Often investment banks, private equity funds, sovereign wealth funds, and other investors have interests in companies that hold authorizations or licenses issued by the U.S. Federal Communications Commission (FCC). The FCC has taken several recent actions of which these direct and indirect (upstream) investors in the telecommunications sector should be aware. The FCC’s approach to ownership is to look “up the chain” when considering who controls an FCC-regulated entity, what is a reportable minority interest holder, and whether an interest is foreign. For example, if 10% of FCC Licensee A is owned by Company B, and Company C owns 100% of Company B, the FCC may require disclosures regarding or transactions involving Company C.
The FCC has recently stepped up its scrutiny of foreign ownership and control issues because of national security, law enforcement, foreign policy, and trade policy concerns. This renewed emphasis was demonstrated by the FCC recent issuance of an Enforcement Advisory, Order, and Notice of Proposed Rulemaking (NPRM). The FCC is increasingly making clear important regulatory obligations apply to indirect owners of entities holding FCC issued authorizations and licenses.
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