The Most Frequently Asked HSR Questions

The Most Frequently Asked HSR Questions

1. Where are the Act and the rules located?

16CFR § 801-803, 15 U.S.C. § 18a and e-CFR

2. How much is the filing fee?

$45,000 for transactions less than $100 MM (as adjusted)
$125,000 for transactions $100 MM (as adjusted) to < $500 MM (as adjusted)
$280,000 for transactions $500 MM (as adjusted) or more

3. Is it ok to send the electronic wire filing fee in the name of the law firm?

No, you should identify the person (UPE) filing. 

4. May the parties file a faxed copy of the affidavit and certification pages?

Yes, but you must follow up with one original to the FTC. (Formal Interpretation 16)  

5. When filing as an acquiring and acquired person, can one form be used?

Yes. However, remember to limit your response in Items 5-8 when reporting as the acquired.person. (§ 803.2 (b) and (c))

6. When filing as an individual, what revenue information is required?

As an acquiring person, revenue for all entities controlled by person plus all investment income.  

7. What is the most frequent deficiency in a filing?

Item 5 deficiency (e.g. using incorrect NAICS numbers) and failure to limit Items 5-8 as an acquired person to the assets or issuer being sold. (§ 803.2 (b) and (c))

8. What is a secondary acquisition?

Section 801.4 of the Rules - Whenever as a result of an acquisition (the "primary acquisition") an acquiring person will obtain control of an entity (either incorporated or unincorporated) which holds voting securities of another issuer which it does not control, the acquisition of the other issuer's voting securities is a secondary acquisition. Note that a secondary acquisition of non-corporate interests only occurs if the acquiring person already held non-corporate interest, which when aggregated with additional non-corporate interests of the same entity, results in control.

9. When is an entity a domestic or foreign person?

A person is foreign if it is not incorporated or organized under the laws of the U.S. or has principal offices outside the U.S. (§ 801.1(e)).

10. Under Item 5 of the Notification Form, should the last full year data include sales for businesses acquired during the past full year or only sales of the acquired businesses during the period that the businesses were owned by the filing entity?

The last full year for the businesses acquired during the year.

11. If the acquired person is a nonprofit corporation, which does not have voting securities, should the proposed transaction be considered an asset acquisition?

Yes.

12. When a filing is withdrawn and refiled within two business days, is a new certification required from the acquiring person?

Yes. You must also update items 4(a), 4(b) and 4(c), if necessary.

13. What constitutes a reformation of an LLC?

With the repeal of Formal Interpretation 15, the concept of a reformation of an LLC is no longer valid. If a business is contributed to an existing LLC in exchange for interests in that LLC, the transaction is treated as an acquisition of the business by the LLC (or its ultimate parent entity). Note that the person receiving the interest in the LLC in exchange for the contribution of the business may also have a reporting obligation if the interest results in control of the LLC.

14. If after the acquisition, the acquiring person holds less than 10% of the voting securities of the issuer and a management position with the issuer, is this exempt under § 802.9?

No, not if the management position is an officer or director of the company.

15. How is an exclusive license valued?

The Board of Directors of the acquiring person or its designee must make that determination based on fair market value.

16. If there is an agreement in a friendly tender offer, does the A side still have to send notice to the B side?

Yes. The rules require notice regardless of the friendly nature of the tender offer.

17. If the filer does not have a 2005 annual report, making 2004 the last time that it prepared an annual report, does it still have to submit 8K's and 10Q's from 2004?

No.

18. If a filer has changed status from public to private within the last year, does it still have to submit SEC documents?

Yes.