest shall be calculated

two or more persons within the United

States (one or all of which may be an by any reasonable method which fairly

affiliated or family group) which, purreflects the amount thereof.

suant to an express or implied agree§ 1000.902 Indirect interests.

ment or understanding, act in concert An indirect interest in a person is an to own or acquire interests in the same interest owned through ownership of an corporation or partnership organized intervening person or chain of persons.

under the laws of a foreign country or The amount of an indirect interest in the same business venture conducted owned by one person in another person is

within a foreign country: Provided, That, calculated by multiplying together the

the interests are not owned or acquired direct interests of each person in the

through a corporation, partnership

(other than a joint venture) or trust chain in each person in the chain (treating stock of a higher tier corporation which is a person within the United held by a lower tier corporation as not

States (without regard to whether the outstanding).

corporation, partnership, or trust is or

ganized or created for the purpose of § 1000.903 Affiliated groups.

owning or acquiring such interests); (a) For purposes of paragraph (b) of And provided further, That the aggrethis section, an "affiliate” of a person gate of such interests would, if owned or within the United States means any acquired by only one of such persons, other person (other than an individual), cause such person to be a direct investor wheresoever located, in which the aggre- in the corporation, partnership, or busigate of direct interests owned by such ness venture under $ 1000.305. person within the United States and any (b) (1) Notwithstanding the proviaffiliate or affiliates (as herein defined) sions of $ 1000.305, each member of an of such person exceeds 50 percent.

associated group shall be deemed a di(b) An "affiliated group” means a per

rect investor in the corporation, partnerson within the United States and all of ship, or business venture in which the its affiliates which are persons within the interests are owned or acquired (hereinUnited States; such person and such

after referred to as the “group affiliated affiliates are members of the affiliated foreign national”) for all purposes of group. Any person which owns a direct this part: Provided, That, a person which or indirect interest in a member an

is a direct investor by virtue of this paraaffiliated group but which is not itself graph (b) (1) but not by virtue of the a member thereof shall be deemed to provisions of $ 1000.305 shall not be subown a direct or indirect interest, as the ject to the provisions of $ 1000.203. case may be, in the affiliated group.

(2) (i) Notwithstanding the provisions (c) Except as provided in $ 1000.906 of $ 1000.503, positive direct investment (b) (1), the members of an affiliated

made during any year, commencing with group shall, for all purposes of this part,

the year 1970, by members of an associbe considered a single person within the

ated group that elect $ 1000.503 in group

affiliated foreign nationals of the assoUnited States.

ciated group shall not be authorized by (d) An affiliated group shall file re

§ 1000.503, unless the aggregate of direct ports under $ 1000.602 in the manner

investment made during the year by all provided in § 1000.907.

such members (being considered for pur$ 1000.904 Family groups.

poses of this subdivision as a single

direct investor) in all group affiliated (a) For all purposes of this part, an

foreign nationals would have been individual who is a person within the

authorized by $ 1000.503. United States, his spouse (unless legally (ii) Notwithstanding the provisions of separated), and all relatives of such in

§ 1000.507, positive direct investment dividual or his spouse residing with such made during any year, commencing with

the year 1970, by members of an associated group that elect § 1000.507 in group affiliated foreign nationals of the associated group shall not be authorized by § 1000.507, unless the aggregate of direct investment made during the year by all such members (being considered for purposes of this subdivision as a single direct investor) in all group affiliated foreign nationals would have been authorized by § 1000.507.

(iii) If one or more members of an associated group elect $ 1000.503 and one or more other members of the group elect § 1000.507, for any year commencing with the year 1971, positive direct investment by such members in group affiliated foreign nationals shall not be authorized by $ 1000.503 or $ 1000.507, unless the algebraic sum of the following is not in excess of $2 million: Aggregate direct investment made during the year pursuant to § 1000.503 in all group affiliated foreign nationals by the members electing § 1000.503 plus aggregate direct investment made during the year pursuant to § 1000.507 (a) (1) and (b) in all group affiliated foreign nationals by the members electing § 1000.507.

(3) Unless the election referred to in § 1000.907(c) (2) has been made and approved by the Secretary, each member of an associated group shall file separate reports under $ 1000.602 in the manner provided in $ 1000.907. (33 F.R. 11711, Aug. 17, 1968, as amended at 35 F.R. 7226, May 7, 1970; 36 F.R. 9507, May 26, 1971] $ 1000.906 Ownership of direct in.

vestors. (a) (1) Unless the election provided for in paragraph (b) (1) of this section is made, no direct investment made or foreign balances held before or after the effective date by a direct investor shall be deemed to have been made or held by any other person within the United States because such other person owns or acquires a direct or indirect interest in such direct investor.

