Kosrae State Government
Department of Resources and Economic Affairs
KSC, TITLE 15. COMMERCE 
 
Chapter 3. Foreign Investment
 
Subchapter A. Introductory Provisions 
Subchapter B. General Rules & Allocation of Government Responsibilities 
Subchapter C. Foreign Investment Permits 
Subchapter D. Expatriate Worker Authorizations and Entry Permits; Reports; Other Provisions 

 
 
Subchapter A. Introductory Provisions 
 
Section 15.301. Short Title. 
Section 15.302. Purpose. 
Section 15.303. Definitions. 
 
Section 15.301. Short Title.

This Chapter is known and may be cited as the "Kosrae State Foreign Investment Act of 1998." 
 
Background.

Chapter 3, Subchapters A-D added by State Law 6-163, which repealed former Section 15.301 and 15.302. Former sections 15.303 through 15.308 repealed by State Law 6-1. 
 
Section 15.302. Purpose.

The purpose of this Act is to encourage foreign investment within the territory of Kosrae State in a manner that serves the economic, social, and cultural interests of Kosrae State. This purpose shall be borne in mind in the implementation and interpretation of the provisions of this Act. 
 
Section 15.303. Definitions.

When used in this Act, 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 Kosrae State Department of Commerce and Industry. 
 
(4) "Eco-tourism" means the business of engaging in tourism that is focused on bringing visitors to Kosrae 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 but shall not include the activities enumerated in subsection (5)(b) below: 
 
     (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 items (i) or (ii) above; provided, however, that
                negotiations with licensed importers for periods of less than 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 items
                (i) through (iii) above, 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; 
 
          (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; and 
 
          (x) holding at least twenty percent (20%) ownership interest in a business entity; 
 
     (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 either an FSM Foreign Investment Permit or a Kosrae State Foreign Investment
            Permit. 
 
     (11) "FSM Foreign Investment Permit" means a permit issued by the Secretary in accordance with the provisions of this 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 Kosrae which is described in the application, as deemed appropriate by the Director; 
 
     (15) "Kosrae State" means the State of Kosrae; 
 
     (16) "Kosrae State Foreign Investment Permit" means a permit issued by the Director in accordance with the provisions of this
            Chapter; 
 
     (17) "Kosrae State Foreign Investment Regulations" means regulations promulgated by the Director in accordance with the
            provisions of this Chapter. 
 
     (18) "local product" means any product locally grown, harvested, created, produced, assembled or manufactured by Kosraens; 
 
     (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 dependant 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; 
 
     (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 the Kosrae
            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. 
 
 
 
Subchapter B. General Rules & Allocation of Government Responsibilities 
 
Section 15.304. Requirement that a foreign investor obtain a Foreign Investment Permit. 
Section 15.305. Categories of economic sectors. 
Section 15.306. Relationship between the Kosrae State Government and the National Government regarding the regulation of foreign investment within the territory of Kosrae State. 
 
Section 15.304. Requirement that a foreign investor obtain a Foreign Investment Permit.

A non-citizen may not conduct any activity in the territory of Kosrae State that amounts to "engaging in business", as defined in Section 15.303 of this Chapter and Section 203 of the FSM Foreign Investment Act, unless that non-citizen holds a currently valid Foreign Investment Permit authorizing that non-citizen to conduct that activity. 
 
Section 15.305. Categories of economic sectors.

In administering the system of Kosrae State Foreign Investment Permits established in this Act, and in regulating foreign investment generally within the territory of Kosrae 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 Regulation - - 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 Kosrae State are: 
 
           (i) Category D ("Kosrae State Red List")- the set of economic sectors that are closed to foreign investment within the
                territory of Kosrae State: 
 
               1. Manufacturing of Toxic and Bio-hazardous material; 
 
               2. Gambling and Casino establishments; 
 
               3. Real property brokering; and 
 
               4. such other economic sectors as the Director may designate in the Kosrae State Foreign Investment Regulations as
                   being on the Kosrae State Red List. 
 
           (ii) Category E ("Kosrae State Amber List") - - the set of economic sectors as to which certain criteria specified in the
                Kosrae State Foreign Investment Regulations must be met before a Kosrae 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); and 
 
          (iii) Category F ("Kosrae State Green List") - - the set of economic sectors which no special criteria need to be met before a
                Kosrae State Foreign Investment Permit will be issued, except for the minimum value standards that may be established
                under Section 15.306(4)(c) of this Chapter. The economic sectors on the Kosrae State Green List include the following: 
 
               1. Eco-tourism; 
 
               2. Professional services; 
 
               3. Exportation of local products; and 
 
               4. such other economic sectors as the Director may designate in the Kosrae State Foreign Investment Regulations as
                   being on the Kosrae State Green List. 
 
