Goto Section: 1.991 | 1.993 | Table of Contents

FCC 1.992
Revised as of October 1, 2014
Goto Year:2013 | 2015
  § 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 § 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% * 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% * 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
   satisfies the insulation criteria specified in § 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 § 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 § 1.993.

   (B) Insulated membership interests. A member of a limited liability
   company that satisfies the insulation criteria specified in § 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.

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Goto Section: 1.991 | 1.993

Goto Year: 2013 | 2015
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