SF-328, Certificate Pertaining to Foreign Interests

Completion Guidance

A.  Requirements

As required by 10 CFR Part 95, eligibility for an NRC licensee, certificate holder or other who may require access and possibly storage of classified matter, depends in part on the degree of any foreign ownership, control, or influence (FOCI) to which a licensee, certificate holder or other is subject.  NRC bases FOCI determinations on information obtained from a variety of sources, including SF-328, Certificate Pertaining to Foreign Interests, and other documents requested in the FOCI Data Sheet that accompanies these instructions.

FACILITY CLEARANCE
NOTICES

           A Facility Clearance and foreign ownership, control and influence (FOCI) information are required when the licensee, certificate holder or other is expected to require employees to have access authorizations (security clearances).

           Licensees, certificate holders or others who have either a Department of Defense or a Department of Energy Facility Clearance generally need not resubmit the following foreign ownership information unless specifically requested to do so. Instead, provide your DOE Facility Clearance code or your DOD assigned commercial and government entity (CAGE) code. If uncertain, consult the office which issued this solicitation.

(a)       Use of Certificate Pertaining to Foreign Interests, Standard Form 328

(1)	The work anticipated by a licensee, certificate holder, or other will require access to classified information. Such access will require a Facility Clearance for the organization and access authorizations (security clearances) for personnel working with the classified information. To obtain a Facility Clearance the licensee, certificate holder, or other must submit a Certificate Pertaining to Foreign Interests, Standard Form 328, and all required supporting documents to form a complete Foreign Ownership, Control or Influence (FOCI) Package.
(2)	Information submitted by the licensee, certificate holder, or other in response to the Standard Form 328 will be used solely for the purposes of evaluating foreign ownership, control or influence and will be treated by NRC, to the extent permitted by law, as business or financial information submitted in confidence.
(3)	Following submission of a Standard Form 328, the licensee, certificate holder, or other shall immediately submit to the NRC written notification of any changes in the extent and nature of FOCI which could affect the company’s answers to the questions in Standard Form 328. Following grant of the facility clearance, the company must immediately submit to the NRC written notification of any changes in the extent and nature of FOCI which could affect the offeror's answers to the questions in Standard Form 328.  Notice of changes in ownership or control which are required to be reported to the Securities and Exchange Commission, the Federal Trade Commission, or the Department of Justice must also be furnished concurrently to the NRC.

(b)       Definitions

(1)

Foreign Interest means any of the following: (i)            A foreign government, foreign government agency, or representative of a foreign government; (ii)           Any form of business enterprise or legal entity organized, chartered or incorporated under the laws of any country other than the United States or its possessions and trust territories; and (iii)           Any person who is not a citizen or national of the United States.

(2)

Foreign Ownership, Control, or Influence (FOCI) means the situation where the degree of ownership, control, or influence over a Contractor by a foreign interest is such that a reasonable basis exists for concluding that compromise of classified information or special nuclear material may result.




(c)

Facility Clearance means an administrative determination that a facility is eligible to access, produce, use or store classified information, or special nuclear material. A Facility Clearance is based upon a determination that satisfactory safeguards and security measures are carried out for the activities being performed at the facility. It is NRC policy that all licensees, certificate holders, their subcontractors or others requiring access authorizations be processed for a Facility Clearance at the level appropriate to the activities being performed under the NRC’s cognizance. Approval for a Facility Clearance shall be based upon:




(1)	A favorable foreign ownership, control, or influence (FOCI) determination based upon the licensee’s, certificate holder’s, or others response to the ten questions in Standard Form 328 and any required supporting data provided by the licensee, certificate holder, or other;
(2)	Approved safeguards and security plans which describe protective measures appropriate to the activities being performed at the facility;
(3)	An inspection conducted before the Facility Clearance date, with a readiness review approval, if the facility is to possess classified matter;
(4)	Appointment of a Facility Security Officer, who must possess or be in the process of obtaining an access authorization equivalent to the Facility Clearance; and
(5)	Access authorizations for key management personnel who will be determined on a case-by-case basis, and must possess or be in the process of obtaining access authorizations equivalent to the level of the Facility Clearance.




