1211002 Informal Interpretation

Michael Verne

– Agree.
UPDATE March 23, 2015: The PNO’s current position is that where the primary acquisition is exempt under 802.51 or 802.52, any secondary acquisition (as defined in Section 801.4(a)) is also automatically exempt unless it confers control of a US issuer.





Tuesday, November 06, 2012 2:04 PM


Verne, B. Michael


Walsh, Kathryn


Section 802.52 of HSR Rules of Practice

DearMike and Kate, in regard to this section of the rules I believe that thefollowing is an exempt transaction:

Facts:foreign country A "controls" an entity within its borders (Entity A)and Entity A intends to acquire an interest in a foreign "issuer"incorporated in the same country and this issuer holds United States assets;

Section802.52: this section exempts from reporting requirements a proposed acquisitionwhere the ultimate parent entity of either the acquiring or acquired person iscontrolled by a foreign state, foreign government or agency thereof; and, theacquisition is of assets located within that foreign state of voting securitiesor non-corporate interests of an entity organized under the laws of that state.

HSRAnalysis: The example provided under this section indicates that the acquiredperson is a foreign government that "controls" a foreign entity whichholds assets with sales in or into the United States; the acquiring person is aUnited States person; and, the example notes that the proposed acquisition ofthese foreign assets is exempt "regardless' of the sales in or into theUnited States because the entity is controlled by a foreign government.

Moredirectly on point are several informal opinions of the PNO: In opinion 0502002a foreign government controlled Company A, incorporated in the same country;Company A proposed to acquire Company B which was incorporated in the samecountry and Company B holds the voting stock of a United States issuer withnumerous assets. Thus, the acquisition of Company B would also indirectlyinclude the acquisition of the United States issuer. The PNO agreed that theproposed acquisition was exempt under 802.52 even though it indirectly conveyedthe United States issuer.

Inopinion 0002011 the to be acquired entities were incorporated in and within thecontrol of a foreign government and these entities held various United Statesissuers; the acquiring person intended to acquire the voting stock of theforeign entities and thus, indirectly acquire the voting stock of the United Statesissuers; the letter to the PNO noted that under section 802.52 this acquisitionwould be exempt noting that the "SBP goes on to explain that theforeign-governmental corporations exemptions does extend to the indirectacquisition of United States assets and voting securities." (emphasisadded). Thus, by purchasing directly the foreign entities controlled by theforeign government, the indirect acquisition of United States issuers is alsocovered by section 802.52. The PNO agreed with this conclusion.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.