DRAFT CSC, Title 16.  Business Organizations & Regulation
 
CHAPTER 4
Foreign Investment Act

1201.  Short title.
1202.  Purpose.
1203.  Definitions.
1204.  Requirement that a foreign investor obtain a foreign investment permit.
1205.  Categories of economic sectors.
1206.  Relationship Between the Chuuk State Government and the National Government  Regarding the Regulation of Foreign Investment within the Territory of Chuuk State.
1207.  Application Procedures for Chuuk State Foreign Investment Permits.
1208.  Form, fees, renewal, modification, and cancellation of a Chuuk State Foreign Investment Permit.
1209.  Expatriate worker authorizations and entry permits.
1210.  Reports by holders of Chuuk State Foreign Investment Permits.
1211.  Reports by the Director.
1212.  Guarantees and entitlements regarding foreign investments.
1213.  Injunction and penalties.
1214.  Judicial review.
1215.  Confidentiality.
1216.  Enforcement.
1217.  Unauthorized foreign business.
1218.  Effectiveness; transition.

      1201.  Short title.
     This Act Chapter is known and may be cited as the "Chuuk State Foreign Investment Act of 1998."

Source:  CSL 4-99-03, 1, modified.

Editor's note:  CSL 4-99-03 that created this Chapter was signed into law by the Governor on February 17, 1999.

      1202.  Purpose.
     The purpose of this Act Chapter is to encourage foreign investment within the territory of Chuuk State in a manner that serves the economic, social, and cultural interests of Chuuk State.  This purpose shall be borne in mind in the implementation and interpretation of the provisions of this Act Chapter.

Source:  CSL 4-99-03, 2, modified.

      1203.  Definitions.
     When used in this Act Chapter, the following words shall have meanings as defined below, unless otherwise required by the context:

     (1)  "Business entity" means any sole proprietorship, partnership, company, corporation, joint venture, government, government entity, or other association of persons engaging in business;

     (2)  "Citizen" means a citizen of the FSM.

     (3)  "Director means the Director of the Chuuk State Department of Commerce and Industry.

     (4)  "Eco-tourism" means the business of engaging in tourism that is focused on bringing visitors to Chuuk to view its cultures, traditions, land, and marine environment with a minimal negative or intrusive effect.  Eco-tourism is subject to all appropriate governmental regulations.

     (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) below of this Section, but shall not include the activities enumerated in Subsection (5)(b) below of this Section:

     (a)  "engaging in business" shall include:

     (i)  buying, selling, leasing, or exchanging goods, products, or property of any kind for commercial purposes;

     (ii)  buying, selling or exchanging services of any kind for commercial purposes;

     (iii)  conducting negotiations for transactions of the types described in Subsections items (5)(a)(i) or 5(a)(ii) above of this Section; provided, however, that negotiations with licensed importers for periods of less then fourteen (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 Subsections items (5)(a)(i) through 5(a)(iii) above 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;

     (v)  maintaining a stock of goods in the FSM for the purpose of having the same processed by another person in the FSM;

     (vi) establishing or operating a factory, workshop, processing plant, warehouse, or store, whether wholesale or retail;

     (vii)  mining or exploring for minerals, or the commercial exploitation or extraction of other natural resources;

     (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, computer consultant 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 fourteen (14) days in any calendar year.

     (b)  engaging in business does not include:

     (i)  the publication of general advertisements through newspapers, brochures, or other publications, or through radio or television;

     (ii)  the conducting of scientific research or investigation, if (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;

     (iii)  the collection of information by a bona fide journalist for news publication or broadcast; and

     (iv)  the lawful sale of corporate shares or other interest or holdings in a business entity acquired not for speculation or profit;

     (6)  "Foreign investment" means any activity in the FSM by a noncitizen that amounts to "engaging in business" as defined above;

     (7)  "Foreign investor" means a noncitizen who is "engaging in business" in the FSM, as defined above;

     (8)  "FSM" means the Federated States of Micronesia;

     (9)  "FSM Foreign Investment Act" means the Foreign Investment Act of 1997, enacted by the Congress of the Federated States of Micronesia as FSM Public Law No. 10-49, and codified in the FSM Code, Title 32, Chapter 2.

