Subchapter C. Foreign Investment
Permits
Section 15.307. Application procedures for Kosrae State Foreign Investment
Permits.
(1) An application for a Kosrae State Foreign Investment Permit shall be made on the form or forms prescribed in the Kosrae State Foreign Investment Regulations, as may be supplemented in particular cases by order of the Director. Such application form or forms shall be made publicly available by the Director. The application form shall require the applicant to identify clearly the person(s) resident in the Kosrae State who are designated as agent for service of process.
(2) Submission of an application for a Kosrae State Foreign Investment Permit shall be made to the Director. Upon receiving an application for a Kosrae State Foreign Investment Permit, the Director shall, within such periods of time as may be prescribed for this purpose in the Kosrae State Foreign Investment Regulations, take one or more of the following actions, as appropriate:
(a) determine whether the application relates to foreign investment in economic sector included in Category A, B or C, as described in Section 205 of the FSM Foreign Investment Act, or in economic sectors Category D, E or F, as described in Section 15.305 above;
(b) deny the application if it relates to:
(i) foreign investment in an economic sector of Category D (Kosrae State Red List);
(ii) foreign investment in an economic sector of Category E (Kosrae State Amber List) or a Category F (Kosrae State Green List) when the application is incomplete or the Foreign Investor does not meet a minimum value standards established pursuant to Section 15.306(4)(c) of this Chapter; or
(iii) foreign investment in an economic sector in category E (Kosrae State Green List) economic sector but does not satisfactorily demonstrate that the investment meets all of the applicable Kosrae State criteria established in the Kosrae State Foreign Investment Regulations pursuant to Section 15.306(4)(b) of this Chapter;
(iv) forward the application to the Secretary if it relates to foreign investment in an economic sector Category A, B, or C, as described in Section 205 of the FSM Foreign Investment Act;
(c) require the applicant to submit further information if the application is incomplete or does not provide enough information for the Director to determine (i) what economic sector(s) is (are) involved, or (ii) whether the requirements for a Kosrae State Foreign Investment Permit have been or will be met;
(d) hold a public hearing for the review of any new or renewal application submitted which falls under Category E (Kosrae State Amber List), if, in the Director's discretion he determines one is appropriate. Any required hearing shall be held pursuant to provisions of the Kosrae State Foreign Investment Regulations.
(e) issue a Kosrae State Foreign Investment Permit if:
(i) the application:
(A) relates to a foreign investment in a Category E (Kosrae State Amber List) economic sector;
(B) is complete; and
(C) demonstrates that the foreign investment meets all of the applicable Kosrae State criteria established in the Kosrae State Foreign Investment Regulations pursuant to Section 15.306(4)(b)and (c) of this Chapter; or
(ii) the application:
(A) relates to foreign investment in a Category F (Kosrae State Green List) economic sector;
(B) is complete; and
(C) meets any minimum value standards established pursuant to Section 15.306(4)(c) of this Chapter.
(f) Place conditions or restrictions on the issuance of the Kosrae State Foreign Investment Permit as deemed appropriate.
(3) Upon taking any action described in Section 15.307(2)(b), (2)(d), or (2)(f) above, the Director shall, within such periods of time as may be prescribed for this purpose in the Kosrae State Foreign Investment Regulations, advise the applicant of the action and the reasons therefor.
(4) The amount of the application fee to be paid by an applicant seeking a Kosrae State Foreign Investment Permit shall be established in the Kosrae State Foreign Investment Regulations.
(5) If the Director issues a Kosrae State Foreign Investment Permit pursuant to Section 15.307(2)(f) above, the Kosrae State Foreign Investment Permit will be sent to the applicant and copies of any Foreign Investment Permit shall be:
(i) inserted into a register to be maintained by the Director for this purpose; and
(ii) sent to the Secretary, for insertion in a register to be maintained by the FSM R&D Department for this purpose.
