Request By:
Mr. Dennis M. Clare
Nold, Mosley, Clare, Hubbard & Rogers
Fifth Floor
The Hart Block Building
730 West Main Street
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your letter to the Attorney General you ask two questions:
(1) May a foreign corporation duly qualified to do business in Kentucky, the shareholders of which are all nonresident aliens, own property in Kentucky?
(2) May a Kentucky corporation, the sole shareholder of which is a foreign corporation, own property in Kentucky?
The term "foreign corporation" includes corporations that are organized and created under the laws of another nation as well as corporations organized and created under the laws of another state. KRS 271A.010(2); 36 Am.Jur.2d, Foreign Corporations, §§ 1, 3.
A foreign corporation must obtain a certificate of authority from the Secretary of State before it may transact business in Kentucky. KRS 271A.520. A foreign corporation that has received a certificate of authority shall "enjoy the same, but no greater, rights and privileges as a domestic corporation . . . ." KRS 271A.525.
In OAG 78-585, we stated that a corporation is a legal entity distinct from its shareholders. We concluded in that opinion that the property of a corporation, the shares of which are owned partially or wholly by a non-resident alien, are not subject to the escheat provisions and may be properly held by the foreign interest.
We reached a similar conclusion in OAG 79-163. There we stated that the real property owned by a firm incorporated in the United States, the shares of which are owned partially or wholly by aliens, is not subject to the escheat provisions and may be properly and indefinitely held by the foreign interests.
In 36 Am.Jur.2d, Foreign Corporations, § 137 at page 143 it is stated as follows:
"A policy of a state or territory which will not permit a foreign corporation to acquire or hold real property must be expressed in some affirmative way and cannot be inferred merely from the fact that its legislature has made no provision for the formation of similar corporations or allows corporations to be formed only by general law." See, Lathrop v. Commercial Bank, 8 Dana (Ky.) 114 (1839).
Furthermore, KRS 381.320 specifically allows aliens to take and hold personal property, such as stock.
Finally, in Texasgulf, Inc. v. Canada Development Corporation, 366 F.Supp. 374 (D.C. Texas, 1973), the court held that the acquisition of a domestic corporation by a foreign corporation was not contrary to the public policy of the United States nor against the national interest.
Therefore, in answer to your questions, it is our opinion that a foreign corporation duly qualified to do business in Kentucky may own property in Kentucky, even if all the shareholders are non-resident aliens. Also, a Kentucky corporation solely owned by a foreign corporation may own property in Kentucky.