     (10)  "Foreign Investment Permit" means an FSM Foreign Investment Permit, a Chuuk State Foreign Investment Permit, or a Pre-Existing Foreign Investment Permit;

     (11)  "FSM Foreign Investment Permit" means a permit issued by the Secretary in accordance with the provisions of the FSM Foreign Investment Act;

     (12)  "FSM Foreign Investment Regulations" means regulations promulgated by the Secretary in accordance with the provision of the FSM Foreign Investment Act;

     (13)  "FSM R&D Department" means the Department of Resources and Development of the FSM or Department of Economic Affairs.

     (14)  "Holder" or "holder of the permit" means:

     (a)  any person or entity that appears on the application for a Foreign Investment Permit, or

     (b)  the business on Chuuk which is described in the application, as deemed appropriate by the Director;

     (15)  "Chuuk State" means the State of Chuuk;

     (16)  "Chuuk State Foreign Investment Permit" means a permit issued by the Director in accordance with the provisions of this Act Chapter.

     (17)  "Chuuk State Foreign Investment Regulations" means regulations promulgated by the Director in accordance with the provisions of this Act Chapter.

     (18)  "Local product" means any product locally grown, harvested, created, produced, assembled or manufactured in Chuuk;

     (19)  "Noncitizen" means any person who is not a citizen of the FSM or any business entity in which any ownership interest is held by a person who is not a citizen of the FSM;

     (20)  "Ownership interest" in a business entity means ownership of or control over, either directly or indirectly, 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 security interest in real or personal property for the purpose of securing a loan; and

     (b)  any interest held by the spouse, minor child, or other dependent of a person shall be counted as owned by that person in determining whether he or she has an ownership interest in a business entity;

     (21)  "Person" includes both individuals and legal entities;

     (22)  "Preexisting Foreign Investment Permit" means a permit issued by the Secretary of FSM R&D or by Chuuk State prior to the date on which this Act Chapter took effect and which has not expired according to its terms or been suspended, or canceled;

     (23)  "Professional Services" means an attorney, physician, dentist, engineer, surveyor, accountant, auditor, computer consultant or other types of professionals providing service for a fee.  The Director may designate additional categories in the Chuuk State Foreign Investment Regulations.

     (24)  "Real property brokering" means the business of procuring the purchase and sale of land or acting as intermediary between vendor and purchaser;

     (25)  "Secretary" means the Secretary of the FSM R&D Department.

Source:  CSL 4-99-03, 3, modified.

      1204.  Requirement that a foreign investor obtain a foreign investment permit.
     A noncitizen may not conduct any activity in the territory of Chuuk State that amounts to "engaging in business", as defined in Section 1203 of this Act Chapter and Section 203 of the FSM Foreign Investment Act, unless that non-citizen holds a currently valid Foreign Investment Permit authorizing that noncitizen to conduct that activity.

Source:  CSL 4-99-03, 4, modified.

      1205.  Categories of economic sectors.
     In administering the system of Chuuk State Foreign Investment Permits established in this Act Chapter, and in regulating foreign investment generally within the territory of Chuuk State, the Director shall be guided by the system of categories of economic sectors established in Section 205 of the FSM Foreign Investment Act, as follows:

     (1)  Categories for National Regulations--- those economic sectors identified by the FSM Foreign Investment Act or FSM Foreign Investment Regulations as categories A, B and C.

     (2)  Categories for State Regulation---economic sectors that are not identified by the FSM Foreign Investment Act or the FSM Foreign Investment Regulations.  The categories in Chuuk State are:

     (a)  Category D ("Chuuk State Red List")--- the set of economic sectors that are closed to foreign investment within the territory of Chuuk State:

     (i)  such other economic sectors as the Director may designate in the Chuuk State Foreign Investment Regulations as being on the Chuuk State Red List.