(6) If the Director denies an application for a Kosrae State Foreign Investment Permit pursuant to Section 15.307(2)(b)(ii) or (iii) above, the applicant may:
(i) resubmit the application with modifications designed to meet any applicable criteria established in the Kosrae State Foreign Investment Regulations, or
(ii) provide to the Director additional information or explanation to indicate how, in the applicant's opinion, the foreign investment would satisfy such criteria. On receipt of such modifications or additional information, the Director shall review the application and make a determination under the procedures prescribed in Section 15.307(2) above. There is no limit to the number of times an applicant may modify an application in order to meet the requirements for a Kosrae State Foreign Investment Permit.
Section 15.308. Form, fees, renewal, modification, and
cancellation of a Kosrae State Foreign Investment permit.
(1) A Kosrae State Foreign Investment Permits shall be in the form prescribed in the Kosrae State Foreign Investment Regulations.
(2) Upon the application for a Kosrae State Foreign Investment Permit, the holder shall fulfil the requirements, if any included in the Kosrae State Foreign Investment Regulations for the payment of an application fee.
(3) Upon the issuance of a Kosrae State Foreign Investment Permit, the holder shall fulfil the requirements, if any included in the Kosrae State Foreign Investment Regulations for the payment of an annual permit fee.
(4) A Kosrae State Foreign Investment Permit shall be valid for one year, and, unless it has been cancelled, suspended, or surrendered pursuant to Section 15.308(8)-(11) below, it shall be automatically renewable on an annual basis upon the fulfillment of the requirements, if any, included in the Kosrae State Foreign Investment Regulations for the payment of an annual fee.
(5) A Kosrae State Foreign Investment Permit shall not be transferable between investments or investors and shall not be assignable to any investment or investor other than the one for which it was issued.
(6) The holder of a Kosrae State Foreign Investment Permit may not make a change in the business for which the holder has obtained a Kosrae State Foreign Investment Permit without obtaining their new Kosrae State Foreign Investment Permit for that purpose under Section 15.307 of this Act (or, if applicable, a new FSM Foreign Investment Permit under Section 207 of the FSM Foreign Investment Act or obtaining a modification in the terms of their present Kosrae State Foreign Investment Permit. Such a modification may be requested by the holder, and granted by the Director, in accordance with such procedures and requirements as the Director may establish in the Kosrae State Foreign Investment Regulations.
(7) For purposes of Section 15.308 (5) above, a "change in the business" occurs if the holder either:
(a) begins operation in a different economic sector from the one(s) for which the Kosrae State Foreign Investment Permit was issued, or
(b) alters, changes, modifies or transfers the amount of the ownership interest which the non-citizen retains.
(8) The Director may cancel a Kosrae State Foreign Investment Permit only if the Director determines, following the procedural requirements of Section 15.308(9) below, that one or more of the following circumstances exist:
(a) the annual fee required under either Section 15.308(2) or (3) above has not been paid;
(b) the holder of the permit requests its cancellation;
(c) the permit application is found to have contained false or fraudulent information;
(d) if any person bribes or otherwise exercises, or attempts to exercise, undue influence the process of the Permit;
(e) the holder of the permit fails or refuses to comply with the reporting requirements under Section 15.310 of this Chapter or with any other requirements of this Chapter or of the Kosrae State Foreign Investment Regulations;
(f) the holder of the permit fails or refuses to comply with any restrictions or conditions included in the Permit, or engages in activities not authorized by the Permit;
(g) the holder fails to comply with any applicable State or National laws.
(9) If a Kosrae State Foreign Investment Permit is cancelled pursuant to Section 15.308(7) above, the noncitizen holding that cancelled Permit shall:
(a) immediately stop engaging in business in Kosrae State;
(b) take such steps as the Director shall direct in order to dispose of that noncitizen's interest in any applicable business entity; and
(c) pay any fines or other penalties that may be imposed under Section 15.313 of this Chapter, under Section 13.526 of Title 13, or under Kosrae State Foreign Investment Regulations.
(10) If it appears to the Director that one or more of the grounds for cancellation of a Kosrae State Foreign Investment Permit, as enumerated in Section 15.308(7) above, may exist, the Director may temporarily suspend the validity of that Kosrae State Foreign Investment Permit and shall commence the following procedures leading to cancellation:
(a) The Director, or the Director's designee, may schedule a hearing on the matter before the Director, or the director's designee. At least 21 days' written notice of the hearing, stating the alleged ground for cancellation, shall be given to the holder of the Kosrae State Foreign Investment Permit, at the address designated on the application for such notice. If during that time the holder of the Kosrae State Foreign Investment Permit takes action satisfactory to the Director to disprove the allegations or otherwise remedy the situation, the Director may cancel the hearing and reinstate the Kosrae State Foreign Investment Permit if it was temporarily suspended.
