Question
From: (redacted)
Sent: Thursday, November 03, 2005 1:34 PM
To: Verne,B. Michael
Subject: HSR questions
There are acouple of related questions on which I've long been confused.
I understandthat if a person "acquires" (through voting rights agreements) thepower to cast a majority of the votes for election of directors of acorporation, that isn't by itself enough to constitute a potentially reportableacquisition, because the voting power alone is only one indicium of beneficialownership. (MV comment YES)
But do you viewa person that has such voting power as controlling the issuer, even if hedoesn't beneficially own a majority of the stock? And if the person controlsthe issuer, is that person viewed as holding all of the issuer's assets (eventhough he may not have acquired them). My understanding is that the PNO position is "yes" to all of this. (MV comment YES)
Here's where I'mconfused. Is the right to vote more than half the shares the same thing as (ordifferent from) a "contractual power presently to designate" half ormore of the directors? I have often explained to clients that control by"contractual power" meant the power to remove and replace at leasthalf the directors at any time. If that's right, is it different from the rightto vote more than half the shares?
(MV comment SAME)
I dimly recalldiscussions about whether the power to vote more than half the shares might notconstitute control under particular factual circumstances, e.g., staggeredterms of directors that would prevent the voting power from being effectivelyexercised "presently" with respect to half or more of the directors.Is that simply a gloss on whether the "contractual power" has theappropriate characteristics or am I mixing together a couple of differentconcepts?