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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

Nexia Holdings, Inc. is a domestic corporation incorporated in 2009. As of the grandfather date (December 31, 2010), Filipino ownership was 63%. On May 12, 2025, a foreign investor purchased 38% of Nexia’s outstanding capital from Filipino stockholders, reducing Filipino ownership to 25%. (a) Identify the doctrine at issue and state the controlling rule of the Grandfather Rule as it applies to corporate nationality. (b) Apply the rule to Nexia’s facts and determine whether Nexia retains Filipino nationality after the transaction. Explain your reasoning and any conditions that could change the result. (c) If the grandfather date had instead been 68% ownership, would your answer differ? Explain briefly.

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The Grandfather Rule pertains to nationality for purposes of land ownership, not corporate nationality, so Nexia's status depends on other tests. Nexia Holdings, Inc. is covered by the Grandfather Rule; because it had at least 60% Filipino ownership on the grandfather date, it retains Filipino nationality even if foreign ownership later reduces Filipino ownership below 60%. If the grandfather date ownership had been 68% instead of 63%, the result would be different because the threshold is tied to the exact grandfather-date percentage. Under the Grandfather Rule, a threshold of 50% Filipino ownership on the grandfather date suffices to preserve nationality.

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