§ 355.3 Criteria to be applied in support of stock data in affidavit.

Collier Advertising Service, Inc.Hudson River Day Line(a) The same criteria should be observed in obtaining information to be furnished for stockholders named (direct ownership of required percentage of shares of stock of each class or series) in the Affidavit as those observed for the primary corporation. If, on the other hand, the “fair inference rule” is applied with respect to stock ownership (see v. , 14 Fed. Supp. 335), the extent of U.S. citizen ownership of stock should be ascertained in the requisite percentage (65 percent for foreign operation and 95 percent for coastwise operation) in order that the veracity of the statutory statements made in the Affidavit (paragraph 5) (see § 355.2) may be relied upon by the Maritime Administration (MARAD).

(b) When applying the fair inference rule (where there are more than 30 stockholders, except where one or more of such number actually owns the controlling or 75 percent interest) in order to prove U.S. citizen ownership in the required percentages:

(1) For non-publicly traded corporations:

(i) For foreign operation, 65 percent of the shares of stock of each class or series must be shown to be held by persons with registered addresses within the United States to prove that 51 percent or controlling interest is vested in citizens of the United States; and

(ii) For coastwise operation, 95 percent of the shares of stock of each class or series must be shown to be held by persons having registered addresses within the United States to prove that 75 percent of the interest in the corporation is vested in citizens of the United States; and

(2) For publicly traded corporations:

(i) At least 95 percent of the stock (each class) of the corporation be held directly or beneficially by Persons having a U.S. address in order to infer at least 75 percent ownership by U.S. Citizens; or

(ii) At least 65 percent of the stock (each class) of the corporation be held directly or beneficially by Persons having a U.S. address in order to infer at least 51 percent ownership by U.S. Citizens; and

(3) For determining the requisite percentage of stockholders with U.S. addresses, the corporation may rely on the methods outlined in paragraph (d) of this section; and

(c) If the primary corporation is consecutively owned by several “parent” corporations (holders of 100 percent of the stock of each or all classes or series of stock issued and outstanding), the facts should be given in proper sequence either by chart or in narrative form, revealing the facts of stock ownership. The information with respect to the ultimate parent should include data relative to the basis upon which controlling or 75 percent (depending upon whether the primary corporation operates in the domestic or foreign commerce) is established, together with the names of the owners of record or beneficial owners of 5 percent or more of each class or series of stock, if more than one class or series, and a statement that such owners are citizens of the United States. In any case where different classes or series of stock exist, each class or series will be treated depending upon whether “closely held” or “publicly held,” individually in applying the fair inference rule, if applicable, or giving the relevant information with respect to United States citizens owning of record 51 percent or 75 percent of the interest.

(d) If the corporation is publicly traded, the corporation may employ the following methods to measure, monitor, determine, and affirm the required percentage U.S. citizen share ownership for the primary corporation:

(1) Use of the Depository Trust Company segregated account (or “SEG-100”) system;

(2) Monitoring SEC filings for 5 percent holders (Schedules 13D, 13G, Form 13F) and follow-up requests for information from filers;

(3) Use of protective provisions in organizational documents in order to guard against and rectify the possibility of what are referred to as excess shares;

(4) Communications with Non-Objecting Beneficial Owners (or “NOBOs”);

(5) Geographic surveys or statistical analyses of shareholder residences;

(6) Use of dual stock certificates; and

(7) Alternative methods upon written MARAD approval.