Date
Rule
801.2(d), 801.40
Response/Comments
The way I analyze these transactions is that if the NEWCO is upstream from A and B, and A and B shareholders are receiving voting securities of NEWCO in exchange for the voting securities of A and B they currently hold, then it is a consolidation. If the NEWCO is downstream from A and B, and A and B get voting securities of NEWCO, then it is an 801.40 formation, despite whether A and B are contributing some or all of their assets to NEWCO. In this 801.40 formation current shareholders of A and B continue to hold voting stock of A and B, not of NEWCO.
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Question
From: (redacted)
Sent:Wednesday, August 02, 2006 12:04 PM
To:Verne, B. Michael
Subject: JV Formation
Mike,
Should thefollowing scenario be analyzed under 801.40 or could it also be deemed aconsolidation for 801.2 purposes?
Company A and Company B contribute all of their assets to anewly formed corporation (Newco) in exchange for voting stock of Newco, otherinvestors contribute cash to Newco in exchange for voting securities of Newco.
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