(b) Hearing procedures shall be prescribed by the Director in the Kosrae State Foreign Investment Regulations and shall include the right of the holder of the Kosrae State Foreign Investment Permit to participate and to be represented by counsel, to call witnesses, and to cross-examine witnesses called against the holder of the Kosrae State Foreign Investment Permit.
(c) Within ten days after a hearing, the Director shall issue a written decision including reasons for the action taken and the remedy to be imposed pursuant to Section 15.308(8) above, and shall transmit that decision immediately to the holder of the Kosrae State Foreign Investment Permit.
(d) If a decision has not been issued pursuant to Section 15.308(9)(c) above within the ten days specified, any temporary suspension ordered by the Director shall automatically end, and the validity of the Kosrae State Foreign Investment Permit shall automatically be reinstated.
(e) Within 20 days after receiving the notice of the decision of the Director, the holder of the Kosrae State Foreign Investment Permit may appeal the decision to the Kosrae State Court. Copies of any notice of appeal shall be served on the Director and the Attorney General of Kosrae State.
(11) A holder of a Kosrae State Foreign Investment Permit may surrender it by meeting requirements specified for this purpose in the Kosrae State Foreign Investment Regulations. Mere cessation of engaging in business in Kosrae State, without meeting such requirements, does not relieve the holder of Kosrae State Foreign Investment Permit from the requirements incident thereto.
Subchapter D. Expatriate Worker
Authorizations
and Entry Permits; Reports; Other Provisions
Section 15.309. Expatriate Worker Authorizations and Entry
Permits.
Sections 210, 211, and 212 of the FSM
Foreign Investment Act and the provisions of the FSM Foreign Investment
Regulations issued pursuant to those provisions, sets forth the entitlements to
expatriate worker authorizations (EWAs') and entry permits. The Director
will work with the FSM Immigration Department, as needed, to assist the holder
obtain any necessary EWA.
Section 15.310. Reports
by holders of Kosrae State Foreign Investment Permits.
(1) The holder of any Kosrae State Foreign Investment Permit shall submit to the Director such reports concerning the foreign investment as the Director may prescribe in the Kosrae State Foreign Investment Regulations. Details of the information required, the reasons for the requirements, and the frequency and form of such reports shall be set forth in the Kosrae State Foreign Investment Regulations.
(2) Any change in foreign ownership of an investment for which a Kosrae State Foreign Investment Permit has been issued shall be reported immediately to the Director, who may take such action as the Director considers appropriate in respect of the Kosrae State Foreign Investment Permit, including its cancellation if appropriate under the provisions of Section 15.308 of this Chapter.
(3) Change in ownership does not include daily or routine changes in stockholders of a corporation whose corporate stock is traded on a public stock exchange. However, if a majority ownership interest of the corporation is transferred, assigned or purchased then the holder shall report said transfer and follow all applicable section of this Chapter.
Section 15.311. Reports by the Director.
(1) The Director shall publish information annually, in such form and detail as may be prescribed in the Kosrae State Foreign Investment Regulations, concerning the extent of foreign investment in Kosrae State.
(2) The Director shall be guided by the provisions of Section 215 of the FSM Foreign Investment Act, and by the provisions of the FSM Foreign Investment Regulations issued thereunder, concerning reports to be submitted by States to the FSM National Government regarding foreign investment.
Section 15.312. Guarantees and entitlements regarding foreign
investments.
(1) The Director shall be guided by, and shall take no action inconsistent with, the provisions of Sections 216 and 217 of the FSM Foreign Investment Act, or with any provisions of the FSM Foreign Investment Regulations issued thereunder, concerning compulsory acquisition of foreign investment property and transfers of earnings and capital relating to foreign investments.
