§ 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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