(d)	A Facility Clearance is required for access to classified information and the granting of any access authorizations under an NRC license, certificate or other activity as the Commission may determine. Prior to the grant of a facility clearance, the NRC must determine that granting of the facility clearance will not pose an undue risk to the common defense and security as a result of its access to classified information. The NRC may require the licensee, certificate holder or other to submit such additional information as deemed pertinent to this determination.
(e)	A Facility Clearance is required even for licensees, certificate holders or others that do not require  their corporate offices to receive, process, reproduce, store, transmit, or handle classified information, but which require NRC access authorizations for the licensee's, certificate holders, or others employees to perform work at an NRC-cleared location. This type facility is identified as a non-possessing facility.
(f)	Except as otherwise authorized in writing by the NRC, the provisions of any license, certificate, or other activity approved by the Commission  must include provisions similar to the foregoing in all subcontracts. Any Subcontractors requiring access authorizations for access to classified information shall be directed to provide responses to the questions in Standard Form 328, Certificate Pertaining to Foreign Interests, directly to the licensee, certificate holder or other, who will then forward on to the NRC for action.

(PLEASE REVIEW BEFORE SUBMITTING)

            Prior to submitting the Standard Form 328, required by paragraph (a)(1) of this clause, the licensee, certificate holder or other should review the FOCI submission to ensure that:

(1)	The Standard Form 328 has been signed and dated by an authorized official of the company;
(2)	If publicly owned, the licensee, certificate holder or other’s most recent annual report, and its most recent proxy statement for its annual meeting of stockholders have been attached; or, if privately owned, the audited, consolidated financial information for the most recently closed accounting year has been attached;
(3)	A copy of the company's articles of incorporation and an attested copy of the company's by-laws, or similar documents filed for the company's existence and management, and all amendments to those documents;
(4)	A list identifying the organization's owners, officers, directors, and executive personnel, including their names, social security numbers, citizenship, titles of all positions they hold within the organization, and what clearances, if any, they possess or are in the process of obtaining, and identification of the government agency(ies) that granted or will be granting those clearances; and
(5)	A summary FOCI data sheet.

NOTE: A FOCI submission must be attached for each tier parent organization (i.e. ultimate parent and any intervening levels of ownership). If any of these documents are missing, granting a facility clearance cannot be completed.

B.  Specific Instructions

SF-328 Question #1:  (Answer 1a. or 1b.)

a.        (For entities which issue stock):  “Do any foreign person(s), directly or indirectly, own or have beneficial ownership of 5 percent or more of the outstanding shares of any class of your organization's equity securities?” If yes:

• Identify the percentage of any class of stock or other securities issued, which are owned by foreign persons, broken down by country.  Include indirect ownership through one or more intermediate level(s) of subsidiaries.  Indicate voting rights of each class of stock.



• Are there shareholder agreements?  If yes, attach a copy(ies), and if none, so state.



• Indicate whether a copy of SEC Schedule 13D/13G report has been received from any investor. If yes, attach a copy(ies).

NOTE: Ownership of less than 5% should be included if the holder is entitled to control the appointment and tenure of any management position.

b.         (For entities which do not issue stock):  “Has any foreign person directly or indirectly subscribed 5 percent or more of your organization's total capital commitment?”  If yes:

• Identify the percentage of total capital commitment which is subscribed by foreign persons.



• Is there an agreement (s) with the subscriber (s)?  If yes, attach a copy(ies), and if none, so state.

SF-328 Question #2 — “Does your organization directly, or indirectly through your subsidiaries and/or affiliates, own 10 percent or more of any foreign interest?”  If yes:

• Identify the foreign interest by name, country, percentage owned, and personnel who occupy management positions with the organizations.



• If there are personnel from your organization who occupy management positions with the foreign firm(s), identify the name(s), title, and extent of involvement in the operations of the organizations (to include access to classified information).

SF-328 Question #3 — “Do any non-U. S. citizens serve as members of your organization's board of directors (or similar governing body), officers, executive personnel, general partners, regents, trustees or senior management officials?”  If yes:

• Identify the foreign person(s) by name, title, citizenship, immigration status and clearance or exclusion status.



• Attach copies of applicable by-laws or articles of incorporation which describe the affected position(s).  However, if you have already provided such copies to the Cognizant Security Agency Industrial Security Representative, so state.

SF-328 Question #4 — “Does any foreign person(s) have the power, direct or indirect, to control the election, appointment, or tenure of members of your organization's board of directors (or similar governing body) or other management positions of your organization, or have the power to control or cause the direction of other decisions or activities of your organization?”  If yes:

• Identify the foreign person(s) by name, title, citizenship, and all details concerning the control or influence.

