User:Natereyes/Foreign ownership

= Foreign Ownership = Foreign ownership or control of a business or natural resource in a country by individuals who are not citizens of that country or by companies whose headquarters outside that country.

In general, foreign ownership occurs when multinational corporations, which do business in more than one country, inject long-term investments in a foreign country, usually in the form of foreign direct investment or acquisition.

If a multinational corporation acquires at least half of a company, the multinational corporation becomes a holding company, and the company receiving the foreign investment becomes a subsidiary. Also, foreign ownership can occur when a domestic property is acquired by a foreign individual. An example is an Indian businessman buying a house in Hong Kong.

Benefits

 * The transfer of technology and organizational knowledge can lead to higher productivity, and the company in the host country can learn from multinational corporations.
 * It increases employment and wages. Inward foreign direct investment has an overall positive effect in employment, as companies have more capital to expand.
 * It lowers prices and improves the quality of products. That is a result of higher productivity, which is beneficial for consumers and the company's competitiveness for exports.

Drawbacks

 * Foreign ownership can increase the demand of products, leading to price increases.
 * The increase in productivity in the firms in foreign ownership can cause other domestic companies to become relatively less competitive, which reduces profits.
 * Multinational corporations may use their power to influence government policies, especially in underdeveloped countries. That may have an adverse impact on economic development.
 * A lowering of employment because of operational optimization or an increase by a planned expansion can occur. Wages can be reduced for new employees by new corporate policies, and an optimized employee benefits package can reduce benefits for all.
 * The demise of local economies can be caused by siphoning money from communities to global elites.

== History of Foreign Investment in the United States == There are records of agreements from the Greek City-states that allowed reciprocal entry of and ownership of property for foreigners and a Clause from the Magna Carta which allowed merchants safe passage and the right to buy and sell in England. Specifically, in the United States, in his Report on Manufactures in 1791, Alexander Hamilton argued that the new nation should keep investment open to foreigners. Hamilton states that “Instead of being viewed as a rival (foreign investment), it ought to be Considered as a most valuable auxiliary; conducing to put in Motion a greater Quantity of productive labour, and a greater portion of useful enterprise than could exist without it. ” The idea of foreign investment contributed significantly to the United States’ development throughout the 18th century and by the middle of the 19th century, half of the federal and state and one-quarter of the municipal debts were held by foreigners. Foreign investment in the United States increased due to the 1849 California Gold Rush. The most significant segment of foreign capital was injected into real estate. Significant holdings in New York, Maine, West Virginia, Florida, and Iowa were acquired by Europeans. An English company was also granted 3 million acres (XIT Ranch) in Texas in payment for building their state capitol building. With the invention of the automobile, oil became increasingly important which led to an influx of foreign oil companies buying property in the United States. However, World War I lead to a drastic decrease of foreign capital. The European creditor companies had to sell many of their holdings in the United States in order to satisfy wartime needs. This caused the United States to shift from a debtor to a creditor nation for a few years. Currently, there are federal regulations and restrictions on foreign investment for the: shipping industry, aircraft industry, mining, energy, lands, communications, banking, governmental contracting, and investment companies.

Assessment
According to the US Department of Defense, the following factors relating to a company, the foreign interest, and the government of the foreign interest are reviewed in the aggregate in determining whether a company is under foreign ownership, control, or Influence:


 * The record of economic and government espionage against US targets
 * The record of enforcement and/or engagement in unauthorized technology transfer
 * Type and sensitivity of the information that is accessed,
 * The source, nature, and extent of the foreign ownership
 * The record of compliance with pertinent US laws, regulations and contracts
 * The nature of any bilateral and multilateral security and information exchange agreements that may be pertinent
 * The ownership or control, in whole or in part, by a foreign government

Shipping Industry
46 U.S.C. §12102(a)

Any internationally unregistered vessel weighing at least five tons is eligible for documentation if it is owned by:

(1) a United States Citizen; (2) an association, trust, joint venture, or other entity, of which all members are United States citizens and are able of holding title to a vessel under the laws of the United States or of a state; (3) a partnership whose general partners are United States citizens and whose controlling interest is owned by United States citizens; (4) a corporation established under federal or state laws whose chief executive officer and chairman of its board of directors are United States citizens and no more of its directors are non-citizens than a minority of the number necessary to constitute a quorum; (5) the United States government; or (6) a state government.

Aircraft Industry
49 U.S.C. §44101

49 U.S.C. §44102

An aircraft must be registered in order for a person to legally operate it.

An aircraft may be eligible for registration if it is:

(1) not registered under the laws of a foreign country and is owned by a United States citizen, a foreign citizen admitted for permanent residence in the United States, or a foreign corporation when the it is organized and doing business under the laws of the United States or an individual state as long as the aircraft is based and primarily used in the United States; or (2) an aircraft owned by the United States Government or an individual state, the District of Columbia, a territory or possession, or a political subdivision of a state, territory, or possession.