(2) Upon payment of such additional fees as the Director may prescribe for this purpose, the holder of a Kosrae State Foreign Investment Permit shall be entitled, for 5 years, to an exemption from any future changes in the Kosrae State transaction and sales tax rates and similar rules applicable to the business entity to which the Permit applies.
(3) Subject to the provisions of both the FSM Foreign Investment Act, and this Chapter, and subject to regulations promulgated pursuant to those provisions, the Government of Kosrae State shall not take action, or permit any subsidiary political unit within Kosrae State to take action, that would result in a foreign investor being given treatment that is less favorable than the treatment given to citizens engaging in business in Kosrae State.
Section 15.313. Injunction and penalties.
Where, on application by the Attorney
General, the Kosrae State Court is satisfied that a noncitizen has acted, or is
about to act, in contravention of the provisions of the FSM Foreign Investment
Act, the provisions of this Chapter, the provisions of the FSM Foreign
Investment Regulations, or the provisions of the Kosrae State Foreign Investment
Regulations, the court may impose an injunction on any such action. The
Attorney General shall provide to the concerned noncitizen(s) at least two
business days' prior notice of an intention to file such an application with the
court.
(1) If the Director determines that any person has failed or refused to comply with requirements imposed under or pursuant to the FSM Foreign Investment Act, this Chapter, the FSM Foreign Investment Regulations, or the Kosrae State Foreign Investment Regulations, the Director may, in addition to initiating action under subsection (1) above, suspend or cancel a Kosrae State Foreign Investment Permit pursuant to Section 15.308 of this Chapter;
(a) impose such administrative fines and penalties as may be prescribed in the FSM Foreign Investment Regulations or in the Kosrae State Foreign Investment Regulations; or
(b) initiate measures for the imposition of criminal or civil penalties as described in Section 15.313(3) and (4) below or in other laws of Kosrae State.
(2) Any person guilty of willfully contravening the provisions of Section 15.304 commits a crime as set forth in Section 13.526 of the Kosrae State Code and as set forth in Section 220 of the FSM Foreign Investment Act, and upon conviction shall be subject to the penalties provided for in said sections.
(3) Any person who fails to comply with any of the provisions of this Chapter is subject to the following civil penalties:
(a) in the case of an individual, the imposition of a civil fine in an amount up to $10,000 per incident;
(b) in the case of a legal entity, the imposition of a civil fine in an amount up to $50,000 per incident;
(c) in any case, the forfeiture to the Kosrae State Government of assets or property rights in any business entity engaging in business in contravention of this Chapter; provided, however, that the value of such assets or property so forfeited shall not be unreasonable in relation to the illegal behavior and injury it caused. The Attorney General shall file and prosecute an action for the imposition of civil penalties in the appropriate court.
Section 15.314. Judicial Review.
A decision by the Director pursuant to Section 15.307 of this Chapter regarding an
application for a Kosrae State Foreign Investment Permit may be appealed by the
applicant. The notice of any such appeal shall be filed with the Kosrae
State Court within 30 days of receipt of notice of the Director. s decision.
A copy of any such notice shall also be served on the Attorney General of
Kosrae State and the Director. Such appeals shall be made under applicable
rules of civil procedures.
Section 15.315. Confidentiality.
In carrying out the responsibilities
imposed by this Chapter regarding the regulation of foreign investment in Kosrae
State, the Director shall maintain the confidentiality of any sensitive business
information relating to a particular foreign investor or prospective foreign
investor, if so requested by such person; provided, however, that this provision
shall not prevent the Director from disclosing information upon order of a court
or pursuant to other laws and regulations of Kosrae State of the
FSM.
Section 15.316. Enforcement.
(1) Primary responsibility for the enforcement of this Chapter shall be placed in the Attorney General of Kosrae and, as to criminal sanctions provided in Section 13.526 of this Act, in appropriate law enforcement authorities within Kosrae State.
(2) In carrying out the responsibility imposed by this Chapter, the Director may require the attendance of any citizen or noncitizen at a meeting or hearing conducted by the Director and may require such persons to testify or to produce at, before, or after such meeting or hearing documents, information, and things relevant to enforcement of the provisions of this Chapter.
(3) The Director shall promulgate the regulations necessary to implement this Chapter, which regulations shall have the force and effect of law.