     (b)  Category E ("Chuuk State Amber List")--- the set of economic sectors as to which certain criteria specified in the Chuuk State Foreign Investment Regulations must be met before a Chuuk State Foreign Investment Permit will be issued include any economic sector that is not included on any other list (Category A through D and F) The economic sectors on the Chuuk State Amber List include the following:

     (i)  Casinos;

     (ii)  Lotteries; and

     (iii)  Such other economic sectors as the Director may designate in the Chuuk State Foreign Investment Regulations as being on the Chuuk State Amber List; and

     (c)  Category F ("Chuuk State Green List") . the set of economic sectors which no special criteria need to be met before a Chuuk State Foreign Investment Permit will be issued, except for the minimum value standards that may be established  under Section 1206 (4)(c) of this Act Chapter.  The economic sectors on the Chuuk State Green List include the following:

     (i)  Eco-tourism;

     (ii)  Professional services;

     (iii)  Intrastate airline services;
 
     (iv)  Exportation of local products; and

     (v)  Such other economic sectors as the Director may designate in the Chuuk State Foreign Investment Regulations as being on the Chuuk State Green List.

Source:  CSL 4-99-03, 5, modified.

      1206.  Relationship between the Chuuk State Government and the National Government regarding the regulation of foreign investment within the territory of Chuuk State.
     The Director shall be guided by the provisions of Section 206 of the FSM Foreign Investment Act, and in particular shall:

     (1)  take all action necessary and within the Director's power to prohibit foreign investment within the territory of Chuuk State falling within economic sectors designated pursuant to Section 205 (1) of the FSM Foreign Investment Act for inclusion on the National Red List (Category A);

     (2)  participate, or nominate someone from his or her office to participate, in meetings convened by the FSM National Government to review sector developments and to add economic sectors to, or remove them from, Categories A, B, and C under Section 205(1) of the FSM Foreign Investment Act;

     (3)  cooperate in other ways with the FSM R&D Department, and with responsible authorities from other States, regarding the regulation of foreign investment; and

     (4)  subject to Section 1216(3) of this Act Chapter, take responsibility for regulating foreign investment within the territory of Chuuk State, including:

     (a)  determining what, if any, additional economic sectors shall be designated for inclusion in Categories D, E, and F pursuant to Section 1205(2) of this Act Chapter;

     (b)  determining what Chuuk State criteria, if any, shall be specified for foreign investments in Category E economic sectors;

     (c)  determining whether foreign investments in Category E or Category F economic sectors shall be subjected to a minimum value standard and, if so, what that minimum value standard should be.  Minimum value standard may be required in order to prevent abuse of the system of Chuuk State Foreign Investment Permits as a vehicle for gaining entry to Chuuk State without a bona fide intention of engaging in business;
 
     (d)  the issuance of Chuuk State Foreign Investment Permits pursuant to Section 1207 of this Act Chapter in respect of foreign investment taking place or proposed to take place within the territory of Chuuk State in all economic sector categories other than those designated for inclusion in A, B, C, or D pursuant to this Act Chapter and the FSM Foreign Investment Act.

Source:  CSL 4-99-03, 6, modified.

      1207.  Application procedures for Chuuk State Foreign Investment Permits.

     (1)  An application for a Chuuk State Foreign Investment Permit shall be made on the form or forms prescribed in the Chuuk State Foreign Investment Regulations, as may be supplemented in particular cases by order of the Director in accordance with Section 1216(3) of this Act Chapter.  Such application form or forms shall be made publicly available by the Director.  The application form shall require the applicant to identify clearly the person(s) resident in Chuuk State who are designated as agent(s) for service of process.

     (2)  Submission of an application for a Chuuk State Foreign Investment Permit shall be made to the Director.  Upon receiving an application for a Chuuk State Foreign Investment Permit, the Director shall, within such periods of time as may be prescribed for this purpose in the Chuuk State Foreign Investment Regulations, take one or more of the following actions, as appropriate:
 
     (a)  determine whether the application relates to foreign investment in an economic sector included in Category A, B, or C, as described in Section 205 of the FSM Foreign Investment Act,

     (b)   or in an economic sector included in Category D, E, or F, as described in Section 1205 above of this Chapter;

     (c)  deny the application if it relates to:

     (i)  foreign investment in an economic sector of Category D (Chuuk State Red List);

     (ii)  foreign investment in an economic sector of Category E (Chuuk State Amber List) or a Category F (Chuuk State Green List) when the application is incomplete or the Foreign Investor does not meet a minimum value standards established pursuant to Section 1206(4)(c) of this Act Chapter; or

     (iii)  foreign investment in an economic sector in Category E (Chuuk State Amber List) economic sector but does not satisfactorily demonstrate that the investment meets all of the applicable Chuuk State criteria established in the Chuuk State Foreign Investment Regulations pursuant to Section 1206(4)(b) of this Act Chapter;

