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0010007 Informal Interpretation
us-ftc-hsr-informal-interpretations-52c2eb2054d8383d917e280d7a1fb0810010007 Informal InterpretationGuidance
Date
Rule
801.2
Response/Comments
Advised the writer that it was unlikely that the FTC would seek civil penalties against holding company if a shareholder acquired it voting stock in violation of the ACT.
Question
[redacted]
October 10, 2000
Mike Verne
Federal Trade Commission
Washington, D.C. 20580
Re: HSR Question
Dear Mike:
As a follow up to our telephone conversation earlier today, the following is a summary of the transaction in question and your answer to the question posed.
In the transaction in question. Company A and Company B will consolidate by forming a Holding Company with tow subsidiaries, Sub-1 and Sub-2. At the effective time: (i) Sub-1 will merge into Company A, (ii) Sub-2 will merge into Company B; (iii) stockholders of Company A will exchange all of their shares of Company A for shares of Holding Company; and (iv) stockholders of Company B will exchange all of their shares of Company B for shares of Holding Company. The result will be that Company A and Company B will become wholly owned subsidiaries of Holding Company, which will be owned by the former stockholders of Company A and Company B.
One set of filing to be made in connection with this transaction will be by shareholders of Company A and Company B for their acquisition of Holding Company voting securities (the consolidation itself, with Holding Company as the "acquired person." A stated in 15 U.S.C. 18a(a), "no person shall acquire" voting securities "unless both persons file notification" pursuant to the HSR Act. Our interpretation of these provision is that, under the circumstances describe above, it is the acquiring person's responsibility to determine whether they need to file, and that the acquired person (Holding Company) will not be liable for violation of the HSR Act for issuing shares to an acquiring person if that person fails to file as required by the HSR Act.
In our phone conversation today, you indicated that although the above position is not explicitly stated in the HSR Act or the regulations, it is the position that the FTC would take under the limited circumstances describe above.
If I have misstated our conversation, or you do not agree with the position as stated, please call me at your earliest convenience.
Sincerely,
[redacted]
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