--- title: 10 Common SF-328 Mistakes and How to Avoid Them description: Avoid common SF-328 mistakes involving foreign ownership, voting rights, incomplete disclosures, and supporting documentation during DCSA FOCI reviews. image: https://industryfso.com/hubfs/Website/Pages/Homepage/Pentagon.webp --- [![Industry FSO logo](https://industryfso.com/hubfs/Website/Logos/Industry%20FSO%20logo.svg)](https://industryfso.com) - [About us](https://industryfso.com/about-us) - Services - [All Services](https://industryfso.com/services) - [FSO Services](https://industryfso.com/fso-services) - [FCL Setup & Maintenance](https://industryfso.com/fcl-formation) - [DCSA Review Prep](https://industryfso.com/dcsa-security-reviews) - [Foreign Ownership (FOCI)](https://industryfso.com/foci-consulting) - [Insights](https://industryfso.com/insights) [Speak to an Expert](https://industryfso.com/contact) - [About us](https://industryfso.com/about-us) - Services - [All Services](https://industryfso.com/services) - [FSO Services](https://industryfso.com/fso-services) - [FCL Setup & Maintenance](https://industryfso.com/fcl-formation) - [DCSA Review Prep](https://industryfso.com/dcsa-security-reviews) - [Foreign Ownership (FOCI)](https://industryfso.com/foci-consulting) - [Insights](https://industryfso.com/insights) [Speak to an Expert](https://industryfso.com/contact) - [FOCI](https://industryfso.com/insights/topic/foci) - [SF-328](https://industryfso.com/insights/topic/sf-328) # 10 Common SF-328 Mistakes and How to Avoid Them ![](https://industryfso.com/hubfs/Website/Global%20images/Sarah%20Phillips.jpg) By [Sarah Phillips](https://industryfso.com/insights/author/sarah-phillips) October 20 2026 6 min read ![10 Common SF-328 Mistakes and How to Avoid Them image](https://industryfso.com/hubfs/Website/Pages/Homepage/Pentagon.webp) ## Contents ## Contents Completing the SF-328, Certificate Pertaining to Foreign Interests, can be more complicated than it initially appears. The form contains nine substantive questions, but answering them accurately often requires a detailed understanding of corporate ownership, voting rights, foreign financial relationships, and other arrangements that could create Foreign Ownership, Control, or Influence (FOCI). For government contractors seeking or maintaining a Facility Clearance (FCL), incomplete or inconsistent disclosures can result in additional questions from DCSA and delays in processing. Many of these issues are preventable. Below are some of the most common mistakes companies make when preparing the SF-328, along with practical steps to avoid them. ## 1. Assuming Minority Foreign Ownership Doesn't Need to Be Disclosed One common misconception is that foreign ownership only matters when a foreign investor owns a majority of the company. In reality, the SF-328 asks about several types of foreign ownership and control, including minority interests. For example, Question 1 addresses certain direct and indirect foreign ownership interests of 5% or more. Other questions address voting rights, management influence, financial relationships, and additional circumstances that may create foreign influence. **How to avoid this mistake:** Review the actual reporting thresholds and definitions in each question. Do not assume that a minority investor is irrelevant simply because the investor lacks majority ownership. Foreign ownership also does not automatically disqualify a company from receiving an FCL. For additional background, read [Can a Foreign-Owned Company Win U.S. Government Contracts?](https://industryfso.com/blog/foreign-owned-company-government-contracts). ## 2. Overlooking Indirect Foreign Ownership Companies sometimes review only their immediate shareholders when completing the SF-328. This can be insufficient when ownership extends through multiple parent companies, holding entities, or investment vehicles. Consider a U.S. government contractor owned by another U.S. company. If that parent company has foreign shareholders, those interests may still be relevant to the contractor's disclosure. The same issue can arise when foreign ownership is held through investment funds or multiple intermediate entities. **How to avoid this mistake:** Develop a corporate ownership chart identifying direct and indirect ownership interests. Review the relevant ownership documentation throughout the corporate structure, applying the definitions and thresholds in the current form. For complex ownership arrangements, coordinate with parent-company representatives and legal or finance personnel who can provide accurate supporting records. ## 3. Confusing Ownership Percentage With Control Ownership and control are related, but they are not interchangeable. A foreign investor may hold a relatively small percentage of a company's equity while possessing significant governance rights. For example, shareholder agreements may provide a foreign investor with the ability to appoint directors, approve major transactions, or influence important management decisions. These arrangements may be relevant even when the investor does not own a controlling percentage of the company. **How to avoid this mistake:** Review corporate governance documents in addition to capitalization tables. Relevant records may include shareholder agreements, voting agreements, operating agreements, bylaws, and investor