Background

Subsection 15.305(2)(I)(1) amended by State Law 6-197. 
 
Section 15.306. Relationship between the Kosrae State Government and the National Government regarding the regulation of foreign investment within the territory of Kosrae 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 Kosrae 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) take responsibility for regulating foreign investment within the territory of Kosrae State, including: 
 
          (a) determining what, if any, additional economic sectors shall be designated for inclusion in Categories D, E, and F
               pursuant to Section 15.305(2) of this Chapter; 
 
          (b) determining what Kosrae 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 Kosrae State Foreign Investment Permits as a vehicle for gaining entry to Kosrae
               State without a bona fide intention of engaging in business; 
 
          (d) the issuance of Kosrae State Foreign Investment Permits pursuant to Section 15.307 of this Chapter in respect of foreign
               investment taking place or proposed to take place within the territory of Kosrae State in all economic sector categories
               other than those designated for inclusion in A, B, C, or D pursuant to this Chapter and the FSM Foreign Investment Act. 
 
 
 
Subchapter C. Foreign Investment Permits 
 
Section 15.307. Application procedures for Kosrae State Foreign Investment Permits. 
Section 15.308. Form, fees, renewal, modification, and cancellation of a Kosrae State Foreign Investment permit. 
 
Section 15.307. Application procedures for Kosrae State Foreign Investment Permits.
 
     (1) An application for a Kosrae State Foreign Investment Permit shall be made on the form or forms prescribed in the Kosrae
          State Foreign Investment Regulations, as may be supplemented in particular cases by order of the Director. 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 the Kosrae State who are designated as agent for service of process. 
 
     (2) Submission of an application for a Kosrae State Foreign Investment Permit shall be made to the Director. Upon receiving an
          application for a Kosrae State Foreign Investment Permit, the Director shall, within such periods of time as may be
          prescribed for this purpose in the Kosrae State Foreign Investment Regulations, take one or more of the following actions, as
          appropriate: 
 
          (a) determine whether the application relates to foreign investment in economic sector included in Category A, B or C, as
               described in Section 205 of the FSM Foreign Investment Act, or in economic sectors Category D, E or F, as described in
               Section 15.305 above; 
 
          (b) deny the application if it relates to: 
 
               (i) foreign investment in an economic sector of Category D (Kosrae State Red List); 
 
               (ii) foreign investment in an economic sector of Category E (Kosrae State Amber List) or a Category F (Kosrae State
                    Green List) when the application is incomplete or the Foreign Investor does not meet a minimum value standards
                    established pursuant to Section 15.306(4)(c) of this Chapter; or 
 
               (iii) foreign investment in an economic sector in category E (Kosrae State Green List) economic sector but does not
                     satisfactorily demonstrate that the investment meets all of the applicable Kosrae State criteria established in the
                     Kosrae State Foreign Investment Regulations pursuant to Section 15.306(4)(b) of this Chapter; 
 
               (iv) forward the application to the Secretary if it relates to foreign investment in an economic sector Category A, B, or C,
                     as described in Section 205 of the FSM Foreign Investment Act; 
 
          (c) 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 Kosrae State Foreign Investment Permit have been or will be met; 
 
          (d) hold a public hearing for the review of any new or renewal application submitted which falls under Category E (Kosrae
               State Amber List), if, in the Director's discretion he determines one is appropriate. Any required hearing shall be held
               pursuant to provisions of the Kosrae State Foreign Investment Regulations. 
 
          (e) issue a Kosrae State Foreign Investment Permit if: 
 
               (i) the application: 
 
                    (A) relates to a foreign investment in a Category E (Kosrae State Amber List) economic sector; 
 
                    (B) is complete; and 
 
                    (C) demonstrates that the foreign investment meets all of the applicable Kosrae State criteria established in the Kosrae
                          State Foreign Investment Regulations pursuant to Section 15.306(4)(b)and (c) of this Chapter; or 
 
               (ii) the application: 
 
                    (A) relates to foreign investment in a Category F (Kosrae State Green List) economic sector; 
 
                    (B) is complete; and 
 
                    (C) meets any minimum value standards established pursuant to Section 15.306(4)(c) of this Chapter. 
 
          (f) Place conditions or restrictions on the issuance of the Kosrae State Foreign Investment Permit as deemed appropriate. 
 
     (3) Upon taking any action described in Section 15.307(2)(b), (2)(d), or (2)(f) above, the Director shall, within such periods of
          time as may be prescribed for this purpose in the Kosrae 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 Kosrae State Foreign Investment Permit shall be
          established in the Kosrae State Foreign Investment Regulations. 
 
