Source: http://www.paclii.org/fm/legis/consol_act/br212/
Timestamp: 2019-06-15 20:51:58
Document Index: 672539359

Matched Legal Cases: ['§ 101', '§ 201', '§ 201', '§ 204', '§ 207', '§ 210', '§ 213', '§ 216', '§ 220', '§ 301', '§ 411', '§ 411', '§ 421', '§ 601', '§ 101', '§ 102', '§ 103', '§ 104', '§ 105', '§ 106', '§ 107', '§ 108', '§ 109', '§ 110', '§ 1144', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1144', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1144', '§ 1', '§ 6', '§ 1147', '§ 1', '§ 1', '§ 1', '§ 215', '§ 6', '§ 1', '§ 7', '§ 2', '§ 9', '§ 2', '§ 203', '§ 1', '§ 1', '§ 12', '§ 3', '§ 209', '§ 14', '§ 4', '§ 16', '§ 5', '§ 17', '§ 6', '§ 18', '§ 7', '§ 20', '§ 8', '§ 22', '§ 9', '§ 24', '§ 10', '§ 216', '§ 25', '§ 11', '§ 27', '§ 12', '§ 219', '§ 303', '§ 417', '§ 1084', '§ 2', '§ 1', '§ 1', '§ 1']

Business Regulation [Title 32]
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1 Business Licensing (§§ 101-110)
2 Foreign Investment (§§ 201-225)
I Introductory Provisions (§§ 201-203)
II General Rules Allocation of Government Responsibilities (§§ 204-206)
III Foreign Investment Permits (§§ 207-209)
IV Expatriate Worker Authorizations and Entry Permits (§§ 210-212)
V Reporting Requirements (§§ 213-215)
VI Guarantees and Entitlements (§§ 216-219)
VII Sanctions; Judicial Review; Other Provisions (§§ 220-225)
3 Anticompetitive Practices (§§ 301-306)
4 Notaries Public (§§ 411-426)
I General Provisions (§§ 411-417)
II Powers and Duties (§§ 421-426)
5 Noncitizen Peddlers [REPEALED]
6 Lateritic Soil Development Franchises (§§ 601-606)
§ 101. Business license required—Generally.
§ 102. Terms and conditions of licenses.
§ 103. License fees.
§ 104. Licenses for combination of businesses.
§ 105. License renewal.
§ 106. License revocation or suspension.
§ 107. License—Judicial review of revocation or suspension.
§ 108. Prepayment of license fees; Revocation of license for failure to pay fees.
§ 109. Willful violation of revenue laws.
§ 110. Monthly penalty upon unpaid fees.
(1) Any person, partnership, corporation, or association engaging in the business of importing, exporting, selling of securities, or insurance, as a condition precedent to engaging or continuing in such business, shall obtain from the Secretary of Resources and Development a license to engage in or conduct such business.
(2) Prior consultation with the Secretary of Finance by the Secretary of Resources and Development shall be required prior to issuance of licenses to businesses engaged in selling of securities or importing.
Source: TT Code 1966 § 1144; COM PL 3-32 § 1(part); TT Code 1970, 77 TTC 1; TT Code 1980, 77 TTC 1; PL 1-67 § 1(1).
Cross-reference: For the statutory provisions on licensing of the copra trade, see title 27, chapter 3 of this code. For the statutory provisions on the President and the Executive, see title 2 of this code.
Licenses issued under this chapter shall not be transferable and shall be valid on the basis of a fiscal year period (October 1st to September 30th) and, regardless of when issued, shall expire on the 30th day of September of the year for which issued or renewed; provided, that all original license fees shall be prorated and one-fourth of the annual fee charged for each quarter or portion of a quarter remaining in the fiscal year from the date of issuance.
Source: COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 2; TT Code 1980, 77 TTC 2; PL 1-67 § 1(2).
The following annual fees shall be paid for the respective license at time of issuance and on or before the 30th day of September of each year, except as otherwise provided for in section 102 of this chapter:
(1) importer, $100 per annum;
(2) exporter, $10 per annum;
(3) securities dealers, $250 per annum;
(4) insurance companies, $1,000 per annum;
(5) insurance brokers, $200 per annum;
(6) insurance agents, $100 per annum.
Source: TT Code 1966 § 1144; COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 3; TT Code 1980, 77 TTC 3; PL 1-67 § 1(3).
Any person, partnership, corporation, or association who operates or conducts business in the Federated States of Micronesia which consists of a combination of two or more of the classes of businesses outlined in this chapter shall obtain a separate license for each such class of business.
Source: COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 4; TT Code 1980, 77 TTC 4; PL 1-67 § 1(4).
A licensee may renew his license upon the expiration thereof by the payment of the annual license fee.
Source: COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 5; TT Code 1980, 77 TTC 5.
The Secretary of Resources and Development with the approval of the Attorney General may revoke or suspend any license issued under this chapter, upon finding, after public notice and adequate hearing, that such revocation or suspension is in the public interest.
Source: TT Code 1966 § 1144; COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 6 (part); TT Code 1980, 77 TTC 6 (part); PL 1-67 § 6 (part).
(1) Any person aggrieved by any such decision of the Secretary of Resources and Development shall be entitled to a review of the same by a competent court upon written appeal made within 30 days from the date the decision is issued.
(2) Upon review, the findings of the Secretary of Resources and Development, if supported by substantial evidence, shall be conclusive.
(3) The filing of an appeal shall not stay the order of revocation or suspension, unless irreparable damage is alleged.
(1) The prepayment of any license fee imposed or authorized under this chapter or under any district law may be made a condition of the issuance of the license.
(2) If the licensing authority issued the license without prepayment of the fee, the license may be revoked by the licensing authority at any time if the fee is not paid within such time as the licensing authority shall fix.
Source: TT Code 1966 § 1147(b); COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 153; TT Code 1980, 77 TTC 153.
Any person who willfully violates any of the provisions of this chapter, or any license, rule, or regulation issued thereunder, shall upon conviction be imprisoned for a period of not more than one year, or fined not more than $500, or both.
Source: COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 201; TT Code 1980, 77 TTC 201.