rights provisions. Pay particular attention to board appointment rights and contractual authority over corporate decisions. ## 4. Providing Incomplete Explanations for “Yes” Answers An affirmative response to an SF-328 question generally requires supporting information. A company may correctly answer "Yes" but fail to provide the documentation necessary for the government to evaluate the relationship. For example, identifying a foreign shareholder without explaining the ownership percentage, voting rights, or relevant corporate structure may leave important questions unanswered. The current SF-328 includes instructions specifying information that must accompany affirmative responses. **How to avoid this mistake:** Treat each "Yes" answer as a separate documentation requirement. Review the corresponding instructions and prepare the requested explanations and supporting records before submission. When referencing an agreement or corporate document, identify the relevant sections rather than expecting reviewers to locate the information themselves. ## 5. Using Outdated Ownership Information Corporate ownership and governance arrangements change over time. Companies may accept new investors, issue additional shares, reorganize subsidiaries, or modify board representation without immediately updating all internal records. If an SF-328 is prepared using outdated information, its responses may conflict with current corporate documentation. **How to avoid this mistake:** Confirm the effective date of the ownership information being reported. Review recent investment transactions, amendments to governing documents, and changes to the board or executive leadership. For companies undergoing acquisitions or financing transactions, coordinate closely with the individuals managing those activities. The goal is to ensure that the SF-328 accurately reflects the company's circumstances at the time of certification. ## 6. Overlooking Foreign Financial Relationships FOCI is not limited to equity ownership. Certain financial arrangements with foreign persons may also be relevant to the SF-328. Depending on the circumstances, these can include financing arrangements, indebtedness, revenue relationships, and other financial dependencies addressed by the form. These questions can be overlooked when the SF-328 is prepared exclusively by a security representative without input from the company's finance department. **How to avoid this mistake:** Include finance and accounting personnel in the disclosure process. Review the financial questions in the current SF-328 and identify the records necessary to determine whether reporting thresholds or other disclosure criteria are met. Do not assume that a company has no reportable foreign interests simply because it has no foreign shareholders. ## 7. Failing to Evaluate Foreign Affiliates and Business Relationships A contractor may have foreign subsidiaries, affiliates, customers, suppliers, or other business relationships that require evaluation under the SF-328. These relationships can be particularly complex for multinational companies or U.S. subsidiaries of foreign corporations. Not every foreign business relationship must be disclosed, and the applicable requirements vary by question. However, failing to review these arrangements can lead to incomplete responses. **How to avoid this mistake:** Identify the company's foreign affiliates and relevant international business relationships. Coordinate with corporate leadership, finance, and legal personnel to determine which relationships fall within the form's specific disclosure requirements. Review the definitions and thresholds carefully rather than assuming all foreign relationships are either automatically reportable or automatically exempt. ## 8. Submitting Inconsistent Corporate Documentation DCSA may compare SF-328 responses with other records submitted during the FCL process. Inconsistencies can create additional questions, even when the underlying ownership arrangement is permissible. Common examples include: - Ownership percentages that differ between the SF-328 and capitalization table - Organizational charts that omit intermediate parent entities - Board information that does not match current corporate records - Shareholder agreements that establish rights not reflected in the disclosure - Different descriptions of the same foreign affiliate across documents **How to avoid this mistake:** Conduct a consistency review before submission. Compare the SF-328 with ownership charts, governing documents, financial records, and other relevant materials. If documents appear inconsistent because they reflect different effective dates or corporate structures, explain those differences where appropriate. ## 9. Assuming a “Yes” Answer Automatically Creates a FOCI Problem Some contractors are concerned that disclosing a foreign interest will prevent them from receiving an FCL. That concern can lead to overly narrow interpretations of the questions or attempts to minimize relationships that should be reported. However, the SF-328 is a disclosure tool. It is not itself a determination that a company is under unacceptable FOCI. DCSA evaluates the disclosed information and determines whether additional review or mitigation is necessary. **How to avoid this mistake:** Focus on accurate, complete responses