     (c)  forward the application to the Secretary if it relates to foreign investment in an economic sector included in Category A, B, or C, as described in Section 205 of the FSM Foreign Investment Act;

     (d)  require the applicant to submit further information if the application is incomplete or does not provide enough information for the Director to determine

     (i)  what economic sector(s) is (are) involved, or

     (ii)  whether the requirements for a Chuuk State Foreign Investment Permit have been or will be met;

     (e)  hold a public hearing for the review of any new or renewal application submitted which falls under Category E (Chuuk State Amber List), if, in the Director's discretion he determines one is appropriate.  Any required hearing shall be held pursuant to the provisions of the Chuuk State Foreign Investment Regulations.

     (f)  issue a Chuuk State Foreign Investment Permit if:

     (i)  the application:

     (A)  relates to a foreign investment in a Category E (Chuuk State Amber List) economic sector;

     (B)  is complete; and

     (C)  demonstrates that the foreign investment meets all of the applicable Chuuk State criteria established in the Chuuk State Foreign Investment Regulations pursuant to Section 1206(4)(b) and (c) of this Act Chapter; or

     (ii)  the application:

     (A)  relates to foreign investment in a Category F (Chuuk State Green List) economic sector;

     (B)  is complete; and
 
     (C)  meets any minimum value standards established pursuant to Section 1206(4)(c) of this Act Chapter.

     (g)  Place conditions or restrictions on the issuance of the Chuuk State Foreign Investment Permit as deemed appropriate.

     (3)  Upon taking any action described in Subsection 7(2)(b), (2)(d), or (2)(f) above of this Section, the Director shall, within such periods of time as may be prescribed for this purpose in the Chuuk State Foreign Investment Regulations, advise the applicant of the action and the reasons therefor.

     (4)  The amount of the application fee to be paid by an applicant seeking a Chuuk State Foreign Investment Permit shall be established in the Chuuk State Foreign Investment Regulations.

     (5)  If the Director issues a Chuuk State Foreign Investment Permit pursuant to Subsection 7(2)(f) above of this Section, the Chuuk State Foreign Investment Permit will be sent to the applicant and copies of any Foreign Investment Permit shall be:

     (a)  inserted into a register to be maintained by the Director for this purpose; and

     (b)  sent to the Secretary, for insertion in a register to be maintained by the FSM R&D Department for this purpose.

     (6)  If the Director denies an application for a Chuuk State Foreign Investment Permit pursuant to Subsection 7 (2)(b)(ii) or (iii) above of this Section, the applicant may:

     (a)  resubmit the application with modifications designated to meet any applicable criteria established in the Chuuk State Foreign Investment Regulations, or

     (b)  provide to the Director 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 Director shall review the application and make a determination under the procedures prescribed in Section 1207 above of this Chapter.  There is no limit to the number of times an applicant may modify an application in order to meet the requirements for a Chuuk State Foreign Investment Permit.

Source:  CSL 4-99-03, 7, modified.

      1208.  Form, fees, renewal, modification, and cancellation of a Chuuk State Foreign Investment Permit.

     (1)  A Chuuk State Foreign Investment Permits shall be in the form prescribed in the Chuuk State Foreign Investment Regulations.

     (2)  In the application for a Chuuk State Foreign Investment Permit, the holder shall fulfill the requirements, if any, included in the Chuuk State Foreign Investment Regulations for the payment of an application fee.

     (3)  Upon the issuance of a Chuuk State Foreign Investment Permit, the holder shall fulfill the requirements, if any, included in the Chuuk State Foreign Investment Regulations for the payment of an annual permit fee.

     (4)  A Chuuk State Foreign Investment Permit shall be valid for one year, and, unless it has been canceled, suspended, or surrendered pursuant to Subsections 8 (8)-(11) of this Section below, it shall be automatically renewable on an annual basis upon the fulfillment of the requirements, if any, included in the Chuuk State Foreign Investment Regulations for the payment of an annual fee.

     (5)  A Chuuk State Foreign Investment Permit shall not be transferable between investments or investors and shall not be assignable to any investment or investor other than the one for which it was issued.