In case of failure to pay any tax, fee, or charge levied or imposed under this chapter when due, there shall be added to the amount due ten percent of the amount of such tax, fee, or charge if the failure is not for more than one month, with an additional ten percent for each additional month or fraction thereof during which such failure continues, not exceeding 100 percent in the aggregate.
Source: COM PL 3-32 § 1 (part); TT Code 1970, 77 TTC 202; TT Code 1980, 77 TTC 202.
General Rules Allocation of Government Responsibilities
Foreign Investment Permits
Expatriate Worker Authorizations and Entry Permits
§ 215A. Review of compliance by holders of FSM Foreign Investment Permits.
Guarantees and Entitlements
Sanctions; Judicial Review; Other Provisions
Editor’s note: The division of this chapter into parts in PL 10-49 was changed to subchapters in accordance with standard code format.
(1) “business entity” means any sole proprietorship, partnership, company, corporation, joint venture, or other association of persons engaging in business;
(2) “character criteria” means the criteria established in the FSM Foreign Investment Regulations pursuant section 205(3) of this chapter;
(3) “citizen” means a citizen of the FSM;
(4) “Department” means the Department of Resources and Development of the FSM or its successor;
(5) “engaging in business” means carrying out any activity relating to the conduct of a business, and shall include the activities enumerated in subsection (5)(a) of this section but shall not include the activities enumerated in subsection (5)(b) of this section:
(a) “engaging in business” shall include:
(iii) conducting negotiations for transactions of the types described in items (i) or (ii) of this section; provided, however, that negotiations with licensed importers for periods of less than 14 days per calendar year shall not be considered “engaging in business”;
(iv) appointing a representative, agent, or distributor by a noncitizen to perform any of the acts described in items (i) through (iii) of this section, unless said representative, agent, or distributor has an independent status and transacts business in its name for its own account and not in the name of or for the account of any noncitizen principal;
(viii) providing services as a management firm or professional consultant in the management, supervision, or control of any business entity; and
(ix) providing professional services as an attorney, physician, dentist, engineer, surveyor, accountant, auditor, or other professional providing service for a fee; provided, however, that such a professional shall not be considered to be "engaging in business" unless he or she, while present in the FSM, performs his or her respective professional services for more than 14 days in any calendar year;
(A) the research or investigation is sponsored by a university, college, agency, or institution normally engaged in such activities primarily for purposes other than commercial profit, and
(B) the particular research or investigation at issue is not for purposes of, or expected to yield, commercial profit;
(vi) the lawful sale of corporate shares or other interests or holdings in a business entity acquired not for speculation or profit; or
(vii) the making of occasional sales as defined by the FSM Foreign Investment Regulations;
(6) “foreign investment” means any activity in the FSM by a noncitizen that amounts to “engaging in business” as defined above;
(7) “Foreign Investment Permit” means an FSM Foreign Investment Permit, a State Foreign Investment Permit, or a Pre-Existing Foreign Investment Permit;
(8) “foreign investor” means a noncitizen who is engaging in business in the FSM, as defined above;
(9) “FSM” means the Federated States of Micronesia;
(10) “FSM Foreign Investment Permit” means a permit issued by the Secretary in accordance with the provisions of this chapter;
(11) “FSM Foreign Investment Regulations” means Regulations promulgated by the Secretary in accordance with the provisions of this chapter;
(12) “noncitizen” means any person who is not a citizen of the FSM, and any business entity in which any ownership interest is held by a person who is not a citizen of the FSM;
(13) “ownership interest” in a business entity means ownership of or control over, whether directly, indirectly, legally or beneficially, some or all of the shares of, property or assets of, voting rights in, or rights to profits or revenue from, that business entity; provided, however, that:
(a) ownership interest shall not include a bona fide security interest in real or personal property for the purpose of securing a loan or other obligation; and
(b) any interest owned or controlled by the spouse, minor child, or other dependent of a person shall be counted as owned or controlled by that person in determining whether he or she has an ownership interest in a business entity, provided that this subsection shall not apply to a noncitizen spouse who is married to a citizen and who does not hold an ownership interest in his or her own right;
(14) “person” includes both individuals and legal entities;
(15) “Pre-Existing Foreign Investment Permit” means a permit issued by the Secretary or by a State prior to the date on which this Act took effect, and which has not expired according to its terms or been suspended or canceled;
(16) “Secretary” means the Secretary of the Department Economic Affairs of the FSM;
(17) “State” means one of the States of the FSM;
(18) “State Foreign Investment Legislation” means legislation enacted and currently effective in one of the States to regulate foreign investment within that State;
(19) “State Foreign Investment Permit” means a permit issued by authorized officials within one of the States pursuant to relevant State Foreign Investment Legislation;
(20) “Substantial ownership interest” means an ownership interest in a business entity of at least 30 percent.
Source: PL 10-49 § 6; PL 14-32 § 1.
Case annotations: By statute the practice of law is specifically included in businesses engaged in by noncitizens requiring a foreign investment permit. 32 F.S.M.C. 203. Michelsen v. FSM, 5 FSM R. 249, 254 (App. 1991).
A noncitizen may not conduct any activity in the FSM that amounts to “engaging in business”, as defined in section 203 of this chapter, unless that noncitizen holds a currently valid Foreign Investment Permit authorizing that noncitizen to conduct that activity, except as provided in section 419 of chapter 4 of title 55 of this code.
Source: PL 10-49 § 7; PL 14-48 § 2.
Cross-reference: Title 55 of this code is on Government Finance and Contracts. Section 419 of chapter 4 (Government Contracts) of title 55 of this code is on Implementation of Infrastructure Development Plan.
Case annotation: A noncitizen cannot engage in business in the FSM unless that noncitizen holds a valid foreign investment permit. A "noncitizen" is any business entity in which any ownership interest is held by a person who is not a citizen of the FSM. Geoffrey Hughes (Export) Pty, Ltd. v. America Ducksan Co., 12 FSM R. 413, 414-15 (Chk. 2004).