(2) A person within the United States which owns a direct or indirect interest in a direct investor may, depending on all the facts and circumstances of the particular case, be deemed to be acting for or on behalf of the direct investor if such person transfers funds or other property to affiliated foreign nationals of the direct investor.

(b) (1) Persons within the United States owning a direct interest in a

direct investor may elect not to be governed by the rule set forth in paragraph (a) (1) of this section: Provided, That this election shall not, unless the Secretary in his sole discretion determines otherwise, be available if there are more than 10 persons (whether such persons are persons within the United States or foreign nationals) which own direct interests in such direct investor. For purposes of this paragraph (b), each member of an affiliated group shall be considered a separate person within the United States.

(2) An election pursuant to subparagraph (1) of this paragraph as to any direct investor shall be made with the consent of those persons within the United States owning, in the aggregate, a majority interest in such direct investor. The election shall be evidenced by a document executed by or on behalf of all persons consenting thereto (hereinafter referred to as the “consenting owners”) and such document shall be filed promptly after its execution with the Program Reports Division, Office of Foreign Direct Investments, U.S. Department of Commerce, Washington, D.C. 20230. All persons within the United States owning a direct interest in the direct investor shall be afforded a reasonable opportunity to join in the election and, if any persons within the United States owning a direct interest in the direct investor do not join in the election, the document evidencing the election shall recite that a reasonable opportunity to join in the election was in fact afforded to such persons.

(3) (i) Notwithstanding the provisions of § 1000.305, if an election pursuant to subparagraph (1) of this paragraph is made as to any direct investor (hereinafter referred to in this subparagraph (3) as the “principal direct investor"), each consenting owner shall be deemed a direct investor in every affiliated foreign national of the principal direct investor for all purposes of this part. The entire amount of direct investment made and foreign balances held by the principal direct investor before and after the effective date shall be deemed to have been made or held by the consenting owners. The portion of such foreign balances and direct investment allocable to each such consenting owner shall be a fraction thereof, the numerator of such fraction to be the direct interest in the principal direct investor owned by such consenting owner and the denomi. nator of such fraction to be the aggregate of the direct interests in the principal direct investor owned by all consenting owners.

(ii) Notwithstanding the provisions of § 1000.503, positive direct investment made (or deemed to have been made under subdivision (i) of this subparagraph) during any year, commencing with the year 1970, by consenting owners that elect $ 1000.503 in an affiliated foreign national of the principal direct investor shall not be authorized by $ 1000.503, unless the aggregate of direct investment made or deemed to have been made during the year by all consenting and nonconsenting owners electing $ 1000.503 (such owners being considered for purposes of this subdivision as a single direct investor) in all affiliated foreign nationals of the principal direct investor would have been authorized by § 1000.503.

(iii) Notwithstanding the provisions of $ 1000.507, positive direct investment made (or deemed to have been made under subdivision (i) of this subparagraph) during any year, commencing with the year 1970, by consenting owners that elect $ 1000.507 in an affiliated foreign national of the principal direct investor shall not be authorized by $ 1000.507, unless the aggregate of direct investment made or deemed to have been made during the year by all consenting and nonconsenting owners electing $ 1000.507 (such owners being considered for purposes of this subdivision as a single direct investor) in all affiliated foreign nationals of the principal direct investor would have been authorized by § 1000.507.

(iv) If one or more consenting owners elect $ 1000.503 and one or more other consenting owners elect $ 1000.507, for any year commencing with the year 1971, positive direct investment made (or deemed to have been made under subdivision (i) of this subparagraph) by such consenting owners in affiliated foreign nationals of the principal direct investor shall not be authorized by $ 1000.503 or $ 1000.507, unless the algebraic sum of the following is not in excess of $2 million: Aggregate direct investment made or deemed to have been made during the year pursuant to $ 1000.503 in all affiliated foreign nationals of the principal direct investor by all consenting and nonconsenting owners that elect $ 1000.503 plus aggregate direct

investment made or deemed to have been made during the year pursuant to $ 1000.507 (a) (1) and (b) in all affiliated foreign nationals of the principal direct investor by all consenting and nonconsenting owners that elect $ 1000.507.

(4) Once an election is made pursuant to subparagraph (1) of this paragraph, it may not be changed without the permission of the Secretary. 133 F.R. 11711, Aug. 17, 1968, as amended at 35 F.R. 7227, May 7, 1970; 36 F.R. 9507, May 26,1971) $ 1000.907 Reporting.