rather than trying to achieve a particular combination of "Yes" and "No" answers. A reportable foreign relationship may be entirely manageable under the applicable security requirements. For more information, read [FOCI Mitigation Explained: How Companies Address Foreign Ownership Concerns](https://industryfso.com/blog/foci-mitigation-explained). ## 10. Treating the SF-328 as a One-Time Requirement Companies sometimes assume that completing an SF-328 during the initial FCL process satisfies their disclosure responsibilities indefinitely. However, changes in ownership, governance, or other foreign relationships may trigger additional reporting obligations. Examples include new foreign investors, acquisitions, changes in voting rights, or significant changes in foreign financial relationships. **How to avoid this mistake:** Establish a process for notifying the FSO and appropriate company representatives when relevant corporate changes are being considered. For cleared contractors, reporting requirements may apply before a transaction is completed. An updated SF-328 may be required depending on the circumstances and DCSA guidance. **Related article:** *Who Needs to Complete an SF-328, and When Is It Required?* \[Link when published\] ## A Practical SF-328 Review Checklist Before certifying and submitting an SF-328, contractors should confirm the following: | Review item | What to verify | | --- | --- | | Current form | The latest SF-328 revision is being used | | Ownership | Direct and indirect ownership information is accurate | | Voting rights | Relevant governance and control rights have been reviewed | | Foreign affiliates | Applicable foreign business relationships have been evaluated | | Financial disclosures | Finance personnel have reviewed relevant questions | | Affirmative responses | Required explanations and supporting documents are included | | Corporate records | Ownership charts and governing documents are consistent | | Certification | An authorized representative has reviewed and certified the form | | Submission | The appropriate government submission process is being followed | | Future updates | Internal procedures exist for identifying reportable changes | This checklist is not a substitute for the official form instructions, but it can help companies organize their internal review. ## When Should You Get Help With an SF-328? Not every SF-328 requires extensive outside assistance. For a small company with a straightforward ownership structure and no significant foreign relationships, completing the form may be relatively simple. However, specialized assistance can be useful when a company has: - Multiple layers of ownership - Foreign investors or a foreign parent company - Complex voting or governance arrangements - Significant foreign financial relationships - An acquisition or restructuring underway - Questions from DCSA concerning previous disclosures - Difficulty determining what supporting documentation is required In these situations, an experienced FOCI consultant can help review ownership information, identify potential disclosure issues, and organize supporting documentation. Legal counsel may also be appropriate when questions involve interpretation of corporate agreements, ownership transactions, or other legal matters. ## Preparing an Accurate SF-328 Submission The most effective way to avoid SF-328 problems is to treat the form as a corporate disclosure exercise rather than simply a security questionnaire. Accurate responses often require coordination among security, finance, legal, and executive leadership. Taking the time to understand ownership relationships, verify supporting records, and address inconsistencies before submission can reduce unnecessary follow-up questions. Industry FSO provides [SF-328 preparation and FOCI consulting services](https://industryfso.com/foci-consulting) for government contractors. Our team helps companies evaluate foreign ownership arrangements, prepare supporting documentation, review disclosures, and coordinate with DCSA when appropriate. If your organization is preparing an SF-328 or responding to government questions concerning foreign interests, contact Industry FSO to discuss how we can help. ![](https://industryfso.com/hubfs/Website/Global%20images/Sarah%20Phillips.jpg) Article by ### Sarah Phillips President & Founder Sarah Phillips founded Industry FSO to make industrial security more accessible and manageable for defense contractors. With deep experience as a Facility Security Officer and a strong understanding of DCSA expectations, Sarah recognized that many small businesses lack the time and resources to manage an FCL on their own. [More articles](https://industryfso.com/insights/author/sarah-phillips) ## Browse more resources Check out more helpful FSO and FCL resources in our Insights section.  [All posts](https://industryfso.com/insights) #### [![When Do You Need a FOCI Attorney?](https://industryfso.com/hubfs/Website/Pages/Homepage/Pentagon.webp) October 20 2026 When Do You Need a FOCI Attorney? 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When a government contractor encounters Foreign Ownership, Control, or Influence (FOCI) requirements, one of the first questions is often whether to hire a law firm or a specialized FOCI consultant. 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