(1) Categories for National Regulation—economic sectors that are of special national significance and therefore fall within the jurisdiction of the National Government in respect of foreign investment regulation. These Categories are the following:
(a) Category A (“National Red List”)—the set of economic sectors that are closed to foreign investment anywhere in the FSM. Economic sectors in the National Red List are the following:
(b) Category B (“National Amber List”)—the set of economic sectors that are subject to National Government regulation and as to which certain criteria specified in the FSM Foreign Investment Regulations must be met. Economic Sectors on the National Amber List include the following:
(i) banking, other than as defined in title 29 of this code; and
(ii) insurance; and
(c) Category C (“National Green List”)—the set of economic sectors that are subject to National Government regulation but as to which no special criteria need to be met before a Foreign Investment Permit is to be issued. Economic sectors on the National Green List include the following:
(i) banking, as defined in title 29 of this code;
(2) Categories for State Regulation—economic sectors that are not of special national significance and therefore are delegated to the jurisdiction of the State Governments in respect of foreign investment regulation. These Categories are to be established separately by each State, by means of the State Foreign Investment Regulations in each State. An economic sector included in any of the Categories for National Regulation pursuant to subsection (1) of this section shall not appear in any of the Categories for State Regulation.
(3) Notwithstanding anything to the contrary in subsection (1) of this section, and regardless of the economic category involved:
(a) every applicant for or holder of an FSM Foreign Investment Permit may be required to meet such character criteria as may be specified in the FSM Foreign Investment Regulations in order to obtain or retain an FSM Foreign Investment Permit; and
(b) every present or future holder of a substantial ownership interest in an applicant for or holder of an FSM Foreign Investment Permit may be required to meet those same character criteria in order to obtain or retain that substantial ownership interest.
Source: PL 10-49 § 9; PL 14-32 § 2.
Case annotations: The Foreign Investment Act regulates the operation of noncitizen business within the Federated States of Micronesia, not individual investors. 32 F.S.M.C. §§ 203(2) and 204 have no application to acquisitions of interests in a business operating in the Federated States of Micronesia with a national foreign investment permit. Michelsen v. FSM, 3 FSM R. 416, 426 (Pon. 1988).
The Foreign Investment Act of 1997 establishes a system of Categories of economic sectors for the purposes of implementing the FSM policy to welcome foreign investment in all sectors of the FSM economy. Three of these categories are made up of economic sectors that are of special national significance and therefore fall within the national government’s jurisdiction in respect of foreign investment regulation. The first is the National Red List. No foreign investment is permitted in the activities specified on this list, which includes the minting of money and arms manufacture. The second is the National Amber List. Banking (other than as defined in Title 29 of the FSM Code) and insurance are included on this list. Certain criteria specified in the FSM Foreign Investment Regulations must be met before investment is permitted in these areas. A third category of activities that fall within the jurisdiction of the national government appear on the National Green List. Helicopter Aerial Survey Pty., Ltd. v. Pohnpei, 15 FSM R. 329, 333-34 (Pon. 2007).
Foreign investment Category C (National Green List) comprises the set of economic sectors that are subject to national government regulation but as to which no special criteria need to be met before a foreign investment permit is to be issued. It includes banking, as defined in title 29 of the FSM Code; telecommunications; fishing in the FSM’s Exclusive Economic Zone; international and interstate air transport; international shipping; and such other economic sectors as the Secretary may, after consultation with States, designate in the FSM Foreign Investment Regulations as being on the National Green List. Helicopter Aerial Survey Pty., Ltd. v. Pohnpei, 15 FSM R. 329, 334 (Pon. 2007).
In contrast to the three areas subject to national regulation, economic sectors that are not of special national significance are delegated to the jurisdiction of the state governments in respect of foreign investment regulation, which are to be established separately by each state, except that an economic sector included in any of the categories for national regulation cannot appear in any of the categories for state regulation. Helicopter Aerial Survey Pty., Ltd. v. Pohnpei, 15 FSM R. 329, 334 (Pon. 2007).
(a) determining, after consultation with the States as required under subsection (2) of this section, which economic sectors, in addition to those enumerated in section 205(1) of this chapter, shall be designated for inclusion in Category A (National Red List), Category B (National Amber List), and Category C (National Green List).
(4) If any foreign investment of a type described in subsection (3) of this section takes place or is proposed to take place within the territories of more than one State, each of those States shall have authority to regulate such foreign investment within its own territory.
(5) Action taken by the Government of a State under subsections (3) and (4) of this section shall be consistent with the provisions of this chapter and the FSM Foreign Investment Regulations.
Based on the language and legislative history of the FSM Foreign Investment Act, 32 F.S.M.C. 201-232, and on that law’s similarity to its Trust Territory predecessor, there is no indication that Congress intended the Foreign Investment Act to apply to the provision of legal services. Carlos v. FSM, 4 FSM R. 17, 28-29 (App. 1989) (Following this decision, the FSM Congress amended 32 F.S.M.C. 203 and 210(8) to specifically include legal services).
Since Congress did not give any consideration to, or make any mention of, the services enumerated in art. XIII, § 1 of the FSM Constitution in enacting Foreign Investment Act, 32 F.S.M.C. 201-232, the avoidance of potential conflict with Constitution calls for conclusion that Congress did not intend the Foreign Investment Act to apply to noncitizen attorneys or to any other persons who provide services of the kind described in art. XIII, § 1 of the Constitution. Carlos v. FSM, 4 FSM R. 17, 30 (App. 1989) (Following this decision, the FSM Congress amended 32 F.S.M.C. 203 and 210(8) to specifically include legal services).
By statute the practice of law is specifically included in businesses engaged in by noncitizens requiring a foreign investment permit. 32 F.S.M.C. 203. Michelsen v. FSM, 5 FSM R. 249, 254 (App. 1991).
The Foreign Investment Act does not explicitly limit judicial review therefore an aggrieved person affected by an agency decision may seek review under the Administrative Procedures Act. Michelsen v. FSM, 5 FSM R. 249, 254 (App. 1991).
The scheme of national, constitutionally-authorized foreign investment legislation is so pervasive there is no room for state to supplement it. Non-FSM citizen attorneys and their private practice of law are expressly subjected to the national legislative scheme. Insofar as attorneys who are engaged in the private practice of law and whose business activities are within the scope of the nat’l FIA, the state FIA is invalid. Berman v. Pohnpei, 5 FSM R. 303, 306 (Pon. 1992).