     (5) If the Director issues a Kosrae State Foreign Investment Permit pursuant to Section 15.307(2)(f) above, the Kosrae State
          Foreign Investment Permit will be sent to the applicant and copies of any Foreign Investment Permit shall be: 
 
               (i) inserted into a register to be maintained by the Director for this purpose; and 
 
               (ii) 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 Kosrae State Foreign Investment Permit pursuant to Section 15.307(2)(b)(ii) or
          (iii) above, the applicant may: 
 
               (i) resubmit the application with modifications designed to meet any applicable criteria established in the Kosrae State
                   Foreign Investment Regulations, or 
 
               (ii) 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 15.307(2) above. There
                    is no limit to the number of times an applicant may modify an application in order to meet the requirements for a
                    Kosrae State Foreign Investment Permit. 
 
Section 15.308. Form, fees, renewal, modification, and cancellation of a Kosrae State Foreign Investment permit.
 
     (1) A Kosrae State Foreign Investment Permits shall be in the form prescribed in the Kosrae State Foreign Investment
          Regulations. 
 
     (2) Upon the application for a Kosrae State Foreign Investment Permit, the holder shall fulfil the requirements, if any included
          in the Kosrae State Foreign Investment Regulations for the payment of an application fee. 
 
     (3) Upon the issuance of a Kosrae State Foreign Investment Permit, the holder shall fulfil the requirements, if any included in
          the Kosrae State Foreign Investment Regulations for the payment of an annual permit fee. 
 
     (4) A Kosrae State Foreign Investment Permit shall be valid for one year, and, unless it has been cancelled, suspended, or
          surrendered pursuant to Section 15.308(8)-(11) below, it shall be automatically renewable on an annual basis upon the
          fulfillment of the requirements, if any, included in the Kosrae State Foreign Investment Regulations for the payment of an
          annual fee. 
 
     (5) A Kosrae 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 Kosrae State Foreign Investment Permit may not make a change in the business for which the holder has
          obtained a Kosrae State Foreign Investment Permit without obtaining their new Kosrae State Foreign Investment Permit for
          that purpose under Section 15.307 of this Act (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 Kosrae State Foreign
          Investment Permit. Such a modification may be requested by the holder, and granted by the Director, in accordance with  
          such procedures and requirements as the Director may establish in the Kosrae State Foreign Investment Regulations. 
 
     (7) For purposes of Section 15.308 (5) 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 Kosrae 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 Kosrae State Foreign Investment Permit only if the Director determines, following the procedural
           requirements of Section 15.308(9) below, that one or more of the following circumstances exist: 
 
          (a) the annual fee required under either Section 15.308(2) or (3) 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 the process of the Permit; 
 
          (e) the holder of the permit fails or refuses to comply with the reporting requirements under Section 15.310 of this Chapter
               or with any other requirements of this Chapter or of the Kosrae 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 Kosrae State Foreign Investment Permit is cancelled pursuant to Section 15.308(7) above, the noncitizen holding that
          cancelled Permit shall: 
 
          (a) immediately stop engaging in business in Kosrae 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 15.313 of this Chapter, under Section 13.526 of
               Title 13, or under Kosrae State Foreign Investment Regulations. 
 
     (10) If it appears to the Director that one or more of the grounds for cancellation of a Kosrae State Foreign Investment Permit,
            as enumerated in Section 15.308(7) above, may exist, the Director may temporarily suspend the validity of that Kosrae
            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 Kosrae State Foreign Investment Permit, at the address designated on the application for such notice. If
               during that time the holder of the Kosrae 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 Kosrae
               State Foreign Investment Permit if it was temporarily suspended. 
 
          (b) Hearing procedures shall be prescribed by the Director in the Kosrae State Foreign Investment Regulations and shall
               include the right of the holder of the Kosrae 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 Kosrae State Foreign
               Investment Permit. 
 
          (c) Within 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 Section 15.308(8) above, and shall transmit that decision immediately to the holder of
               the Kosrae State Foreign Investment Permit. 
 
          (d) If a decision has not been issued pursuant to Section 15.308(9)(c) above within the ten days specified, any temporary
               suspension ordered by the Director shall automatically end, and the validity of the Kosrae 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 Kosrae State Foreign
               Investment Permit may appeal the decision to the Kosrae State Court. Copies of any notice of appeal shall be served on
               the Director and the Attorney General of Kosrae State. 
 
     (11) A holder of a Kosrae State Foreign Investment Permit may surrender it by meeting requirements specified for this purpose
            in the Kosrae State Foreign Investment Regulations. Mere cessation of engaging in business in Kosrae State, without
            meeting such requirements, does not relieve the holder of Kosrae State Foreign Investment Permit from the requirements
            incident thereto. 
 