NOTE:  If any foreign person(s) have such power, this question shall be answered in the affirmative even if such power has not been exercised, and whether or not it is exercisable through ownership of your facility’s securities, if such power may be invoked by contractual arrangements or by other means.

SF-328 Question #5 — “Does your organization have any contracts, agreements, understandings, or arrangements with a foreign person(s)?”  If yes:

• For each instance, provide the name of the foreign person, country, percentage of gross income derived, and nature of involvement, including:
• whether defense/nuclear related or not,



• involvement with classified or export controlled technology, and



• compliance with export control requirements



• Where the organization has a large number of involvements and where these involvements are not defense nuclear related and represent a small percentage of gross income, the explanation can be a generalized statement addressing the totals by country.

NOTE:  We do not expect and will not require licensees, certificate holders or others to ask every customer if he/she falls within the NISPOM definition of a foreign person. We will ask them however, to provide ongoing security education to those individuals who negotiate and/or administer such agreements regarding their responsibilities to report agreements with a foreign person(s) to the best of their knowledge. The contractor will be certifying the response to this question to “the best of his/her knowledge” or "through his/her best efforts”.

SF-328 Question #6 — “Does your organization, whether as borrower, surety, guarantor or otherwise have any indebtedness, liabilities or obligations to a foreign person(s)?”  If yes:

NOTE:  This question should be answered in the affirmative if the debt is with a U. S. entity that is owned or controlled either directly or indirectly by a foreign person. If unknown, so state.

• Provide your overall debt-to-equity ratio (in percentage).



• With respect to indebtedness or liability to a foreign person, indicate to whom indebted or liable, what collateral has been furnished or pledged, and any conditions or covenants of the loan agreement.  If stock or assets have been furnished or pledged as collateral, provide a copy of the loan agreement or pertinent extracts thereof (to include procedures to be followed in the event of default).



• If any debentures are convertible, provide specifics.



• If loan payments are in default, provide details.

NOTE:  As stated above, we do not expect and will not require licensees, certificate holders or others to ask every lender if he/she qualifies as a foreign person. We will ask them however, to provide ongoing security education to those employees who handle lending arrangements regarding their responsibilities to report any such arrangements with a foreign person lender, to the best of their knowledge. The contractor will be certifying the response to this question as being to “the best of his/her knowledge” or “through his/her best efforts”.

SF-328 Question #7 — “During your last fiscal year, did your organization derive:

“a.       5 percent or more of its total revenues or net income from any single foreign person?

“b.       In the aggregate 30 percent or more of its revenues or net income from foreign persons?”

If you answer yes to either part of the question:

• Provide the overall percentage of income derived from foreign sources by country, nature of involvement, and type of services or products.



• Indicate if any single foreign source represents in excess of 5% or total revenues or net income.



• Indicate whether any classified information is involved.



• State whether the facility is in compliance with applicable export control requirements.

NOTE:  As previously stated, we do not expect and will not require licensees, certificate holders or others to ask every customer if he/she qualifies as a foreign person. We will ask them however, to provide ongoing security education to those employees who handle information about company revenues regarding their responsibility to report revenues derived from a foreign person(s) to the best of their knowledge. The contractor will be certifying the response to this question as being to “the best of his/her knowledge” or “through his/her best effort”.

SF-328 Question #8 — “Is 10 percent or more of any class of your organization's voting securities held in "nominee" shares, in "street names" or in some other method which does not identify the beneficial owner?”  If yes:

• Identify each foreign institutional investor holding 10% or more of the voting stock by name and address and the percentage of stock held.



• Indicate whether any investor has attempted to, or has, exerted any control or influence over appointments to management positions or influenced the policies of the organization.



• Include copies of SEC Schedule 13D/13G.

SF-328 Question #9 — “Do any of the members of your organization's board of directors (or similar governing body), officers, executive personnel, general partners, regents, trustees or senior management officials hold any positions with, or serve as consultants for, any foreign person(s)?”  If yes:

• Provide the name, title, citizenship, immigration status and clearance or exclusion status on all such persons.



• Identify, by name and address, each foreign organization with which such persons serve and indicate the capacity in which they are serving.