An isolated interest-free unsecured loan is not engaging in business within the meaning of the Pohnpei State Foreign Investment law. Kihara v. Nanpei, 5 FSM R. 342, 345 (Pon. 1992).
(A) relates to a foreign investment in a Category B (National Amber List) economic sector;
(C) demonstrates that the foreign investment meets all of the applicable national criteria established in the FSM Foreign Investment Regulations pursuant to section 206(1)(b) of this chapter; or
(4) Upon taking any action described in paragraph (b), (e), or (f) of subsection (3) of this section, the Secretary shall, within such periods of time as may be prescribed for this purpose in the FSM Foreign Investment Regulations, advise the applicant of the action and the reasons therefor.
(6) If the Secretary issues an FSM Foreign Investment Permit pursuant to subsection (3)(f) of this section, the FSM Foreign Investment Permit will be sent to the applicant, with copies to be (a) inserted into a register to be maintained by the Department for this purpose and (b) sent to the responsible authority in each State, for insertion in a register to be maintained by such authorities for this purpose.
(7) If the Secretary denies an application for an FSM Foreign Investment Permit pursuant to subsection (3)(b)(ii) of this section, the applicant may (a) resubmit the application with modifications designed to meet the applicable national criteria established in the FSM Foreign Investment Regulations pursuant to section 206(1)(d) of this chapter, or (b) provide to the Secretary 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 Secretary shall review the application and make a determination under the procedures prescribed in subsection (3) of this section. There is no limit to the number of times an applicant may modify an application in an attempt to satisfy the applicable criteria.
Source: PL 10-49 § 12; PL 14-32 § 3.
Case annotations: The “applicant” referred to in the Foreign Investment Act is one interested in doing business, not just investing money, in the FSM, and considerations to be employed in determining whether to grant an application relate to business operations within the FSM, not to investment of funds. Michelsen v. FSM, 3 FSM R. 416, 425 (Pon. 1988).
Since engaging in business is defined as carrying out any activity relating to the conduct of a business and expressly includes leasing property of any kind for commercial purposes, when a foreign investment permittee engaged in the business of providing operational and maintenance support to helicopters servicing fishing vessels in the FSM, its leasing helicopters is one aspect of its business that relates to its fishing activity and is therefore that leasing activity is subject to the FSM’s exclusive jurisdiction and regulation for foreign investment purposes. Thus Pohnpei may not require it to apply for a foreign investment permit. Helicopter Aerial Survey Pty., Ltd. v. Pohnpei, 15 FSM R. 329, 335 (Pon. 2007).
Since, by statute, an economic sector included in any of the Categories for National Regulation must not appear in any of the Categories for State Regulation, the statutory provision contemplates that state and national regulation will be mutually exclusive, and works hand in glove with the stated purpose of the Foreign Investment Act, which is to encourage foreign investment. Helicopter Aerial Survey Pty., Ltd. v. Pohnpei, 15 FSM R. 329, 335-36 (Pon. 2007).
When a company has obtained a national foreign investment permit in an area in which the FSM’s jurisdiction is exclusive and the company has complied with national laws and regulations in this regard, Pohnpei may not require it to obtain a state foreign investment permit in addition to the FSM permit that it already has. Helicopter Aerial Survey Pty., Ltd. v. Pohnpei, 15 FSM R. 329, 336 (Pon. 2007).
When the court has granted summary judgment on the basis that the plaintiff’s helicopters are engaged in fishing, the court need not address the plaintiff’s further contention that it is also subject to exclusive national regulation by virtue of the fact that its helicopters are engaged in interstate and international air transport and international shipping. Helicopter Aerial Survey Pty., Ltd. v. Pohnpei, 15 FSM R. 329, 336 (Pon. 2007).
Public hearings are a standard part of the foreign investment permit application process. Smith v. Nimea, 18 FSM R. 36, 45 (Pon. 2011).
§ 209. Form, fees, duration modification, and cancellation of FSM Foreign Investment Permits.
(3) An FSM Foreign Investment Permit shall be valid until it has been canceled, suspended, or surrendered pursuant to subsections (7) to (11) of this section.
(5) The holder of an FSM Foreign Investment Permit may not make a change in the business that the holder is engaging in without obtaining either
(a) a new FSM Foreign Investment Permit for that purpose under section 207 of this chapter (or, if applicable, a new State Foreign Investment Permit under the relevant State Foreign Investment Legislation) or
(b) a modification in the terms of its FSM Foreign Investment Permit. Such a modification may be requested by the business entity, and granted by the Secretary, in accordance with such procedures and requirements as the Secretary shall establish in the FSM Foreign Investment Regulations. However, no such modification is necessary if an existing business entity for which an FSM Foreign Investment Permit has been issued is expanded, without any change in the business it is engaging in.
(6) For purposes of subsection (5) of this section, a "change in the business" a person is engaging in occurs if that person begins operations in a different economic sector from the one(s) for which the FSM Foreign Investment Permit was issued.
(7) The Secretary may cancel an FSM Foreign Investment Permit only if the Secretary determines, following the procedural requirements of subsection (9) of this section, that one or more of the following circumstances exist:
(a) the annual fee, if any, required under either subsection (2) or subsection (3) of this section has not been paid;
(g) a substantial ownership interest in the holder is owned by a noncitizen who does not meet the character criteria established pursuant to section 205(3) of this chapter.
(8) If an FSM Foreign Investment Permit is canceled pursuant to subsection (7) of this section, the noncitizen holding that canceled Permit shall:
(9) If it appears to the Secretary that one or more of the grounds for cancellation of an FSM Foreign Investment Permit, as enumerated in subsection (7) of this section, may exist, the Secretary may temporarily suspend the validity of that FSM Foreign Investment Permit and shall commence the following procedures leading to cancellation:
(c) Within ten days after a hearing, the Secretary shall issue a written decision including reasons for the action taken and the remedy to be imposed pursuant to subsection (8) of this section, and shall transmit that decision immediately to the holder of the FSM Foreign Investment Permit.
(d) If a decision has not been issued pursuant to subsection (9)(c) of this section within the ten days specified, any temporary suspension ordered by the Secretary shall automatically end, and the validity of the FSM Foreign Investment Permit shall automatically be reinstated.
