A foreign company or national may find it convenient and economical to register their aircraft under the United States registry for their business purpose. The use of a Delaware holding company is a commonly used option for achieving this purpose.
A foreign company or national may not register an aircraft under the United States registry unless he, she or it is a permanent resident, or has a place of business in the United States. The corporation owning the aircraft must be either a U.S. “citizen" corporation or a foreign corporation that is “qualified to do business" in the U.S. As a result of such qualification, it would be taxable in the U.S. and have all the usual obligations of a domestic business according to State and Federal Laws.
As such, many non-U.S. companies and foreign persons form U.S. holding companies in Delaware. The creation and continued existence of the U.S. holding company must be in scrupulous compliance with all state statutes, federal statutes, and Federal Aviation Regulations so the holding company can “qualify" as a “U.S. Citizen".
A Delaware corporation can be treated as a “U.S. Citizen" if at least 2/3 of the members of its board of directors are citizens of the United States and at least 3/4 of its corporate officers are citizens or residents of the United States. The common stock shares are held by the voting trustee who issues certificates of stock ownership to the actual owner(s) of the Delaware Corporation. These are mandatory conditions, and if they are not met, then the corporation is “not a citizen" and the aircraft may not be registered on the U.S. Registry. Once the Aircraft is registered under the U.S. registry with an “N" number, it must be maintained to its manufacturer’s standards as well as those of the Federal Aviation Administration (FAA).
As the Delaware corporation will function solely as a “Holding Company" to hold title to the aircraft for the actual owner(s), it is precluded from doing any business whatsoever in the United States. Everything must be structured exactly in accordance with U.S. Law and the applicable Federal Aviation Regulations (FAR).
An aviation attorney who is knowledgeable in state and federal laws, and in the FARs, can assist their clients who wish to structure their aircraft ownership for registration under the U.S. registry. Doing this using the Delaware holding company is one available option.
Endnotes: 1. 49 U.S.C. §44102, §44103, and 14 CFR § 47.8 of the Federal Aviation Regulations.
By: Mohammad Ahmed Faruqui, ESQ. Mohammad Ahmed Faruqui is an attorney in Fort Lauderdale, FL, servicing aviation clients throughout the United States and abroad. Mr. Faruqui is a member of the Florida Bar Aviation Law Committee, the International Air Transportation Safety Bar Association, the Lawyer-Pilot Bar Association and the Aircraft Owners and Pilots Association. He serves as a panel attorney on the AOPA Legal Services Plan. Mr. Faruqui has been licensed to practice law in Florida since 2006, and graduated from Nova-Southeastern University Shepard Broad Law Center in 2005. He is an instrument-rated private pilot with experience in Cessna 172s and Cirrus SR-20s.
For aviation-related services, Mr. Faruqui can be contacted at [email protected] or at (954) 527-0002.
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