49 U.S.C. §40102(a)(15)

A United States citizen is defined as:

(a) an individual who is a citizen of the United States, (b) a partnership in which all members are United States citizens, or (c) a corporation or association organized under the laws of the United States or any individual state, the District of Columbia, territory, or possession of the United states, of which the president and at least two-thirds of the board of directors and other managing officers are United States citizens and at least 75% of the voting interest is owned or controlled by persons who are United States citizens.

49 U.S.C. §41703

An aircraft of a foreign country which is not a part of a foreign military may be operated in the United States if the operator has the required certificates or licenses from the United Sates or from the nation the aircraft is registered in as long as the foreign nation allows similar privileges for aircrafts registered in the United States.

49 U.S.C. §44711

49 U.S.C. §44703(e)

Operators of any aircraft may be subject to restrictions based on their citizenship. A person must obtain an airman certificate in order to legally operate any aircraft. The Administrator of the Federal Aviation Administration, may restrict or prohibit the issuance of airman certification for foreign citizens, or require agreements with the government of the foreign nation.

49 U.S.C. §§44301 et seq

49 U.S.C. §44303

Obtaining the insurance and reinsurance for the losses or damages associated with the risks of operating an aircraft is provided by the Secretary of Transportation which may be dependent on certain citizenship requirements.

Mining
30 U.S.C. §22

Both surveyed and unsurveyed valuable mineral deposits in lands belonging to the United States are available for exploration and purchase by a citizen of the United States or those who have declared their intention to become a United States citizen.

30 U.S.C. §24

Proof of citizenship may consist, in the case of an individual, of his own affidavit thereof; in the case of an association of persons unincorporated, of the affidavit of their authorized agent, made on his own knowledge, or upon information and belief; and in the case of a corporation organized under the laws of the United States, or of any State or Territory thereof, by the filing of a certified copy of their charter or certificate of incorporation.

30 U.S.C. §181

Deposits of coal, phosphate, sodium, potassium, oil, oil shale, gilsonite, or gas and lands containing these deposits owned by the United States, including within national forests and in incorporated cities, towns, villages, and national parks and monuments, shall be subject to disposition in the approved manner to United States citizens, associations of United States citizens, or any corporation organized under United States, state, or territorial laws. Citizens of another country whose laws, customs, or regulations deny similar privileges to citizens or corporations of the United States shall not by stock ownership, stock holding, or stock control own any interest in any lease concerning these mineral lands.

43 U.S.C. §§1331 et seq

30 C.F.R. §256.35

The leasing of oil, natural gas, and other mineral deposits is allowed in the submerged lands of the Continental Shelf. Regulations require that only United States citizens, foreign citizens permanently residing in the United States, domestic corporations, or associations of one or more of these groups may obtain these leases.

Energy
16 U.S.C. §797(e)

Licenses for the construction, operation, or maintenance of facilities for the development, transmission, and utilization of power on land and water over which the federal government has control may be issued only to United States citizens and domestic corporations.

42 U.S.C. §2133(d)

No license for nuclear facilities may be given to a foreign citizen or to a corporation believed to be controlled by a foreign citizen or government.

Lands
There is little regulation regarding foreign ownership of residential or commercial real estate. However, previous acts restrict the distribution of public land to United States citizens and later, those with declared intention to become United States citizens. There are also present regulations on lands used for grazing or agricultural purposes.

Ch. LXXV, §1, Stat. 392 (1862)

The past Homestead Acts required American citizenship in order to make claims on public land.

43 U.S.C. §321

Today, the Desert Land Act requires citizenship or a declared intention of citizenship in order to make claims on public land.

43 U.S.C. §315b

United States citizenship or declared intention of citizenship is required by the Secretary of the Interior for the authorization of public land grazing permits.

92 Stat. 1263

The Agricultural Foreign Investment Disclosure Act requires the disclosure of transactions involving agricultural land to the Secretary of Agriculture.

43 U.S.C. §375

Public land reclamation projects associated with the Reclamation Act in which are no longer needed for the purposes in which they were improved may be auctioned off at the discretion of the Secretary of the Interior. Purchasers must be a citizen of the United States and may not purchase more than one hundred and sixty acres.

Communitactions
There are present federal restrictions on foreign ownership and operation of mass communication media. However, there does not seem to be any federal regulations regarding the foreign citizen investment in magazines and newspapers of the United States. Having said that, there are regulations regarding investment from foreign principals and its agents.

47 U.S.C. §310(a)

Licenses for radio stations shall not be granted or held by any foreign government or a representative of any foreign government.

47 U.S.C. §310(b)

No broadcast or common carrier or aeronautical en route or aeronautical fixed radio station license shall be granted to or held by:

(1) Any alien or representative of any alien; (2) any corporation organized under the laws of any foreign government; (3) any corporation of which more than one-fifth of the capital stock is owned of record or voted by aliens or their representatives or by a foreign government or representative of that foreign government or by any corporation organized under the laws of a foreign country; (4) any corporation directly or indirectly controlled by any other corporation of which any officer or more than one-fourth of the capital stock is owned or voted by aliens, their representatives, or by a foreign government or representative, or by any corporation organized under the laws of a foreign country if the public interest will be served by the refusal or revocation of the license.