     (6)  The holder of a Chuuk State Foreign Investment Permit may not make a change in the business for which the holder has obtained a Chuuk State Foreign Investment Permit without obtaining their new Chuuk State Foreign Investment Permit for that purpose under Section 1207 of this Act Chapter or, if applicable, a new FSM Foreign Investment Permit under Section 207 of the FSM Foreign Investment Act or obtaining a modification in the terms of their present Chuuk State Foreign Investment Permit.  Such a modification may be requested by the holder, and granted by the Director, in accordance with such (7) procedures and requirements as the Director may establish in the Chuuk State Foreign Investment Regulations.

     (8 7)  For purposes of Subsection 8 (6) of this Section above, a "change in the business" occurs if the holder either:

     (a)  begins operation in a different economic sector from the one(s) for which the Chuuk State Foreign Investment Permit was issued, or

     (b)  alters, changes, modifies or transfers the amount of the ownership interest which the non-citizen retains.

     (8)  The Director may cancel a Chuuk State Foreign Investment Permit only if the Director determines, following the procedural requirements of Subsection 8 (10) of this Section below, that one or more of the following circumstances exist:

     (a)  the annual fee required under either Subsections 8 (2) or 8 (3) of this Section above has not been paid;

     (b)  the holder of the permit requests its cancellation;

     (c)  the permit application is found to have contained false or fraudulent information;

     (d)  if any person bribes or otherwise exercises, or attempts to exercise, undue influence upon the application process for the permit;

     (e)  the holder of the permit fails or refuses to comply with the reporting requirements under Section 1210 of this act Chapter or with any other requirements of this act Chapter or of the Chuuk State Foreign Investment Regulations;

     (f)  the holder of the permit fails or refuses to comply with any restrictions or conditions included in the permit, or engages in activities not authorized by the permit;

     (g)  the holder fails to comply with any applicable State or National laws.

     (9)  If a Chuuk State Foreign Investment Permit is canceled pursuant to Subsection 8 (8) of this Section above, the noncitizen holding that canceled permit shall:

     (a)  immediately stop engaging in business in Chuuk State;

     (b)  take such steps as the Director shall direct in order to dispose of that noncitizen's interest in any applicable business entity; and

     (c)  pay any fines or other penalties that may be imposed under Section 1213 of this act Chapter or under Chuuk State Foreign Investment Regulations.

     (10)  If it appears to the Director that one or more of the grounds for cancellation of a Chuuk State Foreign Investment Permit, as enumerated in Subsection 8 (8) of this Section above, may exist, the Director may temporarily suspend the validity of that Chuuk State Foreign Investment Permit and shall commence the following procedures leading to cancellation:

     (a)  The Director, or the Director's designee, may schedule a hearing on the matter before the Director, or the Director's designee.  At least 21 days written notice of the hearing, stating the alleged ground for cancellation, shall be given to the holder of the Chuuk State Foreign Investment Permit, at the address designated on the application for such notice.  If during that time the holder of the Chuuk State Foreign Investment Permit takes action satisfactory to the Director to disprove the allegations or otherwise remedy the situation, the Director may cancel the hearing and reinstate the Chuuk State Foreign Investment Permit if it was temporarily suspended.

     (b)  Hearing procedures shall be prescribed by the Director in the Chuuk State Foreign Investment Regulations and shall include the right of the holder of the Chuuk State Foreign Investment Permit to participate and to be represented by counsel, to call witnesses, and to cross-examine witnesses called against the holder of the Chuuk State Foreign Investment Permit.

     (c)  Within the ten days after a hearing, the Director shall issue a written decision including reasons for the action taken and the remedy to be imposed pursuant to Subsection 8 (9) of this Section above, and shall transmit that decision immediately to the holder of the Chuuk State Foreign Investment Permit.

     (d)  If a decision has not been issued pursuant to Subsection 8 (10)(c) of this Section above, within the ten days specified, any temporary suspension ordered by the Director shall automatically end, and the validity of the Chuuk State Foreign Investment Permit shall automatically be reinstated.

     (e)  Within 20 days after receiving the notice of the decision of the Director, the holder of the Chuuk State Foreign Investment Permit may appeal the decision to the Chuuk State Court.  Copies of any notice of appeal shall be served on the Director and the Attorney General of Chuuk State.

