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Date
Rule
802.51
Staff
Michael Verne
Response/Comments
If the contributed assets comprised an operating unit, then you should look to their sales into the US in the most recent fiscal year.

Question

From:(redacted)

Sent:Tuesday, January 23, 2007 12:05 PM

To:Verne, B. Michael

Subject:802.51 Reportability Question

HiMike,

Ihave a reportability question I was hoping you could help me with. Thetransaction will be structured as follows:

(1) Parent("P"), a foreign issuer, is forming a subsidiary ("S"), aforeign corporation. P will contribute foreign assets to S.

(2) Buyer("B"), a US person, will acquire a 49% interest in S and willalso contribute IP on a non-exclusive basis to S.

We are trying to determine whether the transaction isexempt pursuant to 802.51. S does not have assets in the US valued inexcess of $50 million (as adjusted). Since S is a newly formed entity, it didnot have any sales in its most recent fiscal year. Can the transaction beexempt on this basis, or would we need to look at the US salesgenerated from the assets that P contributed to S?

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