 
 
Subchapter D. Expatriate Worker Authorizations and Entry Permits; Reports; Other Provisions 
 
Section 15.309. Expatriate Worker Authorizations and Entry Permits. 
Section 15.310. Reports by holders of Kosrae State Foreign Investment Permits. 
Section 15.311. Reports by the Director. 
Section 15.312. Guarantees and entitlements regarding foreign investments. 
Section 15.313. Injunction and penalties. 
Section 15.314. Judicial Review. 
Section 15.315. Confidentiality. 
Section 15.316. Enforcement. 
 
Section 15.309. 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 provisions, sets forth the entitlements to expatriate worker authorizations (EWAs') and entry permits. The Director will work with the FSM Immigration Department, as needed, to assist the holder obtain any necessary EWA. 
 
Section 15.310. Reports by holders of Kosrae State Foreign Investment Permits.
 
     (1) The holder of any Kosrae State Foreign Investment Permit shall submit to the Director such reports concerning the foreign
          investment as the Director may prescribe in the Kosrae 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 Kosrae State
          Foreign Investment Regulations. 
 
     (2) Any change in foreign ownership of an investment for which a Kosrae 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 Kosrae State Foreign Investment Permit, including its cancellation if appropriate under the provisions of Section 15.308
          of this Chapter. 
 
     (3) Change in ownership does not include daily or routine changes in stockholders of a corporation whose corporate stock is
          traded on a public stock exchange. However, if a majority ownership interest of the corporation is transferred, assigned or
          purchased then the holder shall report said transfer and follow all applicable section of this Chapter. 
 
Section 15.311. Reports by the Director.
 
     (1) The Director shall publish information annually, in such form and detail as may be prescribed in the Kosrae State Foreign
          Investment Regulations, concerning the extent of foreign investment in Kosrae 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. 
 
Section 15.312. 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 acquisition of foreign investment property and transfers of earnings and capital relating to foreign
          investments. 
 
     (2) Upon payment of such additional fees as the Director may prescribe for this purpose, the holder of a Kosrae State Foreign
          Investment Permit shall be entitled, for 5 years, to an exemption from any future changes in the Kosrae State transaction
          and sales tax rates and similar rules applicable to the business entity to which the Permit applies. 
 
     (3) Subject to the provisions of both the FSM Foreign Investment Act, and this Chapter, and subject to regulations promulgated
          pursuant to those provisions, the Government of Kosrae State shall not take action, or permit any subsidiary political unit
          within Kosrae 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 Kosrae State. 
 
Section 15.313. Injunction and penalties.

Where, on application by the Attorney General, the Kosrae 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 Chapter, the provisions of the FSM Foreign Investment Regulations, or the provisions of the Kosrae State Foreign Investment Regulations, the court may impose an injunction on any such action. The Attorney General shall provide to the concerned noncitizen(s) at least two business days' prior notice of an intention to file such an application with the court. 
 
     (1) 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 Chapter, the FSM Foreign Investment Regulations, or the Kosrae State Foreign
          Investment Regulations, the Director may, in addition to initiating action under subsection (1) above, suspend or cancel a
          Kosrae State Foreign Investment Permit pursuant to Section 15.308 of this Chapter; 
 
          (a) impose such administrative fines and penalties as may be prescribed in the FSM Foreign Investment Regulations or in
               the Kosrae State Foreign Investment Regulations; or 
 
          (b) initiate measures for the imposition of criminal or civil penalties as described in Section 15.313(3) and (4) below or in
               other laws of Kosrae State. 
 
     (2) Any person guilty of willfully contravening the provisions of Section 15.304 commits a crime as set forth in Section 13.526
          of the Kosrae State Code and 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 sections. 
 
     (3) Any person who fails to comply with any of the provisions of this 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 Kosrae State Government of assets or property rights in any business entity engaging in
               business in contravention of this 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. 
 
Section 15.314. Judicial Review.

A decision by the Director pursuant to Section 15.307 of this Chapter regarding an application for a Kosrae State Foreign Investment Permit may be appealed by the applicant. The notice of any such appeal shall be filed with the Kosrae 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 Kosrae State and the Director. Such appeals shall be made under applicable rules of civil procedures. 
 
Section 15.315. Confidentiality.

In carrying out the responsibilities imposed by this Chapter regarding the regulation of foreign investment in Kosrae 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 Kosrae State of the FSM. 
 
Section 15.316. Enforcement.
 
     (1) Primary responsibility for the enforcement of this Chapter shall be placed in the Attorney General of Kosrae and, as to
          criminal sanctions provided in Section 13.526 of this Act, in appropriate law enforcement authorities within Kosrae State. 
 
     (2) In carrying out the responsibility imposed by this 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 Chapter. 
 
     (3) The Director shall promulgate the regulations necessary to implement this Chapter, which regulations shall have the force
          and effect of law.