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SUMMARY OF FEDERAL LAWS BEARING

ON FOREIGN INVESTMENT
IN THE UNITED STATES

PART I

SPECIFIC FEDERAL RESTRICTIONS ON PARTICIPATION
OF FOREIGN-CONTROLLED ENTERPRISES OR FOREIGN NATIONALS

IN UNITED STATES ECONOMIC ACTIVITY

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2. 3. 4.

Radio and Television Licensing
Telegraph Operations
Radio and Television Operators
Communications Satellite Corporation
Foreign Investment in U.S. Newspapers and Magazines

5.

II.

ENERGY AND NATURAL RESOURCES.

1. 2. 3. 4.

Atomic Energy
Pipelines and Mineral Leasing on Federal Lands
Land
Fishing

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National Banks
Edge Act Corporations
Bank Holding Company Act
Federal Reserve Membership and FDIC Coverage

2. 3.

4.

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GENERAL LAWS AFFECTING THE
CONDUCT OF BUSINESS IN THE UNITED STATES

BY FOREIGN INVESTORS

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Federal Securities Laws
Membership on the New York and American Stock

Exchanges
State and Local Securities Laws
Institutional Disclosure

3. 4.

III.

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Nonimmigrants
Immigrants

FEDERAL RESTRICTIONS ON PARTICIPATION
OF FOREIGN-CONTROLLED ENTERPRISES OR FOREIGN NATIONALS

IN UNITED STATES ECONOMIC ACTIVITY

I

COMMUNICATIONS

1. Radio and Television Licensing. The Federal Commınications Act prohibits aliens, representatives of aliens, foreign governments or their representatives, or foreign-registered, foreignowned, or foreign-controlled corporations from receiving a license from the FCC to operate an instrument for the transmission of communications. A corporation is considered foreign-owned if any director or officer is an alien, or if more than 20 percent of its capital stock is owned by aliens, by a foreign government, or by a corporation organized under the laws of a foreign country. A corporation is considered foreign-controlled if any officer or more than one-fourth of the directors are aliens or if it is directly or indirectly controlled by a corporation, 25 percent of the capital stock of which is owned by foreign interests. Certain exceptions can be made if the FCC determines that the grant of a license would be in the public interest (e.g. broadcasting operations ancillary to another business of a foreign-controlled corporation). 47 U.S.C. § 310(a). 2. Telegraph Operations. The FCC is prohibited from approving a merger among telegraph carriers which would result in more than 20 percent of the capital stock of the carrier being owned, controlled, or voted by an alien, a foreign corporation, a foreign government entity or a corporation of which any officer or director is an alien or of which more than 20 percent of the capital stock is owned or controlled. 47 U.S.C. § 222(d).

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Radio and Television Operators. Foreign citizens may not be licensed by the FCC as operators in radio or television stations. Waiver of the citizenship requirement is permitted for certain licensed aircraft pilots. 47 U.S.C. § 303(1).

4. Communications Satellite Corporation. Not more than an aggregate of 20 percent of the shares of stock of Comsat which are offered to the general public may be held by aliens, foreign governments, or foreign-owned, registered or controlled corporations. 47 U.S.C. § 734 (d).

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5. Foreign Investment in U.S. Magazines and Newspapers. There are urrently no prohibitions against foreign invest ment in U.S. newspapers. However, the Foreign Agents Registration Act (22 U.S.C. $611) applies to any U.S. corporation (e.g. a newspaper or magazine) which is controlled or financed by a foreign entity if it carries on any activity in the United States intended to influence U.S. domestic or foreign policy, or to promote the interests of a foreign government. The scope of the law is broad and requires registration with the Attorney General and filing and disclosure with respect to a wide range of political propaganda disseminated in the United States on behalf of foreign interests. However, if the registration requirement is satisfied and the publication is properly labeled as propaganda, the Act does not permit the Government to control content. Exemptions are permitted for (1) diplomats, (2) nations deemed vital to our national defense, and (3) various nonpolitical activities.

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1. Atomic Energy. The Atomic Energy Act prohibits the issuance of licenses for the operation of atomic energy utilization or production facilities to aliens, foreign governments, foreign corporations, or corporations owned, controlled, or dominated by such foreign interests. In defining foreign ownership or control, there is no threshold test of percentage ownership or other rule of thumb. Determinations are made on a case by case basis. 42 U.S.C. SS 2133, 2134.

2. Pipelines and Mineral Leasing on Federal Lands. Under the Mineral Leasing Act of 1920, aliens or foreign-controlled enterprises may not acquire rights of way for oil pipelines, or acquire any interest therein, or acquire leases or interests therein for mining coal, oil, or certain other minerals, on federal lands other than the outer continental shelf. However, a foreign-controlled corporation may hold such an interest if its home country grants reciprocal rights to United States corporations. 30 U.S.C. SS 22, 24, 71, 181, 185, 352, 42 CFR § 3102.1-1; see generally 43 CFR Chapter II (Bureau of Land Management). However, a foreign-controlled corporation may hold and exploit a lease on the puter continental shelf under the Outer Continental Shelf Act and Department of Interior regulations (43 U.S.C. § 331-43; 43 CFR 3300.1). Foreign ownership up to 100% is permitted.

Under the Geothermal Steam Act, (30 U.S.C. SS1001-1025) leases for the development of geothermal steam and associated resources may be issued only to United States citizens and corporations organized under the laws of the United States or of any State. 30 U.S.C. § 1015. However, a domestically incorporated enterprise may be foreign owned or controlled.

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