PRIA, Government Policy, Made Personal

Summary

A company, partnership, or association counts as a U.S. citizen only when U.S. citizens own the controlling interest. If the business runs a ship in coastwise trade, at least 75% must be owned by U.S. citizens. For corporations there are extra rules: they must be formed under U.S. or state law, the chief executive and the board chair must be U.S. citizens, and the number of directors who are not U.S. citizens must be limited so they stay a minority of the directors needed for a quorum. "Controlling interest" means citizens hold the majority of stock and voting power, with no trusts, contracts, or other ways that let noncitizens control the company. The "75% interest" test is the same idea but uses 75% ownership and voting power and blocks any contract or method letting noncitizens control more than 25%.

Title 46, §50501

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(a)In General.—

In this subtitle, a corporation, partnership, or association is deemed to be a citizen of the United States only if the controlling interest is owned by citizens of the United States. However, if the corporation, partnership, or association is operating a vessel in the coastwise trade, at least 75 percent of the interest must be owned by citizens of the United States.

(b)Additional Requirements for Corporations.—

In this subtitle, a corporation is deemed to be a citizen of the United States only if, in addition to satisfying the requirements in subsection (a)—

(1)it is incorporated under the laws of the United States or a State;

(2)its chief executive officer, by whatever title, and the chairman of its board of directors are citizens of the United States; and

(3)no more of its directors are noncitizens than a minority of the number necessary to constitute a quorum.

(c)Determination of Controlling Corporate Interest.—

The controlling interest in a corporation is owned by citizens of the United States under subsection (a) only if—

(1)title to the majority of the stock in the corporation is vested in citizens of the United States free from any trust or fiduciary obligation in favor of a person not a citizen of the United States;

(2)the majority of the voting power in the corporation is vested in citizens of the United States;

(3)there is no contract or understanding by which the majority of the voting power in the corporation may be exercised, directly or indirectly, in behalf of a person not a citizen of the United States; and

(4)there is no other means by which control of the corporation is given to or permitted to be exercised by a person not a citizen of the United States.

(d)Determination of 75 Percent Corporate Interest.—

At least 75 percent of the interest in a corporation is owned by citizens of the United States under subsection (a) only if—

(1)title to at least 75 percent of the stock in the corporation is vested in citizens of the United States free from any trust or fiduciary obligation in favor of a person not a citizen of the United States;

(2)at least 75 percent of the voting power in the corporation is vested in citizens of the United States;

(3)there is no contract or understanding by which more than 25 percent of the voting power in the corporation may be exercised, directly or indirectly, in behalf of a person not a citizen of the United States; and

(4)there is no other means by which control of more than 25 percent of any interest in the corporation is given to or permitted to be exercised by a person not a citizen of the United States.

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 50501(a)46 App.:802(a) (words before 3d comma and after 11th comma).Sept. 7, 1916, ch. 451, § 2(a)–(c), 39 Stat. 729; July 15, 1918, ch. 152, § 2, 40 Stat. 900; June 5, 1920, ch. 250, § 38, 41 Stat. 1008; Pub. L. 86–327, § 3, Sept. 21, 1959, 73 Stat. 597; Pub. L. 105–383, title IV, § 421, Nov. 13, 1998, 112 Stat. 3439. 46 App.:1244(c).June 29, 1936, ch. 858, title IX, § 905(c), 49 Stat. 2016; June 23, 1938, ch. 600, § 39(b), 52 Stat. 964; Pub. L. 86–327, § 4, Sept. 21, 1959, 73 Stat. 597. 50501(b)46 App.:802(a) (words between 3d and 11th commas). 50501(c)46 App.:802(b). 50501(d)46 App.:802(c). In subsection (a), the words “and with respect to a corporation under subchapter VI of this chapter, all directors of the corporation are citizens of the United States” in 46 App. U.S.C. 1244(c) are omitted because part A of subchapter VI contains the operating-differential subsidy program which, under 46 App. U.S.C. 1185a, is being phased out, and part B of subchapter VI contains the Maritime Security Fleet program which is being repealed (effective October 1, 2005) and replaced by chapter 531 of title 46 as enacted by the Maritime Security Act of 2003. Thus, subchapter VI is being omitted from the revised title and will instead appear as a note under section 53101. The words “and, in the case of a corporation, partnership, or association operating a vessel on the Great Lakes, or on bays, sounds, rivers, harbors, or inland lakes of the United States the amount of interest required to be owned by a citizen of the United States shall be not less than 75 per centum” in 46 App. U.S.C. 1244(c) are omitted as covered by the 75 percent ownership requirement for operation in the coastwise trade. In subsection (b)(1), the words “Territory, District, or possession thereof” are omitted because of the definition of “State” in chapter 1 of the revised title.

§50501 Entities Deemed Citizens of the United States

Summary

Title 46, §50501

Notes & Related Subsidiaries

Historical and Revision Notes

Citations & Metadata