(a) Except as provided in paragraph (b) (3) of this section (or unless a specific exemption from reporting is otherwise available) each person within the United States which is a direct investor by virtue of the provisions of $ $ 1000.305, 1000.905(b) (1), or 1000.906(b) (3) (1), other than a direct investor as to which an election has been made under $ 1000.906(b) (1), shall file separate reports (including Forms FDI-101 and FDI-102) under $ 1000.602.

(b) (1) If a direct investor owns directe interests in one or more other direct investors as to which an election has been made under $ 1000.906(b)(1) and such direct investor has consented to the election, the reports filed by the direct investor shall include, in addition to all other required information, the direct investor's fractional share (computed in accordance with $ 1000.906(b) (3) (i)) of the amount of foreign balances, direct investment and other items which such direct investors would have been required to include in their reports if the elections had not been made.

(2) If a direct investor owns indirect. interests in one or more other direct investors, or owns direct interests in one or more other direct investors as to which an election has not been made under § 1000.906(b)(1) or as to which such an election has been made but the direct investor has not consented thereto, reports filed by the direct investor shall not include any foreign balances held or direct investment made by such other direct investors during the relevant period before or after the effective date or any other items required to be included in the reports of such other direct investors for such period.

(3) If, by virtue of the provisions of paragraph (b) (2) of this section, a directinvestor has no foreign balances or direct.

investment transactions which are reportable by it for any period before or after the effective date, the direct investor shall not be required to file a Form FDI-101 or FDI-102 for such period.

(c) (1) If a direct investor is a member of one or more associated groups, the reports filed by the direct investor shall include, in addition to all other required information, the net transfers of capital made by the direct investor to all group affiliated foreign nationals during the relevant period, and, if any of the group afiliated foreign nationals are incorporated affiliated foreign nationals as defined in § 1000.304, shall also include the direct investor's proportionate share in the reinvested earnings of such incorporated affiliated foreign nationals during such period. A member of an associated group which is a direct investor under $ 1000.905(b) (1) but not under $ 1000.305 is not subject to the provisions of § 1000.203, and such member shall not report its foreign balances on Forms FDI-101 or FDI-102.

(2) Notwithstanding the foregoing, the members of an associated group may elect, by a document executed by or on behalf of a majority in interest of the members of the group and filed with the Program Reports Division, Office of Foreign Direct Investments, U.S. Department of Commerce, Washington, D.C. 20230, to have one member of the group file reports under $ 1000.602 on behalf of all members, each such report to reflect the aggregate direct investment transactions of all members with all group affiliated foreign nationals during the relevant period before or after the effective date. Such election shall be subject to the approval of the Secretary who may grant such approval subject to any terms and conditions that he deems necessary. Once an election is made pursuant to this subparagraph (2), it may not be changed without the permission of the Secretary.

(d) If a direct investor is an affiliated or family group, the reports filed by the direct investor shall aggregate all foreign balances, direct investment transactions and other reportable items attributable to each member of the group. The group's Forms FDI-101 and FDI-102 shall be filed on behalf of the group by one member thereof. Such member shall also file all other reports, certificates and other documents required to be filed by the group under the provisions of this part.

Subpart J—Repayment of Borrowings

SOURCE: The provisions of this Subpart J appear at 33 F.R. 11271, Aug. 8, 1968, unless otherwise noted. $ 1000.1001 Definitions.

For purposes of this part and General Authorization No. 1 (33 F.R. 818):

(a) The term "borrowing by an afiliated foreign national” means a borrowing by an affiliated foreign national of a direct investor from any person (other than the direct investor or another affiliated foreign national of the direct investor), including, but not by way of limitation, an extension of credit by any such person to the affiliated foreign national in connection with the purchase of property (including securities) by the ampliated foreign national from such person. Repayment by a direct investor of a borrowing by an afiliated foreign national includes repayment of all interest, premiums and other fees and charges, if any, owing to the lender in connection therewith.

(b) The term “borrowing by a direct investor” means a borrowing by the direct investor, repayment of which by the direct investor would constitute a transfer of capital under $ 1000.312(a) (7).

