2303002 Informal Interpretation

Sheinberg, Samuel I.
From: 	HSR Help
Sent: 	Monday, March 20, 2023 1:35 PM
To: 	Wals h, Kathryn E. ; Berg, Kare n E. ; Mus ick, Vessel ina; Shaffer, Kristin; She inberg, Samuel I.; Six, Anne;
Fetterman, Miche ll e
Subject: 	FW: Question about 16 CFR 801.1(b)(1)( ii )
From: Whitehead, Nora <nwhitehead@ftc.go v>
Sent: Monda , Ma r ch 20 , 2023 1:34:59 PM UTC-05:00
To:
Cc: 	e p < 	e p 	c.gov>
From:
Sent: 	un ay, 	arc 	, 	.
Subject: RE: Questi on about 16 CFR 801.l( b)( l )( ii)
Confirmed.
From: HSRHelp <HSRHe lp@ftc.go v>
Sent: Sunday, March 19, 2023 7:00 PM
To: Walsh, Kathryn E. <kwalsh@ftc.gov>; Berg, Karen E. <KB ERG @ftc.gov>; Musi ck, Vesse li na <vmusick@ftc.gov>;
Shaffer, Kristin <kshaffer@ftc.gov>; She inberg, Samuel I. <S SHE INBERG@ftc.gov>; Si x, Anne <as ix@ftc.gov>; Whitehead,
Nora <nw hitehead@ftc.gov>; Fetterman, Michelle <mfetterman@ftc.gov>
Subject: FW: Question about 16 CFR 801.l (b )( l )( ii)
) Easte rn Time (US & Canada)
To: HSRHe lp < HSRHel p@ftc.gov>
Subject: Question ab out 16 CFR 80 1.l (b)(l)(i i)
Good morning
I hope you are all we l l.
I'm very sorry to troub le you w ith a quest ion a b out contr ol of an LLC for UPE purposes.
We have an LLC with an investor agreeme nt that a llows one of t he investors the right to a pp oint the majori t y of
the boa r d. That investor does not have the r ight to 50% of the dividends or 50% of t he assets on d iss olution. If
that is the co rr ect analysis, t he LLC is it s own UPE and does not meet the size- of-pe rson test.
801. 1(6 )( 2) does with contractua l a rr angements to a p poi nt a majority of t he boa rd but it does not a pp ly here
b ecause t he entit y is an LLC and not a co rp oration. However, we are concerned because there is st ill de facto
cont rol, a lthough n ot as defi n ed by the rules. If the LLC were cont rolled in an HSR se nse, the invest or would be
the UPE and the UPE would exceed the size- of p erson te st.
Our client is concerned about the appearance of literal form over substance. Can you please confirm that the
current enforcement policy is to apply 16 CFR 801.1 {b){ l ){ii) strictly, so that a contractual power to
designation a majority of LLC directors is irrelevant to the control analysis? Thank you.
Best w ishes
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