• Include a Statement of Full Disclosure of Foreign Affiliations for every cleared individual who is a representative of a foreign interest

NOTE:  We expect the licensee, certificate holder or other to be able to answer this question fully for those individuals holding such positions with his/her foreign subsidiaries and any foreign interests.  However, we do not expect and will not require the licensee, certificate holder or other to ask every individual to ascertain if he/she is serving as a director, officer or manager of a foreign person.  We will ask the licensee, certificate holder or other to provide ongoing security education to all key management personnel of their responsibilities to report serving as an interlocking director or in any other type of positions with a foreign person to the best of their knowledge. The licensee, certificate holder or other will be certifying the response to this question as being to “to best of his/her knowledge” or “through his/her best efforts”.

SF-328 Question #10 — “Is there any other factor(s) that indicates or demonstrates a capability on the part of foreign persons to control or influence the operations or management of your organization?”  If yes:

• Describe the foreign involvement in detail, including why the involvement would not be reportable in the preceding questions.

C.  Additional Definitions

Affiliate — Any entity effectively owned or controlled by another entity.

Beneficial Owner — The true owner of a security who may, for convenience, be recorded under the name of a nominee.  Such ownership entitles the owner to the power to vote or direct the voting of a security or to impose or direct the disposition of a security.

Bond — A certificate which is evidence of a debt in which the issuer promises to repay a specific amount of money to the bondholder, plus a certain amount of interest, within a fixed period of time.

Convertible Debentures — Bonds which the holder can exchange for shares of voting stock.

Covenant — A detailed clause in a lending agreement designed to protect the lender.

Debenture — A general debt unsecured by a pledge of any specific piece of property.  Like any other general creditor claims, a debenture is secured by any property not otherwise pledged.

Debt-to-Equity Ratio — Total liabilities divided by total shareholders’ equity (total assets minus total liabilities of a corporation; also called stockholders’ equity, equity, and net worth).  This shows to what extent owners’ equity can cushion creditors’ claims in the event of liquidation.

Equity Security — An ownership interest in a company, most often taking the form of corporate stock.

Foreign Interest — Any foreign government, agency of a foreign government, or representative of a foreign government; any form of business enterprise or legal entity organized, chartered or incorporated under the laws of any country other than the U.S. or its possessions and trust territories, and any person who is not a citizen or national of the United States.

Foreign Person — Any foreign interest and any U.S. person effectively owned or controlled by a foreign interest.

Guarantor — One who makes the guaranty (an agreement or promise to answer for the debt, default or miscarriage of another).

Immigration Status — Legal basis for a non-U. S. citizen’s residence in the United States (e.g., work visa, admission for permanent residence).  Note: Immigration and Naturalization Service Form I-9 is an excellent source for this information.

Joint Venture — A partnership or cooperative agreement between two or more persons or firms, usually restricted to a single specific undertaking.  Normally the undertaking is of short duration, such as for the design and construction of a dam.

Liability — Claim on the assets of a company or individual.

Licensing Agreement — A permit granted by one business to another which permits duplication of processes and production of similar items.

Management Positions — For the purposes of the questions on this form, management positions shall include owners, officers, directors, partners, regents, trustees, senior management officials, other executive personnel and the facility security.

Nominee Share — A share of stock or registered bond certificate which has been registered in a name other than the actual owner.

Proxy — One who acts for another.  Also, the document by which such a representative is authorized to act.

Representative of a Foreign Interest (RFI) — A citizen or national of the U.S., who is acting as a representative of a foreign interest (see Foreign Interest).

S.E.C. Schedule 13D — This schedule discloses beneficial ownership of certain registered equity securities.  Any person or group of persons who acquire a beneficial ownership of more than 5 percent of a class of registered equity securities of certain issuers must file a Schedule 13D reporting such acquisition with certain other information.

S.E.C. Schedule 13G — This schedule is a much abbreviated version of Schedule 13D that is only available for use by a limited category of “persons” (such as banks, broker/dealers, and insurance companies) and even then only when the securities were acquired in the ordinary course of business — and not with the purpose or effect of changing or influencing the control of the issuer.

Sales Agreement — An agreement between two parties for the sale of goods or services on a continuing basis.

Stock Option — An option is the right to buy or sell at some point in the future.

Street Name — The common practice of registering publicly traded securities in the name of one or more brokerage firms.
Subordinated Debenture — A bond having a claim on assets only after the senior debt has been paid off in the event of liquidation.

Surety — One who is immediately liable for the debt of another if that other person or entity fails to pay.

Total Capital Commitment — The sum of money and other property an enterprise uses in transacting its business.

U. S. Person — Any form of business enterprise or entity organized, chartered or incorporated under the laws of the United States or its possessions and trust territories and any person who is a citizen or national of the United States.