(c) The term “guarantee,” when used with respect to a borrowing by an affiliated foreign national, includes (1) a written acknowledgement of secondary responsibility (whether or not legally enforceable) to a bank with respect to the borrowing or with respect to the financial condition of the affiliated foreign national; (2) a written guarantee, endorsement, surety agreement, application for letter of credit or standby agreement with respect to the borrowing; (3) a contingent contractual commitment with respect to the borrowing of the type involved in so-called through put agreements, take or pay contracts, keep well agreements, and other similar written agreements; and (4) a mortgage, pledge or hypothecation of property as security for repayment of the borrowing, other than a mortgage, pledge or hypothecation to or with a foreign national which constitutes a transfer of capital under § 1000.312(a) (9). The term "guarantee" includes a guarantee given by one affiliated foreign national of a direct investor with respect to a borrowing by another affiliated foreign national of the direct investor if repayment pursuant to the guarantee would result in a transfer of

capital by the direct investor under direct investor, pursuant to the exer§ 1000.505.

cise of conversion or similar rights, to (d) The term "bank” means a domes- holders of debt obligations issued by the tic bank or a foreign bank as described direct investor or by an affiliated foreign in § 1000.317.

national of the direct investor, without § 1000.1002 Transfers of capital in con

regard to the date the borrowing is nection with repayment of borrowings.

made: Provided, That, for purposes of

$ 1000.1003, any such transfer of capital (a) Subject to the provisions of shall be deemed to have been made in § 1000.1003, positive direct investment by the year immediately following the year a direct investor during any year in af- in which the conversion or similar rights filiated foreign nationals in any Sched- are exercised. uled Area is authorized, notwithstanding

(4) A transfer of capital (other than a the provisions of $ 1000.201, to the extent transfer referred to in subparagraph (3) such positive direct investment is attrib- of this paragraph) in repayment of a utable in whole or in part to those trans- borrowing by the direct investor made fers of capital by the direct investor (in- prior to June 10, 1968: Provided, That cluding transfers of capital under

with respect to a borrowing made on § 1000.505) as are described in subpara- or after January 1, 1968, the direct ingraphs (1) through (6) of this para- vestor shall have complied with the cergraph (a):

tification requirements set forth in sec(1) A transfer of capital, pursuant to tion 2(b) of General Authorization a guarantee made prior to June 10, 1968, No. 1. to repay, a borrowing by such affiliated (5) A transfer of capital, pursuant to which transfer is made in repayment of, a guarantee made on or after June 10, or to enable an affiliated foreign national 1968, which transfer is made in repayforeign national: Provided, That, in the

ment of, or to enable an affiliated foreign case of a guarantee made on or after national to repay, a borrowing by such January 1, 1968, the direct investor shall affiliated foreign national: Provided, have complied with the certification re- That the direct investor shall have comquirements set forth in section 2(a) (1)

plied with the certification requirements of General Authorization No. 1.

set forth in paragraph (b) of this (2) A transfer of capital in repayment section. of, or to enable an affiliated foreign na

(6) A transfer of capital (other than tional to repay, a borrowing by such a transfer referred to in subparagraph affiliated foreign national from a bank (3) of this paragraph) in repayment of made prior to January 1, 1968, or a bor- a borrowing by the direct investor made rowing by such affiliated foreign na- on or after June 10, 1968: Provided, That tional from a bank made on or after the direct investor shall have complied January 1, 1968, pursuant to a fixed loan with the certification requirements set commitment or line of credit established forth in paragraph (b) of this section. prior to such date or pursuant to any (b) The certificate required by subparrenewal or extension of such a fixed

agraphs (5) and (6) of paragraph (a) of loan commitment or line of credit: Pro- this section shall (after June 9, 1969) vided, That the liquid assets of the af. be made on Form FDI--106, and shall, exfiliated foreign national are not sufficient cept as otherwise provided in paragraph to repay such borrowing and that the

(e) (3) of this section, be delivered to affiliated foreign national has made every the Secretary not later than 10 days after reasonable effort to refinance the bor- the date of the borrowing by the direct rowing on terms generally available to investor or the date of the guarantee of companies of similar size and financial the borrowing by the affiliated foreign position; And provided further, That, if, national, as the case may be. It shall be on or after January 1, 1968, the amount executed by the direct investor or a duly of such a fixed loan commitment or authorized representative of the direct line of credit is increased by 10 percent investor, shall state the amount of the or more, a new fixed loan commitment

borrowing, and the amount of the reor line of credit shall be deemed to have quired principal repayment, shall idenbeen established at the time of such tify the lender (or the managing underincrease in an amount equal to the writer, if the borrowing involves a public amount of the increase.

offering), and shall certify as follows: (3) A transfer of capital consisting of (1) If the direct investor believes, on the delivery of equity securities of the the basis of all facts and circumstances

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