(e) Within 20 days after receiving the notice of the decision of the Secretary, the holder of the FSM Foreign Investment Permit may appeal the decision to the Supreme Court of the FSM. Copies of any notice of appeal shall be served on the Secretary and the FSM Secretary of Justice.
(10) If an FSM Foreign Investment Permit is suspended pursuant to this chapter, the noncitizen holding that suspended permit shall immediately stop engaging in business in the FSM and refrain from resuming the business unless and until the FSM Foreign Investment Permit is reinstated.
(11) A holder of an FSM Foreign Investment Permit may surrender it by meeting requirements specified for this purpose in the FSM Foreign Investment Regulations. Mere cessation of engaging in business in the FSM, without meeting such requirements, does not relieve the holder of an FSM Foreign Investment Permit from the requirements incident thereto.
Source: PL 10-49 § 14; PL 14-32 § 4.
Case annotations: PL 10-49 repealed the previous Foreign Investment Act, as amended by PL 5-134. The following case annotations that interpreted provisions of the previous Foreign Investment Act have been retained below for reference purposes.
The national government has neither the constitutional authority nor law enforcement capacity to oversee, on a worldwide basis, every noncitizen acquisition of an interest in a business operating within the FSM. Michelsen v. FSM, 3 FSM R. 416, 423 (Pon. 1988).
Since Congress used TT Investment Act as overall model in drafting FSM Foreign Investment Act and adopted language similar to that employed in the TT statute for describing activities to be covered in the FSM law, analysis of the new Act must begin with a presumption that Congress intended that the FSM Foreign Investment Act would regulate essentially the same activities as those covered by the TT Investment Act. Carlos v. FSM, 4 FSM R. 17, 26 (App. 1989).
Scheme of national, constitutionally-authorized foreign investment legislation is so pervasive there is no room for the state to supplement it. Non-FSM citizen attorneys and their private practice of law are expressly subjected to the nat’l legislative scheme. Insofar as attorneys who are engaged in private practice of law and whose business activities are within the scope of the nat’l FIA, the state FIA is invalid. Berman v. Pohnpei, 5 FSM R. 303, 306 (Pon. 1992).
(3) An EWA that is automatically allocated under either subsection (1) or (2) of this section shall remain valid during the entire period that the corresponding Foreign Investment Permit remains valid. However, the criteria to be established pursuant to subsection (2) of this section may provide that, notwithstanding the continued validity of an EWA, a new or renewal entry permit requested under that EWA may be denied and the existing entry permit issued under that EWA may be canceled during any period when those criteria are not being met.
(4) The holder of a Foreign Investment Permit may apply for additional expatriate workers pursuant to title 51 of this code.
Source: PL 10-49 § 16; PL 14-32 § 5.
Cross-reference: Title 51 of this code is on Labor.
(2) If the immigration authorities approve an application for an entry permit applied for under subsection (1) of this section, the immigration authorities shall issue such permit upon the payment of a fee in such an amount and under such procedures as may be established for this purpose by the immigration authorities.
(3) The immigration authorities shall issue an entry permit for a nominee to fill a position to which an EWA applies except in cases of
(a) criminal character or
(b) medical risk to the nation or the nominee, as set forth in pertinent regulations issued by the immigration authorities. If the immigration authorities deny an application for an entry permit for a nominee to fill a position to which an EWA applies, the immigration authorities shall so advise the holder of the Foreign Investment Permit and shall give reasons for the denial. In such a case of denial, the holder of the Foreign Investment Permit may
(i) request the immigration authorities to review the application after submission of additional information on the nominee, or
(ii) apply for an entry permit nominating a different person to fill the position.
(5) In addition to entry permits issued pursuant to EWAs, a foreign investor shall be entitled to one or more foreign investor entry permits as follows:
(a) one if the foreign investor is a sole proprietorship; or
(b) one for each individual holder of a substantial ownership interest in the foreign investor if the foreign investor is any other kind of business entity.
(6) Nothing in this chapter shall be interpreted to require that a noncitizen have an entry permit if that noncitizen is not otherwise required to have an entry permit.
Source: PL 10-49 § 17; PL 14-32 § 6.
(1) An entry permit issued pursuant to section 211 of this chapter, whether a foreign investor entry permit or an entry permit issued under the EWA, shall be valid upon its issuance and thereafter until the sooner of:
(a) five years, or such shorter period as may be prescribed in regulations by the immigrations authorities, after the date of its issuance;
(b) expiration, cancellation, or surrender of the applicable Foreign Investment Permit or EWA; or
(c) cancellation of the entry permit as provided in subsection (4) of this section.
(2) Solely for purposes of subsection (1)(b) of this section:
(a) a Foreign Investment Permit which is renewable annually shall not be deemed to have expired unless and until the official who issued the Foreign Investment Permit has declared it to be expired and so notified the immigration officials in writing; and
(b) an EWA shall not be deemed to have expired unless and until the Foreign Investment Permit under which it was issued is cancelled or deemed to have expired.
(3) Except as provided in subsection (4) of this section, an entry permit issued pursuant to section 211 of this chapter shall be automatically renewed upon its expiration.
(4) An entry permit issued pursuant to section 211 of this chapter may be canceled, or its renewal may be denied, by the immigration authorities only if:
(a) the required immigration fee, if any, is unpaid;
(c) the entry permit, or the EWA to which the entry permit relates, was obtained under false pretenses;
(d) the conduct of the person to whom the entry has been issued constitutes a threat to the security of the FSM. In this case an entry permit may be canceled only after receiving a recommendation of cancellation from a committee appointed for this purpose and consisting of representatives from each of the following: the immigration authorities, the applicable State official responsible for foreign investment regulation in the State, the FSM Secretary of Justice, and the Department;
(e) the person to whom the entry permit has been issued leaves the position the basis of which the entry permit was issued:
(f) the person to whom the entry permit has been issued engages in employment outside the scope of the employment specified by the relevant EWA, whether or not the employment is with the foreign investor to whom the EWA was issued;
(g) the person to whom the entry permit has been issued is deported in accordance with law;
(h) the conditions for cancellation pursuant to section 210(3) of this chapter are satisfied;
(i) the applicable Foreign Investment Permit is canceled or surrendered; or
(j) it is required or permitted under subsection (5) of this section.
