0604008 Informal Interpretation

The combination of irrevocable proxies with direct holding of voting securities that results in the ability to vote 50% or more of the shares does confer control. I think that the analysis in your original hypothetical is a different issue. In your example, A was acquiring control of D's corp through the conversion of non-voting stock to voting securities. Because D's only holdings consisted of minority interests (44%) in B and C, the acquisition of D voting securities is exempt under 802.4 because the value of the minority interests do not count toward the $50 MM (as adjusted) limitation for non-exempt assets in that exemption. However, the secondary acquisitions of B and C stock are potentially reportable, and going forward, A will control both B and C by virtue of holding 54% of the voting securities of each. I'm not sure from our initial exchange of e-mails why control of B and C was an issue. D controls both, but that doesn't affect the reportability of D's corp voting securities by A?? Yes the key is that the proxies are irrevocable. It has always been my understanding that most proxies are revocable, so that is probably what was going on in your executive example. I also can confirm that a person that holds 50% of the voting securities of an issuer still controls even if it has given away the right to vote the shares by irrevocable proxy.