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Code of Federal Regulations (Last Updated: July 5, 2024) |
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Title 31 - Money and Finance: Treasury |
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Subtitle B - Regulations Relating to Money and Finance |
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Chapter VIII - Office of Investment Security, Department of the Treasury |
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Part 800 - Regulations Pertaining to Certain Investments in the United States by Foreign Persons |
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Subpart B - Definitions |
§ 800.243 - Solely for the purpose of passive investment.
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§ 800.243 Solely for the purpose of passive investment.
(a) Ownership interests are held or acquired solely for the purpose of passive investment if the person holding or acquiring such interests does not plan or intend to exercise control and -
(1) Is not afforded any rights that if exercised would constitute control;
(2) Does not acquire any access, rights, or involvement specified § 800.211(b);
(3) Does not possess or develop any purpose other than passive investment; and
(4) Does not take any action inconsistent with holding or acquiring such interests solely for the purpose of passive investment. (See § 800.302(b).)
(b) Example: Corporation A, a foreign person, acquires a voting interest in Corporation B, a U.S. business. In addition to the voting interest, Corporation A negotiates the right to appoint a member of Corporation B's board of directors. The acquisition by Corporation A of a voting interest in Corporation B is not solely for the purpose of passive investment.