(5) An entry permit issued pursuant to section 211 of this chapter shall be canceled by the immigration authorities if the official who issued the Foreign Investment Permit to which the entry permit relates makes a finding, concurred in the FSM Secretary of Justice, that the holder of the permit is not engaged in a bona fide attempt to commerce, operate, wind up, or recommence any business to which the Foreign Investment Permit relates. Such a finding shall be in writing, signed by the FSM Secretary of Justice and the relevant State or national official, and arrived at through procedures which afforded the holder of the entry permit notice and an opportunity to be heard by the relevant State or national official.
Source: PL 10-49 § 18; PL 14-32 § 7.
(2) Notwithstanding any other provision of this chapter, an FSM Foreign Investment Permit shall be automatically suspended for a failure to meet a reporting deadline or a failure to include required information in a report pursuant to subsection (1) of this section. Any such suspension shall be effective from the 60th day after the day on which the report or information is due unless, during the 60 grade period, the holder of the Foreign Investment Permit submits the requisite report or information or provides a written explanation of the failure to do so that is acceptable to the Secretary. The Secretary may move to cancel the FSM Foreign Investment Permit in accordance with section 209 of this chapter at any time after the suspension becomes effective.
(3) Any change in foreign ownership of an investment for which an FSM Foreign Investment Permit has been issued which results in ownership of a substantial ownership interest by a noncitizen who did not previously own a substantial ownership interest shall be reported immediately to the Secretary, who may take such action as he or she considers appropriate in respect of the FSM Foreign Investment Permit, including its cancellation if appropriate under the provisions of section 209(7) of this chapter.
Source: PL 10-49 § 20; PL 14-32 § 8.
(2) The Secretary shall provide, by way of the FSM Foreign Investment Regulations, guidelines for States in providing reports of the types referred to in subsection (1) of this section.
(1) The Secretary shall undertake an annual review of the compliance of each FSM Foreign Investment Permit holder with the provisions of this chapter, the FSM Foreign Investment Regulations and any conditions that attach to the relevant FSM Foreign Investment Permit.
(2) The Secretary shall prepare a written report in respect of each review setting out his or her findings.
(3) Any non-compliance identified during a review conducted pursuant to in subsection (1) of this section may be dealt with in accordance with the provisions of this chapter.
(4) The Secretary shall include aggregate information on compliance in the annual publication required pursuant to subsection 214(1) of this chapter
Source: PL 10-49 § 22; PL 14-32 § 9.
(1) There shall be no compulsory acquisition or expropriation of the property of any business entity as to which a Foreign Investment Permit has been issued, except under the following circumstances:
(iii) the conditions of subsection (2) of this section are met; or
(2) Compulsory acquisition or expropriation of a type described in subsection (1)(b) of this section may be undertaken only after:
(3) Payment of compensation pursuant to subsection (2)(b) of this section shall be promptly made and adequate in amount.
(4) Neither the National Government nor any State Government nor any other entity within the FSM shall take any action that, although not formally designated or acknowledged as compulsory acquisition or expropriation, indirectly has the same injurious effect ("creeping expropriation").
Source: PL 10-49 § 24; PL 14-32 § 10.
Case annotations: By statute, the national government guarantees that there will be no compulsory acquisition or expropriation of any foreign investment property for which a Foreign Investment Certificate has been issued and that the national government will not take action, or permit any state or other entity within the FSM to take action that although not formally designated or acknowledged as compulsory acquisition or expropriation, indirectly has the same injurious effect ("creeping expropriation") and that if such action nevertheless takes place, the national government is responsible for the prompt and adequate compensation of any injured noncitizen. This statute creates a cause of action by the aggrieved alien against the FSM for compensation for a state’s conduct in violation of § 216(1) and (4). AHPW, Inc. v. FSM, 12 FSM R. 114, 120 (Pon. 2003).
The national government guarantees that there will be no compulsory acquisition or expropriation of the property of any foreign investment as to which a Foreign Investment Certificate has been issued. AHPW, Inc. v. FSM, 12 FSM R. 164, 166 (Pon. 2003).
When a party has not alleged that the state has dispossessed it of any property, and that property is now in the possession of the state or its designee, the party has not stated a cause of action for expropriation under the FSM foreign investment statutes. AHPW, Inc. v. FSM, 12 FSM R. 164, 167 (Pon. 2003).
There is no meaningful distinction between the terms "compulsory acquisition" and "expropriation." AHPW, Inc. v. FSM, 12 FSM R. 164, 167 (Pon. 2003).
(1) The National Government guarantees that no holder of a currently valid Foreign Investment Permit will be subject to any restrictions on making lawful remittances of profits and carrying out other lawful current international transactions as defined in the Articles of Agreement of the International Monetary Fund.
(2) The National Government guarantees that any holder of a currently valid Foreign Investment Permit will be permitted to lawfully repatriate any amount of capital that was brought into the FSM for, or that lawfully accrued on, a business entity to which such Permit applies.
Source: PL 10-49 § 25; PL 14-32 § 11.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on taxes are found in title 54 of this code.
Subject to the provisions of this chapter and regulations promulgated hereunder, and subject further to the express provisions of any other statute applicable to specific business categories, the National Government shall not take action, or permit any 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 the FSM.
Source: PL 10-49 § 27; PL 14-32 § 12.
Case annotation: A state would have to actually acquire the property in some fashion for there to be an expropriation, and 32 F.S.M.C. 219 only authorizes injunctive relief and does not create a cause of action for damages. Pohnpei v. AHPW, Inc., 14 FSM R. 1, 24 (App. 2006).
While injunctive relief would be available to prospectively enforce 32 F.S.M.C. 219, noticeably absent from this section is any language which creates a cause of action for damages on the aggrieved party’s part. AHPW, Inc. v. FSM, 12 FSM R. 114, 122 (Pon. 2003).
While § 219 of the Foreign Investment Laws admits of a cause of action for prospective, injunctive relief against the FSM, it does not permit an action for damages. Chapter 3 provides a remedy for damages, but notwithstanding the fact that the remedy is against Pohnpei, and not the FSM, it is nevertheless a remedy. If the plaintiff prevails, the conduct alleged will not go unsanctioned. AHPW, Inc. v. FSM, 12 FSM R. 164, 167 (Pon. 2003).
