A voting trust can help you register your aircraft in the US.
US FAA regulations require that aircraft are registered only by citizens of the United States.
Aircraft Must Be Registered
14 CFR Section 47.3 requires registration of aircraft. Most aircraft owners will register their aircraft as “owned by a citizen of the United States”.
Who Can Register an Aircraft
14 CFR Section 47.3 allows an aircraft to be registered under 49 U.S.C. 44103 only when the aircraft is not registered under the laws of a foreign country and is:
(1) Owned by a citizen of the United States;
(2) Owned by an individual citizen of a foreign country lawfully admitted for permanent residence in the United States;
(3) Owned by a corporation not a citizen of the United States when the corporation is organized and doing business under the laws of the United States or a State within the United States, and the aircraft is based and primarily used in the United States; or
(4) An aircraft of (i) The United States Government; or (ii) A State, the District of Columbia, a territory or possession of the United States, or a political subdivision of a State, territory, or possession.
What is a “Citizen of the United States”
Almost everyone believes their aircraft is “owned by a citizen of the United States”. Despite this belief, it is common for a corporation or LLC to not be owned by a citizen of the United States, as defined and interpreted by the FAA
14 CFR Section 47.2 defines Citizen of the United States or U.S. citizen as one of the following:
(1) An individual who is a citizen of the United States or one of its possessions.
(2) A partnership each of whose partners is an individual who is a citizen of the United States.
(3) A corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States.
If a corporation or an LLC satisfies all of the requirements of Section (3) above, except the requirement that “at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States,” then a voting trust can hold all of the shares or membership interests in order to satisfy the FAA requirement.
Voting Trust Requirements
Submission to the FAA Registry
14 CFR Section 47.8 contains the requirements for a voting trust. If a voting trust is used to qualify a domestic corporation as a U.S. citizen, the applicant must submit to the Registry—
(1) A true copy of the fully executed voting trust agreement, which must identify each voting interest of the applicant, and which must be binding upon each voting trustee, the applicant corporation, all foreign stockholders, and each other party to the transaction; and
(2) An affidavit executed by each person designated as voting trustee in the voting trust agreement, in which each affiant represents—
(i) That each voting trustee is a citizen of the United States within the meaning of 49 U.S.C. 40102(a)(15).
(ii) That each voting trustee is not a past, present, or prospective director, officer, employee, attorney, or agent of any other party to the trust agreement;
(iii) That each voting trustee is not a present or prospective beneficiary, creditor, debtor, supplier or contractor of any other party to the trust agreement;
(iv) That each voting trustee is not aware of any reason, situation, or relationship under which any other party to the agreement might influence the exercise of the voting trustee’s totally independent judgment under the voting trust agreement.
The voting trust must also contain certain terms.
Per 14 CFR 47.8(b), each voting trust agreement must provide for the succession of a voting trustee in the event of death, disability, resignation, termination of citizenship, or any other event leading to the replacement of any voting trustee. Upon succession, the replacement voting trustee is to immediately submit to the Registry the affidavit required by paragraph (a)(2) of 14 CFR 47.8.
Per 14 CFR 47.8(c), if the voting trust terminates or is modified, and the result is less than 75 percent control of the voting interest in the corporation by citizens of the United States, a loss of citizenship of the holder of the Certificate of Aircraft Registration, AC Form 8050-3 occurs, and the Certificate of Aircraft Registration issued by the FAA is no longer effective.
Per 14 CFR 47.8 (d), a voting trust agreement may not empower a trustee to act through a proxy.
Submit To FAA For Approval Prior To Submission For Registration
Even if you think you mastered the voting trust requirements, you should submit the final version of all of your documentation to the FAA for pre-approval prior to submitting it on your closing date to register the aircraft. Pre-approval will allow you to make any required changes in advance in order to properly register your aircraft pursuant to your voting trust on your closing date.
Determining whether a voting trust will allow your corporation or LLC to meet the FAA registration requirements can be challenging. In additional to the US Code and Federal Aviation Regulations, you must comply with FAA interpretations and ongoing changes in how the US government wants aircraft to be registered. Obtaining assistance from an attorney experienced in corporate aviation can help reduce costs and satisfy the registration regulatory requirements for your aircraft.
Michelle M. Wade is a Partner with the aviation law firm of Jetstream Aviation Law, P.A. and counsel clients on the acquisition, financing and operation of corporate jets operated under Part 91 and Part 135 of the US Federal Aviation Regulations. Jetstream Aviation Law can be found at www.JetstreamLaw.com.