1904002 Informal Interpretation

Date:

Tags:

Rule:
801.1(b)
Staff:
Timothy Carson
Response/Comments:

Agree.

Question

From: Carson, Timothy


Sent: Monday, April 15, 2019 5:24:03 PM (UTC-05:00) Eastern Time (US & Canada)


To:  [Redacted]


Cc: [Redacted]


Subject: RE: Control of a corporate issuer under 801.1(b)

Agree

From: [Redacted]


Sent: Monday, April 15, 2019 12:05:11 PM (UTC-05:00) Eastern Time (US & Canada)


To: [Redacted]


Subject: Control of a corporate issuer under 801.1(b)

Dear PNO,

We plan to make an HSR filing for Company C, a corporation, triggered by its proposed acquisition of target, and would like to confirm the UPE assessment for Company C. Company C has two classes of voting shares, Class A and Class B, each with the right to elect 2 of Company C’s 4 directors. Shareholder Y holds a slight majority of Class A shares but less than 50% of the voting shares of Company C, as determined by HSR rule 801.12(b). Similarly, Shareholder X holds a slight majority of Class B shares but less than 50% of the voting shares of Company C, again as determined by HSR rule 801.12(b). Neither Shareholder Y nor Shareholder X, nor any other shareholder, has the contractual right to designate 50% or more of the 4 board seats. Because Company C elects board seats through noncumulative voting, it is the case that, by voting her majority interest in Class A shares, Shareholder Y can effectively elect 2 of 4 board seats, and the same is true of Shareholder X with respect to his Class B interest. However, neither Shareholder Y nor Shareholder X controls Company C under 801.1(b)(1) (holding 50% or more of Company C’s outstanding voting shares) or 801.1(b)(2) (having the contractual power to designate 50% or more of the board). Therefore, neither Shareholder Y nor Shareholder X controls Company C. Please let me know if you agree.

 

 

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.

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