By statute, the national government will not take action, or permit action, or permit action to be taken by any state or other entity within the FSM, that although not formally designated or acknowledged as compulsory acquisition or expropriation, indirectly has the same injurious effect ("creeping expropriation"), and that if such action takes place, the national government will be responsible for the prompt and adequate compensation of any injured noncitizen. Pohnpei v. AHPW, Inc., 14 FSM R. 1, 23 (App. 2006).
By statute, the national government will not take action, or permit any state to take action, that would result in a foreign investor being given treatment that is less favorable than the treatment given to citizens, or business entities wholly owned by citizens, engaging in business in the FSM. Pohnpei v. AHPW, Inc., 14 FSM R. 1, 23 (App. 2006).
(2) If the Secretary determines that any person has failed or refused to comply with requirements imposed under or pursuant to this chapter or the FSM Foreign Investment Regulations, the Secretary may, in addition to taking action under subsection (1) of this section,
(c) initiate measures for the imposition of criminal penalties as described in subsection (3) of this section or in other laws of the FSM.
Cross-reference: The statutory provisions on the Executive are found in title 2 of this code. The statutory provisions of the FSM Supreme Court are found in title 4 of this code. The statutory provisions on Judicial Procedure are found in title 6 of this code.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the FSM Supreme Court are found in title 4 of this code. The statutory provisions on Judicial Procedure are found in title 6 of this code.
Case annotations: A foreign investment permit applicant aggrieved by a final permit decision may appeal the decision to the FSM Supreme Court. 32 F.S.M.C. 215. Michelsen v. FSM, 5 FSM R. 249, 252-53 (App. 1991).
(2) This Act shall be effective on the first day of the first month which begins no less than 90 days after this Act becomes law.
(3) Upon the effectiveness of this Act as provided for in subsection (1) and (2) of this section, this Act shall supersede the Foreign-Investment Act (as amended by Public Law No. 5-134); that Act is hereby repealed and shall no longer have any force of law.
§ 303. Agreements lessening competition—Unlawful.
As used in this chapter, "person or persons" includes an individual or individuals, corporations, firms, partnerships or any other association existing under or authorized by the laws of the Trust Territory.
Case annotation: Any person who proves a violation of 32 F.S.M.C. 302 or 32 F.S.M.C. 303 may recover reasonable attorney's fees. AHPW, Inc. v. FSM, 13 FSM R. 36, 39 (Pon. 2004).
When there is no doubt about the violation of 32 F.S.M.C. 302(2), but when there is nothing of record to establish that even if a trochus harvest had been held after 1994, the plaintiff would have been successful in purchasing enough trochus so that it would have had an adequate source of supply for its button operation, the plaintiff has failed to establish that it was damaged by the defendant's conduct as proscribed 32 F.S.M.C. 302(2). Since that conduct was tortious in nature, the plaintiff is entitled only to nominal damages. AHPW, Inc. v. FSM, 12 FSM R. 544, 555 (Pon. 2004).
Averaging three years of normal operations when the pepper supply was continuous when the manufacturing process was uninterrupted to arrive at an annual profit, is a projection that provides a reasonable basis from which a plaintiff's lost profits can be approximated or inferred under the lower burden of proof applicable for damages in anticompetitive practices cases. AHPW, Inc. v. FSM, 12 FSM R. 544, 555 (Pon. 2004).
When the conduct's nature was discrete and specific, and would have been amenable to injunctive relief had the plaintiff sought it, once that relief had been awarded there could have been no prospective damages since the conduct giving rise to those damages would necessarily have ceased. There should be no recovery for further diminution of a business's value, predicated on the defendant's continuing wrongdoing, after the defendant has been enjoined. The court will thus not award prospective damages from the time of the lawsuit's filing onward because injunctive relief, to which the claim would have been amenable, would have terminated the conduct complained of. But since under the continuing tort doctrine, a plaintiff is entitled to recover all of the damages that result from on-going tortious conduct, even though the inception of the conduct lies outside the limitations period, the court will award damages from the start of the anticompetitive pepper processing operation in mid-1995 until the plaintiff filed suit. AHPW, Inc. v. FSM, 12 FSM R. 544, 555-56 (Pon. 2004).
When the lack of details provided in an attorney's fee affidavit is problematic, but Congress felt that the policy concerns underlying 32 F.S.M.C. 301 et seq. were strong, because a successful plaintiff may recover both reasonable attorney's fees and treble damages and the plaintiff has successfully vindicated an interest protected by this statute and when the case presented complex, novel issues and the relief sought was ultimately achieved, in lieu of denying a fee request altogether, the court may reduce the amount of the fee claimed. AHPW, Inc. v. FSM, 13 FSM R. 36, 41 (Pon. 2004).
When it is not clear whether the plaintiff can demonstrate the type of illegal "combination" contemplated by 32 F.S.M.C. 302, and there is no relevant case law found in the FSM which interprets the anti-competitive practices law and when the court does not have before it any evidence of the parties' relative market shares, it is difficult to evaluate the likelihood of success of plaintiff's claims under 32 F.S.M.C. 301 et seq. Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM R. 409, 417 (Pon. 2001).
The long-arm statute provides how service may be effected, outside of the FSM Supreme Court's territorial jurisdiction, against those who have done certain acts which subject them to the personal jurisdiction of the FSM Supreme Court, and such service has the same force and effect as though it had been personally made within the FSM. Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM R. 200, 204 (Pon. 2001).
The Attorney General has the authority to prosecute violations of the Consumer Protection Act, but private business entities do not. The Act recognizes that unfair or deceptive trade practices are criminal, and also confers standing on consumers who are injured by the practices to recover their actual damages or $100, whichever is greater. Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM R. 409, 418 (Pon. 2001).
Case annotation: Attempts to threaten or induce merchants not to sell competing products violate 32 F.S.M.C. 303. Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM R. 409, 417 (Pon. 2001).