     (11)  A holder of a Chuuk State Foreign Investment Permit may surrender it by meeting requirements specified for this purpose in the Chuuk State Foreign Investment Regulations.  Mere cessation of engaging in business in Chuuk State, without meeting such requirements, does not relieve the holder of Chuuk State Foreign Investment Permit from the requirements incident thereto.

Source:  CSL 4-99-03, 8, modified.
 
      1209.  Expatriate worker authorizations and entry permits.
     Sections 210, 211, and 212 of the FSM Foreign Investment Act and the provisions of the FSM Foreign Investment Regulations issued pursuant to those sections, sets forth the entitlements to expatriate worker authorization (EWAs') and entry permits.  The Director will work with the FSM Immigration Division, as needed, to assist the holder to obtain any necessary EWA.

Source:  CSL 4-99-03, 9.

      1210.  Reports by holders of Chuuk State Foreign Investment Permits.

     (1)  The holder of any Chuuk State Foreign Investment Permit shall submit to the Director such reports concerning the foreign investment as the Director may prescribe in the Chuuk State Foreign Investment Regulations.  Details of the information required, the reasons for the requirements, and the frequency and form of such reports shall be set forth in the Chuuk State Foreign Investment Regulations.

     (2)  Any change in foreign ownership of an investment for which a Chuuk State Foreign Investment Permit has been issued shall be reported immediately to the Director, who may take such action as the Director considers appropriate in respect of the Chuuk State Foreign Investment Permit, including its cancellation if appropriate under the provisions of Section 1208 of this act Chapter.

Source:  CSL 4-99-03, 10.

      1211.  Reports by the Director.

     (1)  The Director shall publish information annually, in such form and detail as may be prescribed in the Chuuk State Foreign Investment Regulations, concerning the extent of foreign investment in Chuuk State.

     (2)  The Director shall be guided by the provisions of Section 215 of the FSM Foreign Investment Act, and by the provisions of the FSM Foreign Investment Regulations issued thereunder, concerning reports to be submitted by States to the FSM National Government regarding foreign investment.

Source:  CSL 4-99-03, 11.

      1212.  Guarantees and entitlements regarding foreign investments.

     (1)  The Director shall be guided by and shall take no action inconsistent with the provisions of Sections 216 and 217 of the FSM Foreign Investment Act or with any provisions of the FSM Foreign Investment Regulations issued thereunder concerning compulsory (2) acquisition of foreign investment property and transfers of earnings and capital relating to foreign investments.

     (3 2)  Upon payment of such additional fees as the Director may prescribe for this purpose, the holder of a Chuuk State Foreign Investment Permit shall be entitled, for 5 five years, to an exemption from any future changes in the Chuuk State transaction and sales tax rates and similar rules applicable to the business entity to which the permit applies.

     (4 3)  Subject to the provisions of both the FSM Foreign Investment Act, and this act Chapter, and subject to regulations promulgated pursuant to those provisions, the Government of Chuuk State shall not take action, or permit any subsidiary political unit within Chuuk 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 Chuuk State.

Source:  CSL 4-99-03, 12, modified.

      1213.  Injunction and penalties

     (1)  Where, on application by the Chuuk State Attorney General, the Chuuk State Court is satisfied that a noncitizen has acted, or is about to act, in contravention of the provisions of the FSM Foreign Investment Act, the provisions of this act Chapter, the provisions of the FSM Foreign Investment Regulations, or the provisions of the Chuuk State Foreign Investment Regulations, the court may impose an injunction on any such action.  The Attorney General shall provide to the concerned noncitizens(s) at least two business days prior notice of an intention to file such an application with the court.

     (2)  If the Director determines that any person has failed or refused to comply with requirements imposed under or pursuant to the FSM Foreign Investment Act, this act Chapter, the FSM Foreign Investment Regulations, or the Chuuk State Foreign Investment Regulations, the Director may, in addition to the action initiated under subsection (1) above of this Section:

     (a)  suspend or cancel a Chuuk State Foreign Investment Permit pursuant to Section 1208 of this Chapter;

     (b)  impose such administrative fines and penalties as may be prescribed in the FSM Foreign Investment Regulations or in the Chuuk State Foreign Investment Regulations; or

     (c)  initiate measures for the imposition of criminal or civil penalties as described in Subsections 13 (3) and (4) of this Section below or in other laws of Chuuk State.
 
