This morning, the Coast Guard issued a Notice in the Federal Register entitled “Mechanisms of Compliance With United States Citizenship Requirements for the Ownership of Vessels Eligible to Engage in Restricted Trades by Publicly Traded Companies.” The notice informs the public of how the Coast Guard plans to exercise its discretion in enforcing the citizenship requirements for public companies. The Coast Guard has moved away from its longstanding position regarding direct proof of citizenship by stating that changes in the trading of securities over the past 20 years have caused it “to take another look” at the ways public companies can establish their citizenship:
The Coast Guard recognizes that in the modern, complex, multi-faceted, and dynamic securities market no single measure or combination of measures may always provide direct proof of the citizenship of every shareholder. The Coast Guard also recognizes that the choice of compliance measures is best left up to the individual company as each one is best positioned to evaluate initially and on an on-going basis the totality of its circumstances. Companies that employ, and diligently administer and adhere to, measures such as those identified [in the Notice] in an active system of monitoring stock ownership may use these as a sufficient basis to file an Application … to document a vessel with a coastwise endorsement.
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