A foreign corporation served pursuant to 4 F.S.M.C. 204 may be sued within the FSM for violations of 32 F.S.M.C. 302 or 303, regardless of where the service occurs, so long as that foreign corporation has done specific acts within the FSM to bring it within the jurisdiction of the FSM Supreme Court. Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM R. 200, 204-05 (Pon. 2001).
(2) Any person who is injured in his business, personal property, or real property by reason of another's violation of sections 302 or 303 of this chapter may sue therefor in the High Court in the district where the defendant resides or where service may be obtained, and may recover three times the damages sustained by him together with a reasonable attorney's fee and the costs of suit; provided, that the Trust Territory and any of its political subdivisions and public agencies shall be deemed a person within the meaning of this section, and may, through the Attorney General or the District Attorney, bring an action on behalf of the Trust Territory, its political subdivisions, or public agencies to recover the damages provided by this section, including a reasonable attorney's fee together with the costs of the suit.
(3) Upon conviction under this chapter of a noncitizen business, as defined in chapter 2 of this title, the High Commissioner may revoke such noncitizen's business permit.
Case annotation: The venue provision of 32 F.S.M.C. 306(2) must be read in conjunction with the service provisions of the FSM "long-arm statute," 4 F.S.M.C. 204, and with the FSM Code's venue provisions. Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM R. 200, 204 (Pon. 2001).
A venue provision that permits a civil action against a defendant who does not live in the FSM to be brought in a court within whose jurisdiction the defendant can be served or his property can be attached does not limit the FSM Supreme Court's subject matter jurisdiction, and does not render the long-arm statute superfluous. Such provisions do not preclude actions which are made procedurally possible by the long-arm statute, which gives litigants the means to effect service on entities not found within the FSM. Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM R. 200, 204 (Pon. 2001).
Damages under 32 F.S.M.C. 306(2) are subject to trebling. AHPW, Inc. v. FSM, 12 FSM R. 544, 555, 556 (Pon. 2004).
§ 417. Compliance with chapter required—Penalties.
(2) The term of office of a notary public shall be two years from the date of his commission, unless sooner removed by the High Commissioner on recommendation of the Attorney General made on findings of cause after due hearing; provided, that after due hearing the commission of a notary public may be revoked by the High Commissioner in any case where any change shall occur in such notary's office, occupation or employment which in the judgment of the High Commissioner renders the holding of such commission no longer necessary for the public good and convenience.
Editor's note: Subsections (1) and (2) were originally one subsection prior to the 1982 edition of this code.
Case annotation: The act of notarizing a document is in itself a verification of the identity and signature of the person who signed the document. If an affiant is not present, however, the notary cannot make the necessary verifications and should under no circumstances notarize the document, and is subject to liability for misconduct of a notary public. Peter v. Jessy, 17 FSM R. 163, 174 (Chk. S. Ct. App. 2010).
Source: TT Code 1966 § 1084; TT Code 1970, 31 TTC 251; COM PL 4C-27 § 2; TT Code 1980, 31 TTC 251; PL 6-36 § 1.
Case annotations: While the majority of notaries are employed by the state government, several are employed by other offices and by private entities. The duties of a notary public are the same, regardless of where they are employed. A notarization performed by a court employee carries the same weight as a notarization performed by a privately employed individual. In re Phillip, 11 FSM R. 243, 245 (Kos. S. Ct. Tr. 2002).
A notary only confirms that the person appeared before him or her, was identified by the notary, and signed the affidavit (or other document) in the presence of the notary. Identity is confirmed by personal knowledge or by appropriate documentation. The identity and signature of the person signing the affidavit are verified by the notary public, and so noted on the document. In re Phillip, 11 FSM R. 243, 245 (Kos. S. Ct. Tr. 2002).
A notary cannot and does not verify or confirm the statements in the affidavit because the notary does not have personal knowledge of those statements. In re Phillip, 11 FSM R. 243, 245 (Kos. S. Ct. Tr. 2002).
A notarized affidavit may be authenticated without the affiant's testimony, as it is presumed to be authentic so long as it is acknowledged in the manner provided for by law. A clerk of court's manner of acknowledging an affidavit is for the affiant to swear to it under oath in the clerk's presence. Peter v. Jessy, 17 FSM R. 163, 173-74 (Chk. S. Ct. App. 2010).
(1) Every notary public shall constantly keep a seal of office, which may be a rubber stamp or impression seal, whereon shall be engraved his name, and the words "Notary Public" and "Trust Territory of the Pacific Islands." He shall authenticate all of his official acts, attestations, certificates, and instruments therewith.
Case annotation: Before a notary can apply the notary seal to an affidavit, the notary must confirm that the affiant has personally appeared to sign the affidavit before the notary, the affiant must be identified at that time by the notary, and the affiant must sign the affidavit in the notary's presence. The notary confirms the affiant's identity by personal knowledge or by reviewing appropriate documentation. When applying the notary seal, the notary notes on the affidavit that the affiant's identity and signature have been verified. Peter v. Jessy, 17 FSM R. 163, 174 (Chk. S. Ct. App. 2010).
Case annotation: Notarization of a document does not establish truth to the statements made in the document: notarization only verifies the identity and signature of the person who signed the document. Consequently, notarization of a document by a court employee does not represent any court endorsement or certification of the statements made in the document. In re Phillip, 11 FSM R. 243, 245 (Kos. S. Ct. Tr. 2002).
Noncitizen Peddlers
[REPEALED in its entirety by PL 5-54 § 1]
Editor's note: The former chapter 5, "Noncitizen Peddlers," was repealed by PL 5-54, § 1.
The Secretary of Resources and Development of the Federated States of Micronesia is authorized and directed to undertake development of lateritic soils and other resources utilizing domestic or foreign expertise, including, but not limited to, entering into a franchise agreement with a foreign or domestic business venture, which is referred to in this chapter as "company," for the purpose of securing franchise rights for the Federated States of Micronesia to use patented methods relating to lateritic soil in the process of manufacturing bricks, blocks, roofing tile, and floor tile, as well as all other building components. All negotiations with the selection of such company shall be made in accordance with applicable laws, U.S. Secretary of Interior Orders, and standard Federated States of Micronesia procedures for businesses entering into franchise agreements with the Federated States of Micronesia.
URL: http://www.paclii.org/fm/legis/consol_act_2014/br212