     (3)  Any person guilty of willfully contravening the provisions of Section 1204 of this act Chapter commits a crime as set forth in Section 220 of the FSM Foreign Investment Act, and upon conviction shall be subject to the penalties provided for in said section.

     (4)  Any person who fails to comply with any of the provisions of this act Chapter is subject to the following civil penalties:

     (a)  in the case of an individual, the imposition of a civil fine in an amount up to $10,000 per incident;

     (b)  in the case of a legal entity, the imposition of a civil fine in an amount up to $50,000 per incident;

     (c)  in any case, the forfeiture to the Chuuk State Government of assets or property rights in any business entity engaging in business in contravention of this act Chapter; provided, however, that the value of such assets or property so forfeited shall not be unreasonable in relation to the illegal behavior and injury it caused. The Attorney General shall file and prosecute an action for the imposition of civil penalties in the appropriate court.

Source:  CSL 4-99-03, 13, modified.

      1214.  Judicial review.
     A decision by the Director pursuant to Section 1207 of this Act Chapter regarding an application for a Chuuk State Foreign Investment Permit may be appealed by the applicant.  The notice of any such appeal shall be filed with the Chuuk State Court within 30 days of receipt of notice of the Director's decision. A copy of any such notice shall also be served on the Attorney General of Chuuk State and the Director.  Such appeals shall be made under applicable rules of civil procedures.

Source:  CSL 4-99-03, 14.

      1215. Confidentiality.
     In carrying out the responsibilities imposed by this act Chapter regarding the regulation of foreign investment in Chuuk State, the Director shall maintain the confidentiality of any sensitive business information relating to a particular foreign investor or prospective foreign investor, if so requested by such person; provided, however, that this provision shall not prevent the Director from disclosing information upon order of a court or pursuant to other laws and regulations of Chuuk State or of the FSM.

Source:  CSL 4-99-03, 15.

      1216.  Enforcement.

     (1)  Primary responsibility for the enforcement of this act Chapter shall be placed in the Attorney General of Chuuk and, as to criminal sanctions provided in Section 1217 of this act Chapter, in appropriate law enforcement authorities within Chuuk State.

     (2)  In carrying out the responsibility imposed by this act Chapter, the Director may require the attendance of any citizen or noncitizen at a meeting or hearing conducted by the Director and may require such persons to testify or to produce at, before, or after such meeting or hearing documents, information, and things relevant to enforcement of the provisions of this act Chapter.

     (3)  The Director shall promulgate the regulations necessary to implement this act Chapter and any amendments or modifications thereto the Director deems necessary, subject to legislative approval of said regulations and amendments or modifications thereto, which regulations and amendments or modifications shall have the force and effect of law.

Source:  CSL 4-99-03, 16, modified.

      1217.  Unauthorized foreign business.
     Unauthorized foreign business is engaging in business as defined in Section 1203(5) of this act Chapter without having complied with Section 1204 of this act Chapter, or engaging in business not authorized by a Foreign Investment Permit issued by the FSM or Chuuk State, or failing to comply with the provisions of the Chuuk State Foreign Investment Regulations.  Unauthorized foreign business is a category one misdemeanor.

Source:  CSL 4-99-03, 17, modified.

      1218.  Effectiveness; transition.
     This act Chapter shall take effect upon its approval by the Governor, or upon its becoming law without such approval.  For a period of twelve (12) months after the date on which this act Chapter becomes effective, any Preexisting Foreign Investment Permit applicable within the territory of Chuuk State shall continue to be valid in accordance with its terms, subject to the provisions of this act Chapter and the provisions of the FSM Foreign Investment Act.  Notwithstanding the provisions of Section 1204 of this act Chapter, any noncitizen who was, as of the date on which this act Chapter becomes effective, conducting any activity that amounts to "engaging in business", as defined in Section 1203 of this act Chapter, but who was not required, under the law in effect immediately prior to that date, to obtain a foreign investment permit for that activity, shall have a period of three months from that date in which to either

     (1)  apply for an obtain a foreign investment it or

     (2)  cease conducting the activity.

Source:  CSL 4-99-03, 19, modified.