22 U.S.C. §§611 et seq

The Foreign Agents Registration Ac t requires that agents of foreign principals register with the United States Attorney General.

22 U.S.C. §611

Foreign principal is defined as:

(1) foreign governments and foreign political parties; (2) persons outside the United States unless it is determined that the person is an individual and a citizen of and domiciled within the United States or that the person is not an individual and is organized under or created by the laws of the United States or a state and has its principal place of business within the United States; and (3) a business organized under the laws of or having its principal place of business in a foreign country.

22 U.S.C. §611(d)

However, agent of a foreign principal does not include any news or press service or association which is a corporation organized under United States or state law or any newspaper, magazine, periodical, or other publication having on file with the United States Postal Service required information so long as it is at least 80% beneficially owned by United States citizens, its officers and directors are all United States citizens, and the news or service or association, newspaper, magazine, periodical, or other publication is not owned, controlled, subsidized, or financed and none of its policies is determined by a foreign principal or its agent.

22 U.S.C. §614

Informational materials for or in the interests of a foreign principal must be labeled to show the relationship between the agent and the foreign principal, and that the agent must file two copies of the printed propaganda with the Justice Department.

Banking
12 U.S.C. §§1841 et seq.

The Bank Holding Company Act (BHCA) regulates the actions of bank holding companies.

Government Contracting
There is little differences between foreign controlled and domestic controlled corporations in conducting business with the federal government. However, there are some federal statues that restrict federal agencies to only purchase products manufactured in the United States.

41 U.S.C. §8302(a)

American materials may be required for public use.

41 U.S.C. §8303(a)

Contractors or suppliers must have a provision in their contract in which they will use only unmanufactured articles or materials mined or produced in the United States for the construction or repair of a public building or work.

19 U.S.C. §§2501 et seq.

9 U.S.C. §2511

The Trade Agreements Act of 1979 gives the President the authority to waive application of foreign citizen restrictions on the products of our trading partners. It does not authorize the waiver of any small business or minority preference.

Investment Company
15 U.S.C. §§80a-1et seq.

The Investment Company Act of 1940 requires registration with the Securities and Exchange Commission (SEC) of an investment company which does business in the United States. Only investment companies organized or created under the laws of the United States or a state are allowed to sell their own securities in interstate commerce in connection with a public offering unless the SEC finds that it is legally and practically feasible to enforce the federal securities laws against the investment company and that the exemption from registration is consistent with the public interest and the protection of investors.

15 U.S.C. §§77aaa et seq.

15 U.S.C. §77fff(a)

The Trust Indenture Act of 1939 prohibits the sale in interstate commerce of certain securities which have not been registered under the Securities Act of 1933 unless the securities have been issued under an indenture.

15 U.S.C. §77jjj(a)(1)

There must be at least one or more trustees under the indenture, at least one of whom shall be a corporation organized and doing business under the laws of the United States, a state, territory, or the District of Columbia or a corporation or other person permitted to act as trustee by the SEC which is authorized to exercise corporate trust powers and is subject to supervision or examination by federal, state, territorial, or District of Columbia authority.

Indonesia
The House of Representatives of Indonesia passed the plantation bill to set stricter rules on foreign ownership in the plantation sector to prioritise smaller local plantation firms. There is no specific percentage value on the limit on foreign ownership, but a 30% foreign ownership ceiling had been demanded by the House's Commission IV.

Plantation business groups as well as the Ministry of Agriculture had previously voiced criticism of the bill, expressing concern that it would negatively impact plantation firms and growers, as foreign investment might be reduced.

Even though the bill was passed to limit foreign ownership, the law encourages cooperation research and development between domestic and foreign businesses, universities and individuals.

A reduction in foreign ownership limit may reduce foreign investment, but it can help boost revenue for domestic firms and economic development.

Qatar
As part of financial reforms, Qatar's emir has issued a law, allowing foreign investors to obtain up to 49% of listed Qatari companies for expansion in the stock market and to stimulate development in the financial industry.

Prior to the law, ceilings on listed Qatari firms restricted foreign ownership to 25%.

The reform aims to help attract more foreign investment in the long run. However, according to a wealth manager in the Gulf, "It's a step in the right direction, but it will have to be backed up by good performance from companies in order to attract foreign investment. Also, there should be limited impact from the law in the short term due to liquidity issues and limited numbers of shares available."

Russia
The Russian Duma has passed a law, reducing the foreign ownership ceiling for print publications and radio and television outlets from 50% to 20%; it was passed by with a vote of 430-2. The legislation forbids foreign governments, organizations, companies and individuals from founding or holding more than a 20% stake in Russian media businesses.

According to Vadim Dengin, one of the bill's authors, " the tighter limit on foreign ownership would help protect Russia from western influence." However, publishers and editors of independent media companies in Russia argued that the new law would further reduce diversity of opinion.