AIRCRAFT REGISTRATION

In order for a foreign person or entity to register an aircraft in the United States, there must be compliance with strict regulations promulgated by the U.S. government. One of the primary ways for a foreigner to acquire eligibility to register an aircraft in the United States is to qualify the owner of the aircraft as a "citizen of the United States". For purposes of these rules, a citizen of the United States includes certain corporations and associations of which (i) the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, (ii) is under the actual control of citizens of the United States and (ii) at least 75 percent of the voting interests are owned or controlled by persons that are citizens of the United States.

Under regulations published by the Federal Aviation Administration, certain U.S. trusts with foreign beneficiaries (i.e., beneficial owners) can hold legal title to an aircraft so long as specific control requirements are maintained. Pursuant to such requirements each trustee must either be a U.S. citizen or a resident alien and the applicant must submit specific documentation showing legal relationships under the trust documents. Next, the trustee must submit an affidavit stating that the trustee is not aware of any situation that would result in foreign persons having more than 25 percent of the aggregate power to influence or limit the exercise of the trustee's authority with respect to the trust. Finally, if foreigners have the power to direct or remove a trustee, the trust instrument must provide that those persons together may not have more than 25 percent of the aggregate power to direct or remove a trustee. It is important to note that these same regulations specifically provide that there is nothing in the above set forth rules that prevents such persons from having more than 25 percent of the beneficial interests in the trust.


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